Livermore property values plummeting, bad investment

This place is a nightmare for real estate. Have you seen what is going on? 10% drop in less than 6 months?

Sadly its not an isolated incident. I reckon that in most communities in this state, if you bought property between 1998 and 2008 you have lost a lot of money. If you bought after 2008, or before 1993 you probably have only lost a little money. Some rare few might have actually seen some real appreciation.

Of course, this doesn't apply to the really affluent areas,like much of Silicon Valley. But most places.

CA real estate overall is a terrible "investment". There is simply no incentive to buy it, and its a huge liability for anyone owning in since the time periods I mention, unless of course its in the "good" areas.

I only mention this because there is a lot of talk about housing development in connection with BART; this will be cheap ass concrete block "projects" (high density/low income) that look like those places in the BART parking lot in Dublin. They were so ugly that I thought when I first saw them that they had moved the Santa Rita Jail closer to the freeway.

Christine Shreeve-Hubbs is in jail, teenage boys are no longer interested in encouraging their parents to purchase in Livermore.

Livermore high school football, basketball, lacrosse, and the chess team will all begin to lose their historic strength and success: the Rodeo professionals will stop returning as well.

Until her return to Hummers and keeping the local hotel beds warm and sticky.

Dropping like a rock. New adjustment for both zips 1% decrease, total decrease in last 30 days is about 5%. That's as much decrease in 30 days as we've had over the 3 months of the summer. For a total 120-day decrease of about 10%. Crazy!

So with this drop, we are within 1% of the historic lows that were reached in Feb-March 2009 - right after the major stock market crash.

It actually makes me think we will see a new crash of the DOW to 6.5K or lower this time.

And housing will drop another 10% from here. When that happens everyone in Livermore who bought since 1995 will be underwater. Right now its everyone since 1998-1999 onwards which is bad enough.

No comments? Really? There must be some homeowners on here.

The Real Anon wrote:

This place is a nightmare for real estate. Have you seen what is going on? 10% drop in less than 6 months?
Sadly its not an isolated incident. I reckon that in most communities in this state, if you bought property between 1998 and 2008 you have lost a lot of money. If you bought after 2008, or before 1993 you probably have only lost a little money. Some rare few might have actually seen some real appreciation.
Of course, this doesn't apply to the really affluent areas,like much of Silicon Valley. But most places.
CA real estate overall is a terrible "investment". There is simply no incentive to buy it, and its a huge liability for anyone owning in since the time periods I mention, unless of course its in the "good" areas.
I only mention this because there is a lot of talk about housing development in connection with BART; this will be cheap ass concrete block "projects" (high density/low income) that look like those places in the BART parking lot in Dublin. They were so ugly that I thought when I first saw them that they had moved the Santa Rita Jail closer to the freeway.

I have to disagree with your statement of those who purchased between 1998 and 2008 have lost a lot of money. I can only speak for myself. I purchased my home in Livermore in 2000. I still have equity. How is this possible? Because I didn't buy more than I could afford. I put over 25% down. This is my second home. My first home was over 50 years old and was a definite fixer-upper. I saved my money for over 7 years to buy that first house and put 20% down. I drove an old car, brought my lunch to work every day, stayed away from Starbucks, didn't go out much and let my friends buy all the toys. I saved and saved. It is amazing how much money people spend on stuff they really don't need. Did I get lucky and experience a significant price jump in the price I paid vs sold? Of course. But I also could have bought more home the first time. I chose the conservative route. And only purchased what I could TRULY AFFORD.
When it came time to buy my second home, I put every penny down that I made on my first home, minus $ for new appliances. I didn't cash out and buy a car(s), boat, motor home, pool etc.. I didn't take money out of the house to buy crap. I still drive an older, well maintained car. Yes home prices have certainly declined. But greed certainly didn't help.

Oh Wait wrote:

<quoted text>
I have to disagree with your statement of those who purchased between 1998 and 2008 have lost a lot of money. I can only speak for myself. I purchased my home in Livermore in 2000. I still have equity. How is this possible? Because I didn't buy more than I could afford. I put over 25% down. This is my second home. My first home was over 50 years old and was a definite fixer-upper. I saved my money for over 7 years to buy that first house and put 20% down. I drove an old car, brought my lunch to work every day, stayed away from Starbucks, didn't go out much and let my friends buy all the toys. I saved and saved. It is amazing how much money people spend on stuff they really don't need. Did I get lucky and experience a significant price jump in the price I paid vs sold? Of course. But I also could have bought more home the first time. I chose the conservative route. And only purchased what I could TRULY AFFORD.
When it came time to buy my second home, I put every penny down that I made on my first home, minus $ for new appliances. I didn't cash out and buy a car(s), boat, motor home, pool etc.. I didn't take money out of the house to buy crap. I still drive an older, well maintained car. Yes home prices have certainly declined. But greed certainly didn't help.

Well said, I agree 100%. If you bought more than you could afford, or used your home as an ATM you are screwed.....if you went with the home you could afford, you have lost equity but not cash!

Oh Wait wrote:

<quoted text>
I have to disagree with your statement of those who purchased between 1998 and 2008 have lost a lot of money. I can only speak for myself. I purchased my home in Livermore in 2000. I still have equity. How is this possible? Because I didn't buy more than I could afford. I put over 25% down. This is my second home. My first home was over 50 years old and was a definite fixer-upper. I saved my money for over 7 years to buy that first house and put 20% down. I drove an old car, brought my lunch to work every day, stayed away from Starbucks, didn't go out much and let my friends buy all the toys. I saved and saved. It is amazing how much money people spend on stuff they really don't need. Did I get lucky and experience a significant price jump in the price I paid vs sold? Of course. But I also could have bought more home the first time. I chose the conservative route. And only purchased what I could TRULY AFFORD.
When it came time to buy my second home, I put every penny down that I made on my first home, minus $ for new appliances. I didn't cash out and buy a car(s), boat, motor home, pool etc.. I didn't take money out of the house to buy crap. I still drive an older, well maintained car. Yes home prices have certainly declined. But greed certainly didn't help.

You sound like a pretty rational guy...and good for you. However, I believe that you *think* you have the same equity, but in reality, you actually don't. Or were you just saying you still have *some* equity left? Its very debatable that you have your original equity. I think the housing crash ate most of it, and that inflation picked up the crumbs.

Don't believe me? Let's do an exercise: pick any (non custom) home in Livermore, doesn't have to be your own house, and we'll do the math on it.

Noballsblogger wrote:

<quoted text>
Well said, I agree 100%. If you bought more than you could afford, or used your home as an ATM you are screwed.....if you went with the home you could afford, you have lost equity but not cash!

Not clear on what you mean by losing equity but not cash. A loss is a loss, or are you saying, its an unrealized loss so its not technically a loss (yet)??

What goes down will go up... Just do not sale.:)

My inlaws bought there ptown hone built in the 70's in 2004 for 660k and sold it last month for 690k. So, u never know.

The Real Anon wrote:

<quoted text>
Not clear on what you mean by losing equity but not cash. A loss is a loss, or are you saying, its an unrealized loss so its not technically a loss (yet)??

OK, let's get the white board out.... using random numbers for the ease of the exercise.

Buy a house for 100K
Put 25K down
House appreciates to 200K (equity 100K)
Housing market falls home worth 110K

If you will notice the equity in the house went up and down, but the cash value is still the same, and during the years you owned the home and made mortgage payments, you saved 30% of your interest in taxes.

You could beat yourself up over the decline in the housing market, but in all actuality there isn't a damned thing anyone can do about it. It sucks, but it's life....move on.

The Real Anon wrote:

<quoted text>
You sound like a pretty rational guy...and good for you. However, I believe that you *think* you have the same equity, but in reality, you actually don't. Or were you just saying you still have *some* equity left? Its very debatable that you have your original equity. I think the housing crash ate most of it, and that inflation picked up the crumbs.
Don't believe me? Let's do an exercise: pick any (non custom) home in Livermore, doesn't have to be your own house, and we'll do the math on it.

Doing "comps" in my neighborhood, surrounding houses are selling on average for 35K-50K more than I paid. So I would call that equity. I never said I had the same equity. Certainly not the height of several years ago when houses were selling for 200K+ more than I paid. But that was unrealistic and obviously couldn't sustain.
I have no idea where home prices will be in the future. But I didn't purchase my home in Livermore as an investment. I chose Livermore because I like the town. I am raising my family here and am quite happy. I contribute to my 401k, a separate IRA and other financial tools for my retirement. My house is my home, my children's home. Any money I make off it will be gravy.
I agree that many people don't have any equity left. There are several reasons for that. But the main one is probably that they paid too much for the house. Probably bad luck/ timing on their part. But you have to live somewhere.

Oh Wait wrote:

<quoted text>
Doing "comps" in my neighborhood, surrounding houses are selling on average for 35K-50K more than I paid. So I would call that equity. I never said I had the same equity. Certainly not the height of several years ago when houses were selling for 200K+ more than I paid. But that was unrealistic and obviously couldn't sustain.
I have no idea where home prices will be in the future. But I didn't purchase my home in Livermore as an investment. I chose Livermore because I like the town. I am raising my family here and am quite happy. I contribute to my 401k, a separate IRA and other financial tools for my retirement. My house is my home, my children's home. Any money I make off it will be gravy.
I agree that many people don't have any equity left. There are several reasons for that. But the main one is probably that they paid too much for the house. Probably bad luck/ timing on their part. But you have to live somewhere.

Well, on the face of it, it might appear as though you have accrued 35-50K in equity, but that is an illusion due to the nominal increase.

There are at least two things you need to adjust for: transaction costs - in order to realize any gain or loss from your investment you'd have to sell the home, incurring 4-6% costs, which on a 500K home, is $20-30K.

Then you have to account for inflation. If you bought say a 500K home in 2000, then it would have to sell at $627K now just to match inflation. Just to keep ahead of the market. Add in the transaction costs and it needs to be probably another $30K on top of that.

And the reason that's something to track is that when you buy vs rent you have to be able to understand both what the "opportunity cost" is as well as the total cost of ownership.

So understanding that includes the potential investment increase you have foregone by taking your down payment capital out of the market, and putting it into real estate. Then there is also the additional cash cost of buying vs renting (if any), accounting for of course, the effect of home ownership and the subsequent deductibility of mortgage interest and property taxes.

So nominally, on paper, you're just *barely* squeaking by with enough increase in equity to avoid a loss due to just the transaction costs of unwinding the investment. But probably, when you add in the effects of inflation, oppty cost, and buy-vs-rent differential, you're *way* behind.

As you say, we all have to live somewhere. And we can't *all* be renters - somebody has to own the property in order to rent it to us. But I think its a fools game. I've owned a property here in Livermore since 1999, and I've also been a RE investor in other states - and got out with my ass intact just in the nick of time on my investments - but I have friends, and even some business partners, who literally have lost their ass just by holding onto their properties. I mean, completely wiped out. Myself, while I have avoided losing money on RE investments, I still have lost a lot on my Livermore home, and to compound that also lost a lot of money in the stock market, after having made a pretty good chunk. Waiting for the next crash to get back in. Its coming....not sure when. But its coming. and its gonna be way bigger of a drop than we had in 2009. I'm talking DOW 5K, maybe lower. Unless companies start throwing off cash, there is almost no reason to own most of the "growth stocks" in the market. And hardly any reason to own blue chips, with their pathetically low dividends.

To sum up, a primary residence isn't an "investment" because owning a house purchased after 1995 or so in CA is really not an asset, but is actually only a liability, in most instances. You gotta park capital someplace, of course, but I am firmly convinced its a huge error to put it into RE, especially in a market like California.

Oh Wait wrote:

<quoted text>
Doing "comps" in my neighborhood, surrounding houses are selling on average for 35K-50K more than I paid. So I would call that equity. I never said I had the same equity. Certainly not the height of several years ago when houses were selling for 200K+ more than I paid. But that was unrealistic and obviously couldn't sustain.
I have no idea where home prices will be in the future. But I didn't purchase my home in Livermore as an investment. I chose Livermore because I like the town. I am raising my family here and am quite happy. I contribute to my 401k, a separate IRA and other financial tools for my retirement. My house is my home, my children's home. Any money I make off it will be gravy.
I agree that many people don't have any equity left. There are several reasons for that. But the main one is probably that they paid too much for the house. Probably bad luck/ timing on their part. But you have to live somewhere.

Well, on the face of it, it might appear as though you have accrued 35-50K in equity, but that is an illusion due to the nominal increase.

There are at least two things you need to adjust for: transaction costs - in order to realize any gain or loss from your investment you'd have to sell the home, incurring 4-6% costs, which on a 500K home, is $20-30K.

Then you have to account for inflation. If you bought say a 500K home in 2000, then it would have to sell at $627K now just to match inflation. Just to keep ahead of the market. Add in the transaction costs and it needs to be probably another $30K on top of that.

And the reason that's something to track is that when you buy vs rent you have to be able to understand both what the "opportunity cost" is as well as the total cost of ownership.

So understanding that includes the potential investment increase you have foregone by taking your down payment capital out of the market, and putting it into real estate. Then there is also the additional cash cost of buying vs renting (if any), accounting for of course, the effect of home ownership and the subsequent deductibility of mortgage interest and property taxes.

So nominally, on paper, you're just *barely* squeaking by with enough increase in equity to avoid a loss due to just the transaction costs of unwinding the investment. But probably, when you add in the effects of inflation, oppty cost, and buy-vs-rent differential, you're *way* behind.

As you say, we all have to live somewhere. And we can't *all* be renters - somebody has to own the property in order to rent it to us. But I think its a fools game. I've owned a property here in Livermore since 1999, and I've also been a RE investor in other states - and got out with my ass intact just in the nick of time on my investments - but I have friends, and even some business partners, who literally have lost their ass just by holding onto their properties. I mean, completely wiped out. Myself, while I have avoided losing money on RE investments, I still have lost a lot on my Livermore home, and to compound that also lost a lot of money in the stock market, after having made a pretty good chunk. Waiting for the next crash to get back in. Its coming....not sure when. But its coming. and its gonna be way bigger of a drop than we had in 2009. I'm talking DOW 5K, maybe lower. Unless companies start throwing off cash, there is almost no reason to own most of the "growth stocks" in the market. And hardly any reason to own blue chips, with their pathetically low dividends.

To sum up, a primary residence isn't an "investment" because owning a house purchased after 1995 or so in CA is really not an asset, but is actually a liability, in most instances. You gotta park capital someplace, of course, but I am firmly convinced its a huge error to put it into RE, especially in a market like California.

Sorry for the triplicate post. It didn't post and when I refreshed, it wasn't there either, so I hit submit a couple of times-but only one verification code, so go figure. Topix is kinda screwed up today.

I bought my house 21 years ago and just paid it off this year. I don't care what its worth. What matters is it is paid off with no mortgage payment. My stress level is greatly reduced. What you owe only matters if you sell, i bought to live and retire in the same place. Don't have such a pity party Anon. Life is pretty good. Spend more time getting ahead and less time bitching. I am 53 years old and i am looking at retiring next year. Waiting of the market to swing back around from the last month, and place my investment in a more stable area.

Tom wrote:

I bought my house 21 years ago and just paid it off this year. I don't care what its worth. What matters is it is paid off with no mortgage payment. My stress level is greatly reduced. What you owe only matters if you sell, i bought to live and retire in the same place. Don't have such a pity party Anon. Life is pretty good. Spend more time getting ahead and less time bitching. I am 53 years old and i am looking at retiring next year. Waiting of the market to swing back around from the last month, and place my investment in a more stable area.

May I suggest, Tom, that you develop a less self-centric viewpoint? You are the very small (apparently) financially more secure minority of Californians. And, unless you have accrued *substantial* amounts of cash or cash-producing assets, then there is simply no way you are going to live out your retirement in this place. Unless you have at least 2M cash on hand, right now, you will run out of money in about 20 years.

That is, of course, unless my suspicions are correct and you're one of these over-compensated public safety folks who will be collecting a giant pension for the rest of your life . That would explain the retirement at 53. Good old 3@50, eh? Well, don't count on that either, because this state is bankrupt and people with any money left will eventually be fleeing in larger numbers than they already are. There won't be enough people left to rob to pay out these nutty pensions for much longer.

Rents rising: true.

Anon, I thought you were moving out of CA?

Anon, your an idiot. Two million. I would have to pull out 100,000 a year with zero interest to lose that in 20 years. No i am not a public employee, just smart with my money

Tom wrote:

Anon, your an idiot. Two million. I would have to pull out 100,000 a year with zero interest to lose that in 20 years. No i am not a public employee, just smart with my money

You think your costs are going to be lower as time goes on, eh? Did you forget about inflation? It eats fixed incomes. And the costs of commodities are inflating crazily. In energy, food, water, health care, etc.

In 10 years, the average utility bill in CA could easily be $500/month. The costs of health care will be $1K/month, your property tax will be much higher (in 20 years, if you pay say $5K right now, in year 20 it will be $7500 and thats assuming you keep the protection offered by Prop 13, which is not for certain), gas could be any crazy amount, could be $15/gal very easily, and to avoid you'd need to buy a $30-40K EV or hybrid, I mean, just think of the many things that can affect your costs.$2M does not go far. you can use a retirement calculator to figure out this stuff, its not guesswork.