patrick.net

Bap33 wrote:

"My sister inlaw is a prime example. Prego at 16, 17, and 19. Same POS doper dude for all 3 kids. She would have more kids but complications from a miscarrige resulted in tubes tied. She has never worked a day nor graduated school. Not because she was stupid, only lazy. Then she found drugs."

Sleeping with a "doper dude" at 16 = Stupid
Not getting on birth control when you are sleeping with your dude = Stupid
Not making your doper dude wear a condom (since many doper dudes are HIV positive) = Stupid
Having a second kid with doper dude = Stupid
Having a third kid with doper dude = Stupid
Not getting an education = Stupid
Using drugs when you have three kids to raise = Stupid

You don't have to say this in front of your wife, but it is hard to argue that your sister in law is "only" Lazy...

"The State sends her THOUSANDS of dollars every month. My mother in-law has the kids full time but she wont do the legal work to take the kids so she has to support them on her retirement pay. So my sister in-law gets free housing in a nice big 4dr home in Los Banos, in a great neighborhood, with free medical and dental, with a free bus pass, she bought her doper lover a pretty nice VW Jetta"

Last week I posted my idea for a boot camp (run by former Marine drill instructors) where we would stick all the guys who don't pay child support. I want to have a similar dorm style "boot camp" for the welfare single moms. Every day they would wake up at 5:00 am and after the morning workout and chores they learn job skills so they can interview for a job and eventually support themselves...

Bap33,

Unfortunately, game theory behavior would kick in and Bill's grand scheme would be doomed before it ever started. Since at least one owner is likely to realize they can increase the value of this scheme to themselves by holding out on Bill, many owners will be forced to also hold out on Bill. Your idea of "all or nothing" has essentially given every single owner a holdout "kill switch". Bill's deal is not worth the same to everyone (even if everyone owned only exactly one house, and even if everyone's house was worth exactly the same fair market value) because not everyone perceives the same economic benefit from selling to Bill. So...if I'm sitting there claiming that the deal isn't worth to me what it is to you and others I demand some kind of compensation either from Bill directly, or more likely from you motivated sellers in order to prevent me from killing the deal for all of you. In fact, even if Bill's deal is great for me, someone like myself will claim it sucks and I can live without it. I'll try to make credible threats to walk away, forcing you to pay me if you want the deal. Others will just start acting "irrationally" (or maybe they are just irrational). Now you have to pay them too for fear that they kill the deal because they hate Bill or hate capitalism or hate squirrels.

What ends up happening in about 2.6 seconds is the entire thing unravels. You have to figure out these kinds of economic problems by reasoning backwards. Start with the end result and move each step back to figure out how rational people will probably behave.

With very very few exceptions welfare mothers are on welfare because THEY (not others) made very very poor choices (I dated a SF assistant who got in to law to help women before she quit in disgust). I heard story after story of stupid women who thought that their drug dealing abusive boyfriends would “change and marry them if they just got pregnant…

well, we only just came down from the trees, you know...

Basically, can anyone show how allowing the “haves” to set up a string of rentals for the “have nots” will soon result in a society of non-owners and the results that are likely? DS, you can do this right?

bap, this is absolutely right. spot on. it's a doomsday scenario which may well come true inside a generation. nobody knows how 'the market' will be used and abused, because it is not regulated or controlled in terms of favouring owner-occupiers over investors - if it creates a class of 'property barons' and their heirs, no-one cares to intervene. no-one cares who is actually doing all the buying - it could well be bill gates for all we know, one place at a time. it's like a regression to feudal relations with one lord and many serfs all paying liege. the only thing that can stop it is political will and government intervention, or else, more roughly, built-in limits in the market. but if no law is passed designed to safeguard housing ownership, the rudderless market sure isn't going to make it happen by itself. that's the trouble with markets - they're comprised of atomised individuals acting in unenlightened self-interest. too much 'greed is good' and '(personal economic) success at all costs' conditioning in our society will only accelerate the final position.

but economic modelling is not my strong suit, i have something of a distrust for it, in fact - i'm too post-scientific, heh... however, look at the history of the run-up to the Great Depression and the fact that housing exploitation was being conducted similarly, speculators were everywhere, then there was a credit squeeze... the other posts about excessive borrowing and national debt levels may give us a clue too... and this whole housing speculation thing has gone right down to the middle-middle class...

which is why i eschew market modelling in favour of simple govt fiat which just spells out a positive social settlement, a reachable social contract to encourage the so-called 'welfare dependents', and puts a lid on inflationary activity as undesirable and unethical. (when was greed elevated from a vice into a virtue, exactly?) this would involve land resumptions, cost-controlled PPP developments, price covenants with rises linked only to CPI, and market controls on inflationary activity. the cost of housing construction is now minor compared with land costs. but realistically i think positive change will happen only in the most fabian way...

Just furthering my edumication on the causes of the Depression (I favour 2 and 3):

In general, theories of the Great Depression can be classified into three groups: 1) orthodox classical liberal, Keynesianism, and neoclassical economics, which focuses on the macroeconomic effects of money supply including production and consumption; 2) Marxist economics, which argues that the root causes of the Depression are based in the fundamental production relationships of capitalism; and 3) structural theories that point to underconsumption and overinvestment ("bubble"), or to malfeasance by bankers and industrialists.

Easy credit fueled the consumer driven economy of the 1920s, and following the depression, credit availability began to tighten, both for business and consumers. With lenders restricting their credit availability, and moving quickly to secure their liabilities, employers who were hurt by the ripple effect of Wall Street were the first to be liquidated. As employers closed their companies, the ranks of the unemployed grew, which further complicated the banking situation by reducing income from credit lines, which cascaded into a liquidity crisis leading up to the banking panic of 1933.

Consumers who had taken advantage of credit sometimes were unable to meet the monthly payment and repossession of automobiles, furniture and household goods became common.

Foreclosures on home mortgages rose throughout the period, and affected people in all income brackets. In a few localities the forced sale of personal property drew neighbors who attempted to disrupt the proceedings as a form of protest of the action and support of the family under the eviction notice. The angry crowds also had the effect of scaring off potential bidders for auction goods. While this allowed neighbors to pay pennies on the dollar for their neighbors' possessions (which were usually given back to the family following the sale), it also did little to reduce the debt of the family being evicted.

http://en.wikipedia.org/wiki/Great_depression

Hmmmmm... when would I buy? Well, the short answer is when I could realistically be able to afford mortgage payments on a traditional 30 yr loan with enough left over to save for retirement, and enjoy life a bit more than simply scraping pennies together. As it is now, prices would have to come down almost 45% in order for this to be remotely possible to me and my wife at our current salaries.
There are other concerns that I have though if there is indeed a tremendous crash in home sales. For one, I think that the state of California's economy is heavily tied to the sucess of RE. More so than even we who have firmly believed in the housing bubble for years. Add to the fact that many homeowners( debtors) who bought in the last 4-5 years were relying on the overinflation of their homes to provide their financial well being. If the crash occurs, these people will be in some serious trouble, hence a double-whammy to the economy. If a miracle happened, and prices did fall say 40-45%, I would probably still wait and see for six months to gauge the damage the bust caused to the local and state economy. It's my belief that a bust could very well set off a domino effect in the entire ecnomic structure of the state that could potentially alter the job market for years. California is already hemmoraging jobs and entire industries to other states and countries at a regular pace, and due to the over-prolonged duration of this particular bubble, the trend to outsource and relocate has set a precedent that I doubt even a crash in housing will stop. So even if I could afford in a few years, what would be the point if the economy and possibly my livlihood are down the shitter? Thus I would want to asess this aspect first. Secondly, if there is to be a national crash, as it appears to be, then what I have saved up now- money that would easily buy a home in any number of up and coming regions now, would buy even more once these prices come down as well, or better yet, I could spend half on the house, invest the rest, and be set. Simple. I think more than anything, living in California for 7 years during an insane housing boom has made me come to appreciate other places and the fact that you do not have to suffer and squirm in an area if you don't want to.

Talking about renting, it does concern me that while the Bay Area does have amazingly cheap rent compared to buying, but all one has to do is look at LA and see that rents rose almost 10% this year, and the supply is tightening. This corrolates with their slowdown in housing sales. This is a classic case that's well known: Housing sales slow, rents rise. What's troubling is that the rates in LA are rising remarkably fast. This could cause rents and ownership costs to meet eye to eye sooner than time requires in order for the prices to fall signifigantly. I hope the same does not happen in the Bay Area. If rents rise to the point of being as expensive to own, and those prices haven't dropped signifigantly, I will move at the drop of a hat.

astrid Says:

"I do wonder what happened to all that rhetoric about “ending welfare as we knew it.” "

In California they changed the name of "welfare" (a program where tax dollars are given to lazy stupid people who sit around doing nothing) to "Cal Works" (a program where despite the name we still give tax dollars to lazy stupid people who sit around doing nothing)...

P.S. one of my Section 8 tenants also gets SSI Disability since he is totally "disabled" with the horrible disease of ...... alcoholism. Yesterday he came home early from a fishing trip due to the rain towing his little fishing boat with his new (used but new to him) truck...

SF Woman/Ha ha,

I've been so busy watching the bubble turn bust I lost track of the weather. There is a belief that we are heading into a PDO or Pacific Decadal Oscillation meaning a 10-15 year period of wetter, cooler weather. According to the Old Farmers Almanac "Zone 15" stretches from the BA to BC and west of the Cascade Mountains. Start liking it! I don't think I could deal with another year of "appreciating" home prices AND crummy weather! Last summer in the Portland area was a total drag. After a decent week in March it rained up until the 4th of July then a few nice weeks but the week after Labor Day the rains came again. My wife and I have even resorted to what we call the "sun chasers" where you get in your car and drive until you see the sun. Sad really.

SFwoman... Yes.. the rain is driving me INSANE! what's worse is that it did this last year too. I figured it was a freak year, and this year would be back to normal. Now it's worse! I'm so sick of my folks calling asking how the weather is then bragging about running around in t-shirts.

Dinor,
What's ironic is that when I was a kid, TN had a 5-6 year period of almost drought like weather, with hot summer and somewhat mild( and dry) winters. THat's all I remember as a kid. Then from the time I was 15-the time I left, it rained for months on end year round. Now that I've left, the weather there is back to a warmer, dryer pattern. So basically, I traded one wet climate for another. Oh well. Might make my decision to move a little easier.

nomadtoons2,
The same thing has probably happened with a lot of BA folks' short memory span re: weather. Remember the early 90's here? Several years of drought, the landscape was brown everywhere, the Oakland Hills fire happened (we could see it across the Bay on the Peninsula), the skiing in Tahoe was crappy, but the weather was nice. Hopefully if you move back to the SE, it won't be just when the weather changes back to being wet there...

Skibum,
Well the diffrence between here and the SE is that the SE has more regular weather, meaning you'll have maybe 2-3 weeks of nice weather, then one or two days of really crappy rainy weather. Sometimes, a freak solid week of rain. In the summer it gets super hot and sunny, but then the afternoons brings a huge thunderstorm that lasts about 10-20 minutes then evaporates.
Here in the bay, the problem is that people get used to the almost clockwork weather patterns, where it basically stops raining from April to November, then rains solidly from Nov- April. So for half of the year, you get totally spoiled and used to having no rain. Then it rains FOREVER in the winter and people are miserable. I'm not sure if having more regular weather or not is better because you don't get spoiled.

The Time to Buy.

Great question. Easy answer.

I have always told my clients I CAN'T CONTROL THE STOCK MARKET!

I can't CAN'T CONTROL them!

The only thing I CAN CONTROL is myself and make a commitment to being a professional at all times.

There isn't much any of us can do about the median price of homes in the country or even our own neighborhood. I like where Randy H is going with the "me too" listings! Avoid them at all costs. In the end it's all of the "coat tailing" that has driven me quite insane. For every quality home there are 9 dirtbags trying to cash in with hastily cobbled fixes. Proper renovation can take months if not years. When we take the time to look closely much of the "work" doesn't stand up to even the most casual scrutiny. You'll have ridiculous house payments AND contend with shoddy repairs. I don't believe any of us should have to wait until 2009 or 2011 to make what we need to happen. Make painful, lowball offers. Someone WILL be desperate enough to accept it. I for one have always ignored "the bubble years" and have opted for a more normal price appreciation model. I want to be careful here b/c the last thing I want is to be labled a "perma-bull" but there are encouraging signs all around. April 1st C/L for the BA shows 297 "price reduced" listings. We all gotta make our own deal. Make yours mercenary!

sounds like a new thread - global warming and the housing bubble...

Dinor,
If there's one thing I am sick and tired of seeing is the god-damned stainless appliances and granite countertops. If I ever buy a home that has granite.. it's sledge hammer time! It already looks outdated. Kind of like painting everything lime green in the dot-com, except worse.
My neighbor is getting ready to sell his house. Yup- the shingle walls were fairly rotten, but thats no problem. He hired a few dudes with spray guns to slap on a coat of paint and bingo!- new looking house with raggedy edged shingles.

DinOR Says:

April 1st C/L for the BA shows 297 “price reduced” listings. We all gotta make our own deal. Make yours mercenary!

Interestingly the vast majority of the C/L listings are in peripheral or not-so-desirable BA locations like Antioch, Richmond, Merced (why is Merced even in the BA C/L?), etc. If any of you live there currently, please don't take offense, but these are probably the types of towns that will bubble-pop first due to poorer RE fundamentals. The bubble decline is not even close to getting going. Once price reductions are common on the Peninsula, in the city, etc, that's when buying should even enter the vocabulary. If one is more conservative financially (as I consider myself), one should plan to buy when prices are past the nadir and actually increasing, as that's when you can be truly sure prices aren't going any lower. Of course, this assumes the calculus for buying is primarily financial, rather than emotional, which is usually not the case.

SFWoman, are you the expert in viral DNA?

i accidentally upset SQT thinking it was her... :oops:

nomadtoons2,
lol - granite rage. It reminds me of that hgtv show "designed to sell." it pretty much sums up the bubble during every 1/2 hour episode. Here is the "storyline" for every single episode:
1) some CA crappy stucco box owner wants to sell
2) the show's "team" (smarmy host included) shows up, tells them what sucks about their house, and does about $2k worth of "improvements"
3) they show the open house, interview the visitors/sheeple and get them to say how great the place is
4) multiple offers, after even raising the original asking price!! tada!

Talk about lipstick on a pig...
I always wonder if the eventual buyer ends up seeing the before-the-crappy-renovation footage and realizes their new home sucks.

George,
I think this issue has been discussed before, either on this board or on others. There is an economist named John Williams, who I think is associated with Dartmouth's b-school who advocates this point exactly, what he calls "shadow government statistics":

http://www.gillespieresearch.com/cgi-bin/bgn/

Skibum,

It's a start. Again I want to be careful here b/c 400% appreciation over 3 years followed by a 10% reduction in asking price does not equate to a "buyer market" in my mind either. Take out about 370% and now we're talking. I just want to do everything that I can to debunk the urban myth that prices "are going to be sticky on the way down". There have been so many stories reaching the mainstream media about distressed homeowners in transition that I've gotta believe that there are going to be some opportunities shortly. The common lament I'm starting to hear is "we should have listed earlier" or "if only we had sold in 2005". Those comments are legit (for people that bought in the 80's). For a couple that bought in 2003 saying they should have sold in 2005 just floors me. Wait a minute, this is RE not the stock market right? Well it certainly strikes me that these people believe or were lead to believe that they could sell anytime THEY WANTED! As the ARM reset and foreclosure picture become more clear we should get a better idea on where we would like to see our own "entry point" for 2006/2007. I didn't sell at the exact top of the market and I don't believe I'll be able to pick the exact bottom either but we should be in better shape than most. Like I say the MBA stated that OVER HALF of the mortgages in America are 3 years old or newer.

Skibum,

My favorite shows are when the people flipping the house or whatever have their friends (usually co-workers etc.) "helping". I don't care how well the end result turns out the bottom line is that the work was not done by professionals, usually with a totally unrealistic time schedule and shoestring budgets! No thanks.

nomadtoons2,

Every time I see something that was a "spray application" it looks really good up until the following spring. Then you begin to see the uneveness of the coat even without having to get out of your car. Then as you look closer you see entire areas that needed an additional coat, primer or replacement. Nothing looks or lasts like a brush application. My standard practice at my old house (10 years) was to paint one side each summer, not wait until the entire house was in need.

@POP,

What’s up? Are we now censoring content that has been plainly applicable to these kinds of boards?

I placed the link and comments last night:

Your comment got held for moderation. You'd be surprised how many spambots hit these threads. Putting more than 1 link into your post will guarantee moderation; putting even 1 link in the post sometimes gets held up by the filter.

As an example, I just deleted a whole little sub-discussion of spambot posts from the moderation queue this morning. These comments appeared legitimate, but were really decoys to get you to link to debt consolidation services cleverly hidden in seemingly legitimate conversation which was almost on-topic. The scary thing is you could see the spambots' comments actually answering one another.

Just FYI, look for Your comment is awaiting moderation right after the YOURNAME Says: right after you post a comment. If you see this, your comment is being held for moderation.

Ben,

"Buying a house is no longer a pleasure"

That is so right on Ben! Up until last fall there was a certain "swagger" amongst sellers that really repulsed me. Now there is a desperation that is equally repulsive. Either way, not fun at all. For the record, just b/c your offer down the road will most definitely not be be to Mr. and Mrs. Homedebtor's liking, will not come close to paying off their loan still doesn't mean it's a good deal! The market may well dictate that these folks overpaid by HUNDREDS of thousands! Do I feel bad? Would it HELP if I felt bad?

Up until last fall there was a certain “swagger” amongst sellers that really repulsed me. Now there is a desperation that is equally repulsive.

greed-fear-greed-fear. this is the modern world.

The manipulation of data and numbers is mind-boggling…. 5% reported unemployment versus an actual unemployment of 9-12%, 5% growth in GDP versus a 2% contraction in GDP when measured against historic standards.

absolutely... they fudge the unemployment figures and measures all the time...

as for GDP, it is the sum total of economic transactions in the country, pretty much. empty housing inflation adds to GDP with no extra productive work being done in the economy, but the govt can still claim 'economic growth' on the composite figure. if you take out empty internal domestic inflation in housing, you can find you're actually going backwards...

similarly, patching someone up after a drive-by shooting goes into the GDP, as does repairing the damage of katrina, as does girding for the iraq war... hence doesn't necessarily represent increased wealth to anyone...

(in reality, even 'true' economic growth isn't really even that important in the scheme of things, nor sustainable growth, but just economic sustainability concerning the environment)

Talk about lipstick on a pig…

lol

There's a show called 'backyard blitz' here, apart from other reno shows, where they 'send the owner away for the weekend' then transform the place into something ghastly. all the concrete is set, paint is dry, timbers erected, landscaping and water feature done within a weekend... i know an electrician who works on the show, it took him 5 days just to do the wiring on one, and you don't see the army of tradesmen it requires on camera = labour $$$!

Thanks Pop!,

I'll share a collection of the more interesting SpamBot chatter if I ever get some more free time. It may be interesting for folks to see what doesn't get let through by Patrick's spam filters. As HARM, Peter P and SQT have said before, keeping up with this blog becomes a bit overwhelming at times. I also freely admit that this is the first high-volume blog I've ever helped admin, so I'm still learning. It's a lot easier dealing with 1-30 comments than 300-500 comments.

The manipulation of data and numbers is mind-boggling…. 5% reported unemployment versus an actual unemployment of 9-12%, 5% growth in GDP versus a 2% contraction in GDP when measured against historic standards.

I imagine that's why in part there is an apparent disconnect between the Fed's current actions (steady rate raises, forecasting probable additional raise) and the "official" inflation numbers. Of course, there's also the talk about a concerted international effort to decrease money supply (the ECB and JCB) as a factor in the Fed's plans. It seems the housing bubble is going to be collateral damage to them. I'm not an economist by any stretch, so please no flame-outs if my assessments are inaccurate...

SQT,

Anytime you have MORE rain than Seattle it can't be a good thing! I'm not sure if Sacto can crash any harder than it already is but sure, O.K. Since the RE perma bulls used everything at THEIR avail on the way up we can use the data of OUR choosing on the way down. Seriously though, this PDO deal has me thinking more than ever that I want to get some kind of "toe hold" in Las Vegas. My friend just moved there and his initial observations are that the crash is in free fall mode. We checked C/L for months before he took the plunge and he said it's EVEN better since he now has direct interaction. The rents that are super cheap don't advertise much so you have to really scrounge but there are great renting values if take the time. My wife and I would love to "sit out" a good part of the Oregon winter and would consider a short term lease in LV just to break up the damn monotony.

If there is anything that can be said about the whole bubble situation of late, it would be what my wife said the other day as we headed back from the grocery store, biking past all the for sale signs. She asked why people simply didn't just stay put and fix up what they had instead of selling it. It makes no sense. The worst part of the boom is the instability it has caused to countless neighborhoods- some that took generations to develop it's character. I doubt many recent home buyers know or care about the neighbors, nor give a rat's ass about the local family owned cafe down the street.So when I see all those spray-painted, Home Depot white picket fences puked up on the lawn, it all feels so damned fake and artificial, plus I can't help but feel that the people who are willing to shuck out the dough for it are the kind of people who I'd really want to be buddy-buddies with.

skibum & others,

I agree that the government numbers are losing relevance when applied to "everyday analyses". I don't really agree this is some kind of a grand conspiracy. I think it's more complacency, failure of the business, finance, and general media, and somewhat even the failure of everyday people to bother to educate themselves in how to read and understand macroecon stuff.

One problem has been that measures like CPI have become increasingly linked to very critical automatic index calculations over the years. Big labor contracts, government entitlements, and other contracts are often tied to CPI. CPI was failing in this regard because it didn't segregate for elasticity, reflectivity or stickiness. In other words, counting something like energy in CPI was causing a bigger misstatement in inflation than omitting it *in the context of contracts*. Of course for Joe American, energy is very much a part of inflation he experiences, but this is a different analysis than what his union contract should index by.

Another problem with GDP is related to the massive shifts that have occurred as a result of globalization in trade, globalization in capital finance (and capital flows), and the increase in money velocity. Money velocity has increased dramatically over the last 30 years, and the distinction between M1 and M2 has become almost irrelevant. What is a "demand deposit"? It can be your E-Trade debit/credit card which is linked to your brokerage account, which sweeps into a money market account, which you automatically invest in your IRA mutual fund every quarter. In this context, what is savings vs. consumption vs. investment vs. money?

Where I tend to agree there is a growing problem is that the government is benefiting from the current misunderstandings about these measures, so they don't bother to try to educate the public. Worse, the media has dropped the ball at shining light upon the situation, simply regurgitating government reports. It's certainly a hard problem -- interpreting GDP is becoming a very complex thing -- but it should be the media and government's responsibility to help people to understand their economy.

nomadtoons2,

That's another "quick fix" I just love! The new "pre-fab" fencing products. All the rage here in Oregon. Vinyl (your choice of colors) pre-fab sections meant to emulate real wood fencing! Genuine imitation wood. Granted, real wood is labor intensive AND expensive but I don't know who these people think they are fooling with their vinyl? Our condo complex is surrounded by it and it's already starting to sag. They took shortcuts b/c every other or every third post is supposed to be concrete filled but then again this whole complex is the perfect example of "bubble building" shortcuts.

nomadtoons2/DinOR/Ben,

I think you're all pointing out different aspects of the same problem created by the bubble. Because of the mania, perceived money-making potential, etc., RE has become thought too much of as an investment and financial asset in the past few years. Of course if one builds equity in their home, blah blah blah, a home is truly an important portion of one's financial portfolio. However, maybe buying/selling real estate SHOULD be more of an emotional, need for a nest, security kind of decision. One of the previous threads talked about how some think wives are the ones "forcing" husbands to buy out of emotional reasons. Whether or not this trend is true, maybe these women are right after all, because in the end, a home is a place to live, have a family, be part of a community, etc. more than anything else.

LA got more rain than Seattle last year. It was kind of nice, actually, since it was such a unique situation. And since this is LA, the days without rain were always clear and sunny.

The rainy season is more gloomy in the Midwest, becuase there you have two or three solid months of cloudy, overcast days even when it doesn't actually rain.

Someone posted an article about elementary school closings a while back. The exact same thing has been happening here. Our kids will be old enough for school in two years, and we will probably leave at that time if prices have not dropped significantly.

I can't imagine why any young family would stay in the bubble areas if they cannot afford to buy. They are already leaving and droves and I expect this trend to continue. We will no longer be able to save any significant sum for a downpayment once private school tuition kicks in -- barring huge medical bills (knock knock) we'll be able to preserve our existing savings, but that's about it -- and any future increases I get will go toward the college fund. Stuff like this makes me want to make the jump now, before the kids start school. Moreover, in many non-bubble areas (such as my native Chicago suburbs) the public schools are quite good, there is no real tradition of having kids go to private school, so we wouldn't even have to pay tuition. I am sure that a lot of people are making decisions like this.

Moreover, I cannot help but wonder whether there will actually be greater pressure to leave on well educated young families to whom things like school districts are very important. These people can afford to buy, but many cannot buy in a place where there are good public schools. We certianly can't. There are plenty of "starter" homes that we can afford in the desert exurbs, but I'm not about to send my kids to school out there. Moreover, I have a white collar job and have to work in the central businss district. If you drive a truck or work as a dental hygenist you can always find a job near your home, but I can't; I have to make the commute into work. This, too, makes me want to move.

If prices have not fallen significantly in a few years, I bet you the pace of school closings skyrockets. I bet you even a few of the private schools will have to consolidate or close their doors.

So even if I could afford in a few years, what would be the point if the economy and possibly my livlihood are down the shitter? Thus I would want to asess this aspect first. Secondly, if there is to be a national crash, as it appears to be, then what I have saved up now- money that would easily buy a home in any number of up and coming regions now, would buy even more once these prices come down as well, or better yet, I could spend half on the house, invest the rest, and be set. Simple. I think more than anything, living in California for 7 years during an insane housing boom has made me come to appreciate other places and the fact that you do not have to suffer and squirm in an area if you don’t want to.

Nomadtoons2,

You hit the nail on the head re: the CA housing market for me. I know --thanks to the long overdue correction-- that if I wait long enough, prices here will revert to the mean (for CA , this is probably close to 5-6X median HH income vs. 2-3X nationally). But the question is, why would I want to? Even at HALF of today's prices, RE here is far more expensive than just anywhere else in the U.S., barring perhaps NYC, Boston & HI. Incomes are nowhere near double the national median, so even at half of today's prices, buying would still be a stretch. And this is assuming I *still* have a job in the middle of a full blown RE crash-triggered recession.

Are my only real lifestyle choices (a) forcing my family wait X-years in hopes of "getting in on the bottom rung", or (b) renting forever? How about a third option: move to an area far less prone to draconian NIMBY anti-development regulations and far less prone to the worst effects of the RE cycle. We've covered this in previous threads before, but I just don't get how some people feel that CA is the only possible place to live a decent life, have culture, etc. I grew up here, and even I have to admit it's no longer *all that* and frankly is becoming less appealing with each passing year.

Do I really "have" to hold on for another 5-7 years, waiting for that magic bottom to hit so I can, like a hamster, jump on the CA mega-mortgage treadmill? Why should anyone feel trapped in a region where they must wait for the next 15-year Wonka bar lottery to get their golden ticket? Why do I keep asking questions I already know the answers to? I just don't know...

Randy H,
You don't agree that there is a "grand conspiracy" (I assume multinational), but you then go on to say that the government is benefitting from these misunderstandings and therefore being passive. Are you claiming a conspiracy on a smaller scale, or just governmental laziness or indifference? On a related note, a naive question: who originally defined CPI's components, can someone change them, and if so, who is that person/organization?

Skibum,

Absolutely! I'm all about quality and value. Personally I'd much prefer a 1,200-1,500 sq. ft. well built home (reasonably appointed) than 3,000-4,500 sq. ft. dump in the making. Here just outside of Portland we have an "up-scale" area of town where the subdivision isn't even 5 years old and not one couple living there is an original owner. Many of the homes have changed hands 2-3 times or more in 5 years? I was talking with an old remodeling guy and he explained that all of the new homes where OSB (Oriented Strand Board) was used CAN NOT LEAK! The slightest exposure to moisture and the whole 4 x 8 sheet MUST be replaced! Remeber when we were kids and would use a piece of particle board in our tree forts? Yeah, it would be a lot like that.

Where I tend to agree there is a growing problem is that the government is benefiting from the current misunderstandings about these measures, so they don’t bother to try to educate the public. Worse, the media has dropped the ball at shining light upon the situation, simply regurgitating government reports. It’s certainly a hard problem — interpreting GDP is becoming a very complex thing — but it should be the media and government’s responsibility to help people to understand their economy.

Bingo! This, more than any other, to me explains why CPI/GDP and other macro numbers are so badly skewed, and getting more so by the minute. As soon as incumbent politicians start using these numbers as talking points in election cycles, the corruption/skewing of those numbers is all but guaranteed. Of course, this is not to say that private industry always does any better --witness NAR's MLS & shameless manipulation of "pending" vs. actually sold, pull-and-re-lists, etc. Perhaps the thing to do is to begin relying more on data from nonprofit & university compiled data, and encourage them to produce their own indices. This would no doubt be a tall order, but luckily computing power and expertise is quite cheap these days.