[PerryChase]

I think that there is such a thing as herd mentalilty.
We do what our social contacts do and talk about.

I believe that people have finally stopped talking about real estate at dinner parties and backyard BBQs. Do people still brag about and try to convince their friends and relatives to buy real estate?

Here’s a study about how people subconsciously imitate their peers. Not surprising at all. Monkey see, monkey do.
http://www.signonsandiego.com/news/health/20070725-1426-bn25weight.html

[PerryChase]

I think that there is such a thing as herd mentalilty.
We do what our social contacts do and talk about.

I believe that people have finally stopped talking about real estate at dinner parties and backyard BBQs. Do people still brag about and try to convince their friends and relatives to buy real estate?

Here’s a study about how people subconsciously imitate their peers. Not surprising at all. Monkey see, monkey do.
http://www.signonsandiego.com/news/health/20070725-1426-bn25weight.html

[PerryChase]

Rustico, not morbid at all. We’ll all die so it’s good to think about it.

My auntie sold her house at 82 years old because she couldn’t deal with the garden anymore. She’s now 84, does not take any pills and is still alive and kicking. If I had not talked her out of it, she would’ve bought some overpriced condo.

Anyway, she now shares my dad’s house and spends 1/2 of the year traveling. I told her to enjoy herself, spend all her money and not leave anything for anyone. But that’s very difficult for her to do because the only thing she spend money on is food. She loves to eat all kinds of exotic (but healthy) stuff.

She’s too old to travel by herself now, but if she were younger, she could rent in London, or Sydney, or Paris for part of the year. Wouldn’t it be great for a senior to rent in Rome and study art and Italian (universities are virtually free in Europe and the rent/buy delta is even greater than in America)?

I do think that seniors who sold should rent because in a market that will stagnate for 10 years +, there’s no upside to buying.

Nodunk, you can rent a downtown condo for 1/2 the cost of buying and use the difference to enjoy your retirement ($3,000/mo for $1 million condo at The Grande). Then watch the listings for the right time to re-enter the market. If you’re worried about decorating requirements, decorating a downtown condo you rent vs. decorating a condo you own is exactly the same thing. The advantage of renting is that when your current kitchen is out of date, you can easily move to another unit that has better cabinets and granite. 🙂 If your view is ever obstructed, ask for a rent reduction or move to one with a better view.

——–

Homeownership is like a religion that is deeply ingrained into us. But if we think of housing as a commodity called shelter, we can then more easily look for the best value for our money.

[PerryChase]

Rustico, not morbid at all. We’ll all die so it’s good to think about it.

My auntie sold her house at 82 years old because she couldn’t deal with the garden anymore. She’s now 84, does not take any pills and is still alive and kicking. If I had not talked her out of it, she would’ve bought some overpriced condo.

Anyway, she now shares my dad’s house and spends 1/2 of the year traveling. I told her to enjoy herself, spend all her money and not leave anything for anyone. But that’s very difficult for her to do because the only thing she spend money on is food. She loves to eat all kinds of exotic (but healthy) stuff.

She’s too old to travel by herself now, but if she were younger, she could rent in London, or Sydney, or Paris for part of the year. Wouldn’t it be great for a senior to rent in Rome and study art and Italian (universities are virtually free in Europe and the rent/buy delta is even greater than in America)?

I do think that seniors who sold should rent because in a market that will stagnate for 10 years +, there’s no upside to buying.

Nodunk, you can rent a downtown condo for 1/2 the cost of buying and use the difference to enjoy your retirement ($3,000/mo for $1 million condo at The Grande). Then watch the listings for the right time to re-enter the market. If you’re worried about decorating requirements, decorating a downtown condo you rent vs. decorating a condo you own is exactly the same thing. The advantage of renting is that when your current kitchen is out of date, you can easily move to another unit that has better cabinets and granite. 🙂 If your view is ever obstructed, ask for a rent reduction or move to one with a better view.

——–

Homeownership is like a religion that is deeply ingrained into us. But if we think of housing as a commodity called shelter, we can then more easily look for the best value for our money.

[PerryChase]

HLS, i agree with you.

But the homeowners who don’t and won’t sell don’t make the market. Who cares about them?

It’s the market that we care about and it should get 100% attention. Sellers and buyers will create the new values for everyone.

[PerryChase]

HLS, i agree with you.

But the homeowners who don’t and won’t sell don’t make the market. Who cares about them?

It’s the market that we care about and it should get 100% attention. Sellers and buyers will create the new values for everyone.

[PerryChase]

So we know that a recession is coming. It would be foolhardy to buy before then.

HLS, the people who aren’t selling because they are fine are not the ones keeping the prices high. It’s the sellers who are still asking high prices. And they still have some willing buyers, but not as many.

Questions are:

1) How many sellers are must-sell? Can they are afford to hang on and how long? I think that most can hang on for another year but not much longer. Empty houses cost a heck of a lot in holding costs.

2) When will must-sell sellers give up and lower prices. They can’t lower prices now because they have no equity or not enough equity. They will walk rather than bring money to escrow. Lenders hate short sales because that only encourages more (news travels fast). Wait for foreclosures to see lower prices.

3) When will buyers stop paying the high prices?
a) When lenders stop offering 100% financing and require substantial downpayments.
b) When teaser rate loans that make initial payments “affordable” disappear.
c) When interest rates go up.
d) When underwriting get stricter and require full doc.
f) When qualifying for a loan means qualifying under the fully amortized monthly payments.
g) When interest-only loans are reserved for the most credit worthy.
h) When the recession hits.

Those are already in the process.

I believe that we’ll have facts on the ground to answer those questions in the fall of 2008. Be a little patient Alex_angel. The price “increases” you’re seeing right now is all subterfuge for the carnage (decreases) to follow. It’s all a mind game. May be best win.

[PerryChase]

So we know that a recession is coming. It would be foolhardy to buy before then.

HLS, the people who aren’t selling because they are fine are not the ones keeping the prices high. It’s the sellers who are still asking high prices. And they still have some willing buyers, but not as many.

Questions are:

1) How many sellers are must-sell? Can they are afford to hang on and how long? I think that most can hang on for another year but not much longer. Empty houses cost a heck of a lot in holding costs.

2) When will must-sell sellers give up and lower prices. They can’t lower prices now because they have no equity or not enough equity. They will walk rather than bring money to escrow. Lenders hate short sales because that only encourages more (news travels fast). Wait for foreclosures to see lower prices.

3) When will buyers stop paying the high prices?
a) When lenders stop offering 100% financing and require substantial downpayments.
b) When teaser rate loans that make initial payments “affordable” disappear.
c) When interest rates go up.
d) When underwriting get stricter and require full doc.
f) When qualifying for a loan means qualifying under the fully amortized monthly payments.
g) When interest-only loans are reserved for the most credit worthy.
h) When the recession hits.

Those are already in the process.

I believe that we’ll have facts on the ground to answer those questions in the fall of 2008. Be a little patient Alex_angel. The price “increases” you’re seeing right now is all subterfuge for the carnage (decreases) to follow. It’s all a mind game. May be best win.

[PerryChase]

Man, I’m in big trouble now!

Rich, sorry if I offended. I didn’t mean to. Of course, your delivery style should be what works best for you.

Perhaps it’s only me. But I’d like to hear the plain unvarnished truth in real estate as well as in life in general — someone to tell us we screwed up bad and now need to face the facts.

Rich, I know that’s not your job. Thank you for providing this great forum for us to discuss real estate and other matters. In that regard, you’ve done a great deal to promote real estate and financial literacy. This site is contributing everyday to changing how is real estate is bought and sold, and how information is dessiminated. You’ve done a lot already to take on the status quo and the REIC.

———-

The real estate bubble and it’s consequences was not just caused by innocent home buyers getting in a little over their heads and buying more than they could afford. That implies that buyers were working so hard and aiming for the American dream that they got sidetracked (and thus were victims). It was a confluence of easy money, greed, fraud and deception that inflated the bubble.

In any field, the bulls are always pie-in-the-sky but the realists have to sugarcoat the bad news else they are labeled as negative and irresponsible. In my view, we need a good dose of realism. Why is it that realists have to be a little self-deprecating to get an audience?

[PerryChase]

Man, I’m in big trouble now!

Rich, sorry if I offended. I didn’t mean to. Of course, your delivery style should be what works best for you.

Perhaps it’s only me. But I’d like to hear the plain unvarnished truth in real estate as well as in life in general — someone to tell us we screwed up bad and now need to face the facts.

Rich, I know that’s not your job. Thank you for providing this great forum for us to discuss real estate and other matters. In that regard, you’ve done a great deal to promote real estate and financial literacy. This site is contributing everyday to changing how is real estate is bought and sold, and how information is dessiminated. You’ve done a lot already to take on the status quo and the REIC.

———-

The real estate bubble and it’s consequences was not just caused by innocent home buyers getting in a little over their heads and buying more than they could afford. That implies that buyers were working so hard and aiming for the American dream that they got sidetracked (and thus were victims). It was a confluence of easy money, greed, fraud and deception that inflated the bubble.

In any field, the bulls are always pie-in-the-sky but the realists have to sugarcoat the bad news else they are labeled as negative and irresponsible. In my view, we need a good dose of realism. Why is it that realists have to be a little self-deprecating to get an audience?

[PerryChase]

SD Realtor, how about subscribing to a service such as realty trac and record all the actual individual foreclosures and tracking them as they are a sold?

Should not be hard to do.

Maybe I’ll give my niece some financial education and have her track foreclosures in Excel as a summer project.

So according to the UT, we have 2896 foreclosure in SD. I wouldn’t be surprised if 90% of them haven’t made it to the MLS yet.

That’s does not include the short sales that sdrealtor is tracking.

[PerryChase]

SD Realtor, how about subscribing to a service such as realty trac and record all the actual individual foreclosures and tracking them as they are a sold?

Should not be hard to do.

Maybe I’ll give my niece some financial education and have her track foreclosures in Excel as a summer project.

So according to the UT, we have 2896 foreclosure in SD. I wouldn’t be surprised if 90% of them haven’t made it to the MLS yet.

That’s does not include the short sales that sdrealtor is tracking.

[PerryChase]

Humm.. interesting. Those foreclosures are soon to become inventory.

Is anyone tracking the foreclosed houses that were successfully resold? The delta would will be absolutely-must-sell inventory.

Wanna be buyers should do that for the zip-codes that the are interested in and share with us all. I ain’t buying nada until at least 2009, after the 2006 loan-reset foreclosures are processed.

[PerryChase]

Humm.. interesting. Those foreclosures are soon to become inventory.

Is anyone tracking the foreclosed houses that were successfully resold? The delta would will be absolutely-must-sell inventory.

Wanna be buyers should do that for the zip-codes that the are interested in and share with us all. I ain’t buying nada until at least 2009, after the 2006 loan-reset foreclosures are processed.

[PerryChase]

Taxes. Getting a tax break is oft cited as the reason to buy.

But many homebuyers aren’t able to fully realize the tax savings. For example if one in unemployed for a while and has to pay the mortgage out of savings, the tax savings are gone. In that case, losing employment will cause the homeowner to pay even more, while he’s cash-strapped, since the tax subsidy is gone.

Lower income homeowners who over over-stretch their purchasing power by using toxic mortgages don’t have the income to fully take advantage of tax savings. Remember, a family with 3 kids already has the standard deduction and personal exemptions.

Real estate boosters often cite that foreigners will come in droves to US “glamour” cities thanks to the weak dollar. Foreigners who are not Green-Card holders and taxpayers don’t get a tax break for owning in America. Why would they want to own a condo in San Diego and pay all the associated costs? If they want to vacation in San Diego, they can stay at any number of nice hotels. Getting a Green Card means paying US income tax.

Likewise for rich American folks. Why would they want to own a home in San Diego just to stay there for a few weeks. Might as well stay at the hotel. Want a place to stay after the ball game? Book a limo to take you to a nearby hotel room.

Therefore I posit that buyers bought mostly because of the protential appreciation (as well as the enjoyment). Take away the appreciation and buyers will dry up.

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