[vcguy_10]

“Pluto’s demotion to dwarf planet has certainly affected buyer sentiment in the real estate market”

“It’s a well-known fact that August months in years ending in ‘004’ are traditionally slow”

“All that talk about the bubble finally made it a reality” (I guess we need to talk about world peace and an end to hunger to make them happen!)

[vcguy_10]

I have a friend in a similar situation. I wonder what happens when you have those piggyback loans: one for 80%, then another for 20%… I wonder if the bank can still go after you for the second loan.

My friend is a young woman who bought in San Bernardino county in Feb or Mar 2006, and she was motivated almost exclusively by expected future appreciation. (I didn’t know her then). She’s an immigrant, and I wonder what would happen if she tells the bank, “hey, I can’t afford the mortgage payments any more and I’m going back to my country for a while; here are the keys, and good bye.”

[vcguy_10]

This sums up what I’ve been telling people since late 2003, and especially since the summer of 2004 (but many looked at me as if I was nuts). It’s amazing that this clarity comes from someone who is a salesperson, while the so-called “experts” keep sugarcoating trends and spinning factoids. (Of course, we know that many such experts are dancing to the tune their employers play).

Kathy Butler, a longtime real estate agent … says many sellers are having a hard time accepting declining prices. Like Wilkinson, they are “chasing the market down.” By the time they realize their price is too high, the market has fallen further … Butler said real estate agents and sellers should brace themselves for the possibility of a long downward trend. California’s home market tends to run in cycles, she said. “The cycles last for years, not for months.” Butler said. “We need to realistically figure this will go on for a while.”

[vcguy_10]

House prices may also drop in a non monotonous way. A year or two from now, some people will “see” the bottom and start buying again, bidding prices upwards, only to see the market resume its free fall the following quarter. And this process may repeat itself more than once before we hit the true bottom. Of course, it’s nearly impossible to tell a false bottom from the true one until after the fact. It’ll be exciting to watch!

[vcguy_10]

Good point, SD-R. Once the market “corrects,” the newbie realtors will be gone, and then only the professional realtors will stay.

Some people don’t realize that it is the NAR’s job to be cheerful of the market and to present data in a way that makes buying or selling attractive. Unfortunately, many expect the NAR to give unbiased investment advice! That’s like expecting GM to tell you objectively about the environmental impact of Hummers.

As a smart consumer, you know that GM is in the business of selling cars, and you take their marketing claims with a grain of salt. Same with the NAR.

[vcguy_10]

The image is here.

You may want to download the image to your computer, then click on the “add image” link just below the edit window where we type our posts, and follow instructions.

[vcguy_10]

CIS.ORG?

They are a bunch of anti-immigrant hate mongers. For a more intellectual, rational approach to the issue, see the Cato Institute’s page on immigration.

[vcguy_10]

Vrudny, unless you provide 2005 summer data, what you wrote does not conflict at all with Steve’s post.

[vcguy_10]

Some true gems in this article:

“Sometimes you do things in life and you don’t know why you’re doing it,” said Fahim. “We’re gullible out here, I guess,” said Fred Stearn.

Sure, that’s what many FBs will be saying in the not so distant future. But this next guy clearly sees the mirage for what it is:

“Why would anybody in their right mind build out there now? … It’s almost on the edge of the Earth,” Brady said.

I’m not saying that desert land so far from Barstow is worthless. Once we have high speed trains linking Vegas and Anaheim, some of this area may be developed. But when? In the 24th century perhaps? No wonder Mr Fahim thinks of the future:

Ashraf Fahim insists he is in Newberry Springs for the long haul. Still, he recently tried to sell one of his holdings near where the owners of a failed water park want to build 1,400 senior housing units. Believing he could cash in, Fahim listed his parcel for $4 million — 57 times what he paid less than two years ago. He didn’t get a nibble and pulled it off the market.

Yup. Long haul indeed. Who knows? His great-grand-grand-grand-grand-grand-grandchildren may sell the land for gazillions some day. But in the meantime, there are those pesky holding costs to worry about:

Fahim’s home equity loan is burning a hole in his checkbook, requiring him to work extra hours. But he takes solace knowing he placed each purchase offer on the altar of his church and prayed before buying “to see if there’s something from God or not.”

In other words, the force is with him, like that movie…

[vcguy_10]

Here’s the link.

[vcguy_10]

So imagine 500 people who know they have lost their job, are forced to show up for several months, in order to eventually collect their severance

C’mon dude… they are not “forced,” nobody is. They get to collect their salary for those months, and then a fat severance check at the end. If they are lucky enough to get a new job offer in the interim, they can always ask the new employer to either wait for the Nokia release date, or a signing bonus to match the size of the expected severance check.

I cringe when I hear journalists say that someone is being “forced” to do something. It sounds like a poor device to make a story easier to sell.

[vcguy_10]

Perrychase is a wise man.

PSeller–Yes, they may have to sell for below $400K in ’07, or they may decide not to sell at all and “wait for the market to recover”. I really hope you’re not getting a “that nosy lady!” reputation in your neighborhood!

[vcguy_10]

Also, watch out for squatters. There’s some good advice in this thread: get the cold facts, holding costs, recent (less than 6 months) comparables, any plans for highway development, etc.

[vcguy_10]

I’m trying to think of a good analogy for “Listening to the NAR’s chief economist talking about real estate prices is like…”

“… Is like listening to a car salesman telling you how you really, really need and MUST have the undercoating service with your new car”

“… Is like listening to Harpo Marx saying ‘who are you going to believe, me or your own eyes?'”

[vcguy_10]

Ray: I agree with you. Techno: I think you missed my point. Buying and holding a house for 5 years may or may not be a good idea; there are financial and sujective criteria to consider, and the point of my post was not to recommend one option over the other.

Instead, the point made by Greenspan and others is that if (for whatever reason, right or wrong) you decide to buy and hold for less than 5 years, then you’re better off with an ARM that doesn’t reset before those 5 years are up.

Such recommendation is essentially based on actual purchase patterns: it can’t be denied that a sizable percentage of homeowners relocate every 4 to 7 years. Whether that’s advisable or not, is of course a different matter altogether.

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