John the Bruce

Send a demand letter via certified mail. Give him 10 days to remit your funds. Otherwise, sue him in small claims court. The entry fee is usually small, $100 or the like. In Philly, the municipal court is the small claims court. Google it and good luck. - Mon Jul 21 2008, 09:31

Jed said, ”…he isn't capable of making a decision that isn't based on empirical data.”

Buying now would be counter to all the empirical data, now would it?

If we could all be so savvy and not swayed by emotion in buying consumption goods – as housing is one.

Hey Dave: are you saying that there are never times when it’s cheaper to buy than it is to rent? If so, please go ahead and provide data wherein it shows it’s ALWAYS cheaper to rent – and feel free to constrain your data to the market of your choice.

Thanks,
-John - Mon Jul 21 2008, 08:29

Jed, how could I forget? It’s different here.™

That is, unless you believe that the manic run-up in prices was fundamentally supported. If you do, then party-on and good luck!

But, if you are an intelligent man you know this: the mania was created by cheap and ready access to lots and lots of easy money. Cheap and easy money caused prices to skyrocket in a way that did not support the underlying fundamentals.

The gas that fueled the mania is long exhausted. No more cheap and easy money. Option ARMS – gone. 100%+ LTV – gone. No documentation loans – gone. No income verification – gone. Get the money out the door anyway you can – gone.

Let me introduce you to 20% down and real underwriting. Who’s buying a house now that you have to show up with a sizable chunk of cash? Pick up the newspaper and you don’t have to search too long for the answer: not many people.

The real estate industry mortgaged its future for big sales in the 2000-2006 time period. People who should have SAVED and purchased with normally amortizing 30 year, 20 percent down loans were swept up in the fray to buy at any cost. It didn’t matter that they didn’t have the income to support the debt. It didn’t matter that they had no savings and no down payment.

It didn’t matter how stupid that was because the lending market did not discount for stupidity. If you had a pulse, you could get a $800,000 loan. It didn’t matter that you only made $40,000 a year because real estate ALWAYS goes up in value! We can always re-finance later or use a HELOC to pay your 1st mortgage!

The thing that drove values up was the easy money. That’s gone and that’s why markets that didn’t experience bubble-style manias are still experiencing price declines.

The scope of this downturn is national because the scope of the credit bubble was national. Thinking that you’re little utopia is going to be different could make for a very expensive economics lesson for you, friend.

We’re in the midst of the unwinding of the largest speculative bubble in the history of the world. Plan accordingly. - Thu Jul 17 2008, 18:10

Ilse Cordoni said, “I understand your unwillingness to pay 3x your rent to own a place; however in the end unless you save the difference between rent and payment and invest it very wisely, you will be poorer than if you had bought.”


Intelligence to beat the return of RE is not required. Investing the difference between rent and P&I in any financial vehicle with a positive return will outpace the negative equity return expected from RE over the next 1-2 years.

Per – people who are data driven rarely make friends with Realtors® here as “the pros” are an “emotion” driven lot. More recently, I think they are driven by hunger.

Additionally, I wouldn’t worry about missing the bottom. If the last downturn is any evidence, we’ll bounce along the bottom for a good number of years prior to any uptrend being established.

During the 13-year period from 1987 until 1999, real house prices stayed roughly within the range of $125,000 to $150,000 – national average. This market will move horizontally after we reach bottom; it won’t spike.

The excesses in this market will take years to shake out; plan accordingly and keep your powder dry.

Good luck,
-John - Thu Jul 17 2008, 17:06

Katherine,

I’m not a habitual TD’er, but I know why Realtors® are getting TD’d from time to time.

The posters here and the lurkers alike are a reasonably smart bunch. Some people post pretty thought provoking questions about current market conditions, negotiations and the like.

That being said, critically thinking consumers, your potential customers, are turned off when a good question is followed by GTTB message after GTTB message. It just cheapens the experience here, in my opinion.

Want to look smart and garner favor among the unwashed masses? Support your opinions with data. The Realtors® that do are respected and appreciated.

Good luck,
-John - Thu Jul 17 2008, 19:22

Jed, I read the other thread and I certainly don’t think that you “won.” Case-Shiller is far and away the best measure of the state of the RE market today.

Capitulation. It’s coming. To some places sooner than others. It will come to every market as the cheap and easy money that fueled this mania was a nationally scoped phenomenon.

I think many markets will experience their capitulation moments come this fall when the summer-sales season passes their houses by without interest or offers. Facing the prospect of carrying a depreciating asset through the slow winter-sales season - and perhaps an ARM adjustment - will be too much for many a seller.

Will this sit well or will they cut their asking prices to get into line with micro and macro-economic reality in what could turn into an interesting “no mas” moment?

It will be an entertaining show, you can bet on that. Sit back and enjoy. - Thu Jul 17 2008, 17:24

Jim,

Why, it's the cheerleader's chorus. GTTB = "Good time to buy." Wish I could take credit for it.

-John - Thu Jul 10 2008, 13:50

> I like to not read the responses until I respond...then compare.

Haha, Paula Swayne.

I guess this is how a thread ends up with so many GTTB messages. When you have only one response to every question, people just end up tuning it out. - Wed Jul 9 2008, 19:18

Realtors® are coming back and deleting their messages. Why, I wonder? - Tue Jun 17 2008, 12:49

> The question was referring to the Sacramento market, John.

I know that, Elizabeth. Did I happen to post something not relevant to the Sacramento market? If so, let me know and I'll delete it to make room for Realtors® to post more “now’s a great time to buy” messages. - Mon Jun 16 2008, 20:17

Of course, my friend. It will, however, incur the wrath of the thumb's down Gods, as evidenced here.

Hope all is well,
-John - Mon Jun 16 2008, 19:57

Oh, silly Realtors®.

Let me respond in turn. And please keep the thumbs down coming Realtors®. I’ve obviously hit a nerve with all these facts, figures and calculations. Pesky numbers!

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Elizabeth said, “I believe the question was should the buyer purchase now, in this market, in this climate in Sacramento, given the 11% increase in closed sales in May over April and the 48% increase in closed sales for May over the same time last year, coupled with rising interest rates. I don't believe the buyer was referring to Connecticut's market nor whether interest rates as a whole are more important than pricing.”
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Uh, no. That wasn’t the question. The question was, “Is it better to buy while interest rates are low or wait for home prices to drop more?” Direct quote. It’s the question that’s right at the top of this page and it’s the question that I answered. As for your point about me being in Connecticut; I didn’t know that you need to live in California to understand the basics of finance and economics. My bad.

Furthermore, Elizabeth, you don’t have to live in California to know that the median price of a home in Sacramento was down 35% during the three months ended May 31 compared to the same period last year, according to Trulia.com.

It’s hardly a “great time to buy” as prices continue to accelerate in their downward trend. Why buy today when I can buy for less tomorrow; unless wiping out the hard earned equity of your clients is your goal. Your “buy now before you’re priced out forever” mantra scared people on the way up, but it makes you look silly on the way down.

The gain (expected value) that a potential buyer stands to benefit from a 95% certainly of continued price depreciation is much greater than the 40-60 percent chance of rates increasing in the near term. I’d wager that it’s greater even with a 100% chance of rates increasing in the near term given the velocity equity evaporation in California.

I do give you props for going counter to your Realtor® friends in admitting that price is more important than rates.


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Bill said, “…because we are near the bottom.”
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Uh, yeah. You guys calling bottoms every month is the height of comedy. The downturn continues to -accelerate- and you’re calling a bottom? We are so far from the bottom that Realtors® will pine longingly for the terrible market conditions we have today and count themselves lucky to have experienced it so good.

We’re in the “rearranging the deck chairs on the Titanic” phase of this downturn. You can still talk-up real estate and make it look pretty. Some people may even still believe that real estate never goes down, just as they thought that the “Titanic is unsinkable.” Maybe this time it is different. Is it getting cold out here?


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Jim said, “Inflation is likely to begin offsetting the decline in areas where property values declined, and I expect prices to at least stabilize if they don't start going up in those areas by the end of the year.”
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Jim – unless you live in the Weimar Republic, circa 1923, there is no way inflation will outpace the decline in real estate values, especially those in California. - Mon Jun 16 2008, 19:35

You people are out and out lying to your clients.

IT IS ALMOST ALWAYS BETTER TO PAY A LOWER PRICE AT A HIGHER RATE THAN TO PAY A HIGHER PRICE AT A LOWER INTEREST RATE!

Example 1: A $320k loan at 10.5% (10.5%!!!) still has a lower monthly payment than a $480k loan at 6.5%.

Example 2: A $480k loan at 8.5% still has a lower monthly payment than a $640k loan at 5.75%.

Low interest rates are not “more valuable” than lower prices. Quite the opposite, actually. Again – you only have one shot at your purchase price and missing on that shot can prove costly.

Realtors® pretending to understand finance are like carpenters thinking they can be brain surgeons. Just because they have the tools to do the job doesn’t mean they should be trusted with it.

Plan accordingly, friends. - Sat Jun 14 2008, 19:28

Realtors® love to tout low interest rates. If it was the other way, and interest rates were high, they’d be screaming about the resultant low prices!

Let me let you in on a little secret. Interest rates don’t matter. Yep, you heard me right. They don’t matter.

Want to know what else doesn’t matter? The term of your loan (10 year, 15 year, 30 years), the payment, the future value of the mortgage (i.e. is there a balloon payment due at the end..) etc, etc.

I’m being over the top to make a point. They don’t matter -much- because they can all be changed down the road. You can change your payment, you can change your interest rate and you can shorten or lengthen the term. It’s easy – just refinance if rates come down later. A whole industry exists to do just that.

BUT - the one thing that you can NEVER change is the purchase price. The price you pay is the price you’re stuck with. You cannot change it. Buy high now and they’ll be no way to change it down the road. - Sat Jun 14 2008, 12:10