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There’s always something to howl about

Life’s Good

This is the comment I found on my own blog Christmas morning:

I can honestly say I wish there were fewer agents like you… Buyer beware, right?

Joy to the world! This from a gentleman whose own blog promotes his mission as sharing his vast research of the Pacific Beach, San Diego real estate market. Specifically, he says, “I plan to focus on listings where the seller is taking a loss”. His most recent post is titled “Another Notice of Default Filed in PB”. Lovely. Notice, I don’t provide a link, because I am finding this recent proliferation of to-hell-in-a-hand-basket reporting nothing more than childish, ambulance chasing tripe of which I have grown weary. Get a hobby, read a book, play with your children, but stop taking perverse pleasure in the misfortune of others. Grow up and stop blaming your personal unrest on NAR, economists, real estate agents, mortgage lending practices and everything and everybody in between.

His little holiday message to me was an epiphany of sorts, and in my typical around the block fashion, I will attempt to explain.

It has been a long-standing tradition in our family to spend the week at our cabin in Lake Arrowhead. Steve and I have been fortunate to be able to offer our children many opportunities, but we are not blessed with a large extended family, the kind that you see in the warm and fuzzy Christmas movies. So each year we pack up Simon-the-world’s-dumbest-dog and the NSYNC Christmas CD and head out of Dodge. Each year has seemingly been better than the last; we look forward to the opportunity for sledding, hiking, entire “Jammie Days” and the annual 007 Days of Christmas. (The girls prefer Pierce Brosnan, while I am still partial to the Sean Connery Bond, for whatever it’s worth).

So, with the greatest of expectations, we headed off for our little definition of family bliss as soon as school was out. Actually, we left a day late due to illness. Fluffy, the family feline, picked the morning of our departure to show the first serious symptoms of Something Is Very Wrong With The Cat disease. The first sign that something was amiss came when she let Steve pet her, this being a bad sign in that she likes Steve about as much as Donald Trump likes Rosie O’Donnell. Day One of my Very Brady Christmas was spent identifying the only vet in town who could see us before the vernal equinox. $363.87 later, we could find comfort in the knowledge that Fluffy (who isn’t) was “not feeling well.”

By Vacation Day Two, we were on the road. Granted, we had to practically carry our oldest to the car as she now had the Something is Very Wrong With Becky disease, but keep in mind that we only delay vacations for our pets’ illnesses. And, this marked the beginning of my very blue week. It is hard for me still to put my finger on the defining moment. The children grew up overnight, and suddenly it became clear that family time was not the priority it had once been. At times, I get the distinct feeling that my daughters see our time together as a sentence, yet I think I have finally figured out how to get them to tackle their chores. “Clean your room or else we are going somewhere together!” Eiyeeee! I know now that this isn’t bad, but just different. We were evolving as a family unit, and I didn’t like it. I knew I was in trouble when I pulled a book off the shelf to cheer myself up, and Death of a Salesman actually did the trick! (I won’t tell you how it ends). Sure, there were some high points to my week leading up to Christmas. I successfully accomplished my goal of finishing A Year in Province in better than real time (by one month). My brisket did, in fact, taste slightly better than shoe leather (but not the fine, Italian variety). On the feed-the-family front, we managed to put four transaction sides into escrow from our remote location in a little under a week.

I woke up Christmas Eve morning with renewed enthusiasm. Fearing my extended absence from the Bloodhound would cause Greg to rethink my “contributor” status, I fired up the internet connection. Alas, in a single morning when Tech Support (or as I like to call them, The Ghost of Christmas Past) is apparently too busy with the holiday office party to answer the phones, my own blog server is down (as in gone from the planet for the better part of the day), my website has decided to morph into an intelligent being who has decided that actual photos of my listings do not belong there, and Sellsius, in a post dedicated to the Who’s Who of real estate bloggers, sends their best wishes to everyone but yours truly. Ouch.

Then it hit me. I am sitting on a deck at 5300 feet, and I can’t see the forest for the trees. As Willy Loman so eloquently put it, “Work a lifetime to pay off a house. You finally own it, and there’s nobody to live in it.” Jeff Brown’s clients make real estate decisions based wholly on financial merits, but most of us make our purchases with a “home” in mind. When I began to see the redefinition of my definition of home, I got uneasy. And, yes, we are mirrors of those around us. I was letting others, including my children and the bubbleheads (even Sellsius), bring me down.

Ironically, during our stay, Steve and I found a vacation home three doors down from our current one that we fell in love with. It has all of the features we have always wanted in our retirement and would serve us well in the meantime as we prepare to close the chapter on our children-at-home years. Steve called our agent in Lake Arrowhead to inquire about the home and, much to the delight of our bubble friends I’m sure, she told him what we knew: “The market sucks”. And do you know our reaction? “So what.” This is a home that, from a strictly financial standpoint, makes absolutely no sense. The timing is wrong, and the price tag is wrong. We have a perfectly good, albeit infinitely older and inferior vacation home, a home that we stretched and sweated to afford. Yet, if we had made all of our life decisions based solely on return-on-investment, we wouldn’t have this second home, we wouldn’t have our San Diego home, and, dare I say, we wouldn’t have children.

We may take the plunge on this new property, but we probably won’t. The point is that, for most of us, home purchase decisions have always been and will remain a very personal decision and a very personal choice. Many will chose to heed the warnings of the doomsdayers and wait it out, which is a perfectly appropriate response if that is what you find best for your personal situation. In the meantime, I see no value in lambasting those whose goals or decisions may not jibe with yours. I fail to see how devoting an entire blog to counting the numbers of homeowners in the red serves any useful purpose, except perhaps to justify a real estate decision you were unable to or failed to make. Your decision to not purchase is no more valid than the decisions of many others, such as four of our clients this past week, to buy. Their motivations and goals may simply have been different. To those on the bubble train that like to consider their cargo of negativity a public service, you will likely continue to hold to your beliefs of an industry maliciously driving the weak and unsuspecting into bankruptcy. Steve and I, as professionals in that very industry, are all too aware of the “market sucks” conditions of which you and our agent speak, yet we define our return-on-investment in different terms. In short, we don’t want to find ourselves waiting for the right time to purchase a home only to find that no one will be living in it.

Life’s good.

Related posts:
  • Two out of three ain’t bad when purchasing a home
  • Mortgage Market Week in Review
  • Catching a glimpse of Don Reedy’s vision: So far, so good.

  • 28 comments

    28 Comments so far

    1. jf.sellsius December 25th, 2006 7:24 pm

      Mea culpa Kris. To make up for our goof we give you a present here and we left another one in the Santa post. No way we would intentionally leave you out of the Who’s Who. You are definitely a Who :)
      Merry Christmas to you and your loved ones.
      http://tinyurl.com/y888ml

      PS Most likely we missed some others but dang we tried not to. Sorry :(

    2. mike December 25th, 2006 8:37 pm

      I’m not sure you all realize just how much animosity there is out there towards realtors. And why.

      It would probably be a good subject for discussion.

    3. Jeff Brown December 25th, 2006 11:10 pm

      Kris – I couldn’t have said it better. No way. I bet you were the cool girl next door. :-)

      And Kris, I apologize in advance for the following vent. But, as usual you ‘stuck your landing’ like a gold medal winner.

      Mike – Though I’m not in the house selling part of the industry, I’ve noticed during my career that there will always be animosity towards agents – even in good times. But I’ve also noticed that even though those same folks probably harbor more bad feelings for attorneys, they never seem to hesitate when they truly need one.

      There are FAR less FSBO sales now compared to 20 years ago. Even 10 years ago. The animosity hasn’t increased. As a matter of fact the public has embraced the use of Realtors more every year. There is really, in my opinion, no need to figure out the ‘why’ of current animosity. It comes from the folks Kris wrote about. They’re bitter, sometimes lonely folks who didn’t have the stones to buy real estate when they could. I don’t mean to say that ‘type’ is universal, far from it. There are some very legit gripes out there. These particular folks just cry longer and whine louder.

      In the end, as this correction takes its course, and the nation as a whole shows price drops nowhere near the monster collapse predicted by this group, they will slowly become less visible, possibly become more bitter, and hope and pray for the next downturn.

      I’ve seen them pop up every time real estate takes a temporary hit. I’ve been licensed since Nixon was in is first year in office, and nothing’s changed when it comes to these malcontents. They’re simply not worth the energy it would take to ‘discuss’ their motivation. They’ll fade away just like the latest rock ‘n roll slut who can’t carry a tune in the shower – and just as quickly.

      In the end, Kris said it perfectly – “Notice, I don’t provide a link, because I am finding this recent proliferation of to-hell-in-a-hand-basket reporting nothing more than childish, ambulance chasing tripe of which I have grown weary. Get a hobby, read a book, play with your children, but stop taking perverse pleasure in the misfortune of others. Grow up and stop blaming your personal unrest on NAR, economists, real estate agents, mortgage lending practices and everything and everybody in between.”

    4. Doug Quance December 26th, 2006 7:23 am

      Well stated, Jeff.

      Well stated.

    5. Kris Berg December 26th, 2006 9:16 am

      JF – That MORE than made up for the “oversight”. Too funny. I will have to hold up a sign in your honor at this year’s Charger Superbowl.

      Jeff – Magnificent rant, and thanks for having my back.

    6. jf.sellsius December 26th, 2006 11:32 am

      Kris, Now that would be an honor. Thanks for the kind thought.

    7. John December 26th, 2006 12:17 pm

      Some people are just bitter and pathetic. There are those who hate lawyers, car salemen, realtors, mechanics, you name it. Some even hate entire companies (eg. Microsoft) and devote endless hours and blog posts to this topic.

      Why bother? There are good and bad people in any industry (mostly good) and you should really have a head on your shoulders and realize when someone is BSing you and not doing their job, and stop working with them.

      Buying a home that you can’t afford is your own fault, and nobody else’s. No realtor or mortgage broker can force you to buy a house or take out a certain type of loan.

    8. Kaiser Sose December 26th, 2006 7:47 pm

      Argumentum ad-hominem.

      Why do you all insist on justifying your arguements by comments like: “except perhaps to justify a real estate decision you were unable to or failed to make.”

      Argumentum ad-hominem.

      Or, “They’re bitter, sometimes lonely folks who didn’t have the stones to buy real estate when they could. I don’t mean to say that ‘type’ is universal, far from it. There are some very legit gripes out there. These particular folks just cry longer and whine louder”.

      Arguementum ad-hominem….but I did enjoy the cheesy “stones” cliche’.

      Many of us who are alarmed at the current state of the RE market ARE owners. Did you hear that Jeff? Many (possibly most) of us own! I even rented out a 2/2 condo because it made sense to. Can you believe a bubblehead had a rental property? Many of us have and still do.

      Now, I don’t have a huge problem with realtors. They are salespeople. That’s what they do. Sell. Many mortgage brokers on the otherhand, for the most part, are weasels. Nevertheless, you are still part of the mechanism that has created an enormous asset price bubble that could have very significant, negative economic implications while it corrects. Notice the operative word ‘while’.

      Perhaps some people are jaded that they may have missed out on participating in the housing inflation. But, I don’t really blame them. All people like me and you did to make a rediculous return in RE was…drum roll please…own a home. Think about it. It defies logic that my house and condo more than doubled in 6 years, and I live in Denver, not Phoenix, DC or LA. That’s approximately 15% per year compounding with 100% equity financing. Use a low-down payment loan and the ROE is staggering. These are houses not futures contracts! Can’t any of you see this is unsustainable and destined for a serious correction?

      I commend people who show what a disastrous decision buying a house can possibly be in this market. I understand if you interpret it as if they are reveling in another persons misfortune. Perhaps they are. Perhaps it depends on who the upside-down debtor is. The single mother who got swindled and bullied into a toxic loan by a shill? Well, that is awful and it is terribly unfortunate. The greedy 24 year-old flipper out to make a fast million? Too bad, so sad.

      Either way, people will have the information and possibly realize that purchasing a home at or near the peak of this bubbble can result in financial ruin, especially for a first-time homebuyer. We aren’t talking about maxing-out a $5,000 credit card here folks. We are talking about possibly being underwater by tens of thousands, perhaps even over a hundred thousand dollars. Imagine the toll that will take on a young family starting out. Why shouldn’t people learn from the mistakes of others? That is the useful purpose of that blog Kris.

      Spin it any you want. Call the bubbleheads the same names the bubbleheads call you. In the end, it won’t matter. 2007 will be a VERY interesting year.

    9. Marlow December 26th, 2006 9:15 pm

      The market goes up, the market goes down. It’s cyclical, like other commodities, and should be viewed as a long-term investment. Realtors, real estate agents and mortgage brokers can’t force a buyer or seller to sign a contract. I do understand that there are some unscrupulous salespeople out there who take advantage of folks, but they could just as soon be selling aluminum siding as real estate or mortgages. Adults are responsible for their decisions, and I hope that if they uninformed, they would turn to a trusted advisor, such as an attorney, a good neighbor, a pastor in their church or someone else who could help them in making a good decision. If a Buyer comes to me and asks for assistance in buying a home, I don’t second-guess them and give them the third degree about their finances to make sure they can afford it. That’s not my business nor my role. Who am I to judge how they spend their money? I may think they shouldn’t buy that double-tall latte mochachino every day and take ski trips to Vail and those designer boots, but it’s not my place to say they can’t afford them or can’t afford that 2BR condo w/river vue. If a mortgage underwrite decides they can afford a property and they meet HUD guidelines, how can I possibly tell them NO, YOU CAN’T BUY A HOUSE? That’s absurd. I think we just educate Buyers about market conditions, but we must trust adults to make their own decisions.

    10. mike December 26th, 2006 10:42 pm

      Why do you all insist on justifying your arguements by comments like: “except perhaps to justify a real estate decision you were unable to or failed to make.”

      Listen to them: they’re convinced that any enmity is unjusified. Let them be; ignorance is bliss.

      Robert Heinlein was right: “Never try to teach a pig to sing. It wastes your time and it annoys the pig.”

    11. Brian Brady December 26th, 2006 11:43 pm

      I personally prefer shark to weasel.

    12. Kaiser Sose December 27th, 2006 9:21 am

      Don’t flatter yourself.

    13. Kaiser Sose December 27th, 2006 2:16 pm

      >>>The market goes up, the market goes down. It’s cyclical, like other commodities, and should be viewed as a long-term investment.

    14. Kaiser Sose December 27th, 2006 2:18 pm

      >>>The market goes up, the market goes down. It’s cyclical, like other commodities, and should be viewed as a long-term investment.

      That is certainly NOT the message the NAR has been sending to the public. “Buy now or be priced out forever”, “real estate only goes up”, or Mr. Lereah’s book, “Are you missing the real estate boom?”.

      Your industry has hyped this market and it has worked for your personal benefit. You should not feel offended when someone makes a comment against the industry that you are a part of. Although, I will admit that the bulk of the problems we are experiencing, and will experience, in the RE market are primarily to be blamed on unscrupulous and predatory lending practices, not the brokers.

    15. jeff Brown December 27th, 2006 7:50 pm

      > It comes from the folks Kris wrote about. They’re bitter, sometimes lonely folks who didn’t have the stones to buy real estate when they could. I don’t mean to say that ‘type’ is universal, far from it. There are some very legit gripes out there. These particular folks just cry longer and whine louder.

      Kaiser, if you’ll notice, I didn’t lump everyone into one basket. I made sure that didn’t happen.

      As far as your personal experience is concerned, if you’d been my client several years ago you wouldn’t be talking about your house and the condo you’re renting. You’d be talking about the five figure monthly income you receive monthly – all tax sheltered.

      And if you wish to tangle with Brian, give me notice. I want a front row seat. He could buy you before his first coffee break and be unaware of it until his accountant told him.

      Brian – You’re too cool. One sentence said it all.

    16. mike December 28th, 2006 4:32 am

      As far as your personal experience is concerned, if you’d been my client several years ago you wouldn’t be talking about your house and the condo you’re renting. You’d be talking about the five figure monthly income you receive monthly – all tax sheltered.

      Jeff, you must manage your own money, yes?

      So, by now, you probably have a six-figure, tax-free monthly income. Am I right?

    17. Kaiser Sose December 28th, 2006 8:55 am

      >>>So, by now, you probably have a six-figure, tax-free monthly income. Am I right?

      Still waiting for the answer to this one from over a month ago…

    18. Jeff Brown December 28th, 2006 9:37 am

      No, not quite six figures. :-)

    19. jb December 28th, 2006 10:01 am

      Bubbleheads are mostly renters who will benefit from a monumental real estate crash (they encourage it with sky-is-falling blogs)….the everything is peachy / there is no bubble crowd is mostly agents and brokers who will benefit from keeping buyers in the game(they downplay bubblespeak on blogs).

      Interesting how most folks are taking a position that benefits them personally. No wonder one of the first thing a judge looks for during a trial is motive.

      But you have to admit – taking an objective look at the facts does indeed point to a bubble of unprecedented proportions. How will it play out? If I knew that with certainty, I’d position myself to take full advantage of it! (my motive = $$ too, just like the rest of you! :-)

    20. Kaiser Sose December 28th, 2006 10:22 am

      Nice Jeff. What would happen to your income if RE fell 20% to 30%? I’d be interested to know how much downside there is to your strategy. I’d be surprized if there wasn’t any.

    21. Jeff Brown December 28th, 2006 7:35 pm

      JB – I can’t disagree with you except on one point. The ‘facts’ as you call them may result in the downturn bubbleheads pray for. But they may not. You and I simply don’t know, do we? I don’t take a do-or-die position on a bursting bubble. Why?

      Because so far, with a rare exception here and there, there just hasn’t been the predicted mass trauma. Christmas is was 75 degrees in my town. Today it’s 55. What did the facts say to predict that? Our crystal balls are equally cracked. :-) San Diego has been one the areas almost universally predicted to fall into the Pacific, but hasn’t. Why? Because even now two things are beginning to happen. 1) Buyers are starting to materialize, sensing the worst could be almost over. 2) Many sellers have realized that if they don’t sell now they won’t lose money – Duh. Still, we all have to wait until the market sends a clear message that SD is to remain above sea level.

      Until that message is sent, the bubbleheads will rant and rave about the ‘coming’ disaster, and hurl insults at those who either don’t believe them, or God forbid, believe something else. And through all this they’ll maintain the facts are on their side.

      Ultimately JB, your right about motivation. People need to be far more objective than they are.

      As far as being objective – the downside in real estate investment is always walking with us, no matter how rosy things may appear. I’ve lived through too many of them to deny it. If folks want to point to the idiots in the industry who wish to pretend up is down and call them ‘the norm’, let them. It makes them look idiotic themselves.

      If I’m not objective when advising my clients, they’d have left me long ago. I’m not always right, but when bad things happen they’re not ambushed. I’ve found that my own best interest is served by being ruthlessly objective and brutally honest, because that’s always the nature of the market.

    22. Jeff Brown December 28th, 2006 7:44 pm

      Kaiser – RE: Downside – I addressed that with JB.

      If real estate went down 20-30% it probably wouldn’t do it universally. But if it did in many areas, I’d still make money, and more importantly, so would my clients.

      Whether the trendline is headed up or down, the experienced and knowledgeable investor knows how to respond accordingly. There will be many millionaires born as a result of this correction, whether it’s almost over, or matches your predictions.

      Knowledge makes the difference. Or, like Warren Buffett likes to say, “Risk is the result of not knowing what you’re doing.”

    23. Brian Brady December 28th, 2006 10:24 pm

      I’d like to offer comments to Kaiser Sose:

      Come On! Someone who adopts the moniker of a homicidal and schizophrenic sociopath could certainly understand a little of my “predatory” humor, no?

      Let me throw you a curveball. Price deflation would have little or no impact on income-producing properties. Only two things would affect that:

      1- DRAMATIC decreases in wages or income (that would affect rent rates)

      2- A glut of multi-family housing (which just ain’t happening in San Diego County). Figures I’ve heard suggest that we need 4-5 years of surplus contruction in that property type to replace the rental units taken out of the market these past 4 years in condo conversions.

      Jeff Brown would suffer a HUGE loss on his “paper” net worth should we have a 20-30% deflation in prices. His debt service would be covered by increasing rent rates (due to smaller supply and an increasing population).

      In concluson. Jeff, and his well-heeled clients would be stuck…waiting for the market to come back over a 7-10 year period. They’s be “stuck” collecting positive cash-flow.

    24. Brian Brady December 28th, 2006 10:26 pm

      Please overlook my quick-fingered spelling errors and attribute it to my new found enthusiasm for BHB

    25. mike December 28th, 2006 10:49 pm

      (Possibly a duplicate; lost my connection last time)

      No, not quite six figures.

      I guess what I’m trying to say is: I’m having a hard time understanding why, if you can really deliver on the promise of a 5-figure, tax-free income to a complete stranger after just several years, why you’re not retired already and living in the lap of luxury somewhere on a $50K/mo tax-free income.

    26. Jeff Brown December 28th, 2006 11:41 pm

      Why does Roger Clemens still pitch? Why does Favre still suit up every Sunday? Why did Nolan Ryan pitch until he was closer to 50 than 40? Why did the best baseball player of all time, Willie Mays, play until he was so old he literally couldn’t catch a lazy fly ball? And the best two – why did Michael Jordon keep trying to come back, and why does Tiger bother to keep teeing it up? They both earn 10 figures annually just because they’re alive.

      And finally, why does Warren Buffett, or Bill Gates, or any other multi-billionaire still go to work every day?

      They love what they do. It’s not work for them. It reminds me of one of baseball’s greatest ever players, (the name escapes me of course) who said, and I paraphrase,
      “I can’t believe they pay me millions to do this, because I’d do it for nothin’”.

      There’s no greater rush for me than to call a client for the purpose of telling them they can quit their day job. Or that they’re officially a millionaire.

      That’s why I still do it. Oh, and the lap of luxury? I allow myself very few ‘treats’. One of them is a six figure car I drive to work every day. Otherwise, I live a pretty normal life. I have the same friends I’ve had for years, they don’t care about any of this.

      When I retire, it will never be totally.

    27. Jeff Brown December 28th, 2006 11:44 pm

      I said Tiger and Michael Jordon earn 10 figures annually when I meant to write 8-9 figures.

    28. [...] I recently wrote a post for the Bloodhound which I’ll call my group therapy. I will admit that one catalyst for my post was a rather hateful little remark (personal attack) that was made here, but the article itself was intended to suggest that not all (or even most) real estate decisions are based solely on the financial bottom line but on more personal considerations. I wrote that home buyers and sellers define “return on investment” in different ways, and it is not always defined in terms of dollars. Case in point, in the past month Steve and I have seen our clients make their decisions to buy or sell based on divorce, need to accommodate a growing family, downsizing for impending retirement, downsizing in response to the last child leaving the nest, relocation both to and from San Diego, and simply a desire to purchase a larger home. In not one of these cases did the state of the market drive these decisions, nor was it a major consideration. [...]