Another 'bubble' blogger gives up
Caught this on the NYT Walk-Through... The Marin Real Estate Bubble blog is considering throwing in the towel...
I’ve lost my faith, at least for Marin County. Despite all reason and rationality to the contrary, I am no longer so sure that Marin County will succumb to a collapsing housing bubble. I’m actually starting to think that somehow Marin (and maybe the Bay Area at large) is not subject to the same laws of economics as everywhere else. Seriously. [more...]Perhaps he finally realized that real estate really is local and there are places (like San Francisco) where demand always exists. We're seeing a different market from last year, but it's nowhere near a 'bubble', and in my world, I'm not seeing anything but a good, balanced market.
Have we finally seen a bubble burst... With the 'bubble' bloggers? [SFHomeBlog]
posted by Matt Lanning @ 10:24 AM
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Dataquick's June figures for Marin show y on y sales down by 20.7% and y on y median price down 2.7%.
Don't think they've given up yet. There's even a digg for all the bubble bloggers and stories now.
Quote: Perhaps he finally realized that real estate really is local and there are places (like San Francisco) where demand always exists.
It's not the place that's the problem, it's the price. Riddle me this - everything else being as it is now, at what price would you consider buying in San Francisco to be a bad financial decision? You can pick the type of property and all the other details, I just want to know at what purchase price you would recommend renting over buying. Just to pick an absurd number, certainly you would agree that a purchase price of $1 billion would be more than is worth it right now whereas a price of $1 would make buying a no brainer. There must exist some price in between where you would consider the options equal and I'm curious as to what that is and how you calculate it.
Here's the thing about that: some of us are inherently renters and some of us are inherently homeowners. I have owned property since I scraped the money together out of college for a downpayment and had three roommates to help me pay my mortgage. Why? Because I knew that I wanted to be a homeowner. I grew up in a rental house and had to move more than once due to someone else's decisions. I wanted to make sure that wouldn't be the case as soon as possible, and I did what I could to buy something.
Others will always be renters. And some will go back and forth in an attempt to 'time' the market.
So I don't really have an answer to your question because it's not an option for me, personally.
Do I think anyone should sell their house to become a renter? Heck, no! Are there people in SF who have a great rent controlled apartment that might be better off staying put? Perhaps. But they're still never secure in their situation (no matter how hard the 'supes try to change that) until they own their home.
Call me crazy, but I like to have a little say in my own destiny, and that is worth more than you can put on a spreadsheet.
Quote: Here's the thing about that: some of us are inherently renters and some of us are inherently homeowners.
Sure we all have preferences, but some of us look at the prices and weigh that against our preferences. For many first time buyers like me who would like to own, the prices difference is just too great to justify the extra money it would take to realize that preference.
There are plenty of real estate markets around the country that haven’t shown signs of slowing down or crashing. As Tip O’Neil said, “All politics is local.”
Markets like San Antonio, Jacksonville, Fl, and Kansas City, Kansas haven’t slowed down. They might not be as glamorous as the Bay Area, but are proof the “Crash” isn’t impacting everyone.
Thanks for that nugget of wisdom, Jeff.
Matt -
I understand what you are saying about paying a premium in order to avoid being at the whim of a landlord, and that can certainly seem worth it. But today... what is that amount, that premium? Do you have a figure for that?
If I've calculated my own situation correctly (and from what I've seen, it applies to many others in SF), I would pay nearly 2x my rent as a monthly payment to own, using traditional forms of financing (fixed rate with a sizeable amount down), before including taxes and maintenance.
If one has the flexibility right now, where is the common sense in buying today? It's probably hard for you to believe since you've only lived in SF since '98, but even here in the land of milk and honey there is not an inexhaustible supply of people who can ignore such a situation and have the luxury of paying such an ownership premium.
And in part, perhaps, that is why the market is changing today and will continue to do so for several years into the future.
Yeh, my calculations are that the after-tax cost of buying in SF (interest, taxes, insurance, hoa dues) is almost twice that of renting an equivalent property. That's a higher premium than I'm willing to pay, particularly at this point in the real estate cycle.
And this "control over one's destiny" works both ways if property values stagnate or decline. I'd much rather have the 'control' to walk away at the end of a lease than have to bring $$s to the table if I needed to sell in a difficult market.
Just to add a different side to the discussion. I read several years ago in an airline magazine (so this is definitely FACT) that buying a home is really only 'worth' it in the financial sense if appreciation is at least 4% per year.
Hear me out...what the author meant was that financially, anything less that 4% per year is offset by the cost of upkeep, taxes, AND time/convenience lost by doing the upkeep oneself: gardening, painting the outside, fixing the roof etc. Less that 4% and renting makes sense.
The author pointed out, and I think this is what Matt was trying to get at, for some people there is an emotional factor that cannot be measured. Owning might not make financial sense but the emotional satisfaction of being able to call a place one's own is worth the added cost.
Personally, I agree that this emotional factor is impacted by price. I see placed in SF all the time that 'emotionally' I would LOVE to call home but even if I could afford them I would not shell out the money. I love lofts but I'm not paying 800,000 for less than 1000 square feet.
Interesting discussion.
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