[4plexowner]

Hammer – I feel for you on this one – it’s a tough choice

The area you are talking about is great – I think I would prefer a view of the harbor vs the ocean (harbor is more dramatic at night) but the view from south Sunset Cliffs doesn’t suck

Another factor for me at this point in my life is commuting – getting from south Sunset Cliffs to the freeway is not fun – I think for the commuting factor I would choose Pt Loma over Sunset Cliffs although it is probably a toss-up

I don’t have need of a big house right now so $1.1 mil wouldn’t cause me to bite today – it might make sense for you however if this is really the house you want to live in for the next decade or so

[4plexowner]

I may end up being wrong but I expect to buy view property in Pt Loma / OB / Sunset Cliffs for $800K at the bottom of the market

I’m not expecting to get the ‘top of the hill estate with a 180 degree unobstructed view’ for this price but I believe I will find a single-level SFR with an unobstructable view for well under $1 mil (in today’s dollars)

Only time will tell

~

I expect view property in Bay Park / Bay Ho to be $600K or less

[4plexowner]

Raybirnes – the houses you are whining about are exactly what I was referring to in my recent post

This is STUPID activity occurring as part of the last gasps of the RE boom

I recently walked through a large part of Normal Heights north of Adams – numerous properties in the process of major upgrades – IMO these are F’d flippers who may or may not realize yet how F’d they are

The properties are very nice when completed – fresh stucco, landscaping, etc and would have drawn top dollar in mid-2005 – now however, they are over-done for the location / market conditions IMO

Note to flippers: it isn’t mid-2005 anymore and many of the upgrades you are doing will be WASTED MONEY (assuming you can sell the place at all)

~

Some more stupid building that I didn’t mention in previous post:

> Genessee and Clairemont Mesa Blvd: apartments? townhomes? being build a stone’s throw from this intersection with almost no setback from the sidewalk/Clairemont Mesa Blvd

Again, IMO we are seeing the last gasps of the dying/dead RE boom – picture the death throws of a cockroach – lots of frantic, meaningless activity but the roach will be dead soon

[4plexowner]

I was at a meeting recently where a CCDC (Center City Devlpmt Corp – quasi-govt agency being used to rape the taxpayers of San Diego – no wait, I mean a quasi-govt agency being used to facilitate the rebuilding of downtown) representative was saying that there will be 90K residents downtown by 2020 (currently 30K supposedly)

I assume they are referring to homeless people living in cardboard boxes because there sure as hell won’t be 90K people living in $700K condos

It amuses me to see the ‘official’ projections of rising population (which are used to justify stupid projects at the taxpayer’s expense) when other data shows a net out-migration of just the people that these projections say should be coming into the area

[4plexowner]

At the bottom, not only will the sheeple NOT be talking about real estate being a good investment, they will be talking about what a HORRIBLE investment real estate is and how stupid anyone would be to buy right now

One of the likely scenarios IMO is that in 2008/2009 the REIC and sheeple will believe that the worst of the correction is over because there is a lull in the reset of ARMs (see Credit Suisse chart)

Then the Option ARM resets start in 2010 and continue through most of 2011

In 1929 market crash terms, we are currently in the first downleg of a huge correction – in 2008/2009 we are likely to see a cyclical upturn that the REIC and sheeple will paint as being the end of the correction – the second leg down occurs in 2010/2011 and absolutely crushes the sheeple and REIC

This seems to be the way the bear likes to work – big downleg followed by a noticeable (maybe even exciting) upleg – this upleg sucks in the last of the bulls’ money and then the bear wipes out the bulls with the final downleg

[4plexowner]

Raybirnes – I drive through the neighborhoods you mention and see the properties you refer to

Interesting that my perspective is different than yours

What I see are flippers who are about 18 months too late and may or may not realize it yet

Many of these properties are being way overbuilt for the general area and/or specific location – for example, building a spec home on the narrow, curved portion of Ingraham just before crossing the bridge and thinking that somebody is going to pay $1+ mil for it is stupid

Another example of stupid building: the condos on Garnet just as you enter PB – the creek right next to these condos ALWAYS smells like sewage – so for half-a-mil you can own a condo next to a creek that smells like shit

Anyway, you look at these properties and see a strong market, I look at these properties and see the last gasps of a real estate boom – it actually amuses me to think of how F’d these flippers/builders are at this point

~

As an aside: if you want to call someone a simpleton you should ensure that you don’t look like one yourself – have you heard of spell-check? “Once again on the attach. You are a simpleton. Credit has already been factored into all analasys.”

[4plexowner]

I want to follow up on CONCHO’s post

The overall plan as I understand it is to have a transportation corridor between Mexican ports and a processing facility in Kansas

What does this accomplish?

1. freight coming from Asia can bypass the ports of Seattle, San Francisco and Long Beach and go to Mexico instead – dock workers in the US make $140K because of their union – same job in Mexico will probably pay $12K to $25K? – European shippers will bypass the US ports on the East coast to gain the benefits available in Mexico

2. freight being trucked out of a Mexican port goes onto a Mexican truck with a Mexican driver vs US truck/driver – Mexican truck/driver don’t have to comply with US regs as CONCHO points out and the driver makes much less than US driver [the Mexican trucking companies will probably be able to declare bankruptcy and disappear if one of their trucks causes an accident inside the transportation corridor]

3. freight being transported via the new corridor is not subject to any existing US laws / import restrictions / import duties / trade tariffs / liability insurance for hazardous material / etc – [I’m reaching here but I can see TPTB doing a total end run around all existing US laws if it puts $$$ in their pockets]

Is this the country you want to leave to your kids?

[4plexowner]

Politicians will continue to hand out the taxpayer’s money and sell off pieces of our country to the highest bidders until we hold them accountable – they don’t care about us except as pawns to be used as needed

This country was founded on the idea that We The People grant power to the government

We The People have allowed this to become a country where the government is in control and they are granting power to the people

And the power being granted to the people is being reduced everyday

How can we as concerned citizens solve this crisis of leadership in our own country?

[4plexowner]

I’ve checked out powayseller’s site three times – on each occasion I found bad grammar, mis-spellings and incorrect data being presented as fact

The most obvious data mistake was her saying that the US needs $35 billion per day from strangers when the real number is $3.5 billion

OK, it’s only a mistake with a decimal point but why would I want to read about economics from someone who can’t spell, use correct grammar or check their work for accuracy?

I also found ps’s description of herself amusing to the point of LOL’ing – this is a person who posts things like “I forgot about inflation” claiming to be an economist

Lord save anyone who follows ps’s advice blindly

[4plexowner]

We’ll get to the point where people won’t admit to having been stupid enough to buy a condo downtown – obviously we aren’t there yet

At last count (about 2 months ago?), there were 3400 additional condos coming online downtown in the next 18 months

Recent downtown condo sales rate is 40-50/month and there are around 600 units available – ie, at least 12 months of inventory currently available and according to Rich prices have downward pressure whenever supply goes over 8 months

With the 3400 added units we will have 80 months worth of inventory or 6.7 years worth

Sounds like a stable market to me!

[4plexowner]

Bugs – I go back and forth between trying to be conservative and trying to wake people up with shocking numbers

Neither one seems to make much difference – I am starting to believe that the 95% of the human race that is asleep will always be asleep

It is disheartening to see my country being ruined by a small group of corrupt, power-driven people while most of America sleeps and watches American Idol when they aren’t asleep …

[4plexowner]

Is it that surprising that there are “really cheap” housing units in the current foreclosure capital of the nation?

Guess what, these units are going to get “really cheaper”

[4plexowner]

I love that ARM reset chart! If you haven’t seen it before take a look.

Note the BIG chunk of green in months 40 thru 60 – if I am counting correctly, this corresponds to 2010 thru fall of 2011 – these are Option ARMs where the mortgage holder has the option of paying 1) a fully amortized payment, 2) interest only, or 3) minimum payment (which results in negative amortization)

Now, given what you know of the typical American consumer, which of these three options do you think has been exercised the most?

How upside-down will these mortgages be in 2010/2011?

~

I am expecting the final bottom in this real estate cycle to be created in 2010 / 2011 when the Option ARMs blowup and those homes come onto the market as distressed inventory in a market that has already been declining for 5+ years – at that point there should be enough inventory available to satisfy demand for the next 3 to 5 years

Sentiment towards real estate will be very negative and it will probably seem like the market will never bottom out

The “bottom” that I am expecting will last for several years as the massive overhang of inventory is worked off

[4plexowner]

“The Greatest Price Decline in Housing since the Great Depression”

4plex: 1998 prices here we come!!!

“Derivatives numbers are staggering. The Bank for International Settlements estimates that the notional amount of derivatives traded on regulated exchanges topped a quadrillion dollars last year and that the outstanding unregulated off-exchange (called over-the-counter – OTC) amount stood at $370 trillion in June 2006. Because the OTC market is composed of endless strings of bilateral transactions – the systemic risk is unknown.”

4plex: The global economy does about $40 trillion in real business every year but we have a “derivatives economy” that is $1,370 trillion in notional size – ie, the amount of derivatives is 34 times the size of the annual global economy – can you say, “Golly, gee, Beev, that’s a lot of leverage – isn’t there some risk?”

“In fact, a recent survey showed that only 1 in 7 Americans believe that house prices will go down. Even now, very few people grasp the underlying issues or the potential for disaster. We’re on a treadmill to oblivion and they think it’s a merry-go-round.”

4plex: I love that quote! “treadmill to oblivion and they think it’s a merry-go-round” – at least here in San Diego they get to enjoy the gorgeous weather while they slave away on the treadmill

“None of the bailout plans are large enough to make any quantifiable difference. The numbers are just too big.”

4plex: Yes, I agree wholeheartedly. And even if the bailout numbers were bigger, Mish (http://globaleconomicanalysis.blogspot.com/) made an excellent point recently about the fatal flaw in ALL the bailout plans. That flaw is this: all the bailouts keep the FB in the house AT THE HOUSE’S INFLATED VALUE. Let’s say I’m an FB and I get bailed out so I can continue to service my $400K in mortgage debt on the house I bought for $360K and then used like a piggy-bank. A year or two passes and houses like mine are now selling for $285K. That bailout isn’t seeming like such a great deal now – I’ll be working for the rest of my life paying for this albatross – they must think I’m stupid – should I mail the keys or just leave them on the kitchen counter?

[4plexowner]

When I say that entry-level houses in Clairemont will bottom around $275K in 2010/2011 I am referring to today’s dollars

Who knows what $275K in today’s dollars will look like 4 years from now

The Fed is currently pumping our money supply at a 12% rate, Russia increased their M-2 money supply by 48% in 2006 and most other countries with central banks are furiously debasing their currencies as well

We may even be pricing our homes in Ameros before this current correction ends – who knows …

Bottom line for me is that we are nowhere near a bottom so I don’t have to worry about what prices will be when we get there

[Author]

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