patrick.net

FAB,

How about posting to YouTube and posting the link here

I have plans for this footage I'm getting, but I'll most likely adopt some relatively anonymous front when I post it. I'll be sure to send you an email though.

SFWoman,

It's been my own personal experience that the annoying, arrogant lawyer types think that no one else could possibly comprehend the law but them. Same with doctors, computer programmers and indian chiefs.

I suspect in the long term something similar is going to happen here, and fossil-fuel power stations and the like will actually be able to sell (or profit from) their CO2-rich gas flows. Now THAT will drive the extreme greens crazy.

nuclear will drive the extreme greens crazy... actually absorbing CO2 is better than carbon trading credits, i don't think any green would disagree with a process that is 'CO2 neutral'

there's a non autoclaved aerated cement developed in the states that uses MORE and lower quality fly ash from coal burning power stations than is usually used in cement production -- and it doesn't require steam autoclaving with its massive energy cost. it uses 1/4 of the cement of ordinary concrete per unit volume. i'm trying to find out more about this technology, not sure if it's proprietary or protected. apparently only 15% of fly ash produced as waste by power stations is currently converted into cement at present, the rest goes to landfill... can't find the site now, grrr

CB,

Thanks for the info ! Man, I would have never imagined it happening so fast in Rivermark. (I missed earlier posts about Rivermark).

For those not familiar with BA, Rivermark is a nice little new community in Santa Clara. Ideally situated between a triangle of freeways and almost walking distance to many hi-tech jobs.

The problem is school district. The new school has just started there. Brand new. First year. But prices were bid up with the assumption that this will become a great school district. Classic bubble logic. Since "VA Linux" is going to be the next Microsoft in future, it should be valued today like Microsoft. After all you don't want to miss the guaranteed appreciation. Risk is a four letter word. Don't say it.

I live among a crowd that worships any land of good school district. I got so fed up after listening about how great Rivermark is that I stopped following it.

Prices are below 2005 level ? Amazing. Now I am sure I will hear the other part. "But it is near Amtrack", or "You know, outside Rivermark, the area is not that great". The fact is, it is like any other part of BA, with both positives and negatives. The bubble logic ignored the -ve.

SFWoman Says:
DS,
I really like that Schiller graph you put on your blog. We should periodically post it here on new threads.

yeah, you have to examine it carefully -- it's housing inflation controlling for monetary inflation against time (I think) -- some of my text on the blog is a bit rough I just realised, I don't spend much time on entries ;)

my intent is to expose laissez-faire economics, hence the anti-govt polemic is a bit strong...

I'll be up in the glory filled gold brick paved oh so special bay area the 7-10th. Remember I'm 37% less offensive in person. Staying at the Sir Francis Drake as their pet policy is most uber bitchen. Blog Party NorCal?

CB Says:
For the house that I posted, the following is the approx. price for the last few years for the same model.
2002 650K
2004 900K
2005 1.05 M (peak)
2006 958K
2007 ?

I like my house a lot and I am not an FB, but I think only the RW’s that are selling houses here would like you to believe that this is a prestigious area, LOL.

Actually, I like Rivermark too - close to a lot of jobs, good public transport, shopping and dining. Reminds me of a Dutch town I briefly lived in many years ago. I wish more communities were built like that. Even the lady I ran into today is actually happy with the place - her husband works somewhere on North 1st, and she hops on to the light rail to work. No kids yet, so school is a non issue.

The main problem though (as you pointed out) is that it was built during the bubble years and _started_ selling out at over 600K, and prices became progressively more ridiculous.

SP

Reminds me of a Dutch town I briefly lived in many years ago. did you visit said dutch town in 1650? If so I totally Grok. San Hosebag and a Dutch town circa 1650 are pretty much equal. Rampant crime, fascist police, no center, a lack of community, ethnic violence, no freedom of movement after nightfall, I could go on and on but what would be the point of that? All san ho needs, is like all turds, is a good flush. Whooooops sorry, san hosebag is after all the "capital" of silicon folly.

contrary to all popular belief it’s not all pass the guacamole and the Eagles...

Dinor, DryFly, FRIFY, etc.

I think your arguments are right on. Great thread.

CB Says:

...Yes, there is a housing bubble in the Bay Area.

2002 650K
2004 900K
2005 1.05 M (peak)
2006 958K
2007 ?
___

Oh, that's easy...

2007 = $29.65

And even that's too much.

_____

Surfer-X Says:

San hosebag is after all the “capital” of silicon folly.
___

Silicon Folly! Great term.

Ha, ha, haaa...oh, yeah! The hope of all mankind springs eternal from... Silicon Folly.

Now, put down the bong, pass the Guacamole, kick the Chihuahua and crank up Hotel California...

Vicente asks, "RandyH, Not sure what I did to offend you."

Perhaps he thought you were referring to him with:

"Yawn, indeed there are some amateur economists who will have complex explanations"

Btw, agree that no complex explanations needed here.

I openly admit to being an amateur economist, as I do not have a PhD in economics. I certainly don't get paid for doing macroecon work either, although I do sometimes incorporate quite a bit of microecon into financial models I am occasionally paid to create.

Although not offended, I am always troubled by anyone claiming that something rather complex, such as any market or economic sector, is "just that simple". If it's "just that simple", then how did all this bubble trouble come about in the first place? Asserting it is "just that simple" is proclaiming that decades or centuries of learning are irrelevant, and those who pioneered our current understanding of things were trivial. I, for one, consider Friedman much smarter than I ever hope to pretend to be, and he thought the housing market was complex.

Gravity is "just that simple"; you through something in the air and it comes back down. Ok, now please use that to solve FRIFY's challenge many comments above.

I openly admit to being an amateur economist, as I do not have a PhD in economics.

Bill Gates does not have a PhD in business. Is he an amateur businessman?

I think it is that simple. A simple combination of easy credit, low interest rates, greed, and RE guru seminars. And the apparent neverfailing wellspring of irrational exuberance in a money-making, market-crazy society. A simple equation in people's heads of 'rent in, mortgage payments out' in the case of investors. Or 'flip that house' in other cases. I don't think it's worth modelling, as its easy for the models to go wrong. But then I have a healthy postmodern mistrust of money markets, econometrics and so on. It's like trying to model the behaviour of a beehive -- why do it? Let's just watch the real bees and see what happens.

There is some value perhaps in attempting to predict what a single independent variable change might do to 'the economy', such as changing interest rates or the taxation regime, and so on. I don't remember which economist is famous for restricting their work to just this sort of analysis -- was it Bernanke?

btw, Friedman wrote some real crap about the housing market back in the 40s as a young economist -- the situation then was uncannily similar to today, and his remarks and dry right neoclassical view was just as ill-considered and wrong and full of arguments of convenience favouring 'neoliberalism' and the people holding the reins.

JMHO

This whole thing goes deeper than economics, past trends, world geo- financial markets and currency. See post WW II we created a model for the world to follow. We created a lifestyle utopia of abundance and consumption. The entitled notion that we deserved far more than we earned in reality. A different psychology took hold over the last twenty years especially in the western coastal U.S.

The boomer generation grew up with this grandiose notion that living large was the only way to live. They passed that down to their children who couldn't see past their own need to "have it now". Many of these people got into the investor class sometimes leaving their morals unchecked. It was about getting their piece of the wealth at the cost of others. Greed replaced decency and fair profit. Corporate america was sick of the middle class advancing and paid the electorate to pass Nafta and Cafta. They soon found a new source of cheap slave labor overseas and the middle class slide begun about ten years ago.

For the last eight of those we've had a government who big business could buy. Now we've lost our position of power to the Chinese who we are beholding to. Through our own fault we stopped being a great producer nation. We let other nations overrun us because we need their "investment in our debt. Until recently the checks and balances on wall street didn't exist. The banking and lending models have been bastardized billions of dollars soon to default. Don't think for one damn minute that this administration doesn't know how we are on the edge as a nation.

Basically we the Great American People did it to ourselves. Short sighted and self centered never looking past today... And like a virus this attitude spread to the rest of the world.

Syvie, I agree with your observation about the rise of the consuming psychology. And greed and other evils are prevalent and a problem. However, this is not new at all. It has always been this way.

We are not as beholding to China as they are to us. Yes, we enjoy buying lots of their stuff – but we buy it real cheap and then paying them with debt. That debt is denominated in dollars - declining in value. So the Chinese send us real stuff, and we return a promise to pay in a fiat currency that we control.

We could choose to stop buying their products and better balance our budgets. However, China cannot afford to stop selling to us on these very cheap terms. If we stop buying they will have a social and economic disaster on their hands.

Surfer-X said:
1650? If so I totally Grok. San Hosebag and a Dutch town circa 1650 are pretty much equal. Rampant crime, fascist police, no center, a lack of community, ethnic violence, no freedom of movement after nightfall, I could go on and on but what would be the point of that?

Lol. No, the area around Rivermark is not even remotely as interesting as that. It is a fw communities of small townhouses on small lots, more or less surrounded by office-parks.

The comparison to townhouses near Eindhoven was only on the basis of scale - culturally they're fine olive oil and dirty dishwater. :-)

SP

RandyH, wasn't addressing you and perhaps "it's just that simple" was poorly chosen. What I was trying to say was that FOR ME, it's "just that simple" that I don't factor in nebulous guesses about inflation or long-term economy into my buying decisions. Can I afford this now, that is something I can grasp. Other people may have more complex standards. What those would be I do not know.

On the flip side of this, the original post...

If anyone remembers at this point

Was someone positing that, somehow, inflation in some murky way, would make it a good idea to buy RE just now after all.

Do I need to re-read this thread a 3rd time? Perhaps it's buried in there somewhere. I just don't see how prediction of inflation would make me want to run out and buy RE now.

I picked up Al Gore's Inconvenient Truth at the video store just the other day. If and when the California real estate crash ever arrives here in any truly significant fashion, gaining California land at mid elevations would seem prudent. According to Al, if things continue to go unchecked the meltdown of the Greenland, Arctic and Antarctic ice sheets will bring us new coastlines.

Buying in at a severe California real estate crash at mid elevations, then waiting things out again for rising sea levels can make your well located land become the new beachfront. With much of what we have known of as California underwater, your now prime beachfront property is likely to see the soaring California real estate boom of the 2040's. Hang on. Take care of your health. Live a long life, then enjoy your profits. Booms, busts and turning tides tend to be cyclic. Ride them rightly and profit accordingly.