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September 12, 2037


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2007 Apr 3, 5:37am   24,323 views  333 comments

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http://www.time.com/time/printout/0,8816,915445,00.html

Unleashing their pent-up demands and taking advantage of fairly easy mortgage money, millions of people are shopping for houses. In Santa Rosa, Calif., a 90-minute commute north of San Francisco, buyers in June began camping out in sleeping bags on a Thursday night to be first in line Saturday morning when 27 houses in a new subdevelopment went on sale. In the Kendall neighborhood of southwestern Dade County, the last open area reasonably close to Miami, prospective buyers on weekends parade caravan-like in cars and campers through flag-festooned developments.

Sound familiar? Yet another story from 2005? Nope... the publication date of this article was September 12, 1977 - nearly 30 years ago.

Let's look at some other snippets from this time capsule:

Rachelle Resnick, 27, a San Francisco school-bus driver, counts herself fortunate to have bought—with much help from her father—a two-bedroom house that she candidly describes as "a little nothing." It cost $48,500, and she will have to spend $5,000 or so to repair termite damage. But had she waited, it almost surely would have gone higher. The house sold in June 1976 for $28,000, and has since been resold four times by four separate speculators, none of whom lived in it.

Such speculation is common in California and is beginning to appear in other states. Indeed, California is a housing Oz unto itself; its population is still growing faster than that of any other large state except Texas; the recession bit especially deep in California, creating a huge backlog of demand, and strict environmental requirements severely limit the land available for housing. Prices are starting to level off, but the level is in the stratosphere. In platinum-plated Beverly Hills, one cynical real estate broker exclaims: "Oh, I have such a dog on the market right now! Come to my Sunday open house and see what I'm offering for $185,000. I can tell you, for $185,000 you get a piece of nothing." Tom Lorch, a high school principal who is looking for a house in San Francisco, adds, "When we talk about houses, it's money, money, money—not how we're going to live, which seems wrong. And these absurd numbers, $100,000. It's some kind of fantasy world."

Does anyone know what happened to the housing market in California after 1977? Or was the impact of Prop 13 too influential in the resulting statistics?

And finally, the social impact:

Like all inflations, housing inflation has serious social effects. Some wives feel forced to go to work, not because they want to have careers or earn their own spending money, but because buying that dream house nowadays usually requires two incomes. Six out often first-time buyers are families in which both husband and wife hold jobs. Couples who want to have children sometimes face the brutal choice of a house or a child—and, more often than in past years, select the house. In the early postwar period, sociologists and merchants suggested that Americans spent too little on shelter, too much on less basic needs. If so, the market has more than corrected that tendency. In order to buy a house, couples are scrimping drastically on other spending—for cars, food and even furniture; not a few fancy new houses are almost bare inside. Young people have always asked parents for help in scraping up the down payment on a home; mortgage bankers call the payoff from papa a "gift letter." Now the pool of cash required to spend the first night in a new house—frequently $20,000 to $30,000—has made this sacrifice of independence a matter of necessity rather than choice.

So... this was in 9/1977. Now, it's hard enough predicting what 9/2007 will be like - but what do you think September 12, 2037 will be like?

Already, both parents are working, realtors are spinning the Bay Area as a place so great that you don't need to take vacations - what's next? Will child labor make a come back? ("Monta Vista High School and Fireworks Factory #88"?) How much more special can it get here?

(Bonus points for including Peak Oil in your prediction...)

#housing

« First        Comments 247 - 286 of 333       Last »     Search these comments

247   Peter P   2007 Apr 4, 11:35am  

Chocolate.

248   Malcolm   2007 Apr 4, 11:35am  

Yeah, I was leaning that way.

249   Peter P   2007 Apr 4, 11:35am  

I think the moral imperative compells me to eat cakes. I cannot help it. :)

250   Malcolm   2007 Apr 4, 11:37am  

You were given a survival instinct.

251   Paul189   2007 Apr 4, 11:41am  

funny thing too -

I think exchange rates were fast and furious at that time also. This is when I became fascinated by the markets as a pre-teen. I arbitraged cash currency between banks even giving up the 3 cent spread between bid/ask in the Canadian. I still remember the trade - one bank was .71 bid .74 ask and all others .65 bid .68 ask. Maybe the person who was to update the quote went to lunch - I don't know, but to a kid, free money is very cool! I did it a couple of times made a few bucks and then the day was done.

252   Paul189   2007 Apr 4, 11:47am  

It was also about that time my grandfather gave me some $ to go buy pennys because the copper in each was worth more than 1 cent. He was correct on that arb. but it took about 25 years. Anyone know where I take those pennys now to lock in the profit? Of course now they don't put all that copper in todays pennys, do they?

253   Allah   2007 Apr 4, 12:41pm  

Can we just eliminate marriage altogether? It is a pointless concept. I’ve been with my girlfriend for 15 years, and we have seen some couples marry and divorce two or more times. People change.

Marriage is pointless if you aren't going to have children; It's essential if you are. It's supposed to be a well thought out destination; It's sad how people get married for all the wrong reasons only to end in divorce.

254   FormerAptBroker   2007 Apr 4, 2:02pm  

SFBubbleBuyer Says:

> I qualify myself as a liberal republican
> or a conservative democrat.
> I’m all for :
> A monkey in every garage, and an elephant
> in every pot. Or was that the other way around?

How about a monkey in every trunk?

http://www.trunkmonkey.com/content/view/28/1/

255   Peter P   2007 Apr 4, 2:02pm  

And getting into a top college means nothing either.

256   skibum   2007 Apr 4, 2:08pm  

It’s all about facing the facts. If the market was so weak, which it is clearly not for anybody actually bidding on, and looking for a house to buy, how could this house go pending in under 2 weeks at $3.5 million asking? I was going to see this last Sunday, and it was already in contract!

Yeah baby, MarinaPrime/FaceReality/ConfusedRenter is BACK! Troll on, dude!

257   Peter P   2007 Apr 4, 2:09pm  

Was the house sold for 250K over asking? :)

258   Malcolm   2007 Apr 4, 2:18pm  

Jon Says:
April 4th, 2007 at 7:09 pm
Here’s a philosophical question.
Let’s say one concludes that the housing market or a stock is disconnected from funadmentals and that prices are mostly speculative. Let’s say you expected the speculative mania to continue so you purchased the home or stock with the intention of selling it to a greater fool down the road at a profit. You know at some point someone will get left holding the bag.
Outside of risk factors, would you have any problems with that, moral or otherwise?

Why would you feel guilty that someone's selfishness harms them? First, everybody puts a different value on things so to try to determine if they are overpaying is irrelevant. Secondly, even if you think so this is a competitive free market, you won't get anywhere if you can't stomache making a profit.

259   Malcolm   2007 Apr 4, 2:19pm  

Would you feel guilty getting a bargain on something?

260   Peter P   2007 Apr 4, 2:23pm  

Let’s get the government out of the “marriage” and “civil union” business.

There are many legal consequences (e.g. gift tax, estate, etc) of a marriage. If the government is to uphold the legal system it must uphold the integrity of marriage.

261   Malcolm   2007 Apr 4, 2:24pm  

I can tell you not getting married is the way to go. Everyone I know who is married wishes they weren't.

262   DaBoss   2007 Apr 4, 2:24pm  

"1- The 30 year fixed mortgage rate in 1977 was not 18%"

My parents home was at around 7-8% fixed 30 year.

263   Peter P   2007 Apr 4, 2:25pm  

What matters is what kind of friends you make at schools before college.

Absolutely. This is why I think golf is a very good investment.

264   Peter P   2007 Apr 4, 2:25pm  

Everyone I know who is married wishes they weren’t.

I am happily married. You should un-know me now. :)

265   Malcolm   2007 Apr 4, 2:26pm  

lol, let's talk in 5 years.

266   Malcolm   2007 Apr 4, 2:27pm  

God I hate golf.

267   DaBoss   2007 Apr 4, 2:27pm  

pending in under 2 weeks at $3.5 million asking?

Someone I knew well bought for 3.4 in Saratoga in 2000 but then had to sell in 2001... took a 800K loss.

268   Peter P   2007 Apr 4, 2:29pm  

Would you feel guilty getting a bargain on something?

Guilt is a useless emotion. It will drag you down. It is best not to feel it at all.

Let’s say you expected the speculative mania to continue so you purchased the home or stock with the intention of selling it to a greater fool down the road at a profit. You know at some point someone will get left holding the bag.
Outside of risk factors, would you have any problems with that, moral or otherwise?

No problem whatsoever. The bag holder should have known better. It is morally justifiable that his money be put into better uses.

269   Malcolm   2007 Apr 4, 2:29pm  

Seriously, even with my girlfriend sharing a bank account and the house, it seems so simple to be able to undo everything if we wanted to.

270   DaBoss   2007 Apr 4, 2:30pm  

, which gets their money from hedge funds (or private equity)---

no its millionairs who invest into VCs ... many are in tech themself.. CEO/CFOs
no hedge funds invest into startups... no return .. its all a lost for several years.

271   Peter P   2007 Apr 4, 2:30pm  

lol, let’s talk in 5 years.

I am happily married for 5+ years already.

272   Peter P   2007 Apr 4, 2:32pm  

God I hate golf.

I hate golf too. It is a silly game but I met most of my friends directly or indirectly through golf.

273   Malcolm   2007 Apr 4, 2:32pm  

Now I know you're lying.

274   Peter P   2007 Apr 4, 2:34pm  

Seriously, even with my girlfriend sharing a bank account and the house, it seems so simple to be able to undo everything if we wanted to.

Be careful, that can be considered a common-law marriage in some states.

I am not a lawyer.

275   Malcolm   2007 Apr 4, 2:35pm  

I always make friends where I work, and when people talk about golf I know right then we won't be hanging out. That was one thing about grad school, that's all these guys could talk about. That and getting drunk.

276   Peter P   2007 Apr 4, 2:35pm  

Now I know you’re lying.

How?

This statement is false.

Now you know I must have lied.

277   Malcolm   2007 Apr 4, 2:36pm  

Yup, but not in Cali

278   Malcolm   2007 Apr 4, 2:37pm  

ha ha ha

279   Peter P   2007 Apr 4, 2:37pm  

I always make friends where I work, and when people talk about golf I know right then we won’t be hanging out.

I never really made friends at work. I like to be as detached as possible.

280   Malcolm   2007 Apr 4, 2:38pm  

I thought about our conversation earlier when the waitress said they were out of chocolate cream pie, but they did have a slice of French Silk.

281   FormerAptBroker   2007 Apr 4, 2:39pm  

Peter P Says:

> And getting into a top college means nothing either.

Some of the smartest (and most successful) guys I know are Kauffman Fellows:
http://www.kauffmanfellows.org/
It must be some kind of fluke that since “getting in to a top college means nothing” that so many Kauffman Fellows went to top schools…

If I am at a party at the home of anyone that works in VC or PE there is a 50% chance that anyone I talk to will have a degree from Harvard, Stanford, or Wharton…

282   Peter P   2007 Apr 4, 2:42pm  

Some of the smartest (and most successful) guys I know have opposable thumbs... ;)

283   Malcolm   2007 Apr 4, 2:44pm  

Just another way to look down at someone else. I used to hate some engineers at an old job because all they could do is complain out of jealousy that the HR manager (who made more than them) had received a BBA degree from National University.

284   Malcolm   2007 Apr 4, 2:47pm  

That's the thing with engineers, they just don't get it. It wasn't the school (for those out of CA National is a bit of a joke) they should be knocking, it's the fact that she F'd the right guy who took her along with him throughout his career.

285   Peter P   2007 Apr 4, 2:48pm  

Just another way to look down at someone else. I used to hate some engineers at an old job because all they could do is complain out of jealousy that the HR manager (who made more than them) had received a BBA degree from National University.

Very true.

Another way to look at it: the manager made more than they did with just a BBA degree. I think they need to wake up. One cannot find truth in a degree. One must go make some truth.

286   Peter P   2007 Apr 4, 2:49pm  

Hey Malcolm, whatever works. :)

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