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teatsonabull
ParticipantYou are dead right, powayseller.
Check out what Buffett and Munger had to say about replacement costs at last May’s Berkshire Hathaway shareholder’s meeting: (It’s no typo..he did say $60 MILLION DOLLARS AN ACRE)
Buffett: “A lot of the psychological well being of the American public comes from how well they’ve done with their house over the years. If indeed there’s been a bubble, and it’s pricked at some point, the net effect on Berkshire might well be positive [because the company’s financial strength would allow it to buy real-estate-related businesses at bargain prices]….
“Certainly at the high end of the real estate market in some areas, you’ve seen extraordinary movement…. People go crazy in economics periodically, in all kinds of ways. Residential housing has different behavioral characteristics, simply because people live there. But when you get prices increasing faster than the underlying costs, sometimes there can be pretty serious consequences.”
Munger: “You have a real asset-price bubble in places like parts of California and the suburbs of Washington, D.C.”
Buffett: “I recently sold a house in Laguna for $3.5 million. It was on about 2,000 square feet of land, maybe a twentieth of an acre, and the house might cost about $500,000 if you wanted to replace it. So the land sold for something like $60 million an acre.”
Munger: “I know someone who lives next door to what you would actually call a fairly modest house that just sold for $17 million. There are some very extreme housing price bubbles going on.”
If this is the next bullshit mantra fronm the real estate industry about how prices won’t “go below replacement costs”….then once again they are doomed!! Why don’t some of them “come around” to the realization that they have been wrong!!! It’s okay to make mistakes….just admit them and try to mitigate the damage for your friends and customers…if you don’t…I know of a whole lot of nice houses that are gonna be for sale REAL CHEAP in Arizona that you can probably move to after you’re run out of town!!
ParticipantAn update…since my friend engaged the realtor in a discussion about the likelihood of her receiving 975K for her house being next to NIL, she has subsequently REMOVED the VALUE RANGE of 975K to 1.025M from her listing. Her house is now listed only as 975K…so it looks like he caused this gal to second-guess herself to the tune of 50K!!! I love it…now if we go hard enough-we can get ’em all to drop their prices by 50K and this will get the SNOWBALL rolling. Hopefully, it will come crashing down on Alan Gin, David Lereah, Leslie Appleton-Young, and all those other FOOLS out there lying to the SHEEPLE!!! Not that the SHEEPLE are without fault here…they are simply TOO STUPID to understand the consequences of their actions! BAAAH…BAAAH….BAAAH
ParticipantYeah…my wife thinks it quite odd of me to be doing this…this bubble blogging thing has almost turned into an addiction for me. I applaud and encourage your efforts. My goal is to go to at least one open house a week now…perhaps even dropping in on one of those curious mid-week open houses on the way from one appointment to my next. You’ll get a kick out of this:
A friend of mine low-balled a McMansion via ZipRealty last weekend and got an e-mail from the Zip agent, encouraging him to stop wasting people’s time with such ridiculous offers..(750K for a 1.375M listing) He replied to her that the offer he made was based on where he expects to buy the house in a few years, post-Greenspan. Turns out..he engaged the agent in several e-mails back and forth, and learned that she is selling her OWN house in a decent part of North County Inland (asking price 950K to 1.1M, I think) and buying in a MOBILE HOME PARK to escape being house-poor. Can you f*(ing believe that???
I can only imagine what she’ll say to get her house sold. Anyway…my friend promptly put her in her place and told her “the train has left the station” for her asking price and that she better get used to seeing LOTS of ANGRY, DEPRESSED former real estate customers in the next few years.
Cheers,
By the way…my name “teatsonabull” refers to the uselessness of real estate agents…”useless as teats on a bull”, get it?
ParticipantIf you like the townhouse…keep your eye on it but it is WAY TOO EARLY to begin thinking about haggling with the new owner…you, my friend, have just run into the “greatest fool”. ANYONE who has purchased a home/townhome/apartment(er..”quas”dominium) in the last few months has been hitting the tank (nitrous, that is) a bit too hard. I’d suggest finding a townhome (or single family) that you like that has been on the market for several months and probably has an eager seller.
If I had to buy today (which I don’t and I won’t), I would pay no more than 55-60% of the most recent “comps” for an exact replica (location, size, features) of the home you’re looking at. Any thing else would be financial suicide should you need to sell your house in the next several years. This is an educated opinion, nothing more, and I could be wrong…but I sure as hell wouldn’t touch anything near the prices we are seeing today.
Research the links from this website on the right hand side of the page..you’ll see the meltdown has begun in many markets, including CA. Check out this link to see even more…http://patrick.net/housing/crash.html.
Again, I would pay no more than 55%-60% of today’s asking prices. Use that as a guide and you shouldn’t go wrong…granted, it’ll take some time to achieve your objective, but you should be able to uncover some distress situations out there REAL SOON that will bring a smile to your face and a painful grimace to the face of your new neighbors! Good luck!
ParticipantI concur with Powayseller…see what they say. I’d pay no more than $1 per sq. ft. plus a gardener fee if applicable. The house two doors down from me in RB has been vacant and for rent for nearly SIX months…it seems all the remaining “good” renters went and bought themselves converted apartments (with granite counter-tops, don’t forget ;)…these landlords will call you back begging when they can’t find a renter. Have fun with it and remember–as a renter, you are one of the few remaining people nimble enough to take advantage of the dramatic opportunites we will be seeing here VERY soon. Let’s not sugar coat or doubt ourselves anymore…the game is OVER for the sheeple and the fools. They are becoming very scared and soon will be making even BIGGER mistakes. Good luck. (I doubt you’ll need it.)
ParticipantBelieve it or not, there are a lot of “good tenants” out there who have not become homeowners “by now”. Lest ye not forget–the median household income in San Diego is NOT amongst the highest in the Nation. Additionally, there are an ever growing number of people unwilling to pay what it would take to buy “condos” (apartments really) at current prices. Finally…higher rents are not due to “risk premiums”…rather over-leveraged speculators who are BARELY staying above water to own said “condos” trying to raise rents. Dead ducks they are!! Every single one of them!! Remember—“DENIAL IS NOT JUST A HOUSING BUBBLE IN SAN DIEGO”
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