patrick.net

dodgerfanjohn you bring up a great question but the answer to it is multifold. I don't mean to open up a can of worms but here we go.

The demands that employers ask from employees keep increasing. This is because the labor market has dramatically expanded post world war two. Civil rights coupled with womens rights (some might argue today gay rights) created equality in the legal sense in terms of employment. The government did not offer incentives to expand jobs during this and thus created a surplus of labor. It is not surprising that a household could not withstand inflation of the early 70's and thus had to have both parents work. Drug tests started in the 80s, background checks maybe in the 90's and today some even require credit checks. A bachelors degree is the defacto high school diploma of decades ago. Employers in the past that would let things slide and hire say a high school drop out frankly no longer exist. The military won't take people without at least a GED, box stores won't hire people without that and factory work is more sophisticated then ever.

Secondly government policies have gradually removed the family and put government in its place (no pun intended). I won't take some sort of religious right argument here but outside of government usually religious organizations are the second largest provider of social services (In Mass it's the Catholic church)
Social assistance in the form of welfare is nearly circular and compounds with time. It actually doesn't work as the low unemployment rates of the 90's would have killed it off. Heck Florida seems to be the only state that is starting to drug test those that are on welfare.

Third. It can be argued that the division of rich and poor is the mere possession of items (I don't believe this myself). So liberal economic policies are largely pushed along with any means of which to afford those items.

I used to do collections on phones (cell and then LAN lines). There was a debtor once that was owed $300..not a huge amount. They were paying $20 a month..BUT sent it western union each time which cost $10. So 15 months it will take them instead of 10..AND they'd end up paying $150 more or 50% more than the principle. When I pressed why they thought it would "Keep them in good standing!?" then again I saw people signing up for a credit card and giving SSN's out to someone just offering cheap crap..nothing even showed it was a real employee of that place. I worked in retail and a customer was sick of waiting. He claimed he spent 30K at the store. A manager took him up on that and said if thats true then everything he has is free. Ran some information..total lie.
------------
Lastly and this is more based on a conversation I had a few years ago in a interesting class. The US is the most successful former colony. Look at north and south america, africa, asia etc. In being a colony the important asked was to own things. Owning your own place with a huger of amount of space was seen as envious. A giant lawn (non productive land is what it really is). Reminds me of someone I know that's on welfare that traded a 3 year old rav4 for a new H3 (half the mpg..go figure)

ChrisLA says

Maybe we have been too comfortable as a nation for too long, without realizing that it was a lot of hard work that brought us to this level of success. Add government corruption, union thugs and fraud thats perpetuated all through every sector that government touches and this is where we are today.

I remember when conservative thinking has saved this nation from collapse, today that hope is bleak. Too many conflate conservatism with right wing extremes.

Ah, the old "things were way better back then" canard. You do realize that union membership and liberal policies were at an all time high in your days of yore? Post WW2 was the time of a liberal Democratic congress and Truman, JFK, LBJ, and Ike, who today would be considered a liberal even though he was a Republican. The policies of both parties, but mostly of the conservative wings of the Republican and Democratic parties, are what have killed off good paying jobs and funding of education, including huge tax breaks for the rich. Take a look at this graph:

I love how people wash off history and then recycle it in another form for their own purposes. And another thing...Paul Revere.

Sure, there is government corruption and there are some union thugs, but for the most part, it is corporate welfare and its lobbying for limited regulation are what have really hurt this country. In case you are wondering, Im a small business guy that has been involved in several successful tech startups. I have never worked for a union and Im very pro-business (but anti-corporate).

sybrib is right....Let me tell you some examples of real estate some other countries . One of my friends bough some condo for USD 30K in Mumbai and sold it for 350K ( It's more than 12 times ...!!!).

Go figure... No wonder they were okaay buying a house in Los Gatos without a problem. And It seems they have many such properties back home.

SubOink says

…which is what this website advocates. Renting.

Not really. Go read the main page. It isn't anti-owning, it's anti-buying-like-a-dumbass. Those who strive to not make the biggest purchase in their lives like a dumbass have found value in this site.

E-man says

dodgerfanjohn says

Why are people so dumb?

Wow.
Go read the book “The Richest Man in Babylon” and report back to us. If you could understand 5% in that book, you would understand how the world work, and you might realize who is actually the dumb one.
After you’ve read that book and still didn’t learn anything from it. I will reimburse you for its cost. Are you up to the challenge?
Success isn’t by chance, but by choice.

The Richest Man in Bablyon has 7 basic principles:

1) Start thy purse to fattening - save/invest
2) Control thy expenditures - watch out for self serving brokers
3) Make thy gold mutiply - use powerful investments
4) Guard thy treasures from loss - watch out for brokers with
their hot tips.
5) Make of thy dwelling a profitable investment - rental properties, your own home---but stay within your means.
6) Insure a future income - do work that you love to do. Become excellent at it.
7) Increase thy ability to earn - education never stops. Keep reading good books like this one, The Millionaire Next Door, Rich Dad Poor Dad and so on.

1-3 (save, budget, invest) are the most important points.

cloud13 says

bough some condo for USD 30K in Mumbai and sold it for 350K

Good investment scheme. You may want to consider buying that for 350K and sell it for 3500K. :)

E-man says

If this were true, I expect interest rate to go down YOY, too.

I am very clear on that, whether interest rate go down or you expect it to go up, downward slide of home prices will continue.

MyPunanyIsBiggerThanYourPunany says

Make thy gold mutiply

That pagan didn't understand that you need a very expensive nuclear reaction for transmutation.
Gold don't multiply. Yes, it is money. No, it is not an investment. Because it doesn't multiply/grow, nor does it make income.

Waitingtobuy says

Sure, there is government corruption and there are some union thugs, but for the most part, it is corporate welfare and its lobbying for limited regulation are what have really hurt this country.

Government corruption is corporate welfare. Don't take two as separate please. It's the clubby nature of Washington and K street.

IT Guru says

What I mean to say is, I want to die with nothing in my pockets after having a great life enjoying the limited time afforded me. So many on these forums write about how much they have in the bank or in investments. They wake up looking at the balances and pinch every penny. I rent a small apartment, drive a beater, and save 1000 bucks for any emergency. I blow all the rest enjoying myself and on others. By the way I make a six figure salary and have zip in 401k or stocks or banks. They are all setup to take from us.

What the hell do you spend your money on? Prostitues and blow? haha.

klarek says

SubOink says

klarek says

3. You need help with math.

Definitely! But not from you

Just as well. Haven’t needed to teach basic arithmetic to anybody since I was a teenager, so you could probably find better tutoring.

Love it! We are like Batman and the Joker. You're the Joker.

klarek says

Well when the govt tries to implement quasi-bubble measures for “softening” the crash (thereby duping dumb people into believing the crash is over therefore buying),

This is what you seem to not get. I didn't buy because I think "the crash" is over. I bought because for years I knew what I wanted to spend and what kind of house I would like to buy. I waited until I could buy what I was looking for, for what I wanted to afford. The time came. I hated renting and wasted way too much money that way. That's not the only thing I hated about renting. But I won't get into it...we all know the reasons as they have been discussed with impunity in this forum.

klarek says

SubOink says

I know that lending standards are strict because I just went thru it and experienced it first hand. Did you? What do you know? Other than reading patrick.net and doom and gloom statistics.

I know what it was like to get a loan ten years ago, five years ago, and today (I’ve been approved twice in the past eight months). So I have three points to compare. What do you have? Tell me.

Good for you getting pre-approved. Now, what does that have to do with knowing how the loan process goes these days?
Anybody can get pre-approved. There is nothing to it. You have nothing to compare until you go thru an 30 or 45 day escrow these days. Sorry, but your pre approval doesn't mean jack.

E-man says

Go read the book “The Richest Man in Babylon”

Oh for fucks sake! This is just more rhetorical horseshit for the chicken soup soul. Fuck. How 'bout "be excellent so that excellence becomes you"... or "losers never win, and winners never lose"? This type of pseudo-intellectual, masterbatory crap is worthless.

APOCALYPSEFUCK says

This is great. I should write a book.

Damn straight.

Blah, blah, blah…… Now did anyone notice that for the first time in as long as I’ve been coming here religiously on a nightly basis that the daily update is 3 HOURS LATE?!?!

I say it’s time everyone dip in their pocket and send Mr. K a little something to keep his forum up!!

I don't know whether anyone is still following the thread this far down, but I think most of the posts have missed dodgerfan's real point.

I think the point is that we are collectively better off--and most of us are individually better off-- avoiding debt, living within our means, and focusing on the pleasures money doesn't buy. Happiness is not that strongly correlated with accumulating wealth, and for most of us it IS correlated with security and freedom from debt.

That said, if you have a talent for investment and you want to treat your residence as one, you may be an exception--and if you're currently treating your house as an investment, I hope you are.

SubOink says

This is what you seem to not get. I didn’t buy because I think “the crash” is over. I bought because for years I knew what I wanted to spend and what kind of house I would like to buy. I waited until I could buy what I was looking for, for what I wanted to afford. The time came. I hated renting and wasted way too much money that way. That’s not the only thing I hated about renting. But I won’t get into it…we all know the reasons as they have been discussed with impunity in this forum.

I asked you up above why you were renting a shitbox which at that price you could have rented the equivalent of what you own now. You never responded.

SubOink says

Good for you getting pre-approved. Now, what does that have to do with knowing how the loan process goes these days?
Anybody can get pre-approved. There is nothing to it. You have nothing to compare until you go thru an 30 or 45 day escrow these days. Sorry, but your pre approval doesn’t mean jack.

Actually, excluding some technicalities like the appraisal price of the house, most everything involving lending limitations is covered in the pre-approval: bank statements, pay stubs, W-2, credit history pull, etc.

Why don't you tell me what's harder about buying a house today versus ten years ago. What's stringent about it? What experience do you have buying houses during normal, pre-bubble times?

Johndavis is right. Buying things like crazy won't get people anywhere. Especially when wants constantly go down in price (electronics). A bigger house means bigger bills (heating/ac, water, etc) maintenance cost money.

I'm sure someone might try to counter with peak earning years but frankly that doesn't apply anymore. Longevity keeps increasing.

mdovell says

Especially when wants constantly go down in price (electronics).

Moore's Law. An observation Dr. Moore made that cost per component goes down by half every eighteen months or so.

It's become some kinda freakin religion now, like Bay Area Fortress Real Estate.

Moore's Law, a race to the bottom among the competitors. Even when you win, what do you win? The privilege to sell a commodity with ever reduced price. Even when you win, you lose.

johndavis says

most of us are individually better off– avoiding debt, living within our means

But then we'll miss the opportunity to get rich investing in RE, isn't it? Living in America debt free is foolish. /sarcasm

bubblesitter says

johndavis says

most of us are individually better off– avoiding debt, living within our means

But then we’ll miss the opportunity to get rich investing in RE, isn’t it? Living in America debt free is foolish. /sarcasm

Those are two very different ideas. Living within your means is, of course, vitally important. But that is not at all incongruent with taking on some debt. Debt is a tool, used by wise investors.

Living debt free is foolish.

dodgerfanjohn says

And so onto my question…Where is the disconnect? How did we go from immigrants who could not speak the language comming here and building a hard scrabble life into the quintissential American Dream….to what we have now days.

"I'm telling you. We're getting sloppy.

Our thinking, our fucking attitude,
you know?

We're not fucking hungry anymore."

-Tony Montana

ChrisLA says

Waitingtobuy says

Sure, there is government corruption and there are some union thugs, but for the most part, it is corporate welfare and its lobbying for limited regulation are what have really hurt this country.

Government corruption is corporate welfare. Don’t take two as separate please. It’s the clubby nature of Washington and K street.

For the most part, agreed, ChrisLA. Taking money from corporations to get elected in exchange for passing laws favorable to corporations is a form of quid pro quo. However, I wouldnt call the thieves in Bell part of corporate welfare.

Schizlor says

“I’m telling you. We’re getting sloppy.

Our thinking, our fucking attitude,
you know?

We’re not fucking hungry anymore.”

-Tony Montana

That is certainly a huge factor. I see this a lot in younger crowd. They have lived such a comfortable life that they don't actually know what it is like to be hungry. Many have grown to expect goods and services from society without lifting a finger. The attitude of "I want it now therefore I should have it now."

I do not believe that is a good thing.

There's no need for people to get all bent out of shape over this. I get what the OP was alluding to which is the notion that materialism has become a much larger aspect of today's living. I don't know if I would put it that way because there's always been "those who came first" and since technology and science advances with time so too does the general quality of life. In the 40's and 50's there were many wondrous new thing that came about. Television, hi-fi, advanced medicine, electronic computers, jet powered passenger planes and so on. Just previously in the 30's most of the country lacked electricity or indoor plumbing, which only come with the rural electrification board. I have no doubt that the old timers of the day complained about the then youngsters and their new-fangled gadget filled houses and ridiculous cars with fins.

Its interesting now because my generation ( 30's) is just now getting to that age where things like boom boxes, Atari, The Cosby Show and other relic of the 80's are becoming sentimental and romanticized. I even hear people say how much better it was back then ( which makes sense: you were a kid!)

Where am I going with this? Every generation lays blame on other generations. Either that or they make generalized assumptions of what it was like or how much better/worse a certain time or era was. Hence the reason why people seem to be so attached to the 50's-80's mantra of the "American Dream" which is now archaic and mostly impractical.

As far as houses and whether its dumb or smart to buy them, its neither. I don't feel smarter or dumber for renting. It makes financial sense for our particular situation. On the other hand I know people who are paying way too much for rent. The same goes for people who've bought. Whatever's right for you is going to be the best outcome.

klarek says

Not really. Go read the main page. It isn’t anti-owning, it’s anti-buying-like-a-dumbass. Those who strive to not make the biggest purchase in their lives like a dumbass have found value in this site.

Well said.

klarek says

SubOink says

This is what you seem to not get. I didn’t buy because I think “the crash” is over. I bought because for years I knew what I wanted to spend and what kind of house I would like to buy. I waited until I could buy what I was looking for, for what I wanted to afford. The time came. I hated renting and wasted way too much money that way. That’s not the only thing I hated about renting. But I won’t get into it…we all know the reasons as they have been discussed with impunity in this forum.

I asked you up above why you were renting a shitbox which at that price you could have rented the equivalent of what you own now. You never responded.

Sorry, I forgot to answer that. Trust me, we looked hard to find a better house at same rental price but every house was an equal 1950's shitbox renting between 2500-3000/month - we realized that our rent was considered "a deal" ...very frustrating. The rental inventory in Calabasas, Woodland Hills (south), Encino/Tarzana (south of blvd) is very low actually. People get astronomical rent prices. There is very high demand on rents now because all the foreclosed people have to live somewhere. We realized that we would have to sacrifice neighborhood. But why would I spend that much on rent when I can buy for it? I work from home and have been wanting to build an actual home office. So the house we bought has a separate guest house which is now my office. Just for the record, the house we bought was previously rented to 2 different parties. Main house for $2500.- and guest house for $950...The people that sold needed to move fast...patience was a virtue all these years but being ready to jump got me an amazing deal here. There were multiple offers but all FHA. I was the 20% down guy and got the house even though my offer was lower than the others.

So, maybe you can see that it was a very logical, common sense step. It's a great time to buy when its right for your own personal situation.

Katy Perry says

klarek says

Not really. Go read the main page. It isn’t anti-owning, it’s anti-buying-like-a-dumbass. Those who strive to not make the biggest purchase in their lives like a dumbass have found value in this site.

Well said.

Okay, maybe I am reading the wrong page but what I found on the front page was this...

"Why It's A Terrible Time To Buy An Expensive House"

Beats me but somehow that sounds like you should N O T buy a house now. in other words for right now the website advocates RENTING. Just like I said.

johndavis says

I think the point is that we are collectively better off–and most of us are individually better off– avoiding debt, living within our means, and focusing on the pleasures money doesn’t buy

There is no such thing as debt free. Life costs money. You need a place to live and if you cannot afford to buy a house with cash you have 2 choices...rent or buy one. If you think you are debt free as a renter because you don't have a 30 year mortgage than you are lying to yourself because as long as you have to rent...you have the debt of paying rent. You OWE the landlord a rent check every month. Whether you relocate to another rental or not...you owe a rent check. The sucky part is that rents are subject to change. And rents track inflation. So you are on the hook for more and more rent over the years.

Same in a 30 year mortgage..you owe the mortgage except that payment is going to be the exact same until the house is yours.

Debt Free would be to move in the mountains, be completely self contained, own well, solar power, no tv, internet...and no prop tax even. Not sure if there is such a place and if it would be desirable to live like that. Maybe it would. I don't know. I'll try it in my next life...maybe. Maybe not. :)

I heard someone once say There are a lot of really stupid people out there, and quite frankly, it explains a lot of human behavior.

Norbecker says

I would have to put some of the blame on lawyers. Yes lawyers. Oh you spilled hot coffee on yourself while driving - not your fault the coffee was too hot. I’ll get you millions. Oh you slipped and fell in a store - not your fault. I’ll get you big $$$. Got fired from your job….not your fault. Sue and get $$$$$. People have somehow got the belief that they are NOT responsible for their situation and that they are entitled to everything they want. We have become a nation of irresponsible, dumb asses who believe they are owed a certain lifestyle and someone else should provide it for them

It wasn't that long ago that lawyers could not advertise on TV. That law needs to be brought back.

zzyzzx says

It wasn’t that long ago that lawyers could not advertise on TV. That law needs to be brought back.

Lawyer advertising is regulated state-by-state. Lobby your legislature if you want this to change.

Norbecker says

I would have to put some of the blame on lawyers. Yes lawyers. Oh you spilled hot coffee on yourself while driving - not your fault the coffee was too hot. I’ll get you millions.

There are egregious cases, like the McDonald's coffee cup, but you will find that average and median payouts have decreased quite greatly when you adjust for inflation. Most of the people who blame lawyers are doing so for ideological reasons, not for numerical ones. Most cases get dismissed, and judges are quite good at throwing out frivolous cases.

bubblesitter says

cloud13 says

bough some condo for USD 30K in Mumbai and sold it for 350K

Good investment scheme. You may want to consider buying that for 350K and sell it for 3500K.

bubblesitter ,

I did buy some properties, flats and all of them have doubled in less than 4 years. But the properties in Mumbai have become 10 times.
Also....
It's really a frinedly advise , you are going to keep sitting bubbles while the rest of the world profits from it.

cloud13 says

rest of the world profits from it.

I am happy for you and good luck on your money making adventures.

SubOink says

Okay, maybe I am reading the wrong page but what I found on the front page was this…
“Why It’s A Terrible Time To Buy An Expensive House”
Beats me but somehow that sounds like you should N O T buy a house now. in other words for right now the website advocates RENTING. Just like I said.

Why do you continually persist on putting your little neck of the woods as the face of the entire state? You qualify and quantify down to a minimal area, rife with SFR's, and bereft of rental units, then you extrapolate that to include every other neighborhood. WTF dude? Why are you SO over the top defensive? You bought, you're happy. Is there some ridiculous emotional need/want that compels you to think that every negative comment about the housing market is directed personally at you?

And the statement means exactly what it says. Its a horrible time to buy an EXPENSIVE house. Nothing more, nothing less. I see nothing in the statement implying its a horrible time to buy a reasonably priced house. Just expensive ones.

cloud13 says

I did buy some properties, flats and all of them have doubled in less than 4 years. But the properties in Mumbai have become 10 times.

Where in Mumbai and when did you buy and sell, and for what price? Also, what type of flats?

SubOink says

If you think you are debt free as a renter because you don’t have a 30 year mortgage than you are lying to yourself because as long as you have to rent…you have the debt of paying rent. You OWE the landlord a rent check every month.

What???

Does that mean I am in debt to Subway because they won't give me my sandwich until they have the money in hand?

Rent isn't paid in arrears; mortgage payments are. When you pay a mortgage payment May 1, you are paying for April's principal, interest, taxes, and insurance. You are paying on a debt. Money already owed, meaning you already consumed the good before you paid for it, and are thus "in debt" for it.

When you cut a rent check for May 1, you are paying May's rent. It's a purchase, not repayment of a debt. You pay, and are now entitled to 31 days use of that property going forward. You then pay again to obtain another month's use of the property on June 1, and so on.

I can't believe you're arguing that any time you have to pay money for something, that means you're paying on a debt.

dodgerfanjohn says

And the statement means exactly what it says. Its a horrible time to buy an EXPENSIVE house. Nothing more, nothing less. I see nothing in the statement implying its a horrible time to buy a reasonably priced house. Just expensive ones.

Duh! It's ALWAYS a bad time to buy ANYTHING expensive.

"expensive" is relative. Like Klarek said $450k is expensive to him. To me that is dirt cheap. After all, that's what we are all arguing about here for the most part.

I have always been the one advocating buying something reasonable and something you can afford but there are folks here that take it to the next level. Nothing is reasonable, the apocalypse is coming, doom and gloom...one should not buy ANY house because we are going straight to hell. That's 90% of patrick.netters. Totally ridiculous.

I am trying to infuse some common sense here. Some balance. I am lucky to have a couple of older friends that have given me decent advise against my often too scared nature and I simply trying to share that. As soon as I mention anything about it - you guys keep going crazy. It's not me that's on the defense. Its you guys defending your little doom and gloom world mindset.

But you are right...I probably should just stay out of it :) I just can't help myself sometimes. Especially when I read complete non-sense.

Schizlor says

I can’t believe you’re arguing that any time you have to pay money for something, that means you’re paying on a debt.

You didn't get it...I did not say that any time you have to pay money for something you are paying on a debt.

I was saying that because you have to live somewhere there is no way to get around having to pay that rent EVERY month. It doesn't matter if you are technically paying on something you owe or not because the fact is...you are paying your rent every month and I am paying my mortgage every month.

We are both forced to keep working to pay that rent or mortgage.

Yes, technically you are "debt free"...but in reality you have to come up with the money EVERY month to pay your rent. Do you not??

SubOink says

I have always been the one advocating buying something reasonable and something you can afford but there are folks here that take it to the next level. Nothing is reasonable, the apocalypse is coming, doom and gloom…one should not buy ANY house because we are going straight to hell. That’s 90% of patrick.netters. Totally ridiculous.

That's my biggest beef with people on here lately. They act like it is still 2006-2007. And they worry about the most unlikely events - eminent domain and other absurd things that almost never happen. They still make arguments that people only purchase in prime areas using NINJA loans even those haven't been around for 3+ years, yet plenty of sales (not peak numbers, but well above nobody buying) are still happening. They are ultra-uber-conservative and won't buy but with cash. They redefine words or phrases such that you don't own your home until it is paid off - even though such terminology has been used for the past 50 years. To some, a mortgage is a life sentence or indentured servitude. Too much worry; too much negativity.

ch_tah says

That’s my biggest beef with people on here lately. They act like it is still 2006-2007.

That's because despite prices being more affordable (though still correcting), it's a LOT like that period of time when buyers were using asinine and purely made-up reasons for buying. Or worse, they caveat it with no-brainers such as "I can afford it".

Well gee, Sherlock, you sure figured out how to unfuck yourself from this jam. You should write an economic thesis on how the time to buy is when it feels right and you can afford it. It's like I'm reliving the housing bubble's peak and beginning collapse again. The prices are different, but the rationalizations are every bit as stupid as they were then.