Pain? They think the Bay Area is experiencing "pain?" This is shortness of breath and a tingling sensation in the left arm. SF has a skilled and mobile productive class. They are either invested or not. You can wave goodbye to the "nots" and tthat will kick the one remaining leg out from under the megaregional economy.
Add to the financial layoffs, and the retail disaster in NYC, loss of ad revenues is hitting publishing--mags and newspapers--and ad agencies. RE in Manhattan, like Sf, has nowhere to go but down.
"The New York Times Company told print and Web employees of its flagship New York Times newspaper this afternoon that non-union staff would receive no pay raises next year."
From Forbes.
layoffs here is sf have just begun in earnest this past month. economically we've had enough on the table to keep many businesses afloat until now. tourism is still big. in the summer it was the europeans, now it seems the japanese are back. conventions every week but did just hear about the first significant cancelled convention. macworld is in a couple of weeks and big vendors (adobe, belkin) have paid for their spaces but have decided to not show at all. biotech taking it on the chin. yahoo collapsing. architecture really dead now. panic is most definitely setting in. i know quite a few wealthy folks here who are in trouble.
San Franciscans are quite possibly the most real estate deluded people to have ever lived.
On the various SF blogs people actually believed that RE could fall up to 50-60% in the East Bay and that would cause ZERO depreciation in the "city".
the arguments went like this:
Well the country is bad but California is special
California is hurting but the Bay Area is special
the Bay Area is hurting but the City is special
Parts of the city are hurting but "the real SF" is still ok.
now it's "well, it's a great time to buy as we're in a lull... all you have to do is hold for 3-5 years".
Many properties in the city are now selling for 2005-6 prices. In the not-as-good neighborhoods they're going for 2004 and prior neighborhoods.
and they might not be building more land in SF... but they're definitely building more housing (ORH, Infinity, Millenium, most of SoMa, South Beach, Mission Bay and so on).
the city is in trouble mostly because of the astronomical prices.
If I recall, the top 10% of households in SF have a median annual income of only $200k.
and yet housing can cost $500-1250/sq ft.
so San Franciscans had to stretch, and stretch far to buy a place. Often times it's DINKs that both make $100-300k total, but they're buying places that cost $800k-$3M
of course, using ALT-A products. I believe 70% of mortgages were either IO ARMs or Option ARMs by the end of last year... (I may be a bit off, but don't think so)
so much of the local economy is based on tech, and much of that is really advertising (Yahoo, Facebook, Google, etc).
the coming decrease in capex combined with likely decrease in advertising expenditures could cripple tech in SF.
but SF is only now realizing that perhaps it isn't as special as it thought it was, and perhaps the people aren't as rich as people assumed.
San Fran has by the largest amount of visible homeless of any U.S. city that I"ve visited. I don't say that in a perjorative way, but it always made me wonder about the cost of living, and how many were just scraping by. Seemed like lots.
Everybody can't be upper middle class..., except for Lake Woebegon and that's in my neck of the woods.
CR, I don't understand these two statements taken together: I think those hoping for a price bottom in 2009 (in San Francisco) are way too optimistic. Some low end areas might be close to the bottom already. If there's no bottom in sight for core neighborhoods why might the outer ring areas be near the bottom?
YTL: that is exactly what I've heard my Bay Area friends say for so long now. Oh, and don't forget Marin and the South Bay, they are also "special". There can't be foreclosures there, house prices only go up, $1000 per sqft is reasonable etc.
. And while no one expects San Francisco to see the kind of foreclosures and bank sales that have become common in the East Bay, the city's real estate market is clearly suffering.
No one? I'm someone that thinks they will, so the above statement is false.
.
San Francisco has a high % of visible homeless people because the city allows it.
In LA they put them in jail or put them on outbound busses.
In places like Chicago there is a huge division between the North (richer) end and the south (poorer) end. so the homeless are congregated away from the middle class/affluent.
but SF is very protective of their homeless peoples, and the good and bad neighborhoods are in close proximity. thus they're more visible.
of course this tolerance leads to more moving to SF for that reason. The temperate weather helps as well.
(I'd rather be Homeless in SF than in Houston or Minneapolis)
San Francicso is really a special type of real estate market.
And that is why I believe that they will only experience 50% price declines off from the peak instead of the 80% declines that most of the rest of the bubble areas will see before this Depression is over.
If you want to see homeless folks, visit Santa Monica. Never went there until my son moved there. Homeless sleeping on the lawns...Mercedes driving by. Quite a contrast. My son says his business is still doing well....bar restaurant. I certainly have my fingers crossed for him.
SF is special in several respects. A product of geography, demographics and economy SF retained "classic" core/cenurb/exurb patterns. Geography also allowed some aspects of transportation (transit) to persist. Then came the tech revolution and the worldwide trillions pouring in. What we have is what people think of when they think traditional city. Now comes the hard part; keeping it together without anymore cards to play. The cost of even mantaining the infrastructure they have is going to be huge.
I have some friends who have been living in an extremely spartan apartment in S.F., near the Castro for over 10 years. They are both starving artistic types, married, with no children. Their landlord is a sweet old lady who likes them, and has not jacked their rent because they've been such good and reliable tennants. The place could easily rent for double.
My friends tell me if they had to move, there was no way they could afford to rent anywhere in that city unless as somebody's roommates. They'd be gone.
A substantial rent increase is like an earthquake for them. Eventually, it will come. Every day that it doesn't is a blessing. But when it comes, it'll a game changer.
Grabbed these off foreclosure radar. Not a ton, but they're growing:
SF Preforeclosures SF Bank Owned
<a "href="http://4.bp.blogspot.com/_OjftCEBUcYQ/SUU4JainE8I/AAAAAAAAES0/MNhFd4bhDa4/s1600-h/auction.PNG">SF Bank Auctions Scheduled
Right, I see no reason to predict a bottom for the outer areas and I foresee a reverse ripple effect which might hetrodyne into SFs finally experiencing the exurb diaspora that most other metro areas in the US have already experienced.
We are only now seeing the downturn really impact the service sector. It has been surprisingly strong until now. More than surprising to me since global job/wage arbitrage has quite an impact on services.
Now we'll see how well CA can manage to keep house prices 100% above national median. CA has a lot more downward price movement potential than anywhere in the nation IMO.
Sports Guy:
SF has some very archaic rent control laws.
The rent control doesn't count for newer buildings (built after 1979), but that doesn't include most of the buildings near the Castro.
so the landlady can't jack the rent up.
this year's allowable rent increase is 2%. no more.
if they've been there for a while and the landlady hasn't upped the rent, she can "bank" the rent increases over the years (to a limit, I forget how much). But even then,that would be a max of 18% if she hasn't raised their rent at all in the last 10 years.
bah, the best parts of SF are sub-prime compared to Arlington (most desirable part of inner-ring around Washington DC). Obama hasn't even started the presses yet, and the money still sloshes here in Mordor-on-Potomac.
Alt-A (and worse) product usage in Arlington: 1%.
Traffic here is actually getting WORSE (both weekend and rush-hour), and the number of out-of-state license plates is slowly increasing.
I live in one of the close-in East Bay communities. Prices have come down, but not as much as I expect they will before all is said and done.
In my immediate neighborhood, I've already seen one short sale go off at 70% of its '06 price. Others owners have resorted to renting out homes they spent a lot of time and $$ renovating.
It's going to get worse. But in the end I am hopeful that homes will again become affordable for working families. As they were for me when I moved here in the summer of 1998.
"And while no one expects San Francisco to see the kind of foreclosures and bank sales that have become common in the East Bay," Of course, the banks and lending standards were completely different. SF is it's own country, with it's own banking laws. No bad loans were made in SF. No ridiculous assumptions were made to create those loans. Not in SF, heck no!
is very protective of their homeless peoples, and the good and bad neighborhoods are in close proximity. thus they're more visible.
Heh. Tell that to hunters point.
SF tolerates the poor-as-amusement-park of the tenderloin as a badge of progressiveness, but don't fool yourself. As soon as sh*t gets heavy, SF shoves it out of sight just like the other cities.
so much of the local economy is based on tech, and much of that is really advertising (Yahoo, Facebook, Google, etc).
Advertising is the big JT up the Wazoo. California is goign to be SLAMMED by the cut in ad revenue. I belive LA will be harder hit than our northern neighbor. Why? First you cut ad production (of which LA has the most market share) than you cut ad time. Since LA has print, TV, and tech...
CA has a lot more downward price movement potential than anywhere in the nation IMO.
As bad as it will be here, I think FL will be worse (going forward too!). California prices are insane relative to incomes; but FL just is not building enough industries with high wage jobs. Taking care of retirees and the Mouse are never going to be super high paying jobs (when mouse management resides in CA...).
I remember talking to a Taiwanese cabbie when out there for the Oracle bonanza in '06. He was a RE flipper on the side.
The national price declines had already begun, and he was totally convinced that it "would not happen here." "RE prices never go down."
The price retracement will mirror the run up in real terms -- just like everywhere. The declines are taking longer to hit places with real econonmies, and SF is no different in that respect either.
It is hard to say what the declines will look like when the offsetting forces of dollar devaluing and deflation are through, though.
They would have to muck it up for that to occur. There is a cycle to SF. It attracts the young. They get married, move out to start a family, and a new batch of young flow in.
But until then, can't see how the desirable parts of Washington DC metro collapse.
badger boy
In a credit crunch... it will happen. How will Arlington stay high when everywhere else is dropping? In other words, people from elsewhere won't be able to afford as much due to home and stock declines? Evidence is pointing to 'better value' in Arlington. I like how the DC blogs point out 'not in the nicest areas.'
There is no immune area. 2009 is going to be far too interesting.
OT--Brevard & Dade report. Went to anniversary dinner at expensive restaurant. Not packed, but busy. Lots of people older than boomers there, as well as middle aged. Few young.
My son hasn't done any Christmas shopping; neither has my secy; neither has my hub. So maybe there will be a last minute rush.
Lots of empty CRE, but people on the space coast don't seem to be hurting yet. Fewer than ever for sale signs in my general area.
Non short/bank/developer sellers in Brevard and Dade seem to have given up trying to sell.
I repeat. The banks have got to finance the sales of their foreclosures (or each other's foreclosure) or rent them or do something creative, or we will have a house rotting crisis of worse than hurricane Andrew proportions. Andrew did its worst in South Dade. These rotting houses will be interspersed everywhere and have dreadful effects on neighborhoods everywhere.
It will become apparent in 2-3 years, or after a hurricane, whichever comes sooner.
NY housing prices still show state of denial, but reality is catching up. Number of pre-forclosures in outlying areas of the city are rising, prices are coming down. Still a long way to go.
I remember talking to a Taiwanese cabbie when out there for the Oracle bonanza in '06. He was a RE flipper on the side.
That's the issue, everyone flipped! Most of my coworkers own multiple homes. Most are renting out the spares at negative cash flow (some exceptions).
Gee... they won't panic when they realize holding onto the albatross is going to cost them a retirement... Naaa...
This was a Global mania. Over-investment into real estate. DC is going to be really hard hit when all of the condos come online. Price to rent...
But that will take 'the skeptical bond market.' ETA next summer...
Allen Cwrites: \t"exurb diaspora" They would have to muck it up for that to occur. There is a cycle to SF. It attracts the young. They get married, move out to start a family, and a new batch of young flow in. \t Allen C | \t \t \t \t12.14.08 - 12:12 pm | #
If there's been one reliable aspect of government response it has been the preternatural ability to muck it up chosing the most suboptimal choice of many. I mentioned above that the infux of "nots" was coming to a screeching halt. Any economic contraction and the highly paid recent hires will vote with their feet. Quickly.
"(B)ut FL just is not building enough industries with high wage jobs."
Retirees with high net worth and relatively high retirement incomes continue to flock to FL. The problem is that they only live there for a relatively short period before they die and the house comes on the market again.
Northern Trust which caters to high net worth individuals just opened an office in Fort Myers.
"And that is why I believe that they will only experience 50% price declines off from the peak instead of the 80% declines that most of the rest of the bubble areas will see before this Depression is over."
This is what I believe as well.
At 50% off, most of the City is still too expensive.
Good point, Neil. In wider DC metro area Montgomery County is sliding, houses on my block have been on the market for 6-9 months, some places are shuttered, county and state revenues are crashing, and school programs are being slashed.
One thing that might be different is if a larger percentage of real estate is owned out right, i.e., the family never wanted to sell. I wonder if that is the case. Does anyone know?
Fla state govt is nowhere near the disaster that Cali's is. Yeah, they are short, but they are trying to cut (meat, not fat like sports stadia of course).
And I'm looking for a bottom in the worst bubble areas of half off give or take 5%, not including towers. Don't see that SF should be worse.
What happens to network tv when the car ads get cut in half?
Nice video Counterpointer. From the wikipedia page on the movie:
The central character of Ferdinand also embodies Jameson's notion of the postmodern citizen as a victim of "compensatory decorative exhilaration" or a mass media-addled mindset in which individuals lose the ability to distinguish truth from fiction or important issues from trivial ones.
Here's what I see in our "special" South Bay Area citiies (Palo Alto, Los Altos, Los Gatos)...the ones that are supposed to be immune like SF...
Transactions for the $1M+ market are nearly nonexistent. My old neighborhood has 10 houses for sale, several of them listed since end of summer. This is at least 50% more than during the typical summer/spring selling season.
Special cities are now in that stage where the already-pummelled cities began their decent -- rising inventories and declining sales.
These are Jumbo areas, so they are not getting much help from lower interest rates. On top of that, they face crushing unemployment, and will be affected much more by the stock-market crash.
If there's been one reliable aspect of government response it has been the preternatural ability to muck it up chosing the most suboptimal choice of many.
Hmmm... or, they just make the most politically optimal choice of the moment.
The "taiwanese cabbie who is a real estate flipper on the side," should serve as the emblem for GD II, in the same way that the (probably apocryphal) shoe-shine boy giving stock tips became for GD I.
The upper tier neighborhoods around the bay were driven up by the dot.com employee options and VC money, Google was the last option splash and that has finally run out. While the best neighborhoods got bid up many marginal areas also got plenty of new buyers that did significant rehab to older homes or knocked down smaller units and built large homes upgrading old neighborhoods. Now stranded upper end homeowners are looking out at a very limited number of buyers with the ability to take on these prices. This is the real problem no 2nd or 3rd wave of dot.com options spending that could provide the fuel to buy into not only the older best neighborhoods but all the marginal areas that have become trendy and expensive.
the rent control laws are totally unique and fairly strong
there are more cars than people in SF
SF has a little over 800K people - significantly under its peak in 2000, but not much more than the 1950s
SF is only 7X7
less than half of those 49 miles are the SF that comes to mind when people think of it - the excelsior, hunter's point, etc, all have relatively poor and not-so-charming features, while the sunset and richmond district, which comprise almost half the city, are largely flat and more like a middle-class part of the penninsula than the rest of SF
CR is right. The median price within the San Francisco city limits was down 12.1% year-over-year in November, according to DataQuick. The prices are stickier on the way down in San Francisco because, as Taleb might say, the turkey has had a much longer time to be fed before Thanksgiving, and with much better cuisines.
I plan on using 2001 as a guide. Maybe for GDP as well. My fear is for worse.
Look at the total debt to GDP graph over decades and then focus on the current decade. When you come to terms with the fact that the GDP growth was all debt creation now in reverse, you become more than a bit concerned.
jus me writes: \tNow 43 states facing shortfalls, some intense. Counterpointer | 12.14.08 - 12:19 pm | #
So the Fed bailout of the states will be unanimous! Excellent! ---- Yeah and the 7 fiscally stable States are going to just bend over for a dose of California's debt injection.
You think responsible homeowners are bitching about bailing out their neighbors just wait for tate on sate ass whoppin'. People's gotgots guns, States gots National Guards.
Duarte(Unrated) writes: I just ran into someone who paid 600k+ for a fairly average house in Davis, CA. I guess that the market is immune in some areas. ---- Wait for the 25% reduction in State funding to the UC system along with a 15% tuition increase and a collpse in attendance to UC Davis. A lot of the Davis home price rise was parents buying their kids a house to live in close to campus and rent out two rooms, take the deductions, pay the kid a management fee and pay for the rest through appreciation.
"Fl has alwats been a low wage state. Sunshine, no State income tax and cheap cocaine offsets low wages"
Florida is a bit of an enigma. Rednecks plus older retired people, dwellers of near-slums, and mix in a few Cubans and Mexican immigrants.
It's got terrible public schools through 12th grade, but very good state universities (UF and Florida State).
Crime rates are high, yet the people are laid back (at least compared to California).
The Everglades ecology is largely a disaster, but the beaches are far cleaner than those in California.
People in Florida fear the police more than they do in states like California, but the rate of people arming themselves is much higher in Florida.
Sadly, they've been tearing up a lot of productive orange groves and other agriculture to make room for very poorly built shitbox houses in the middle of nowhere.
Yeah and the 7 fiscally stable States are going to just bend over for a dose of California's debt injection.
And how stable are they really?
The whole thing in Cali will end in tears. Barring a miracle from Washington, chapter 9 is the only option. Only a Federal receiver can untangle the mess that is California spending.
Let do redistribution of land like Zimbabwe. Instead of tax the rich, help the poor. San Francisco should take the lead by taking land from the landowner and give it to the everyone to make it affordable.
By the way I remember our Speaker of the House in Congress. She live in San Francisco right? We should ask her to pass a law in congress to conficate all the land in San Francisco and give it to everyone else. Nothing likes leading by example as a great leader.
Prairedog beat me to it, but LA is covered with the homeless. They are bused IN to LA and not out. I believe the Midwest states call it Greyhound therapy.
In the Peoples Republic of Santa Monica the homeless are like lawn ornaments.
the area between the 280 and the bay south of phone park is a different world than the haight, castro, nob hill, marina, etc. $/sq/ft in the more well-known neighboorhoods does mean something.
According to an SF Chronicle article a few months ago, about half the "homeless" people begging on the street in SF have some place to go: often a subsidized halfway house, a long-term homeless shelter, etc. But they still put on the act and beg for their own purposes.
So in some ways, SF's generosity is counterproductive; they're reducing the number of homeless, but those ex-homeless people are still begging.
As for pricing in coveted Bay Area locations: down in Santa Cruz County, median price has sunk into the mid-400s on the basis of rapid REO and short sales down in Watsonville, the county's low-income subprime hub. Up by Santa Cruz, asking prices haven't budged nearly so much -- but almost nothing is selling.
I'm from Marin, and occasionally "slum it" down in The City.
The dot com thing killed SF, with all these culturally clueless tech people coming into SF, prices rose, and it became vanilla pabulum.
I'm off to a show in SF today.
True. Many in Davis own their homes outright, so it stands to reason that it will weather a real estate crisis better than other areas. I know of many people who relocated from the Bay area to Davis, and take the train to work in the Bay.
Three friends of mine have purchased within the last 5 months. More friends are close to purchasing. In all cases, these people believe that SF may drop, but not by much, and not for more than a few years.
The demand here is very high, and prices do not need to drop that much to get the next round of buyers in the game.
Houses in Castro/Noe Valley continue to sell in week rather than month times.
As usual, I call what I see happening on the ground in SF with my own eyes, so feel free to dispute my observations.
What part of Montgomery County are you in? I lived there 20 years ago and worked as a real estate appraiser at the tail end of the last DC crash. I find it amusing when people say the DC metro area is immune, since it sure wasn't immune in the late 80s.
gold rushes aren't a particularly new thing in SF. 2nd and Mission was once the nicest part of town, pack when General Sherman (yes, THAT Gen Sherman) lived there.
SF is a disaster waiting to happen at these ridiculous prices. The only thing that sustained housing there through the dot com collapse was cheap, easy money. That is now gone. Look at their economy--finance, tech, and tourism--all on the decline. And the most bloated govt. of any big city in the country.
What happens to network tv when the car ads get cut in half?
Before this thing runs its full course, in addition to the demise of one of the inconic American manufacturing icons (General Motors), we will also be witness to loss of one of the three broadcast networks.
I just ran into someone who paid 600k+ for a fairly average house in Davis, CA. I guess that the market is immune in some areas.
Wait for the 25% reduction in State funding to the UC system along with a 15% tuition increase and a collpse in attendance to UC Davis. A lot of the Davis home price rise was parents buying their kids a house to live in close to campus and rent out two rooms, take the deductions, pay the kid a management fee and pay for the rest through appreciation.
Rob Dawg | Homepage | 12.14.08 - 12:39 pm | #
Rob- your insight is spot on. Winter graduation was this weekend, and I never saw so many BMWs and Mercedes in Davis before. One must think that these people have some financial resiliency. As for UC cuts, does this mean that my job at UC Davis is in jeopardy? Luckily, I'm funded by federal grants, and Obama "promised" to increase funding.
Anyone who tries to understand the SF real estate market (city and county,NOT msa)needs to look at the profound differences in neighborhoods.Pacific heights? Bayview? inner and outer mission? Russian Hill? presidio and marina,Soma? In the last downturn SF city and county lost about 30% in inflation adjusted terms.The losses were not evenly distributed then and will not be this time.There have been a LOT of condo's built,the economy has a different structure,the demographics have changed and of course those financing and refinancing the last few years have used a lot of the innovative products that were suitable for the sophisticated.I predict a 60% drop in real terms over the next 5 years if things go well.
Sometimes, but not in this context. Chapter 9 only applies to political subdivisions of a state, and only if the state allows them to be subject to BK. It expressly does not subject the states themselves from BK; the whole 11th Amendment issue.
Because creditors can't collect against a state anyways, there's really no advantage for a state filing for BK.
SF might be expensive, but it is a beautiful place. If I had the money to buy a house outright and shelter my kids from the sicko liberals there, I'd be there in an instant.
WASHINGTON (AP) The White House said Sunday it does not expect to make an announcement by Monday on a possible plan to prevent the collapse of the troubled auto industry.
SF has a incredibly well-paid gov't sector, with the city paying about 50% more for public services than other cities in CA. Early retirement rampant. Attempts to rein-in the costs with "two-teir" pay systems fail when softy voters erase the distinction in the interests of "fairness". With Prop 13 on the books, city pays for this largess with a Ponzi-type scheme of encouraging new condo/loft developments and high housing prices to keep the property taxes rolling in. Asset price deflation here would be crushing.
I think it's coming, and deserved. Sadly (and much like California itself) the day of restructuring may be put off, due to a local daughter made good: it's the home port of Nancy Pelosi. Don't expect the bailout dollars to miss here!
Bush is in Iraq for a surprise goodbye visit. Convenient. See what the markets do and if it looks like it will stay steady then rethink using TARP money for the Big 3.
"The demand here [in SF] is very high, and prices do not need to drop that much to get the next round of buyers in the game." - Chill Bear
Funny how that demand thing works out. Demand in Santa Ana and Sacramento was very high, and look how that turned out.
"Demand" for housing is a nebulous thing that comes and goes, and the perception of demand comes and goes at will. Changes in demand and perceived demand seems to always shock the observer. So maybe you'll be shocked too, Chill Bear.
12th Percentile - Ft Sumner / Glen Echo. The mansionizing has blown out, and it's mostly those homes with signs out for months and months. Arts and Crafts builders are popular still, but who knows if they're getting paid. The ramblers aren't moving fast, but they are mostly selling.
Little observed other point, the only US made cars are driven by retirees. Families all seem to have Japanese, mostly vans.
Sunday, December 14, 2008
The mendacity of hope, the urgency of not
Chicago streets were remarkably crowded this weekend. Usually my mode of transportation is bipedal. Luxurious strolls for coffee, food, or just exercise as intermission. However, a errand called me out to the suburbs - so I navigated through congestion for an hour or so whilst wondering why I was doing it. The purpose of my travels were known to me of course. My fellow travelers' motivations, not so much.
One thing was for certain though, everyone was clearly in a hurry.
When historians look back on this age, the more scrutinizing types will most probably ring up the same observation.
Certainly that would be an appropriate representation of today's investors, be they amateur or professional, versed in equity or credit.
To that I would offer, Why hurry? If you take a breath and relax for a while all the prices you currently are witnessing will resurface again ... from the other direction.
For my part I sit in cash with a splash of yen content(or perhaps my dissenters would say confused) in the knowledge that there will be a bear market bottom in stocks comparable to past metrics (40-50% lower),that the deflationary supertanker will not reverse until most commodities are in backwardization, that convertible and corporate bonds will rise to more absurd yields, treasuries to more absurd PEs, and efforts to forestall Mr. Market's creative destruction to more absurd heights.
If I am wrong I lose only opportunity not capital.
Call it the mendacity of hope, and the urgency of not.
Posted by Anonymous Monetarist
One problem that people seem to neglect with California is the immense entitlement program that it has. There are literally millions of people (and many illegal immigrants), who get food stamps (VIC), day care assistance (fully paid in many cases- 700/mo), MediCal, and subsidized housing. All of this must cost billions. Not to mention the 10s of thousands of state workers making 100k, 200k, 300k+. Adding it all up together with the insane cost of living, and it's a disaster with no easy solution.
Funny, the undertone of the country rubes waiting for mighty Soddom to fall. It could be 1870.
Take out the Sunset and Richmond, and SF may be 3/4 renter, many of them renting well under market and many with 100K+ incomes. That's a slightly different dynamic than Richmond, Pinole, Tracy, Palmdale, Riverside County etc.
And in Marin, Sonoma, Santa Clara, etc. The desirable areas. I conclude there is significant spec real estate owned. It is typical for recently purchased, bay area RE to be negative cash flow due to appreciation expectations. This was true even before the bubble.
Many of these speculators are sitting on significantly negative cash flow investments with a mark well under market except for the most desirable areas. And those areas will decline appreciably next year.
Eternal hope by "economists" doesn't change the facts. We are in a nasty downturn with every financial asset in deflationary mode. Eventually, all neighborhoods will be affected, even San Francisco. I have been following the Westside of Los Angeles, and the same is true for Santa Monica, Beverly Hills, Brentwood, Pacific Palisades, Malibu, and Manhattan Beach, etc....
Maybe these areas can hold out longer, but they fall faster, once price declines become more evident.
Hey Duarte, SF is only beautiful because of liberals. Otherwise it would have been ruined. Name a nice "conservative" city. Has SF gone too far in the other direction re: preservation? Yes, but only by a bit.
And only about 15 percent of the liberals in SF are truly crazy. The rest are in the mainstream of the USA. The mainstream that soundly rejected the policy positions of Bush and McCain.
In the mid-60s, US Customs levied a $300 million fine against the Japanese color television industry for dumping product in the US. Specifically, the Japanese were secretly reimbursing US retailers using Swiss bank accounts for incoming tariffs. The Japanese government, via MITI (Ministry of International Trade and Industry), was implicated in this effort.
President Johnson dispatched his old friend Bob Strauss, a long-time Democratic operative, to Japan as ambassador. Strauss agreed to forgive the fine and open US markets in exchange for the continued presence of US military bases in Japan, which were needed to prosecute the war in Viet Nam. This isn't just my opinion. It's a fact. Look it up.
The rest of the US consumer electronic industry quickly followed color television manufacturers into oblivion.
I write this because many of you may not be aware of what actually happened. This isn't about free markets or competition. It's about politics.
The same thing is true in the automotive industry. I can remember many times, during the late '50s and throughout the '60s, when auto industry management was ordered to settle with the UAW because it still had political clout in Washington.
In the case of the auto industry, everyone is culpable. Industry management, the unions, and the government must share equal responsibility for what happened.
In San Francisco, about about 30% of loans in 2005-2006 were negative amortization option ARMS. Another 40% interests only. These will be amortizing in the coming years.
The next wave (of foreclosures) is coming next year and in 2010, and that is primarily due to these pay-option ARMS and the five-year, adjustable-rate hybrid ARMS that are coming up for reset, said William Longbrake, retired vice chairman of Washington Mutual.
The depression era photographs are very powerful and tell a tale of hardship.
I searched for a website that was documenting with images, videos or photos signs of the recession in everyday life. Couldn't find any. Good idea for a website with good traffic potential.
In econ 101 we learn about supply and demand curves and their intersections, etc.
Places like San Francisco (and the rest of Cali) blew supply and demand out of the water.
As prices grew, demand actually increased! And now with prices falling, demand is sinking like a stone. So the demand curve had a positive slope, not a negative one. How screwed up is that?
Hey Duarte, SF is only beautiful because of liberals. Otherwise it would have been ruined. Name a nice "conservative" city. Has SF gone too far in the other direction re: preservation? Yes, but only by a bit.
IMO California is only progressive in superficial ways. Proposition 13 is the most regressive tax policy imaginable. Californians pat themselves on the back for establishing a comprehensive welfare state, but at the same time force a truly impressive number into serfdom.
"Duarte says: If I had the money to buy a house outright and shelter my kids from the sicko liberals there..."
Sorry Duarte, that the moral (see it raht heh on mah sleeeve?), law-and-order, fiscally conservative Cons destroyed the economy and your kids' chances get away from the sicko liberals. Funny dat.
Me, I'm trying to get away from the sicko Cons and their soul-destroying fantasies. So coming across your idiotic slander was also unwelcome.
dtripper writes:
Hey Duarte, SF is only beautiful because of liberals. Otherwise it would have been ruined. Name a nice "conservative" city. Has SF gone too far in the other direction re: preservation? Yes, but only by a bit.
And only about 15 percent of the liberals in SF are truly crazy. The rest are in the mainstream of the USA. The mainstream that soundly rejected the policy positions of Bush and McCain.
dtripper | 12.14.08 - 1:01 pm | #
The same liberals who support open borders and illegal immigration, but don't want to deal with it in their own backyards- no, they just ruin it for the rest of us who get to deal with it in our schools and emergency rooms, while they get to have their top 10 schools and million-dollar McMansions. I like to call this brand of liberal a cocktail-party liberal.
The same liberals who parade the few kids that they have around gay marriages and cross-dresser parades with public sex-acts. No, it's definitely better with liberals running the show.
The same liberals who give homeless $300/mo to stay homeless and provide them with clean needles. No, it's definitely better with liberals running the show.
Also, the last time that I checked, Bush and McCain were fiscal liberals, and they have left liberals virtually untouched except for late-term abortion and marriage (which is a State-law issue anyway). Clinton sold us to China. No, the country is definitely better off with liberals running it.
I bet that you listened to Bernie Ward too- definitely an upstanding liberal.
Look at the conservative States...compare their debts to liberal States. There's no comparison. Liberals are definitely better.
The whole thing in Cali will end in tears. Barring a miracle from Washington, chapter 9 is the only option. Only a Federal receiver can untangle the mess that is California spending.
Or just think of government as habitually acting in people's short-term interests, at the expense of their long-term well-being.
But the long-term condition is no more than a summation of all the nearsighted short-term decisions made in the course of a wreckless, 40 year, fed-sponsored credit binge.
This conservative prefers to conserve! That certainly includes the environment. And BTW, a true conservative would never let a financial disaster occur.
It is beginning... After the dot-com-bomb the city was emptying out real fast with moving vans on every corner. Now, the same thing is happening. On my way to work in SF I see now moving vans every morning all across the Nob Hill/Russian Hill neighborhoods.
I'd guess a lot of the people moving now were laid off by the bank offices downtown, the next wave is going to be a substantial number of service/IT/tech folks with crazy high rents and no jobs.
But prices and rents have been sticky - maybe a lot of landlords and owners were hoping for a short recession and thought they could weather it without reductions, but it must be sinking by now that this is not working. Some of the For Rent signs on the buildings on Nob Hill have already faded out from a long summer in the sun.
Allen C writes:
"only beautiful because of liberals."
This conservative prefers to conserve! That certainly includes the environment. And BTW, a true conservative would never let a financial disaster occur.
Sorry for the OT, political remarks.
Allen C | 12.14.08 - 1:17 pm | #
And BTW, a true conservative would never let a financial disaster occur.
True conservatives believe gummint is the problem, you know, "I'm from the government and I'm here to help" and all that.
I'm neither liberal or conservative, I'm for what works. This pushes me into a progressive bias since history shows us that our received ideas are more faulty than correct, and that equality of opportunituy is not something that the market is interested in providing.
dtripper writes:
Infanticide? OK, ban this loser.
dtripper | 12.14.08 - 1:02 pm | #
Yes, the infanticide that you voted for when you elected Obama, or did he fool you about that too? 99.9% of his voters did not know that he is a chain smoker. His propaganda machine is top notch.
Your call to ban me is so typical of a communist liberal. You prefer to suppress anything that makes you feel uncomfortable about your own political views- such as late-term abortion, which BHO will allow the day after he's elected, but it will be suppressed by the media. Mark my words.
It's all about the decisions made. The government and the market can both be used as tools of emphasizing hort-term priorities at the expense long-term well being". It's about the character of the person who makes the decisions, not what Bible they read.
Duarte: "Also, the last time that I checked, Bush and McCain were fiscal liberals..."
FAIL
I call a spoof troll. No way anyone could be so stupid as to simply aggregate all one's peeves and irritations in life into a nebulous strawman group, while simultaneously ignoring their own contributions to the disaster befalling America and the world.
Oh, wait. This is a Con, and I'm living in the nightmare of their narcissism. Funny how I keep thinking these caricatures will ever, ever, EVER either take responsibility for their actions or have the grace to shut their freakin' ignorant pieholes.
Duarte = CON = people too stupid to realize how stupid they are, and without the honesty of shame.
that equality of opportunituy is not something that the market is interested in providing.
Like the equality that progressive Clinton provided to China and Bush provided to Mexico. The "market" just took the profits, but the government provided the means.
i believe that's the whole bay area, which includes zip codes in alameda and contra costa county which have fallen over 70% from the peak. sf is maybe 10-15% of that by sales volume.
CON = people too stupid to realize how stupid they are, and without the honesty of shame.
Hey man, never underestimate the power of tax rate cuts to garner undying support. Lowering rates 300bps was the smartest thing the Bushites ever did. The rest is noise.
I live in San Francisco and have been trying to buy a second house. We have been outbid 7 times now. Yes there are a small number of REOs on the market but they are all condos - lofts and what have you in some of the gentrifying areas. No REOs in Noe Valley or those. Every article I read about SF bay area real estate reads like a wish book "oh yes its coming, real estate WILL get hit in SF and Palo Alto- it will it will I promise you- and this is not different. Notice he says prices started falling in 2H08. That means they were RISING until July! This was long after every other region in the country started to fall. We also don't have many layoffs, the tech companies like Cisco aren't laying off at all.
This site, like every other real estate bear site reads the exact same way and anybody who is actually LOOKING for a house here is going to be severely disappointed. Parts of the peninsula are the same way, Burlingame, Palo Alto, Mountain View and even parts of San Jose. The mountain view voice just ran an article showing no decline in Mountain View property sales or prices this year. That is up until now- none.
anybody who is actually LOOKING for a house here is going to be severely disappointed. Parts of the peninsula are the same way, Burlingame, Palo Alto, Mountain View and even parts of San Jose.
Have to disagree about Mtn View and San Jose - Rose Garden and Willow Glen are looking ugly, and even the 94040 is showing some weakness.
Allen C says: "And BTW, a true conservative would never let a financial disaster occur."
Yeah, except that your "CEO President's" regime just DID let a financial disaster occur. Maybe you're having trouble because it happened out here in real life, the one you feel so immune too and superior about.
You don't get to re-define reality when you screw up. Nice try though, and quite an engorged fantasy life you have going there. And BTW, your definition of a "true conservative" would be a liberal.
Resident of SF here. Another thing I've noticed is we used to have weekly street cleaning in residential neighborhoods. A couple months ago that changed to bi-weekly. I imagine the tickets written up for parking your car on the street those days brings in some money for the city. Obviously not enough to justify the costs of frequent street cleaning.
Isn't this one sign of decline?
Also I am somewhat partisan but please take the liberal versus conservative shouting matches out of an otherwise fine blog.
JR writes:
Duarte: "Also, the last time that I checked, Bush and McCain were fiscal liberals..."
FAIL
I call a spoof troll. No way anyone could be so stupid as to simply aggregate all one's peeves and irritations in life into a nebulous strawman group, while simultaneously ignoring their own contributions to the disaster befalling America and the world.
Oh, wait. This is a Con, and I'm living in the nightmare of their narcissism. Funny how I keep thinking these caricatures will ever, ever, EVER either take responsibility for their actions or have the grace to shut their freakin' ignorant pieholes.
Duarte = CON = people too stupid to realize how stupid they are, and without the honesty of shame.
JR | Homepage | 12.14.08 - 1:24 pm | #
I love how liberals with no facts or substantive arguments resort to name calling, suppression of speech, and prose using words like "befalling" "nebulous" "caricatures". Your nebulous rant sounds like it came from a caricature.
Duarte is sitting at home bored. He/she decides to get on CR and troll to see if anyone bites. Surprisingly enough there are many bored people on CR willing to troll right back. Great fun was had by all.
the declines are crawling inward from the east. they're probably starting to creep into the truly wealthy areas west of the 280 in SM and SC county as I type this, though I expect volume to be a trickle there all throughout 2009
Duarte said "Clinton sold us to China"
Another Right wing Urban myth.IIRC
there was a US-China trade agreement signed in 1980 granting Most Favored Nation. Because of the Jackson amendment aimed at USSR and human rights this had to be approved annually. Which it was. Clinton made that MFN permanent. He also negotiated to get China under WTO where WTO rules would apply.
The final negotiations of allowing China into WTO was signed by our current president.
Well a country of a billion plus is going to have some say in trade I imagine. So blaming one side for "letting" China into the WTO seems kind of silly.
JR writes:
Allen C says: "And BTW, a true conservative would never let a financial disaster occur."
Yeah, except that your "CEO President's" regime just DID let a financial disaster occur. Maybe you're having trouble because it happened out here in real life, the one you feel so immune too and superior about.
You don't get to re-define reality when you screw up. Nice try though, and quite an engorged fantasy life you have going there. And BTW, your definition of a "true conservative" would be a liberal.
JR | Homepage | 12.14.08 - 1:31 pm | #
Yeah, and thanks to Janet Reno, appointed by Bill Clinton, the mortgage companies and banks were forced to give mortgages to sub-prime borrowers with no money down or else lose FDIC insurance. The Bush admin is definitely guilty for running with it, but wheels were set in motion way before Bush...try going back to Carter and the "Fair Housing Amendment of 1980". Every true conservative that I know owns their home outright and does not draw from public assistance. They believe in personal responsibility. I don't see how these people are flawed or bad.
Duarte says: "Yeah, and thanks to Janet Reno, appointed by Bill Clinton, the mortgage companies and banks were forced to give mortgages to sub-prime borrowers blah blah blah..."
Actually, Eureka California is special. Home to all the homeless San Francisco deosn't want (they actually bus them up to Humboldt county), and notorious for the world's best dope, housing prices here haven't fallen at all--despite no jobs and a median household income of only $40,600, median home prices remain 8 times that income, and are still at 2005 peak pricing. People here are even more delusional than in San Francisco--and any foreclosure on the market is quickly snapped up by "investors." This place is like a time warp back to 2005.
GM writes:
Duarte is sitting at home bored. He/she decides to get on CR and troll to see if anyone bites. Surprisingly enough there are many bored people on CR willing to troll right back. Great fun was had by all.
There are houses on major streets that people bought to flip and now those are REOs. There are hundreds of those on the market and they skew the price downward. But if you want a quality, remodeled house on a reasonable lot and expect to pay what people were paying here in 2006, forget it. Now that we have a trickle of lower sales which happens EVERY CHRISTMAS, the bears jump on the bandwagon with this is it, we're going to crasssshhh!.
Well, I am looking for a house, and I'm sick of reading all this. Put up the numbers on an 18 square feet, DESIRABLE HOUSE in Noe, or Palo Alto or somewhere, not on a major street, remodeled, and compare 2006 to today.
Another thing that has happened, is that 950K used to be high end 2 years ago, and now its low end.
If I seem like I have an attitude its because we could have bought a 2nd home 2 years ago but instead we read these bear sites telling us a major impending crash was coming. Well we had a crash, in everything but desirable bay area real estate. We could have bought then at 7% interest and refi'd into 4% next year. We would have been much better off. Instead we read articles like this one.
Its obvious that in the bay area people have money and are afraid of inflation. They are parking it in quality real estate.
and clinton held a gun to the head of the banks and forced them to securitize mortgages, then write CDS and create synthetic CDO, sell resulting bonds far and wide to entities that didn't do due diligence, and clinton forced the wealthy to invest in hedge funds that levereged up until the bets turned wrong . . .
the universal theory of the financial crisis: clinton
blame soon to be shared by obama
Yes, I always look to the MV Voice for quality journalism. MiMi, you sound like an angry realtor to me. Frankly we were looking to buy in San Jose but now are waiting it out because Mtn View prices are falling into our range. And the tech layoffs are just starting.
Short Courage,
We sold in Oct after two days on market.
$2Mil. Area Code 94301. Got asking with no contingencies. We estimate we were down 300K from March. Our house was in what I call the servants quarters of 94301.
Neighbors were congratulating us for getting out when the getting was good.
A young couple who live nearby told us of parents who had been trying to sell their Atherton 3.5Mil place for a year with no offers. Their new price is 3Mill with no offers.
Our old area is feeling the effects of the market drop as well as the credit crunch. Our buyers had to put down 35% to get a loan.
Then there is the example of the wife's sister and BIL who had their Portola Valley place on the market for 2 years, during the peak, before it sold. And then there is their Napa Condo that they tried to sell last year that is now a rental. We think they just got greedy and couldn't believe that the market had changed.
We have two years to move back to either Santa Clara, San Mateo or Alameda counties and retain our Prop 13. Hope we don't have to spend two winters at Donner before the bottom.
Crash and Burn Housing Market!
Absolutely. I'm afraid however, that since we have a pretty big slice of the population that for whatever reason are predisposed to do just that line of work, we had better find a way to make it suck less and provide a heckuva lot of it and export a lot less of it.
We should find a term that describes the difference between those who don't have a safe place to put their head down at night, from those who wander the streets of the Tenderloin with eyes the size of lacrosse balls..
If I seem like I have an attitude its because we could have bought a 2nd home 2 years ago but instead we read these bear sites telling us a major impending crash was coming. Well we had a crash, in everything but desirable bay area real estate. We could have bought then at 7% interest and refi'd into 4% next year. We would have been much better off. Instead we read articles like this one.
Its obvious that in the bay area people have money and are afraid of inflation. They are parking it in quality real estate.
MiMi, jump in, the water is fine. And also GO ALL-IN on the stock market. You Can Do It!
.
"Governments were urged to finance wars, social welfare spending, police state intelligence technologies, infrastructure and excess, defaulting through loose monetary policy, defrauding through massaged official statistics, and deregulating the financial sector and capital markets when credit constraint threatened to stem the tide."
Well, anon and mp, I just thought I'd come on here and inject a DOSE OF REALITY into your daily caffeine intake. As far as specific prices in specific expensive real estate zipcodes, like Mountain View, the best way to judge that is LOCAL reporting, so ranting about journalistic quality is pretty silly, and as far as the "if you don't like what we have to say- LEAVE!" jargon, you are on a respected real estate site that is reporting BS.
These sites attract the angry renter crowd. Your reality is not reality.
2 years ago 950K was high end, and today it is low end here. And the articles posted my Mr Mortgage (my favorite idiot), and sites like this one CR which is actually quality, is the same.
bgates- yes we are going to expand our reach. The really annoying thing is we can't even get a prop 8 tax reduction on our other house. Thats prop 8 the tax reduction one, not gay marriage (yikes- lets not go there here!). According to the city prices in the area of our other house continue to go up.
MiMi, I visited N California last month and looked at the situation, specifically commercial real estate. I'm not interested in California residential.
At the moment, I wouldn't touch California commercial with a ten foot--make that 100 foot--pole right now.
If you don't think that's a realistic view, fine. You see, I really don't care. It's my money, not yours.
the reality is that there is an epic demand for quality school districts in the lower penn/west valley. that's the trend you're fighting against, and it has very little to do with the greater housing trend, which is down, down and more down.
"Does it make more sense to prosecute the drug users or providors ?"
That's less a statement of blame than a historical explanation.
As far as blame goes, the real issue is that debt is considered normal, moral, "cheaper than equity" in some corporate finance circles, "good debt" in the context of housing, student loans, etc.
it isn't. debt is immoral and toxic, and I blame our religious/social leadership for collectively forgetting this over the past few decades.
Anon, I am not a realtor, and you're the one who bashed the mountain view voice for "journalistic excellence". You can't see your own bias.
As for tech layoffs, I am a VP in a tech company. We aren't going to have many layoffs here, since the industry has been in a consolidation mode since 2001. 2008 was a horrific corporate year, why would layoffs be postponed until next year in SF? Wouldn't they have started this last summer, after the market had already crashed? What is the rationale there? Adobe and the companies who WERE going to lay off have announced it in their recent quarter. There were very few of those. The reason is because the entire industry outsourced itself to india a few years ago and the dirty little secret is that has not been the bonanza it was presented to be in 2002. We might even have net hiring next year if the 2nd half has even a tinge of recovery.
In all fairness to mimi, there is one guy called "Angry Renter" who posts here.
That said, I find it very funny that people are blaming a blog for them not being able to pick up a second million dollar home (all other facts aside about the impending crash that apparently mimi is ignoring).
Mimi, if you were in the big leagues at least you could've been blaming Madoff or Citadel.
Full disclosure: I sold my second home because of this blog. Couldn't be happier about doing that. And prices are still going up in my market.
A valid point is that the listing prices in the most desirable areas seem stable based on my periodic assessment. I suspect at least a 10% reduction from the peak is required to get a property to actually sell.
It seems rather fanciful to think the entire worlds economy is in full crash mode but one little section of California, a state that is technically bankrupt will be immune...But hey, who am I to disparage other's fantasies...
No I am not blaming a blog for our decision not to buy in 2006 and instead "wait for the fall". But the amount of buzz from these real estate blogs about the existing on impending doom to areas like mine is incredible. If we fall 10% from the peak now, which is entirely possible, we will just be where we were in about March 2007 which was 10% higher than 2006.
Some reasoned assessment of the high end areas would be nice to see, and believe me I am looking for it- never found it. Median price won't work, price per sq feet won't work, because there are all these undesirable REOs on the market but that has nothing to do with quality places.
As to the guy up there talking about Atherton, I think I might be in more of the sweet spot, looking for a $1 million place give or take. Those prices are the ones that seem to be holding up. Maybe the ultra high end is taking a hit? But again, if those people are unwilling to sell at a lower price, which your post seems to indicate, that doesn't help us either.
Many variables in real estate and the majority are local. Buying a home while waiting to see if the recession and job losses deepen is a dicey endeavor.
Taking the wait and see attitude just seems prudent with the plethora of horrible economic news from around the world.
Of course if I have a million dollars sitting in the bank and no place to put it then looking for a nice piece of real estate seems logical. Pretty sure that is a percentage of a percentage but those people who do seem to congregate together and will hold onto their property rather than take a loss. For awhile at least.
Well, lucky you, Mimi. You're very fortunate to have that kind of cash to throw around.
Me, I'm lucky too. I'm using my extra cash to pay a friend's car loan, who has been out of work in L.A. for over a year now.
Maybe you should think about other people for a change, or find something more productive to do than rant at people who are trying to figure out what the economy is going to do in a world that is not full of MiMis right now.
Mimi, this is like complaining that the front row to see the Giants is going up next year despite the CPI falling. Perhaps a legitimate complaint, but pretty silly on the whole.
You do know that towns like Richmond are literally 75% or so off the peak, right? That's a crisis, at least for the folks in those communities and those that depend on any kind of social service, and there are a few more of them than the people in nicer parts of PA and MV. The alarmist tone wasn't just justified on these blogs, it was probably understated.
Maybe you should think about other people for a change, or find something more productive to do than rant at people who are trying to figure out what the economy is going to do in a world that is not full of MiMis right now. donna | Homepage | 12.14.08 - 2:18 pm | #
The depression era photographs are very powerful and tell a tale of hardship.
I searched for a website that was documenting with images, videos or photos signs of the recession in everyday life. Couldn't find any. Good idea for a website with good traffic potential.
GM | 12.14.08 - 1:03 pm |
"RRE - Survivor" (or "Last Market Left Standing").
We nominate say 10 markets, e.g. possible nominees:
(i) Coastal San Diego (La Jolla, Solona Beach, Cardiff)
(ii) LA Coast (SM, Malibu)
(iii) SF (Marina District, ?)
(iv) Long Island Gold Coast (Port Washington, etc.)
(v) SE Florida (are there any that have a prayer, LawyerLiz?)
(vi) NJ (Princeton, ?)
etc., etc. (must be a major metro bubble market)
To make it interesting, should exclude DC Metro (Arlington, ?) due its unusal Government recession proof, perpetual growth market.
The winning pick is the market which suffers least decline, top to bottom.
Winners share pot, less 20% to stake holder (I nominate CR, if willing, to subsidize his phenom blog)
Bets are $100 (to encourage max participation). Anyone willing to play, or does everyone (including lurkers) just talk the talk?
Dunno why we should act so morally reprehensed by all the embezzlement, fraud, deceit, chicanery, extralegality, contempt, sytem gaining, mortgage guisement, etc.
The core foundation for man's sense of himself in society, his accountability for his actions, his personal compass restraining his selfish actions has been so thoroughly diluted as to have been extinguished.
No discussion, no deep consideration of the author of health, wealth, and happiness is anymore tolerated. Remove the eternal from the equation and come to man's devolution. Without that ultimate long-term investment, only a fool doesn't seek to extract the greatest amount of goods with the least exertion into the system. The system thrives only where actors reap that which they sow. Once the reward system is mangled, collapse isn't far. Madoff and others shouldn't be pilloried, but admired. In the immoral matrix we've constructed about us, they are the preeminent takeall greed mobsters. The true arts of wealth creation and distribution have been marginalized and brigandry now owns the crown.
To be fair, I'm sure waiting to buy has been painful for folks looking for stuff in the top fifth of CA markets. But that's why the volume doesn't exist. Sellers don't want to accept the trend.
In that database, HP, Cisco, the big companies in the SF area are nowhere. Intel and HP had some small layoffs in places like Roseville but even then tiny, more like pruning than a real layoff. We know they aren't planning anything because it would be in here. There is very little fat in the tech businesses in Silicon Valley this time around. I have no doubt Cisco and HP and laying off tons of people in India, which is where all the hiring has been in this decade, not here. And when it comes to hiring back, they may change their plans and hire back here based on what I have seen but that is only a prediction on my part, no hard evidence of that.
A few years ago, a buddy of mine noticed solid demand for that price range, so he went to $1.5. I have to believe that with the current jumbo requirements, demand has to be lower.
I know of a couple of houses in SF that were inherited, the owners defaulted on $700,000+ equity loans and stayed for months after foreclosure. Out of town lawyers dont know how to evict in San Francisco.
I saw a few ground level commercial, 2d story residential places for sale that say Wells Fargo will provide financing.
On the other hand, I know of another person who just recently bought a house in SF because he didnt trust the banks with his money.
Also need to bear in mind that the .com bust was a tech investment bust. The current bust is consumer driven. The impact is likely to be delayed and perhaps not as deep.
I'm on the Florida panhandle my home appraised for 210K two years ago. I'm trying to refinance right now and we are looking at a value of 160 K now. Had you bought this house in 2006 you would be severely under water now.
MiMi, I think the bottom line is this: if you've found your "dream home," buy it. Don't concern yourself with the possibility it will depreciate. It's your "dream home," right? You're not going to leave it, ever, right?
On the other hand, if you're thinking about flipping it, that's another story. Or, if you're contemplating being laid off, that's yet another story.
You're right. The high end homeowners have not gotten the "massive deflation" bulletin, and sites like this have a huge amt of posters that reply with things like "Mountain View voice hahaha" and "Classic" when I post actual data to support what I am saying.
I'm going to find a site of real estate bulls (if I can find one) and whenever somebody comes in from Contra Costa county (which is a devastated area because it is EXURB) and they post facts about where Coco prices are- low and lower- I will write CLASSIC and HAHA as responses and pat myself on the back.
To top it off with a cherry on top, rents in the SF bay area have exploded UP! So if you are renting a house in PA or Noe you can now reasonably expect to pay- $5000/mo! Fortunately for us we own another house and are not renting but we are growing out of our house and smashed. Plus I want my kids to get into their real school district so by May 09, its move and pay to play up here, come hell or high water. With rentals at $5K/mo in the same areas we want to buy, renting is not an option either. The low end areas that are west bay here like Redwood City are now renting as cash flow positive from day one and that is without the 4.5% mortgage rates.
About all we can hope for is a massive layoff at Cisco, which I believe is still the areas largest employer but as you can see from that db they are not planning any layoffs, because they shipped most of what is fungible offshore. They are gaining share anyway and may not layoff. HP just had an outstanding quarter also.
Of course if I had a million dollars I would have bought a few acres, remote location, year round water, completely off the grid, and planted a big garden.
That's just me being pragmatically pessimistic. I'm sure this is all going to turn around any day now.
Right GM, I'm sure HP and Cisco will continue to do well when unemployment here hits double digits as people with no jobs tend to buy more computers...
Flash: W just did something good.
An Iraqi journalist threw 2 shoes at him from fairly close range. He ducked both, smiling. But he didn't cover, kept his composure and joked that they were size 10.
Frankly, and this is what I advised a friend, buy or build a place in the Santa Cruz Mountains, then buy a small helicopter (like a Robinson) to commute to work.
It would cost a hell of a lot less than buying some over-priced cracker box in San Francisco.
"rents in the SF bay area have exploded UP! So if you are renting a house in PA or Noe you can now reasonably expect to pay- $5000/mo!"
they've only exploded up relative to the 2001 crash, when they fell by a third.
the appeal of Noe Valley still mystifies me. It was considered very working class just 20 years ago. is there something magical in the screech of the J train that I just don't get?
incidentally, this damages your theory a little:
CUPERTINO \t36 \t$804,500 -22.12%
There are parts of Alameda county which have been shelled which are the opposite of an exurb, as well, though I don't think Fruitvale tops the list of desired housing markets in your case.
About all we can hope for is a massive layoff at Cisco, which I believe is still the areas largest employer but as you can see from that db they are not planning any layoffs,
Go to that db, search for Yahoo. See where the 10% laid off last month is listed. Cant see it?
Re: YTL at 11:33 SF homeless
I used to volunteer at the Legal Action Center For the Homeless in New York City in the early 90's (Dinkins)
I can't tell you how often I heard a story like, "I got charged with vagrancy in [frequently a red state]. Either jail or I could take a one way bus ticket here. New York has good welfare doesn't it?"
bggates, I don't know what that 22% down in Cupertino is referring to, but if it is median home prices that is typical, the problem is the south bay has all these REOs on major streets and former rentals and they skew the median down. If we were willing to buy next to a freeway or on a major cross street in Cupertino we could have got a killer deal. My theory is that in the bay area, most of the REOs were owned by investors and not subprime or risky mortgage types. Obviously not very good investors. Anyway those are available for cheap. But quality homes are few and far between.
As to Noe its appeal is the sun. There are very few sunny spots in SF. Golden banana. Believe me if you live in SF you start to really cherish the sun. Out there by UCSF Parnassas is absolutely beautiful but no sun.
"As to Noe its appeal is the sun. There are very few sunny spots in SF."
Folsom and 20th is much sunnier, as is the Dogpatch neighborhood. Weather doesn't have much to do with it, the desire for a suburban mindset in an urban setting does.
GMAC, which is trying to swap $38 billion of debt for a lesser amount of debt, preferred stock and cash, said in a statement Friday that holders of "a substantial portion of the outstanding notes" had agreed in principle to the new terms.
But the new conditions still need "significant additional participation."
The new terms for the swap, which concerns notes issued by GMAC and Residential Capital LLC, its mortgage unit, include a higher dividend rate of 9 percent. That rate will be reduced to 7 percent once GMAC has raised $2 billion of Tier 1 capital, including $750 million from its shareholders.
So far only about a quarter if the debt in question has been tendered.
The deadline for early delivery was extended until Tuesday, Dec 16, while the expiration date was extended to Dec 26.
The further people live from the Bay Area, the more expert they are in or local RE market.
Those of us actually here on the ground, looking to buy in a decent location are idiots because we haven't seen prices fall 50% like all the experts tell us they have.
Some neighborhoods in SF have fundamentally changed character. Neighborhoods with a lot of single family homes, close to transportation to financial district, with dry cleaners, grocery stores etc within walking distance, have changed their fundamental character from working class to upper class. Prices will not be dropping back into affordability for working class people. (Unless we go Mad Max of course)
On the other hand, prices in Richmond are down 80% in some places. There are SFH under $100k, within easy drive and BART to financial district. But there are good reasons people do want to live there.
Well yoko, again, that db is one source of info about layoffs in CA and a lot of layoffs are in there. All you are throwing out is hyperbole. I am trying to post facts.
Yahoo probably has some kind of exclusion hardship etc. But other companies who have announced layoffs are in there. Another one who is not there but should be is Foundry/Brocade merger. There is probably some kind of merger exclusion on that list. But my company is required to post there, and we did. Trying to claim that the exceptions to that list are the majority is a kind of denial.
It would cost a hell of a lot less than buying some over-priced cracker box in San Francisco. mp | 12.14.08 - 2:42 pm | #
But then the kids wouldn't be in their real school district. I think the real solution is to out bid those other people. It is really the only option since renting is too expensive. I'm not sure how the numbers work out, but I'm going to accept MiMi's evaluation at face value. I'm thinking private school is also not an option, since you wouldn't want the kids to become elitist.
mimi -[when I post actual data to support what I am saying]
Listen, if you go back to '06 everyone used the very same actual data. Then in 07 there were fewer actual data pts and in 08 almost none. Just wait till 09. Your time will come. Look at metrics other than prices and you'll see the same trends that were present in other areas prior to their meltdowns. Don't be delusional.
Cisco, Google, and HP are all implementing cost cutting measures. Start with trimming budgets for as long as possible before you cut salaried staff. I respect that and wish more companies took this path.
Of course cutting contract workers or not renewing contracts doesn't count as lay offs. I'd like to see some data on those numbers.
The one reason I hear most frequently for buying in San Francisco is access to "culture," what that means.
I live in a remote area and, thanks to my ride, have access to all kinds of culture: jazz, symphony, universities, food, whatever.
As far as schools go, I can't think of a single school in this country, public or private, that's worth the tuition. Conjure did a terrific job educating son of mp, but I guess there aren't that many Conjures out there.
Absolutely right, Chill bear. Thanks for your post.
I question anybody going to Las Vegas now for an investment property when you can buy in Contra Costa at the same price at this moment. But that has no bearing on the really desirable areas in the SF bay area.
Its almost like, for the RE bears to feel that they have been right, high end SF HAS to fall. They keep predicting it, but no cigar. Right now this is December. There is always a small blip down in December no matter what the market.
My brother in law owns a small rental property in San Jose downtown or Rose Garden I think. It is RENTING for $2800/mo. That guy is making $650/mo on that place. Rentals would have to fall 30% for the low end to take another hit here. YES rentals did fall that much in 2001, when the SF bay area alone lost ONE MILLION jobs. Its just stupid to expect that kind of devastation again.
The best advice for bloggers that I have is- unless you LIVE in the SF bay area- please quit making offbase predictions!
"My brother in law owns a small rental property in San Jose downtown or Rose Garden I think. It is RENTING for $2800/mo."
Oh please, in SJ Rose Garden? You can rent a house for under $2k per month. Feel free to be bullish on SF, but you sound really foolish applying the same fantasies to San Jose.
The SF Chronicle made the claims regarding the downturn of SF RE. The bloggers commented. Please write to the editorial section of the Chronicle to raise your objections.
Mimi: "We aren't going to have many layoffs here, since the industry has been in a consolidation mode since 2001."
This is interesting thinking when considered. I expand this to "We aren't going to have many layoffs here because we are really efficient/irreplaceable here."
Having spent the last several years exposed to the "Bay Area Optimism Field" - particularly the "Silicon Valley Optimism Singularity" - I can understand where that kind of thinking comes from.
However, these days we're not talking of the "Oh, no more capital or exit strategy" failure of the start of the decade. A time when hiring was based significantly on being able to obtain resources and figure out what to do with them to "3. Profit!" later.
These days, we're talking about a future of "This business model (or investment) does not work. We are terminating it." layoffs. Consolidation and offshoring have no bearing on this situation.
Think about why VC funding is drying up. It's not because people don't want to make healthy profits on their investments. The extension of that is that the money is no longer there.
Let me know when average prices on the bluffs in Encinitas, Cardiff, Solona Beach, La Jolla, Del Mar fall even 20%. Not saying it couldn't happen, but ....
there is some capital and appetite for risk in Asia which is finding its way into some new ventures in the US.
but, then, at least when you indirectly work for the Red Army instead of some Sand Hill Road sharks, you know that there are some values and sense of accountability at the top.
Its almost like, for the RE bears to feel that they have been right, high end SF HAS to fall. MiMi | 12.14.08 - 3:02 pm | #
Surprisingly, I agree. I'm bearish, but I'm happy enough with the fall in the aggregate level. It doesn't matter to me how much Malibu or La Jolla or SF fall. I think everywhere will take a hit, but it really matters very little to me if a few pockets don't. But I am puzzled why if real estate prices are holding strong, and you believe they will be strong going forward, you aren't willing to pay the price you think is right.
"but, then, at least when you indirectly work for the Red Army instead of some Sand Hill Road sharks, you know that there are some values and sense of accountability at the top."
Conjure says, "BWAHAHAHA!"
"I want one of those Red Army capitalist uniforms."
Its just stupid to expect that kind of devastation again
China devaluing. Prepare for another flood of layoffs. Few Americans left who can afford SF but perhaps the Chinese will buy it to rent to Americans who... can't afford to buy it.
Let me know when average prices on the bluffs in Encinitas, Cardiff, Solona Beach, La Jolla, Del Mar fall even 20%. Not saying it couldn't happen, but .... Comrade V | 12.14.08 - 3:07 pm | #
Ummm, they fall when the bluffs do, we're due for another one after the rains. If you can figure out a way to shield San Diego from liability, they might let you buy that collapsed area on Mount Soledad.
But I thought they weren't making any more land.
Not in SF they ain't
Finally Nemo!
Pain? They think the Bay Area is experiencing "pain?" This is shortness of breath and a tingling sensation in the left arm. SF has a skilled and mobile productive class. They are either invested or not. You can wave goodbye to the "nots" and tthat will kick the one remaining leg out from under the megaregional economy.
I know folks who bought 3 homes in SF on little income.
We'll see foreclosures in "the city"
Add to the financial layoffs, and the retail disaster in NYC, loss of ad revenues is hitting publishing--mags and newspapers--and ad agencies. RE in Manhattan, like Sf, has nowhere to go but down.
"The New York Times Company told print and Web employees of its flagship New York Times newspaper this afternoon that non-union staff would receive no pay raises next year."
From Forbes.
Has it come to this...talking about bottoms in San Francisco?
San Fran is a nice city. The natural and manmade beauty is second to none.
I could imagine living there if I was independently wealthy, in my 20's and didn't have any children.
I'm none of those things, though.
layoffs here is sf have just begun in earnest this past month. economically we've had enough on the table to keep many businesses afloat until now. tourism is still big. in the summer it was the europeans, now it seems the japanese are back. conventions every week but did just hear about the first significant cancelled convention. macworld is in a couple of weeks and big vendors (adobe, belkin) have paid for their spaces but have decided to not show at all. biotech taking it on the chin. yahoo collapsing. architecture really dead now. panic is most definitely setting in. i know quite a few wealthy folks here who are in trouble.
San Franciscans are quite possibly the most real estate deluded people to have ever lived.
On the various SF blogs people actually believed that RE could fall up to 50-60% in the East Bay and that would cause ZERO depreciation in the "city".
the arguments went like this:
Well the country is bad but California is special
California is hurting but the Bay Area is special
the Bay Area is hurting but the City is special
Parts of the city are hurting but "the real SF" is still ok.
now it's "well, it's a great time to buy as we're in a lull... all you have to do is hold for 3-5 years".
Many properties in the city are now selling for 2005-6 prices. In the not-as-good neighborhoods they're going for 2004 and prior neighborhoods.
and they might not be building more land in SF... but they're definitely building more housing (ORH, Infinity, Millenium, most of SoMa, South Beach, Mission Bay and so on).
the city is in trouble mostly because of the astronomical prices.
If I recall, the top 10% of households in SF have a median annual income of only $200k.
and yet housing can cost $500-1250/sq ft.
so San Franciscans had to stretch, and stretch far to buy a place. Often times it's DINKs that both make $100-300k total, but they're buying places that cost $800k-$3M
of course, using ALT-A products. I believe 70% of mortgages were either IO ARMs or Option ARMs by the end of last year... (I may be a bit off, but don't think so)
so much of the local economy is based on tech, and much of that is really advertising (Yahoo, Facebook, Google, etc).
the coming decrease in capex combined with likely decrease in advertising expenditures could cripple tech in SF.
but SF is only now realizing that perhaps it isn't as special as it thought it was, and perhaps the people aren't as rich as people assumed.
San Fran has by the largest amount of visible homeless of any U.S. city that I"ve visited. I don't say that in a perjorative way, but it always made me wonder about the cost of living, and how many were just scraping by. Seemed like lots.
Everybody can't be upper middle class..., except for Lake Woebegon and that's in my neck of the woods.
CR,
I don't understand these two statements taken together:
I think those hoping for a price bottom in 2009 (in San Francisco) are way too optimistic. Some low end areas might be close to the bottom already.
If there's no bottom in sight for core neighborhoods why might the outer ring areas be near the bottom?
YTL: that is exactly what I've heard my Bay Area friends say for so long now. Oh, and don't forget Marin and the South Bay, they are also "special". There can't be foreclosures there, house prices only go up, $1000 per sqft is reasonable etc.
.
And while no one expects San Francisco to see the kind of foreclosures and bank sales that have become common in the East Bay, the city's real estate market is clearly suffering.
No one? I'm someone that thinks they will, so the above statement is false.
.
San Francisco has a high % of visible homeless people because the city allows it.
In LA they put them in jail or put them on outbound busses.
In places like Chicago there is a huge division between the North (richer) end and the south (poorer) end. so the homeless are congregated away from the middle class/affluent.
but SF is very protective of their homeless peoples, and the good and bad neighborhoods are in close proximity. thus they're more visible.
of course this tolerance leads to more moving to SF for that reason. The temperate weather helps as well.
(I'd rather be Homeless in SF than in Houston or Minneapolis)
Rob -
Because the outter areas have experienced fast and dramatic price declines, whilst the core sections have steady and slow declines?
San Francisco will be all right, right after the second half rebound occurs, we've got two weeks to pull it off. Let's get cracking!
CR writes 'I think those hoping for a price bottom in 2009 (in San Francisco) are way too optimistic.'
Those hoping for a price bottom nationally in 2009 are being way too optimistic.
If there's no bottom in sight for core neighborhoods why might the outer ring areas be near the bottom?
Rob:
first: I'm not saying that we're anywhere near bottom in any area of the country right now, BUT
a lot of the far out suburbs of SF have taken massive hits. Up to (maybe even over) 50% drops already.
some areas of the city have taken 0-1% drops.
but the strain started long ago in the far out burbs, and moved in.
thus, you could see a stalling of the fall in the outer rings, with acceloration in the inner areas.
saw this all over by the way. (further getting hammered first, then moving centrally).
that said, a lot of the far out suburbs (like Antioch and Tracy and what not) might get even more slaughtered.
Let's not forget Vallejo, how are they doing?
Anyone seasoned in RE knows the cycles are in terms of years. The last downturn was from '90 to '97.
To make matters worse, no one publicly considers the fact that this run-up was absolutely unprecedented.
buddy has a listing in antioch @ 95g's , down from '05 peak at 385g's.
75% reduction, and overpriced , according to him.
To make matters worse, no one publicly considers the fact that this run-up was absolutely unprecedented.
Allen C
Or the fact that this economic turndown is unprecedented
San Francicso is really a special type of real estate market.
And that is why I believe that they will only experience 50% price declines off from the peak instead of the 80% declines that most of the rest of the bubble areas will see before this Depression is over.
If you want to see homeless folks, visit Santa Monica. Never went there until my son moved there. Homeless sleeping on the lawns...Mercedes driving by. Quite a contrast. My son says his business is still doing well....bar restaurant. I certainly have my fingers crossed for him.
SF is special in several respects. A product of geography, demographics and economy SF retained "classic" core/cenurb/exurb patterns. Geography also allowed some aspects of transportation (transit) to persist. Then came the tech revolution and the worldwide trillions pouring in. What we have is what people think of when they think traditional city. Now comes the hard part; keeping it together without anymore cards to play. The cost of even mantaining the infrastructure they have is going to be huge.
rob- also that is exactly what one would expect at the bottom as people living in SF are forced to move to outer areas.
that is not to say the outer areas have hit the bottom.
Todays musical interlude
YouTube - Spinning Wheel - High Quality Version
I have some friends who have been living in an extremely spartan apartment in S.F., near the Castro for over 10 years. They are both starving artistic types, married, with no children. Their landlord is a sweet old lady who likes them, and has not jacked their rent because they've been such good and reliable tennants. The place could easily rent for double.
My friends tell me if they had to move, there was no way they could afford to rent anywhere in that city unless as somebody's roommates. They'd be gone.
A substantial rent increase is like an earthquake for them. Eventually, it will come. Every day that it doesn't is a blessing. But when it comes, it'll a game changer.
Grabbed these off foreclosure radar. Not a ton, but they're growing:
SF Preforeclosures
SF Bank Owned
<a "href="http://4.bp.blogspot.com/_OjftCEBUcYQ/SUU4JainE8I/AAAAAAAAES0/MNhFd4bhDa4/s1600-h/auction.PNG">SF Bank Auctions Scheduled
Sports Guy Lafleur - Not to mention rent control.
"Or the fact that this economic turndown is unprecedented"
The GD was one nasty era. We have a long way to go. One poster predicted unemployment claims hitting one mill. That may very well happen.
I conclude many are unable to economically extrapolate. Greenspan called the bottom in Q4/2006. Clueless or crooked.
Right, I see no reason to predict a bottom for the outer areas and I foresee a reverse ripple effect which might hetrodyne into SFs finally experiencing the exurb diaspora that most other metro areas in the US have already experienced.
We are only now seeing the downturn really impact the service sector. It has been surprisingly strong until now. More than surprising to me since global job/wage arbitrage has quite an impact on services.
Now we'll see how well CA can manage to keep house prices 100% above national median. CA has a lot more downward price movement potential than anywhere in the nation IMO.
Sports Guy:
SF has some very archaic rent control laws.
The rent control doesn't count for newer buildings (built after 1979), but that doesn't include most of the buildings near the Castro.
so the landlady can't jack the rent up.
this year's allowable rent increase is 2%. no more.
if they've been there for a while and the landlady hasn't upped the rent, she can "bank" the rent increases over the years (to a limit, I forget how much). But even then,that would be a max of 18% if she hasn't raised their rent at all in the last 10 years.
I conclude many are unable to economically extrapolate.
Allen C | 12.14.08 - 11:57 am | #
Uh, given the past few years, I'd say too many were economically extrapolating.
San Francisco will suffer foreclosures and further real estate price drops just like all the other inflated areas. It is only a matter of time.
Although, to be fair, my aunt would not have upped the rent on anyone if her costs had remained constant; she, too, was a sweet little old lady.
no one expects San Francisco to see the kind of foreclosures and bank sales that have become common in the East Bay
Ah, isn'tthis the incipient germ "node", that later becomes... "Hoocoodanode?"
bah, the best parts of SF are sub-prime compared to Arlington (most desirable part of inner-ring around Washington DC). Obama hasn't even started the presses yet, and the money still sloshes here in Mordor-on-Potomac.
Alt-A (and worse) product usage in Arlington: 1%.
Traffic here is actually getting WORSE (both weekend and rush-hour), and the number of out-of-state license plates is slowly increasing.
I live in one of the close-in East Bay communities. Prices have come down, but not as much as I expect they will before all is said and done.
In my immediate neighborhood, I've already seen one short sale go off at 70% of its '06 price. Others owners have resorted to renting out homes they spent a lot of time and $$ renovating.
It's going to get worse. But in the end I am hopeful that homes will again become affordable for working families. As they were for me when I moved here in the summer of 1998.
Obama hasn't even started the presses yet,
I wonder what's stopping him? Hmmm, can't think of anything. Can you?
"And while no one expects San Francisco to see the kind of foreclosures and bank sales that have become common in the East Bay,"
Of course, the banks and lending standards were completely different. SF is it's own country, with it's own banking laws.
No bad loans were made in SF.
No ridiculous assumptions were made to create those loans.
Not in SF, heck no!
is very protective of their homeless peoples, and the good and bad neighborhoods are in close proximity. thus they're more visible.
Heh. Tell that to hunters point.
SF tolerates the poor-as-amusement-park of the tenderloin as a badge of progressiveness, but don't fool yourself. As soon as sh*t gets heavy, SF shoves it out of sight just like the other cities.
Cheers,
prat
so much of the local economy is based on tech, and much of that is really advertising (Yahoo, Facebook, Google, etc).
Advertising is the big JT up the Wazoo. California is goign to be SLAMMED by the cut in ad revenue. I belive LA will be harder hit than our northern neighbor. Why? First you cut ad production (of which LA has the most market share) than you cut ad time. Since LA has print, TV, and tech...
CA has a lot more downward price movement potential than anywhere in the nation IMO.
As bad as it will be here, I think FL will be worse (going forward too!). California prices are insane relative to incomes; but FL just is not building enough industries with high wage jobs. Taking care of retirees and the Mouse are never going to be super high paying jobs (when mouse management resides in CA...).
Got Popcorn?
Neil
But then again, no place is immune. Arlington will crack when Ron Paul is in the White House and a Libertarian majority in each house of Congress.
But until then, can't see how the desirable parts of Washington DC metro collapse.
More thread music, this is Wave of Mutilation done to Goddard:
YouTube - Pixies - Wave of Mutilation (UK Surf)
Perfect. What a Sunday.
Can't wait til Asia opens.
C
SF is special, but it is not different.
I remember talking to a Taiwanese cabbie when out there for the Oracle bonanza in '06. He was a RE flipper on the side.
The national price declines had already begun, and he was totally convinced that it "would not happen here." "RE prices never go down."
The price retracement will mirror the run up in real terms -- just like everywhere. The declines are taking longer to hit places with real econonmies, and SF is no different in that respect either.
It is hard to say what the declines will look like when the offsetting forces of dollar devaluing and deflation are through, though.
"exurb diaspora"
They would have to muck it up for that to occur. There is a cycle to SF. It attracts the young. They get married, move out to start a family, and a new batch of young flow in.
But until then, can't see how the desirable parts of Washington DC metro collapse.
badger boy
In a credit crunch... it will happen. How will Arlington stay high when everywhere else is dropping? In other words, people from elsewhere won't be able to afford as much due to home and stock declines? Evidence is pointing to 'better value' in Arlington. I like how the DC blogs point out 'not in the nicest areas.'
There is no immune area. 2009 is going to be far too interesting.
Got Popcorn?
Neil
OT--Brevard & Dade report. Went to anniversary dinner at expensive restaurant. Not packed, but busy. Lots of people older than boomers there, as well as middle aged. Few young.
My son hasn't done any Christmas shopping; neither has my secy; neither has my hub. So maybe there will be a last minute rush.
Lots of empty CRE, but people on the space coast don't seem to be hurting yet. Fewer than ever for sale signs in my general area.
Non short/bank/developer sellers in Brevard and Dade seem to have given up trying to sell.
I repeat. The banks have got to finance the sales of their foreclosures (or each other's foreclosure) or rent them or do something creative, or we will have a house rotting crisis of worse than hurricane Andrew proportions. Andrew did its worst in South Dade. These rotting houses will be interspersed everywhere and have dreadful effects on neighborhoods everywhere.
It will become apparent in 2-3 years, or after a hurricane, whichever comes sooner.
NY housing prices still show state of denial, but reality is catching up. Number of pre-forclosures in outlying areas of the city are rising, prices are coming down. Still a long way to go.
I remember talking to a Taiwanese cabbie when out there for the Oracle bonanza in '06. He was a RE flipper on the side.
That's the issue, everyone flipped! Most of my coworkers own multiple homes. Most are renting out the spares at negative cash flow (some exceptions).
Gee... they won't panic when they realize holding onto the albatross is going to cost them a retirement... Naaa...
This was a Global mania. Over-investment into real estate. DC is going to be really hard hit when all of the condos come online. Price to rent...
But that will take 'the skeptical bond market.' ETA next summer...
Got Popcorn?
Neil
Neil +1
Allen Cwrites:
\t"exurb diaspora"
They would have to muck it up for that to occur. There is a cycle to SF. It attracts the young. They get married, move out to start a family, and a new batch of young flow in.
\t Allen C | \t \t \t \t12.14.08 - 12:12 pm | #
If there's been one reliable aspect of government response it has been the preternatural ability to muck it up chosing the most suboptimal choice of many. I mentioned above that the infux of "nots" was coming to a screeching halt. Any economic contraction and the highly paid recent hires will vote with their feet. Quickly.
Neil writes,
"(B)ut FL just is not building enough industries with high wage jobs."
Retirees with high net worth and relatively high retirement incomes continue to flock to FL. The problem is that they only live there for a relatively short period before they die and the house comes on the market again.
Northern Trust which caters to high net worth individuals just opened an office in Fort Myers.
Mr. T:
"And that is why I believe that they will only experience 50% price declines off from the peak instead of the 80% declines that most of the rest of the bubble areas will see before this Depression is over."
This is what I believe as well.
At 50% off, most of the City is still too expensive.
Good point, Neil. In wider DC metro area Montgomery County is sliding, houses on my block have been on the market for 6-9 months, some places are shuttered, county and state revenues are crashing, and school programs are being slashed.
I'll re-post the state revenue disaster numbers:
Center on Budget and Policy Priorities
Now 43 states facing shortfalls, some intense.
C
"rotting houses"
Excellent point. Tragic to over-invest in housing only to have it decay.
The govi should focus on smoothing the liquidation rather than attempting to prop up the unsustainable.
One thing that might be different is if a larger percentage of real estate is owned out right, i.e., the family never wanted to sell. I wonder if that is the case. Does anyone know?
Fla state govt is nowhere near the disaster that Cali's is. Yeah, they are short, but they are trying to cut (meat, not fat like sports stadia of course).
And I'm looking for a bottom in the worst bubble areas of half off give or take 5%, not including towers. Don't see that SF should be worse.
What happens to network tv when the car ads get cut in half?
Nice video Counterpointer. From the wikipedia page on the movie:
The central character of Ferdinand also embodies Jameson's notion of the postmodern citizen as a victim of "compensatory decorative exhilaration" or a mass media-addled mindset in which individuals lose the ability to distinguish truth from fiction or important issues from trivial ones.
Very timely.
Here's what I see in our "special" South Bay Area citiies (Palo Alto, Los Altos, Los Gatos)...the ones that are supposed to be immune like SF...
Transactions for the $1M+ market are nearly nonexistent. My old neighborhood has 10 houses for sale, several of them listed since end of summer. This is at least 50% more than during the typical summer/spring selling season.
Special cities are now in that stage where the already-pummelled cities began their decent -- rising inventories and declining sales.
These are Jumbo areas, so they are not getting much help from lower interest rates. On top of that, they face crushing unemployment, and will be affected much more by the stock-market crash.
If there's been one reliable aspect of government response it has been the preternatural ability to muck it up chosing the most suboptimal choice of many.
Hmmm... or, they just make the most politically optimal choice of the moment.
The "taiwanese cabbie who is a real estate flipper on the side," should serve as the emblem for GD II, in the same way that the (probably apocryphal) shoe-shine boy giving stock tips became for GD I.
The upper tier neighborhoods around the bay were driven up by the dot.com employee options and VC money, Google was the last option splash and that has finally run out. While the best neighborhoods got bid up many marginal areas also got plenty of new buyers that did significant rehab to older homes or knocked down smaller units and built large homes upgrading old neighborhoods. Now stranded upper end homeowners are looking out at a very limited number of buyers with the ability to take on these prices. This is the real problem no 2nd or 3rd wave of dot.com options spending that could provide the fuel to buy into not only the older best neighborhoods but all the marginal areas that have become trendy and expensive.
some basics, for those unfamiliar:
Now 43 states facing shortfalls, some intense.
Counterpointer | 12.14.08 - 12:19 pm | #
So the Fed bailout of the states will be unanimous! Excellent!
Neil writes,
"(B)ut FL just is not building enough industries with high wage jobs."
Fl has alwats been a low wage state. Sunshine, no State income tax and cheap cocaine offsets low wages
I know two people who speculatively bought in San Francisco (not East Bay or Silly Valley) and I live in Orange County!
Max - I for one welcome our new postmodern citizen overlords.
C
SF is the last bastion of California Dreamin'.
CR is right. The median price within the San Francisco city limits was down 12.1% year-over-year in November, according to DataQuick. The prices are stickier on the way down in San Francisco because, as Taleb might say, the turkey has had a much longer time to be fed before Thanksgiving, and with much better cuisines.
So the Fed bailout of the states will be unanimous! Excellent!
Nah.
Just 49.
Alaska doesn't need any federal money
I plan on using 2001 as a guide. Maybe for GDP as well. My fear is for worse.
Look at the total debt to GDP graph over decades and then focus on the current decade. When you come to terms with the fact that the GDP growth was all debt creation now in reverse, you become more than a bit concerned.
jus me writes:
\tNow 43 states facing shortfalls, some intense.
Counterpointer | 12.14.08 - 12:19 pm | #
So the Fed bailout of the states will be unanimous! Excellent!
----
Yeah and the 7 fiscally stable States are going to just bend over for a dose of California's debt injection.
You think responsible homeowners are bitching about bailing out their neighbors just wait for tate on sate ass whoppin'. People's gotgots guns, States gots National Guards.
I just ran into someone who paid 600k+ for a fairly average house in Davis, CA. I guess that the market is immune in some areas.
I guess that the market is immune in some areas.
No, some people are immune from common sense.
El Cliffo:
SF prices were down 12.1% YOY in October not November. November figures come out later this week or early next week.
Yeah and the 7 fiscally stable States are going to just bend over for a dose of California's debt injection.
Rob Dawg | Homepage | 12.14.08 - 12:35 pm | #
Oh, expectt some goodies in for them too.
Duarte(Unrated) writes:
I just ran into someone who paid 600k+ for a fairly average house in Davis, CA. I guess that the market is immune in some areas.
----
Wait for the 25% reduction in State funding to the UC system along with a 15% tuition increase and a collpse in attendance to UC Davis. A lot of the Davis home price rise was parents buying their kids a house to live in close to campus and rent out two rooms, take the deductions, pay the kid a management fee and pay for the rest through appreciation.
"Fl has alwats been a low wage state. Sunshine, no State income tax and cheap cocaine offsets low wages"
Florida is a bit of an enigma. Rednecks plus older retired people, dwellers of near-slums, and mix in a few Cubans and Mexican immigrants.
It's got terrible public schools through 12th grade, but very good state universities (UF and Florida State).
Crime rates are high, yet the people are laid back (at least compared to California).
The Everglades ecology is largely a disaster, but the beaches are far cleaner than those in California.
People in Florida fear the police more than they do in states like California, but the rate of people arming themselves is much higher in Florida.
Sadly, they've been tearing up a lot of productive orange groves and other agriculture to make room for very poorly built shitbox houses in the middle of nowhere.
Yeah and the 7 fiscally stable States are going to just bend over for a dose of California's debt injection.
And how stable are they really?
The whole thing in Cali will end in tears. Barring a miracle from Washington, chapter 9 is the only option. Only a Federal receiver can untangle the mess that is California spending.
Can a federal court nullify state tax law?
Hey!
Let do redistribution of land like Zimbabwe. Instead of tax the rich, help the poor. San Francisco should take the lead by taking land from the landowner and give it to the everyone to make it affordable.
By the way I remember our Speaker of the House in Congress. She live in San Francisco right? We should ask her to pass a law in congress to conficate all the land in San Francisco and give it to everyone else. Nothing likes leading by example as a great leader.
Prairedog beat me to it, but LA is covered with the homeless. They are bused IN to LA and not out. I believe the Midwest states call it Greyhound therapy.
In the Peoples Republic of Santa Monica the homeless are like lawn ornaments.
a city-wide median really isn't that meaningful.
the area between the 280 and the bay south of phone park is a different world than the haight, castro, nob hill, marina, etc. $/sq/ft in the more well-known neighboorhoods does mean something.
According to an SF Chronicle article a few months ago, about half the "homeless" people begging on the street in SF have some place to go: often a subsidized halfway house, a long-term homeless shelter, etc. But they still put on the act and beg for their own purposes.
So in some ways, SF's generosity is counterproductive; they're reducing the number of homeless, but those ex-homeless people are still begging.
As for pricing in coveted Bay Area locations: down in Santa Cruz County, median price has sunk into the mid-400s on the basis of rapid REO and short sales down in Watsonville, the county's low-income subprime hub. Up by Santa Cruz, asking prices haven't budged nearly so much -- but almost nothing is selling.
This will not last.
I'm from Marin, and occasionally "slum it" down in The City.
The dot com thing killed SF, with all these culturally clueless tech people coming into SF, prices rose, and it became vanilla pabulum.
I'm off to a show in SF today.
No, some people are immune from common sense.
True. Many in Davis own their homes outright, so it stands to reason that it will weather a real estate crisis better than other areas. I know of many people who relocated from the Bay area to Davis, and take the train to work in the Bay.
" but almost nothing is selling."
the same thing is happening in just about every upper-middle class part of CA. almost no volume.
Three friends of mine have purchased within the last 5 months. More friends are close to purchasing. In all cases, these people believe that SF may drop, but not by much, and not for more than a few years.
The demand here is very high, and prices do not need to drop that much to get the next round of buyers in the game.
Houses in Castro/Noe Valley continue to sell in week rather than month times.
As usual, I call what I see happening on the ground in SF with my own eyes, so feel free to dispute my observations.
Disclaimer: I rent in the East Bay.
Counterpointer
What part of Montgomery County are you in? I lived there 20 years ago and worked as a real estate appraiser at the tail end of the last DC crash. I find it amusing when people say the DC metro area is immune, since it sure wasn't immune in the late 80s.
"The dot com thing killed SF"
gold rushes aren't a particularly new thing in SF. 2nd and Mission was once the nicest part of town, pack when General Sherman (yes, THAT Gen Sherman) lived there.
SF is a disaster waiting to happen at these ridiculous prices. The only thing that sustained housing there through the dot com collapse was cheap, easy money. That is now gone. Look at their economy--finance, tech, and tourism--all on the decline. And the most bloated govt. of any big city in the country.
People will move from economically depressed areas to where there might be jobs. Be interesting to see where these mass migrations start and end.
Anyone have a guess to where there will be a net gain in employment? California is not the promised land it was during GD1. Midwest?
What happens to network tv when the car ads get cut in half?
Before this thing runs its full course, in addition to the demise of one of the inconic American manufacturing icons (General Motors), we will also be witness to loss of one of the three broadcast networks.
Rob Dawg writes:
Duarte(Unrated) writes:
I just ran into someone who paid 600k+ for a fairly average house in Davis, CA. I guess that the market is immune in some areas.
Wait for the 25% reduction in State funding to the UC system along with a 15% tuition increase and a collpse in attendance to UC Davis. A lot of the Davis home price rise was parents buying their kids a house to live in close to campus and rent out two rooms, take the deductions, pay the kid a management fee and pay for the rest through appreciation.
Rob Dawg | Homepage | 12.14.08 - 12:39 pm | #
Rob- your insight is spot on. Winter graduation was this weekend, and I never saw so many BMWs and Mercedes in Davis before. One must think that these people have some financial resiliency. As for UC cuts, does this mean that my job at UC Davis is in jeopardy? Luckily, I'm funded by federal grants, and Obama "promised" to increase funding.
You are right, SF Tanzanite--I meant "in the November report." (We apologize for any inconvenience this may have caused.)
Anyone who tries to understand the SF real estate market (city and county,NOT msa)needs to look at the profound differences in neighborhoods.Pacific heights? Bayview? inner and outer mission? Russian Hill? presidio and marina,Soma? In the last downturn SF city and county lost about 30% in inflation adjusted terms.The losses were not evenly distributed then and will not be this time.There have been a LOT of condo's built,the economy has a different structure,the demographics have changed and of course those financing and refinancing the last few years have used a lot of the innovative products that were suitable for the sophisticated.I predict a 60% drop in real terms over the next 5 years if things go well.
Can a federal court nullify state tax law?
Sometimes, but not in this context. Chapter 9 only applies to political subdivisions of a state, and only if the state allows them to be subject to BK. It expressly does not subject the states themselves from BK; the whole 11th Amendment issue.
Because creditors can't collect against a state anyways, there's really no advantage for a state filing for BK.
SF might be expensive, but it is a beautiful place. If I had the money to buy a house outright and shelter my kids from the sicko liberals there, I'd be there in an instant.
O/T, but:
WASHINGTON (AP) The White House said Sunday it does not expect to make an announcement by Monday on a possible plan to prevent the collapse of the troubled auto industry.
!!!!!!
SF has a incredibly well-paid gov't sector, with the city paying about 50% more for public services than other cities in CA. Early retirement rampant. Attempts to rein-in the costs with "two-teir" pay systems fail when softy voters erase the distinction in the interests of "fairness". With Prop 13 on the books, city pays for this largess with a Ponzi-type scheme of encouraging new condo/loft developments and high housing prices to keep the property taxes rolling in. Asset price deflation here would be crushing.
I think it's coming, and deserved. Sadly (and much like California itself) the day of restructuring may be put off, due to a local daughter made good: it's the home port of Nancy Pelosi. Don't expect the bailout dollars to miss here!
Bush is in Iraq for a surprise goodbye visit. Convenient. See what the markets do and if it looks like it will stay steady then rethink using TARP money for the Big 3.
"The demand here [in SF] is very high, and prices do not need to drop that much to get the next round of buyers in the game." - Chill Bear
Funny how that demand thing works out. Demand in Santa Ana and Sacramento was very high, and look how that turned out.
"Demand" for housing is a nebulous thing that comes and goes, and the perception of demand comes and goes at will. Changes in demand and perceived demand seems to always shock the observer. So maybe you'll be shocked too, Chill Bear.
12th Percentile - Ft Sumner / Glen Echo. The mansionizing has blown out, and it's mostly those homes with signs out for months and months. Arts and Crafts builders are popular still, but who knows if they're getting paid. The ramblers aren't moving fast, but they are mostly selling.
Little observed other point, the only US made cars are driven by retirees. Families all seem to have Japanese, mostly vans.
C
Sunday, December 14, 2008
The mendacity of hope, the urgency of not
Chicago streets were remarkably crowded this weekend. Usually my mode of transportation is bipedal. Luxurious strolls for coffee, food, or just exercise as intermission. However, a errand called me out to the suburbs - so I navigated through congestion for an hour or so whilst wondering why I was doing it. The purpose of my travels were known to me of course. My fellow travelers' motivations, not so much.
One thing was for certain though, everyone was clearly in a hurry.
When historians look back on this age, the more scrutinizing types will most probably ring up the same observation.
Certainly that would be an appropriate representation of today's investors, be they amateur or professional, versed in equity or credit.
To that I would offer, Why hurry? If you take a breath and relax for a while all the prices you currently are witnessing will resurface again ... from the other direction.
For my part I sit in cash with a splash of yen content(or perhaps my dissenters would say confused) in the knowledge that there will be a bear market bottom in stocks comparable to past metrics (40-50% lower),that the deflationary supertanker will not reverse until most commodities are in backwardization, that convertible and corporate bonds will rise to more absurd yields, treasuries to more absurd PEs, and efforts to forestall Mr. Market's creative destruction to more absurd heights.
If I am wrong I lose only opportunity not capital.
Call it the mendacity of hope, and the urgency of not.
Posted by Anonymous Monetarist
GM I figure they'll be moving South, it's at least more comfortable to be homeless and live under a bridge if it's warm. Just a thought.
One problem that people seem to neglect with California is the immense entitlement program that it has. There are literally millions of people (and many illegal immigrants), who get food stamps (VIC), day care assistance (fully paid in many cases- 700/mo), MediCal, and subsidized housing. All of this must cost billions. Not to mention the 10s of thousands of state workers making 100k, 200k, 300k+. Adding it all up together with the insane cost of living, and it's a disaster with no easy solution.
Funny, the undertone of the country rubes waiting for mighty Soddom to fall. It could be 1870.
Take out the Sunset and Richmond, and SF may be 3/4 renter, many of them renting well under market and many with 100K+ incomes. That's a slightly different dynamic than Richmond, Pinole, Tracy, Palmdale, Riverside County etc.
"speculatively bought in San Francisco"
And in Marin, Sonoma, Santa Clara, etc. The desirable areas. I conclude there is significant spec real estate owned. It is typical for recently purchased, bay area RE to be negative cash flow due to appreciation expectations. This was true even before the bubble.
Many of these speculators are sitting on significantly negative cash flow investments with a mark well under market except for the most desirable areas. And those areas will decline appreciably next year.
Eternal hope by "economists" doesn't change the facts. We are in a nasty downturn with every financial asset in deflationary mode. Eventually, all neighborhoods will be affected, even San Francisco. I have been following the Westside of Los Angeles, and the same is true for Santa Monica, Beverly Hills, Brentwood, Pacific Palisades, Malibu, and Manhattan Beach, etc....
Maybe these areas can hold out longer, but they fall faster, once price declines become more evident.
Blogger: Blog not found
Gay marriage ceremonies will save SF.
comrade swan - I'm also doing a currency play. It'll be modest, but I've got skin in. Might make 6 figs by end 09.
Unless the USD crashes.
Umm, oh...
C
bearly writes:
Gay marriage ceremonies will save SF.
bearly | 12.14.08 - 12:57 pm | #
That, prostitution, and infanticide will save SF.
Hey Duarte, SF is only beautiful because of liberals. Otherwise it would have been ruined. Name a nice "conservative" city. Has SF gone too far in the other direction re: preservation? Yes, but only by a bit.
And only about 15 percent of the liberals in SF are truly crazy. The rest are in the mainstream of the USA. The mainstream that soundly rejected the policy positions of Bush and McCain.
/Off-topic rant on
In the mid-60s, US Customs levied a $300 million fine against the Japanese color television industry for dumping product in the US. Specifically, the Japanese were secretly reimbursing US retailers using Swiss bank accounts for incoming tariffs. The Japanese government, via MITI (Ministry of International Trade and Industry), was implicated in this effort.
President Johnson dispatched his old friend Bob Strauss, a long-time Democratic operative, to Japan as ambassador. Strauss agreed to forgive the fine and open US markets in exchange for the continued presence of US military bases in Japan, which were needed to prosecute the war in Viet Nam. This isn't just my opinion. It's a fact. Look it up.
The rest of the US consumer electronic industry quickly followed color television manufacturers into oblivion.
I write this because many of you may not be aware of what actually happened. This isn't about free markets or competition. It's about politics.
The same thing is true in the automotive industry. I can remember many times, during the late '50s and throughout the '60s, when auto industry management was ordered to settle with the UAW because it still had political clout in Washington.
In the case of the auto industry, everyone is culpable. Industry management, the unions, and the government must share equal responsibility for what happened.
/Off-topic rant off.
Infanticide? OK, ban this loser.
In San Francisco, about about 30% of loans in 2005-2006 were negative amortization option ARMS. Another 40% interests only. These will be amortizing in the coming years.
From 'Pay option' loans could swell defaults - Mortgage Mess- msnbc.com :
The next wave (of foreclosures) is coming next year and in 2010, and that is primarily due to these pay-option ARMS and the five-year, adjustable-rate hybrid ARMS that are coming up for reset, said William Longbrake, retired vice chairman of Washington Mutual.
The depression era photographs are very powerful and tell a tale of hardship.
I searched for a website that was documenting with images, videos or photos signs of the recession in everyday life. Couldn't find any. Good idea for a website with good traffic potential.
In econ 101 we learn about supply and demand curves and their intersections, etc.
Places like San Francisco (and the rest of Cali) blew supply and demand out of the water.
As prices grew, demand actually increased! And now with prices falling, demand is sinking like a stone. So the demand curve had a positive slope, not a negative one. How screwed up is that?
Iraqi reporter throws his shoe at Bush during presser. Shoe sailed past Bush's head. Today...we are all Iraqis
comrade swan - Holy Money, Holy Love, from your eponymous:
YouTube -
Why am I thinking of Spitzer?
C
bearly writes:
Gay marriage ceremonies will save SF.
bearly | 12.14.08 - 12:57 pm | #
That, prostitution, and infanticide will save SF.
Duarte | 12.14.08 - 12:59 pm | #
I have heard that you can get some really expensive tea bags in San Francisco as well. That's gotta help in the economic recovery going forward.
o more bailouts its time
for the jailouts to begi
Hey Duarte, SF is only beautiful because of liberals. Otherwise it would have been ruined. Name a nice "conservative" city. Has SF gone too far in the other direction re: preservation? Yes, but only by a bit.
IMO California is only progressive in superficial ways. Proposition 13 is the most regressive tax policy imaginable. Californians pat themselves on the back for establishing a comprehensive welfare state, but at the same time force a truly impressive number into serfdom.
"Duarte says: If I had the money to buy a house outright and shelter my kids from the sicko liberals there..."
Sorry Duarte, that the moral (see it raht heh on mah sleeeve?), law-and-order, fiscally conservative Cons destroyed the economy and your kids' chances get away from the sicko liberals. Funny dat.
Me, I'm trying to get away from the sicko Cons and their soul-destroying fantasies. So coming across your idiotic slander was also unwelcome.
"IMO California is only progressive in superficial ways."
We gave the world Nixon and Reagan, nuf said.
dtripper writes:
Hey Duarte, SF is only beautiful because of liberals. Otherwise it would have been ruined. Name a nice "conservative" city. Has SF gone too far in the other direction re: preservation? Yes, but only by a bit.
And only about 15 percent of the liberals in SF are truly crazy. The rest are in the mainstream of the USA. The mainstream that soundly rejected the policy positions of Bush and McCain.
dtripper | 12.14.08 - 1:01 pm | #
The same liberals who support open borders and illegal immigration, but don't want to deal with it in their own backyards- no, they just ruin it for the rest of us who get to deal with it in our schools and emergency rooms, while they get to have their top 10 schools and million-dollar McMansions. I like to call this brand of liberal a cocktail-party liberal.
The same liberals who parade the few kids that they have around gay marriages and cross-dresser parades with public sex-acts. No, it's definitely better with liberals running the show.
The same liberals who give homeless $300/mo to stay homeless and provide them with clean needles. No, it's definitely better with liberals running the show.
Also, the last time that I checked, Bush and McCain were fiscal liberals, and they have left liberals virtually untouched except for late-term abortion and marriage (which is a State-law issue anyway). Clinton sold us to China. No, the country is definitely better off with liberals running it.
I bet that you listened to Bernie Ward too- definitely an upstanding liberal.
Look at the conservative States...compare their debts to liberal States. There's no comparison. Liberals are definitely better.
The whole thing in Cali will end in tears. Barring a miracle from Washington, chapter 9 is the only option. Only a Federal receiver can untangle the mess that is California spending.
Or just think of government as habitually acting in people's short-term interests, at the expense of their long-term well-being.
But the long-term condition is no more than a summation of all the nearsighted short-term decisions made in the course of a wreckless, 40 year, fed-sponsored credit binge.
We're all long-term now.
"only beautiful because of liberals."
This conservative prefers to conserve! That certainly includes the environment. And BTW, a true conservative would never let a financial disaster occur.
Sorry for the OT, political remarks.
It is beginning... After the dot-com-bomb the city was emptying out real fast with moving vans on every corner. Now, the same thing is happening. On my way to work in SF I see now moving vans every morning all across the Nob Hill/Russian Hill neighborhoods.
I'd guess a lot of the people moving now were laid off by the bank offices downtown, the next wave is going to be a substantial number of service/IT/tech folks with crazy high rents and no jobs.
But prices and rents have been sticky - maybe a lot of landlords and owners were hoping for a short recession and thought they could weather it without reductions, but it must be sinking by now that this is not working. Some of the For Rent signs on the buildings on Nob Hill have already faded out from a long summer in the sun.
Proposition 13 is the most regressive tax policy imaginable
ayup, given that the least worst tax is a tax on land value.
Kudos to the superwealthy in CA -- you've really rigged things well.
Allen C writes:
"only beautiful because of liberals."
This conservative prefers to conserve! That certainly includes the environment. And BTW, a true conservative would never let a financial disaster occur.
Sorry for the OT, political remarks.
Allen C | 12.14.08 - 1:17 pm | #
Thank you Allen C!
You know, it would be really good if you folks could get past all of your conservative and liberal bulls*&t and start thinking like Americans.
Fact is, TPTB use this thinking to divide and conquer you, lest you figure out who's really slicing up the pie.
I am thoroughly confused. one look at calculated risks last case shiller chart shows SF down 30% since the peak.
http://4.bp.blogspot.com/_pMscxxELHEg/SQcTFm1URhI/AAAAAAAADpc/RDr8hdt_Jiw/s1600/CSAugust08Cities.jpg
And BTW, a true conservative would never let a financial disaster occur.
True conservatives believe gummint is the problem, you know, "I'm from the government and I'm here to help" and all that.
I'm neither liberal or conservative, I'm for what works. This pushes me into a progressive bias since history shows us that our received ideas are more faulty than correct, and that equality of opportunituy is not something that the market is interested in providing.
^ wut mp said, LOL
Wave of Mutilation is such a catchy tune, I can't wait to hear what is playing when we get to Capitulation.
"Fact is, TPTB use this thinking to divide and conquer you, lest you figure out who's really slicing up the pie."
This is what the liberal media would have you believe. Ahh, the liberal media claims another victim. Sigh.
(j/k)
dtripper writes:
Infanticide? OK, ban this loser.
dtripper | 12.14.08 - 1:02 pm | #
Yes, the infanticide that you voted for when you elected Obama, or did he fool you about that too? 99.9% of his voters did not know that he is a chain smoker. His propaganda machine is top notch.
Your call to ban me is so typical of a communist liberal. You prefer to suppress anything that makes you feel uncomfortable about your own political views- such as late-term abortion, which BHO will allow the day after he's elected, but it will be suppressed by the media. Mark my words.
It's all about the decisions made. The government and the market can both be used as tools of emphasizing hort-term priorities at the expense long-term well being". It's about the character of the person who makes the decisions, not what Bible they read.
Duarte: "Also, the last time that I checked, Bush and McCain were fiscal liberals..."
FAIL
I call a spoof troll. No way anyone could be so stupid as to simply aggregate all one's peeves and irritations in life into a nebulous strawman group, while simultaneously ignoring their own contributions to the disaster befalling America and the world.
Oh, wait. This is a Con, and I'm living in the nightmare of their narcissism. Funny how I keep thinking these caricatures will ever, ever, EVER either take responsibility for their actions or have the grace to shut their freakin' ignorant pieholes.
Duarte = CON = people too stupid to realize how stupid they are, and without the honesty of shame.
OMFG - even better, here's Swans on FAILURE:
YouTube - Failure - Swans
Makes Johnny Cash look like laughingboy.
C
LOL mp, try not to make so much sense, they're trying to have an emotional, hysterical rant...
I've been working the past two days, what time is it on Conjure's clock now?
that equality of opportunituy is not something that the market is interested in providing.
Like the equality that progressive Clinton provided to China and Bush provided to Mexico. The "market" just took the profits, but the government provided the means.
"SF down 30% since the peak."
i believe that's the whole bay area, which includes zip codes in alameda and contra costa county which have fallen over 70% from the peak. sf is maybe 10-15% of that by sales volume.
CON = people too stupid to realize how stupid they are, and without the honesty of shame.
Hey man, never underestimate the power of tax rate cuts to garner undying support. Lowering rates 300bps was the smartest thing the Bushites ever did. The rest is noise.
I live in San Francisco and have been trying to buy a second house. We have been outbid 7 times now. Yes there are a small number of REOs on the market but they are all condos - lofts and what have you in some of the gentrifying areas. No REOs in Noe Valley or those. Every article I read about SF bay area real estate reads like a wish book "oh yes its coming, real estate WILL get hit in SF and Palo Alto- it will it will I promise you- and this is not different. Notice he says prices started falling in 2H08. That means they were RISING until July! This was long after every other region in the country started to fall. We also don't have many layoffs, the tech companies like Cisco aren't laying off at all.
This site, like every other real estate bear site reads the exact same way and anybody who is actually LOOKING for a house here is going to be severely disappointed. Parts of the peninsula are the same way, Burlingame, Palo Alto, Mountain View and even parts of San Jose. The mountain view voice just ran an article showing no decline in Mountain View property sales or prices this year. That is up until now- none.
Like the equality that progressive Clinton provided to China and Bush provided to Mexico.
Assembly line manufacturing jobs suck. Export 'em. We have other means to create wealth to pay for our imports.
Duarte
Bush has been the worst disaster in American history
With his economic and foreign policy , he has destroyed the USA, perhaps forever.
I suppose you think Bush is
a fiscal conservative?? 6 trillion in 8 years and still counting.
Who really knows the cost of the last few months. Hank refuses to tell us,.
Those free marketers should be ashamed to ever show their face again.
anybody who is actually LOOKING for a house here is going to be severely disappointed. Parts of the peninsula are the same way, Burlingame, Palo Alto, Mountain View and even parts of San Jose.
Have to disagree about Mtn View and San Jose - Rose Garden and Willow Glen are looking ugly, and even the 94040 is showing some weakness.
Allen C says: "And BTW, a true conservative would never let a financial disaster occur."
Yeah, except that your "CEO President's" regime just DID let a financial disaster occur. Maybe you're having trouble because it happened out here in real life, the one you feel so immune too and superior about.
You don't get to re-define reality when you screw up. Nice try though, and quite an engorged fantasy life you have going there. And BTW, your definition of a "true conservative" would be a liberal.
Resident of SF here. Another thing I've noticed is we used to have weekly street cleaning in residential neighborhoods. A couple months ago that changed to bi-weekly. I imagine the tickets written up for parking your car on the street those days brings in some money for the city. Obviously not enough to justify the costs of frequent street cleaning.
Isn't this one sign of decline?
Also I am somewhat partisan but please take the liberal versus conservative shouting matches out of an otherwise fine blog.
yeah, I'm in Sunnyvale and things are falling fast enough to pay my rent ($1750 per month).
"lest you figure out who's really slicing up the pie."
Indeed. Follow the strings from the politicians.
JR writes:
Duarte: "Also, the last time that I checked, Bush and McCain were fiscal liberals..."
FAIL
I call a spoof troll. No way anyone could be so stupid as to simply aggregate all one's peeves and irritations in life into a nebulous strawman group, while simultaneously ignoring their own contributions to the disaster befalling America and the world.
Oh, wait. This is a Con, and I'm living in the nightmare of their narcissism. Funny how I keep thinking these caricatures will ever, ever, EVER either take responsibility for their actions or have the grace to shut their freakin' ignorant pieholes.
Duarte = CON = people too stupid to realize how stupid they are, and without the honesty of shame.
JR | Homepage | 12.14.08 - 1:24 pm | #
I love how liberals with no facts or substantive arguments resort to name calling, suppression of speech, and prose using words like "befalling" "nebulous" "caricatures". Your nebulous rant sounds like it came from a caricature.
"and prose using words like"
would you prefer poetry, eva?
Kristina, just for you--
CONJURE'S GLOBAL DEPRESSION CLOCK
11:59:48
CONJURE'S BOND CRASH CLOCK
11:52:00
Duarte is sitting at home bored. He/she decides to get on CR and troll to see if anyone bites. Surprisingly enough there are many bored people on CR willing to troll right back. Great fun was had by all.
"in Sunnyvale and things are falling fast enough"
the declines are crawling inward from the east. they're probably starting to creep into the truly wealthy areas west of the 280 in SM and SC county as I type this, though I expect volume to be a trickle there all throughout 2009
Duarte said "Clinton sold us to China"
Another Right wing Urban myth.IIRC
there was a US-China trade agreement signed in 1980 granting Most Favored Nation. Because of the Jackson amendment aimed at USSR and human rights this had to be approved annually. Which it was. Clinton made that MFN permanent. He also negotiated to get China under WTO where WTO rules would apply.
The final negotiations of allowing China into WTO was signed by our current president.
mp
Tell Conjure about the two-year invert saddle on the long bond.
I'm hearing Swans again.
C
"your "CEO President's""
I didn't vote for him. As far as I am concerned, I am without representation.
Re: China.
Well a country of a billion plus is going to have some say in trade I imagine. So blaming one side for "letting" China into the WTO seems kind of silly.
JR writes:
Allen C says: "And BTW, a true conservative would never let a financial disaster occur."
Yeah, except that your "CEO President's" regime just DID let a financial disaster occur. Maybe you're having trouble because it happened out here in real life, the one you feel so immune too and superior about.
You don't get to re-define reality when you screw up. Nice try though, and quite an engorged fantasy life you have going there. And BTW, your definition of a "true conservative" would be a liberal.
JR | Homepage | 12.14.08 - 1:31 pm | #
Yeah, and thanks to Janet Reno, appointed by Bill Clinton, the mortgage companies and banks were forced to give mortgages to sub-prime borrowers with no money down or else lose FDIC insurance. The Bush admin is definitely guilty for running with it, but wheels were set in motion way before Bush...try going back to Carter and the "Fair Housing Amendment of 1980". Every true conservative that I know owns their home outright and does not draw from public assistance. They believe in personal responsibility. I don't see how these people are flawed or bad.
We have other means to create wealth to pay for our imports.
MBS.
Greatest.
Export.
Ever
"but wheels were set in motion way before Bush."
that nasty socialist FDR and his FHA!
and then the GI bill letting those yokels into our schools...
dam libruls
I got poetry if you prefer, Duarte, you CONservative gasbag who hates his fellow Americans:
The horrible thing about Traitors,
Is Traitors are horrible things,
Their thoughts are made out of blubber,
Their conscience bounces on springs,
They're name-calling loony blaming goonies,
No, they're not much fun,
But the most horrible thing about Traitors is,
There's never only one!
Thanks mp. I thought that is what time it was. Why is his bond clock slower than his global depression clock?
Duarte says: "Yeah, and thanks to Janet Reno, appointed by Bill Clinton, the mortgage companies and banks were forced to give mortgages to sub-prime borrowers blah blah blah..."
Shorter Duarte: B-b-b-b-but CLINTON!
Actually, Eureka California is special. Home to all the homeless San Francisco deosn't want (they actually bus them up to Humboldt county), and notorious for the world's best dope, housing prices here haven't fallen at all--despite no jobs and a median household income of only $40,600, median home prices remain 8 times that income, and are still at 2005 peak pricing. People here are even more delusional than in San Francisco--and any foreclosure on the market is quickly snapped up by "investors." This place is like a time warp back to 2005.
GM writes:
Duarte is sitting at home bored. He/she decides to get on CR and troll to see if anyone bites. Surprisingly enough there are many bored people on CR willing to troll right back. Great fun was had by all.
GM wins.
If you had to name one person most responsible for this mess
I think Phil Gramm would get the nod
He gave the Wall Street crooks everything they wanted.
Kristina, because a global depression will lock into place before the long bond crashes.
Conjure reminds us to keep in mind that conditions have yet to lock in, but we are getting close.
Everybody on these bearish sites say things are looking ugly but that is just not reality.
Mountain View Voice Mountain View Voice: Home sales buck downward trend (November 28, 2008)
There are houses on major streets that people bought to flip and now those are REOs. There are hundreds of those on the market and they skew the price downward. But if you want a quality, remodeled house on a reasonable lot and expect to pay what people were paying here in 2006, forget it. Now that we have a trickle of lower sales which happens EVERY CHRISTMAS, the bears jump on the bandwagon with this is it, we're going to crasssshhh!.
Well, I am looking for a house, and I'm sick of reading all this. Put up the numbers on an 18 square feet, DESIRABLE HOUSE in Noe, or Palo Alto or somewhere, not on a major street, remodeled, and compare 2006 to today.
Another thing that has happened, is that 950K used to be high end 2 years ago, and now its low end.
If I seem like I have an attitude its because we could have bought a 2nd home 2 years ago but instead we read these bear sites telling us a major impending crash was coming. Well we had a crash, in everything but desirable bay area real estate. We could have bought then at 7% interest and refi'd into 4% next year. We would have been much better off. Instead we read articles like this one.
Its obvious that in the bay area people have money and are afraid of inflation. They are parking it in quality real estate.
Sorry typo, meant 1800 sq ft.
Thanks for the clarification mp and thank Conjure too!
"If you had to name one person most responsible for this mess"
I'd nominate J6P and his desire to magically double his income through equity extraction
and clinton held a gun to the head of the banks and forced them to securitize mortgages, then write CDS and create synthetic CDO, sell resulting bonds far and wide to entities that didn't do due diligence, and clinton forced the wealthy to invest in hedge funds that levereged up until the bets turned wrong . . .
the universal theory of the financial crisis: clinton
blame soon to be shared by obama
"Instead we read articles like this one."
the same thing is happening in santa barbara, LA on the west side, OC in laguna, etc.
broaden your horizons away from the most expensive fifth of the market, and you may find a decent deal.
Yes, I always look to the MV Voice for quality journalism. MiMi, you sound like an angry realtor to me. Frankly we were looking to buy in San Jose but now are waiting it out because Mtn View prices are falling into our range. And the tech layoffs are just starting.
Short Courage,
We sold in Oct after two days on market.
$2Mil. Area Code 94301. Got asking with no contingencies. We estimate we were down 300K from March. Our house was in what I call the servants quarters of 94301.
Neighbors were congratulating us for getting out when the getting was good.
A young couple who live nearby told us of parents who had been trying to sell their Atherton 3.5Mil place for a year with no offers. Their new price is 3Mill with no offers.
Our old area is feeling the effects of the market drop as well as the credit crunch. Our buyers had to put down 35% to get a loan.
Then there is the example of the wife's sister and BIL who had their Portola Valley place on the market for 2 years, during the peak, before it sold. And then there is their Napa Condo that they tried to sell last year that is now a rental. We think they just got greedy and couldn't believe that the market had changed.
We have two years to move back to either Santa Clara, San Mateo or Alameda counties and retain our Prop 13. Hope we don't have to spend two winters at Donner before the bottom.
Crash and Burn Housing Market!
Troy - [Assembly line manufacturing jobs suck]
Absolutely. I'm afraid however, that since we have a pretty big slice of the population that for whatever reason are predisposed to do just that line of work, we had better find a way to make it suck less and provide a heckuva lot of it and export a lot less of it.
"Well, I am looking for a house, and I'm sick of reading all this."
Change the channel. No one is forcing you to visit this site.
"broaden your horizons away"
Do yourself a favor and wait. At best, prices will stagnate.
re : S.F. "homeless"
We should find a term that describes the difference between those who don't have a safe place to put their head down at night, from those who wander the streets of the Tenderloin with eyes the size of lacrosse balls..
I'm also pretty confident that the nicer SC/SM county stuff in the bay and the coastal markets in greater LA will start to tank hard in 2010
[I'd nominate J6P and his desire to magically double his income through equity extraction
bgates ]
Does it make more sense to prosecute the drug users or providors ?
If I seem like I have an attitude its because we could have bought a 2nd home 2 years ago but instead we read these bear sites telling us a major impending crash was coming. Well we had a crash, in everything but desirable bay area real estate. We could have bought then at 7% interest and refi'd into 4% next year. We would have been much better off. Instead we read articles like this one.
Its obvious that in the bay area people have money and are afraid of inflation. They are parking it in quality real estate.
MiMi, jump in, the water is fine. And also GO ALL-IN on the stock market.
You Can Do It!
.
MiMi, buy three, they're small.
"Governments were urged to finance wars, social welfare spending, police state intelligence technologies, infrastructure and excess, defaulting through loose monetary policy, defrauding through massaged official statistics, and deregulating the financial sector and capital markets when credit constraint threatened to stem the tide."
Muffin top, this ones for you:
Zero interest, too much supply
Drive the bond market to destruction
The economy's dead, but we'll bail away
On a wave of capitulation
I've leaked the news, called Gasparino
Shook the hand, of Paulson
We'll kick the can, down to Obama
On a wave of capitulatio
Well, anon and mp, I just thought I'd come on here and inject a DOSE OF REALITY into your daily caffeine intake. As far as specific prices in specific expensive real estate zipcodes, like Mountain View, the best way to judge that is LOCAL reporting, so ranting about journalistic quality is pretty silly, and as far as the "if you don't like what we have to say- LEAVE!" jargon, you are on a respected real estate site that is reporting BS.
These sites attract the angry renter crowd. Your reality is not reality.
2 years ago 950K was high end, and today it is low end here. And the articles posted my Mr Mortgage (my favorite idiot), and sites like this one CR which is actually quality, is the same.
bgates- yes we are going to expand our reach. The really annoying thing is we can't even get a prop 8 tax reduction on our other house. Thats prop 8 the tax reduction one, not gay marriage (yikes- lets not go there here!). According to the city prices in the area of our other house continue to go up.
These sites attract the angry renter crowd. Your reality is not reality.
We haven't that spirit here since 2005.
MiMi, you should try burbed.com. I think that crowd is more your speed.
Hm, not seeing any angry renters, just angry MiMis.
MiMi, I visited N California last month and looked at the situation, specifically commercial real estate. I'm not interested in California residential.
At the moment, I wouldn't touch California commercial with a ten foot--make that 100 foot--pole right now.
If you don't think that's a realistic view, fine. You see, I really don't care. It's my money, not yours.
I'm an angry renter. I want 3xmedian income home pricing to make a big comeback. I won't/can't buy until that happens.
"yes we are going to expand our reach."
the reality is that there is an epic demand for quality school districts in the lower penn/west valley. that's the trend you're fighting against, and it has very little to do with the greater housing trend, which is down, down and more down.
[These sites attract the angry renter crowd]
MiMi darlin', at least get your terminology down. It's bitter renter for chrissakes.
"Does it make more sense to prosecute the drug users or providors ?"
That's less a statement of blame than a historical explanation.
As far as blame goes, the real issue is that debt is considered normal, moral, "cheaper than equity" in some corporate finance circles, "good debt" in the context of housing, student loans, etc.
it isn't. debt is immoral and toxic, and I blame our religious/social leadership for collectively forgetting this over the past few decades.
I'm not an angry renter, I'm a pissed off homeowner, does that count?
Anon, I am not a realtor, and you're the one who bashed the mountain view voice for "journalistic excellence". You can't see your own bias.
As for tech layoffs, I am a VP in a tech company. We aren't going to have many layoffs here, since the industry has been in a consolidation mode since 2001. 2008 was a horrific corporate year, why would layoffs be postponed until next year in SF? Wouldn't they have started this last summer, after the market had already crashed? What is the rationale there? Adobe and the companies who WERE going to lay off have announced it in their recent quarter. There were very few of those. The reason is because the entire industry outsourced itself to india a few years ago and the dirty little secret is that has not been the bonanza it was presented to be in 2002. We might even have net hiring next year if the 2nd half has even a tinge of recovery.
Hey, just found little known clip of Conjure in his Thinking Chair!
This for you too muffin top:
YouTube - Within Tribute to Neurosis and Jarboe
C
In all fairness to mimi, there is one guy called "Angry Renter" who posts here.
That said, I find it very funny that people are blaming a blog for them not being able to pick up a second million dollar home (all other facts aside about the impending crash that apparently mimi is ignoring).
Mimi, if you were in the big leagues at least you could've been blaming Madoff or Citadel.
Full disclosure: I sold my second home because of this blog. Couldn't be happier about doing that. And prices are still going up in my market.
A valid point is that the listing prices in the most desirable areas seem stable based on my periodic assessment. I suspect at least a 10% reduction from the peak is required to get a property to actually sell.
"the listing prices in the most desirable areas seem stable"
too bad listings aren't sales and almost all of the listings for over $450 sq/ft are doing nothing but sitting there
Oakland report...
My next-door neighbor's home is going on the market today @ $969k. She's lived there for 44 years.
Will update as appropriate.
" for 44 years."
wow. that's a 20x increase in the tax bill, right? if she gets that price.
MiMi- I'm curious why you want a second house. Anyway, shouldn't you bite the bullet and pay the price if real estate isn't going to fall?
"We aren't going to have many layoffs here, since the industry has been in a consolidation mode since 2001."
Classic.
Classic
Bookmark that one next to the Sebastian quotes.
It seems rather fanciful to think the entire worlds economy is in full crash mode but one little section of California, a state that is technically bankrupt will be immune...But hey, who am I to disparage other's fantasies...
No I am not blaming a blog for our decision not to buy in 2006 and instead "wait for the fall". But the amount of buzz from these real estate blogs about the existing on impending doom to areas like mine is incredible. If we fall 10% from the peak now, which is entirely possible, we will just be where we were in about March 2007 which was 10% higher than 2006.
Some reasoned assessment of the high end areas would be nice to see, and believe me I am looking for it- never found it. Median price won't work, price per sq feet won't work, because there are all these undesirable REOs on the market but that has nothing to do with quality places.
As to the guy up there talking about Atherton, I think I might be in more of the sweet spot, looking for a $1 million place give or take. Those prices are the ones that seem to be holding up. Maybe the ultra high end is taking a hit? But again, if those people are unwilling to sell at a lower price, which your post seems to indicate, that doesn't help us either.
Its probably the same in Manhattan.
" but one little section of California, a state that is technically bankrupt will be immune"
are there any other little sections of CA with 2/3 renters and incomes in the top tenth percentile?
I thought Conjure was furry? The critter in the video wasn't furry...I want a furry Conjure video..
Many variables in real estate and the majority are local. Buying a home while waiting to see if the recession and job losses deepen is a dicey endeavor.
Taking the wait and see attitude just seems prudent with the plethora of horrible economic news from around the world.
Of course if I have a million dollars sitting in the bank and no place to put it then looking for a nice piece of real estate seems logical. Pretty sure that is a percentage of a percentage but those people who do seem to congregate together and will hold onto their property rather than take a loss. For awhile at least.
"I thought Conjure was furry?"
Conjure is hairy, not furry. He does not shed.
Another misconception laid to rest.
Well, lucky you, Mimi. You're very fortunate to have that kind of cash to throw around.
Me, I'm lucky too. I'm using my extra cash to pay a friend's car loan, who has been out of work in L.A. for over a year now.
Maybe you should think about other people for a change, or find something more productive to do than rant at people who are trying to figure out what the economy is going to do in a world that is not full of MiMis right now.
"but that has nothing to do with quality places."
Mimi, this is like complaining that the front row to see the Giants is going up next year despite the CPI falling. Perhaps a legitimate complaint, but pretty silly on the whole.
You do know that towns like Richmond are literally 75% or so off the peak, right? That's a crisis, at least for the folks in those communities and those that depend on any kind of social service, and there are a few more of them than the people in nicer parts of PA and MV. The alarmist tone wasn't just justified on these blogs, it was probably understated.
Maybe you should think about other people for a change, or find something more productive to do than rant at people who are trying to figure out what the economy is going to do in a world that is not full of MiMis right now.
donna | Homepage | 12.14.08 - 2:18 pm | #
Glide Church could always use some help.
[Bookmark that one next to the Sebastian quotes.]
Yeah. I think we should make HWMNBN into an annual award. I nominate Mimi for the 2009 one.
The depression era photographs are very powerful and tell a tale of hardship.
I searched for a website that was documenting with images, videos or photos signs of the recession in everyday life. Couldn't find any. Good idea for a website with good traffic potential.
GM | 12.14.08 - 1:03 pm |
A Photo Essay on the Great Depression
.
Bank of America and Mr. Higgins missing $millions, It can happen to you, my fellow Americans
More info: Bank of America and Mr. Higgins missing $millions,
Lets have a betting pool:
"RRE - Survivor" (or "Last Market Left Standing").
We nominate say 10 markets, e.g. possible nominees:
(i) Coastal San Diego (La Jolla, Solona Beach, Cardiff)
(ii) LA Coast (SM, Malibu)
(iii) SF (Marina District, ?)
(iv) Long Island Gold Coast (Port Washington, etc.)
(v) SE Florida (are there any that have a prayer, LawyerLiz?)
(vi) NJ (Princeton, ?)
etc., etc. (must be a major metro bubble market)
To make it interesting, should exclude DC Metro (Arlington, ?) due its unusal Government recession proof, perpetual growth market.
The winning pick is the market which suffers least decline, top to bottom.
Winners share pot, less 20% to stake holder (I nominate CR, if willing, to subsidize his phenom blog)
Bets are $100 (to encourage max participation). Anyone willing to play, or does everyone (including lurkers) just talk the talk?
Refinements welcome.
Dunno why we should act so morally reprehensed by all the embezzlement, fraud, deceit, chicanery, extralegality, contempt, sytem gaining, mortgage guisement, etc.
The core foundation for man's sense of himself in society, his accountability for his actions, his personal compass restraining his selfish actions has been so thoroughly diluted as to have been extinguished.
No discussion, no deep consideration of the author of health, wealth, and happiness is anymore tolerated. Remove the eternal from the equation and come to man's devolution. Without that ultimate long-term investment, only a fool doesn't seek to extract the greatest amount of goods with the least exertion into the system. The system thrives only where actors reap that which they sow. Once the reward system is mangled, collapse isn't far. Madoff and others shouldn't be pilloried, but admired. In the immoral matrix we've constructed about us, they are the preeminent takeall greed mobsters. The true arts of wealth creation and distribution have been marginalized and brigandry now owns the crown.
czar picosec,
Thanks. I was looking for a site that is chronicling the current recession in image form.
Great site you linked.
"Bets are $100 (to encourage max participation)."
Sorry, count Conjure and me out. We do not "bet."
Long time readers here know that.
"I nominate Mimi"
To be fair, I'm sure waiting to buy has been painful for folks looking for stuff in the top fifth of CA markets. But that's why the volume doesn't exist. Sellers don't want to accept the trend.
So you have no rebuttal to my comment about tech layoffs other than "classic"? LOL. Come on now.
California runs a database of layoffs that requires companies laying off a significant portion of their workforce to file 60 days in advance. My experience is the really big layoffs are posted 3 mos in advance. Here is the db.
California Layoffs Database: See if your company is planning big layoffs in 2010 - San Jose Mercury News
In that database, HP, Cisco, the big companies in the SF area are nowhere. Intel and HP had some small layoffs in places like Roseville but even then tiny, more like pruning than a real layoff. We know they aren't planning anything because it would be in here. There is very little fat in the tech businesses in Silicon Valley this time around. I have no doubt Cisco and HP and laying off tons of people in India, which is where all the hiring has been in this decade, not here. And when it comes to hiring back, they may change their plans and hire back here based on what I have seen but that is only a prediction on my part, no hard evidence of that.
"looking for a $1 million place give or take. "
A few years ago, a buddy of mine noticed solid demand for that price range, so he went to $1.5. I have to believe that with the current jumbo requirements, demand has to be lower.
I know of a couple of houses in SF that were inherited, the owners defaulted on $700,000+ equity loans and stayed for months after foreclosure. Out of town lawyers dont know how to evict in San Francisco.
I saw a few ground level commercial, 2d story residential places for sale that say Wells Fargo will provide financing.
On the other hand, I know of another person who just recently bought a house in SF because he didnt trust the banks with his money.
"Refinements welcome."
Stamford and the Upper East Side resent their exclusion. Maybe Cambridge, MA and Los Gatos, CA too?
MiMi, Stop fighting it. It's a losing battle. The sooner you get with the home-price-deflation program, the better it will be for you.
"very little fat in the tech businesses"
Also need to bear in mind that the .com bust was a tech investment bust. The current bust is consumer driven. The impact is likely to be delayed and perhaps not as deep.
"The sooner you get with the home-price-deflation program"
I think she's just peeved that the folks west of ECR in PA and MW haven't gotten the bulletin yet.
and how could I of all people forget - Medina, WA for the win!
I'm on the Florida panhandle my home appraised for 210K two years ago. I'm trying to refinance right now and we are looking at a value of 160 K now. Had you bought this house in 2006 you would be severely under water now.
Think virtual hairy.
Like virtual realty.
C
MiMi, I think the bottom line is this: if you've found your "dream home," buy it. Don't concern yourself with the possibility it will depreciate. It's your "dream home," right? You're not going to leave it, ever, right?
On the other hand, if you're thinking about flipping it, that's another story. Or, if you're contemplating being laid off, that's yet another story.
You're right. The high end homeowners have not gotten the "massive deflation" bulletin, and sites like this have a huge amt of posters that reply with things like "Mountain View voice hahaha" and "Classic" when I post actual data to support what I am saying.
I'm going to find a site of real estate bulls (if I can find one) and whenever somebody comes in from Contra Costa county (which is a devastated area because it is EXURB) and they post facts about where Coco prices are- low and lower- I will write CLASSIC and HAHA as responses and pat myself on the back.
To top it off with a cherry on top, rents in the SF bay area have exploded UP! So if you are renting a house in PA or Noe you can now reasonably expect to pay- $5000/mo! Fortunately for us we own another house and are not renting but we are growing out of our house and smashed. Plus I want my kids to get into their real school district so by May 09, its move and pay to play up here, come hell or high water. With rentals at $5K/mo in the same areas we want to buy, renting is not an option either. The low end areas that are west bay here like Redwood City are now renting as cash flow positive from day one and that is without the 4.5% mortgage rates.
About all we can hope for is a massive layoff at Cisco, which I believe is still the areas largest employer but as you can see from that db they are not planning any layoffs, because they shipped most of what is fungible offshore. They are gaining share anyway and may not layoff. HP just had an outstanding quarter also.
Of course if I had a million dollars I would have bought a few acres, remote location, year round water, completely off the grid, and planted a big garden.
That's just me being pragmatically pessimistic. I'm sure this is all going to turn around any day now.
Right GM, I'm sure HP and Cisco will continue to do well when unemployment here hits double digits as people with no jobs tend to buy more computers...
Flash: W just did something good.
An Iraqi journalist threw 2 shoes at him from fairly close range. He ducked both, smiling. But he didn't cover, kept his composure and joked that they were size 10.
Maybe he's found a place he can relax?
I'd pay cash money to see a video of that.
W just did something good.
1 currency soon [yogi] | 12.14.08 - 2:39 pm | #
Good would have been choking to death on that pretzel a few years ago.
ytl writes: "SF has some very archaic rent control laws."
Why archaic? I say progressive. Perhaps they were designed so that starving artist types could stay in SF.
I'd pay cash money to see a video of that.
GM | 12.14.08 - 2:41 pm | #
http://www.msnbc.msn.com/id/21134540/vp/28223089#28223089
Frankly, and this is what I advised a friend, buy or build a place in the Santa Cruz Mountains, then buy a small helicopter (like a Robinson) to commute to work.
It would cost a hell of a lot less than buying some over-priced cracker box in San Francisco.
I welcome MiMi's thoughtful, well written comments. Diversity of experience and point of view is healthy. This is why I come here. Just my 2 cents.
"rents in the SF bay area have exploded UP! So if you are renting a house in PA or Noe you can now reasonably expect to pay- $5000/mo!"
they've only exploded up relative to the 2001 crash, when they fell by a third.
the appeal of Noe Valley still mystifies me. It was considered very working class just 20 years ago. is there something magical in the screech of the J train that I just don't get?
incidentally, this damages your theory a little:
CUPERTINO \t36 \t$804,500 -22.12%
There are parts of Alameda county which have been shelled which are the opposite of an exurb, as well, though I don't think Fruitvale tops the list of desired housing markets in your case.
Eric,
Thanks. I am rolling with laughter here!
bgates writes:
"Stamford and the Upper East Side resent their exclusion. Maybe Cambridge, MA and Los Gatos, CA too?"
Agreed
"buy or build a place in the Santa Cruz Mountains"
the neighbors would love that. HWY 35 isn't quite as rustic as it would seem, and good luck finding a large enough flat space for a pad.
About all we can hope for is a massive layoff at Cisco, which I believe is still the areas largest employer but as you can see from that db they are not planning any layoffs,
Go to that db, search for Yahoo. See where the 10% laid off last month is listed. Cant see it?
Yeah right. That is the source of truth. My a$$.
Shrub's reflexes still pretty good? Judge for yourself.
Iraqi Journalist Hurls Shoes at Bush, Is Detained - Political News - FOXNews.com
Re: YTL at 11:33 SF homeless
I used to volunteer at the Legal Action Center For the Homeless in New York City in the early 90's (Dinkins)
I can't tell you how often I heard a story like, "I got charged with vagrancy in [frequently a red state]. Either jail or I could take a one way bus ticket here. New York has good welfare doesn't it?"
Black Day Market: Appreciated your essay.
bggates, I don't know what that 22% down in Cupertino is referring to, but if it is median home prices that is typical, the problem is the south bay has all these REOs on major streets and former rentals and they skew the median down. If we were willing to buy next to a freeway or on a major cross street in Cupertino we could have got a killer deal. My theory is that in the bay area, most of the REOs were owned by investors and not subprime or risky mortgage types. Obviously not very good investors. Anyway those are available for cheap. But quality homes are few and far between.
As to Noe its appeal is the sun. There are very few sunny spots in SF. Golden banana. Believe me if you live in SF you start to really cherish the sun. Out there by UCSF Parnassas is absolutely beautiful but no sun.
"As to Noe its appeal is the sun. There are very few sunny spots in SF."
Folsom and 20th is much sunnier, as is the Dogpatch neighborhood. Weather doesn't have much to do with it, the desire for a suburban mindset in an urban setting does.
GMAC, which is trying to swap $38 billion of debt for a lesser amount of debt, preferred stock and cash, said in a statement Friday that holders of "a substantial portion of the outstanding notes" had agreed in principle to the new terms.
But the new conditions still need "significant additional participation."
The new terms for the swap, which concerns notes issued by GMAC and Residential Capital LLC, its mortgage unit, include a higher dividend rate of 9 percent. That rate will be reduced to 7 percent once GMAC has raised $2 billion of Tier 1 capital, including $750 million from its shareholders.
So far only about a quarter if the debt in question has been tendered.
The deadline for early delivery was extended until Tuesday, Dec 16, while the expiration date was extended to Dec 26.
GMAC sweetens terms of debt swap, extends deadline
| Reuters
Tic-Tic-Tic
MiMi,
The further people live from the Bay Area, the more expert they are in or local RE market.
Those of us actually here on the ground, looking to buy in a decent location are idiots because we haven't seen prices fall 50% like all the experts tell us they have.
Some neighborhoods in SF have fundamentally changed character. Neighborhoods with a lot of single family homes, close to transportation to financial district, with dry cleaners, grocery stores etc within walking distance, have changed their fundamental character from working class to upper class. Prices will not be dropping back into affordability for working class people. (Unless we go Mad Max of course)
On the other hand, prices in Richmond are down 80% in some places. There are SFH under $100k, within easy drive and BART to financial district. But there are good reasons people do want to live there.
I was actually impressed with Shrub. He knew the other shoe was going to drop.
"Unless we go Mad Max of course"
Glenn Park is slowly reverting back to its previous state. The crime wave helps.
Well yoko, again, that db is one source of info about layoffs in CA and a lot of layoffs are in there. All you are throwing out is hyperbole. I am trying to post facts.
Yahoo probably has some kind of exclusion hardship etc. But other companies who have announced layoffs are in there. Another one who is not there but should be is Foundry/Brocade merger. There is probably some kind of merger exclusion on that list. But my company is required to post there, and we did. Trying to claim that the exceptions to that list are the majority is a kind of denial.
It would cost a hell of a lot less than buying some over-priced cracker box in San Francisco.
mp | 12.14.08 - 2:42 pm | #
But then the kids wouldn't be in their real school district. I think the real solution is to out bid those other people. It is really the only option since renting is too expensive. I'm not sure how the numbers work out, but I'm going to accept MiMi's evaluation at face value. I'm thinking private school is also not an option, since you wouldn't want the kids to become elitist.
"since you wouldn't want the kids to become elitist."
as if going to a public school like Gunn, Lowell, Los Gatos High etc in a district with a millionaire median somehow precludes that.
of all of the delusions of coastal californians, this is one of the stranger ones.
"I am trying to post facts."
Trying and failing.
"Those of us actually here on the ground, looking to buy in a decent location"
Are you the poster whose girlfriend just bought a condo in SF or is that someone else?
mimi -[when I post actual data to support what I am saying]
Listen, if you go back to '06 everyone used the very same actual data. Then in 07 there were fewer actual data pts and in 08 almost none. Just wait till 09. Your time will come. Look at metrics other than prices and you'll see the same trends that were present in other areas prior to their meltdowns. Don't be delusional.
You may choose to give the kids as elite an education you can afford (might be public) and teach them, by example, not to be elitist.
Cisco, Google, and HP are all implementing cost cutting measures. Start with trimming budgets for as long as possible before you cut salaried staff. I respect that and wish more companies took this path.
Of course cutting contract workers or not renewing contracts doesn't count as lay offs. I'd like to see some data on those numbers.
The one reason I hear most frequently for buying in San Francisco is access to "culture," what that means.
I live in a remote area and, thanks to my ride, have access to all kinds of culture: jazz, symphony, universities, food, whatever.
As far as schools go, I can't think of a single school in this country, public or private, that's worth the tuition. Conjure did a terrific job educating son of mp, but I guess there aren't that many Conjures out there.
IMO, there's a lot of myopic thinking going on.
anon: she bought in 2005, and her condo (1 of two units) is holding value. Home 1/2 block away sold in about 3 weeks.
" I can't think of a single school in this country, public or private, that's worth the tuition."
in-state UC undergrad is still very cheap, as are the community colleges, some of which are decent.
that may change.
Absolutely right, Chill bear. Thanks for your post.
I question anybody going to Las Vegas now for an investment property when you can buy in Contra Costa at the same price at this moment. But that has no bearing on the really desirable areas in the SF bay area.
Its almost like, for the RE bears to feel that they have been right, high end SF HAS to fall. They keep predicting it, but no cigar. Right now this is December. There is always a small blip down in December no matter what the market.
My brother in law owns a small rental property in San Jose downtown or Rose Garden I think. It is RENTING for $2800/mo. That guy is making $650/mo on that place. Rentals would have to fall 30% for the low end to take another hit here. YES rentals did fall that much in 2001, when the SF bay area alone lost ONE MILLION jobs. Its just stupid to expect that kind of devastation again.
The best advice for bloggers that I have is- unless you LIVE in the SF bay area- please quit making offbase predictions!
"Its just stupid to expect that kind of devastation again. "
true, I expect much worse
"My brother in law owns a small rental property in San Jose downtown or Rose Garden I think. It is RENTING for $2800/mo."
Oh please, in SJ Rose Garden? You can rent a house for under $2k per month. Feel free to be bullish on SF, but you sound really foolish applying the same fantasies to San Jose.
The SF Chronicle made the claims regarding the downturn of SF RE. The bloggers commented. Please write to the editorial section of the Chronicle to raise your objections.
Iraqi Throws Shoes At Bush During Press Conference (VIDEO)(SLIDESHOW)
the comments there are hilarious!
This is what I hear in my mind when I read posts from most people about San Fran:
"I don't like San Francisco and I would never even live there, so real estate prices have to drop 50%."
Frankly, if had the money, I would buy the next place on the market in Sea Cliff. Walking distance to Deadman's and Hangman's for those in the know.
If this makes me "stupid" I'm cool with that.
" That guy is making $650/mo on that place."
wow, a whole 8K/year on a place worth 600K which is probably losing at least that much every week this winter.
does he have any tapes or books we can order?
Mimi: "We aren't going to have many layoffs here, since the industry has been in a consolidation mode since 2001."
This is interesting thinking when considered. I expand this to "We aren't going to have many layoffs here because we are really efficient/irreplaceable here."
Having spent the last several years exposed to the "Bay Area Optimism Field" - particularly the "Silicon Valley Optimism Singularity" - I can understand where that kind of thinking comes from.
However, these days we're not talking of the "Oh, no more capital or exit strategy" failure of the start of the decade. A time when hiring was based significantly on being able to obtain resources and figure out what to do with them to "3. Profit!" later.
These days, we're talking about a future of "This business model (or investment) does not work. We are terminating it." layoffs. Consolidation and offshoring have no bearing on this situation.
Think about why VC funding is drying up. It's not because people don't want to make healthy profits on their investments. The extension of that is that the money is no longer there.
The. Money. Is. No. Longer. There.
Let me know when average prices on the bluffs in Encinitas, Cardiff, Solona Beach, La Jolla, Del Mar fall even 20%. Not saying it couldn't happen, but ....
"The. Money. Is. No. Longer. There."
Yup, yup, yup!
Right on!
How else can I express my enthusiastic affirmation?
San Francisco is in for a big decline. No doubt about it. The prices there have been so inflated for so long, good grief!
bearly writes:
Shrub's reflexes still pretty good? Judge for yourself.
Of course. He's the bloody anti-Christ
"The. Money. Is. No. Longer. There."
there is some capital and appetite for risk in Asia which is finding its way into some new ventures in the US.
but, then, at least when you indirectly work for the Red Army instead of some Sand Hill Road sharks, you know that there are some values and sense of accountability at the top.
Its almost like, for the RE bears to feel that they have been right, high end SF HAS to fall.
MiMi | 12.14.08 - 3:02 pm | #
Surprisingly, I agree. I'm bearish, but I'm happy enough with the fall in the aggregate level. It doesn't matter to me how much Malibu or La Jolla or SF fall. I think everywhere will take a hit, but it really matters very little to me if a few pockets don't. But I am puzzled why if real estate prices are holding strong, and you believe they will be strong going forward, you aren't willing to pay the price you think is right.
Comrade V,
You may be waiting a long time.
It would be sweet to have a place overlooking Swamis.
"but, then, at least when you indirectly work for the Red Army instead of some Sand Hill Road sharks, you know that there are some values and sense of accountability at the top."
Conjure says, "BWAHAHAHA!"
"I want one of those Red Army capitalist uniforms."
All this talk about San Francisco is making me hungry for some...
Rice-A-Roni Commercial - Vox
"It would be sweet to have a place overlooking Swamis."
especially if it comes with a 1978 tax bill and the sure knowlegde that someone who just bought a condo overlooking 880 is paying more
Speaking of SF culture, is "Pink Pussycat" still in business?
Conjure wants to know.
Its just stupid to expect that kind of devastation again
China devaluing. Prepare for another flood of layoffs. Few Americans left who can afford SF but perhaps the Chinese will buy it to rent to Americans who... can't afford to buy it.
Mish's Global Economic Trend Analysis: China To Print Money To Combat Deep Slowdown
SOMALI PIRATE DEMANDS RETURN OF SHOES.
Offers to trade for hostage penny loafers.
C
Let me know when average prices on the bluffs in Encinitas, Cardiff, Solona Beach, La Jolla, Del Mar fall even 20%. Not saying it couldn't happen, but ....
Comrade V | 12.14.08 - 3:07 pm | #
Ummm, they fall when the bluffs do, we're due for another one after the rains. If you can figure out a way to shield San Diego from liability, they might let you buy that collapsed area on Mount Soledad.
The best advice for bloggers that I have is- unless you LIVE in the SF bay area- please quit making offbase predictions!
Living in the bay area, working for yet another big company that is not in the database, but cutting, I call your bullshit as it is.
All this from a VP of a tech company? Yet more bullshit or your company is destined to be the next dodo in toto.
And who pays for the military-industrial you know what?