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Regardless of who wrote that or what their motivations are, I assume the comments on PS’s web site that bear her name are an accurate reflection of her point of view.

I think Rich lets his work speak for him instead of the other way around, and I appreciate that. He seems to lay all the information he comes across out there and allows it to take it’s own form, even though some of the datapoints may conflict at times with the overall trends. BTW, that is the way the data behaves out in the real world – sometimes it’s more consistent than others. A lot of why I find Rich’s work credible is because when it’s inconsistent or inconclusive, he says so. He doesn’t try to jam every little square piece into the round hole for the express purposes of calling it all round.

As for him not using his every waking moment to run down every lead and pursue every story that comes to his attention, that’s not very difficult to understand. He isn’t running a pay site, this isn’t a business for him, and Piggington’s was never intended to be anything other than a blog or casual forum. We SHOULD have different expectations for a site like Piggington’s than we would for a site purporting to provide investment guidance or which is oriented to providing a professional service.

I’m here because of his work, not because of his personality or because I think he’s cute (although I’m sure some people do consider him to epitomize the image of a Greek God).

The only time I remember Rich getting involved in the user forums was on a couple occasions in the meetup threads and once to threaten to regulate the close quarters combat that was going on at the time between PS and her loyal opposition.

Who would have ever imagined Rich’s following would get big enough to have a vocal fundamentalist splinter group?

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One more dimension to this affordability issue is that the borrower’s willingness to pay a certain amount of their paycheck towards housing is not the same as their maximum ability to pay that amount. We’ve recently seen examples of people being willing to pay (or at least, commit to paying) more than they can afford to pay; but we haven’t seen as much in the way of borrowers being unwilling to max out their paychecks on housing.

I think that unwillingness is not only possible but even probable at some point. We saw it back in the mid-90s – mortgage payments (PITI) as cheap as rents. Could it happen again? Maybe.

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The number I used was the combination of detached and attached housing, and is strictly limited to what the MLS itself shows. The builders mostly don’t use the MLS, so their sales would be in addition to the MLS numbers. Likewise, the FSBO and non-sale transfers don’t show up in the MLS either. I think it’s fair to say that the MLS is just the MLS, not the complete picture. I still think it’s a good indicator of trends, though.

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I think that some bears try to approach the subject with a certain amount of circumspection. Bears are not greedy people by nature. I think a lot of bears subscribe to the idea that it’s not cool to get caught hoping for a correction that will cost a large percentage of our neghbors their shirts.

We still have the data and history to consider and we ignore either at our own peril. Any price correction less than 50% won’t even get us close to the long term trendline. If you believe that the past indicates to the future, then a complete correction (and indeed – overcorrection) is more probable than not.

At the same time is also important to remember that the residential markets are not rational. Just because the markets should correct doesn’t mean that they will correct at this time. Who knows, maybe we’ll get a divided cycle whereby we get halfway to the trend this time, followed by a short up-down cycle that gets the rest of the way by the time it’s over.

No matter what, the regional pricing will eventually have to reconcile with wage/population trends, one way or another.

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There’s no easier time for a builder to install finishes than when they’re in construction. They don’t have to remove existing finishes to replace them so it should be cheaper for the builder to do it then – and it is.

The problem is that those savings don’t get passed down to the buyer. In fact, the builder charges a lot more to do it than the the homeowner would pay outside contractors to do the install for them.

A construction lender could probably do a loan whereby the buyer takes possession of the property after the shell is completed and the costs to finish the interior are fund-controlled while the buyer’s contractors finish up the interior; then the total can be financed under permanent financing. It’s like doing a construction loan, except instead of starting at ground zero they’re starting out with a shell. The interior buildouts of commercial and industrial buildings are completed this way all the time, and there are a lot of lenders who know how to structure such a deal.

Just think what a builder would have to sell the shell for if the buyer had breakdowns on the pricing on the interiors of other units already sold; the buyer could deduct those “costs” and start negotiations from there.

If a builder is desperate to move inventory they’re liable to do anything.

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Isn’t that a variation of “everyone wants to live here”? It’s simply not true. SD County has population outmigration situation going on right now, and a large percentage of the people who are leaving are people who would normally own or buy properties. They are not being replaced by people who made their money elsewhere.

There is some foreign money coming in, but the number of people involved is miniscule within the context of the RE market. There’s nowhere near enough foreign money coming to either town to support pricing across the board.

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If investors aren’t participating in the RE markets, their money has to go somewhere. This whole RE bubble started when the stock bubble migrated out of the stock market and into the RE markets.

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Options and upgrades are a huge profit center for these builders. Huge, as in 300%-of-cost huge.

As for not knowing? Don’t kid yourself – they know exactly what they’re putting in and exactly what they’re charging you for it. The reason they’re not showing you the detailed breakdown is because they don’t want you to look at what they’re charging you. People are prone to price shop when they can make their comparisons.

Stick around – I’ll bet at some point you’ll be able to buy a shell with no flooring, fixtures or appliances and design your custom interior yourself. The only question for the builder will be how to avoid disclosing that sale price in the public records so as to not piss off their other buyers.

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There’s nothing any group of people can do to prevent foreclosures or short sales or divorces or relocations or probate sales from occuring in their neighborhood. Must-sell is must-sell, regardless of the reason; and those must-sells drive the pricing in a down market just as surely as the must-buys drive pricing in an increasing market.

I don’t think it’s such a bad thing to advise people to take enough pride in their neighborhoods to prevent vandalism and looting among these foreclosed homes.

I will say that appraiser’s aren’t so stupid as to not account for the effects of condition or the terms of sale if they have to use a foreclosure sale in an appraisal. There are a lot of appraisers right now who haven’t been around long enough to know how to deal with this, but they’ll learn real quick – appraising in a down market is a great learning experience.

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I’ll say one thing about the people who are sitting this one out – they aren’t losing money right now and they aren’t sweating their positions.

F_L_Union – surely you can see that the current direction of both the price trend and the volume of sales is down and all indicators are that the pace of decline is picking up steam. There are no data to suggest a turn right now other than some wishful thinking from people who have, at this point, no remaining credibility.

Whether the whole thing bottoms out at -30% or -70% nobody can possibly know. But we do know there have been declines and we do know it’s going to decline more before it’s over. I direct your attention to just 18 months ago when the RE bulls were still reassuring everyone that the market was just going to level off, take a breather and then resume these increases. This in spite of a ton of data to the contrary. They were wrong then and they’re wrong now.

You have expressed the contrary view and there’s nothing wrong with that. Now lets see you come up with some data, some factor in the local economy, some factual reason to have that hope other than “it hasn’t happened yet” that supports your opinion. We have information and analysis that supports why we hold our opinions – do you? If so, we’d LOVE to see it. I direct your attention to Piggington’s motto below.

Eventually this downtrend will reverse course and from that point RE will be a great investment – that’s what a lot of people on this board are waiting for. Until then, time is on their side and they are the freaking geniuses.

Try to remember the most important rule of RE: You make your money when you buy, not when you sell.

It doesn’t matter what all those people have right now as a result of all their “hard work” and entrepreneurial spirit. It’s not what you make that counts, it’s what you can keep.

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Remember when I was making references to “RSF wannabes”? Cielo is one of those wannabes. Yes, it’s in the 92067 zip area, but it doesn’t have much else in common with the rest of RSF other than the fact there’s a golf course.

There are two sides to the project, a north side and a south side; the latter being the “low end” with lots as small as 1/2 acre. The north side is much larger and has a lot more lots, and for the most part those lots are larger.

One of the factors that detracts a bit from the appeal is that relative to the sizes and prices of the homes the usable lot areas are very small. On most of those lots you can squeeze in a pool and deck but that’s about it. We’re not talking about a lot of separation between the homes or natural features that provide any illusion of privacy like you’d find in the flatter areas.

So it would generally be a big mistake to compare 7,500 SqFt of new house in Cielo to most of the other neighborhoods in RSF, except for maybe a couple of the projects east of the Covenant area. A couple projects in the Del Mar Heights area or the upper end of Santaluz (also RSF pretenders) would probably be a more direct comparison.

If a new home of similar quality in the Covenant area on a similar or slightly larger lot would sell at $3mil, then that home in Cielo might reasonably sell for $2mil. The difference is that great.

At any rate, when looking at all the RSF wannabes, they’re all hurting for sales right now, and it’s only going to get worse from here. These spec builders have built a lot more McMansions than our market can support, and more are in process as we speak. The last time I looked we had almost a 2-year supply of listings of these homes on tap relative to the closed sales.

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Those agents don’t get paid all that well. Compensation varies, but back when times were good I think most developers had them work off a base + commission structure that’s heavily influenced by how many options and upgrades they can pack in.

Right about now, I can’t imagine any builder would look kindly on a sales office rep who was rude or short with any type of buyer. There just aren’t enough of those to go around.

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Residential land prices seem to be declining more dramatically than finished homes right now, which is to be expected. If housing tripled in retail sale price, 30% or more of that increase was in the land. As prices decrease, the easiest place to start cutting back is land pricing.

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Just the fact that the unit already lost between the time you bought and the time you sold should tell you that getting out now was a good move.

Now you want to take the difference between the mortgage and your rent, and SAVE it instead of throwing it away on the IO mortgage payments.

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I don’t think I’d buy an apple from that guy. He has the numbers right in his hand and he still screws it up.

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