Randy_H's Discussions

"RealtorSandy"---Aldreth Do you own your own home????? How about you klarek? I would like to know what background your advise comes from??I've owed 5 homes and a 4plex and have NEVER lost money. Real Estate is an investment.You didn't ask me, but I'll answer anyway.I've owned 3 houses. I now rent. When we had to move in 2005 we decided to bank the gains of the previous 10 years and wait for the silliness to end.When we bought our first house in Redwood City in 1996, guess what! We bought it for 9% *LESS* than the previous owners paid in 1989. Wha? You mean they did _lose_ money? But you just said ... Oh well.Real estate is _not_ an investment if you're talking about a primary residence. Categorically. Sorry. Maybe in realtornomics it plays that way, but in the real world one's primary home is treated economically and financially as a structured form of savings. Just like a timed CD, but with a different asset base. Houses are not counted in the GDP national-income-accounting equation as investment. They are counted as savings towards rental equivalence.But you do say it with authority, I applaud that at least.Btw, you can look up my background to your heart's content. I'm not anonymous. I already had my credentials challenged by someone with "a lot of hours in accounting and economics classes".Seriously, if Real Estate _is_ an investment then you're in violation of a whole host of SEC and related regs. Investment professionals are not permitted to make forward lookings statements. Maybe it's time real estate agents were held to the same standard, since you're selling houses as "investments"?

We had to move about 6 months after having our first. It was very hard deciding not to buy again but rent & wait. Very hard. But it's not all that terrible once you get the big picture. Think how much good you're doing for your little one's futures. Someday they'll thank mom & dad for being wise enough to not blow their chances at college on Tulip Futures.There's an up side if you're moving out of a house to a rental: you get a real excuse to throw away about half of your useless crap. It's liberating, really. Just try it. You don't need half that stuff.

True, mortgage rates are not *tied* to LIBOR, but they are *correlated* to LIBOR much more strongly than the Fed official rate. Mortgage rates are set by *the market*, which in turn is strongly trade bounded by LIBOR.Should we have a full on bond market discussion now? Maybe we can calculate durations for fun and games?

@nic07, sorry for my negativity. Just way too much whining in the media for me to take this past week.@Real Estate Agents:I'm very encouraged to see there are good agents out there who are advising *sellers* to wake up and taste reality. I see a lot of them here in Zillow's discussions.What I _don't_ get, really, are the agents who insist on focusing on the buyer. The simple fact is that buyers aren't really all that sticky. Their reluctance to buy is mostly set on their own ability to afford. They pretty much always pay the maximum they can afford, which is why we have this stupid bubble in the first place. They believed they could afford to buy way too much with suicide loans.But sellers are sticky on the way down. Always. A billion reasons why, which lots of very smart academics have and continue to study. But, as agents, you only make money on volume, not on price. Price is a minor variable in your earning equation. Better to sell 5 houses at 20% price reductions than 1 at full price, right? So why aren't more agents out there working their magic on sellers, instead of continuing to try to scare buyers into committing financial suicide?

Sandy Sandy SandyRent is often 1/4 of equivalent PITI in the Bay Area. You know that. People have been buying at 15x income. You know that too. You should be ashamed of yourself for suggesting anything like that is "a good investment". Seriously. Enough.You can keep telling yourself that real estate is "an investment" and clicking your heels together. It won't make it so. Real estate traditionally, in the US, returns about 1.2% in excess of inflation; about 2.5% in excess of inflation on the coasts.And you mix your own true investment properties with most people here, who are looking to buy a primary residence. Sandy, are the tax rules different? How much mortgage interest can you deduct on your 4th home? Your 5th?Why are you fighting the buyers anyway? If you're a good agent you should be out there un-sticking all the sticky sellers. You make money on volume, not on price. Or has that changed in post-bubble realtor reality now too?

The Midwest isn't the problem. I grew up in the Midwest, incidentally. Your part of the country has very fundamental factors affecting home prices. Namely jobs. The rust and farm belts are in a long revaluation cycle. My father in law now has 4 farms (being the last of the kin alive) that no one wants. He won't sell them because he thinks they're worth 2x what the market will bear.Agents out here in Cali are singing a different tune. They're still out there ridiculing, cajoling, and trying to terrify buyers into buying now at any cost. Get in now! they shout. One is right below this thread, for crissakes. All we're saying is enough is enough, already.

I'm in the San Francisco Bay area; north bay, Marin County. Prices here are simply disgusting. For example, it's not uncommon to see people asking $2.2mm for a home they paid $1.4mm for in 2004. I used to think these folks were just all incredibly wealthy. Then I figured out how to pull title data and realized that most of them had 1/3, 1/4 or less equity in their houses than I had on my last home, which was less expensive.I can think of nothing other to say than, WTF? We're talking about folks who bought a $1.4mm home with about $100K down, $1.3mm in 2, sometimes 3 adjustable loans, who now think they deserve $800K _profit_ for no other reason than being foolish enough to take on crippling debt.And they whine. Every time we approach a selling agent about an offer the answer is the seller will be offended. WTF do you mean "offended". Your asking price is offensive. It's not even that they _don't want to lose money_. It's that they _don't want to lose anything off of their imaginary gains_.And we wonder why this is a crisis.

I hope everyone else reading this thread sees "RealtorSandy" for what she is: a salesperson. Just like no used car salesman will ever tell you it's not a good idea to buy his car, she's not about to grant that waiting to buy is a good idea either.Her answer to why we bought our first home in 96 from folks who bought in 89, and they LOST money, was "Obviously they over encombered[sic] themselfs[sic]".No, Sandy. They were quite well off. Dual income, corporate exectuives at Apple, with something like 60% equity in the house and a very conservative loan. They lost money because ... wait for it ... they bought at the exact wrong time. All the houses in that neighborhood were selling for what they paid in 89, not just theirs. So everyone who bought them in 89 overpaid, not just them.It is *not* "always a great time to buy". My family has a fine home, rented. By selling in 2005 and renting I've already put about 9% net of taxes and everything else realtors always try to argue about into buying some f-d buyer's home out of foreclosure in 2008.Yes, I did a very comprehensive spreadsheet calculator that takes *everything* into consideration, including the "paying rent pays your landlord's rent" bullsh!t argument. You can find it by looking at my profile and hitting my blog if you care; I'm sure "RealtorSandy" won't. She already has all the answers, after all, she's been a realtor for years...

@bethrahrigMy wife is a corporate executive for a large company here, and I work in San Francisco. Living in Marin is a practical necessity due to the commutes 'round here.@Marci Reinheimer [agent]People won't pay for that which they cannot afford. I used to believe you. I almost bought into it when we moved here from San Mateo county in 2005. We could well afford these prices (which aren't really that different from Palo Alto or Menlo Park prices, though Marinites like to think they're special).But then I learned how to get title data. Wow! Half of these people cannot afford their McMansions. They're banking on it "always going up". Just scan through Strawberry. There's house after house where the owners have $1.6, $1.8, $2.2mm in loans, almost nothing in the house, everything an ARM.No, Maric, they won't continue to "pay the prices". Not if no one gives them a loan for a house that's 15x their income. Try looking at the Marin median salary data and explaining to me exactly how all this primeness came about.

AvachatI said on my other thread: buyers aren't very sticky in their buying habits. They pretty much buy the maximum they can afford. That's why there is a bubble, they thought they could afford way more than they really could because of all the irresponsible lending and housing bubble mania.Sellers are the sticky ones. They are terribly sticky in down markets. If realtors focused on that, and that alone, houses would sell themselves. Avachat is an example of this, perfectly.