[SDbear]

Isn’t this good for us. Typically builders have huge margins on the finished homes as discussed by bugs, realtors(both) and docteur (whom I consider insiders). Major costs for them is land. Someone had mentioned that their typical construction cost is around $80/sqft. Generally speaking they could still build on the land with a bit more cost and recoup most of their investment. If they are walking away from their land or taking carrying costs, I would think they know they can’t sell even with price reductions. It wud be diff if they were just walking away from land options.
What wud it do for the sentiment? wud’nt it also hit the construction economy with less people getting paid. As for inventory reduction a couple hundred less than ~25k wud’nt make that much of a diff to hurt supply

[SDbear]

http://www.kitco.com/ind/laird/aug152006.html

Anice theory on the recent gold movements

[SDbear]

I recently moved to Irvine from SD and I felt the same. People here think that Irvine is immune to the bubble. I have met people who were following the markets close enough to realise that SD RE market is slowing but truly felt Irvine wud do well. Actually the Irvine company (that owns all of Irvine) does a good job of managing new inventory to keep the demand up. I do see a lot of Open house notices around. So the resale market here might take a hit in some time. But the sentiment is not even close to what I felt in Caramel valley last week. I was driving through the streets of caramel valley and it felt like a carnival with all the flags, balloons and colourful signs.
It might take a few more months for Irvine to reach that frency, but it surely will. People here are just having some wishful thoughts.

[SDbear]

bubba99,
How and where do we buy foreign currency denominated Bonds?

[SDbear]

Docteur,
You present an important point. If we consider $100 per sq. foot of construction cost (higher end that you mentioned) and the historical norm of land cost (including fees and permits) being a third of the house price; including a 5% margin for the builder we get around $160 per sq. foot. Land prices which are mainly speculatory might come back to historic mean (I don’t beleive in the ‘there’s only so much land to build’ argument). Isn’t this around 50% of what new houses are currently selling for in some neighbourhoods.
Builders might have paid more for the land. Now they have an option of either taking a hit and completing the projects to get some of their money back or sell the land or hold the land. If every builder knows that the market is going down, who will buy the land? If some one does buy, Is’nt he/she bullish on the market and will build? If they are holding the land are’nt they taking a hit on ROI and how long can they hold? There is also the scenario of already constructed (new) inventory which is losing demand. Will builders just hild on to these or sell them below their replacement costs.
I would think all these scenarios will play out in varying degrees. If this happens to the new house market, how will the resale market hold?

[SDbear]

Seems like some people are following the CV market closely. Seems like there is quite a bit of inventory from already constructed phases of these new projects and there are atleast a few projects in the pipeline. Does anyone know if any of these projects are getting cancelled?

[SDbear]

Powayseller,
I don’t think there was anything in Bmarum’s posting to suggest he was mad at you. I think you have to change your attitude. According to you anyone who does’nt agree with your point of view is either stupid, a liar or mad.

I had a 35% increase in salary in the past 3yrs and I don’t think 50% is a stretch. I know people who have had it. Remember Bmarum’s is not talking about average salary increase.

[SDbear]

MLS #: 066034153 is off the listing (I’m looking at Ziprealty). Did someone bite the new price?

[SDbear]

SD Realtor,
Thanks for the excellent info. I’m a complete novice with regards to the RE transaction process. Sorry for bringing up these basic questions. Can someone explain the exact role of agents, brokers and realtors (I always thought they are all the same) during a real estate transaction? Also if a buyer sees an interesting listing on the MLS and directly contact the listing agent, can he demand the 3% towards the buyers agent? What drawbacks do you see with this for the buyer?

[SDbear]

What would a seller gain by paying closing costs? Won’t he/she be better off taking a price reduction? With a lesser recorded sale price he/she will have less money to claim as capital gain (more as loss) or less money to plough into a new house to save tax.
It wud be understandable if the buyer demands it, so that it could be included in the loan. Or is it the realtors demanding it to keep the comps high?

[SDbear]

OwnerMayCarry.com suggests a win/win/win for buyer/seller/realtor.

How is this different from investing in a company that takes 2nd deeds, other than helping your buyer qualify for a loan? In fact the website's suggestion increases risk for the seller. In my opinion the seller would be better off reducing the price and investing the proceeds in a company that buys 2nd deeds. It reduces his risk by diversifying his exposure and increases his returns. Although this is not a good time to invest in such companies. It surely seems to be a win for the buyer and a BIG win for the realtor. It might be a good option for the seller in a rapidly declining market. In which case buyer qualification for a loan may not be an issue at all.

[SDbear]

Powayseller is right. At any given time mortgage rates would be higher than the TBill returns.
But if you are speculating on the interest rates to rise and lock in a fixed rate mortgage; in certain Tax situations you could use the spread to advantage. But there is always interest rate risk.
I have’nt done that on a mortgage, but on my car purchase. I had a low interest offer and at that time returns on low risk CDs and TBills were lower than the interest. Although I could have easily paid off the loan then, I took the interest hit and am now getting good returns on the loan amount. But if the interest rates had stayed in the bottom, I would have been losing money on all the interest payments.

[SDbear]

SoCalMtgGuy has a good post with numbers on this topic. I’m sure many have seen it, but for others who have’nt
http://anotherfuckedborrower.blogspot.com/2005/12/40yr-mortgageis-it-for-you.html

[SDbear]

This month’s PIMCO comentary ‘Fed focus’ explains it well.
http://www.pimco.com/LeftNav/Late+Breaking+Commentary/FF/2006/FF+May+2006.htm

[SDbear]

Don’t make that conclusion yet. This was what the Oracle of Omaha spoke at BRKA’a annual meeting.
http://money.cnn.com/2006/05/05/news/newsmakers/buffett_050606/index.htm

I understand he has’nt been right in all his plays (like his short position on $$ last year). But I trust him most on the long term plays. Nice analogy to the cinderella tale too.

[Author]

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