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"Everyone gets everything he wants". "I wanted a mission, and for my sins they gave me one". "When it's over, I never want another".
"The river snaked through the war like a main circuit cable, plugged me straight into Lereah"
Sorry for the long post!
There are 2 recent interesting WSJ articles relevant to this thread. The first is from this past Saturday, in part posted below (I think WSJ online is subscription only, so sorry for the long post). I tried to cut out irrelevant parts. The article is depressing. It probably explains in part why rents are going up. It's interesting though, that the profiled family can't sell their DC house to buy into the SV housing market insanity.
The second is from today, which speculates that CPI will be altered slightly, to be published out to 3 decimal points instead of the current 1 decimal point. I wonder if the "higher ups" are concerned that small fluctuations in CPI are going to push the Fed to overreact one way or another.
Boomtown Redux:
Job Market Heats Up
In Silicon Valley
Start-Ups, Small Firms Are
Especially Keen to Hire;
Mr. Boos Eats His Words
By PUI-WING TAM
August 12, 2006; Page A1
SAN FRANCISCO -- Four months ago, Jamie Odell packed two suitcases and left behind his wife and three kids in Potomac Falls, Va. Narayan Raja loaded up a truck with his belongings last year and left Warwick, R.I. Marty Boos sold his 3,700-square-foot home in Eden Prairie, Minn., to make a new start.
All three had the same destination: Silicon Valley. After suffering an exodus during the dot-com bust, the region is once again a land of opportunity.
Mr. Odell was lured by stock options and a bigger title at a start-up company called Sling Media Inc. "I know it's a risk," says the 40-year-old marketer, "but this area is the hot space to be in now." His new employer sells a box that relays programming from a living-room television set to any computer with high-speed Internet service.
The nation's technology capital lost 185,000 jobs, or one in five, between 2001 and 2005. This year, state economists expect a net inflow of people into the area for the first time in six years.
[snip]
"People keep saying Silicon Valley is dead, and it's never true," says Sean Randolph, president of the Bay Area Economic Forum, a San Francisco-based group that studies the region's economy. "There's an immense infrastructure for research and development here," he says, that helps push Silicon Valley continually up the skills curve.
One of its big draws is money. Average annual pay for the region's tech workers rose to $70,000 last year from around $64,000 in 2003, according to Joint Venture Silicon Valley, a nonprofit business group. Executive positions typically command six-figure packages. While stock options have come under fire amid cases of improper dating of grants, many tech companies, especially start-ups, are still doling them out heavily. That offers employees the chance to cash in big if their company goes public and its stock price rises.
[snip]
Mr. Boos paid nearly $1.4 million for a Silicon Valley home, according to public records, three times what he got for his Minnesota home last year. His wife, Rhonda, who had worked for Sun Microsystems in Minnesota for 17 years, transferred to Sun's Silicon Valley headquarters from Minneapolis and received a 15% increase in total compensation.
"I came here for the future equity," says Mr. Boos. "The ante to get into this game is very high, but so is the potential return."
[snip]
The cost of living in Silicon Valley remains sky-high. In June, the median cost of a home in San Mateo County hit $940,000, four times the national median of $231,500, according to the California Association of Realtors.
[snip]
His wife, Kathleen, was concerned about the move. The couple had left Silicon Valley in the 1990s to be close to their families in the Washington, D.C., area. Their three kids -- a 7-year-old son and 5-year-old twins -- were settled there, and they owned a 3,300-square-foot, five-bedroom home on a cul-de-sac, purchased for around $400,000 six years ago.
Mrs. Odell, a stay-at-home mom, says she worried about moving the family and paying for housing. "It's a big risk," she says. "I was in denial. For a few weeks, I didn't think Jamie would really do this." In February, she and Mr. Odell flew to Silicon Valley and realized they would have to pay more than $1 million for what they considered a passable house. "It's scary that you can pay so much and get so little," says Mrs. Odell, who is also 40.
Still, they took the plunge. Mr. Odell decided to live out of a suitcase until his family could sell the Virginia house. They planned to move everyone out by early July and to get the kids into a good public school in the Bay Area.
Little has gone according to plan. Amid a slowdown in the Washington-area housing market, the Odells had their home on the market for three months and had to settle in mid-July for $150,000 less than their original asking price, which they decline to give. They're still looking for a Bay Area home and plan to rent for the time being. The move was pushed back to later this month and the Odells, with their living situation unsettled, plan to send the kids to private school at least for the first year.
Mr. Odell calls the move stressful. "Being without family has been tough, and working at a start-up, the hours are crazy," he says. Sling co-founder Jason Krikorian says he has taken Mr. Odell out to sing karaoke and given him a Starbucks card. "When I have an individual who's uprooting to join us, I think a lot about" what the person has to go through, Mr. Krikorian says.
Randy H
2006 Aug 14, 3:17am
SQT,
The guy who sold you that train table may not be a FBer at all, but someone going through that mandatory great purge stage of life. I know when we hit that wall we took advantage of a move to just unload everything we could at any price, asap; the rest getting donated and the residual going to the landfill.
skibum,
The scene:
Dimly lit smokey tavern (complete with 8 year old pickled eggs in a jar of 40 year old of vinegar) AND...... it's Karaoke Friday Night!
Mr. DinOR (who's been here since the close of the market) is now visibly, blatantly and obviously.......... stinky.
As he careens wrecklessly (and unapologetically) through the crowd of largely sober patrons he teeters toward the DJ's "sound system".
Brushing this two bit punk aside he clutches the "mic" like a salty, veteran performer. DVD's spill out on to the "dance floor" and he spies something from "back in the day".
Fumbling, (and after flailing and awkward length) he manages to get the damn thing to work. He squints hard to glean the words scrolling across the elevated screen.
This The End,
My o......nly friend, The End
(Always cheers me up)
The Fed, when it was created, was created for the ostensible purpose of keeping the dollar strong. Considering how miserably it has failed to do that since its creation, why would we expect it to do any better now?
It was, is and will be, a political tool. The Fed will do whatever its masters think is best for them.
Yes. Much as I would like to see Bendover pull a Volcker and raise rates to the sky to pop this thing quickly, I am far too congnizant of the Fed's politically-driven past behavior to expect he will do anything but obey his political masters.
It doesn't matter which corrupt, fossilized party of the moneyed elite gets "elected" this year or in 2008. Nothing will change the fact that politicians and their prime benefactors (banks, CC companies, HBs, etc.) stand to lose far more if rates are raised vs. lowered. I expect there will only be a short pause, then they will resume slashing --to zero if necessary.
Downsides of raising rates (from the Fed/Congress/Administration's perspective):
1. Could trigger a severe recession. FBs don't like severe recessions. FBs tend to vote regularly and tend to punish incumbents who favor taking away the punchbowl.
2. Could trigger broad-based deflation. This will strengthen the USD and make dollars repaid (to foreigners) on our $9 Trillion National Debt more expensive in real terms. This is bad for both taxpayers and our balance of payments.
3. Deflation --or even just LOW inflation-- would also gigantically increase the real cost of future Medicare/SS obligations promised to retirees (which are indexed to the CPI). Thanks to hedonics or just plain leaving shit out, the CPI currently does a brilliant job of UNDERstating very rampant true inflation, which means USDs being paid to current retirees are LOSING real value with each passing day. Reversing this carefully constructed arrangement would be a very bad thing (for the government).
Don’t mince words HARM, tell us how you really feel.
:lol: my pleasure!
As an agent, I can tell you being in the middle of the lowball buyer/unrealistic seller menage et tois is pretty uncomfortable. So is the swelling the morning after your seller let’s you have it for bringing him a “ridiculous†offer you are under every obligation to bring.
George, given that you're about the last honest FL agent left standing, I totoally symnpathize with you. Again, I place the blame for any pain or "swelling" on the greedy unrealistic FB, not you. If they don't understand the law (or price to sell), it should not be your problem.
Its all the more incentive to qualify your sellers ahead of time. It they are stuck with little or no equity, have unrealistic expectations, and aren’t truly willing to bend over backwards to make the sale, then it isn’t worth my time. Let some other schlub deal with them.
I think you've hit upon the ideal solution, my friend!
Randy H
2006 Aug 14, 4:26am
George (and all other decent, reputable realtors),
While writing "lowball offers" (which is a misnomer as I'll explain), I recommend the following common sense:
1. Make sure you actually *want the house you're bidding on*. You should have the attitude, "if I could get that house for X, or a little bit more, then I'd happily buy it today and never look back (even if prices fall further)".
2. Be professional and courteous to the selling agent. Sometimes you won't get the same treatment in response. But you can't go wrong taking the high road. A surprising number of agents are professional and will say something like "Thank you for the offer. I think your offer is a bit/lot low for this seller. My client isn't interested in couteroffering at this time, but I'll contact you if that changes in the future".
3. The offer shouldn't be a "lowball" at all, but what you as the buyer really truly think the house is worth. I like anchoring in negotiations, but in this case prices are already so ridiculously high that simply offering the true value of the home is a massive low end anchor. I'd personally be happy to pay a *reasonable* premium over my guess at the house true value for the privilege of not waiting for the absolute bottom. I think that's a reasonable attitude.
My current formula is actual or best guess at 2002 home value minus 10%-20% depending upon school district, condition of home, and how much my wife likes it.
Newsfreak --very sorry to hear about your job. But, at least you're not an over-leveraged flopper and are in a cash-strong position. You have options most FBs can only only dream of.
The offer shouldn’t be a “lowball†at all, but what you as the buyer really truly think the house is worth.
Sad, but I'm 100% sure that pretty much every BA seller at this point will regard a fair-priced offer as an insulting “lowball†offer. Kind of like the perma-bull Orwellian definition of "buyer's market" (tons of inventory, sky-high asking prices, no significant negotiations to be had on price).
Give it a couple more years, and it will be a different story.
Peter P
2006 Aug 14, 4:43am
Santa Clara County inventory seems to have reached a sort of plateau.
If inventory has reached a plateau at this time, perhaps the market will live another year. Median price is leveling off though. So there is no urgency to buy. However, there is no urgency to sell either.
However, there is no urgency to sell either.
There is if you're an underwater FB who's already spent all that guaranteed "equity" and is now seeing your "flexible payment" option-ARM adjust for the first time (but not the last).
Peter P
2006 Aug 14, 4:50am
China needs us before the 2008 showdown time to show off to the rest of the world what a great country it has become. You cannot imagine how important this is to the face of PRC, and how far they will go to make sure not to mess things up.
When is the 2008 Olympics again? Pluto will enter Capricorn in late 2008. And Capricorn is associated with snob.
Peter P
2006 Aug 14, 4:58am
How many weeks until the mid-term elections?
Not too many. But it will be 17 years before pluto enters the Aquarius New Age.
While it’s sort of annoying that there are this many cheap lawn mowers on the site, it is very telling about what is going on.
... That people have finally realized how inane it is to spend so much time/money/resources on a lawn? :)
So much water, so much fertilizer, so much pesticides... for what?
"If inventory has reached a plateau at this time, perhaps the market will live another year."
I just looked back at the inventory numbers I logged last year. It looks like August 2005 inventory fluctuated between 3700-3900. Inventory hit 4000 in early September and continued a slow climb to 4347 by October 21st. Inventory went down from that point and did not come back up until May 8th of this year when inventory was 4349. Current inventory stands at 5521 (SFH/condos combined, SC County, source: mlslistings.com). I wonder if we will see a similar inventory climb this September/October. Only time will tell, obviously.
MA,
Thanks for the Bend link and update. What a joke. To hear people in that area talk you'd think there were 99 Californians A DAY moving there! Well that certainly would explain 400% appreciation over the last 5 years would it not?
Up in PDX there was an accident with an Isuzu Rodeo and a Tri-Met bus and this poor guy was actually EJECTED out of the vehicle w/life threatening injuries and this 66 year old guy heists his wallet as he's laying in the street! www.katu.com. Is this pathetic or WHAT!
eburbed says
… That people have finally realized how inane it is to spend so much time/money/resources on a lawn?
i hear you.
Here in LA's sunny San Fernando Valley (river basin/desert) green lawns are de rigeur - and so are the $500 DWP bills every month.
You'd think that the Astroturf people would have marketed a new brand - something longer, lusher and greener than the stuff that they sell for sports - specifically designed to cover the average 5,000 ft lot.
No water, no pesticides, no mowing. And it would look a lot better and cost have less maintenence than the real thing.
eburbed,
My problem with this strange "cult" called Home Despot is that the latest trend is to have so many freaking gazeebos, koi ponds, decks and landscaping there's no damn room for kids to even play!
Hmm. Imagine that, a yard for.........kids? One indirect result of the bubble is the amount of money that has gotten dumped into these useless projects! Drive around and see how many people are actually getting ANY utility out of these albatrosses. Now I could see when it was well over a hundred degrees out but by and large the patio furniture etc. goes unused. What waste. I guess FB's feel the need for all of this crap b/c it's become the "standard".
"You're trying to sell your overpriced sh@tbox and you DON'T have "expansive decks" and a koi pond"?! No "extensive landscaping"? You're in trouble Mister!
So there's a house down the road that just sold over asking for $1,215,000, asking 1,198,000 listed on June 28th, sold July 11th - sounds bad for us until I tell you that it was originally listed April 13th for 1,358,000 - or at least that's when I first came across it.
Still not good for me as I can't afford that kind of price, but I can afford to rent :-)
DinOR,
Thanks for the inspiring Karaoke image - maybe you could follow it up with a rendition of "End of the World as We Know It" (REM).!
Here's a question I pose to everyone: it seems the general consensus is that the Fed SHOULD raise rates to combat inflation, but it probably won't because of political pressures. What happens if it doesn't, and even drops rates? Of course the obvious answer is rampant inflation, but what I'm wondering is what about down the road? How long will the average FB, Congress, the next President tolerate runaway inflation? Look what happened to Carter, for example.
I’m ashamed to call myself a conservative anymore. The fiscal policies of this administration and Republican Congress have been nothing short of shameful.
I still consider myself conservative (fiscally, at least). The current Republican administration is not fiscally conservative at all, so you shouldn't be ashamed of calling yourself conservative.
George,
From the excellent Volcker article you linked,
A wise observer of the economic scene once commented that "what can be left to later, usually is -- and then, alas, it's too late." I don't want to let that stand as the epitaph of what has been an unparalleled period of success for the American economy and of enormous potential for the world at large.
Sadly, this is exactly what the Fed and the current administration appear to be doing right now.
Randy H,
Just a thought on lowball offers. Why can't we just take out an ad or even use C/L and simply say;
Wanted: Reasonably priced home in the 92XXX zip code. Prefer 4 bd. 2 1/2 bath on larger lot. Older home o.k. Potential buyer is qualified to XXX,XXX. Please call (415) 555-5555.
and just see what happens? Or just use your trash e-mail and only call back the ones that are mostly sober. I'm sure you'd get some real winners responding but you only need ONE, right?
1. Get a new, temporary phone number - like a disposable prepay cell phone. Also, a temporary Hotmail address wouldn’t hurt.
2. Go to as many open houses as you can. Talk to the agents and feign interest and exuberance. Give them your temporary contact info.
3. Negotiate a 0.5% price decrease with them. This gets them genuinely excited that they can finally dump the place.
4. Go silent and repeat steps 1-3.
I know, I know - this is just plain cruel. So if you do this, please choose deserving targets :-)
Better yet, go to the open house wearing some really expensive clothing. Eat their food, drink, light up a nice thick smelly cigar (they probably won't stop you because you look like you are a potential sheep who has money), when you have the place just about clouded with smoke, offer them (with a straight face) 50% of the asking price and ONLY if they throw in a new BMW and a years supply of gas. Sometimes I have evil thoughts :twisted:
I don't believe Kiosaki was the first one to use the term, but it's certainly come back into vogue in recent months (for obvious reasons) and is bound to get even more popular. Here's a good fresh post on the subject over at Mish's:
http://globaleconomicanalysis.blogspot.com/2006/08/beware-of-alligators.html
I don’t believe Kiosaki was the first one to use the term,
Who was it then?
I don’t believe Kiosaki was the first one to use the term,
Who was it then?
Though it pains me to give a shameless, self-promoting confabulator like Kiyosaki any credit, I suppose he could be credited with popularizing the "equity alligator" term. It would not surprise me, though, if it goes back years or decades --even possibly to the previous Florida real estate bubble of the 1920s. If I had an membership to the online O.E.D. or access to a good etymologist, I could probably find out.
You don't like kiyosaki? I find his articles very interesting to read.
allah,
Kiyosaki may be a very entertaining speaker/writer, but then again so are a lot of slick, dishonest hucksters, which is what he appears to be (Different Sean or ajh might prefer the term "spruiker"). I recommend reading John T. Reed's excellent expose of Rich Dad Poor Dad to see how Kiyosaki bends and distorts the truth --or just plain makes shit up-- to sell books and seminars, all the while claiming he made his fortune by being a brilliant investor (not likely).
That's just one persons opinion. Writers do this sometimes criticise other writters to help them promote their own material. I always take peoples opinions with a grain of salt. He may have some skeletons in the closet, but so does everyone else. I have never read his book "Rich Dad Poor Dad" so I cannot make any judgments myself; but as far as the articles he writes, I found them logical, truthful and entertaining as well.
Kevin Says:
Kevin wrote:
> Let’s try this: 1. Get a new, temporary phone number -
> like a disposable prepay cell phone. Also, a temporary
> Hotmail address wouldn’t hurt.
> 2. Go to as many open houses as you can.
I have a friend that always uses (415) 267-6999 when he needs a fake phone number...
allah,
If you have found value in what RK has written and put it to good use, then more power to you. I can't claim to be an expert in Kiyosaki debunking nor have I bought his books or boardgame. Even so, the degree of fact-fudging and vagueness about his past, as well as the questionable "sources" he used for RD/PD raises some red flags for me.
No one is bias free or correct 100% of the time, this is true. Even so, I find his casual willingness to blur the line between fact and fiction a bit a bit too James Frey-esque for my taste. His whole operation smells strongly of "get rich quick/motivational speaker", or as Reed puts it, a "cult of personality".
I have a friend that always uses (415) 267-6999 when he needs a fake phone number…
I think the person wanted to get call backs to continue messing with the person.
For that, just sign up for a SkypeIn account - it's like $36 or something for a few months. I have one so that I can have a 646 number and pretend I'm living in Manhattan. :)
You’d think that the Astroturf people would have marketed a new brand - something longer, lusher and greener than the stuff that they sell for sports - specifically designed to cover the average 5,000 ft lot.
The Ortho-Toro-Scotts industrial complex probably would crush them. :(
Randy H
2006 Aug 14, 12:48pm
DinOR,
Wanted: Reasonably priced home in the 92XXX zip code. Prefer 4 bd. 2 1/2 bath on larger lot. Older home o.k. Potential buyer is qualified to XXX,XXX. Please call (415) 555-5555.
That's not a bad idea. I don't know what kind of quality you'd get; probably pretty low. And the sellers you want to reach -- the equity rich probably older seller -- isn't going to be scouting CL for houses wanted ads. But maybe someone would see the ad and tell them about it? Longshot, but maybe worth it with a Skype # or some other disposable phone w/ voicemail.
Randy H
2006 Aug 14, 12:56pm
BayBear,
I do agree with most of the HFers opinions about the Fed's likely actions. I will point out that truly believing oneself immeasurably smarter than the entire Fed is a pre-requisite of being a Hedge Fund Manager.
I heard a BGI global macro fund manager once proclaim that he was able to consistently outflank every major world Central Bank. Not that I doubt BGI's global macro performance, but it may not be 100% pure alpha genius either. It could just as well be that we've been coming through an extended period of arbitragable central bank policy. I'll be curious to see how well these guys do once trade barriers start rearing their ugly heads again.
And if we are on the precipice of another global depression and endemic deflation then I'll go on record as predicting that the Hedge Funds will be the first casualty. Those that don't go under in their positions will be seized, confiscated, frozen or regulated out of existence in very short order. They are the perfect scapegoat for any meltdown. Just read the FT any day to see how much global suspicion there is for these guys.
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After a 2 year tightening cycle and 17 straight rate increases, the Fed has finally decided to pause. What do you think the Fed will do next?
Will the Fed pause again at their next meeting, or do you believe this is only a temporary reprieve? Or conversely, do you think it's possible the Fed could lower rates next time?
And most importantly, what do you think the Fed should do? What is in the best interest of the U.S. economy?
Also, will there be any real impact from the pause in the tightening cycle?
Lastly, what do you think the Fed's ultimate agenda is? Are they going to try to prop up housing to "save us" from a recession? Or do you think they will try to funnel U.S. $$ into something else, like the stock market?
#housing