“Prospects for an economic recovery this year dimmed after reports today showed new-home sales collapsed, durable-goods orders slumped and a record number of Americans collected unemployment benefits.” Huh.
U.S. Economy: Sales of New Homes, Durable Goods Orders Tumble [Bloomberg]
SocketSite’s Residential Real Estate Outlook For 2009 [SocketSite]

Comments from Plugged-In Readers

  1. Posted by jessep

    I think I’m just going to assume my property is worth $0.
    That way any boost will seem like a good thing.

  2. Posted by Jason

    What is starting to piss me off is something that I think is pissing a lot of us off. I played by the rules. I saved up a 20% downpayment, I bought a home I could afford, lived in it 5 years, sold it for a (small) profit… could’ve been more, but the market’s taken a hit obviously. I’m alright with all this; I can accept it.
    The thing is, I’m in the market. I’m shopping for property in San Francisco now. I’ve already been renting for a year to get my ducks in a row and learn the area. I have money, I have good income, I think my job is safe for at least the immediate future (my niche is still expanding, too).
    I plan to be around at least a few years… maybe more, but also maybe not. I don’t have a single dollar of debt, close to the highest credit score possible, no car loan, and I’ve played by the rules. I just want to buy a place to live to settle down and decorate and make into my home and not have it massively depreciate and wipe me out. This should really not be asking that much.

  3. Posted by tipster

    It’s worth at least ten times that.

  4. Posted by Sb

    OK Jessep. Fantasyland might be a pleasant enough place to stay. Not everyone can afford to pay cash for their properties though, so the rest of us are going to try to figure out the market as best as we can.

  5. Posted by ex SF-er

    you forgot to put in your post why you’re upset.
    you elucidated all the things you’ve done, but not why you’re upset.

  6. Posted by Jason

    Oh, I’m upset because of the unraveling of all this makes it extremely difficult to actually be able to settle down and just live life and not worry about any of this. Plus because, like I said, I thought I was doing all of the things I was supposed to do to be able to step up to better real estate (in this case, a fairly modest 1 bedroom condo in San Francisco, which is a trade-up in location from where I used to live).
    I guess I should just be glad I don’t yet have skin in the game, but my primary concern is less investing in real estate for the “investment” purposes than because I just want a place to live and have grown weary of living out of boxes for a year while I wait for the market to calm down.
    Sorry, I’m probably venting too much. The endless parade of bad news has impacted plenty of people far more than me, but it’s such an endless march that it’s hard to not get upset sometimes. The psychological element is probably part of why it keeps getting worse, too.

  7. Posted by ex SF-er

    vent all you want. sometimes it is needed.
    I agree, you did everything right. And right now life seems crappy. However, I’d bet it’s a lot better than if you were $100k upside down on a condo with no savings or way out, with Bankruptcy facing you down.
    Lots of people talk about how “smart” people were who did the no-down, 110% financed Option Arm who then get foreclosed upon (long time of “free rent”).
    however, they neglect the stress that this causes. One would have to be a sociopath to be able to sleep soundly while collectors are calling every day and the Sheriff is coming to evict.
    in times like these, there are rarely ever winners. there are just those that lose less…
    believe me, I feel the same way as you. Did everything right, and still life sorta sucks.
    I would have gone insane about 2 years ago if it weren’t for the blogworld where I finally found people who were interested in economics and the financial world as it relates to human existence. Prior to that it was like I took crazy pills. (not a lot of people are interested in the exotic world of OTC derivatives and its effect on the credit bubble that fueled the real estate bubble)
    hang in there.
    that said: perhaps think about leaving SF? I know it’s blasphemy. And every time I say it I get the “you’re just bitter” argument. But believe me when I tell you there are many wonderful places where one can live, often with much less stress than you have in SF.

  8. Posted by dub dub

    ex SF — but leaving SF *now* makes him a two-time loser, like a british soldier getting killed at the battle of New Orleans (hopefully there are no war of 1812 veterans here).
    Besides, renting is the new owning anyway 🙂

  9. Posted by garrett

    man, the news everywhere makes me just want to stay in bed. there’s gotta be something happy happening somewhere, sometime, right? i mean, it’s a beautiful sunny day…

  10. Posted by Jimmy (No Longer Bitter)

    If you want some good news — I’m getting married in two weeks. So y’all can feel happy for me 🙂
    And, my fiancee owns a house so I’m no longer a bitter renter, either …
    It’s all good.

  11. Posted by 1stTimeBuyer

    Tipster – “10 times that”…you’re hilarious.
    Jason – I hear you loud and clear. This entire process can get so incredibly frustrating, and the frustration is multiplied when you start to look at it as an “investment” rather than as a place where you want to be. I calm myself by gathering as much constructive information from as many people as my tiny mind can handle. Socketsite is good at providing info.
    I listen to people who have vested interests, but I try to filter out the extent to which their interests may be influencing their opinions.
    But most of all, though I’m not religious at all, I mutter under my breath – “this too shall pass.”

  12. Posted by dub dub

    @Jimmy: congratulations! I guess you’ll be changing your Prop 13 opinions now. Better do it under a different name 🙂

  13. Posted by tipster

    Jason, it’s not ALL bad. Sure you are now (pardon the pun) foreclosed from buying a house for the next few years at least, as prices sink.
    But what would be really bad is if you, as a taxpayer, had to ALSO bail out people who did everything WRONG – the people who did not act responsibly, saved nothing down, paid whatever price was asked and lived better than you did for the last few years.
    And what would be catastrophic would be if you ALSO had to bail out their enablers, the finance guys who made it all so easy, who handed out other people’s money and collected ginormous bonuses, and the investors who set up a system that allowed them to lose the money that you and I will be handing to them via a “bad bank”, which is nothing more than the Super SIV of 2007 reborn.
    The only thing that keeps me going through all of this is that I am quite confident that I will be able to buy back from the bank, and for half the price I was planning on, the $2M condo that a secretary with an option arm loan outbid me on.

  14. Posted by Jimmy (No Longer Bitter)

    Actually we just sent in a request to have our house re-assessed (down). It was bought in 2003, and definitely worth much less now than it was back then.
    Her family owns several homes on the Peninsula, all of which benefit tremendously from Prop. 13 (the taxes on some of them are ~$700/year) … their argument is that “old people use less gov’t resources so they should pay less” to which I replied “oh really? then why is Social Security and Medicare (both of which target old people) bankrupting the nation?”
    So, no, I don’t support Prop. 13 and won’t until 800 sq. ft. cottages in San Bruno start selling for $1M+ (and therefore I would benefit from it in a big way)…
    Prop. 13 fundamentally punishes young people and new entrants for the benefit of old, entrenched interests, and if anyone can disprove this I would like to hear it.

  15. Posted by garrett

    congrats jimmy!

  16. Posted by condoshopper

    i’m in same current situation and feel similarly; i just want to buy a place to live and i don’t even care if it appreciates, but the powers that be (market forces, gov’t interference, investor greed, whatever it is) makes it feel like buying a home in SF involves speculative timing, which i’m not in the game for.

  17. Posted by FSBO

    tipster – It’s too bad that most Americans and members of congress don’t understand (or care to understand) the excellent points you made in your post of 11:34AM. The Paulson plan, the Obama plan, whatever – it’s all BAD (and getting worse).

  18. Posted by rr

    (not to be too preachy but)
    A house is really a place to live. The major differences compared to renting are: you can improve it any way you’d like and when stuff breaks, you have to pay to fix it. Your life is not going to be dramatically different on a day to day basis anymore than it would be if you had rented the same house you just bought.
    Stop worrying about where the housing market is going to go, since you’re not knee deep in it. Eventually it will stabilize, and at that point you can look without worry. Hey, it may even drop far enough that you can buy a very nice house instead of a modestly better one.
    In the meantime, enjoy the rest of what life has to offer.

  19. Posted by LMRiM

    Here are two (sort of) fun videos. The first one dates from two years ago, the second is just a promo from iTulip (I’m sure lots have seen it). The idea that the last two or three decades are going to be good guides to the future course of the US economy is crazy IMO. The second one especially is pretty compelling if you make it all the way through.

  20. Posted by FSBO

    LMRiM – thanks for the links, I hadn’t seen the iTulip one before. Great quote at the end, “If anyone thinks that central bankers know what they are doing, think again”.

  21. Posted by Justin

    “Besides, renting is the new owning anyway”
    Bravo Dub Dub!

  22. Posted by anon

    Renting is the new renting. And also the old renting. Renting while renting out is the new Rice-A-Roni.

  23. Posted by LMRiM

    In relation to JBR’s lament of prop 13, I’ll take the other side: I love prop 13.
    The guy across the street from me bought his SFR for about $1.3M in 2005, and had to spend some money getting it livable. It’s really no better than the 3/2 I rent for $2800/mo. Arguably, it’s less desirable because it is a bit smaller and has a more obstructed view of the Bay and GG Bridge (we’re in Tiburon), smaller kitchen, but slightly nicer fixtures in the bathrooms. Most of these places are essentially identical 50s ranchers, although ours was expanded in the late 1960s.
    We were talking a few weeks ago (he’s in financial services – I used to be), and he was complaining about school budgets and how it’s not “fair” that people are living in these houses and the owners are paying “like $1000” in taxes. He’s underwater on the house and he knows it (probably couldn’t get $1.2M now – perhaps lower; nothing is selling, so who knows?). Yet he is paying $15K+ per year in prop tax. And of course a whole lot more than $2800/mo in mortgage and other carrying costs.
    I told him that they should get rid of prop 13, or at least restrict it to only owner-occupied houses. He thought about it for a while, and then he said, “But that would knock down the value of my house – there are 3 or 4 other houses on the block that are being rented by owners who don’t live here and would just dump the properties if they had to pay.” I just smiled 🙂
    My wife volunteers a LOT with the school system, and they are very worried about budgets and donations to the school foundation (we don’t give $$ to governmental organizations unless required by law – like income tax). One of the head honchos on the foundation also complained and said “the problem is that a lot of people have moved here to rent places, and they use the schools, but they don’t pay property tax”. My wife laughed, and said, “Yeah. Like us!!” I love it when distortions become apparent to people.
    Last anecdote, another fellow resident asked my wife about the school budget situation, saying that she was “worried that the quality of education was going to go down; what would you do if the school quality went down?” My wife just looked at her and said cheerfully, “Oh we don’t care. We just rent. No big deal, we’ll just move or put him in a private or Catholic school. But so far it seems great; if it changes, we’re just gone.”
    I love Prop 13. One of the most foolish, and diabolical, distortions I think I’ve ever seen on a large scale. Don’t get me wrong – I am all for starving the government of revenue and imposing limits on its ability to siphon money out of our pockets. After all, I am of the school that believes government is little different than an organized crime syndicate. But to create such a distortion and subsidization across cohorts – such a ponzi – is truly breathtaking. Bravo, California!

  24. Posted by justin

    Fluj, I owned before you were out of high school, and renting is the smart thing to do right now.

  25. Posted by Foolio

    Is fluj back? All I see are bitter anon comments.

  26. Posted by 44yo hipster

    prop 13 is owner’s form of rent control. and why not, renters have RC, so i get prop 13. fair is fair. (i only own is SF, so it’s apples to apples folks.)
    me likey prop 13 too. as i tend to buy dumpy fixers, my prop tax base is waaay low. i have a condo i rent in bernal, probably worth $700k, but my prop tax is

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