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Author: kf6pfk Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 449470  
Subject: I like it! Date: 4/20/2013 1:25 PM
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KF6PFK's the name, and I live in San Francisco. I'm a long time lurker here on the METAR board, and really appreciate the insights that I've gleaned from the posters here. Kudos to you all, (Even the ones I disagree with)

I am posting to tell you that I don't know why, but local housing has taken off in the last 3 months. Everywhere I look in my neighborhood there is construction going on. And yesterday I got the quarterly home sales activity guide from our local realtor. It showed that median sold prices have not just fully recovered, but are higher that the peak of 2007. It happened so quick that it took me by surprise. I realize that San Francisco real estate is special, but maybe this is a leading indicator for the rest of the country.
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Author: warrl Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 421046 of 449470
Subject: Re: I like it! Date: 4/20/2013 1:39 PM
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KF6PFK's the name, and I live in San Francisco. I'm a long time lurker here on the METAR board, and really appreciate the insights that I've gleaned from the posters here. Kudos to you all, (Even the ones I disagree with)

I am posting to tell you that I don't know why, but local housing has taken off in the last 3 months. Everywhere I look in my neighborhood there is construction going on. And yesterday I got the quarterly home sales activity guide from our local realtor. It showed that median sold prices have not just fully recovered, but are higher that the peak of 2007. It happened so quick that it took me by surprise. I realize that San Francisco real estate is special, but maybe this is a leading indicator for the rest of the country.


Welcome aboard.

What you say is just one anecdote, but a sufficiently large collection of well-distributed anecdotes becomes data.

Do you happen to know what fixed-rate mortgage interest rates are running in that area?

A few points:

* The government is actively trying to re-inflate the housing bubble.

* The real-estate market is extremely sensitive to mortgage interest rates, and interest rates in general are artificially suppressed by the Federal Reserve at the moment.

* Almost everyone who WANTS a house and CAN AFFORD to buy, move into, and maintain a house, HAS a house. And those who don't have a house, can alternatively afford to rent a decent house or apartment. So the collection of buyers can shrink dramatically overnight.

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Author: whafa Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 421047 of 449470
Subject: Re: I like it! Date: 4/20/2013 1:56 PM
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What neighborhood? I lived in Hayes Valley for 8 months for work (and I'm from Alameda).

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Author: notehound Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 421051 of 449470
Subject: Re: I like it! Date: 4/20/2013 2:27 PM
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* Almost everyone who WANTS a house and CAN AFFORD to buy, move into, and maintain a house, HAS a house. And those who don't have a house, can alternatively afford to rent a decent house or apartment.

Warrl,

I have to slightly disagree with you - or at least add the following to your above comment based upon what I am seeing.

The 60% or so of college grads who have found jobs over the last 5 years include a lot of folks who have been renting and saving for a down payment. A measurable percentage of these younger folks are getting married, co-habitating and/or establishing new households. This group has been under-represented among homebuyers in the last couple of years, for the following reasons:

1. Much of the cheaper stuff (foreclosures and even short sales) has been snapped up by cash buyers (investors) for the last few years, beating the younger folks out. This limits supply.

2. A lot of potential home sellers (even some who are underwater) are not willing to sell until the prices in their own particular areas recover to near 2007 levels. This limits supply.

3. A lot of small builders went out of business and thus aren't building any more - and not that many new homes are being built in areas where younger folks want to live (close to work centers). This limits supply.

4. A measurable percentage of the younger folks with their down payments saved up were afraid to buy during a falling market, but now are emboldened to look at buying, since they have heard prices are rising. This increases demand.

5. When supplies are limited and demand is increasing, home prices will naturally rise.

Of course, once prices recover (or are inflated) to levels close to what the pent-up sellers are willing to sell for, a flood of "for sale" signs might start appearing.

However, in the meantime, there is actually a shortage of affordable housing for sale in areas where young folks want to live. San Francisco is the pinnacle of this type of area. However, in many close-in areas near job centers, there is a shortage of affordable housing on the market for sale.

That's at least what I'm seeing.

Of course, in the farther from the city exurbs (areas that were overbuilt between 2002 and 2007), and where the remaining builders are able to obtain cheap land for building, the prices will remain subdued for quite a while.

All of the above observed trends could, of course, be reversed pretty quickly if one of the following occurs:

1. A rise in mortgage interest rates.

2. A flood of foreclosed properties hits the market.

With the Fed still in charge, and the banks still not being required to mark-to-market (thus allowing them to sit on non-performing assets without having to liquidate by foreclosure), I expect the present circumstances to continue for quite some time.

Of course, I could be very wrong.

;-)

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Author: kf6pfk Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 421053 of 449470
Subject: Re: I like it! Date: 4/20/2013 2:34 PM
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Do you happen to know what fixed-rate mortgage interest rates are running in that area?"

Wells Fargo is the main TBTF bank. 30yr fixed FHA loans are 3.25% for an 800,000 FHA loan with 20% down. 800,000 is about the median price in my neighborhood, which is mostly populated by middle class people.

Before anyone gasps, San Francisco is a unique market.
SF is always at the top of the most expensive real estate in the country.
The City is built out. There is no where to build something, without tearing something down.
It is a regulators paradise.
It is VERY expensive to place to live.
It really is a beautiful City, and lots of people want to live here. But few people stay once reality sets in. So there are few home owners, mostly renters, that pay as much as the market will bare.
And of course we get a lot of international buyers.

So we may not be representative of the “outside world”.
But we are often trend setters.

What neighborhood? I lived in Hayes Valley for 8 months for work (and I'm from Alameda).

Sunnyside, between City Collage and Glen Park, and I love Alameda, especially Hanger One distillery. http://www.hangarone.com/ Alameda, really is a nice place.

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Author: notehound Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 421054 of 449470
Subject: Re: I like it! Date: 4/20/2013 2:51 PM
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3.25% for an 800,000 FHA loan with 20% down. 800,000 is about the median price in my neighborhood, which is mostly populated by middle class people.

$800K middle class? Dang, ya'll are rich people! I didn't think rich people were the ones the FHA loan program was designed to serve, but what do I know?

Folks in San Francisco, Manhattan and D.C. certainly have a different perspective from the folks in "flyover country."

I wouldn't lend $800K to anyone for less than 6% interest in any market. I couldn't afford the risk of default or the carrying costs of the house if I had to foreclose the loan. I'd insist on a premium price on the cash commensurate with the premium price of the collateral.

I'm sure the government can afford to take the risk, though. It's only taxpayer money.

;-)

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Author: soycapital Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 421055 of 449470
Subject: Re: I like it! Date: 4/20/2013 3:00 PM
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<I'm sure the government can afford to take the risk, though. It's only taxpayer money.>

I recently listed a home for sale in Central Missouri with a Realtor friend. She informed me that there was an 80% chance that the buyer would finance with some type of Govt. loan. When the house sold a month later in fact it was a govt. loan. Not much doubt as to what is driving the real estate market a present.
I'm not sure how the small town banks can expect to compete with the situation as it is.
By the way, we don't have 800K homes around here but plenty of prime farmland may do yah.
soybeans..........

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Author: tim443 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 421056 of 449470
Subject: Re: I like it! Date: 4/20/2013 3:27 PM
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$800K middle class? Dang, ya'll are rich people!


Dang, in West Vancouver you have to put a 2 in front of that!!!! }};-()

Somewhat interestingly Banker Lady's taxes on her 1.2 million place in Oakland Heights were twice as much as her place in West Vancouver that she paid more than twice that for.


Just some added info on the housing market, the lumber companies in Kanada have taken off (check out the one year charts).


Any <How many are in an umpteen?> mouse


https://www.google.ca/finance?q=TSE%3ACFP&ei=-71yUajvHIW...

https://www.google.ca/finance?q=TSE%3AWFT&ei=aOpyUcDSI4S...

https://www.google.ca/finance?q=TSE%3AANS&ei=oepyUcCuL8m...

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Author: kf6pfk Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 421057 of 449470
Subject: Re: I like it! Date: 4/20/2013 3:38 PM
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$800K middle class? Dang, ya'll are rich people! I didn't think rich people were the ones the FHA loan program was designed to serve, but what do I know?


There is quite a difference between having 800,000 in debt and having 800,000 in CD’s. Few young people can get together the down payment. You have to have a lot of faith (stupidity) to take everything you have, plus everything you can lay your hands on, and put it in a bag to hand over to a seller. But that’s the way the game is played here. If you don’t want to pay, well, step aside, you’re blocking traffic. I bought my house 30 years ago, and it was just as hard to scrape together the down payment then, as it is for someone to do it now. But my house has quadrupled in price, since I bought it. There is no other investment that I have that has done as well. And I doubt one could do it safely outside SF, DC or NYC...
I don’t know if it will continue to appreciate in value, but I didn’t know that 30 years ago either.

Folks in San Francisco, Manhattan and D.C. certainly have a different perspective from the folks in "flyover country."

Yes, we do. ;o)

I wouldn't lend $800K to anyone for less than 6% interest in any market. I couldn't afford the risk of default or the carrying costs of the house if I had to foreclose the loan. I'd insist on a premium price on the cash commensurate with the premium price of the collateral.

A WFB non FHA loan is 3.5% Qualifying for the loan might be tough for most.

I'm sure the government can afford to take the risk, though. It's only taxpayer money.

I agree. So... you’re an investor, how you playing that?

By the way, we don't have 800K homes around here but plenty of prime farmland may do yah.

Prime farmland is a wonder thing... Warren Buffets son is a farmer (Kinda Sorta)

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Author: warrl Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 421060 of 449470
Subject: Re: I like it! Date: 4/20/2013 3:58 PM
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3.25% for an 800,000 FHA loan with 20% down. 800,000 is about the median price in my neighborhood, which is mostly populated by middle class people.

$800K middle class? Dang, ya'll are rich people! I didn't think rich people were the ones the FHA loan program was designed to serve, but what do I know?


Some years ago I noticed that, at that time, the typical listed price of real estate in Seattle (over 6,700 people per square mile) was about the same as the typical listed price of real estate in Mineral County, Montana (county population: about 4,200).

The difference is that in Seattle you got a house on a postage-stamp lot. In Mineral County you got a larger house, a few outbuildings, and a few hundred acres of land.

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Author: kf6pfk Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 421062 of 449470
Subject: Re: I like it! Date: 4/20/2013 4:17 PM
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Dang, in West Vancouver you have to put a 2 in front of that!!!! }};-()

Just some added info on the housing market, the lumber companies in Kanada have taken off (check out the one year charts).

Oh, we have our “Upper Middle Class neighborhoods too ;o)

http://www.huffingtonpost.com/2013/04/16/san-francisco-housi...

You reminded me...I had to buy a couple of sheets of Russian plywood at our local wood store, Beronio’s. Darned if I didn’t have to wait in line. It hasn’t been like that for a couple of years.

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Author: PosFCF Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 421064 of 449470
Subject: Re: I like it! Date: 4/20/2013 4:19 PM
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Wells Fargo is the main TBTF bank. 30yr fixed FHA loans are 3.25% for an 800,000 FHA loan with 20% down.

The old mortgage broker in me wants to know why one would get an FHA loan when they have 20% down?

The old cynic in me says that its because Wells can get a higher service release premium. But it is still not a good deal for the buyer.

I'm sure Dave Donoff would have more current input on the topic.

Poz

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Author: Gingko100 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 421068 of 449470
Subject: Re: I like it! Date: 4/20/2013 5:58 PM
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Didn't ever really slow down much here in Berkeley, but I think the exurbs got hit the hardest. Entry level housing ($500K - $600K) has continued to sell briskly the past few years, including in my neighborhood.

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Author: jaagu Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 421069 of 449470
Subject: Re: I like it! Date: 4/20/2013 6:01 PM
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I am posting to tell you that I don't know why, but local housing has taken off in the last 3 months.

--------------------------

KF6PFK'

I live in Sonoma County. I own a house in Sonoma County and a second house in Marin County on the coast. Both of these houses have appreciated over 25% in the last 3 months. I only have a small mortgage balance on my Sonoma County house so I am still paying the old 5.75% rate on that loan balance. I am totally surprised by the rapid increase in values.

My house values have not come up to the peak values of 5 years ago. Another 10-20% will put them at a new high. Looks like people are moving back to California after working the low pay jobs in other states.

jaagu

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Author: soycapital Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 421075 of 449470
Subject: Re: I like it! Date: 4/20/2013 8:28 PM
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< Looks like people are moving back to California after working the low pay jobs in other states. >

I'd be surprised if this was true. Got some numbers on that?

I'd think people with brains would be moving to low cost states.

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Author: kf6pfk Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 421077 of 449470
Subject: Re: I like it! Date: 4/20/2013 9:14 PM
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The old cynic in me says that its because Wells can get a higher service release premium. But it is still not a good deal for the buyer.

I was just using Wells Fargo as an example of local rates from a TBTF bank. (They are SF based)

I have refinanced a couple of times over the years. Each time I found the WFB was overpriced compared to other institutions. But over the years my mortgage keeps getting sold to WFB. I guess they like me, more than I like them.
Maybe I shouldn't be so hard on them, they spend a lot of money on the arts and community here in SF.
In my youth I had spent a lot of time in different banks fixing copiers. I had the opportunity to meet a lot of staff. WFB was always very friendly and business like, and in a coolish sort of way.

Oh yeah I've noticed the WFB Branch service has markedly improved over the last 2 years. In the past they were almost dysfunctional. Now you can get your needs meet pretty quickly. Someone must have reminded the staff who they worked for.

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Author: kf6pfk Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 421078 of 449470
Subject: Re: I like it! Date: 4/20/2013 9:32 PM
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Didn't ever really slow down much here in Berkeley, but I think the exurbs got hit the hardest. Entry level housing ($500K - $600K) has continued to sell briskly the past few years, including in my neighborhood.

I think your correct. One time I was looking at a foreclosure map of the Bay Area. If you drew a bullseye with SF in the middle, each 10 mile ring would represent a marked increase in foreclosures all the way out to Stockton. The ring was a little warped because of Richmond and Vallejo.

My only rationalization was that SF is Internationally known, and attracts international money. This was followed by Marin (The richest county in the US), with Silicon Valley, Berzerkeley, and Ms. Orinda/Moraga. From there on out, the land gets cheap, but the commutes are horrendous. What really killed the xburbs was 5.00 gas.

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Author: jaagu Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 421083 of 449470
Subject: Re: I like it! Date: 4/20/2013 11:26 PM
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<I'd think people with brains would be moving to low cost states.>

California's unemployment rate is droping twice as fast as that of Texas, while low cost Southern states like Alabama and Mississippi have rising unemployment.

As California has a much larger population than Texas, which means that California is adding more than twice as many jobs as Texas.

So what was your point about brains?

jaagu

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Author: jaagu Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 421084 of 449470
Subject: Re: I like it! Date: 4/20/2013 11:27 PM
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And here is the data:

http://www.bls.gov/web/laus/laumstch.htm

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Author: soycapital Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 421085 of 449470
Subject: Re: I like it! Date: 4/20/2013 11:47 PM
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<So what was your point about brains?>

Brains is living in Texas............
so sorry have friends in CA and they belong there. No offence intended.

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Author: bluecollarTim Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 421100 of 449470
Subject: Re: I like it! Date: 4/21/2013 9:18 AM
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What a coincidence. I live in Des Moines and just yesterday 4/20 my realtor friend Facebooked that the market here was hot and good with multiple offers now coming on all his listings. bcTim

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Author: Goofyhoofy Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 421114 of 449470
Subject: Re: I like it! Date: 4/21/2013 1:31 PM
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It really is a beautiful City, and lots of people want to live here. But few people stay once reality sets in. So there are few home owners, mostly renters,

Hardly uncommon:

San Francisco: Homeownership rate, 2007-2011 37.1%
http://quickfacts.census.gov/qfd/states/06/06075.html
Orlando: Homeownership rate, 2007-2011 40.6%
http://quickfacts.census.gov/qfd/states/12/1253000.html
New York City Homeownership rate, 2007-2011 32.6%
http://quickfacts.census.gov/qfd/states/36/3651000.html
Boston Homeownership rate, 2007-2011 34.6%
http://quickfacts.census.gov/qfd/states/25/2507000.html

There are other cities with higher rates of home ownership; in general (at least the few I tried) those tend to be older, more gentrified cities where people aren't as mobile.

I'd think people with brains would be moving to low cost states.

People with brains like to get paid for having brains. That means going to an "intellectual capital" state like California, New York, Washington, Massachusetts, Connecticut, Chicago. Others find greater success trading muscle power on assembly lines, factory farms, or other rote-type work.

States that specialize in brain power industries tend to have higher living costs, compensated by high paychecks. You can look it up, if you like. You can use those same charts, and those of other cities, to confirm the coorelation.
 


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Author: soycapital Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 421140 of 449470
Subject: Re: I like it! Date: 4/21/2013 8:08 PM
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<People with brains like to get paid for having brains. >

That makes sense to me but some people do have higher priorities than the size of the paycheck. I do. No offence...........

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