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Housing Bubble Pre-Flight Checklist


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2006 Apr 10, 7:44am   29,558 views  313 comments

by HARM   ➕follow (0)   💰tip   ignore  

1. Congress enacts/President signs new Tax Code into law (1997) subsidizing real estate speculation? Check.

2. Cabal of arrogant Fed bankers/Washington politicians/Brokerage firms ignore (or actively encourage) massive Dot.com stock bubble? Check.

3. Aforementioned stock bubble imploding in Fed's/Pol's faces (2000)? Check.

4. Extreme Fed/Pol fear of damage to the rest of the economy by ruptured stock bubble and willingness to flood economy with ultra-cheap credit (to inflate new bubble)? Check.

5. Massive GSEs market intervention, allowing private mortgage lenders to shift default risk from themselves onto taxpayers, FCBs & institutional investors (using the magic of MBS/CMOs)? Check

6. Complete erosion of lending standards, thanks to Fed's easy credit + GSE's MBS/CMO mortgage risk transfer? Check.

7. Cabal of arrogant Realt-whores enforcing monopoly MLS, gaming the numbers and lobbying for federal protection? Check.

8. Public's unshakable faith in the impregnability of real estate ("it never goes down")? Check.

9. Public's complete lack of historical memory, understanding of credit bubbles, the Fed/GSEs, business cycles, etc.? Check.

10. China/Japan underwriting much of our toxic MBS/CMO debt, while secretly hoping we fall on our asses? Check.

11. International carry-trade spawning RE bubbles all over the globe, thanks to ultra-cheap $USD ? Check.

HOUSING BUBBLE, YOU ARE CLEARED FOR TAXI

Discuss, enjoy...
HARM

#housing

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230   skibum   2006 Apr 11, 5:15am  

re: last post,
- to
+ too

231   edvard   2006 Apr 11, 5:16am  

Post and Beam? Actually, a friend of ours makes those. They don't come cheap either. But they still have that rustic feel. A family friend is putting his father's house up for sale in TN. It is a vintage 1860's log cabin, 2 stories, a built on garage, and other collection of hodge-podge add ons that makes it look sort of charming and unusual for 130k. I'm so tempted. If anything, it would probably make a nice bed and breakfast.

232   skibum   2006 Apr 11, 5:16am  

nomad,
Ironic post given this thread topic (bubble flight plan)!!

233   Peter P   2006 Apr 11, 5:17am  

Have you looked into recycled shipping container structures? You can fit a lot of floor length windows into one and there’s no termite problems.

Hmm... I rather have a wood or concrete home. The idea of living in a container feels uncomfortable to me.

234   DinOR   2006 Apr 11, 5:17am  

nomadtoons2,

I believe they call it the world's 7th largest air force, Monthan-Davis Air Base just outside of Tucson, AZ. You can see abandoned airplanes from space! I think you could get one alot cheaper!

235   Peter P   2006 Apr 11, 5:19am  

Actually, the coolest thing I saw recently was a company in NC buying up retired passenger jets, gutting the innards, engines, etc, and offering for around 250k to deliver it to your property.

With or without wings?

236   DinOR   2006 Apr 11, 5:19am  

Peter P,

Yeah, uh huh, 57th best year since back in 1950! I hear ya! 2007 just around the corner.

Btw, what is a "glide house" and who is Michelle Kaufman?

237   Peter P   2006 Apr 11, 5:20am  

The vaulted living room climbing wall idea won’t fly - those walls probably won’t be able to hold up a normal rock climber’s weight, much less that of a fat FB and their fat kids.

Too funny!

238   Peter P   2006 Apr 11, 5:20am  

Btw, what is a “glide house” and who is Michelle Kaufman?

http://www.mkd-arc.com/whatwedo/glidehouse/index.cfm

239   astrid   2006 Apr 11, 5:33am  

Nomad,

Watch out, aliens probably single out redneck houses for abductions1

Peter P,

I do find her Breeze house to be even nicer. Too expensive though. The QuikHouse gives similar space with about half the cost.

240   Peter P   2006 Apr 11, 5:36am  

I do find her Breeze house to be even nicer. Too expensive though. The QuikHouse gives similar space with about half the cost.

Somehow I am more attracted to the simplicity of the glide house. Need to find a lot with a good view though.

241   astrid   2006 Apr 11, 5:41am  

Peter P,

What I really love (and can't afford) are the LA study houses from the 1950s/60s. They have the most beautiful bones + amazing views.

242   astrid   2006 Apr 11, 5:44am  

One other way to approach the high density housing problem is to look at how the Japanese deal with it. They build beautiful interior courtyards to let in light.

243   Peter P   2006 Apr 11, 5:47am  

What I really love (and can’t afford) are the LA study houses from the 1950s/60s. They have the most beautiful bones + amazing views.

Don't worry, make more money and buy two!

244   edvard   2006 Apr 11, 5:50am  

I formerly really liked Arts And Crafts style homes..until I moved out here. Every other home in the Bay Area is an arts and crafts home, and it seems that all of them have the same front doors, little alcoves, and interiors. I like the simple clapboard farmhouses I saw a lot of in my region. They are fairly straightforward and functional inside and out. I also like the old school car garages seperate from the house with the 2 large front doors. That's the style of garage we have at our rental, and it is nice to work in there on a sunny day with both doors swung open.
For some reason I also like the work of IM Pei, and his all-glass house from the 50's.

245   DinOR   2006 Apr 11, 5:50am  

Peter P,

Most interesting! It's refreshing to see someone actually following through with their design. Most home/home improvement shows run an "obligatory" show on solar or "green" homes and then it's right back to pergraniteel and faux brick facades! Now that these are in actual production I'd be curious to know if there is franchise potential or dealership affiliations. This would sell well in OR particularly on our coast where exterior maint. is such an issue (and and eye sore)!

246   astrid   2006 Apr 11, 5:51am  

I think I'd have to be a Hollywood mini-mogul to afford one of these places. There's only a handful of those in existence.

The sad thing is that the original clients were just doctors and lawyers. Now normal doctors and lawyers can't even dream about living in one of those places.

247   Peter P   2006 Apr 11, 5:54am  

One other way to approach the high density housing problem is to look at how the Japanese deal with it. They build beautiful interior courtyards to let in light.

I rather have a few 40 story tower so that we can get more open space.

For example, 20 acres of land can accommodate 160 one-eighth-acre homesites. However, if we have just one 40 story tower with 4 "flats" on each level, everyone can share the open space!

248   Peter P   2006 Apr 11, 5:57am  

Most interesting! It’s refreshing to see someone actually following through with their design.

Very true. I saw her promoting the breezehouse in Menlo Park last year. She is genuine. We need more people like her.

Now that these are in actual production I’d be curious to know if there is franchise potential or dealership affiliations. This would sell well in OR particularly on our coast where exterior maint. is such an issue (and and eye sore)!

They definitely sell in OR. Their factories are all in the Pacific Northwest.

249   Allah   2006 Apr 11, 5:59am  

I just laugh alot about the overuse of the word "homeowner". If someone owes more than 50% on a house, they should be refered to as their rightful name homedeptor. I see so many signs all around "For Sale by Owner", because they can't afford to pay real estate commisions, these signs should read "For Sale by Homedeptor" instead!

Now the realthores are thinking about giving up part of their commision to the buyer (How nice of them!).


"Finding the house is probably 75 percent of the work," says Joe Fox, CEO of BuySide, one of those new, Web-based businesses. "Why not give [buyers] 75 percent of the commission?"

250   astrid   2006 Apr 11, 6:05am  

Peter P,

I like high density housing too. I used the Japanese example to highlight a solution to pre-existing sub-optimal building sites.

Though skyscrapers only really work in mountainous terrains or facing the ocean. Otherwise, they leave such a large footprint that they block out views and the sun for other buildings. The other concern is with natural light in such buildings.

251   astrid   2006 Apr 11, 6:06am  

"homedeptor"????

252   Peter P   2006 Apr 11, 6:09am  

Though skyscrapers only really work in mountainous terrains or facing the ocean. Otherwise, they leave such a large footprint that they block out views and the sun for other buildings. The other concern is with natural light in such buildings.

True. But I rather live in a condo tower with 15+ acres surrounding open space than a house that is detached only by definition. :)

253   skibum   2006 Apr 11, 6:10am  

Peter P Says:

I rather have a few 40 story tower so that we can get more open space.

Sounds like Le Corbusier. Look where that's gotten the French these days! Speaking of Bauhaus, some of the other ideas w/ respect to architechture are very cool.

More practically speaking, though, for the BA what do people think about Eichlers? I personally like them aesthetically speaking, especially if they've been updated.

254   Peter P   2006 Apr 11, 6:14am  

More practically speaking, though, for the BA what do people think about Eichlers? I personally like them aesthetically speaking, especially if they’ve been updated.

Eichlers? The only problem is the exposed beams. It is a feng shui challenge. (I am a New Age guy)

I am a big fan of modular homes.

255   astrid   2006 Apr 11, 6:15am  

Peter P,

I think there's a good mid point between ultra modern skyscrapers and subdivision hell. There's some good designs for 4-5 floor high multifamily communities. With good landscape design, you'd get most of the open space as you would with taller buildings, but they they can be designed to look less out of place and have less of an impact on the overall cityscape.

256   Peter P   2006 Apr 11, 6:18am  

There’s some good designs for 4-5 floor high multifamily communities.

Perhaps. A 5-story building on 2 acres with 10 half-floor condos may work.

257   skibum   2006 Apr 11, 6:18am  

astrid Says:

Though skyscrapers only really work in mountainous terrains or facing the ocean.

You must love Hong Kong's architecture, then.

258   DinOR   2006 Apr 11, 6:18am  

Peter P,

They didn't mention specifically where in the NW but even if it is BC shipping would be cheaper (I think) to OR. What makes this so compelling is that the modular and "manufactured" housing industry has been trying to rebuild itself ever since the bottom fell out even before 2000. The primary reason that the industry fell apart was the same reason "stick built" residential RE is about to fall apart.

They were sold to the wrong crowd, for the wrong reasons with the wrong financing package! In Oregon in the late 90's the standard practice was for the manufacturer to pay for the first years space or park rent. So alot of people that had been renters (entry level buyers) here were suddenly able to afford "owning" and build equity. Well no sooner had the 1 Year Free Space Rent expired and all of these homes were simply abandoned and dumped back to the bank b/c the people could not afford the house payment PLUS the space rent.

Sound familiar?

259   Peter P   2006 Apr 11, 6:20am  

Clever condo design can eliminate shared walls. Also, a split-level, upside-down (bedrooms downstairs) floorplan can ensure that no neighbors are directly on top of you when you sleep.

260   Peter P   2006 Apr 11, 6:21am  

They didn’t mention specifically where in the NW but even if it is BC shipping would be cheaper (I think) to OR.

I think they are in Vancouver, BC. Perhaps I should move to BC and get a glidehouse. :)

261   Peter P   2006 Apr 11, 6:23am  

In Oregon in the late 90’s the standard practice was for the manufacturer to pay for the first years space or park rent. So alot of people that had been renters (entry level buyers) here were suddenly able to afford “owning” and build equity. Well no sooner had the 1 Year Free Space Rent expired and all of these homes were simply abandoned and dumped back to the bank b/c the people could not afford the house payment PLUS the space rent.

I think you need to own the land for a modular house though.

But this is eerily similar to ...

262   astrid   2006 Apr 11, 6:24am  

skibum,

I like Eichler, that was certainly a better solution to street facing housing than garage faced McMansions.

I still haven't made it to Hong Kong. My family in Shanghai, who have been to Hong Kong, tell me that the zoning codes lead to some incongruous results - with brand new buildings next to absolutely decrepit ones. But overall, yeah, that's the idea, the impact of skyscrapers is a lot lower if it is built against a steep hillside or if it is facing the ocean on one side or more sides.

263   skibum   2006 Apr 11, 6:25am  

Peter P,

Man, I love Vancouver. So much good Asian food, and Whistler is 2 hrs drive. Pretty bubblicious, I hear. There's an example of a city with lots of vertical housing (downtown, at least). I wouldn't mind a cabin on Victoria Island, though.

264   Peter P   2006 Apr 11, 6:29am  

Man, I love Vancouver. So much good Asian food, and Whistler is 2 hrs drive. Pretty bubblicious, I hear. There’s an example of a city with lots of vertical housing (downtown, at least). I wouldn’t mind a cabin on Victoria Island, though.

I love Vancouver too. Victoria is actually more beautiful, but food is not as good. Man, colors look brighter there!

265   astrid   2006 Apr 11, 6:31am  

Peter P,

I think a lot of the stigma of multi-family housing can be taken out if builders just start using better sound insulation material. The standards cannot be all that high. I've never heard upstairs neighbors when I spent time in Shanghai, and this is just plain ole steel and concrete construction.

I was thinking of condo communities of 100-500 units, that's a good size to give everybody enough green space and provide some basic services (including the soon to be completely mocked high end gyms and conference rooms)

266   surfer-x   2006 Apr 11, 6:32am  

www.msnbc.msn.com/id/12269915/

Love the spin, be the spin, become the spin.

267   Peter P   2006 Apr 11, 6:36am  

I think a lot of the stigma of multi-family housing can be taken out if builders just start using better sound insulation material. The standards cannot be all that high. I’ve never heard upstairs neighbors when I spent time in Shanghai, and this is just plain ole steel and concrete construction.

Very true. High-rise buildings will be better because they have to be steel and concrete. Wood construction is completely unacceptable. We need at list 10 inches of concrete. Also, we need sound absorbing materials if anything other than thick carpet is used.

Builders need to see multi-family housing as the preferred solution, not a compromise.

268   DinOR   2006 Apr 11, 6:39am  

Peter P,

I noticed under their "Steps to Ownership" section that the Glide House folks mention land ownership as Step 1. I can't understand why anyone would want to live in a trailer park anyway? I just thought there were incredible parallels to what had happened in manufactured housing in the 90's as it tanked and what we are about to see.

The Glide House HAS to be a completely different animal b/c mobile homes simply would not support that much glass at the site (let alone in transit).

269   skibum   2006 Apr 11, 6:41am  

More on Eichler. Turns out one of his chief contractors was a patient of mine briefly. He told me this story about building the first few Eichlers in the BA. The house that may have been one of the first ones built in the area was originally built with some kind of crappy flammable insulation that was cheaper to manufacture (Eichler was not aware of this), and the house actually burnt to the ground within minutes when it caught on fire during the final stages of construction. Eichler supposedly made drastic changes to very high quality building materials which were used through the rest of the building period. Per this guy, this scenario showed him that first, Eichler was much more a designer than a developer, and second, he actually had principles and would not cheap out. Don't know if it's actually true, but interesting nonetheless.

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