[greekfire]

My personal opinion is that this situation has you wrapped up emotionally. Don’t take this the wrong way, but the sale is by a party with whom you have some sort of relationship (so you feel somewhat obligated), and you sold 3-4 years before the housing peak so you’ve had to endure some additional ridicule from friends/family than those that waited longer to sell.

My recommendation is to try your best to separate the emotional components of this transaction and view it as objectively as you can.

The first thing to do would be to view the historical price fluctuations of the property, along with all of the withdrawn and canceled offers that have been made over the years. Analyze the comps as a means of upping your negotiating power. It sounds like this home is quite unique, however, and reasonable comps may be hard to come by. So use them when they favor you and discount them when they don’t.

The next thing would be to try to transcend the fact that you have a relationship with the current owners. Without knowing the depth or breadth of that relationship, I would advise that you focus on how the transaction might benefit your situation, rather than how it might adversely affect the current owners’.

Delaying the process a month or so to perform “your research” may give you a wealth of information. Imagine your wife and the current owners pressuring you make a move and fast. This will give you insight into what their position might be in the sale – whether they are more or less motivated to sell for whatever reason(s). It is perfectly acceptable to tell them that you want to take your time in making the investment of a lifetime. Meanwhile, you may have earned yourself some additional savings in the form of reduced home values and/or negotiated price.

The first rule of negotiating is to NEVER lose the power to walk away from a negotiation. Your current situation is putting you in a position that may potentially compromise this rule, so you must work to overcome it.

I wish you the best of luck on this, and be sure to keep us all posted.

[greekfire]

Maybe Francis and Gin can work together to come up with a more credible (and defendable) economic indicator for San Diego.

[greekfire]

The comment about the young couple with parent’s that live across the pond reflects a VERY small percentage of potential buyers.

[greekfire]

How are the taxes computed if a house that was covered under Prop 13 is inherited? Does it get re-assessed at the current market value or do the inheritors continue to pay the old Prop 13 tax? Is there anyway to ensure that inheritors continue to pay the Prop 13 tax, e.g., putting the home into a trust?

[greekfire]

This is nothing other than a shell game with money – shifting it around from one entity to the next in an effort to obfuscate and prop-up something that isn’t really there.

Let not your heart be troubled. This tactic is employed for short-term gain and will have grave consequences when it is eventually prosecuted under law. As I have said countless times before, there are many who benefit from the last housing bubble and will do everything in their power, including death threats, to see that it continues.

[greekfire]

I don’t necessarily agree with the article, either. I think the article pointed to increased foreclosures in places like Ohio due to their higher unemployment rate…which was a whopping 0.2% higher than California’s 4.8%. Like HiggyBaby said, what good does it do to have a job if you still can’t afford to make the payments?

Employment (more so the psychology of high employment) IMHO, is going to be the straw that breaks the camel’s back in this inflated market. I predict that there will be an inevitable hiccup with employment at some point in the next 12-18 months and it will expedite the housing crash. Who knows.

[greekfire]

Christopher Mayer came across more like a realtor than an objective economist. What do you think his first argument was? Time on the market has decreased over the last 4 or 5 months. As soon as I heard that I knew this guy was full of it. The man teaches economics at an esteemed university, he goes on national TV to debate against an internationally respected economist, and the first argument that he presents is about “time on the market”. Un-frickin-believable.

Mayer’s whole deal was that the negative housing metrics we are seeing today aren’t “nearly” as bad as they were in the late 80s. In fact, he said that there isn’t a single indicator today that is as bad as it was in the late 80s. He also mentions that it is not correct to compare current or potential decreases in today’s market as they are coming off an unprecedented bubble. This should be of comfort to home owners who are seeing their values drop on a daily basis. It’s gonna fall much farther than it ever has, but it least the drop is not as fast as it was in the late 80s!

[greekfire]

I would recommend looking for those SFR properties that have been owned for some time and the owners don’t need to charge a lot in order to make a profit.

In our case, we stumbled upon a 1700sf SFR in the Carlsbad area that was well below what we had been planning for($1865/mo). Being the skeptic that I am, I thought that there had to have been a catch. We went to the address, physically checked it out, and noticed that it had not been maintained as well as it should have been…but it wasn’t in that bad of shape. This (along with the year they purchased the property) explained why the monthly rent was so low.

We ended up going for the place. After a few months we worked out a deal with the owner to reduce the rent to $1800 if we took care of the basic landscape services (mowing the lawn, etc). They didn’t mind this as they terminated their contract with their landscaper who would just “mow, blow, and go” in just the front yard.

This brought the price per square foot down to about $1.06. I also run my own business out of the garage (~400sf) and we also deduct one of the living areas, so the cost per square foot is much lower than would normally be had we owned the property outright.

I hope this helps.

[greekfire]

You might want to explore investing in a foreign-laden mutual fund of some sort. It would probably also make sense to figure out exactly which foreign areas/entities you are investing in and why…as well as the term length of your investment. The previous statement may sound redundant, but it can really help to narrow down your choices.

It might be beneficial to consult with a professional about it if you are still unsure. Afterall, they are the ones that research this stuff on a daily basis. This site’s host specializes in this sort of thing (I am not affiliated with his company). If you are a do-it-yourselfer, there is an absolute mountain of data (some free, some not) concerning foreign investments. Either way, I wish you the best of luck in your endeavors.

[greekfire]

IR,

You give a nice synopsis of the Piggington Blog (er, Powayseller’s posts) over the past 2+ years. Nearly everything you said makes sense, however, it will take some time for the general public (and fundamentals) to catch up.

I want to say that I feel you, but that there is some inconsistency with at least one of your statements. The Minnetonka vs. Irvine example is the one I would like to highlight. Although both cities have extremely similar median incomes, they both have extremely dissimilar housing demand.. The reason that Minnetonka median home prices are so much lower than Irvine’s is simply due to supply and demand. How many people do you hear of driving cross country from the East Coast to end up in…Minnesota?

In hindsight, it is plain to see that a plethora of Irvine’s demand was driven by speculation in the OC, LA County, as well as Riverside County. With that said, even speculation has to succumb to the laws of supply and demand. The point I am trying to drive across here is that there appears to be a measurable difference between the number of people that want to purchase a property in Irvine (nice weather year round), versus those that want to purchase a property in Minnetonka (nice weather May-September, crappy weather the rest of the year).

Of course, local economies, diversity, public schools, and the like all play a role, but you catch my drift. Having grown up in Maine myself, I see exactly where you are coming from. Ten years ago I would probably have told you that you are completely full of it. However, Arizona, Texas, and Nevada have caught on and present much more competition to potential California transplants. Add to this the age of the Internet and you have a workforce that can potentially be connected from anywhere there an internet connection.

[greekfire]

I agree with Bugs. The hull has already struck the iceberg. The best thing that honest individuals with savings can do is invest their profits into a vehicle that is gaining a higher return than housing…and just wait out this correction. You must be prepared for the long haul and just keep doing what you are doing. Your leverage increases with every day that goes by in which you don’t purchase a home. The real estate industry depends upon consumption just like any other industry.

Heaven forbid there is a hiccup in the employment figures. When that happens (not if, IMHO), it’s party time for the bubble sitters.

[greekfire]

Masayako-
I now see what you are trying to say. Thanks for the clarification.

[greekfire]

Masayako,

I would say that I have generally agreed with the majority of your posts except this one. So much so that it has actually caused me to reply to it, which I wouldn’t ordinarily do.

You mentioned that the government doesn’t count investment as savings. In response, I would venture to say that a good portion of middle-class, working Americans do have a certain amount of investing, but it is tied up in IRAs, 401ks, SEP-IRAs, or the like. These are investment vehicles that can’t be withdrawn from until they reach the age of 59.5…unless they want to incur penalties that are basically structured to keep them from withdrawing in the first place.

I also disagree with your statement that the credit situation in this country is not that bad. The majority of wealth for the majority of homeowners in this country exists on paper in the form of the value of their home or other properties they may own. This is the single biggest value that has allowed many a home owner to refinance into a lower-interest, adjustable mortgage vehicle in an effort to increase short-term cash reserves. Moreover, as the market continued to sky rocket, many homeowners used the leverage in the equity of their homes to upgrade it and further inflate it’s market price. This had, IMHO, the effect of over-inflating the already over-inflated home prices.

I am sure that there are copious other statistics out there to back up my claim, but I am too tired to hunt for them. :-). Making the statement that “The credit situation of this country is not that bad,” to me, is as bad as the real estate hacks saying that real estate prices are always going to go up.

[greekfire]

I personally wouldn’t trust John McCain any farther than I could throw him. Just read between the lines and probe deeper than the headlines is all I am saying. You might find that there is more to the story than you think.

[greekfire]

TheBreeze,

Tell us all something we don't already know. Please tell us that you have a better comeback than that. Perhaps the picture below will help to tell the tale in terms that you can more easily understand, since you seem to have trouble with the written word. I am assuming that you did not know the flags in the picture represent countries where we have military bases. You come across as being less a "breeze" and more like a fart in a whirlwind.

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