patrick.net

"It is impossible to switch classes today. Anyone try it?"

Ooh, me, me! I did. I'm still a little working class around the edges, LOL, but I grew up in a poor single-mother working class family and managed to pay my own way through college and end up in the middle class. So I believe it's still possible...in CA, I don't know. I didn't grow up here. But elsewhere, yes, definitely. I had no advantages other than the example of my mother who worked her ass off.

Starting back at the beginning:
2. Marriages strained due to long work hours and struggles to afford BA cost of living
3. kids who have very little time with their parents
4. people with more of a grasping, greedy mentality than I’ve ever seen before

I've read quite a few articles describing how professionals, etc. are feeling the pinch from BA cost of living--and when they say "cost of living", don't we know they mean housing? Really, unless you have an incurable habit for gourmet foods, designer clothing and high-end furniture, aren't most other costs fairly manageable? Ok, gas has become a big issue too. It's really the housing that's hit us here; and most of us forget when that was reasonable too.

Regarding those "grasping" moneygrabber types: In addition to living costs, I think the BA has attracted a lot of people who came here to "strike it rich" in tech, finance, or biochem. First and foremost were their carreers and bottom line, which I'd say has poisoned the social climate and infected many other people. I might be exaggerating, but when someone makes huge wads of cash and shows off their new Corniche convertible or spacious hilltop mansion, people get envious and feel driven to be just as "successful"--without stopping to consider what life is really about. Following that reasoning, many people have divested themselves from any meaningful foundation in life. They become wealthy, but self-absorbed; life becomes measured by things and not by connections to people and environment. They grow old amidst expensive toys that collect dust. And in the end, they finally "arrive": under six feet of sod, their toys are now distributed to their children, who start the process anew.

While housing costs in the BA are currently high, they are somewhat avoidable...if one dares to stoop to be a lowly "renter". The irony is that many people--who complain about housing costs--have also bought into the lie, thinking they can grab just a little more wealth from buying a home now. Many want a meaningful life, close families, but they perceive that wealth is imperative to securing that. Perhaps that's why so many people are so willing to so far into debt: "the good life" is unobtainable otherwise.

Throwing borrowed money at happiness can't go on forever. One way or another, social values will find a saner equilibrium.

t is impossible to switch classes today. Anyone try it? There are the working poor, the poor, the we don’t think we’re poor because we have a house ATM, the wealthy and the uber wealthy. So that really leaves two classes, the have and the have-nots. And I don’t think the haves are taking applications any longer.

It's not impossible, just increasingly improbable. My wife and I both succeeded to move up, quite a lot actually (we both grew up pretty damned poor). But that was years ago when education was a great enabler of upwards mobility; it would have been harder much harder today.

I still think there are at least 4 classes, because you've left out the abject poor--a frighteningly quickly growing strata. The working-educated who have the ATM-houses aren't the same as the New Orleans, in-the-projects poor. Of course, there's no officially agreed upon classification, but most stuff I read tends to divide into these 4(5):

* The poor. Truely no wealth, often little or no secondary education, entirely dependent upon others for economic survival, usually the government. This group has little chance to gain education or skills from formal training due to early childhood neglect and failure to understand the process of education.

This class is growing.

* The working-class. Little or no wealth; any wealth is distressed or at severe risk of loss due to insufficient access to or understanding of insurance. This group lives paycheck-to-paycheck and can be moved down to the Poor by a single event such as a sickness of the primary provider.

This class is not growing or shrinking by some estimates.

* The Educated (or educated-working class, or The Skilled Class). This group has some wealth, usually in the form of home equity, which is generally not distressed and is often insured. They are strongly deliniated from the lower classes by an education (University, trade school, etc.) which is generically applicable to many jobs. This group generally has 4-times or more the rate of health care coverage and property insurance. This group has little risk of falling to the Poor, and only slight risk of occassional dips into the working-class. This class can sustain moderate periods of reduced or no income without falling into poverty.

This class, when summed with the next highest, is not growing.

(The "Rich" classes)
* The near-wealthy/sub-wealthy/"BoBo's"/neveux rich. This group has often moved up from the Educated Class, usually within the most recent generation. It is a dispute whether this is attributable to quality of education, timing and location, or simply luck. This group has significant, usually growing wealth in the form of assets in addition to their primary home, often in the form of equity ownership, investments, or income-producing assets. Few in this group move up to the "True Rich", and many consume much of their wealth within 2 generations, their children and grandchildren settling back into the Educated Class. This class can sustain significant periods of loss of income by liquidating assets--often equating to multiple years worth of viability.

This class, when summed with the previous is not growing.

*"True Rich". Total financial independence. This group requires no income to exist economically. This class leaves long lasting wealth legacy, often esnuring that their families will maintain this level of existence for many generations. It is rare and often spectacular when there is downward mobility out of this strata.

This class is not growing.

Randy, nice breakdown of demographics.

If there's an overal reduction in wealth, that would appear to spell doom for US corporations relying on consumer spending, unless they find a way to keep the credit binge going fullsteam.

"I’ve read quite a few articles describing how professionals, etc. are feeling the pinch from BA cost of living–and when they say “cost of living”, don’t we know they mean housing?"

True that housing is the biggy, but I think it causes everything to be more expensive (since everyone who provides a business/service there has to pay for housing too). Every business, every service rendered--everything's more expensive there. Sometimes significantly more. Off the top of my head, I remember comparing private school costs for elementary kids recently, and it's around $25K yearly for some of the better school in the BA, while it's more like $12K for some of the better schools in cheaper locations.

"people get envious and feel driven to be just as “successful”–without stopping to consider what life is really about. Following that reasoning, many people have divested themselves from any meaningful foundation in life. They become wealthy, but self-absorbed; life becomes measured by things and not by connections to people and environment."

I can't agree enough with this. It's just so sad and true. And now that you mention it, it made me realize that yes, when I visit the BA I do see more extreme exhibitions of wealth than I do elsewhere, and it does affect me too. It erodes my less-materialistic definition of success. And then I visited my hometown this past summer, where all my family is still living pretty far below the middle class standard, and I realized that my own lifestyle, which I consider modest, seems conspicuously flashy compared to theirs.

Excellent social class breakdown, Randy. Very insightful. Definitely something I'll be thinking more about now.

The RE wealth effect out here is really interesting. I've heard that most lottery winners usually end up losing all of their winnings because they've never had that kind of money before.

I think we're going to see that kind of phenomenon out here. So many of the Re "investors" here have never had the kind of money they are seeing right now and it's like it's burning a hole in their wallet and they can't get rid of it soon enough. Hence all the Escalades, super lavish vacations, home improvements and so on. I also think that people here have never seen this kind of run-up in RE before (LA and the BA I believe are more used to big gains in RE) and it seems as if they have pretentions to try to be like the moneyed BA types. I think a lot of newly flush RE lottery winners are going to go broke very soon.

If there’s an overal reduction in wealth, that would appear to spell doom for US corporations relying on consumer spending, unless they find a way to keep the credit binge going fullsteam.

That is a very reasonable worry. The problem, according to the demographics I stated, is that most consumer spending comes from the Educated & Near-Wealthy classes. The housing bubble is putting pressure on one of the attributes of the Educated Class which makes them more prone to fall to Working-Class status, that is primary home-related wealth. As more in this class distress their homes unwittingly with NAAVLPs, they risk losing their primary asset base.

I suspect that a significant restructuring of corporate revenue expectations is in store. But, then again, we're ignoring many macro factors which could extend "credit" outside of this analysis, the biggest being international trade and purchasing-power-parity adjustments. If you want to know why Wal-Mart with a zillion tons of cheap plastic products from China works for the economy it is because this dynamic helps to plug the hole you pointed out.

I don't think it's likely that the "music will stop" suddenly one day, though. I think it will be a period of prolonged, quite painful and slow structural adjustments. The effect will be less upward movement across the big class divide between Working-Class and Educated, and perhaps more in the opposite direction. I think the churn between the Educated and Near-Wealthy could slow or stop too, and then within about 30 years that class will evaporate. The rich will always stay rich; the poor will always stay poor--sadly.

The rich will always stay rich; the poor will always stay poor–sadly.

There is a saying, if you want to be rich, make money off the poor.

I think the churn between the Educated and Near-Wealthy could slow or stop too, and then within about 30 years that class will evaporate.

Very well said. That class is so unnatural in the order of things. Randy, what caused this anomally?

Very well said. That class is so unnatural in the order of things. Randy, what caused this anomally?

I don't pretend to answer that conclusively. My guess is that it's not an anomally at all, just a temporary phenomenon. I think such sub-rich classes arise naturally when there is structural change, rapid growth, or rapid technological shifts. Such a class existed for about 20 years in the early 20th century and ended with the onset of the Great Depression. I think something similar occurred during the great Industrialization phase also. Maybe it comes into existence because the societal structure can't accomidate new wealth generation fast enough.

That is, it takes the Rich time to figure out how to transfer new wealth back into their own pockets, in the mean time the neveaux rich get to spend it for a while.

Jim Cramer: "the housing bubble is dead"

I thought he used to say that there is no housing bubble.

Okay, the unicorn is dead.

Hey, MP, did you see the sfarmls link I posed in the last thread? Do you think that one is "underpriced" because it is below the $1000/sf you suggested?

A $3.051M house in premium SF hardly provides any evidence of the housing market. What next, shall we shop comparables on Belvedere Island and in Atherton? I really could care less about asset values in the

Hey guys, are you surprised that this house went for $550,000 over asking? I mean, it’s September right and we’re supposed to be in a bubble right?

Not surprised. I even expect the condo link I posted yesterday to go for 400K over asking.

It proves nothing about the housing market in general.

i think it’s good value

Whatever. That link provides little info for comparisons.
And speaking of which, what's with this micro-focus on select SF markets?
So the examples you hand-pick are selling high, one could easily take issue with that if we're making assumptions about the overal RE scene. What are providing to overal commentary? You examples are repetitious, and rather irrelevant and absurd, IMO.

What next, shall we shop comparables on Belvedere Island
Well, speaking of which: homes in Belvedere are mostly sitting. I've seen some with signs for 6 mos. or more--with no price reductions.

Peter P - You thinking your condo is going $400,000 over asking (35%+!!) while maintaining a bearish stance on real estate is inconsistent. How does that logic make sense to you? That’s like being a meat eating vegetarian!

1) These condos are not too credit dependent, people do not usually stretch to buy them. They are not representative of the general housing bubble picture.

2) Price over asking shows nothing because even if the asking price is $1, it will still go for the roughly the same sale price. Come on, "efficient market", right?

That’s like being a meat eating vegetarian!

I know a vegetarian who eats sushi.

You thinking your condo...

I wish it were my condo. :-P

Here you are, full of hatred, swearing, and bitterness b/c you missed the boat

A lot of us here didn't miss the boat at all, myself included. We're just figuring out where the dock is to the next boat. You Realtors(tm) ...i love that, we trademark our title like we're a cult or something...go ahead and think that boats float forever. I'm staring at a 42 page document prepared by the Federal Reserve Bank of New York which says your boat is sinking, by all measurable dimensions. What you got? Padded MLS listings? California Association of Realtors data which has been conslusively proven false by nearly every reputable econometricist in the state? A "Virtual Tour"?

Ok, vent-off. I really hate Trolls. I can never avoid taking the bait.

Guys, is there a dilplomatic solution?

Okay, this needs to stop.

Peter P, actually yes, there is a diplomatic solution, I won’t post here anymore, as quite frankly while I really enjoy most of your comments, fucknobs like Primetroll are the reason I despise the BA.

That is entirely unacceptable. You are a star here. I sincerely ask you to stay.

Why don't you start the next thread and you will have the power to delete?

Social effects of the bubble

The great schadenfreude I'll experience as I watch myriad Realtors(tm) get bounced out of their leased Lexuses. Oh where will they all end up? They're not charasmatic enough to sell used cars. They lack the quantitative skills to be insurance adjustors, or the salesmanship to be insurance agents. Forget about real licenses like CPAs or Series-X. Hmmm. I think we'll see that social-mobility (downward) theory come to life for this bunch. And this, I'll not mourn.

Social effects of the bubble

LOL. Randy, you are the expert!

Forget about real licenses like CPAs or Series-X.

Amazing that real estate professionals do not have real licenses.

Peter P,

Thanks for taking care of our little 'problem child' --you beat me to it. I really wish he'd take up Surfer-X on his offer. I have a feeling that would take care of the problem ;-) .

I'm sorry I wasn't here when the troll started posting, I can't monitor the site all the time so it's ineveitable the troll will post when I'm not here. I'm begging you guys to please stop responding to him. He likes the insults. He's here for the attention. You must ignore him or he won't go. Surfer-X, please don't go, I'll always jump in and delete his comments as soon as I can. But know this, there is nothing you can do to annoy him more than ignoring him. Truly.

Thanks for taking care of our little ‘problem child’ –you beat me to it.

That was SactoQt, not me. :)

BTW, only Patrick and the thread-owner has the power.

Yup, anyone who starts a thread has power to delete, this one just happens to be "mine."

Say goodbye to MP's latest incarnation. He'll be back soon enough, of course.

I think whoever thinks that US is definitely going down need to take some time off and travel around the world for a year, and I mean it. There is nothing more telling than seeing the world with your own eyes. If you think we stink, there are far more stinkier countries out there. I say so because I am a first generation immigrant (legal of course) and I thought real hard about which passport to carry. I deliberately worked and studied in many countries to make sure I don't get on a sinking boat.

I am with Randy H 100% on his/her assessment of the situation. Grant it, when the bubble bursts, we will be heading into probably the most difficult period of American history, since we need to repay many debt that this country has accumulated over the years, moral debt, social debt, skill debt, etc, the list goes on. But never lose sight that even with all these problems, we still enjoyone of the highest natural resources per capita, we have more than enough food and water generated in this country for our own consumption (60% of world's food output comes from US) even if world trade comes to an entire halt. So if it is going to be the end of the world, I will stick around here because we shall have a better survival chance than anywhere else on earth. Period.

In a way, we need a big recession. We have been sick for a while, and it is about time that the symptoms surface altogether so we can take a stab at the root of the problem. Perhaps we have to turn a bit left for social stability, perhaps we have to cut down shopping expenditure, that is all needed for the healing process.

Wow, guess something happened while I was away.
Did someone have a meltdown? awww.

Why don’t you start the next thread and you will have the power to delete?

X-man, stay around--your posts are interesting, and far more relevant than our bent Marina statistician.

1. Let everybody speak. To silence one is a mistake.

2. Ignore him or don't.

3. Surfer X, come on man, thicken that skin. Physical threats? He's beaten you so many times here, why take it up in person? He has got a thumb on your button, and you can't ever beat a button pusher by popping your head off every time he pushes your button.

4. To threaten a man about whom you know little or nothing is either very brave or very foolish. As I once said in a younger year when anger was still within me . . . "I don't care how big you are, if you're not bulletproof, you're picking the wrong fight."

According to Merrill's annual survey, we have close to 4M millionaires in the US (50% of the world), classified as those with at least 1M worth of cash or cash equivalents (stock, bonds, etc.), realty holdings and occupied homes don't count towards the networth. I think only these 4M people should be counted towards the sub-rich class. Of course, the billionaires are also included in the 4M number.

Escaped from the District . . . With Kurt Russel Says:

4. To threaten a man about whom you know little or nothing is either very brave or very foolish. As I once said in a younger year when anger was still within me . . . “I don’t care how big you are, if you’re not bulletproof, you’re picking the wrong fight.”

Please don't chime in just to stir the pot, it isn't needed or wanted. Many many times has the blog voted to BAN the troll, we've tried to block him but he's so desperate for attention he won't go away. We like Surfer-X and want to keep him so please don't add to the antagonism.

I was chiming in to stir the pot?

Man o man. Does that minimize what I thought I was doing.

Hey - sure - whatever. I guess I'll try to go figure out why I cared enough to post.

Don't feed the troll. Mollify the profane crybaby who provides "valuable posts."

Oh wait, look, I'm a troll. Better delete this post before is messes up the profound continuity of this thread.

I vote to nicely ask Surfer-X to stay.

Oh wait, look, I’m a troll. Better delete this post before is messes up the profound continuity of this thread.

How are you a troll?

Escape, your view are highly valued too.

Gosh, diplomacy is hard.

So I have enjoyed the company of this board. You all seem like decent people. You all certainly are smart people.

Goodbye folks, be good to your neighbors, regardless of how little they will deserve your goodness.

You posted this earlier in a fit of pique and only came back to defend what?? The troll his ability to irritate the hell out of everyone? We have tried to block him from the site at least 4 times because he's nothing more than an irritant. You think this is about free speech? You certainly objected to other pov's enough earlier to "leave" when you didn't like what was said. But now you're going to pull out the "holier than thou" card for an idiot who does nothing but provoke? Why waste your time?