thinktom [local realtor] at RE Talks 29 may 2011 9:42pm – “I sold a 33′ lot in Dunbar a few months ago for $1.55M. It’s back on at $1.8M.”
Gee. Assuming that ‘a few’ means ‘three’, that’s 16% appreciation in 3 months, for an annual compound interest rate of 82%. Much, much higher with the inevitable leverage, of course. Not too shabby. Amazing, in fact, given the interest rate environment, where the banks are offering savers 1% on a one year GIC. Wait!… maybe it’s because of these low interest rates that the lot prices are on fire. Speculative mania; 8th inning? ; Top of the 9th? (Or, rather, 3rd period, 20 seconds left on the clock?) – vreaa
There is some really stupid money out there at this point. $1.55 million for a LOT? Really stupid money. I wonder what a standard-sized lot would be in San Francisco. Not in the suburbs, but in the city. Less than $1.5 million, I’d bet.
“stupid money” = someone with a lot of money doing something you do not understand with and industry that you are an outsider to.
Reality check! Maybe the buyer are not the stupid ones here.
stfu
I am an industry insider, and a property owner.
(When denying your stupidity, it would be best to edit your post for grammatical errors.)
how dare you critique the grammar skills of a loyal cadre!
Generally the flipper is the “smart” money in the event of a profitable trade. The new buyer could also be “smart” money if he too then flips for a profitable trade. If houses are traded like stocks then one should expect their prices to go up and down. Eventually someone will buy as prices fall and the degree of his/her stupidity will be determined by the extent of the price drop and how much leverage was employed in the transaction. The point of flipping houses and trading in general is to make money. As an investment, however, the Dunbar lot at 1.5M+ is very likely stupid money to anyone who has even a shred of business and risk management knowledge. Just ask a professional investor and I think you will find agreement that best-case returns here are very likely negative. Bottom line: any idiot can spend money but it takes a certain amount of smarts to properly invest it.
What about the stupid people that all the bears were saying when they bought for a million? they don’t look stupid now do they?
Only if they sold and took their winning. Otherwise, the jury is still out.
Touché, touché. You have convinced me to make an offer. The Lord shall provide.
Someone’s going to have regret, either the buyer or the seller, and fools who only wished they were so smart.
If that lot isn’t right on the water, that price is way out of line with san fran.
http://www.zillow.com/homes/#/homes/for_sale/San-Francisco-CA/land_type
what’s better, stupid money or smart broke? (hint hint – to be able to spend money on something even stupidly or to not have any money to spend in a “smart” way).
What’s better? I know of a stupid builder who ended up bankrupt. So now he’s not even “smart broke” — he’s just “pitiful broke” and now must rely on his wife’s pension.
What’s best is to be in a good position in all market conditions.
It’s easy to make money on the way up in bubble runs. Smart money makes money on the way down.
Stupid broke, like you rusty, is the worst.
“what’s better, stupid money or smart broke?”
I agree with you that smart rich is better.
trick question – there’s no such thing as dumb or stupid money. The rich don’t get rich by being stupid or making dumb decisions. You renters are pitiful at this game
‘Dumb money’ is a useful concept.
Google the term; Lots of good articles.
Are you the smart money or just smart money looking to be stupid?
http://209.85.12.237/30078/151/0/f5103993/StagesOfABubble.png
I am certain that the only smart real estate investors are the ones that do not treat their principle residence as an “investment”, and that do not have a high percentage of the their net worth in real estate used as a principle residence.
So basically, very few Candadian homeowners are smart real estate investors.
Canadian-me smrt.
What is interesting is if the HAM is buying because they like the schools, etc.
Why are the houses being resold shortly after?
“The rich don’t get rich by being stupid or making dumb decisions.”
People with wealth do, on occasion, make bad investments and loose major portions of their assets. They may also invest unwisely and make a poor or negative return — this is called “high opportunity cost.”
Short hand for this is known as “dumb money.”