[cashman]

I discovered something really interesting as I was on Zip Realty last night. I live in Diamond Bar, and have been really amazed (and disturbed) at how the prices have been so resistant to declining. But I was only looking at listing prices. True, they haven’t budged much. But just for fun, I thought I’d look at sales prices. They were all about 10-15% lower than the asking prices! So something is really happening after all.

[cashman]

I discovered something really interesting as I was on Zip Realty last night. I live in Diamond Bar, and have been really amazed (and disturbed) at how the prices have been so resistant to declining. But I was only looking at listing prices. True, they haven’t budged much. But just for fun, I thought I’d look at sales prices. They were all about 10-15% lower than the asking prices! So something is really happening after all.

[cashman]

I was just discussing this topic today with my son, who’s 22. We were talking about mortgage brokers, and he said he know several people in that field in OC that have been hurting as of late. For about a five year period they were hot, making from 200K to 600K per year. Yes, per year. You know what they have to show for it today? Zip. Nada. I think a lot of people, not just ex mortgage people, typifiy the addage “the more you make, the more you spend”. Now, on the opposite end, take my daughter, 26, working as an accountant in Irvine, makes 55K per year, lives with her boyfriend who works at Cingular selling cellphones, making 80K. Combined, that’s 135K per year. Not bad for mid twenties. They rent, and listening to my advice, are saving a good chunk of their monthly for when the time is right to buy a house. So there are a few smart ones out there, but you have to dig deep.

[cashman]

I was just discussing this topic today with my son, who’s 22. We were talking about mortgage brokers, and he said he know several people in that field in OC that have been hurting as of late. For about a five year period they were hot, making from 200K to 600K per year. Yes, per year. You know what they have to show for it today? Zip. Nada. I think a lot of people, not just ex mortgage people, typifiy the addage “the more you make, the more you spend”. Now, on the opposite end, take my daughter, 26, working as an accountant in Irvine, makes 55K per year, lives with her boyfriend who works at Cingular selling cellphones, making 80K. Combined, that’s 135K per year. Not bad for mid twenties. They rent, and listening to my advice, are saving a good chunk of their monthly for when the time is right to buy a house. So there are a few smart ones out there, but you have to dig deep.

[cashman]

A few years ago, after the dot com bust, and after I lost about $150K trusting my money with Morgan Stanley during the bust, I decided to give day trading a try. I executed 100 trades, with 98 winners and 2 losers. Why did I stop? Stress, plain and simple. You have to be glued to the real time charts for the whole time the market is open, at least that’s how I did it. I traded big blocks and scalped small moves in the price. Sometimes just a couple of cents! Bottom line, it’s just not worth it to me to be so absorbed in one thing. I need a life, too! Now I make a handful of strategic trades a year, and keep an eye on the market just for amusement. And I sleep well at night.

[cashman]

A few years ago, after the dot com bust, and after I lost about $150K trusting my money with Morgan Stanley during the bust, I decided to give day trading a try. I executed 100 trades, with 98 winners and 2 losers. Why did I stop? Stress, plain and simple. You have to be glued to the real time charts for the whole time the market is open, at least that’s how I did it. I traded big blocks and scalped small moves in the price. Sometimes just a couple of cents! Bottom line, it’s just not worth it to me to be so absorbed in one thing. I need a life, too! Now I make a handful of strategic trades a year, and keep an eye on the market just for amusement. And I sleep well at night.

[cashman]

I cashed out in Nov. ’05 and have all of it in CD’s and money market accounts, hence my handle “cashman”. Looking back, that was foolish as the stock market did really well during this period. But if I was afraid to commit money to the markets then, I’m terrified now. Perhaps I’m missing something, or the whole world has gone mad. I’ll be talking to Rich when he gets back from Europe. The problem I have, is that every time I’ve given money to a professional money manager, whether it be through a big brokerage firm or an independent, I’ve lost money. That’s why my money’s been parked in safe, low returning (around 5.5%), bank accounts. I, too, am open to suggestions.

[cashman]

I cashed out in Nov. ’05 and have all of it in CD’s and money market accounts, hence my handle “cashman”. Looking back, that was foolish as the stock market did really well during this period. But if I was afraid to commit money to the markets then, I’m terrified now. Perhaps I’m missing something, or the whole world has gone mad. I’ll be talking to Rich when he gets back from Europe. The problem I have, is that every time I’ve given money to a professional money manager, whether it be through a big brokerage firm or an independent, I’ve lost money. That’s why my money’s been parked in safe, low returning (around 5.5%), bank accounts. I, too, am open to suggestions.

[cashman]

Rustico, to answer your questions, I sold in Nov.’05 for 2M. I had no loans, it was all equity, minus commissions, of course. It was the lowest priced 7000+ ft. home listed in the neighborhood, but I feel I got a fair price at the time. Others were priced higher, but not selling. The top end of the neighborhood was abot 3M. As of last month, it was worth approx. 2.6M, so that’s a 30% gain in roughly 18 months. Now there are homes here priced at 4.5M. It’s insane! The market here is without question behind other areas. Biggest gains were in ’06, right after I sold, of course!! Anyway, I’m really not bitter. I’m just posting for amusement, as I’m in a good cash situation. But I would like to eventually buy again, and sometimes wonder if prices will really come down to meet the fundamentals in my lifetime.

[cashman]

Guilty, as charged. Yes, I find myself a bit disgruntled. I sold my home a year and half ago, and have been renting ever since, waiting, and watching, reading Piggington, waiting, watching, and did I mention, reading Piggington. Reading the posts on Piggington made me feel like a friggin’ genious, but reality paints a slightly different truth. The home I sold continued to rise in value, and is currently worth about 600K more than when I sold. Other homes in my area have also gone up in value during this time period. I shop around in OC, thinking my area is just a fluke, and find sales brisk in new developments, with lots of sold stickers on the tract maps, and the most desireable lots gone. Prices are still at outrageous levels and if they have gone down any, it’s like Alex says, just a pittance. There just seems to be too much money here in So. Cal. for the ship to sink. So I sit here in my dumpy 2500 sq. ft. rental after moving out of my 7400 sq. ft. home that would now cost me 600K more to just buy it back, calculating that I’ve spent about 50K in rent so far for this privilege. To be honest, it just doesn’t feel right. All my life I’ve been a homeowner, until now. But you know what? Piggington people are right. Even a broken clock is right twice a day. I just hope I’m still alive to benefit when the inevitable decline really comes.

[cashman]

I don’t think the psychology shift has happened yet. I read an article recently that says only 1 out of 9 Americans believe housing is a bad investment right now. We have a ways to go if that’s true.

[cashman]

Take your 700K and run. Rent for two years, then look around. If you’ve been reading on this site the overwhelming consensus is anyone buying today will regret it tomorrow. I believe most housing in LA that is currently priced under $1M will drop $100K this year and another $100 next year at a bare minimum. The optimum time to sell in LA County was 2-6 months ago, but it’s not too late. Don’t overprice, as it will sit, and you will lose more as each month goes by. 2007 and 2008 are going to be nasty years in real estate.

[cashman]

Excuse my ignorance, but these sales figures sure don’t suggest a collapsing market, at least in that neighborhood. Whether sales are new or resale, nonetheless a sale has been made. And strong pricing for the new homes will support, if only temporarily, resale pricing. I was out in Irvine this weekend and looked at several new tracts in Portola Springs neighborhood. Same story. Sales are strong and the parking lots were full. Guess most of the public doesn’t have the same perception that us Pigginton bloggers have.

[cashman]

Gn, that’s my point. I think I did sell too cheaply. I was timing the general market, where it probably peaked somewhere late in 2005. Where I made my mistake was not allowing for the specific conditions in my neighborhood, which lagged behind the general market, and we can now see peaked in early 2007. I find the Zillow price history graph classic in the sense that the sharpest rate of appreciation was just after I sold it. Of course! 2006 was a banner year. And to answer your question whether I paid too much for it in 1994, I don’t think so. The builder had sold two other homes on that street in 1991 for $2.0 M and $1.8M. He was asking $1.8M for my house, but dropped it to $1.4M for a quick sale. True, I didn’t buy it at the absolute bottom, as he sold another one in 1995 for $1.1M across the street from me, about the same size with an indoor pool. That was a bargain! But I feel I got a fair price at the time. But getting back on topic with this thread, I think I sold a year too soon, and dished out $50K in rent on top of it. The Zillow numbers are accurate, because other homes in the area have all increased in 2006. For what I sold my home for, you get 2000 square feet less now. I am very tuned into this market because I’ve been renting for a year and half now and was hoping to see lower prices by now so I could buy back in. Looks like I’m gong to have to wait much, much longer.

[cashman]

Yes, it’s true, here’s the link:
http://www.zillow.com/HomeDetails.htm?zprop=21661162
You can also check the price data to see that I was the original owner, bought in 1994 for $1.4M. I thought I got a great deal at the time. The builder was asking $1.8M. As the market was soft, and it was sitting vacant for six months, the builder was very negotiable. Due to divorce, I put it on the market in 2001 for $1.2M and couldn’t sell it. It was listed for over a year. I kept it until 11/2005, when I finally did sell it for just shy of $2M. I didn’t think I was an “idiot” then, but after missing out on another $600K, I guess I was an idiot! And like I said previously, I’ve spent another $50K on rent!

[Author]

Posts