patrick.net

In case people here are not aware, a lot more countries are joining the competition for getting into Ivies than before.

There are prep classes in the most affluent parts of China for rich kids aiming at the Ivies. A friend of my wife's classmate from undergrad went to China about 12 years ago as an independent freelancer, and then started a business coaching local kids on their essays, SAT scores, activity profile to get into top American colleges. He also started a bunch of other businesses, but this Princeton Review-equivalent is flourishing big time. This outfit even hooks up existing students at Ivies with Chinese applicants brushing up their essays and resumes for a fee. In fact, international applicants may receive more favor because they appear more "exotic". Also, as long as the applicant has stellar SAT scores, it is much easier to pedal other extra-curricular stuff since it is harder to verify, yes I am talking about the grey areas of - fraud.

Welcome to the globalization of everything.

Welcome to the globalization of everything.

You guys are depressing me. What a way to start the weekend.

Surfer-X,

Why yes, I do have experience with the MCC (Mortgage Credit Certificate) program. It's funny you asked because I intended to ask if they have it in SF. I was recently reviewing the program in Chicago. It's funny because after you have not owned for 2 years you will be considered a first time homebuyer. I'll explain the program and my experience for those who care.

The MCC gives you a Fed. Inc. tax CREDIT for a percentage of mortgage interest paid each year that you live in the property FOR THE LIFE OF THE LOAN! When I had one in the early '90's it was for 35%. So, if I paid $3,000 interest in a year I had a income tax credit of $1,050 that comes right off your tax bill as it is a credit and not a deduction - Awesome.

In order to qualify you either need to be a first time homebuyer (read not owned in the last two years) or buy in a "targeted area". In addition, your income must be below certain thresholds. These vary by number of persons in the household, type of property purchased, etc.. I actually met all of the criteria when I applied. The location part is funny because I was buying on the edge of what is called the Gold Coast but the trageted areas were determined decades ago so, the area was considered blighted, etc. and thereby a targeted area. I recently looked into this again and most of the city is still a targeted area.

Here is the link-

http://tinyurl.com/y5hjo6

I find the competitive HS mindset sad and depressing. What kind of childhood is that?
Mr. Skibum,
It is people like you who will drive down property values in Crapertino. Please keep your opinions to yourself. Next thing you know, you will be suggesting children go to community college for two years and then go to UCB. I mean, Berkeley will be on their diplomas, but they will be scarred for life from the community college experience. I would rather my child get an ulcer (and graduate in the middle of the pack) in Crapertino than graduate with honors, from say, high school in San Jose.
signed,
Concerned Parent and Realtor

Cheer up!

Your children, should they become directors/vp's/c-level execs will have unbelievable human resources available to them to implement strategies and produce products at prices and scales previously unimaginable. They'll really be able to make a difference. And profit!

Go look at some open houses. That’ll cheer you up

Good idea. I'll just imagine they mistakenly added a zero to the price, and put in an offer at "asking".

Santa Clara has a MCC program:

http://www.sccgov.org/portal/site/oah/menuitem.244564f66e6d425580b558bb35cda429?path=%2Fv7%2FAffordable%20Housing%20Office%20of%20%28DEP%29%2FHomebuyer%20Programs%2FMCC%20Program

Personally I think it's ridiculous. Government manipulation like this only boosts property prices.

SFWoman Says:
How can you control the costs of land to a developer? If the land is owned by the city or unified school district that is one thing, but land owned by a private individual? They can sell at whatever the market will allow.

There's little things called 'eminent domain' and 'resumption of land'. Or, indirectly, the govt can mandate for an 'affordable housing developer's levy', which means that the developer will automatically offer less money to the land vendor to absorb the levy. This is being done in Oz. Hence, the land vendor just has to take the price being offered, as they won't get a better deal elsewhere -- the developer cites the fact he has to pay the levy to the vendor. However, if the govt is too scared to do these things, it can, as you say, re-use state owned lands to do its own affordable housing developments.

There was a time when the govt wasn't too scared to intervene in a market crisis, known as the 'New Deal'.

The developers I have spoken with told me that their ‘below market rate’ units actual lose a small amount of money per unit. This is fine when it is 15% of a development, but not when it is nearly 2/3 of a development.

I wouldn't necessarily believe what a developer told me. But I would need to look into the detail of what your Supervisor is suggesting to see whether what she is suggestng is practical or not.

I remember there was a large condo and apartment below market and subsidized development built in Boston when I was in college (late 1980s). At the time it ended up costing $600,000 per unit to build. I had friends who were buying condos in Back Bay for about $350,000 at the time. The whole thing was a giant boondoggle for someone.

If you look at the financial picture of the Fisherman's Wharf development available on the Web you will see that they have developed it at about half the cost of a market-oriented development. There is enormous waste and corruption in construction practice already, I would think a public project under scrutiny should come to less.

Most of the “not for profit” developers (including Bridge) are just shell companies that allow politicians to pump money back to campaign contributors. On average “not for profit” housing costs at least twice as much to build as “for profit housing”.

You'd better pull the figures and show me. If that's the case in the US, they should be doing things differently there, shouldn't they?

Many liberals think that developing real estate is a license to print money. It is not, it is a very risky line of work that has put a lot of smart guys in to bankruptcy. When a “not for profit” develops property the costs just keep going up and up since the government will pay for all the “costs”, just not any of the “profit”. Let’s not forget that a “cost” to a “not for profit” developer includes a lot of “profit” that goes to the contractor and all the subs…

It IS a license to print money. I know of several billionaire developers even in a small country like this one. Many of the risks are to do with guessing the 'right' price to offer for land, and hoping they can sell inventory for the projected price. These particular risks are taken away by doing affordable development, as there will most definitely be demand, and the state has controlled the land price. The equation then become much easier. I wold expose the process to intense public scrutiny and transparency also to prevent overruns on building costs. The govt does NOT have to pay all costs (not that that should really matter), they can merely act as brokers for the whole process in a PPP relationship and make sure the land is affordable to begin with, and that they have specified caps on asking prices. The contractors and subbies all get paid, but no-one walks off with 25-30% slush money profits which creates the billionaire syndrome with 2 Maybachs in the driveway.

eburbed Says:
Santa Clara has a MCC program. Personally I think it’s ridiculous. Government manipulation like this only boosts property prices.

How does it boost prices? Why is it that posters here want a deus ex machina to come down and fix the market, and when govt starts to do just that, no matter on how small a scale, a huge cacophony of wailing and gnashing of teeth goes up, amid cries of 'we're doomed', 'it'll never work', etc?

4 months old, you say? Just when you start getting exhausted, frustrated and angry, they start smiling, interacting and being generally cute. It’s like an “intelligent design” to keep parents from killing their newborns.

yeah -- altho i think 'natural selection' may have put paid to the ones who didn't smile, interact and be cute... however, cuteness is evident across the mammalian kingdom, so it probably predates primate evolution... :D

Why is it that posters here want a deus ex machina to come down and fix the market,

They do? My feeling is that most posters here just want the government to enforce the law.

-Prosecute shady appraisals
-Restore integrity to the mortgage industry - lying on your application is a crime. Enforce it.

eburbed Says:
They do? My feeling is that most posters here just want the government to enforce the law.

-Prosecute shady appraisals
-Restore integrity to the mortgage industry - lying on your application is a crime. Enforce it.

And that will completely reverse the recent 6-7 year boom and completely prevent capitalist waves and boom/bust cycles? I don't think so. It will be increasingly necessary to quarantine housing from 'investors' into the future to facilitate a decent social settlement.

The primary drivers are liberalised credit products, a shaky sharemarket and historically low interest rates. And 'irrational exuberance'.

The few people who have overreached will come unstuck by themselves in a very short space of time. In this sense, the market is self-correcting. However, govt should be doing much more to guarantee a better social settlement and affordable housing for all.

However, govt should be doing much more to guarantee a better social settlement and affordable housing for all.

Ah.

I used to believe in that kind of stuff in college. Then I got a job and started paying taxes. This is a very cliche story. :)

I guess that brings us back to the France discussion earlier on this page... is housing a right? is medical care a right?

Tough questions.

DS,

I think what eburbed meant was, whenever government attempts to subsidize something, the market inevitably reacts by raising the price (to absorb the subsidy). Basically, all a subsidy ends up doing long-term is to raise macro consumer demand for the good/service, and producers react by raising prices. And this isn't some crazy, right-wing notion, either, but a principal that's been proven time and time again in real markets. It's been estimated that without perpetual corn & milk subsidies in the U.S., the price for these would be at least 50% lower.

In a nutshell, as a tool for redistributive economics (to help the poor), government subsidies generally suck. Even programs that add directly to supply (government-built/owned housing) don't have as bad a track record as subsidies do.

eburbed Says:
Ah.
I used to believe in that kind of stuff in college. Then I got a job and started paying taxes. This is a very clichéd story.
I guess that brings us back to the France discussion earlier on this page… is housing a right? is medical care a right?
Tough questions.

Questions that have been answered in other countries, as per France, Scotland, etc. There is no question that you are operating in a minimal govt laissez-faire framework at present. A better welfare state will articulate and offer more guarantees and rights of citizenship, whether it's health, housing, education, whatever. (e.g. I get free health care and heavily subsidised scripts as a universal health care right of citizenship.) And you have to ask where your taxes are going and to what use they're being put, at a 30% tax rate... Why would you be proud to be an American if all Americans are cut-throat and laissez-faire and your overarching govt is a corrupt shambles that helps no-one and extends no decent guarantees? It's just an atomised society of hairy-chested individuals with no unifying features at that rate...

A better welfare state will articulate and offer more guarantees and rights of citizenship, whether it’s health, housing, education, whatever.

Welfare only works in smaller population with proportionally abundant resources.

The US has 300M people. Welfare will not work.

Looking back, I guess it’s idea of appreciation is that over inflation. If you enter 0, you don’t break even - but the delta isn’t that bad:

Year: 30
PITI: $4,338.66
Payment After Tax Savings: $4,127.98
Rent Payment: $6,237.30
Value of Investment: $678,879
Home Equity: $657,060
I hate to sound like your parents, but what does the analysis look like after year 30. Your home appreciates with inflation AND you no longer have rent payments (you do have taxes and insurance, though). Not a bad (somewhat) fixed return on your investment for the golden years. That is why many here are pro-home ownership for the long haul. You will do okay in the long term if you buy now, but I'd continue to bubble sit for at least a year. Negative appreciation can be very ugly if you hold for "average" terms. People held onto their homes the longest in Monterey County (6.7 years) and the shortest in Napa County (just over four years).

I am not sure I understand the tone of the posts regarding education, competitiveness and getting admission to the Ivy League. Everyone is speaking as if all this ensures, that top achievers will get to rule the world as one of the few CxOs.

Since when did academic excellence start having the same meaning as professional success ? They are often mutually exclusive.

Yes, I have heard of the "Old Boys' Network". But as a middle class person, I don't expect my kids to be "accepted" even if I send them to Ivy League schools. But more importantly, high GPA does not imply high corporate power.

skibum Says:

> What is interesting to me is that competitive students
> and parents seem to think going to a competitive HS
> like Monte Vista, Gunn, etc. is a ticket to getting into
> a top college. I would second Mt. View Renter’s point –
> how many of the “middling” students at, say, Monte
> Vista get lost in the crowd of overachievers and hence
> don’t get into a top school? If that same kid had gone
> to a less competitive school, maybe that kid would have
> been valedictorian.

I went to public schools up until High School when I went to a real good private school. Going to high school with kids who all expected to be very successful and who thought that anyone that didn’t go to a top school was pathetic changed my outlook on college and life in general (remember as a kid I took apart old water beds and refrigerators to save the nuts and bolts with my Dad who didn’t go to college). If I ever have kids I’ll plan on sending them to the best private school in the area.

More often than not kids end up like the kids they hang around with so if a kid goes to a school with other kids who have been told since they learned how to talk that you need to get good grades and get in to a good college odds are your kid will get good grades and get in to a good college (100% of the kids in my high school got good grades and went to top colleges).

If you drive across the bay to Oakland Tech. or Kennedy High in Richmond where the kids all learned since they were little that the white man is evil and you need to act tough if you want to be a good gangster (depending on what report you read either more than half the kids or just under half the kids don’t even graduate)…

Why would you be proud to be an American if all Americans are cut-throat and laissez-faire and your overarching govt is a corrupt shambles that helps no-one and extends no decent guarantees?

Well when you put it -that- way. :)

I prefer to identify myself as a New York-American.

And our government isn't in corrupt shambles... compared to Somalia. :)

But as a middle class person, I don’t expect my kids to be “accepted” even if I send them to Ivy League schools.

I've seen it happen. Believe it or not, your ability to drink really helps. Joining the right frat (in the east coast) may really help your chances of getting a good finance job.

Peter P Says:
Welfare only works in smaller population with proportionally abundant resources. The US has 300M people. Welfare will not work.

That's ridiculous. You can upscale or downscale a welfare state to any sized population, it's simple math. America does have proportionally abundant resources, it's the most affluent country on earth, a large land mass with ample resources, and the largest oil consumer. Further, you already have a welfare state working in a multitude of ways, it's just that it's arguably not as good as other countries, and there are prevailing 'discourses' that have been generated in the public mind about why it should remain as it is. What we see is a huge abundance that is not distributed very well -- huge wage multiples, extremes of wealth and poverty, etc.

America does have proportionally abundant resources, it’s the most affluent country on earth, a large land mass with ample resources, and the largest oil consumer.

That last part isn't exactly an asset. :)

And it's that last part that will screw us over when Peak Oil hits thanks to our no-hope-in-the-future style of car-based living.

@DS,

There is an important difference between price-bargaining and price subsidies. In the case of subsidies, all that is occurring is the taxpayer is absorbing part of the cost, while the ultimate cost is never even a consideration. There are cases where this is a socially desirable solution (providing expensive medicine to poor people for example), but in the end, everyone else bears those costs.

In the case of collective price-bargaining, the government itself acts as "informed consumer" on our behalf to negotiate a better price from competing suppliers. In other words, it uses free market capitalism to the consumer's and the taxpayer's advantage. IMO, a far more effective solution at containing costs long-term.

they are doing both, HARM :cry:

because one method by itself is not enough to guarantee affordability to the public...

Well when you put it -that- way.
I prefer to identify myself as a New York-American.
And our government isn’t in corrupt shambles… compared to Somalia.

heh, no.

oil is definitely a problem going forward. I've got some uranium I can sell you...

DS,

Your analysis is correct, but I think the cost of the PBS is going to become a big issue going forward. And people do abuse it; because, sad to say, they will always over-consume a "free" good.

What do you think of last May's Super changes? I was in the UK at the time, but I've been to a couple of seminars since returning and I consider the current rules absurdly generous to self-funded retirees (even though I fully intend to take advantage insofar as I can :twisted:).

I did west coast schools admissions as an alum officer for an Ivy League college for about four years

I did interviews for my non-ivy league east coast school for 2 years.

But I didn't really care so I would tell the kids that they could ask me questions about any east coast school, and I would just give them frank advice I wish people had given me: "Don't take it too seriously. Those are 4 years of your life you'll want to remember." "Get a job in the summer. Period."

But the one piece of advice that I gave that would always trigger fear and shock was: "DON'T BRING YOUR CAR."

Especially the kid who was driving a brand new Toyota Highlander.

"Seriously?"

And was also thinking of going to Columbia.

Ah, California.

StuckinBA,

I was reading an article only this week that pointed out that an unusually LOW percentage of CEO's at the 50 biggest US companies have Ivy League backgrounds at present. IIRC it was something like 7 out of 50.

Something like 60% of kids attending Ivy League schools receive financial aid of some sort.

But just to be clear, the school offering semi-subsidized loans is considered financial aid. When I was applying and read that, I thought it meant "grants". Boy was I in for a surprise. :(

And people do abuse it; because, sad to say, they will always over-consume a “free” good.

Yes, game theory 101. There is no free lunch.

Looks like my earlier question about an Email point for 'Guest Thread Suggestions' black-holed. Pity, I still think it's a good idea.

I was reading an article only this week that pointed out that an unusually LOW percentage of CEO’s at the 50 biggest US companies have Ivy League backgrounds at present. IIRC it was something like 7 out of 50.

Stanford's not an ivy - how does that factor in? :)

I hear Google doesn't require a 3.0 GPA anymore to be employed. Hurray!

Especially the kid who was driving a brand new Toyota Highlander.

And was also thinking of going to Columbia.

LOL. Was it a lot of work doing the writeups after the interviews? I've been thinking of doing something like that to help kids out. But don't have a ton of time.

There was 1 unofficial frat at Harvard, and a good number of what they called "finals clubs," which I think are pretty similar to frats except you don't get to live there. That's where the real old boys clubs were.

Was it a lot of work doing the writeups after the interviews?

Not really. But I wasn't invited back after I was too real and word got back that I had said some negative things about the school. :(

It's not like any of those things were exactly secrets. Oh well. Their loss.

HARM,

Wouldn't it be a piece of really useful research if someone was able to plot subsidy level against abuse level for a particular good or service? Especially if the result could be extrapolated.

Here in Australia there's been a bit of discussion about EMTR (= Effective Marginal {Income} Tax Rate) recently. Where I live there are points at relatively low income levels where people on welfare face an EMTR of 80%+, due to a combination of taxes and withdrawal of benefits.

My own nephew has told me he carefully schedules his work to keep his income just under one of these threshold points, and I can't say I blame him. It basically makes no sense for him to earn more than about $140 a week unless he's going to get $500 or so.

This is, of course, a huge incentive to get into the black economy.

eburbed,

The article writer actually referred to "Ivy League + Stanford + MIT", my bad.

http://www.prudentbear.com/articles/show/90

They’ll probably come through great, but having drug addict and convict parents and having to keep younger siblings doctors appts and register them for school, etc.

When I interviewed for Harvard, the interviewer strained to find some sob story for me to get in on. "Do you parents have any problems that you had to overcome?"

I knew I wasn't a very good candidate - but that certainly didn't make me feel better.

BTW, I didn't know the kids could read your report. I thought it was confidential.

“Do you parents have any problems that you had to overcome?”

Easy question.

Even if you had perfect parents, you could always say that your parents were trying to be too perfect and that you had to learn to face reality yourself. :-P

eburbed Says:

> I’ve seen it happen. Believe it or not, your ability
> to drink really helps. Joining the right frat (in the
> east coast) may really help your chances of getting
> a good finance job.

This is not just an East Coast thing…

It is biggest in the South where there are many firms with over half the guys from the same frat, but even here in SF there are many firms with a high percentage of guys who were in the same fraternity. More than fraternity ties it is after college groups that seem to help people get jobs. I can quickly think of a dozen firms in SF where over half the guys are Guardsmen, Bohemians, or members of the St. Francis YC or O Club…