patrick.net

Jon,

But to say that realtors are evil for putting a self-serving spin on the facts is like handing out speeding tickets at the Indy 500 or asking someone not to smoke in a burning building.

I am all about caveat emptor, and agree with your observations but for one important distinction in this particular case:

Realtors are making forward looking statements about something they are "selling" as an investment.

We have rules about such things, which everyone else selling investments has to abide by or risk fines and jail time. Realtors are selling "investments" much larger than most people will encounter anywhere else in their entire lives. Why do they get to make shit up when your stockbroker cannot?

I'm a free-market biased person. But consistency wins out over free market ideals. Either turn all investments loose on everyone with no regulation or bring Realtors under the same controls we have in place for everything else.*

If they want to sell a home to live in, raise your kids, and plant your garden. Fine. They can say anything they want. But the minute they start giving out financial advice they cross the line into territory that should be regulated.

--

*In reality I do not think investments and finances should be unregulated. The simple fact is that, like nuclear reactors and aircraft engines, financial instruments are complicated beasts which are truly understood only by people who study long and hard at learning lots of theories and skills. For this reason, asking someone to caveat emptor about investments is unrealistic.

Why don’t we just put up a very fancy looking Center on Economics and Housing Trends and Policies website (unless that name is taken) and write our own articles?

How about...

National Association for the Advancement of Very Leveraged People (NAAVLP)

I love it. I'll see if i can register some domains this weekend.

SFWoman,

That article demonstrates my contention regarding just about everything reported by any MSM. Not that they have a bias--I don't believe in conspiracy theories--just that they are lazy.

Caption to the little graphic:

Investors loaded up on hard assets such as real estate after stocks fell in 2000. Now a softening of home prices in Los Angeles, where this house is listed, and other markets may push some back to stocks. (AP / Mark J. Terrill )

There exists no evidence for this inverse correlation in any credible academic literature or unbiased industry studies. At best, real-estate is UNCORRELATED with the stock & bond markets. See, this kind of slip makes the job of the spinners like Mr. 'I have a MA in Marketing and now I'm going to play Economist for the Working Man'.

Fewlish,

I looked into this a bit after our last interchange on my blog. It is not illegal to destroy US currency, only to deface it for purposes of fraud. Since there is no intent on fraud with melting pennies for their intrinsic content, there is no existing legal problem.

I still contend that transformation costs (energy) and holding costs (lots and lots of warehouse space and lifting equipment) make this arbitrage unprofitable unless conducted on a massive scale. And those are some pretty huge fixed costs to invest in given external risks:

1) Copper and/or Zinc values fall.
2) The US gov't decides to reformulate the penny or discontinue it altogether. If they do this, pennies will immediately gain value, not lose it (as a function of supply and demand paired with market pricing of pennies based on intrinsic value not face value).

DinOR, what do you think about this house?

http://www.craigslist.org/sby/rfs/167453918.html

It is my dream house now... for 750K. :)

National Association for the Advancement of Very Leveraged People (NAAVLP)

That's so good, I'm adding it as an alternate definition to the Bubble Glossary thread.

Does anyone happen to know how to improve the performance of Solver in Excel when it is attempting to maximize a value for a HUGE number of variables (like thousands or tens of thousands), and the problem is non-linear?

SFWoman asks;… If some Realtor(TM)(-how did Robert Cote get the proper registration mark to appear?)

ALT+0174 seems to be the (obvious and intuitive, not) combination.

Or just use Character Map, it's under Accessories in the System subfolder. You can copy/paste from there.

Does anyone happen to know how to improve the performance of Solver in Excel when it is attempting to maximize a value for a HUGE number of variables (like thousands or tens of thousands), and the problem is non-linear?

Buy a faster computer.

The above is ½ © and ¼ ™, the remainder ® to Яæħđŷ Ħ

Are you guys being sarcastic? That is an awfully nice house. I don't know anything about the area, but the house itself is great. It has a little more space than we really need, and it's certainly not in our price range, but it's a nice house.

Buy a faster computer.

I don't know, this one is pretty kicking. I think the problem is Solver. It's not optimized for real work. And I really don't want to transform all this to a linear approximization and matrix algebra, damnit.

Not to make you all jealous, but my in-laws house is very similar to the one Peter posted the link to. Their’s is considered French Country though, and not Victorian, though the the styling is very similar. Theirs is a tad smaller too, but it’s a really great place and almost paid off. Ok, I just made myself jealous……

I certainly do not need almost 4000sf of interior space. A 2000sf 3/3.5 would be sufficient.

BTW, the house has a blog:

http://covehomeforsale.blogspot.com/

Maybe we should all pile in there and leave some comments?

test

Again

I am not sure if the NAR ad on TV has been running for a while or not but I saw it tonite and was taken back when it said that REALTWHORES have to follow some ethics code or some BS like that. It shows some home buyers trusting the ethics of the REALTWHORES for their home purchase decisions. I guess NAR is feeling that the bad press about their hefty commission for not doing anything worthwhile are getting to the people and they have to do something about it.

www.har.com/HARTV/

Bunch of funny REALTWHORE ad's...

I believe the correct phraseology for leaving a present in an adversaries commode, that they will remember for weeks is, Upper-decker.

Peter P,

Lovely home, great setting!

However; saying "east of La Grande" is like, well........ saying "East Jesus". Unless you want to teach EOU the only other employment is with the US Geological Survey. I have a client out there that moonlights taking pictures (and I am not kidding here) of rodeo clowns. The fact that the seller requires a blogspot should tell us something. Bring money, b/c you will not find it here. I've often tinkered with the notion of having a place in EO as a "perk" to clients that would somehow skirt the NASD issue of "excessive gifts" issue. Me? My blogspot entry? Try selling it as a time share and "buy" yourself a job as the manager. And in the end that's what people that invest in "income property" do. They "buy" a job! Hell I've even considered it. When I get too old and too cantankerous I could just buy an apartment building just like on "The Ropers" (an abysmal spin-off) from Three's Company. Anyone here that thinks I am too far gone to interface with equity markets (and clients) please let me know when it would be more appropriate for me to buy a job.

Mike/a.k.a Sage,

Oh great! It's not enough that I have the permanent image Surfer X has emblazened in my brain, now I will never again be able to hear a sports announcer say "that's an "upper decker" home run ladies and gentlemen! Let's add that to: "Mental images I could live without"

Kidding.

What did the smut shop attendant say in the movie 8 MM say ? "There are things out there that you can't un-see"!

Was it Norman Fell that played Mr. Roper? Yeah, I think that was the guy. When I grow up I want to be just like Mr. Roper.

SFWoman,

I'm all for taking this blog to the "next level" We have our very own CBA (Certified Bubble Analyst)!

Another nail in the MLS monopoly coffin? Google's home search.

HARM, kindly delete the troll above.

Nuclear terrorism and the Bay Area, two great tastes that taste great together.

Well I can have a dream can't I?

This show’s that it is a SELLER’S Market! What type of buyer would agree to a 90 day close? You realize now the seller bought on 6/2/04 if you look on Zillow for $1.2 mil, which means the seller made a cool $460,000 TAX FREE in two years. And guess what? The sellers have gone and upgraded to a Single Family House for over $2.5 million in prime Marina. That’s how you do it guys.

No you maggot piece of fucking shit they didn't make $460K.

tinyurl.com/mrh84

Look at the sales history

06/02/2004: $1,205,000
07/01/1996: $385,000
06/28/1996: $385,000

They made a total of about 100K after PITI, and reatwhore commisions, the person that made the money was the one who sold it to these suckers. Hey one other thing, could you tell your Mom to lay off the corn? I was buggering her quite proper last night (I'm sure a fag like you can appreciate this), and well as i was reaching to give her a bag of meth as payment I notice way way too many kernals on my quite ample staff.

Is it just me or is the SFMLS bullshit starting to get a bit tiresome? I love zillow as it offers a counter to these fuckknobs. No, you didn't make $460K, you made exactly fucking squat, and you have to fucking move, great, and you'll do it again in what two years?

The biggest fucking mistake was the $500K tax free every two years. What the fuck is the point of this again?

I edited the Troll's comment. The best strategy to dealing with Trolls is simply to not feed them. Eventually, without an audience, they'll return to the theatre known as Craig's List.

I tend to agree. There isn't much evidence for the tax deduction being a primary motivator for buy/sell. It is probably a marginal motivator, meaning if one has other reasons for wanting to move anyway, the tax deduction might make the difference. But clearly in CA with rapidly rising prices it did not pay to give up tax base for tax exemption.

LILLL

None. It was a life-situation and quality decision entirely. The decision to not buy again right away and rent for awhile is an opportunistic one given that we had to move from the Peninsula to Marin anyway. We would have made the move even if we had to pay cap gains, which wouldn't have been anywhere near enough to replace the "value" of moving. The fact we didn't have to pay cap gains was a fringe perk.

before May 7, 1997, the only way you could avoid paying taxes on your home-sale profit was to use the money to buy another, more-expensive house within two years. Sellers age 55 or older had one other option. They could take a once-in-a-lifetime tax exemption of up to $125,000 in profits. And in all instances, there was tax paperwork (Form 2119) to fill out to show that you followed the rules.

The way I see it the current exemption is better than the old system for two reasons:

1) The old system was discriminatory in favor of people over 55, and acted as a direct income redistribution mechanism from young to old.

2) The old system still allowed all the behaviors occurring under the existing system except for the small percentage of cases where people did not buy a new home within 2 years and/or the new home was less expensive.

Sure, there are some cases of people selling and not buying again within 2 years, and there are cases of people downgrading. But the old system only afforded those options to old people, and essentially helped to prop up the housing market by excluding the "I'll rent as long as I want until I buy again" option. Although I don't buy the tax-as-a-prime-motivator argument, assuming it is then the old system would have forced people to rebuy after selling at the same or greater price within 2 years. That means that even in a down market people would be driven to buy homes for the same nominal value. Certainly what we have today isn't worse than that, and probably is better if we want a free flowing market for home prices.

All that said, I favor no exemption, but that's because I favor no capital gains on anything.

LILLL

A bubble isn't one until after the fact. We say all bubbles are ex-post. One has no way of knowing if a bubble is a cycle, a trend, or a cycle inside a trend ex-ante (before the fact). Worse, bubbles are really an artifact of charting, which is notoriously "interpretative". While charts work really well for the human mind, and help us to see what appear to be obvious patterns or events, they are simplifications which hide a lot of nasty details in the functions that define them.

In 2002 things certainly looked like a bubble to many observers as a relative comparison. Then again, 98 looked like a bubble as a relative comparison. Maybe they were. Maybe they were all steps up to a much bigger bubble. We won't know until later. In fact, it could be that 50 years from now history books talk about the great 1980-2010 "30 year bubble". It could also be that there are no bubbles at all, and everyone forgets about this in 50 years.

Randy H,

One of my old teachers told my class on day one "the first student that says that's not fair (regarding taxes) is going to get bounced out on their ear". What about our tax system isn't age discriminatory? From start to finish nearly every aspect is age/income tested or both! Are you over 65 and blind? How many dependents in your household are under the age of 18 are unmarried and are full time students? The very year your children turn 17 you can no longer claim them under the "additional child care tax exemption". Yes, even if they were born on DEC 31st! Take $'s out of your IRA prior to age 59 1/2? you've got a problem! Retain $'s in your IRA after 70 1/2 you've got a problem. If NOT having to pay capital gains was a fringe perk at best please remit the dollar amount you would have paid to the DinOR/Surfer X Let's Stamp Out Sobriety in our Lifetime Fund.

DinOR,

Fair enough. I certainly am happy for any tax break afforded to me. For the record, I think all these societal engineering tax policies are ill founded. I am for an absolutely agnostic system of consumption taxation or a pure flat-tax system as a fallback, with zero deductions of any type for anyone. If the gov't needs to help 65 year old blind people then they should set up a program to dispense cash/resources to them directly, not through the tax system.

My point about cap gains on home being but a fringe perk was relative to the value I placed on my wife not having to commute 3-3.5 hours per day, thus effectively turning her into a weekend mom. Given the value we place on our family, any tax break of any ilk is but a fringe perk, and would never prevent us from making a decision in favor of our family's happiness.

WWAD

What would Alan Do?

The man is a legend, he deserves a Nobel

__________
Sarcasm off

LILLL,

Well I must admit, I never thought of that! "Serving up" Fannie and Freddie would kill several birds with the same stone and effortlessly I might add. It absolves the FED of any wrong doing or indiscretions. They are on a tight rope and many of us are aware of it. Right now the PPT's primary objective (along with our newly appointed Sec. of Treas.) is to restore faith in the dollar. Or should I say our "housing dollar" as RE has become what our currency leans most heavily upon. THE UNITED STATES OF REAL ESTATE! In Real Estate We Trust. (Is there anyone out there comfortable enough w/latin to translate that for us?) Since we have now and forever linked the value of our currency directly to Zillow perhaps it would be appropriate to Home Depot's founders on the dime and the quarter.

Notwithstanding reasonable differences of opinion on where we're at in this whole housing bubble scenario, one thing's for sure: Surfer-X's tirades against the mothers of his enemies definitely gives new meaning to the word Corndog.

LILLL,

SOMEONE has to go to jail on this one. When all of these FB's (most everybody) are upside down in their soon to be/already adjusted mortgage that they can no longer use as an ATM Machine (about to be reposessed) "someone" has to go down. Who will it be? Doesn't much matter. But we will need a whipping boy and that's for sure. Will everyone get exactly what they deserve in the end? Bet on it.