patrick.net

humanity says

This is like saying there is no correlation between monthly mortgage payment and price. It's the most ridiculous thing I've ever heard you say.

it's true as far as it goes, since "historically" the Fed has (ab)used interest rates to kill incipient wage-price spirals, which means the correlation is harder to tease out of the raw plots.

And actually, there is no correlation between monthly payment and price, since the payment is determined by down payment requirement, interest rates, tax subsidies, length of amortization (if any) . . .

Scandinavian housing markets are totally nutso now, and they've gotten that way by essentially going with interest-only ARMs. They've screwed themselves just as badly as the Japanese did in the 1980s, and Casey Serin did 2004-2005.

bgamall4 says

Yeah, it attempted to bring the country together to rally around gun control. Yeah, Bigs, I bet that is what you NWO Brits want anyway.

Putz is a word that is too good for you. Bigsby says

NWO Brit? Oh dear, here we go. Where's that face palm smiley when you need it? And so what if I think a semblance of gun control might actually make your country safer rather than more dangerous. I hardly think I'm alone in that. I'd say a good number of people would prefer that it was a bit more difficult for certain individuals to get their hands on weapons. I wouldn't, for example, be too pleased living next door to an individual with views like yours at the best of times let alone if you were armed to the teeth with such urban necessities as a Bushmaster etc... Clearly countries like the UK (0.25 gun deaths per 100,000) and Japan (0.06 deaths per 100,000) have greatly endangered their population by having strict gun controls, whereas the US is safely protecting its population (10.3 deaths per 100,000) by allowing people in many places to buy guns with the minimum of background checks.

bgamall4 says

Easy, they control the media. But the hold is weakening. More and more people are seeing that Sandy Hook was a hoax. You are a hoax. You are a fake. You are a NWO guy who wants us to think you serve tea in Kuwait.

Easy? They control the media? Ha! Presumably they also control the thousands of people who you say took part in your supposed 'hoax' because I haven't seen too many of them pop up on your favoured nut job websites. I take it those are also under the control of the instigators of this all encompassing zionist plot.

And how would you like your tea? With a sprinkling of paranoia?

humanity says

?? You know what I meant. Most people, if buying to own, have a monthly payment they make, and it is indeed connected to the price they pay, after a downpayment. . It's hard to buy a place for over 800K with as low a monthly payment as say a tiny place you buy somewhere for 50K. So yes, that correlation exists.

I guarantee you that if interest rates were 1.5% higher, versus 1.5% lower than now that there is a radical difference in pricing pressures. This is just an assertion I know, but it's an obvious one to nearly everyone.

Do I really need to elaborate ?

This subject has been covered ad nauseum. Interest rates don't rise in a vacuum. They move in tandem with wage growth, and wage growth is a much more important variable w.r.t. housing prices than interest rate level so it drowns out the rate effect.

This can be easily seen by looking at nominal housing prices and interest rates over history. There is actually a slightly positive correlation-indicating that prices actually rise as interest rates go up. As counter-intuitive that may seem to you, the data doesn't lie.

tatupu70 says

As counter-intuitive that may seem to you, the data doesn't lie.

It's not about intuition or what data you can find to back up your point of view.

Of course since interest rates sometimes go up in reponse to inflation, you will find periods when rising rates are slightly lagging rising prices.

You will aslo find times like the mother of all booms when prices were going up much faster while rates were plummeting.

I know enough to know that I don't know what's going to happen, (unlike so many around here). But there is a very obvious connection between what someone will pay per month to buy a home, and what the actual price is. These prices are two sides of the same coin. (cash purchasers too are affected by interest rates.)

When interest rates are rising, the price of buying a home is going up, even while the total price is holding steady. So much of this is too ridiculous to even argue.

Does this mean that if interest rates are rising, that home prices have to be dropping ? OF course not. Do rapidly falling interest rates mean that prices have to be rising ? OF course not.

It is a factor though. The yield curve and real interest rates may be a more telling factor and yes, these things are complicated.

Still, all else being equal if interest rates were to rise enough (with real interest rates rising as well), it would put significant downward pressure on home prices. This is a fact.

bullshitmagnet says

However at least land might hold it's value reasonably well.

Thank you Captain Obvious.

http://research.stlouisfed.org/fred2/series/CUUR0000SEHA

Buildings themselves depreciate/wear out.

Not with maintenance. Depreciation schedules are a joke.

Apartment my parents rented in the mid-1970s is still around:

http://goo.gl/u3SDcK

House (built in 1948) my parents rented in the late 70s is still around . . .

These will be around 50 years from now, too.

marcus says

Still, all else being equal if interest rates were to rise enough (with real interest rates rising as well), it would put significant downward pressure on home prices. This is a fact.

Agree - however some think that the prices of many assets, like stocks/houses, are more influenced by emotion, rather than logic. Example: dot com companies headed by 20 years olds with no business experience, and no earnings, that investors are will to pay obscene amounts of money to own shares in.

So it is possible, even if higher interest rates make owning a home seem less attractive logically, that people will continue to bid up housing prices.

Bellingham Bill says

bullshitmagnet says

However at least land might hold it's value reasonably well.

Thank you Captain Obvious.

http://research.stlouisfed.org/fred2/series/CUUR0000SEHA

Buildings themselves depreciate/wear out.

Not with maintenance. Depreciation schedules are a joke.

Apartment my parents rented in the mid-1970s is still around:

http://goo.gl/u3SDcK

House (built in 1948) my parents rented in the late 70s is still around . . .

These will be around 50 years from now, too.

Well, not only do they wear out, by they go out of style, and newer homes are better. They are more energy efficient and so on. Plus, due to the "income disparity" that so many discuss here, labor to build homes is getting cheaper (and tools/technology getting more efficient).

I know a family now that is trying to sell their home, which is only a few years old, but having trouble because the home has a "sunken living room" which is now out of style. Kind of expensive to change things like that.

Some also think that close in urban living is more in fashion now, meaning houses in the suburbs requiring a car/traffic will be more difficult to sell.

bullshitmagnet says

There is no land shortage.

There may be 6 acres of land per person in the lower 48, but the problem is the rich own most of it and aren't selling it.

I cruise the parcel maps in redfin and just cry. All that great property, might as well be on the moon since the owners ain't selling.

And why should they, with Prop 13 eliminating their current holding costs.

eg:

http://www.zillow.com/homedetails/1250-Redwood-Dr-Santa-Cruz-CA-95060/16151715_zpid/

47 acres, $700k Prop 13 valuation.

Japan has this same problem. Totally crap land (no services, no schools) an hour+ out from the city center is priced at $1M per acre, thanks to the lack of supply and their very low interest rates (~2%) and land value taxes (~1%).

tatupu70 says

Interest rates don't rise in a vacuum. They move in tandem with wage growth, and wage growth is a much more important variable w.r.t. housing prices than interest rate level so it drowns out the rate effect.

I do not totally dissagree with this. Your interest rate wage growth connection seems way too simple to me. Things have changed a lot since the seventies. We don't actually know what kind of shocks might lead to interest rate spikes. Yes it's clear that wages will be the last thing to go up in an inflationary environment.

Interest rates sometimes move due to international currency manipulation games, or in reaction to so called currency crises. You may know what's going to happen with the dollar relative to other currencies and commodities, in the next 10 years, but I sure don't. What happens if and when the dollar loses it's reserve status ? What happens when QE gets to a point that the world loses faith in the dollar ? Maybe these things never happen. To what leangths would the Fed have to go to defend the dollar ? I don't claim to understand or know.

Maybe these things are all arguments for owning real assets. In the long run that's always a good idea. But what we're talking about here is timing.

I do think we're in a different regime from the 1970s.

http://research.stlouisfed.org/fred2/graph/?g=qf8

we've untaxed corporations and the wealthy, so the average Joe is going to have to pay the debt burden this century.

But oh how leveraged we've gotten. Like Japan, the system can't support higher interest rates any more.

bullshitmagnet says

Well, not only do they wear out

NOT with adequate maintenance, especially in California's mild climate.

(Tokyo and Houston are different stories)

by they go out of style, and newer homes are better.

Nope! Location, Location, Location still rules. All the best locations were platted before I was born.

The new in-fill homes in Sunnyvale are total crap compared to the older stock that's as old as me. A house is largely concrete, sticks and bricks, the insides can be updated for pennies a month, more or less.

Here's a house built in 1950 totally refurbd:

http://www.redfin.com/CA/Salinas/229-San-Miguel-Ave-93901/home/14955872

Bellingham Bill says

Location, Location, Location still rules. All the best locations were platted before I was born.

And they were priced-in accordingly. The land that appreciated the most percentage-wise in the past decade probably was not the prime real estate in NYC or SFBA, but the farm land and wasteland in the Dakotas, which around the year 2000 were bought and sold for less than $1000 per acre. So were you too young to buy those plots back then?

Stop blaming others for your own failure.

Bellingham Bill says

Japan has this same problem. Totally crap land (no services, no schools) an hour+ out from the city center is priced at $1M per acre, thanks to the lack of supply and their very low interest rates (~2%) and land value taxes (~1%).

As a country, Japan does not have land shortage. Much of the land in Northern Japan is practically empty. Fully 1/4 of the entire Japanese population live in the Greater Tokyo Metropolitan area because they have a crony capitalist economy, where one's financial success depends on proximity to the political power center.

dublin hillz says

What's happening in SFBA is that with low inventory, the technocrats get first dibs. A couple both working as google software engineering for example can easily make 240K base and with bonuses/options, over/under is 300K

employers, dont keep operations in the SFBA or hire locally, they move out to
greener pastures.... and its all too easy given many other cities/states are more
than willing to provide incentives.

http://www.sfgate.com/business/ontherecord/article/ON-THE-RECORD-CARL-GUARDINO-2574540.php#ixzz1v6EFUJaI

So SFBA home prices and rents go up.. and we all loose our jobs... look around
what is happening !

"What we hear time after time from CEOs as well as frontline employees is how incredibly difficult it is to come here and stay here. That truly does have an impact on a company's bottom line when the cost differential is so much higher here than it is in other regions around the state, nation and globe, or the ability to recruit top talent is also impacted.....Hewlett-Packard and Dell are the top two computer-makers in the world. Corporate headquarters for HP are located in Palo Alto and Dell is in Round Rock, Texas. Obviously, they both have people and facilities around the globe.

In those two communities where their corporate headquarters are and where a lot of research and development takes place, the median resale price for a home in Palo Alto is about $1.6 million. In Round Rock, Texas, it's about $180,000, except the home and property are bigger.

We hear from HP all the time that a huge deterrent to the ability to recruit and retain people anywhere near Silicon Valley is the housing issue. We don't hear that from Dell, which is also a member company, about their operations in Round Rock. It does continue to plague us and we will continue to sound the alarm."

"So what do you think land price should be per acre?"

enough to make sure people who need access to more land aren't priced out by the people who are hoarding it.

One mechanism to make this calibration is uptax over-median land values, especially commercial and unoccupied land.

Carrying cost on 40 nice wooded acres 10 minutes out of Santa Cruz would be more than $1000/mo, I'll tell you that.

I'd also untax the fixed improvements entirely. It's fucking retarded that we penalize people who build new supply that way, and reward (via Prop 13) those who don't.

I don't have any problem with people profiting from the creation and management of new supply.

What I have a problem with is the way things have devolved over the decades.

One way to fix that would be for gov't to forcibly increase the supply of quality housing where it is needed*, though just upzoning everywhere to permit more density would also work I guess.

* this would require we have a gov't more like the nordic eurosocialist paradises and less like the government that gave us the 1950s cheap-ass public housing disasters.

dublin hillz says

I don't see sfba house prices lessening unless tech sector experiences massive layoffs.

over the past 10-13 years we shifted more jobs out of state... no massive layoffs were noticed.. today, only 5% are locally vs 90-95% not in SFBA...

overall, we lost lots of well know companies since the "zenith" of global the spending.

Larry Ellison ... "We saw the zenith in tech jobs around 2001. We saw a point where half of all capital spending was tech. That will never happen again. My industry will never come back. Nor should it. Computer systems are still too expensive. They're too labor intensive."

http://www.sfgate.com/business/ontherecord/article/On-the-Record-Larry-Ellison-2590921.php#page-6

" Fully 1/4 of the entire Japanese population live in the Greater Tokyo Metropolitan area because they have a crony capitalist economy, where one's financial success depends on proximity to the political power center."

This is not how 'mother cities' function, actually.

The analog for Tokyo would be New York, not DC.

(The US heartland -- Know Nothings and Populists -- rallied against "East Coast Bankers" not DC in the 19th century)

Japan's gov't expense is a LOT lower than ours, btw. Defense is $47B. Their infamous 'public works' is all of $52B, with $60B under "Miscellaneous".

Dominant costs are social spending -- $290B, and interest on the debt, $100B.

With the way their non-proportional representation is, a lot of money flows AWAY from Tokyo, back to the rural areas. Tokyo gets it all back of course, since that's where all the corporations and wealthy are.

"the same about prime NYC real estate in the 1980's, only to be massacred in the early 1990's"

the main deal with Japan's asset collapse was that they were leveraging stocks with bubble land values and buying land based on margin secured by inflated stock valuations. This was all a cross-default collapse waiting to happen, and boy did it ever hit them in the 1990s, making them distressed sellers in a down market.

http://research.stlouisfed.org/fred2/series/NIKKEI225

They were in no position to weather the 1990-1994 downturn, though if they could have held on, they would have been OK by 1999.

They paid $800M for Pebble Beach in 1990, $50B in deals in total in that bubble period.

Japan now has a NIIP of $2.5T. They're doing OK, probably just laugh at their bad timing now.

Bellingham Bill says

The analog for Tokyo would be New York, not DC.

Tokyo is Japan's New York and DC wrapped into one. It became that way because it became their DC hundreds of years ago, when the primary Japanese commerce center was not Tokyo but Osaka (their equivalent of NYC back then). Nowadays, even a sattelite city in the Greater Tokyo Metropolis, like Yokohama, is more populated than Osaka. That's crony market intervention in action.

Bellingham Bill says

enough to make sure people who need access to more land aren't priced out by the people who are hoarding it.

Do you think any bum should be able to homestead on your lawn? or the patch of woods giving you privacy from your neighbor?

Bellingham Bill says

One mechanism to make this calibration is uptax over-median land values, especially commercial and unoccupied land.

Whatever "uptax" or "over-median land value" means, you do realize that would have consequences on land valuation, right? Regulations like what you are proposing would actually reduce transaction, not increasing it like you are hoping.

Carrying cost on 40 nice wooded acres 10 minutes out of Santa Cruz would be more than $1000/mo, I'll tell you that.

I thought the League of Conservationist idea is to keep as much land nicely wooded as possible, instead of becoming developers' playground.

Bellingham Bill says

I'd also untax the fixed improvements entirely. It's fucking retarded that we penalize people who build new supply that way, and reward (via Prop 13) those who don't.

I don't have any problem with people profiting from the creation and management of new supply.

While I can sympathize with what you are saying, I hope you do realize why the current system is what it is: the primary goal of any tax system is to maximize tax revenue while minimize enforcement cost.

Bellingham Bill says

One way to fix that would be for gov't to forcibly increase the supply of quality housing where it is needed*, though just upzoning everywhere to permit more density would also work I guess.

You are presuming that government bureaucrats magically know where housing is needed. If they knew that for certain, they'd be developers instead of government bureaucrats.

* this would require we have a gov't more like the nordic eurosocialist paradises and less like the government that gave us the 1950s cheap-ass public housing disasters.

Yada yada, must be all those colored people messing up a good thing again. In case you did not realize, Sweden was saved from a full socialist collapse only because it was a country of 10million people hence much more manageable and responsive than a mega state of 300million.

This time is different (TM)!

Call it Crazy says

"If you like your insurance, you can keep your insurance, unless it's a crap policy, then you can't keep your insurance, but now you CAN keep your insurance"........

What comes next???

at what part does this Lie become Gross Negligence...

Gross negligence is a conscious and voluntary disregard of the need to use reasonable care, which is likely to cause foreseeable grave injury or harm to persons, property, or both.

Ceffer says

Gloria to selling designer blue jeans and accessories

they were the rage of the Disco era 70s..
especially them sexy high school girls
i knew... man did they look good !

bgamall4 says

You would have seen the fact that many people from NYC had moved into Sandy Hook prior to the hoax.

Sandy Hook has a population less then 2000 people. How "many" people could have possibly moved there from NYC? Did you want to order a hat?

bgamall4 says

Silicon Valley has been reaching its tentacles into San Francisco for some time now,

what was once Silicon Valley is long long gone... the people today have no idea
where or how SV got its start or anything.. they are just mindless drones unable
fathom why they are here...

so called techies is a perversion... senseless idiots who program web sites...

No one is really interested in having a real tech center anymore... it icky stuff.

This video is just a small part of SV history... comes close to the kind of people that made it happen.

Why Santa Clara County... Cheap Land ! thats all.. just cheap land !

http://video.pbs.org/video/2332168287/

tatupu70 says

I'll try it again for you--it's really pretty simple.

Your mind is pretty simple.

bgamall4 says

You lazy ass. You didn't look at the video. You would have seen the fact that many people from NYC had moved into Sandy Hook prior to the hoax. You would have seen that the Wyatt girl had the picture of another girl as hers, and that after that was revealed because the other mother complained, the Wyatts dropped out of sight, except for their donation site.

Had you watched the video you would have seen that many of these Zionist folks became very active in their pursuit of gun control. One gal used the exact same hyperventilation method of finding her emotion, without tears of course, that was employed by Robbie Parker.

The comparison is so creepy as to give even you, pause. But you never saw it because you were beating your thingy instead of studying. You are Peter Venkman.

Let me get this straight. You believe that the entire town was shipped in from NYC (presumably the training ground for thousands of non-Jewish zionist actors). Is that right?

You really are stark raving bonkers.

thomaswong.1986 says

No it doesnt ... shows the opposite

Could you provide some evidence or data to back up that statement?

tatupu70 says

Sure, some powers are non-monetizable. So what? My wife can get me to fix the toilet. How exactly does that contradict the well established relationship between wealth disparity and economic health?

There is no such "well established relationship" between the two across different countries. North Korea has much lower nominal wealth disparity than the US; few would argue their economy is heathier than ours, outside of North Korea. LOL.

tatupu70 says

Again--so what? POTUS is very powerful. Probably moreso than his wealth indicates.

That's the point that I was making. The amount of money/asset a person owns does not represent the total amount of power he/she wields; there is little correlation between the two when analysing across different societal context. So "wealth disparity" is a distraction, when the real imbalance in a society is Power Disparity.

tatupu70 says

Reality says

It's useless because noise far outweigh signal

No--actually it doesn't. The data is pretty clear and unambiguous. The signal far outweighs the noise.

You need to prove how North Korea's Kim's $1000/yr or so salary conveys more signal than noise.

tatupu70 says

Reality says

Furthermore, your observation that "too high" in our society leading to busts is essentially agreeing to my point that busts are corrective mechanisms in our relatively capitalistic free market economy, and busts are leveling! So why do your ilk want the government to intervene and stop busts?

You're kidding, right?

Why? Busts are leveling events. When you allow government bureaucrats to interfere, who do you think the government bureaucrats tend to help more? Their friends in the establishment of course!

Clown boy aint so funny now is he?

Notice his approval has slipped since his Defjam comedy tours don't wow and dazzle people anymore. Now that they know how he is in practice. His humorous road maps chocked full of GOP zings and quips, and always punctuate by how bad Bush was and how much of a mess he left after every promise, schtick doesn't pack the peanut gallery anymore.

Do you think he could pack the national mall, with millions of people clamoring to hear his lies today?

try not to delete it this time...

Someone deleting all my posts again... Everyone just look under my comments to read them... its annoying when someone keeps deleting all my posts...

Banks shouldn't lend to a public that cannot pay back the loans. But they will lend to RE investment firms that have walked away from loans. Why the double standard?

bgamall4 says

Oh, and there was at least one guy who was already active in gun control. Watch the video, NWO Brit, Bigsby.

Whoa - a seed agent!

Gun control advocates are a truly rare occurrence!

Blurtman says

Banks shouldn't lend to a public that cannot pay back the loans.

the buyer were the ones who overbid and wanted to overpay...

they are the party who overpriced homes... why would they

wrongly believe a typical 200K home was actually worth paying

500-600K...

wave9x says

On The SF Peninsula, add in record low inventories. It is absolutely insane to see a city of 100k (San Mateo) with only 15 SFHs for sale. Low supply = higher prices. Not to mention rents are insanely high (again, in desirable areas) so the rent vs buy ratios are still good for buying.

pocket listing are now 25% of inventory sold.. so there is 33% additional unlisted inventory (MLSlisting) available in No Calif. Clearly this is having a problem ! Who know how deep the problem may go in places like San Mateo... could be half are unlisted...

California Association Warns About 'Pocket Listings' | Realtor ...
realtormag.realtor.org › News & Commentary › Daily News‎
Jun 27, 2013 - About 1-in-4 home sales are reportedly pocket listings in some Northern California markets, and the California Association of REALTORS

Pocket Listings webinar recording and slides - California ...
www.car.org › Newsstand > › News >‎
Pocket Listings webinar recording and slides ... In case you missed it, C.A.R. recently hosted its first Hot Topics webinar, “The Pressing Issue of Pocket Listings. ... gain a clear understanding of how pocket listings are affecting REALTORS

wave9x says

Also, the GDP is on fire right now (over 4% growth). If that holds, the economy continues to improve, and unemployment continues to drop, that will also drive house prices (and inflation in general) higher.

we are nowhere near 4% or even 3%....at best only half of that at 2%....

Fed officials do see economic growth and the labor market gathering more strength next year, though the forecast is little changed from September. U.S. gross domestic product is expected to advance between 2.8% to 3.2% in 2014, versus September’s projection of 2.9% to 3.1% growth. The unemployment rate is now expected to average between 6.3% and 6.6% during the fourth quarter of the year, compared with an earlier range of 6.4% and 6.8%.

The policymakers say the economy will grow between 2.2% and 2.3% for all of 2013. Through the first three quarters of 2013, the economy has grown at a 2.4% annual rate. Private forecasting firm Macroeconomic Advisers said the economy should nearly maintain that pace in the fourth quarter

http://blogs.wsj.com/economics/2013/12/18/fed-projections-see-no-rate-increase-until-2015/

bgamall4 says

I believe this article is accurate.

This is the first sentence of a blog post that bgamall calls an "article."

It is time to call out the scumbags who historically have been mostly responsible for promoting gun control legislation in what have been obvious attempts to destroy the Second Amendment.

I mean honestly, wtf ?

We knew how stupid you are. And we knew that the emotional /pschological problems run strong with you. But Jesus !

Is it going to keep getting worse until the holidays are over ?

Do you ever have a redeeming moment when you say,..."wow, I really am fucked in the head." Ever ??

Once the ACA finishes kicking in, will you please consider looking in to medication ?

bgamall4 says

HydroCabron says

Gun control advocates are a truly rare occurrence!

Gun control advocates that are Zionists are very prevalent. http://ronabbass.wordpress.com/2013/05/13/its-mainly-zionist-jews-pushing-for-gun-control-in-the-usa/

I believe this article is accurate. And I believe that it is as the Jewish hero Shahak has said, once the Zionists subdue the middle east they will be coming after America.

I was blind, but now I see.

I had thought that these people were trying to minimize the incidence of people putting holes in other people in schools, movie theaters, offices, and homes.

Turns out the whole thing is on behalf of the State of Israel.

Bellingham Bill says

NOT with adequate maintenance, especially in California's mild climate.

(Tokyo and Houston are different stories)

by they go out of style, and newer homes are better.

Nope! Location, Location, Location still rules. All the best locations were platted before I was born.

The new in-fill homes in Sunnyvale are total crap compared to the older stock that's as old as me. A house is largely concrete, sticks and bricks, the insides can be updated for pennies a month, more or less.

Here's a house built in 1950 totally refurbd:

http://www.redfin.com/CA/Salinas/229-San-Miguel-Ave-93901/home/14955872

And there are some cars still around from the 1950's as well, that have been refurbished and are running like new. So would you advocate that we all invest in a parking lot full of cars?