patrick.net

HARM - legislating morality is the last resort of an utterly broken down society. Humans have a hard time screwing over people they know. So, if you want to design a minimally moral society, you make sure people have few friends and social connections, and you make most interactions not person-to-person but the individual against impersonal entities like corporations, gov't agencies etc.

I am bearish on humanity.

How many senior people will get axed?

Probably not many. Many mortgaged junior people will be axed though.

Hopefully, our friend in Marina will do fine. Oh, he is a "VP" right? :-P

Just make sure that you lock in a FRM and drag out the repayment for as long as possible, then you will be all set. ARM will have to head up some point, so you don’t want to be exposed to that risk.

We're fixed rate all the way. We wouldn't buy if we couldn't afford to do that.

OO

The yen has had many false starts and yet, like you, I also feel that this time the yen will really unwind. I sense it more from gut feel but am curious as to why you think it will happen ?

ex-sunnyvale-renter Says:
November 9th, 2007 at 6:38 pm
"HARM - legislating morality is the last resort of an utterly broken down society. Humans have a hard time screwing over people they know. So, if you want to design a minimally moral society, you make sure people have few friends and social connections, and you make most interactions not person-to-person but the individual against impersonal entities like corporations, gov’t agencies etc."

Different angle because you are both right. It is wrong for government to pass laws imposing morals onto society, HOWEVER, it is proper for government to regulate businesses based on larger social values as to prevent the forced decline in values by businesses gaining unfair competitive advantages by unethical practices. An example of this is banning pesticides or food additives which cause environmental or health damage but increase short term profits.

DinOR Says:
I’m so happy for SQT. Especially on a Friday, what a great way to go into the weekend.

Totally. Happy for the great deal SQT got. AND as a bonus the this week the stock market finally lost its bladder control. What a week this was!

I was thinking… Coors? Oh HELL NO! Now I’m thinking… Corona’s at least! I’m open to suggestions, and don’t just limit it to beer.

Try Negra Modelo, which tastes like a dark Viennese lager. IMO better than Corona.
SP

Negra Modelo dark is a headache in a bottle though, try Guinness but you have to be careful, only in glass bottles WITHOUT any modern gimmicks such as CO2 thingies, so "little sour ones" or "big sour ones".

May the US stock market crap its pants, and realize that it's about at about 8000 to anyone outside the Evil Empire, and may Surfer-X find happiness in SackOtomatoes.....

Danville woman,

ask the Japanese housewives.

About 2 years ago, there were quite a few reports on the Japanese housewives getting into the carry trade (borrowing Yen investing in USD), because Yen deposit is not earning anything, and Japanese are obsessive savers. When I was in Tokyo, I saw lots of posters for Yen carry trade seminars targeting Japanese housewives. If you want to know what's hot in Japan, check out the popular seminars.

Recently I have been reading that the Japanese housewives are anxious to do the trading in reverse, dumping their dollar deposit and going back to Yen, because Japan is getting very inflationary, particularly in the recent months. In fact, Japanese housewives are retrieving fund from America to buy gold as a hedge against inflation. That is why you see Yen strengthening without causing gold price to crash.

135 per sqft? arfk, (are you fucking kidding?) wow, right on!

StuckInBA Says:

I would buy one at 250 right now ! But I cannot get anything at that rate even in Mountain House.

If your willing to consider something as far out as Mountain House, look in Discovery Bay-its actually closer to the Bay Area than Mountain House and prices are better. Prices have been hit hard thanks to the overbuilding in 2005-2006 and lots of foreclosures in those housing developments. You cant get anything on the deep water for that price, but there are dozens of 2-3 year old houses under $160 sq/ft. My personal favorite is $128 sq/ft (4,088 sq ft, asking $525K).

Congrats SQT!!!

Has everyone seen the latest from Ben Bernanke?

At the very end of the hearing, Sen. Schumer, the Chairman of the Joint Economic Committee, asked the Fed Chairman what his recommendation would be should the Congress increase the loan limit that the GSE's are allowed to purchase (the limit now stands at $437,000).

Bernanke replied simply, "A million."

WTF? This is insane,

and I forgot, many congratulations to SQT and family.

As a point of reference, I bought my place here in an mid-upscale neighborhood in Boise for $137 per s/f in June 2006. Current asking prices on the same floorplan have recently dropped to $134 per s/f. I'm wondering how this compares with the actual cost of construction nowadays.

Anyone who can buy a long-term home with comfortable financing has a good deal. I got really good financing on my place here: 0% fixed-rate on a no-doc mortgage. I did however put 100% down. :)

The FB who bought my Cambrian Park house in April 2006 paid $670 per s/f, and he used a 103% NINJA loan to do so. When I bought said house in 1981 I paid $110 per s/f.

As mentioned before, the best thing about SQT's deal is the property tax break he gets vis-a-vis his neighbors.

I digress. Idaho property tax law is quite different from CA property tax law. ID has NO "prop 13" and you pay around 1% of the assessed value. But this assesed value is NOT based on the sales price: it is completely VOLUNTARY to disclose the sales price here so the assessor cannot use them as a basis. He has to use comps and square footage to produce an assessed value. For tactical reasons I DID disclose my sales price, but the assessor came back with an assessed value considerably less than my sales price.

In CA there's a $7K "homeowner's exemption" for property tax, which is an insultingly low amount. Here in ID the homeowner's exemption is some oddball figure in the mid $80K range - about a third of the typical assessed value.

Japanese housewives ..... cool.

In a trdational Japanese shop among other neat things you can find little ceramic/glazed charms of a frog. You keep that in your purse so that every dollar (yen) that goes out will come back.

Japanese housewives are famously losing the, um, kimonos off their back right now. Currency speculation is a game you play with less leverage and deeper pockets. When the big boys get sick of the (small) increased cost of doing business they periodically swat all of these speculators out of the market. With Out Warning. I strongly urge people not to watch this group.

By the way - construction costs vary too much to answer your question Dennis. Direct labor is heavily influenced by location and cost per square foot is most influenced by the kitchen and number (and quality) of baths.

As a pure guess I would say a 3/2 with 1600 sq feet for $215k in Sacto would probably be about $45k less then building cost.

They won't put up the address because they want to get you to come to them personally, so that they have a chance of getting you to sign a screw-me-if-I-buy-anything buyer's agent contract.

Another rough way you can estimate the proper price of a house in Merced County is to take the typical yearly rent for a house and divide it by the current long-term mortgage rate, plus a few percent for other costs. So if a house rents for $12,000 per year ($1,000 per month) and 30 year fixed interest is 6%, divide by 8% to cover property tax and minimal maintenance to get $150K. That's the price a rational landlord would pay to break even. If he pays more, it's not worth his time.

You can put in other scenarios here:
http://www.forbes.com/fdc/rentorsell.shtml

Administrator Says:

> Another rough way you can estimate the proper
> price of a house in Merced County is to take the
> typical yearly rent for a house and divide it by the
> current long-term mortgage rate, plus a few percent
> for other costs. So if a house rents for $12,000 per
> year ($1,000 per month) and 30 year fixed interest
> is 6%, divide by 8% to cover property tax and minimal
> maintenance to get $150K. That’s the price a rational
> landlord would pay to break even. If he pays more,
> it’s not worth his time.

Even if you could get a 6% fixed rate loan on a rental home, and you lived down the block and managed it yourself, and you were a skilled contractor and did ALL the maint. and repairs by yourself you would still probably have negative cash flow paying $150K unless you had dream tenants that never moved (since most renters move every couple years the vacancy and turnover costs will push you in to negative cash flow).

As Randy H has pointed out the homes that people “buy” are usually a lot nicer than the homes that people rent. Over the past few years with more and more yuppies moving to Burlingame and San Mateo and fixing up homes there is a huge difference between the quality of rentals and for sale homes (you won’t find any $100K kitchens in any of my Dad’s rental homes).

So the regulatory efforts have begun, starting in the mortgage origination business. More sober heads like DinOR tried to warn the people in that industry, now is the time to pay the piper for getting too aggressive with their customers instead of taking a sustainable husbandry / harvesting approach to their business. When a client looks to you for guidance, even if they have a blank check, it is bad business to take them for all you can. I'm pretty hardcore capitalist, and believe in "all the market can bear", but I'm not a glutton for sales work. Repeat business is 10X less expensive to earn than new business, and clients always find out sooner or later how good a deal they got.

I think Carry trade will unwind, and this is just beginning of the end. But FXY has rallied very strongly very fast. So lot of people are expecting it to unwind. So I wouldn't be surprised if there is a little pull-back before another run up.

justme Says:
...what [Bernanke's] recommendation would be should the Congress increase the loan limit that the GSE’s are allowed to purchase (the limit now stands at $437,000).

Bernanke replied simply, “A million.”

In that case, someone should ask the fool whether that is the real rate of inflation since Y2K, when the limit was around 250K.

Otherwise, make the bastard explain why the rate should be raised, since the F'ed thinks inflation has been so super-golly-low all these years.

SP

SQT’s number is hard to evaluate because I didn’t see how many sqft she bought. Obviously $135 is good. My friend paid $146 but brand-new with upgrades and warranties. Bigger houses - you pay less per sqft.

I've noticed this too. We bought a bigger house, almost 3000sqft and per sqft it's a lot cheaper than say a 1500 sqft house. I feel really good about the $135 price because the house is only 4 years old and in great shape. Not tons of upgrades, but good carpet and tile, so I'm happy.

Getting back to investment question. I am not too comfortable putting more money into metals and oil at this point. If any of these get too expensive demand will adjust.

What I want to invest in is agriculture. Not sure where to start. I have ADM and it has kind of done OK. But it's not a pure play. I looked at DBA and it hasn't really done well.

Any ideas ? TIA.

If any of these get too expensive demand will adjust.

Oh really? Did housing demand adjust simply because it got "too expensive?"

I know people who bought in Mountain House and after 6 months of living there, they moved back to the Bay Area.

On the Merc awhile back, they reported that Mountain House does not even have a supermarket, people have to go to Tracy. If that's true, seems like a dead giveaway about the value of the developement.

but, they have trouble explaining why the lending standards were removed and free money was handed to liars just to buy those under-priced houses.

Do they not have trouble explaining anything right? :)

You should be happy. Sacramento - if it is where you want to be (family, jobs) - beats Mountain House by far.

I'm not familiar with Mountain House. We live in an outlying area of Sacto, about a half hour away, called Rocklin. Very nice place. I've lived around here for over 20 years so I know what I'm getting into. ;)

Oh really? Did housing demand adjust simply because it got “too expensive?”

Not sure if you are kidding. But people can live without Gold.

Housing demand first kept increasing just because prices went up - just like a typical ponzi scheme. But eventually the same reason was one of the many factors of the bust. Sales - a measure of demand - have been falling for a long time.

Oil is interesting. It will keep getting expensive. But the rate might slow down. I know it's a lot more complicated and will take far longer to develop comparable alternatives on that scale, but it will eventually happen. Mankind has no choice but to try to survive without oil.

That aside, does anyone have good ideas to invest in agriculture related stocks ?

I have often mentioned about Mountain House. Never been there. But people around me were raving about it as the next hot area. From their description, I formed my opinion - that it's going to crash big time.

I know one who bought there. I also posted about one who backed out. IMHO, he lost deposit but saved his financial future.

These days all the chatter around me is about Windmere, San Ramon. No one is calling it hot, but everyone is raving about the "bargains" they are finding there. Not sure if they are aware that property taxes can be 2% there. Yeah, that's right. Pay 2% on 1M - and not deductible on Fed taxes for many due to AMT. Just remember not to bang your head against the free upgrade of granite countertops when you eventually realize that.

Right now, on bloomberg.com I see these headlines.

--
Nikkei down more than 500 points.
Yen at 110.
Aus central bank says inflation to go up to 3.25%.
Asian central bankers imposing regulation to halt USD's free fall.
Japanese bonds look attractive to JPMorgan. (!!)
--

May you live in interesting times.

Bap33 - I think that's a good gauge of affordability. A house should cost 2x-3x annual income.

If one has a down payment, then subtract that but the amount to get the loan for should be 2x-3x annual income.

Min wage here yields about .... $1000 a month. Annual income would then be $12k a year. 3x that would be $36k. So, at min. wage I could get a place that costs me $36.

At $36k we're talking a piece of land with a trailer on it, and I improve it bit by bit. You can buy a place for that out here and in fact in most of the land area of the US. And that beats the hell out of living in the bushes or homeless shelter or shopping cart in the Bay Area!

FYI - ex-sunnyvale-renter
The homeless now use baby strollers! Yeah, this way they are owner occupied. Don't have to worry about them being taken back by the shop owners!