patrick.net

I wonder how many who'll lose jobs related to the RE downturn are renters...

skibum,

my neoclassical side agrees with you completely. But, on a very personal level, a clerk or support-desk worker takes a job wherever they can get one. If not for the RE industry perhaps they'd have retrained or given up earlier. Who's to say. But to them it was just a gig to pay the rent.

I will not be gloating when my clients can't pay their bills because the home equity spigot has run dry. Many of us JBRs have been indirect beneficiaries of the HB. As JBRs, we may avoid being devastated by falling home prices, but that doesn't mean we will benefit (except, perhaps, in the very long run if we buy the right house at the right time and hold it for 10 years+).

It is interesting to observe the fallout of the tech bubble as a recent example of bubble dynamics. If you waited out the tech bubble and timed it just right, you could have bought AMZN for $7 and EBAY for $15 in 2001, then sold for $40 and $60, respectively, in 2004. On the other hand, you could have bought CMGI or JNPR post-crash and you still would have lost money.

I doubt that very many JBRs will manage to time the housing market just right. It is very hard to do and few get it just right. We may buy too soon, or we may wait too long. Should we use the early '90s housing bust as our model? Or post-bubble Japan? Either way, our schadenfreude may be short-lived as we watch our friends, family, co-workers, etc. go under.

I, for one, am quite willing to go on record stating that I have no intention of trying to "time the bottom". When a suitable house hits my price I'll buy and I don't care if it loses value thereafter because I'll be there long enough for it to recover -- and even if it doesn't completely, I'll still be better off with a house for my family than this makeshift temporary crap.

I do have family members and friends who may well get crushed by the downturn. They are good people and are as much victims of all this as we are.

Seriously, though, I have some strongly ambivalent feelings on this subject.

On the one hand, I passionately believe (as anyone who has been paying the least bit of attention to my posts for the last 13+ months already knows) that the current mess we are in is largely the result of grotesque, mammoth moral hazards engineered by myopic, misguided, and just plain idiotic government policies at all levels --federal, state and local. Sure there are "natural" business cycles, and government involvement is certainly not a required pre-condition to creating an asset bubble. But, brother, did government help to create THIS Mother of all Bubbles!

I see a complete dereliction of duty by the Fed, Congress and current + previous Administrations in not only failing to curb the damaging speculative excesses of this RE bubble, but actively ENGINEERING it in the first place. From that standpoint, the government (in its traditional public "watchdog" role) has failed its citizens miserably. So in that sense, I DO have some sympathy for young families who --manipulated by lies, deceit, trickery and outright fear-mongering from government officials and so-called media "experts"-- took a huge financial gamble and put their families' futures at risk simply to put a roof over their heads.

However, the fiscal Libertarian in me recognizes that, while many of these same people were systematically lied to at every turn and blatantly manipulated through FUD, they were also not entirely blameless. While I wish we could expect better of our elected (and un-elected: e.g., Fed) officials, the fact is: we can't. Come to think of it, since when have most politicians and entrenched bureaucrats (with a few notable exceptions) ever been anything except lying, self-serving demagogues, incompetent idiots and sleazebags?

Don't we --as voters and citizens-- also have some obligation to think for ourselves and do a little advance research and critical thinking? In other words, whatever happened to caveat emptor and not accepting whatever the establishment/government/MSM says at face value?

Granted, we can't all be economics PhDs or become housing experts just because we are interested in buying a house. Nobody can be a brilliant expert in all things, and virtually everyone purchases a home at some point in his/her life. Even so, a house is the largest single purchase most of us will ever make in life. As I posted earlier, is it really too much to ask of people to first do a little research and consider the long-term consequences of this decision? Most people do more research before buying a friggin’ TOASTER than they do before buying a house, for God’s sake!

Is it really so hard to figure out that if the only way you can "afford" to buy the place is with a $0-down, stated income, NAAVLP, then you can't really afford it? Do we really NEED to be told that the banker or real estate agent --or anyone trying to sell you something-- is NOT your "friend" and is not likely to provide you with accurate, unbiased information?

Look, I really want to feel sorry for these people, I really do. But…

Look, I really want to feel sorry for these people, I really do. But…

We have a bit of myopia here, assuming that everyone is a home owner or aspires to become one. Lots of younger working class people had lost any hope of ever owning a home well before the bubble started. Many of these people have only meager high school educations and, if they're lucky, some college or trade-school.

Most of "them" are renters who have never owned, and may never be able to now with depressed working-class wages, even if prices come down by 50% or more. I cannot be so cavalier as to expect a Home Depot clerk or Bed Bath & Beyond cashier to be able to have somehow planned for this reality.

anon,

Even real estate firms have office admins, janitors, and system admins. Even mortgage brokers use couriers, outsourced payroll clerks, and parking lot attendants. For you to lump them into the guilty with malice is well deserving of anger.

These folks don't really pay attention to what macroeconomic blunder created their paycheck-to-paycheck jobs. I'm happy you're so sanguine about it, though. You sound like a Libertarian in denial to me.

Randy H you are a class act. Schadanfreude may feel good, but it is bad for the soul.

And just keep your gloating to yourselves. This forum excepted, of course.

And I am not just speaking as a FB, but as a human being who also suffered (and profited) from the dotcom boom.

I think if the housing downturn goes as bad as so many of you think, many of us will end up out of a job, too, so their might not be that much to gloat about.

I cannot be so cavalier as to expect a Home Depot clerk or Bed Bath & Beyond cashier to be able to have somehow planned for this reality.

Randy,

You mean these people won't be able to get a home?? (From LA Times sunday edition:

Karla and Carlos Estevez landed their bargain home closer to the urban hub. Karla, 23, an office receptionist and Carlos, 25, a Home Depot clerk, found their four-bedroom, two-bath house — in 1,300 square feet — in Pomona after living in an Azusa apartment for a year.

The light-yellow stucco home surrounded by a white wrought-iron fence is on a mostly residential street off the 10 Freeway in the southern part of the city, so traffic noise can be an issue. But the house, built in 1995 and in move-in condition, was just what they wanted, Karla said. The $405,000 price tag was a relief after their initial look at $500,000 homes in Rialto and Fontana, Karla said.

Poor bastards.

http://www.latimes.com/classified/realestate/news/la-re-bargains20aug20,0,6515990.story?coll=la-class-realestate-news

Randy,

Maybe California, with its 30-year War on the Middle Class has distorted your perspective a little (it's certainly affected mine), but not ever U.S. working class family is quite as badly off as they are here in Boomertopia --YET. I agree that wealth disparity and class bifurcation (in favor of older generations) is accelerating just about everywhere. Even so, having an average paying job plus H.S diploma or trade school might still enable you to buy a median priced house in many other states --especially when a little fiscal discipline and deferred gratification is applied.

For those that are truly "collateral damage/innocent casualties" who did not participate in (nor benefit from) the current bubble, but may lose their jobs as a result, yes, they have my sincere sympathies. I still do not think I'm being cavalier or mypoic to suggest that soem FBs out there should have done a little more "due diligence" before taking the plunge, though. Same goes for ex-daytraders cum Realtors who are now facing unemployment.

HARM,

Roughly 1/3 of Americans rent. There are more at the lower end of the income scale who do not own than at the higher end. Education level, employability, and mean unemployment between displacement are all correlated to one's income level.

I would say that assuming these folks, of which more are renters than owners, have somehow contributed to this mess other than by trying to make a living is a bit of a stretch. As for my perspective being distorted? I remind you that renting is actually more expensive than owning in wide sections of the rust belt, yet home ownership rates there are far below the national average. Why? If I take anon's reasoning, they're ignorant and therefore only have themselves to blame.

Just for some clarity, from the BLS (2003): The 40 percent of young adult Americans who rent have an average income of $18,233. I'm sure someone can find an example of one of them who got a NAAVLP and bought a condo. But those are rare exceptions.

I have very strong feelings about the virtue of being compassionate, and empathizing with others even when they were part of that which we fought to overcome. Sure, some are deserving of their fates. Some much more than others. But many are also unaware, or only tacitly aware of the bigger picture. Perhaps they don't have the opportunity we do to fully comprehend, analyze or study the situation.

I believe that I'll be defined by how graciously I handle victories as much as I am by how I handle failures.

Anyways, I was raised in the Midwest and was taught it's just plain rude to be smug. Ever. Even when you're right. Even when they're jerks. Ever.

But I concede this thread to those who's virtue is vengeance.

But I concede this thread to those who’s virtue is vengeance.

Well, now that you mention it, Wrath is my favorite sin. ;-)

As for the skilled workers offshore losses, I have complete sympathy. The programmers, scientists, manufacturing techs, these people have been royally screwed by our government/businesses.

Perhaps they should have foreseen the cyclical nature of their own economy's wage inflation? You draw the line there because...we know why you draw the line there.

Even though I've left your baiting in my thread I'll conclude by simply stating I don't like people like you. I think you're ideological and completely full of shit. You only care about yourself and cloak it in some grandiose bullshit about saving the world, while at the same time marginalizing the very people you claim to so ardently defend.

Night Harm... ;)

Hmm, not sure if I should step into this little flame war, but for something completely off topic:

http://tinyurl.com/esgyo

California 2nd In Housing Growth. This should shut up the SMUG whiners, those who wish California would just pave over everything in site and ruin the state, so that they could afford to buy a house here.

But it won't, because most of them are opposed to good planning for ideological reasons, not for any rational reason they can explain.

I believe that I’ll be defined by how graciously I handle victories as much as I am by how I handle failures.

Seriously, though, I think keeping your modesty and following the Golden Rule is a great way to approach life and treat others. And caring for the poor/less fortunate is virtuous in anyone's book.

There are times, however, when a little wrath directed towards particular individuals is completely justified --especially elites & public officials who abuse their power. And there are times when a little schadenfreude is justified as well --towards MP-style asshats who were needlessly ungracious, condescending, arrogant and rude at all times. They deserve to have that smug, condescending smile smacked right off their faces. Actually, I would like to personally volunteer for the job (if Surfer-X doesn't beat me to it). :mrgreen:

But it won’t, because most of them are opposed to good planning for ideological reasons, not for any rational reason they can explain.

Huh? I think they should sell condos in Presidio and Yosemite though.

California 2nd In Housing Growth.

California had the second-highest increase in the number of housing units of any state last year, adding 181,997 new dwellings, the Census Bureau reported.

Is this what you were trying to say?

Many posters here are opposed to smart growth. Most of them blame Californias high home prices on a supposed inability to build houses here.

The truth is, California is building houses like mad. Too many, if you ask me.

Jimbo,

They are building too many of the wrong kinds of dwellings. They are building more and more mcmansions farther and farther into the desert.

They do this because it is hard to navigate the red tape, permitting, NIMBYs, etc. to get approvals for "urban infill" projects, which is what CA really needs.

anon,
give it up.

I won't disagree with you there Glen. That is precisely what smart growth is all about: suburban and urban infill, higher density, tranit oriented growth, etc. But it has a bad reputation on this blog.

Well, if "smart growth" means removing the hurdles to urban development, then I'm for it.

If it is used as an excuse for NIMBYs to block growth that they do not deem to be "smart," then I'm against it.

"I was disappointed, it was a lot lower than I anticipated," said David Lereah, NAR's chief economist. "What is clear to me is sellers are more stubborn than I expected them to be. We definitely need a correction in prices in order for buyers to come back into the market."

He said he expects home prices to come down 5% nationally, more in some markets, less in others. And a few cities in Florida and California, where home prices soared to nose-bleed heights, could have "hard landings," he said.

Let me translate, SUCK IT HARD SUCK IT LONG

oh oh oh my fucking jeebus clad clown, whoops, I meant my jeebus ... wait a minute I'm drinking and bogging.

HARM, will you and that hot young biscuit, aka Mrs. HARM be attending the "lets stop Peter P from eating all the food" party this coming labour day?

If so, let me know and I shall pencil you in for lodging at my pathetic rental.

All others, fuck off :)

Sincerely

Surfer-X

Many posters here are opposed to smart growth. Most of them blame Californias high home prices on a supposed inability to build houses here.

The truth is, California is building houses like mad. Too many, if you ask me.

We should let the free market, not residents, decide what will be built.

Robert Toll was right that California has too much regulation.

I also believe that all rent control and condo conversion regulations should be dropped.

Rent control is too good at creating bad neighborhoods.

Oh, Randal H. Esq. and Sacramento Sassypants are welcome to stay also.

Perhaps all you JBR's could carfool on the way down. A hint, 10 miles before and 10 miles after King City, do the speed limit, otherwise there be a ticket in your future.

Peter P. it's albacore season. Let me assure you my food loving fiend, I knows how's to cook me's some's albacore.

aofo

all others fuck off

That is precisely what smart growth is all about: suburban and urban infill, higher density, tranit oriented growth, etc. But it has a bad reputation on this blog.

If only the city allows more hgher density housing. Prop 13 is not helping urban renewal.

If we stop trying to protect everyone, we will find out that everyone is suddenly protected.

Perhaps all you JBR’s could carfool on the way down. A hint, 10 miles before and 10 miles after King City, do the speed limit, otherwise there be a ticket in your future.

I will be coming down with my wife and a friend. I will let them know. Thanks. I usually do speed limit though.

Albacore. Yum.

What time shall we meet? I need to plan activities for my wife and my friend and sneak out for the blog party.

BTW, I am 73% less of a market fundamentalist in person. ;)

HARM, will you and that hot young biscuit, aka Mrs. HARM be attending the “lets stop Peter P from eating all the food” party this coming labour day?

But of course. There's no way I'd miss an opportunity to meet the legendary Peter P --in person!!

all others fuck off

Awww... c'mon now. What about our other Bay Aryan brothers and sisters? SF Woman, SHTF, skibum, Glen, Conor, etc. Can they at least stop by for cocktails?

I am so very, very thankful that this mother of all housing bubbles has occurred at this point in my life at 45 years. Had it not, the economic catastrophe that will ensue, might have been put off for another ten or twenty years, at which point, I would not be able to make a decent living and prepare for my retirement.

I am so very, very grateful to all those that participated in driving housing prices into the stratosphere so that no normal working class people can afford to buy anything at this point in time. This will hasten the demise of our fake economy and will cause our trading partners to suspend trading with our debtor nation.

Only than can this nation secure our borders, and erect trade barriers against countries that compete unfairly with the working class in the US.
The working class wages have been undermined for decades by cheep wages from overseas, and the importation of cheep labor from south of the border. This practice must end if this nation is to survive. The working middle class must not be allowed to die. The cure that is coming will be like chemotherapy; not pleasant, but necessary.

I am a happy participant sitting on the sidelines, watching the economic disaster unfold in real time. As an experienced machinist, I have seen my prospects of a fruitful life eroded away by wage arbitrage, and the war against the working middle class in this country, for the gain of a few. That will end soon.

I thank you all, for causing the destruction of our current economy, sooner rather than later. I may be a BA (bitter American) for now, but hopefully that will change, when things change for the better, due to the meltdown currently underway.

hang on, how many janitors jobs have been created by the housing boom? through land speculation, trading little pieces of paper?

all the little people at the bottom have been hurt by being priced out of the market, they will be grateful for a collapse...

i saw david lereah on a newsfeed for the first time today, talking about the imminent US collapse. he seemed a nice, honest man... :) at the same time, the ABS here pronounced growth of about 2% over whatever period -- i don't get it... although the figures don't include the latest interest rate rise... the various people who compile the figures get them from different sources, so they say different things, and none of them are too accurate anyhow...

i wonder if the market here is just hanging before the fall, and the money is just about to run out... RE agents have been reporting a price slump, so don't know how the esteemed ABS gets 2% growth...

DS,

Quite a few jobs have been created by the growth of consumer credit spending in the US, largely supported by growing home equity "wealth effect". If you generalize that janitor into all the marginal working class jobs created in the economy, I've seen estimates that 6 in 10 up to 8 in 10 are attributable to the housing bubble, over the last 5 years.

surfer-x Says:

"...all others fuck off."
_____

In God we trust "...all others fuck off."

Tell it to the mouse!

:o~~

surfer-x Says:

"...all others fuck off."
_____

In God we trust, "...all others fuck off."

Tell it to the mouse!

:o~~

surfer-x Says:

"...all others fuck off."
_____

In God we trust, "...all others fuck off."

Tell it to the mouse!

:o~~