patrick.net

I thought pre-tax PI approximates after-tax PITI, right?

Only for the first payments. The affect of T is iterative, because of the interest-shield.

Only for the first payments. The affect of T is iterative, because of the interest-shield.

I thought everyone uses interest-only loans nowaday. Why throw money away in amortization when it always goes up? ;)

Wait, does that still mean road trips to the Colorado Plateau?

Colorado Plateau is a permanently high plateau.

SQT,

That's "anchoring" at work. It is very hard to break/displace anchors once they become established. Usually it takes time. Another reason RE prices are not market efficient. As opposed to stocks or other "non-real" markets, RE doesn't have any effective arbitrage mechanism causing observed prices to closely chase theoretical prices, or quickly revert to such after a speculative runnup.

People already forget gas used to cost $1 or $2/gal

We saw gas at $2.97 in SJ and my wife said, "look, gas is suddenly very cheap."

And in California, more than anywhere else, are you buying the house? Or are you buying where the land/ lot is–ie. close to shopping, good commute, beaches, quiet, schools?

To me... house, commute, quiet.

Certain things are very important, e.g. whether the current owners have a great marriage, lead positive lives, etc

Certain things are less important, e.g. schools

how much can consumers tolerate as Exxon makes all those trips to the bank?

I estimate that consumers should be able to tolerate $7 gas.

newsfreak Says:

And then we will need interplanetary realtwhores?

Even then, RE will STILL go up. They're not making anymore planets, are they?

If you can afford the rent, then you can afford the mortgage.

Explanation:

If you can afford the rent of a 1.1M house, then you can afford the interest-only mortgage of a 25 years old walk-up 1 bedroom condo.

LOL

Robert Cote,
Here's a novice's question re: the density question and the relative merits of exurbia vs. urban dwelling. What metric do you use to account for the loss of community when everyone lives on a cul-de-sac in exurbia, so that you have to drive 5 miles to the mall/box store, you hardly get to know neighbors, kids can't walk to school, etc. etc.? I see an erosion of sense of community in large part resulting from the way exurban communities are planned in this way.

Returning to BA,

I feel your rage man! Really I do, but for one added reason. This guy lives in a cloud! Probably has most if not all of his adulthood. Probably hasn't had to "sell" anything (other than to the troops) for a long, long time! This is the typical disconnect you get from people that have been insulated from reality for so long they wouldn't recognize it if it bit them on the a$$. They are still working off of a 1970's playbook for financial planning. Hello?

Squashblossom,

I have to say that for much of my youth the impression I had of the "American West" came from watching "spaghetti westerns" filmed largely I'm told in Spain. So Italian producers, a few American lead players, gypsy extras and plenty of violence. Ah, I miss "the old west".

The greatest hero of the coolest dystopia, has to be:

http://www.internationalhero.co.uk/m/magrbt.htm

Yeah, Magnus rules.

Are CEO’s actually fantastic at their jobs, or are they normal human beings like the rest of us who were born lucky?

Yes, they are mostly just born lucky. But they probably deserve the luck.

Robert,

I'll accept that answer, although it's a bit wishy washy. I do agree that it's a bit of "to each his own" in terms of lifestyle/community preferences between exurbia and cities.

But it does raise the point that the ideal situation is to have both options available in a free choice society.

T Lynch,

I believe RC uses "agnostic" as an extrapolation. The strict definition (aside from the historical group reference) is someone who believes that it is impossible to know whether or not God exists. This is often extrapolated to mean someone who cannot find enough justification to take one side or another of a particular issue/argument.

Or are they everyday slobs who were born to priviledge?

It is born to be priviledged, even though some of them were born poor. It is fate, which is the number one contributing factor of success, failure, and death.

Peter, TBAorNTBA,

The big problem with executive compensation is lack of oversight and checks and balances. Compensation is usually set by the Board of Directors, who, guess what, are often nominated by the CEO or vice versa. At the very least, they're all chummy. The stockholder gets left out of the loop.

The stockholder gets left out of the loop.

This is why Randy said it is better to be a 50% owner of a small company then a 0.0001% owner of a large company.

Ths thing is, why aren't we the one getting "unfair" executive compensation (yet)? ;)

Medicare isn’t what you think it is, my grandmother must pay a $750.00 a month co-pay.

...which is an amazing deal for a Grandmother. Go try to buy insurance in the private sector and see what that costs you.

Health Insurance is a prime example of where private markets fail to maximize the public good for the injected money. Medicare may be flawed, but by insuring everyone they avoid the problem of private markets where insurers cherry pick the healthy money makers and drop at first chance the expensive clients.

When you grandmother needs a new Hip, $750 will look cheap.

I use a board definition of religion. To me, region is an organized belief system. Science is a religion. Agnosticism is a also religion.

Health Insurance is a prime example of where private markets fail to maximize the public good for the injected money.

Perhaps the market does not perceive longevity (past productive age) as being a public good.

Perhaps the market does not perceive longevity (past productive age) as being a public good.

Run Logan! Run! That would solve the housing problem in a hurry. Sell your house Grandma for another two years of life.

I'm biased towards public spending on the young, but not quite that selfish.

I’m biased towards public spending on the young, but not quite that selfish.

The market tend to spend money on the productive group. Voters may choose otherwise though.

If you equate belief system= religion, then absolutely.

Science is definitely a religion.

newsfreak said: And then we will need interplanetary realtwhores?

Actually they are, but the newer ones have no atmosphere.

Ouch - where's the rim shot when you need one?

Besides, I thought there were some that believe, assuming the Big Bang Theory to be true, we may be headed towards or already in the collapsing phase of the cycle??

Normally I’d be right there with you on to each his own but all things are not equal. Los Angeles spends 78%-87% of all its transportation funding on the 2% that is public transit.

Some of this is based on the belief system, er, religion, of the superiority of mass transit/urban dwelling, but a whole lot of this inequity is probably just pork barrel politics.

Run Logan! Run! That would solve the housing problem in a hurry. Sell your house Grandma for another two years of life.

Again, it's the Logan's Run references! If Michael York were lurking, he'd be smiling right now.

On that note, has the red light on anyone's palm gone off yet??? Time's up!

Returning to BA,

Sorry but this is not at all untypical. You might even want to call us the "Sun Pikers". We (I) complain bitterly about the drizzle but the minute it get's into the 80's everyone over 35 stays inside! Sad really. Since our daughters are now college age we can explore new living arrangements including sitting out some of the drizzle. Be warned, it sucks. I recall one time in the late 90's Seattle had a 3 week summer! I am not kidding, wish I was.

The commonly used meaning of religion is largely dependent on things like ‘faith’, i.e. a willingness to believe a hypothesis without requiring the existence of a rigorous, logical and independently verifiable proof.

The "faith" in empirical methods should qualify. Science and logic can never completely converge. There is always a small element of faith.

I am not saying that Science is not useful. It is. Very much so too. But it is nonetheless a belief system.

Returning to the BA,

I will say though that while in the service I was stationed at the now defunct Treasure Island? The sailors called it T.I, during Feb, Mar and Apr and it seems like parts of our spring share similarities. I understand that you guys had a "wet one" yourselves this spring complete w/flooding in some areas. All that aside if the bubble doesn't burst to you liking we would love to have you!

newsfreak,

Don't sell me short, I can be very childish!

Returning to BA,

Well all kidding aside I'm not trying to "sell" anyone. We do have wonderful summers and mild winters but things are changing. We've discussed the potential for a PDO (Pacific Decadal Oscillation). A cycle of 10 to 20 years of cooler and wetter weather. The reality is this may affect the BA as well. They seem to have mounds of evidence.

Science can be loosely defined as a religion since one must believe

Boomers could be loosely defined as human.

Science = scientific method, no religion involved, or imaginary friends.

at Robert Cote', not exactly an urban legend. GM is guilty as sin, as is Firestone.

tinyurl.com/pheh8

Thanks to Quinby’s warning, the Feds eventually took GM to trial and convicted them not for ripping out streetcar lines, but rather for controlling these companies to monopolize sales of its products, a violation of the Sherman Anti-Trust Act. The participants were each fined $5,000 (plus court costs) and senior executives were each fined $1.00. And that was that. Unfortunately, no one sought an answer to Quinby’s most penetrating question (referring to the 1935 Public Utility Holding Company Act), "WHO IS BEHIND THIS CAMPAIGN TO SEPARATE THEOBVIOUSLY ECONOMICAL COMBINATION OF ELECTRIC RAILWAY AND ITS POWER PLANT?"

Something I hadn't considered until reading this thread. Greed blew the RE bubble to amazing proportions, and greed is going to drive RE into the dirt. Think about it, realtwhores only care about their commisions, bless them. What drives commisions? Volume. So sales volume is way down, blame the "investors" and go negative as quickly as possible. Yes, 6% of 600K is great, but twice the volume at 400K is better. They don't care they make money either way, the only way the realtwhore doesn't make money is if houses don't sell. I have noticed that in the past month the news has gone from "soft landing, it never crashes" to watch out below. Our friends the realtwhores will drive this one right into the dirt.

RC,

Gross energy efficiency in the US is with one unexplicable exception very uniform across all built environments and urban patterns. This is where Kunstler goes horribly wrong right at the very beginning of his rants. This has become a case of repetition morphing into data. A “Long Emergency” or anything else is not going to reverse 96 years of exurban diaspora. If anything it will acellerate the process.,

Your method of analysis is flawed. I don't care about uniformity of transmission loss due to resistance. The relevant factor is transmission-miles. Reducing that yields a factor impact on total system efficiency responsible for something like 80% sensitivity. That means, even using 100% more efficient transmission lines won't make up for a simple 15% reduction in transmission-miles. This is the flaw of "micro-generation" strategies. They are of only marginal help unless they produce to peak consumption, which makes them not so "micro".

And I'm not even throwing the capital requirements at you yet. We could talk about capital depreciation replacement costs if you want instead.

I'm not arguing about whether urbanism or exurbanism is better. I am agnostic about this. I simply believe that it will go urbanistic short of any calamity, due to systemic constraints. In the current era, people like me prefer to live in an exurban or suburban environment. We are willing to support a system that allocates capital thusly, even if it is not the most efficient use of capital. This is sustainable for only so long, so long as you favor free-market systems. Exurbian utopia is antithetical to free-market capitalism.

What makes you think transit is in any way more energy efficient? This is another of those urban myths that refusses to die.

Mass transit can be (but isn't always in reality) more system efficient. You are again ignoring capital costs and infrastructure externalities. What you are doing is making arguments that contain an error of assumption. Any system capable of realizing scale economics will be more efficient.

I posit to you that your "challenge" is flawed. You are making the incredible claim that economies of scale are in fact diseconomies of scale. Such diseconomies do exist, but it is up to you to prove that transit, energy, or any of these other infrastructure dimensions are such, because they are not considered to be so by any acceptable measure, literature, or analysis. You may be right, but these claims require equally incredible proofs.

Peter P,

Science is not a religion. It is not a belief system, unless you have gone postmodernist on us. Science is self disconfirming based upon a mechanism of deduction that is open to challenge and independent verification. I need not believe in anything to demonstrate gravity or electromagnetic principles. Again, that is unless you go to Different Sean's extreme of denying that 2 + 2 = 4, and insisting that such is merely a "belief".

Bay Area Real Estate is a religion.

Science is not a religion. It is not a belief system, unless you have gone postmodernist on us.

If you say so, it must be so. Hail Randy, our religious leader.

I need not believe in anything to demonstrate gravity or electromagnetic principles.

You do need to believe that reality can be deduced from observations though. Science is not pure logic.