June 30, 2008

Mini Meltdown At The Metropolitan? (333 1st Street #N1906)

333 1st Street #N1906

According to the listing, 333 1st Street #N1906 is now a bank owned studio at the Metropolitan with an asking price of $399,000.

And while according to Redfin the 506 square foot #N1906 sold for $885,000 on May 30, 2008 (which doesn’t quite pass our smell test even assuming out-and-out mortgage fraud), according to the Chronicle it changed hands in April of 2005 for $525,000.

And if Cyberhomes is correct, Metropolitan units #N1203, #S1508, and #N1006 are either in foreclosure or headed that way as well.

∙ Listing: 333 1st Street #N1906 (0/1) - $399,000 [MLS] [Redfin]

First Published: June 30, 2008 10:45 AM

Comments from "Plugged In" Readers

The interior looks like something at an Avalon or a cheapish studio out in the outer richmond. I really wish these mega projects would create better interiors.

Posted by: sf at June 30, 2008 11:02 AM

Looks like the refrigerator is gone but at least they left the cabinets!

Posted by: Michael at June 30, 2008 11:06 AM

Can any of the experts in the trenches comment on why increasing numbers of luxury millionaires aren't paying their mortgages here in the city? Makes it look like locals can't afford the absurb real estate prices of the past few years. Odd. Because wasn't this building supposed to be full of n-th properties for absentee gazillionaires and celebrities? This place isn't in Bayview, is it?

Sarcasm aside, the Met is actually one of my favorite buildings in the city. Great amenities and views even if many of the floorplans are a little snug. Will be interesting to see what happens as the building is outluxuried by its newer neighbors.

Posted by: Dude at June 30, 2008 11:07 AM

There appears to be a glaring space where the fridge is supposed to be? Either way, the Met is a great building [I say that having lived there] although this unit is really small. However, even for the bears, a price point 24% lower than the April 2005 mark surely creates some interest?

Posted by: Recent ORH buyer at June 30, 2008 11:11 AM

Yow, $600/mo HOA dues on a studio!?!

At least it has parking ...

I gotta get one of these as a shag pad in the city...

what do they rent for?

I'm astonished that anyone would pay north of $500k for a 500 sq. ft. studio. Do people actually live in these places full time?

Posted by: Jimmy (Bitter Renter) at June 30, 2008 11:18 AM

I saw a 400 sq ft studio at The Hayes for $400k without parking. Now THAT is unlivable. Who buys these things?

Posted by: Amazed at June 30, 2008 11:26 AM

Shag pad?!

Posted by: fred at June 30, 2008 11:29 AM

Yeah, a shag pad! You know, someplace cool that you bring your date for a Friday-night ride.

Posted by: Jimmy (Bitter Renter) at June 30, 2008 11:41 AM

"And while according to Redfin the 506 square foot #N1906 sold for $885,000 on May 30, 2008 (which doesn’t quite pass our smell test even assuming out-and-out mortgage fraud), according to the Chronicle it changed hands in April of 2005 for $525,000."

I'm guessing the May 30 sale was the sale on the courthouse steps as the bank bought the place from itself via foreclosure to clear the title.

If I'm right, that meant that this "homeowner" pulled $360,000 in cash OUT of this place and now is letting it go to the bank rather than selling it at a loss.

That's $120,000 PER YEAR they took out of this place: $10K per month. Probably an option arm on which they were making minimum payments, as the balance stacked up, so cash in their pocket was probably less. In any event, it was enough or more than was needed to make the minimum payment for three years until the option arm reset, at which point they just didn't see any need to continue the charade. And now it's the bank's problem.

No WONDER there was a shortage of housing: it was free to own them! If something was free, why wouldn't demand soar. Why, you could build an unlimited supply of them and there STILL wouldn't be enough to them. You could build them to the sky! Which is exactly what they did. And price is not an object when your monthly payments are $0. So who cares if you have to pay 20% more than last year, your net payments are still $0.

And now the music has stopped, and there are no chairs for anyone in Soma, because prices there fell first and you can't refinance and continue to pay $0 like everyone thought. As prices fall further in SoMa, that will pull down the prices of other condos in the city that were financed similarly: lather rinse and repeat.

This is the tip of the iceberg: by the end of the year, it will start to happen around the city in earnest.

Posted by: tipster at June 30, 2008 11:44 AM

here is the floor plan if anyone is interested. what i cant figure out is the sale price in may? makes no sense...

http://www.shawntyler.net/robyn_kaufman/floorplans/n21_sa.html

Posted by: Ryan at June 30, 2008 11:46 AM

well, to me an arm's length transaction that went from 1.02 to 1.3 mill is clearly a sign of strength

we have a data point. now we need but gather some more.

but it's ORH 1. bears 0.

Posted by: ex SF-er at June 26, 2008 6:41 PM

update ORH 1. Bears 1. ;-)

Posted by: badlydrawnbear at June 30, 2008 11:52 AM

C'mon, Jimmy. Here in sophiscticated San Francisco they're called "pied a terres."

The HOAs at the Met are exorbitant but you get parking, doorman, full size pool, gym, and a mini theater in the building. Not saying the fees are warranted, but this building really is full service.

Regarding rents, these studios usually go for around $2,000 to $2,300 per month. So run the buy vs. rent assuming 20% down and, even at a 24% discount to bubble peak, you're still better off renting, but the high HOA fee makes up most of the delta. Pick this up around $350K and you're pretty close depending on your tax situation. But then again, who can really live in a studio long-term?

Posted by: Dude at June 30, 2008 11:53 AM

No. Those numbers don't make sense.

A neg-am for 525K would have recast at 125% at most. Say 656K.

You could have used a HELOC to get the total outstanding loan amount up to 885K but if the recent sale was a foreclosure it would have gone for the amount of the first lien only. So it wouldn't register for 885K.

These numbers don't really add up to anything sensible, even in our crazy market.

Posted by: diemos at June 30, 2008 12:02 PM

"I saw a 400 sq ft studio at The Hayes for $400k without parking. Now THAT is unlivable. Who buys these things?"

There is a unit at 199 new montgomery, 414 SF without parking, initially asking 550K. Then they reduced it to 500K, but still. The price even shocked even me who is numb to SF's irrational prices.

Posted by: condoshopper at June 30, 2008 12:05 PM

Wow, what a wonderful bargain for some lucky new owner!

Posted by: Foolio at June 30, 2008 12:39 PM

Who would buy a studio? (at any price)

I just don't get it...actually, I don't understand why anyone would buy 1BR either.

Posted by: John at June 30, 2008 12:44 PM

This makes sense for folks who enjoy the City, who work downtown, who are happy as hell they're not spending much money on gasoline for their own cars, appreciate $20 or lower a month electric bills, and who want to spend less time commuting to work and other great activities .... not for everybody, but I'm likely to be living in my Rincon Hill studio for years to come ...

Posted by: jamie at June 30, 2008 1:09 PM

John - my guess is that it's what they are willing to pay for whatever area (and set of amenities) they find attractive. Despite high prices, there are some obvious advantages to owning. Also units tend to be larger in older buildings so that might explain some of it as SF has an older building stock.

Posted by: Enthano at June 30, 2008 2:24 PM

I didn't ask why anyone would LIVE in a downtown studio. It has its attractions.

However, I don't get why people would buy it. Studio (and 1BR) are for single lives, and when you are single, you move around for new jobs and new experience. How many would say "I plan to remain single for at least 5 years, so I want to buy"?

Posted by: John at June 30, 2008 2:27 PM

I just realized this studio is right next door to the 2/2 that my wife and I used to rent at the Met. The unit should have a great view of the Bay Bridge, the Infinity and parts of the city. Accordingly, it would be a great shag pad ... I mean pied a terre. However, Jimmy, I don't think the price includes company for a Friday night, so you are on your own for that endeavor :-)

As an aside, the owner of our 2/2 Met unit [next to this one] recently listed his place at $1200 per sq. ft [now down to $1150]. I'm sure he's not too thrilled that his neighbor's forclosed studio is on the market at 800 per sq. ft. However, if a shag pad is what one is seeking, this is a good spot at a reasonable price point, IMO.

Posted by: Recent ORH buyer at June 30, 2008 2:29 PM

When you live in a big city and are a young single, buying a studio makes some sense. You start building equity (and hopefully have market appreciation) which means that you'll have some badly needed seed money for your next big move.

Also, being a renter limits the kind of life you can have in a studio. If you have parties late at night, you don't get evicted for it. You can remodel the place to your taste.

The first place I bought was a 350sf studio. I lived in it for 3 years then rented the place out for 8. Thanks to a fast amortizing 15-year mortgage and great timing, the renter paid for the place and then some. I'll never regret this purchase.

Other big pluses:

- It's also a good lesson in responsibility
- HOA meetings are a great way to meet your neighbors

Posted by: San Fronzischeme at June 30, 2008 2:36 PM

I'm sure most single people don't plan on remaining single, it just works out that way in this town more than others, IMO. That seems to be the case with most people I have met in SF over the years, myself included.

We decide to buy because we get tired of waiting to be a couple and then buy. That may explain why there are so many units for single people as opposed to families.

Posted by: view lover at June 30, 2008 2:39 PM

"I didn't ask why anyone would LIVE in a downtown studio. It has its attractions.

However, I don't get why people would buy it"

SF certainly has a lot of single people and DINKS, both straight and gay. My guess is that there are enough of both to support the market, and that aren't willing to make the necessary trade off for a second bedroom (and don't forget the "shag-pad" factor, lol). I know several couples that live in 1 bedrooms, albeit large ones, and have done so comfortably for years. They could buy more, they just choose not to and allocate their resources elsewhere (retirement, savings, etc.)

Posted by: Enthano at June 30, 2008 2:42 PM

Studio condos have always been expensive. But there are a lot less alternatives at $400k than at $1.2 million. I think part of the pricing reflects that studios are the entry to ownership. But the incremental cost of getting an actual standalone bedroom or two are not that much, so I don't believe studios are that great of a deal.

Posted by: anon at June 30, 2008 2:43 PM

Small pads for singles are part of a cycle in a city. When I first rented, the landlord was a guy who was moving with his GF into a bigger place they'd just bought.
When I rented out the first place I'd bought, it was to do exactly the same thing.

Thanks for this market, otherwise we'd all be dependent of outfits like Citiapartments..

Posted by: San FronziScheme at June 30, 2008 2:46 PM

update ORH 1. Bears 1. ;-)

BDB:
I agree. and remember, I am very bearish on SF real estate.

i was only pointing out that there are some data points that go against "our" hypothesis. one ignores them at one's own peril. my goal is to be as dispassionate and rational as possible, and not get carried away by the momentum.

there will be more and more of these data points as time goes on. and the trend will likely continue to become clearer.

there is still the possibility (although small IMO) that ORH will maintain value while nearby projects (like the met) struggle.

as I've said before, I went through and watched the San Diego downturn and it has been very similar to what we're seeing in SF, but advanced by about 2 years.

to me a lot of these properties never made sense. As someone said: why on earth buy a Studio for so much??? there's no way you're going to live there full term. People bought most often with the expectation that they could resell at a higher valuation much later. those days seem to be behind us.

Posted by: ex SF-er at June 30, 2008 2:47 PM

John - Two things to consider. First, even if you only live in the studio for a few years, you can still rent it out afterwards. If you are one who believes that SF real estate will continue to appreciate at a decent rate (admittedly a big if!), then it would be a good investment (rent-to-price ratio of a studio looks better than that of a 2 BR or a SFH).

Second, your "how long could you really plan to live there?" argument could apply to most properties in SF. I don't know anyone with a decent income that wants to raise a family in a 2 or 3 BR condo. Heck, even if you have a SFH, SF is still a lousy place to raise kids given the sorry state of the schools. So the only long-term 2+ BR condo holders will be those who are married or in domestic partnerships and who never plan to have or adopt kids. Are they a much, much larger percentage of the population than the long-term singles? I'm not sure, but I certainly have no data to suggest that they are.

Posted by: gmh at June 30, 2008 3:24 PM

San Diego "similar to what we're seeing in SF, but advanced by about 2 years."

Therefore it is not the same thing at all.

Rampant speculation? We have it. Astonishing amount of new condos? Check. Adjusting loans? Check. Outlying areas getting hosed? Check.

When, folks? When is when? I'd like to know myself. I just had some clients write on a TIC and they came in 11% under asking, after 2 1/2 months on the market. I figured it was a good idea. Nothing ventured, nothing gained, you know? But along came another group who wrote for asking price and since we were so far under they didn't bother countering. (It isn't as if my clients wanted to get in a bidding war anyway.)

I just think that at a certain point you have to say that this is its own thing, by and large. If you want to talk similar cities, I think Seattle is really the most apt comparison. It is neighborhood by neighborhood up there too and has been so for over a year all the while seeing record prices in spots.

Posted by: fluj at June 30, 2008 3:28 PM

Well said Fluj. I don't always agree with you, but what you expressed seems to convey the reality without the endless analysis of data points.

I've stated here before that I have been looking at condos in district 5. Been about 3 months now and I can tell you that it's spotty overall but I continue to see that good properties (clean, updated, good location, no disclosures issues, parking) disappear quickly.

Posted by: mktwatcher at June 30, 2008 4:15 PM

Bears don't get a point until we see at what price this one closes.

Posted by: will at June 30, 2008 4:39 PM

Studios are not just for singles.
My husband and I have lived in a 470sf studio for 5 years now. Our condo building is mostly studios and there are many couples living in studios.
Why live in a studio: we could not afford a one bedroom or more at the time and the neighbourhood (tendernob) fits our lifestyle. We wanted to buy instead of renting a place. The fire in the rental bldg was a big reason - wanting to have neighbors that cared about the bldg we lived in.
At the time SOMA was not that appealling as we are car-less.
Previously, we lived in a 430 sf 2-bedroom condo with excellent views in Hong Kong. We would have snapped up something similar if it was available here.
Over the years, we have happily realized our living arrangement in very sutainable: we buy only what we need, no car, walk/bart to work, etc.
We do rent a 50SF storage space in the building for earthquake supplies/camping gear.
Upside the place is quick to clean and we have learned to live in a small space together - communication is key to this.
Downside is you get up whenever the other person gets up!

Posted by: hara at June 30, 2008 4:46 PM

kudos to you hara

i'm sick of people flaunting their eco credentials when they have two Prius's (or would that be Prii?) sitting in the driveway of their 2000+ sq ft house while they eat steak and foie gras at the latest hot restaurant
living in a small studio space is not for everyone, but doing so, without a car, is the definition of sustainability.

i happen to drive a car to work that is not a hybrid, and i have too many sq ft for my family size, but I have not nor will i ever present myself as living an ecologically friendly lifestyle.

living in a studio, or being a vegetarian is eco friendly, eating meat, driving a hybrid to work every day, all while living in a 2000sq ft LEED certified condo/house, well that is not.

Posted by: enonymous at June 30, 2008 5:02 PM

i eat meat, drive an SUV every day, live ina large place for a single person, regularly go on business trips all over the country and world via plan, but I only use recyclable bags at the grocery store. do i qualify as eco friendly

Posted by: Spencer at June 30, 2008 5:17 PM

Thank you Fluj for posting a realistic urban comparison. In Seattle, Victorian homes on Queen Anne hill are still hot, while outlying suburbs are facing a sea of foreclosures. There are still multiple offers on homes not only on Queen Anne Hill, but also Capitol Hill, Lake Union, etc.

Thank you also for not comparing SOMA to Hong Kong, New York, Paris, or London. Nothing is more silly than when someone talks about what a "bargain" S.F. is compared to other urban areas that are huge mega-cities.

Posted by: Justin at June 30, 2008 5:23 PM

Thanks. One of my best friends is a fairly recent homeowner and a reporter who covers VC up there, so I'm pretty well versed in what's going on. He owns in Ballard. That neighborhood is faring very well too. I liken it to maybe Glen Park here except probably a lot cooler (literally and figuratively) with worse transportation.

Posted by: fluj at June 30, 2008 5:34 PM

Fluj, why do you think San Diego is different than SF or Seattle? I don't understand - by painting San Diego with one big brush, you're committing the exact same fallacy that uber-bears commit when they point to massive declines in CoCo County and say that SF will follow in just X months.

San Diego is a massive county. At 4200 sq miles, it's larger than San Francisco, San Mateo, Marin, Alameda, Contra Costa, and Santa Clara counties all combined together. As such, there is a heck of a lot of variation in different areas in San Diego, just like there is a ton of variation in different areas in the Bay Area. And just as the nicer areas in the Bay Area are not declining as much as the outer lying areas or the less gentrified areas, so too with San Diego.

Anyone who invokes SD on either side of the debate really ought to check out:

http://piggington.com/desirable_yes_immune_no

It's like the exact same freaking conversation that we have every week on this blog. Just cut and replace "Bay Area" with "San Diego County" and "Nicer SF Districts/Rockridge-Berkeley Hills/Palo Alto/etc" with "Coronado/Del Mar/Carmel Valley/etc." Goodness, they even have a CSI graph that looks just like ours (click on the "home price graphs" link in the article main text) and a conspiracy-theory guy who is throwing out claims about "builders who in the last 18 months rebated 25% of the purchase price post closing subject to a confidentiality agreement" in order to explain why the high end areas don't appear to have dropped so much!

So ex-SFer is right to compare SD to SF. But that doesn't necessarily mean that the nicer areas in SF (or in the Bay Area in general) are in for huge declines. That hasn't even happened in SD yet.

Posted by: gmh at June 30, 2008 5:38 PM

You know what, you're right gmh. You need to put a finer point on things always. I more or less objected to the way San Diego was used there, as a buzzword for r.e. collapse.

Posted by: fluj at June 30, 2008 5:43 PM

There is a sucker born every minute. House prices are dictated by supply and demand. SF properties does not hold any magical powers over any other city.

Back in May, 2005, I paid $300 to hear one man (my mentor) talk about future real estate prices in California. He was speaking to about 200 multi-millionaires.

After speaking for about 90 minutes, a good portion of them was on their cell phones to their real estate agents to sell their properties immediately. I could not believe what I saw. In hindsight, that was the right thing to do.

FYI: He does not have a crystal ball making any unsubstantiated predictions. What he did to back up his words was spend thousands of dollars on research.

Fast forward to today and I can safely predict that SF house prices will decline 15% or more over the next 3 years.

By the way, unlike the majority of SocketSite readers who have college degrees or more, I am a high school dropout. However, I have something that has helped me tremendously over the years: COMMON SENSE.

Posted by: Dan at June 30, 2008 5:56 PM

@ Justin

Hot like these places on Capitol Hill...

910 19th Ave E - $300k price cut

900 18th Ave E - $300k price cut

943 19th Ave E - Selling for less than purchase

727 18th Ave E - $200k price cut

Or perhaps these on Queen Anne...

300 Highland Dr - $200k Price Cut

1008 4th Ave N - $200k price cut

314 W Prospect St - Price cut $200k - will sell below 2007 purchase price

BTW the Seattle market is about 10-15% down from the peak last summer on a per sqft basis. Just ask anyone with a house on the market. And yes even mighty Ballard is falling in price...

Posted by: unearthly at June 30, 2008 6:14 PM

oh yeah well I think your mentor is mud spelled backwards and that stands for stupid

hahaha. whatever dude. Opinions are like ....

Seriously though, why read real estate blogs then?

And unearthly,

You know we could post 10 properties that recently sold for over asking too, right?

Posted by: Dancheckerfluj at June 30, 2008 6:19 PM

Ouch. I stand rebuked. I was told by friends that they got multiple offers on their home in Queen Anne, but it was a nice house at a fair price.

Posted by: Justin at June 30, 2008 6:20 PM

@Dancheckerfluj

So show me 10 that have sold over asking in the past few months that wasn't some sort of underpriced fixer?

@ Justin

The last couple of quarters have been really slow. Some stuff has sold for asking but those are usually well below the median $/sqft as they need some work. Inventory is increasing substantially on Capitol Hill and Queen Anne. If these close in neighborhoods are falling then watch out the further you go out.

Posted by: unearthly at June 30, 2008 6:32 PM

Fixes don't count, why? I could show you 10 in Ballard alone and you already know that I'm sure. Multiple bidding on fixers is a sign of strength. Fixers do not create bidding wars in soft markets.

Posted by: fluj at June 30, 2008 6:38 PM

Posted by Justin: Ouch. I stand rebuked. I was told by friends that they got multiple offers on their home in Queen Anne, but it was a nice house at a fair price.

Multiple offers??? Who are you kidding!!!

In the past year, I have seen house after house with many multiple offers and the sale never went through. Give me a break!!!

A multiple offer is only valid if the person making the offer qualifies to buy the house. Hence, I can have 50 offers, but only 2 offers qualify. That's why Real Estate Agents are scum, they lie, cheat and steal for you to buy a house. If everything was so rosy, how come they're not jumping on the bandwagon themselves and buying 10 houses now???

Don't be a follower, be a leader.

Posted by: John at June 30, 2008 6:40 PM

" That's why Real Estate Agents are scum, they lie, cheat and steal for you to buy a house."

But the people they're working for, your friends, family and neighbors, are completely and utterly blameless.

An invalid offer isn't even considered, John. A realtor can separate the wheat from the chaff in a minute. It isn't considered and it isn't in the conversation either.

Posted by: fluj at June 30, 2008 6:45 PM

@fluj

Ballard is the lower end of the Seattle housing stock - not exactly Queen Anne, Capitol Hill, or Madison Park. There's a much larger pool of buyers in the low-end that can afford to live in Ballard. Ballard has way more housing stock than is needed. See Seattle's housing growth is off the charts.

OK - I'm ready so list recent properties going over asking (list price, sale price, address, etc)...

Posted by: unearthly at June 30, 2008 6:48 PM

Dancheckerfluj,

From reading your comments, you must be a Real Estate Agent loser.

Multiple offers overasking price? I don't think so.

I can easily create a demand by artificially underpricing any property. Wow, I had 75 offers over asking price. Big deal!

Posted by: Mike at June 30, 2008 6:49 PM

I don't want to get into this type of discussion and I won't be baited. We all know where it's going. Artificial pricing blah blah blah. "Loser." Gee, thanks, winner.

Posted by: fluj at June 30, 2008 6:53 PM

Just noting that there are (at least) two regular posters on this board signed "Dan." I think I'm the original "Dan" posting here. I'm the one with the advanced degree, who won't make a prediction whether SF prices are going up or down. Not that I don't have an opinion on the direction of prices, but I find that those (Dans included) who make percentage predictions are not really adding much value to the discussion by doing so.

Posted by: Dan at June 30, 2008 6:57 PM

So ex-SFer is right to compare SD to SF. But that doesn't necessarily mean that the nicer areas in SF (or in the Bay Area in general) are in for huge declines. That hasn't even happened in SD yet.

exactly my point. My old condo in Mission Hills Neighborhood of SD (very desireable) has lost a fair amount of value but SFHs nearby have lost very little, and they're at least 3-4 years into the decline. When just down the way places in Normal Heights are getting crushed and in the outlying areas (like Temecula) they're getting slaughtered.

You know what, you're right gmh. You need to put a finer point on things always. I more or less objected to the way San Diego was used there, as a buzzword for r.e. collapse.

Fluj: I never said anything about collapse. I said that SF's emerging downturn is turning out VERY similar to what SD has seen, but 2 years behind.

Nowhere did I say that SD is in armageddon mode. I said it is going through a downturn, and so it is.

and as I have repeatedly said on this blog, I think the RE downturn in SF will take years and years and years and years and most of the losses will be due to inflation and not nominal losses. So far I'd say my prediction is fairly true, n'est pas?

you did what you hate in others; you put words in my mouth and then went hog wild.

You chose Seattle because they are still holding up pretty well... but SF and Seattle and Portland started their booms together, a few years AFTER SD started its boom. then SD faltered, but the other 3 markets stayed strong. Now here we are 3 years later and SD is clearly in a downturn, and yet SF, Seattle are still holding on.

But I heard all these same conversations and all this same analysis 2-3 years ago in SD. when I sold my SD condo in March 2005 I was derided as crazy.

I recently heard all the same chatter in Seattle (I was there a few months ago) and also Vancouver, where people also think "RE can never go down" and where they say things like "we're not california... people really want to live here especially the chinese" and in Vancouver "we're getting the olympics".

now the bearish part:
the downturn in SD seems nowhere near over. things continue to get worse. Will the downturn eventually hit areas like La Jolla, Del Mar? who knows? I think it will.. but as I've said elsewhere it is possible that we will see a schism, with uber high end properties continueing to go up as the rich try to escape the middle class (who are falling behind), and everybody else has falling values as they can't get credit.

Posted by: ex SF-er at June 30, 2008 7:16 PM

Fluj,

If you don't want to get into this type of discussion, don't act like one and be a hypocrite.

Your comments created rebuttals. Simple as that.

Posted by: Scott at June 30, 2008 7:18 PM

Ex SF-er,

THANK YOU FOR YOUR COMMENTS! YOU ARE DEAD ON! I COULDN'T HAVE SAID IT ANY BETTER!

Posted by: Gary at June 30, 2008 7:21 PM

What do you mean San Diego's boom happened before San Francisco's? You can go back to 2004 as a real spike for SF, true. But you could call 1997-2003 a boom time as well. The whole country experienced things like cheap money contemporaneously.

And San Diego is treated as a buzzword for collapse more often than not around here. Sorry for putting words in your mouth.

Posted by: fluj at June 30, 2008 7:40 PM

San Francisco's biggest boom (percentage-wise) was before San Diego's, in the late 1990's through 2000. A friend of mine, priced out of SF by that earlier boom, moved to San Diego, bought a house, then sold the house about 2 years later for almost double what he paid for it. He took that money and bought here in SF.

Posted by: Dan at June 30, 2008 7:56 PM

Fluj:

it is true that dating "the boom" is hard between different cities.

In my own personal opinion, most cities started a mini-boom in the mid to late 1990's after the tax laws were changed (so that you could get up to $250k single/$500k couple in capital gains on RE tax free)

however the "mega boom" happened after 2001 IMO. when SF was still suffering from the Dot Bomb explosion, SD started creeping upwards.

By 2003 it was FEVERED in San Diego but still sedate in SF. The SD Newspaper had a headline each month where it would say things like "SAN DIEGO REAL ESTATE GOES UP $1,000 PER DAY!!!!" (I'm not kidding). this went on for months in the summer of 2003 (or was it 2004... I forget) where median home values were going up $30k per MONTH

By 2004 it was insane. The difference in RE between SF and SD was like night and day. I can barely explain it. It was around this time (2004 or 2005) where many parts of SD became MORE expensive than SF. this was unheard of especially given that when I moved to SD it was a relatively sleepy forgotten tourist city.

There were many reasons "given" for this. SD has "perfect" weather, not like SF's horrible weather. everybody wants to live in SD. everybody wants to own vacation properties in SD. SD is part of LA and thus we share it's economic base now. and so on.

but the truth as we know was otherwise. I started realizing that people were taking out cazy loans in 2004 and 2005. I sold in 2005 because RE in SD didn't make any sense.

FWIW: I was on a different blog at the time. Here is my post from that time (May 2005):
(the posts below were related to an article in Money Magazine titled : "America's "scariest housing market" - San Diego")

"I like Money... it's simple and straightforward, and I enjoy reading it. It's not always the most detailed or impressive news reporting, but it's more fun...

America's Scariest Housing Market (San Diego)

Yeah. It's overheated. Skyrocketing prices, and nobody with the income to buy them. Last quarter they showed another 20% yearly increase, but those days are soon to be over IMO. (hence I sold). At least in LA and SF and NYC you have a lot of rich people and high salaries. That doesn't really exist much in San Diego. They're starting to overbuild condos in San Diego now too... lots of highrise condos going up... and the prices will undercut what has been selling of late. At least there will be more "affordable" homes there (yeah right, a small condo for $400k... but it's better than what there was)"

and also
I agree completely. (see post #2 by me)

I make 50% higher salary here in [snip] than I would in San Diego (which is why I didn't stay out there).

And SD doesn't have the "glam jobs" that LA/SF do. As an example, the big consulting firms don't even have primary SD offices... Most big business is NOT from there. They may have a little local office there, but it's overshadowed by LA offices.

Beautiful city. But I don't see how people are going to stretch much more out there.

and with those new condo towers they're building downtown... could there be overbuilding?

as for the BK, they've been facing that for quite a while now. Who knows what the status really is anymore? One NICE thing for SD county though is that with the high turnover in home sales and the rapid appreciation, SD county gets more revenue than they otherwise would have!

Posted by: ex SF-er at June 30, 2008 8:02 PM

I don't know, Ex-SFer. I think perhaps you feel that way because you were so close to it. We definitely had people talking "housing boom" around here at the millennium. It wasn't sleepy. A fixer I bought in the Mission in 1998 got three offers in a week. We were the backup and were lucky to get the property.

Posted by: fluj at June 30, 2008 8:10 PM

That was 1999, not 1998.

Posted by: fluj at June 30, 2008 8:21 PM

"San Francisco's biggest boom (percentage-wise) was before San Diego's, in the late 1990's through 2000. A friend of mine, priced out of SF by that earlier boom, moved to San Diego, bought a house, then sold the house about 2 years later for almost double what he paid for it. He took that money and bought here in SF."

SF's late 1990's boom could be explained at least by the tech boom. I remember it well for it is what caused me to move to SD in 1999. after that boom was a lull though. So I don't think of SF as "leading" when it went up AND THEN stagnated while SD was starting to go up.

I think of SF as having 2 booms. 1995-2000, and then 2003-2007, or maybe 2008! :)

SD's was 2001-2005. at the time, it seemed like SD led the charge.. but part of that is that is how our newspaper worded things. Headlines like "SD LEADS NATION IN HOME APPRECIATION FOR Xth STRAIGHT MONTH" and what not. I could be wrong. like I said, it's hard "dating" these things.

but I'll tell you that when SD was on fire, SF and other markets were barely moving. when SD started having trouble almost all the other markets still looked strong.

I used to go to SDCIA.com (a san diego RE investor website) and I used to watch what they said. They'd say "hey, I hear Coeur D'alene Idaho has promise" and sure enough, 6 months later I'd see RE data that Couer D'Alene Idaho and Salt Lake City and St. George Utah were the fastest appreciating areas.

So my point isn't that SD is SF. It is that what I saw happen in SD is eerily similar to what I just went through in SD. ANd the arguments sound almost the same. And the results (thus far) are also similar... but separated by about 2 years.

Look up RE bubble blogs from 2005 about San Diego. Or go to Piggington (which was the SD RE "bubble blog") and read posts from 2005. then come back here.

just because things are eerily similar doesn't mean that they will be exactly the same. Another eerily similar place was South Beach Miami (where I ALMOST bought, and where I used to spend most of the winters). Again, same story. But SoBe and SD have had different outcomes. (neither good by the way but SoBe is getting hit much harder). and then I compare it to Chicago (my other home). Again, same story. Right now Manhattan has the same story too (rich foreigners want to live here, NYC is unique). As does LA proper.

I just find it interesting that almost every major North American City went through a sudden rapid increase in price in 2001-2005 or so, give or take a few years. And now they are all going through relatively rapid declines. RE is local?

Posted by: ex SF-er at June 30, 2008 8:22 PM

fluj;
yes, I agree that 1997-1999 was boomy in SF. very much so.
I remember (the chronicle?) used to have articles where it would say "guess the price?"
it would show some dumpy ranch style house in the South Bay.
Then it would say:
"List Price: $700,000"
"Offers: 37"
"Final Sales Price: $985,000"

so you are totally correct when you say that SF had a big boom before SD did... but I think of the late 1990s boom as the LAST cycle (not this cycle). it's mainly just how you frame the question, so I'm amenable to changing it to your way of thinking.

Posted by: ex SF-er at June 30, 2008 8:29 PM

The thing about NYC and LA is that rich foreign people actually do want to live in those cities! And the boom somehow missed the big Texas cities for a long time, right? Houston was a very late arrival to the party, Austin too. And Dallas never really took off. I could be wrong about that. Also, the Midwest except for Chicago doesn't know what this boom of which we speak is all about.

Posted by: fluj at June 30, 2008 8:30 PM

Comments by ex SF-er & unearthly sure humbled fluj & Justin.

There is a huge difference between OPINION & FACT. One will cost you plenty and the other will make you a fortune.

Comments by ex SF-er were some of the best I have ever read on any post. All of us should take note of his comments (facts) and refer to it before making any decisions.

Timing is more important than location.

Posted by: Steve at July 1, 2008 12:17 AM

"Also, the Midwest except for Chicago doesn't know what this boom of which we speak is all about."

Fluj: Minneapolis also saw the bubble. Actually, all of the Harbor Country areas along Lake Michigan in Michigan and Indiana also skyrocketed and are in bubblicious territory ($300k for a "vacation" condo anyone?)

Same with the vacation areas of Lake Geneva and Door County in Wisconsin.

There are quite a few bubble areas of the Midwest.

Posted by: sabrina at July 1, 2008 4:38 AM

sabrina said it for me:
there are many midwest areas that bubbled. Perhaps not to the extreme of SoFL or LV or Phoenix, but they bubbled. Parts of Minneapolis and Chicago metro areas doubled and tripled in 7 years. Madison also incraeased signficantly, as did Ann Arbor Michigan. in these cities they have a lot of buildable land so the overall bubble was muted.

Vacation places in northern MN, northern WI, and the UP of MI bubbled as well (I vacation to these areas once in a while). especially the entire coast of Lake Superior, Lake Michigan (do you know how much coast that is???) I have friends who recently bought 20 acres and a house in Northern WI for $7M. sure, it's acerage but who would have thought you'd get $300k/acre in the woods without utilities?
You also obviously haven't tried to buy farmland recently. The runup started prior to the commodities bubble by the way. a good friend of mine was a commodities analyst in Chicago (analyst for gold actually) but burned out and bought farmland in southern MN 3-4 years ago. He paid an extreme premium for the land although I never asked him how much. With the commodity boom farmland is good as gold right now.

Places like Calgary (oil) and Saskatoon and Winnipeg and Vancouver and Toronto also saw huge runups, as did land out in Nova Scotia.

Obviously the entire coasts (both sides) ran up tremendously. Portland, Seattle, entire Oregon and Californian coast, all the major CA cities. Not to mention Maine, the NYC/Boston/Philly/NJ metro areas. DC, Charlotte (actually all of NC), SC coast, Atlanta, Savannah. My in-laws have a lake home in Charlotte that has quadrupled since they bought it...in the mid 1990's. (Lake Norman). don't even talk to me about Kiawah island SC.

TX rarely has rapid RE appreciation, even in the best of times (like when Oil does well)... it's because there is tons of land to build, and almost no zoning restrictions.

of course the rust belt (not considered the midwest by people in flyover land) is doing poorly.

but that's why I wrote "almost every North American City" and not every NA city.

Posted by: ex SF-er at July 1, 2008 5:18 AM

"Comments by ex SF-er & unearthly sure humbled fluj & Justin"

Naah, not really. Ex SF-er conceded my point in his own way with to paraprhase "two booms versus one." And "Seattle doesn't get overbids on anything except fixers and Ballard doesn't count" wasn't particularly humbling either. (But I tried to look for non-fixer, non Ballard solds this morning and it was starting to take too long so I stopped.)

Sabrina,

I did see properties on or near the Great Lakes get appreciated too. You're right. Go a little bit south of there, tho, and forget it.

Posted by: fluj at July 1, 2008 8:31 AM

"Comments by ex SF-er were some of the best I have ever read on any post. All of us should take note of his comments (facts) and refer to it before making any decisions."

Steve,

I concur with you wholeheartedly. As a matter of fact, I find his insights more valuable than 'the legend of Satchel' that is apparently now in [permanent?] hibernation. And I say that as someone who often doesn't fully concur with his conclusions but certainly can't fault his very thorough, balanced analysis.

Even though I am a shameless ORH cheerleader, I think the following statement by Ex-SFer is spot on -

"I think the RE downturn in SF will take years and years and years and years and most of the losses will be due to inflation and not nominal losses. So far I'd say my prediction is fairly true, n'est pas?"

There is no question that this is what has been occurring for SF real estate, probably since around the middle of 2005. I agree that it will continue for years and years and years and years ... for a total of 4 years :-) Accordingly, I think we may have another 12 months left, while ex-SFer likely sees the current trend panning out for a longer time. Banks are not shutting down and while we will not see no money down transactions being offered by lending institutions for decades, I feel capital will become somewhat more readily available one banks start recouping some of their steep losses, and as they continue to recapitalize. Moreover, particularly given the current plight of global equity markets, hard assets [see the current commodity bubble] are a solid hedge against inflation, which I believe is far higher than current statistics appear to indicate. That said, gone are the days of double digit growth ... we may see low to mid single digits [mid single digits if we are VERY lucky] when things do turn around. Again, as has been well documented on this thread, certain properties in the 'right' areas will fare better than the norm.

Posted by: Recent ORH buyer at July 1, 2008 9:49 AM

I did see properties on or near the Great Lakes get appreciated too. You're right. Go a little bit south of there, tho, and forget it.

fluj:
as you say, we know nothing of the SF market. So I will counter: you know nothing of the great lakes region. Since I live here I think I'm a little more tuned in to it than you are.

I would consider Iowa Farmland to be more than "a little bit south of the lakes" since it is hundreds and hundreds of miles away from any great lake. and yet Iowan farm prices are up 23% YOY.
It's not just Iowa though, farmland is up 6% in MN, it's up a lot in IL, substantially in NE and so on.

You know nothing about this market, so stop. you're really embarassing yourself

also:
I didn't say "Seattle doesn't get overbids on anything except fixers and Ballard doesn't count", that was somebody else.

I do concede that SF had a double RE appreciation phase. but it doesn't negate my point, which is that SF's current downturn is very similar to SD's current downturn, delayed by 2 years. why not say SF had a triple phase? when it appreciated in the mid 1980's, then the mid to late 1990's and then the 2000's? That's why I'm telling you that this part is semantics more than anything.

that said, my point isn't to humble anybody. it is simply to create a logical argument.

Posted by: ex SF-er at July 1, 2008 9:49 AM

"Banks are not shutting down..."

I know ths is not what you're referring to, but have you seen Wall Street recently? Lehmans, and WaMus, and Bear Stearns, oh my!

Posted by: Foolio at July 1, 2008 10:12 AM

Ex SF-er,

I know quite a lot about the Great Lakes region. I was raised there, my family owns on Lake Erie, I want to buy there myslef, and you really need to stop lecturing at me. Or at the least please stop dissecting my language for a second and look at some overall trends in some very important cities. Do you think Columbus, or any part of Ohio south of the lake, or St. Louis or Detroit experienced a any boom? I don't. Not like the West or East saw.

http://www.realestatejournal.com/columnists/livingthere/20060315-livingthere.html

I know you didn't say you humbled me. I know that you didn't make the Seattle points. I also have not looked at farmland in the Midwest either, just cities.

SF never stopped climbing from '97 to 2006. There may have been a brief two month lull in like fall-winter of 2002-2003. That's it. If you want to call it two distinct bubble periods, go ahead.

Posted by: fluj at July 1, 2008 10:21 AM

Foolio,

Actually, what you bring up is part of the problem. All of the institutions that you mentioned will need further writedowns of the toxic CDOs/auction rate preferreds and the like that are on their books. None of them are done yet. At the same time, they will need capital infusions to offset this losses and to continue ongoing operations. Some of them will fail or be absorbed into a larger entity, see Bear Stearns. More ugliness yet to come ... but hopefully the light at the end of the tunnel will emerge by this time next year.

Posted by: Recent ORH buyer at July 1, 2008 10:36 AM

@ fluj

Pretty much everyone but the cheerleaders will tell you Seattle peaked last summer. That it's down 10% from last summer even in parts of Ballard is no surprise. The combination of excess inventory, little to no wage growth, and lender tightening will lead to this. Condo mania is over in Ballard.

The reason I made the comment about 'fixers' is because I'd didn't want you to show me houses with a list 15% below the median that sold for 12% below the median; that doesn't tell me much.

Posted by: unearthly at July 1, 2008 10:41 AM

Everyone but the cheerleaders, eh? 10 %. Sounds eerily familiar.

Posted by: fluj at July 1, 2008 10:47 AM

Just a friendly jab - hey where are my comps?

Posted by: unearthly at July 1, 2008 11:19 AM

I can't believe how myoptic these post are. Real estate does not exist in a vacume, look at the general economic picture and its clear to see that RE mirrors the general markets. How does anyone expect any real estate market to not be impacted by the general economic picture for the nation in general. Will real estate prices fall for 3 or more years, not if the economy recovers. And if they fall for 3 or more years, heaven help us.

Posted by: view lover at July 1, 2008 11:40 AM

@ORH:

Yep, that was my point. Not a wonderful time (IMO) to be making very large bets (which is what a home purchase is, essentially) when everything is crashing down around you.

Posted by: Foolio at July 1, 2008 11:48 AM

Foolio,

In this environment, it is particularly important to make good decisions about large purchases - certainly a home falls squarely into that category for most. That said, there aren't too may asset classes where one is insulated from what appears to be a global slowdown. We haven't heard much recently from Tipster about his "8-10% opportunity cost", referencing the amount one could make in the equity markets versus a R.E. investment. Perhaps the fact that the S&P 500 [at around 1280] is down more than -13% year to date may have a fair amount to do with it. We are money manager, and our flagship strategy is down 'just' -4% and we are probably among the top 10% of managers with our strategy ... in other words, -4% is very good, relatively speaking. And even those that CLAIM to have been loaded up on treasuries the whole time, remember that yields right now barely keep up with inflation, plus with the propsect of the Fed raising later this year, bond prices are likely to fall.

So, my point is there aren't to many places to 'hide' in what is a universally difficult environment for all asset classes. Moreover, as we are witnessing with the flow of capital to commodities, hard assets are a good refuge/hedge against inflation. Real estate is a hard asset, and until the R.E. market stabilizes, I'm not sure equity markets will be able to establish a strong foothold either.

My wife and I liquidated a large portion of our equities in early February with the S&P 500 around 1380. With the recent mark to market for Unit 2202 at ORH coupled with the fall of global equity markets since then, we are feeling pretty good about our transaction ... thus far.

Posted by: Recent ORH buyer at July 1, 2008 1:05 PM

"Do you think Columbus, or any part of Ohio south of the lake, or St. Louis or Detroit experienced a any boom? I don't"

Uh, fluj, I think I covered columbus and Ohio etc with my comment on "the rust belt".

Let us repeat what I've already said above since you're not listening:
of course the rust belt (not considered the midwest by people in flyover land) is doing poorly.

again, you made broadsweeping comments about how there was no bubble in the midwest. When 2 people who LIVE HERE showed you many examples of bubble, you said "well, yeah but only right at the lakes". when I showed you farmland in Iowa (which is nowhere near the great lakes) you come up with the rust belt which I already agreed did not see a bubble... however Detroit and the Rust belt (Ohio, Southern Michigan, Western Pennsylvania, Northern Indiana and parts of West Virginia) have been experiencing near depression like conditions for quite some time.

so again, as far as we can tell almost EVERY major city in North America went through rapid appreciation (significantly above long-term trend) from around 2002-2006 give or take a year, just as I said. Texas and Rust Belt are some of the ONLY regions that did not experience this, as I have already acknowledged. where else?

and to fend off any rediculous retort: yes there are some who would consider Ohio to be "Midwest" but the number is few. In the same way very few consider Phoenix to be west coast even though on some maps NV and AZ and even ID are considered "west coast"

the region near Ohio is the Rust belt, and Phoenix is the sun belt. Ohio has little to do with midwest economy or RE or anything, just like Phoenix has little to do with Bay Area economy or Re or anything.

Posted by: ex SF-er at July 1, 2008 1:07 PM

Oh, "the rust belt" is not in the midwest in your view. OK. Neither is St. Louis.

I asked you to please stop picking apart my language. You persisted in doing so. If you wish to think Ohio is not a midwestern state, that's fine.

Other areas that didn't see great appreciation include the more northern southern states.

Posted by: fluj at July 1, 2008 2:46 PM

@ORH:

In general, diversification is a good way to weather financial storms. Putting all (or most) of your money into one asset class (or even just one asset) is not IMO a successful, long-term strategy. The past few months in the market may have been rough, but a diversified portfolio has been shown time and again to be the most prudent course of action for long-term investors. Real estate can (and IMO should) be part of that portfolio, and through the magic of REITs, it can be, without becoming a disproportionately large part of that portfolio.

Posted by: Foolio at July 1, 2008 3:11 PM

Foolio,

In general, your premise is correct. However, there aren't too many places to turn at present, even if one runs a global diversified strategy ... we do, so we should know. Over the long term that shouldn't be the case, but over the next 3-5 years, who knows. Moreover, your premise hasn't held true for a group fairly frequently cited here who derive most of their wealth from a single asset - Google.

Posted by: Recent ORH buyer at July 1, 2008 3:24 PM

fluj:
I promise to not pick apart your language IF you promise to not write statements that are completely wrong.

I'm not sure who is picking apart whose language. I was very clear initially that I agreed with you that the rust belt is not doing well. I was very clear that I did not consider the rust belt to be the midwest, although some people do.

I was very clear and said ALMOST every MAJOR city saw rapid appreciation. Not that every city did, or that most minor cities did...

and then you bring up places like Columbus Ohio. Columbus Ohio is both the rust belt, and hardly a major city. thus, it does nothing to my argument

I agree that not 100% of everywhere went through rapid RE appreciation. But I still maintain that most of the country did.

some areas that did not (and I've already acknowledged this) were
-Texas
-The Rust Belt
-I will also agree, the rural deep south

but all this is besides the point: because you came on here and made EXTREMELY incorrect statements like "Also, the Midwest except for Chicago doesn't know what this boom of which we speak is all about."

when I give you concrete examples of how wrong you are (Minneapolis, Madison WI, Ann Arbor MI, Duluth, MN, Farmland in Iowa, etc) you complain of me "picking apart [your] language".

So what am I supposed to do when you state something that is PATENTLY false? this wasn't some semantic error, you are completely wrong.

again, as I said: if you want to relate Ohio to the Midwest in terms of the economy, that is fine. Most midwesterners do not because Ohio is the hub of the manufacturing-based industrial belt and has been going through a severe economic contraction for as long as I can remember. Whereas the midwest generally has an agriculture and commodity based economy that has been BOOMING.

in the same way, I could call Las Vegas "the west coast" because it is labelled as such on some maps... but I don't because the Sunbelt has VERY different economic and cultural inputs when compared to CA/OR/WA. HOWEVER I would also be correct calling Las Vegas "the west coast". would it help me when discussing RE issues? doubt it.

but even if we include Ohio and Detroit and St. Louis, your statement is STILL wrong: "Also, the Midwest except for Chicago doesn't know what this boom of which we speak is all about."

Posted by: ex SF-er at July 1, 2008 3:28 PM

Man, nobody says "rust belt." Give it a rust.

Posted by: fluj at July 1, 2008 3:35 PM

From reading these comments, you can easily tell who is a Liberal/Democrat or a Republican.

Posted by: George at July 1, 2008 3:43 PM

Many, many people consider Ohio the Midwest. Both of my parents families come from there and it has always been the Midwest. I understand your argument about the differences between the 'rust belt' and the 'corn belt', but then you'd have to say Nevada is probably in the 'sun belt'. This semantic argument has little point.

Identifying the trends though is instructive. Farm land is clearly becoming more valuable, whether it's in the Midwest or California.

Of the cities you mention that have seen a boom, Ann Arbor and Madison are university towns. I don't see how those are "major" cities. Minneapolis is and has been cited as one of the most desirable places in the country to live (Fortune mag, not me.)

Posted by: michiko at July 1, 2008 3:45 PM

Ok, you got me on that one. I'm smiling. thanks.

and on that note we will agree to disagree, amicably I hope, and I will take my leave to go bikeriding.

I hope you, too, leave your keyboard tonight with a smile on your face.

can I make you smile? let's see: (this is comedic not sarcastic... tone is hard on the computer and I'm smiling):
we in the midwest still call ohio the rust belt, because we're so far behind the times. That's why we're just now saying things you folk down Californee-way said years ago, wearing things you wore decades ago, and thinking things you thought centuries ago.

As we say out here "Things are hella bad in the rust belt, dont'ya know."

so that you have a picture of me

Posted by: ex SF-er at July 1, 2008 3:51 PM

oops:
my post got held by socketsite.

Fluj:
I did a post to try to "make up". it should clear soon.

have a good day.
===
Michiko:
I don't understand your comments
I understand your argument about the differences between the 'rust belt' and the 'corn belt', but then you'd have to say Nevada is probably in the 'sun belt'.
I did say exactly that.

This semantic argument has little point
I disagree. there are very clear differences (economic, cultural, geographic) between coastal states and sunbelt states. and also very clear differences between corn and rust belt states. I elucidated them above.
For instance: I think that Phoenix and Las vegas will react similarly. And SF, LA, SD and coastal california will react similarly. But I don't think SF will act like Phoenix.

why? because the sun belt is so different from coastal california.

Likewise: I think that MN, WI, IL, IA etc will react similarly to their downturn, and VERY different from MI, OH, western PA etc.

why? because they are different economies different situations.

Of the cities you mention that have seen a boom, Ann Arbor and Madison are university towns. I don't see how those are "major" cities. Minneapolis is and has been cited as one of the most desirable places in the country to live (Fortune mag, not me.)

again, I don't follow you. I never said "only major cities boomed". I said "almost every major city boomed"
this means (to me) that if you take all the major cities, then most of them boomed.
It says nothing (to me) about medium or small sized cities.

My point (again) was to show that MANY places in the midwest boomed, because a claim was made that nowhere besides Chicago boomed. thus, i purposefully gave 3 different types of cities to refute that argument
large cities (Mpls)
medium cities (Ann Arbor/Madison)
smaller cities (Duluth MN)
Farmland (Iowan farm land)

Many, many people consider Ohio the Midwest
and as I've admitted 1000 times, some people do consider Ohio the midwest, but I don't.

and as I've already said: yes, I agree completely that there is a huge difference between the rust belt and what you call corn belt, JUST LIKE there is a huge difference between the coastal states and the sunbelt. you are arguing MY point.

Posted by: ex SF-er at July 1, 2008 4:11 PM

but michiko:
your post helps me because I can now use a word I've not heard much of: "the corn belt"

thus, I can refine my arguments better and use "corn belt" instead of "midwest" which is too broad (obviously)

now, I'm really on to that bikeride.

fluj: i hope that my one post did make you giggle just a little bit. a good night to you.

Posted by: ex SF-er at July 1, 2008 4:17 PM

Ohio is hugely agrarian too tho! It is part of the corn belt or grain belt and I think it's way up there in dairy production too. So is PA. West Virginia is too mountainous.

I am not mad at anybody, ex-SFer. No hard feelings whatsoever.

And 94114 I went out to look at properties for a few hours today, actually. Multitaskin'.

Posted by: fluj at July 1, 2008 4:25 PM

The key midwest news today are the dismal numbers on auto sales. Very bad news for the workers in (some of) that (disputed) area. And a pretty solid indicator that we are in a real economic downturn now.

"Don't you people have jobs and/or lives?" -- I'm sitting in a mediation today; lots of down time (that I get to bill to the client anyway -- beats work).

Posted by: Trip at July 1, 2008 4:33 PM

ex-SFer,

I'm not arguing your point, but I am making the observation that you're arguing semantics and defining the terms however you want. If you haven't been wherever you are long enough to hear the term 'corn belt', I can't help you buddy.

Oh, you left already?

Posted by: michiko at July 1, 2008 4:35 PM

yep. went on a great bike ride.

I never said I had never heard of "corn belt" I said that I don't hear it often so didn't think to use it. I agree with you, this semantic argument is of no interest.

So I'll stick to my argument, not the off topic "what is the midwest" argument that is dull.
1) almost all major cities in North America demonstrated rapid appreciation in the 2000's. those same cities now mostly seem to be getting in trouble together, although not in unison. This causes me to question the "RE is local" meme.
2) To me, SF's downturn thus far seems very similar to SD's downturn, but behind by about 2 years. I've already agreed, it is my perception of things and there are reasons why this could be in error. others can see if they agree by going to Piggington.com and reading articles from 2005-2006, or you can see my bolded post from 2005 when I sold my SD condo (the month I sold, SD RE went up 20% YOY basis by the way), or you can just say "ex SF-er is a crackpot". it's all good.
3) the runup in RE prices did involve some of the midwest and was not restricted to Chicago, no matter how you define the word "midwest".

and I agree totally
1) there were some places that did not see a runup. The Ohio and surrounding region, TX, and the rural deep south are some (but not all) of those areas.
2) the runup was not confined to major cities (I never said that it was). it also included medium and smaller cities, smaller towns, farmland, vacation spots, and the list goes on and on. this of course supports the idea that something "national" happened since so much of the geographical US seems to be involved
3) SF is special and there are unique things about it. I agree fully, and this is part of the "RE is local" argument. That said, almost everywhere is special or unique in some way. It is not yet clear to me if being special (in whatever way) will spare a place from the downturn.
4) some areas might be spared the downturn. but I'm not sure which areas those will be.

Posted by: ex SF-er at July 2, 2008 6:21 AM

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