Category Archives: Real-Estate

Real Estate Recency Bias

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If there’s one sweet job to have — besides being a Goldman banker – - it’s Palo Alto real estate agent (at least a top-tier one). These days, just toss an ad into the Palo Alto Daily Post, and, voila, multiple above-market offers, of which you get a healthy percentage. The winningest realtor in town these days in Ken DeLeon, who is (not surprisingly) given editorial space on a regular basis in the paper in which he advertises regularly so he can share his (cough cough) objective view on where real estate is headed. His conclusions, of course, tend to suggest everlasting upside.


More Unreal Estate

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I have personally benefited in two direct ways from the insane multi-trillion dollar credit-creation that we’ve seen happen over the past half decade: one, a private investment I made in a startup has been blossoming very nicely, and two, the house in which I live is worth nine times what I paid for it. It’s this latter phenomenon I wanted to touch on this holiday, since it’s quiet, and Slopers outside the Silicon Valley might find perverse comfort in the relative bargains of their neighborhood.

Below is a simple chart showing the median sales price of Palo Alto houses and – helpfully – the percentage of the list price received. It’s a pretty interesting litte chart. At first, it gently descends, as the Valley dipped from the Internet bubble bursting. Next, it began a steady ascent, as interest rates plunged (thanks to Greenspan) and the housing bubble went into full swing. The financial crisis took the froth out (although Palo Alto didn’t suffer the 50%+ drops of less attractive areas, like Stockton) and, most recent, we have soared into unchartered territory, both in terms of median sales price and price received (as you can see, the price being paid is actually averaging 11.6% above the already lofty asking price). (more…)

Real Estate’s Strength

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The ETF symbol DRV, shown below, is a triple-bearish instrument which has a well-formed head and shoulders pattern. The fact that it retraced to the neckline perfect and is now again retreating just strengthens the view that real estate – - which looked pretty much doomed in the financial crisis – continues to thrive. For now………