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Housing Bubble Pre-Flight Checklist


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2006 Apr 10, 7:44am   29,627 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

« First        Comments 274 - 313 of 313        Search these comments

274   edvard   2006 Apr 11, 6:59am  

Why would anyone live in a trailer park? Well for one thing, the trailers are only 10-14k new for a small unit, and as little as 5k for a used one. Even if you don't own the land, you won't have to pay rent. The land use fees are usually very low as well. Not everyone wants to live in a highrise. I know I don't. Trailers take up less room than houses, and believe it or not, some of them are actually pretty nice. I fancied a vintage 50's trailer with mahogany veneer on the interior walls. My parents started out in one just like this. It had the little wall sconces with the ship steering wheel on the rosette and all! They paid $500 for it at the time. They make total sense for anyone in a low income bracket that wants a degree of indepence and the ability to save some money. Some of the trailer parks I've seen around here are actually pretty nice. Hell- I'd move into one if I knew for a fact that I would be staying here forever. It's the only real affordable living situation left.

275   skibum   2006 Apr 11, 7:05am  

nomad, Peter, astrid,

RE: trailer parks, all is not well in the BA. A couple of weeks ago their was a piece on "30 minutes: Bay Area" (I think that's the name - looked like a local spinoff of 60 minutes) about how one of the major landowners of trailer parks in the BA (I think one of the parks was in San Leandro) was asserting his right to raise the F$%K out of the land rents. This was forcing many "owners" to sell b/c of unaffordability, but this led to a catch-22, b/c, who the hell wants to buy a trailer on a piece of rented land with a landlord raising rents like there's no tomorrow? I felt really bad for these people, until one of them complained, "this was my nest egg for retirement." Again, a home of any kind - a nest egg? NOT!

276   LILLL   2006 Apr 11, 7:08am  

A friend of mine has gotten RICH in the trailer park biz. He's not a flipper either. Owns the parks...some right by the beach...not bad.
My dream is a straw bale house. Thick insulated walls, recycled rough hewn beams, tile floors...MMMmmmmm....

277   Peter P   2006 Apr 11, 7:14am  

No bubble in District 7.

I think prime SF is not necessarily in a bubble.

However, prime locations have their own cyclical nature. Caveat emptor.

278   edvard   2006 Apr 11, 7:19am  

Gotta be careful with those straw houses. They CANNOT EVER leak. Hay has a rapid decomposition reaction to water, and once a leak causes water to wick into the walls, it will eventually ignite. That's why you don't see them anywhere that gets large amounts of precipitation. Pretty cool building material though. There are some of these that are over 100 years old.

279   skibum   2006 Apr 11, 7:22am  

Linda-in LA-LA-LAND Says:

My dream is a straw bale house. Thick insulated walls, recycled rough hewn beams, tile floors…MMMmmmmm….

Does that mean you have to watch out for the big bad wolf?

280   Peter P   2006 Apr 11, 7:23am  

Does that mean you have to watch out for the big bad wolf?

Probably. Bricks are better! Watch the chimney though.

281   LILLL   2006 Apr 11, 7:25am  

Straw house ignite? I've never heard of that before. It was my understanding that they DON'T burn. Besides...I'm talking about straw bales rather than hay bales. I understood that they were packed so tight that they don't burn well...but yes, I wouldn't want a leak . I hate leaks. Leaks are my pet peave.

282   LILLL   2006 Apr 11, 7:26am  

Skibum...Actually I am married to the big, bad wolfe. :)

283   LILLL   2006 Apr 11, 7:27am  

And yes, I have to watch out for him. :twisted:

284   requiem   2006 Apr 11, 7:27am  

Wow... that's good to know about hay. (Seemed counterintuitive, so I went online and found: http://www.montana.edu/wwwpb/ag/hayfire.html )

High moisture hay stacks can have chemical reactions that build heat. Hay insulates, so the larger the haystack, the less cooling there is to offset the heat.
When the internal temperature of hay rises above 130 degrees Fahrenheit (55 degrees C), a chemical reaction begins to produce flammable gas that can ignite if the temperature goes high enough.

Also scary is the preservative treated hay that produces hydrogen cyanide gas at high temps.

285   LILLL   2006 Apr 11, 7:35am  

SFWoman
Yes, the tweakers have presented a problem for my friend in the trailer park biz.(or mbile home parks, as he calls them)
GWs"past" alcoholism??? I believe alcoholism is a disease that has no cure.

286   Peter P   2006 Apr 11, 7:36am  

I walked to the end of the hall to open the door - and it was fake. There was just a door, no room. All for show.

Perhaps the door is for spirits only. I have seen doors leading to nowhere in the Winchester House.

287   edvard   2006 Apr 11, 7:37am  

Linda,
Usually if you have them sealed up in walls there isn't near the risk,because it isn't getting a huge amount of oxygen. But indeed- if you take a bale of straw and place it in a puddle of water, it can spontaneously ignite after a few weeks.Compost can get up to 18o degrees in the center when it decomposes. That's what mushroom soil is made of, and the heat "cooks" all the germs out. That's why my uncle was antimate about getting them into the barns as soon as they were baled. The bigger threat would be the walls rotting if there was a leak. Straw can last forever. I saw a lot of straw roofs in England, and if they are properly binded, they can last for almost 60 years. Not cheap though.

288   LILLL   2006 Apr 11, 7:42am  

Nomad
Thanks for the info. I had no idea...I'll have to look into it in more depth.

I like the idea of buying a small house in a place ...maybe New Mexico and addig a large straw bale room as a family/living/party room. Give the whole structure a mission flair. There's something about thick walls that feels more permanent.
I would never fair well in a McMansion.

289   Peter P   2006 Apr 11, 7:43am  

There’s something about thick walls that feels more permanent.

How about 10 feet of concrete? You can have your own nuke bunker.

290   LILLL   2006 Apr 11, 7:45am  

Peter P
No thanks...that's a liiiiiiitle too thick. :)

291   LILLL   2006 Apr 11, 7:46am  

I like walls just thick enough to make a natural window seat!

292   requiem   2006 Apr 11, 7:47am  

I guess posting links is ungood. Nomadtoons, I was curious about the hay fire hazard, then found a link explaining. Learn something new every day.

(Wondering if that's how early man got started with fire; it seems more probable than relying on lightning.)

293   LILLL   2006 Apr 11, 7:49am  

Requiem
Please post link!

294   requiem   2006 Apr 11, 7:50am  

Linda: it's awaiting moderation...

296   astrid   2006 Apr 11, 8:30am  

Nomad,

Please notice that I specifically exempted people like your parents, who own their own land. I was thinking about the overall economics of apartments vs. economics of trailers. It seems to me that in suburban areas, apartments are more cost efficient to run than trailers. I wasn’t railing out against trailer dwellers, I just can’t see how suburban trailer parks made any sense unless the costs are very low.

Incidentally, my boyfriend and I were contemplating about buying a used RV to live in. Apparently, there are some free parking areas in the BA and some people on fatwallets.com claim this was the cheapest way to live in the BA. I’d say all the benefits of trailer living and you can move your home if someone kicks you out. It was finally dismissed for being a little too absurdist.

Skibum,

I remember last summer there were a crop of million dollar trailer stories. These were in Malibu trailer parks owned by someone else. I laughed my ass off.

Re: straw houses, HARM kindly provided some links that I’m reposting:

http://www.dsaarch.com/
http://www.strawbuilding.org/
http://www.buildinggreen.com/auth/article.cfm?fileName=040301a.xml
http://www.skillful-means.com/menupages/strawbaletips.html

From what I read, straw houses do not burn easily. They are less likely to burn than all but concrete, adobe, and metal shelled houses. Straw is high in silica, which is a flame suppressant. Tightly packed straw doesn’t have enough oxygen to cause a problem.

SFWoman,

They should try selling your example Tuscan McVilla to Chinese investors, there will be takers :P

297   astrid   2006 Apr 11, 8:37am  

Linda,

Have you considered adobe as an alternative to straw? It might be a bit more expensive to build, but it has similar good insulation qualities and there's no question of combustibility

298   astrid   2006 Apr 11, 8:39am  

SQT,

Thanks, I guess wordpress thought I had too many links for one post.

299   requiem   2006 Apr 11, 8:39am  

SQT: I think it had gotten approved before then, as it now appears back on the page. (Same link that Linda came up with, actually.)

300   Peter P   2006 Apr 11, 8:46am  

there’s no question of combustibility

When all houses are fire-proof, firemen will have nothing to do but to burn books. :-P

301   requiem   2006 Apr 11, 8:51am  

Sounds like Peter P's been reading some forbidden literature.

302   Peter P   2006 Apr 11, 8:54am  

Sounds like Peter P’s been reading some forbidden literature.

I am Patrick Killelea's "Bay Area Housing Crash Continues".

303   astrid   2006 Apr 11, 8:55am  

10023. Million dollar trailers. check.

304   astrid   2006 Apr 11, 9:00am  

guys,

I'm going to post my first thread here. It'll be on post asking for thoughts on post-crash economics and job opportunities. Let me know that sounds okay.

305   Peter P   2006 Apr 11, 9:02am  

I’m going to post my first thread here. It’ll be on post asking for thoughts on post-crash economics and job opportunities. Let me know that sounds okay.

Just post it. Never ask. Anything is better than "Huh?"

306   Peter P   2006 Apr 11, 9:15am  

My daughter used to have a silly game with a crystal ball called “Ask Zandar,” perhaps we should question a crystal ball?

I have more faith in the stars.

Or perhaps a crystal ball called "Ask Zillow".

307   astrid   2006 Apr 11, 9:25am  

new thread: Business and the economy in the post bubble world

308   Allah   2006 Apr 11, 10:05am  

“homedeptor”????

Alright...So I mispelled a word..... "astrid"????

309   astrid   2006 Apr 11, 10:07am  

well, I thought you were intentionally trying to poke fun at somebody

310   FormerAptBroker   2006 Apr 11, 10:07am  

"Yes, the tweakers have presented a problem for my friend in the trailer park biz.(or mobile home parks, as he calls them)"

In commercial lending we call them "Manufactured Home Communities"...

311   surfer-x   2006 Apr 11, 10:30am  

HARM, please delete the troll, mustly let them fester. "flowergirl" anyone that posts that maggot troll gibberish, ie, mls listings from SF should be shot. As we cannot shoot them, we can only delete them.

tanks.

312   astrid   2006 Apr 11, 11:15am  

"In commercial lending we call them “Manufactured Home Communities”…"

FAB, I hope I don't come across as completely ignorant, but I'm curious what sort of interests lead to "mfgr home communities"? Given how hard it is to move the trailers around, this sort of split ownership seems like a bum deal, particularly for the trailer owners. They're placing their immobile property in a place and betting that the mfgr home community will continue to be affordable and will not be slated for more lucrative developments(which seems like an easy temptation given the low cost of preexisting infrastructure).

Are these places considerably cheaper to run compared to apartments and thus produce enough economic benefits for both the trailer owner and the trailer park owner?

313   Peter P   2006 Apr 11, 11:38am  

Are these places considerably cheaper to run compared to apartments and thus produce enough economic benefits for both the trailer owner and the trailer park owner?

We should just make apartments more appealing. Why should they even have things like "on-site laundry facilities"? I thought it is the 21st century!

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