Sonoma Housing Bubble

Pulling the cork out of Sonoma's bubbly housing foolishness

Friday, March 17, 2006

Could it be there is No Bubble?

There is a real estate agent who has an ad in the local paper practically every Sunday. You would think considering the number of times I see it and laugh out loud, sometimes even involving projectile food or liquid... that I would remember SOMETHING noteable about the agent or the firm or something. But no... all I really notice is that at the top of the add is written "What Bubble?" I start laughing then. By the time I can take a breath the statement at the bottom of the ad gets my attention again... "I'm not afraid of bubbles." The laughter begins again. But maybe I am wrong to find such humor...

... could it be there is no bubble? It appears another blogger is asking the same thing as the real estate agent that amuses me so much... What Bubble? He advises also not to fear the bubble. Read his case here: There Is No Housing Bubble


At 3/17/2006 07:20:00 PM , Blogger moonvalley said...

just got off the phone with a friend who has seen her house double in value over the last couple of years. She said ,"you'd better buy soon, the market is going to level out this year and then start to climb again. You'd better move quick!" Hoo boy!

At 3/17/2006 09:11:00 PM , Blogger Athena said...

Maybe you should have told her to hurry and run out and buy another house or she is going to miss out on the opportunity to create more debt and turn it into that much more wealth!

I zillowed my friend's house and looks like he has given up 2% of his gain this last year. The drop in value was 2% in the last 30 days.

You know... it would be interesting though to know what it is that your friend thinks is going to make the market take off again.

Ask her... ask her what she thinks it is that is causing the leveling off, and what it is that is going to cause it to rise again... I would love to know what she thinks the market pressures are...

At 3/17/2006 10:20:00 PM , Anonymous Anonymous said...

Is that article a joke?

At 3/17/2006 10:23:00 PM , Blogger Athena said...

well I certainly hope that it is no joke that my house will be worth $3 billion dollars by the time I pay it off. LOL ;-) (big wink)

At 3/18/2006 12:21:00 AM , Blogger moonvalley said...

She truly believes that it all just goes up. She sold her previous house, that she'd lived in for years and years for 1.5k, bought a place for 300k back in 2001 and now it's worth about 600k or so. I hate to even engage her in that kind of conversation as she truly thinks I'm going to be priced out. I'm not worried about that in the least, I could buy something now if I wanted , I'm just not that dumb.
My neighbor, who I thought I'd convinced finally, yelled to me today as I was walking up the driveway, "can you check this out for me?" he handed me the real estate section with a property, with an "income property" on the same lot. It's somewhere near Mills College in Oakland. The asking price is 550k. We're talking a 1929 sh**box here, about 600 sq feet per "house".
The present owners bought it for 325 back in 2002. They're either F'd borrowers who've sucked all the equity out or just plain greedy. The taxes alone are 5600 a year. he thinks he's going to make money on this!?
I printed out the info I got fromZillow and Domania, I'll give him the bad news tomorrow.

At 3/18/2006 10:48:00 AM , Blogger marin_explorer said...

"I'm not afraid of bubbles"

Sounds vaguely a certain leader addressing a growing insurgency/terrorist movement:

"Bring it on."

We all know what happened next.

At 3/18/2006 11:14:00 AM , Blogger Marinite said...

I love that blog. It is brilliant. How else to describe:

"Therefore homes become MORE affordable as they become more expensive due to this secondary revenue stream."

At 3/18/2006 11:38:00 AM , Anonymous Anonymous said...

"Therefore homes become MORE affordable as they become more expensive due to this secondary revenue stream."

Ah, the essence of thought behind all this insanity.

At 3/18/2006 01:48:00 PM , Blogger Bubble-X said...

It's pretty hard to take that kind of thing seriously.


At 3/18/2006 03:02:00 PM , Anonymous Anonymous said...

There is only 1 reason why there may NOT be a bubble. INFLATION.

If a large part of the recent doubling of house prices is actually inflation and NOT WEALTH GROWTH then there may not be as much a bubble as many think.

There are many signs pointing to significant inflation going on even thought the "official" numbers show little inflation.

However, if there truely is THAT MUCH inflation then that may be MORE PAINFULL then a real estate bubble and even more people may default on thier loans due to INFLATION sucking up thier ability to pay thier mortgage, even though in that case prices may only adjust down a little.

Either way, if you are a buying with a job that will keep up with inflation then waiting is the best strategy.

At 3/18/2006 04:04:00 PM , Anonymous Anonymous said...

Nice blog. Both his and yours. I laughed like a hyena with an interest only loan. I guess that is a good thing.

At 3/18/2006 04:21:00 PM , Blogger Rob Dawg said...

Anon 3:02 thinks indflation can preserve asset prices. Yup and those of us with -assets- AND -fixed- debt instuments will do fine. Seen the numbers on how many conventional fixed with large downpayment loans have been written in the last few years? Even those are priced at the margin a thus will fall with the vast majority of variable or worse loan resets.

At 3/18/2006 04:31:00 PM , Blogger moonvalley said...

I got into a conversation with a woman in the Boulangerie this morning, on bubbles and such. This lady has a house here in Sonoma, one in the city, and a place in Carmel. No, she's not a flipper, her husband has racehorses etc. Her houses are to live in, she just happens to have beaucoup bucks.
She was wondering how all these people out there are able to afford these inflated prices. I told her they can't. Then I told her about mortgage fraud. She made me stop she said she wouldn't be able to survive her breakfast. She also said it would be great if houses would stop being an investment tool and once again places that people own just to live in and enjoy.
I'm continually surprised at how much people don't see in the mainstream media.

At 3/18/2006 05:04:00 PM , Blogger Athena said...

Oh the mainstream media won't report on this bad dog until the masses are already feeling pain. There is a reason why it is a given to the point of being cliche that politicians and the media are way out of touch and by the time they start piping up it is nothing but pointing out the obvious.... they are the best indicators that something has already happened in a big scale by the time they start talking about it.

And if something is of no concern to you- you screen out all the warning signs. Those of us with fixed loans who live within our means... if we had no interest in things that make financial sense we may have been just like others who pay no attention. I worry less about those who are comfortable enough to not pay attention than I do about the ones that are still repeating their party line of it always goes up like stepford people with OCD.

At 3/18/2006 09:43:00 PM , Anonymous Anonymous said...

anyone see the press democrat aticles yesterday and today?inventory at 9 year high,sales at 5 year low,median price down 9% this year,then positive quotes from was better,all positve quotes about southwest santa rosa,from realtors,only,again.anyone out there following west county who is't delusional or a pathological liar?

At 3/19/2006 12:03:00 AM , Blogger Athena said...

drat! I have missed the articles and had done some searches to see if the press d had been on the real estate beat lately and didn't get any hits. Was out all day today and didn't have a chance to get copies of the hard copy. Will pick one up tomorrow and post the interesting items.

At 3/19/2006 10:13:00 AM , Anonymous Anonymous said...

Maybe it is time to look at California like a club. Once you buy in, ie buy a home, Prop 13 keeps the dues low. The dues are the real estate taxes. By paying high prices to get into the "club" you keep the undesirables out merely by having the purchase price unaffordable to them.

But then if Prop 13 was sucessfully attacked, the club members would be shocked by their new "dues". For example on the Nevada side of Lake Tahoe, taxes on the average 5000 sq ft home overlooking the lake went to $80,000.00 per year due to reassessment. It is typical in other states to pay 2 - 3.6 dollars per thousand of assessed valuation.

So that $1,000,000.00 home in other states such as Wisconisin, Ohio, Illinois, etc. would be taxed at 20,000 to 36,000 per year. Believe me the wine would be spewed across the table if the "dues" jumped to these levels!

At 3/19/2006 02:11:00 PM , Blogger Marinite said...

If a large part of the recent doubling of house prices is actually inflation and NOT WEALTH GROWTH then there may not be as much a bubble as many think.

If there was that much inflation then you would expect to see a corresponding inflation in wages. That has not occurred. So either wages double to catch up with housing prices or housing prices decline or both wages increase and housing prices decline and meet in the middle.

At 3/19/2006 02:24:00 PM , Anonymous Anonymous said...

robert cote-

yeah, like I am so sure all that "inflation" has been target just at housing and nothing else. that just makes a lot of sense.

At 3/20/2006 03:31:00 PM , Blogger Athena said...

and... somehow I just don't think we could have that much inflation and have it remain a secret ingredient.


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