patrick.net

it was a contingency of broader interests at the metro and state level. They had “determined” “that” RE “value” would be in decline should the situation continue, because it was actually detracting from the general job market. These interests were involved in the construction of the WTC. and yes it did work its magic, NYC was very prosperous during the 80s and 90s.

Shmend,

What is your control group here? Are you certain NYC in the 80s and 90s would not have been as "prosperous" w/out rent control? NYC has long been the financial banking hub of the U.S. (if not the world). How would this have been changed significantly (if at all) by the absence of rent control?

Aside from the ex-post facto guesstimations, who's to say the NYC rental market would not have eventually self-corrected due to the general lack of affordability (as we are now seeing happening in the CA, FL, AZ housing markets)?

Of course - that is one of the premier fields for intellectual hand-pulled noodles, so to speak.

that's a very informed and scientifically rational series of arguments you are making. i can see the benefit of all your training now...

People who want an absence of regulation usually have specific economic motives.

exactly. i just can't be bothered writing a critique outlining how it is always the vested interests who want 'free markets' and subsidised american farmers who want 'level playing fields' and so on and so forth. and the other million criticisms of free market ideology that have been made out there, all easily obtained...

The goal of players in a free market, as many economists have shown, is to put an end to the free market by eliminating all competition.

Right, cartels and monopolies are inherently anti-free-market. Which is why competition must be preserved with anti-trust, pro-market regulation. Since when does being anti-price/rent control automatically make one an anarchist and/or plutocrat apologist?

Efficient, transparent "free" markets are neither "naturally occurring" nor good for plutocrats and monopolies.

Hmm... why am arguing with a guy who just accused me of being retarded?

OpinionsPlease/MarinaPrime/ConfusedRealtor asked a thread or two ago about buying a condo at Resort at Squaw Creek. Well, that's a topic near and dear to my heart (the skiing, that is). If anyone think's it's a good time to buy in Tahoe, here's a relevant article from the usually rosy DQNews:

http://dqnews.com/RRCA2Home0207.shtm

"Steep Drop in Sales of California Vacation Homes"

We rented a lux condo at the new Squaw Village last Spring - top of the line finishes, right at the base in the Village, decent price. After staying, the owner offered to sell it to us below what he paid. No thank you, at least for now!

On some Bay Area Chinese immigrant blog sites, buying a house for occupation or investment is still a hot topic. I am not sure if they received the memo of the recent stock market crash, but as skibum said, they've never seen a serious crash in their entire life, so the current state of housing is perceived as the bottom. The most senior "Bay Area residents" came here in 1989 or 1990 as FOB students, so they had little memory of what happened back then. When they started shopping for a home, the market hit the bottom and it was all glamor story from that point onwards.

The working class (I think of anyone who needs a wage as working class, including myself) Chinese typically buy in MSJ and Sunnyvale (with Cupertino school district), more established immigrants from Hong Kong or Taiwan buy in Los Altos, Cupertino and Saratoga. You can find quite a few elected municipal leaders born in Hong Kong, Taiwan and India in Los Altos, Palo Alto, Cupertino and Saratoga, so that gives you an idea of where these ethnic groups are buying.

There is also substantial money laundering going on from corrupted funds in China, but these people typically park their dough in SoCal, San Marino, Palos Verdes, and to a lesser extent SF City.

Again, I don't think the support from immigrants alone are going to carry the south bay housing through rough times, but there will be lots of knife-catching initially because they are either aggressive compulsive savers, or are able to give up a lot for home ownership, or the combination of two. In the initial phase of a housing downturn, I expect to see a divergence in pricing, houses in good school districts keeping its level and houses in so-so or bad school districts going into a free fall.

Although I think the houses in good school districts will also fall in the end, the net net result will be a bigger divergence in housing price between the desirable and undesirable areas (or school districts), just a miniature reflection of what the US was going through after each housing bubble. If you look back in history, it seems that after series of economic recessions, the inland falls further and further behind with the coasts soaring higher and higher, the pricing differential between the Rich America and the Poor America is further amplified after each recession. Bay Area will follow exactly that pattern.

@SQT: ;-)

Different Sean Says:

i just can’t be bothered writing a critique outlining how it is always the vested interests who want ‘free markets’ and subsidised american farmers who want ‘level playing fields’ and so on and so forth.

DS,

Vested interests want anything BUT a "free market" or level playing field, which is preceisely why everyone ELSE should want one. Monopolies and cartels do NOT like competition or price/wage tranparency. Is the NAR lobbying in favor of Open-MLS or for fee-based commissions?

It looks like there is now a dinner bubble underway.

Is Kanye West saying something about the quality of New York Indian restaurants?

The housing market's crashing!

The stock market's crashing!

Gold's crashing!

...and I'm dancing in the streets singing, "la, la, laaaa..."

There is also substantial money laundering going on from corrupted funds in China, but these people typically park their dough in SoCal, San Marino, Palos Verdes, and to a lesser extent SF City.

I keep hearing a lot of scuttlebut about that... definitely more in SoCal, but here as well.

OO
On some Bay Area Chinese immigrant blog sites, buying a house for occupation or investment is still a hot topic.

Can you post a link?

go to www.mitbbs.com, and go search the SF local forum. mitbbs is the largest forum for mainland Chinese immigrants and students in the US. HK and Taiwan immigrants are much more disperse and well assimilated, so you probably can only find us on English speaking sites.

Does it stand for MIT the school?

eburbed,

I doubt it. The site is registered to someone in BA and the discussions are all over the place.

You're not missing too much contentwise.

OO,

I didn't dig too deeply but my short glimpse in suggests a site is crawling with FOBs who think entirely too well of themselves.

OP, you think YOU are frustrated? Talk to my realtor who saw my wife and I walk away from making an offer last month.

I doubt it. The site is registered to someone in BA and the discussions are all over the place. I didn’t dig too deeply but my short glimpse in suggests a site is crawling with FOBs who think entirely too well of themselves.

That's kind of why I thought that maybe MIT stands for the school. Just to make it "look better".

Here's a REAL question for people on the board...

If you had a chance to do a 'lease' option on a place you really liked in a neighborhood you really loved, where you had to put down 2.5% 'earnest' money, and had 1/5th of the rent for the time you would be there be added to the earnest money as part of the downpayment for when you bought the place.

Here's the 'hypothetical' :

A well kept up original owner selling his place for 950k, wants 25k earnest and charges 2500 a month rent of which 500 goes to the eventual downpayment, with a hard deadline of 'buying' in 2 years.

Your 'downside' is about 2.5%, in theory, but if you walk, you really are walking from 25k. The rent is comparable, so you're not losing money on 'overpaying' for the rental. If the market crashes, in 2 years you offer the fair market value, but he gets the 25k + 6k credit, plus all the rent you paid over the years.

OP, we didn't make the offer because I felt we were 'settling.' My wife REALLY wants a house, market be damned. But the place we almost offered on, we were settling for a house we knew was a little small in a neighborhood that wasn't exactly what we wanted, and in a school district that wasn't as good as we'd like. I just couldn't blow 3/4 of a million on 'settling' for a house, especially in a bubble. It involved a good deal of arguing and eventually kissing and makign up between me and my wife.

The site was started by someone who went to MIT, of course it has no connection with the school whatsoever.

SFBubblebuyer,

I have a problem of the strike price two years down the road. How do you set the price?

After all, you are not buying a stock, and if the transaction volume dries up in your neighborhood, you may not even be able to find a reasonable comparable. If you can agree on an objective yardstick that both sides can agree upon (for example, pegging the transaction price to the movement of DOW, or something like that), then it may not be a bad deal if you are uncertain about the housing movement in your target neighborhood in the defined time frame.

$25K is like an option you buy on the house. I suppose that you must be targeting some highly desirable neighborhoods where supply is rather limited. If you are just looking at some cookie-cutter burbs, then I would not pay the $25K.

Different Sean Says:

> How many LLs are prepared to sign leases restricting
> rent increases and making longer terms?

Most landlords will sign a longer lease if it makes sense for them. In areas of high turnover most landlords will give you a lower rent for a longer term lease, but in an area with increasing rents you will probably have to pay more to lock in a flat rent for multiple years.

> This particular apartment block was built ‘wholesale’
> by a developer years ago, before the boom,

What do you mean by “wholesale” (we don’t use that term to describe real estate in the US)?

> However, he wants to charge marginally *above* market
> rates right now because he thinks he can, at a time when
> rates are supposedly rising rapidly.

Unless a market is regulated by the government a landlord can’t get “above market” rents.

> This all goes back to my constant remarks in the past of
> what represents a fair and healthy social settlement.
> I have currently amassed about 6 emails from other
> tenants also protesting the steep rise.

You are better off trying to make a deal on your own, let the other 6 make their own deal.

> The fair social settlement notion is what underpins all rent
> control systems, and attempts to protect people from exactly
> this sort of behaviour.

What rent control does it give a small number of people a good deal at the expense of landlords and any new people that move to the city.

> Ironically, I suppose I’m from a family a little like FAB’s,
> who has amassed a pile of investment properties —
> I can move interstate and be given one at any time
> I like for almost nothing…

I don’t think you read that I have not taken a penny from my parents since my freshman year in college when they threatened to stop paying for college if I joined a fraternity to “goof off and drink beer” (and when I joined the fraternity they stopped giving me money). As a kid my parents didn’t make me pay for food but made me work at the rental properties for free. I never got an allowance and had to work outside the home if I wanted any money (they even made me pay for stamps when I wrote thank you notes after Christmas every year)…

OO, it's an area that has houses selling for comparable amounts right now. My yardstick would be "Can I buy a similar/better house for more than 31k less?" on whether I exercised the option. (Actually, it'd probably be rather more like 60K difference as we'd have 'grown roots' by then.) My wife and I have looked at other houses in the neighborhood and love the area, and the schools are good.

The fact that the option is about 2.5% of the 'current market price' makes me feel almost accomodating of it. It limits my risk of 'buying right now' by putting an option on it, and if it really IS a soft landing it keeps my wife from punching me in the head repeatedly.

And yes, there aren't a lot of houses in this area. It might make 'yardsticks' hard to come by in 2 years for comps.

SFBubbleBuyer Says:

> Here’s a REAL question for people on the board…
> If you had a chance to do a ‘lease’ option on a place
> you really liked in a neighborhood you really loved,

Lease options usually don’t make a lot of sense since if you thought prices were going up you should buy the home now and if you think prices are going down why “pay” to lock in the price a the top of the bubble?

> Here’s the ‘hypothetical’ : A well kept up original owner
> selling his place for 950k, wants 25k earnest and charges
> 2500 a month rent of which 500 goes to the eventual
> downpayment, with a hard deadline of ‘buying’ in 2 years.

Let’s say you have $190K in a money market or CD it will be earning about $825 a month.
If you get a $760K first TD at 6% your payment will be about $5,400 a month and taxes/insurance/misc. will be about another $1,300 a month so your pre tax cost to “buy” will be about $7,500.

If you really like the home renting it for $2,500 a month or just over $3,500 a month if you spread the $25K over two years rent is a great deal. I would try and get the lease option for longer than two years. Despite the perception from DS that every landlord is rolling in money most bust their ass to get the bills paid every month and will often give you a great deal if you can pay the rent 6 months or a year in advance.

The lease option seems like it might be a good idea for my particular circumstances where the wife doesn't believe that housing prices will crash no matter how much info I give her. We've been up in the neighborhood and REALLY loved the location. If the house is pretty much exactly what we're looking for, I'd consider it. An extra 1k a month in rent for a very happy wife would be worth it to me in the first place.

I'm sure housing prices will fall. How quickly they'll fall I'm less certain of. But I DO think 2 years from now everyone will have a better idea. If I had my druthers, we'd wait until it really was cheaper to buy than to rent, or we had a kid getting old enough to start attending school. 5-7 years makes sense for a target for me. My wife disagrees. :D Houses before kids, she says. I cannot argue with her ovaries effectively as they have no ears. Alas.

I'm going to look at the property tomorrow, most likely, and if it turns out to be a 'dream property' I'd consider doing it. The worst case for ME is property values plummet, and he refuses to sell me the house for anything BUT the strike price, in which case we 'lose' our overpriced dream house and the 25k (plus investment gains/cap gain taxes, etc.) and start looking for a 'new' dream house.

Oh, and the best case is I overpay for the house by 30-40k (by offering him market value plus my deposit when the 2 years is up. and then housing prices continue to drop and I've STILL overpaid.

Damn this housing market!

SFBB,

You present a compelling case. $25K is not a high price to pay for two years of domestic tranquility and conjugal bliss. This might be the best compromise for you.

If you go ahead with this, do have a RE lawyer go through the contract for for you. You need to protect your option - even if you think it's likely to be worthless. Make sure that the seller will be in a position to sell you the house in two years' time and the contract will hold up if you stand to benefit from the arrangement.

SFBB,

Nah. The best case scenario for you personally is to have the housing market drop 50%+ in the next 24 months. Then you can congratulate yourself on saving hundreds of thousands of dollars and a wife who thinks you're a financial genius -- and take us all out for sushi.

justme Says:

> I seriously hope that everyone that is against
> rent control also is against Prop. 13!
> While FAB is probably a principled person,
> somehow I can imagine that most landlords
> are not with respect to this matter.

I have said many times on this BLOG that I think that it violates the “equal protection” clause of the constitution when the government to give special benefits to anyone so I am against both rent control and Prop. 13 (and laws cost us all money when qualified firms with low bids lose out on government contracts to less qualified forms that charge more to make the government feel good about helping women and minorities who may be worth many times more than the white guys that own the firms with the low bids)…

Cody red, I feel your pain...not!

What about the pain of all the responsible people who played by the rules: joined the Army, joined the Army Reserves, went to college & got a BS & then an MBA only to be laughed at and told, "we've just raised the bar again dumb a--!"

What about all the people who were laughed at as dumb a--es for renting while the insouciant, irresponsible masses who luxuriated in their pimp digs and just piled into housing & piled it on because "housing friggen' NEVER goes down...Don't you know they aren't making land anymore?"

I don't know. I guess I'm so numb, I just can't feel your pain anymore.

Keep on looking. You’ll find something. B/c when you love something, it sometimes doesn’t even matter what it costs as long as you can afford it. You feel me?

Only if you feel like too many serranos in my chili, about three hours after the fact. Your posts certainly smell the same.

remember it is very simple. for every work visa, there is a non american working a job that an american, who votes and thinks in a similar way to you, would otherwise be working.

Bullshit. Sometimes people just don't have the intelligence or capabilities that you require. Using visas to cherry pick smart people from other countries gives you a much bigger pool of intelligent candidates. What you're suggesting might be true in undifferentiated grunt labor like construction or software, but it isn't accurate in high-end fields.

New Thread

SF Bay Area is Stubbornly Sticky (for now)

These are the ads Google sense is serving me right now:

Real Estate Bubble Burst?
We're hanging from a $300 billion rope, on its last thread. Full rpt.

Bipolar Disorder
Learn About Symptoms & Treatment Options: Find Information

For some reason, I find this incredibly amusing.

The visa holders competed with other engineers for their jobs. In my experience they are generally very bright and hardworking people.

The "generic" candidates work out of India or China. Nobody is going to spend good money to bring a substandard candidate to the U.S. If you want to bring the generic jobs back onshore, then talk to your fellow Americans. It wasn't until recently that engineers enjoyed the same level of wealth as doctors and lawyers. $40,000 is not a shameful starting salary as college grads are now led to believe. People can live without the Rolex, the Lexus and the McMansion.

And I'm not selling anyone out. Welcome to reality--if people want to buy cheap shit from China, the U.S. will keep losing manufacturing jobs. In the earlier part of this century we did the same thing to Europe. Nobody in the U.S. cried for them when our standard of living surged at their expense. The Chinese feel as sorry for us as we felt for the English, French and Germans.

Cold world, ain't it?

I recall back in late 70's when the Vietnamese people came over, their offspring who barely spoke English take to Computer programing like fish to water. The rest of the kids in Sunnyvale High were just more preoccupied getting stoned.

Local employers are not interested in cherry picking foreigners. Its doesnt solve problems on cost side. Therefore you will find many employers find it much easier to set up R&D in Asia due to cheaper labor and friendlier goverment taxation.