patrick.net

DS,

DS, if they take up your suggestions, please tell them to study well from California and Oregon. There's a lot of pitfalls to government sponsored housing, and it'll be not to repeat the mistakes (incredibly difficult to correct mistakes, due to the vested interests once the process starts) Americans have already made.

Also keep in mind that of the presence of the "gold collar" people who work blue collar jobs but consume luxury goods. It's not just the rich who are hyper-consuming. A lot of working class and middle class families are also spending like there's no tomorrow, often taking out HELOCs to finance their lifestyle.

yes - rising interest rates, increased fuel prices, saturated housing market and price 'overshoot', economic uncertainty in general, widespread unemployment, general inflation -- will all reduce housing prices...

most of the above are occurring at present. i believe the housing boom can cause general inflation, so it is a little self-cooling that way, but it's painful, as people have to agitate for higher wages. the 'oil price shock' was not the people's fault...

DS,

From my own subjective view, the nicest thing would be the creation of nice, mix income public housing similar to those in Singapore. Nothing would be better than to turn people's attention towards things that could make a society better, like better health, education, and productivity. The housing bubble has been an orgy of greedy, fear, and keeping up with the Joneses. However, the political system and society in the US do not support it.

DS,

Au contaire, the oil shock is very much an American production. Unlike much of Western Europe and Japan, we as a collective have neglected the inevitable depletion of oil by living in big houses, driving big SUVs, and relying heavily on fossil fuel. There's also the war in Iraq.

However, how much are you Aussies hurting from oil prices? I assume the hurt is a lot more obvious in the US because our currency has devalued so much and we have been sucking on the teat of cheap oil in a much greater way than any other developed economy.

newsfreak,

I'm afraid I'm a bit vague with the phrasing, I meant the political system and society does not support public housing and government land grants to home owners (though BLM sure give out a lot of usage rights, but I guess it only applies to corporations).

DS,

Liberalizing home ownership is not good for most poor people, who are more likely to be economically marginal and more likely to face period unemployment.

hence the conception of a 'credit' system. look, poor people here just occupy cheap public housing on peppercorn rents for decades anyway, so it's the same outcome. the housing dept ended up selling a lot of their stock to the inhabitants because they looked after them better if they owned them themselves, for the same reason -- they value owning their own place. i know of multiple generations living in public housing.

basically, the state govt is your very tolerant mortgagee.

clearly, it's protected and subsidised ownership, we're not throwing them to the mercy of the banks with foreclosures, huge mortgages, etc. and i believe the same treatment should be extended to low and middle income earners. isn't that why you guys have Fannie Mae and Freddie Mac in the first place? I've read more policy words about assisting people into home ownership from US sources than anywhere...

the US, CA and OR are not the only places who have public housing and affordable housing initiatives -- it's worldwide...

DS,

That policy has "helped" so many people that the subsidy effect kicked in and pushed up the house prices. End result, the old owners, the realtor industry, and the mortgage brokers take away most of the tax payer's largess.

True public housing is a different matter, but so far your plan just sounds like another subsidy scheme that will push up the house prices and provide little long term relief for the poor.

newsfreak,

I saw some pretty overgrazed BLM land this summer...and way too many suicidal jackrabbits. ;)

Different Sean Says:

> i don’t think the ‘poor’ and working class are by
> definition poor savers and poor budgeters, they
> just have less to bring to the labour market than
> others, and therefore remain trampled at the
> bottom of the heap.

There are two reasons why people in America are poor:

1. They are Lazy
2. They are Stupid

Most poor people are both Lazy and Stupid (so are most people that end up filing BK)…

newsfreak,

I'd say that the poor also need access to free or cheap preventative care, childcare, and decent K-12 schooling. Working in meatgrinders like Wal-mart and McD's nowadays is a deadend of poverty and despair. The working class jobs nowadays aren't enough to raise a family.

True public housing is a different matter, but so far your plan just sounds like another subsidy scheme that will push up the house prices and provide little long term relief for the poor.

not at all. the plan is very deliberately designed at every step to contain prices. first, control the price of govt owned land on release -- that 's the big speculation item. control construction prices and selling prices. and, finally, put long-term price covenants on the property and stipulations of owner-occupying or renting as needs be.

another approach is for the govt to retain freehold title on the land and let the land be used as leasehold with the understanding it's for affordable housing, similarly controlling prices. if you control prices, you control prices. that's how it's done.

there's a huge ex-church owned area near me called the glebe which was made public with the stipulation that it be for public affordable housing, and that's what it's been ever since.

the principal thing is to bring down land speculation.

astrid, you're something of a faux progressive.... or a devil's advocate... i've never seen a progressive knocking every initiative and arguing that things that will work won't work and claiming that a dysfunctional market is the best possible thing... you're not ann coulter in disguise are you?

I'd say a little from column A and a little from column B. However, any society that rewards laziness is likely to see more lazy people in the future.

sybrib Says:

> The USA is becoming like so many other places,
> children of the elite families are overrepresented
> in the elite universities. Whoever said life is fair?

The USA is becoming MORE like most countries in that the elite families control more of the wealth, but LESS of the children are going to elite universities.

In the 1950’s when my parents started (but didn’t finish) college they said that the kids who had Dad’s in the Bohemian Club the PU Club (or even the Olympic Club) could get in to Cal or Stanford even with a poor High School academic record.

In the 1980’s when I was in college it was much harder for kids from elite families to get in to Cal and Stanford and it was almost impossible without a good academic record (or a huge donation).

Today it is almost impossible for all but the small number of the most elite families to pull strings and get their kids in to Cal, Stanford or other elite universities without a massive (seven figure and up) donation that again a very small number of families will write a million dollar check to get a kid in to a good school…

Glen (in a good post) Says:

> A common situation is that one of the kids will attempt
> to buy out the others. However, very few of them can
> afford to do so in today’s market. Imagine a typical
> scenario: mom and dad own a $750K house and have
> 3 kids. The parents die leaving the house (paid off)
> and $150K of other assets. One of the kids decides they
> want the house so they can keep the parents’ low tax basis.

Where I grew up on the Peninsula (with the average home price around $4mm) and where I live now in Presidio Heights (with an average home price that might even be higher) it will be tough for most kids to buy out their siblings no mater how much they want the low tax basis…

As far as dropping home prices go it looks like San Mateo will soon have a couple low comps since I have convinced my parents that we have seen the “top of the market” and it is time to (quickly) sell a couple crappy little rentals that they bought in the 70’s for under $50K each for over a million each (while they still can)… Prices in San Mateo seem to be dropping fast with current “asking” prices more than $100K less that the “selling” prices of similar homes last fall.

As I have said in the past it will be interesting to see how people react when they see a couple years of home prices dropping by $10K a month. People act differently when numbers are bigger (and the ARM resets and sales by long time landlords will only help to drive prices lower faster)…

DS,

I'm not ann coulter in disguise. I do consider myself a liberal and a progressive. However, I am indeed not your typical "liberal" or "progressive". I think governments serve a vital function in society and are capable of much good. But I don't believe problems can be solved just by throwing money at problems, and I am weary of too much government intervention because I've seen law of unintended consequences work a little too often.

As I said, people have free will and there are limits to any society's resources. It's best to focus the resources in a manner that encourage good behavior. Social engineering is a dangerous thing, and has a habit of coming back to bite society on its ass.

There are two reasons why people in America are poor:

1. They are Lazy
2. They are Stupid

"god must have loved the common people, because he made so many of them."

so what if they're stupid? everyone is stupid. middle class people are stupid for speculating in google and the nasdaq. upper class people are stupid for needing esteem markers. so what?

lots of inheritance kids are lazy and stupid. lots of successful business people are lazy, they leverage other people's time.

people generally aren't allowed to choose their intelligence genes before birth... and sometimes it may because they've had mental illness, or couldn't pay a $100,000 medical bill due to unexpected illness and no insurance...

so people are stupid. so what? they still have basic human rights. no more or less than you.

see john rawls on the 'original position' and 'justice as fairness':
http://en.wikipedia.org/wiki/Justice_as_Fairness

is this just more US fatalism and disregard for the plight of others? devil take the hindmost, because i got mine? is that how you want to be treated if you ever have a setback?

But I don’t believe problems can be solved just by throwing money at problems, and I am weary of too much government intervention because I’ve seen law of unintended consequences work a little too often.

this is just silly. i'm proposing govts don't throw money, rather that they control expenses and curb expenditure using covenants and legislation.

and that they cut out fat developer profits (25-30%) by doing PPP developments of their own on govt owned land. that's the third arm of reducing costs.

it's all been done before, it's just that today's market-obsessed govts have forgotten about it.

i could talk forever about unintended consequences and so on, but you have to look at each project on its merits. the govt here just did a PPP tolled roadway that was completely disastrous because they're idiots -- they basically sold the road to a consortium. a child could've told them it wasn't going to work -- and i couldn't make it to a focus group i was invited to in advance to tell them...

DS,

Nobody here is advocating depriving poor people of their rights. However, they, as taxpayers, may wish the divert their tax dollars elsewhere.

As for objectively lazy and stupid people. Before the twentieth century, society had a way of clearing them out of the system. Maybe this society should also get out of the way.

enough! govt lobbying awaits...

and my two posts awaiting moderation -- can someone free them?

DS,

A well organized government housing scheme, with the proper restrictions and oversight, might do very well. I'm more dubious about the government as a mortgage holder. Wouldn't housing estates that evolve into pseudo-property be treated like property by the renters?

astrid Says:

> Working in meatgrinders like Wal-mart and McD’s
> nowadays is a deadend of poverty and despair.
> The working class jobs nowadays aren’t enough
> to raise a family.

You will learn a lot working at Wal-Mart and/or McDonalds just like I learned a lot getting up every morning to do my paper route as a kid and when I got a little older getting up early to caddy.

Working at McDonalds or as a stock clerk (or having a paper route or hauling golf clubs) NEVER paid enough to raise a family. We just seem to have more stupid people today trying to do it…

As for objectively lazy and stupid people. Before the twentieth century, society had a way of clearing them out of the system. Maybe this society should also get out of the way.

that's very bloody progressive. see what i mean? completely anti-progressive by any conceivable measure. you have no idea of the history of all that -- what did they do to lazya nd stupid people exactly? england used to deport stupid and lazy people to america, and when they lost that, to australia. their only sin was being born during a population boom during the agricultural revolution and then finding there was no work for them as adults, so they resorted to nicking things in desperation...

i'm afraid all are equally righted under the law, and welfare is there for a reason -- re-check the john rawls link above on 'the original position'...

let's go all the way back to small scale hunter gatherer societies where everyone was pretty well uniformly intelligent and all survived and no-one was branded stupid...

DS,

I've read your comments (but can't free them). I do agree with your observations. However, as I've mentioned before, what the "people" want in much of the states is to keep the RE prices as high as possible. The political process will not lead to lower overall prices. We will have much better luck waiting it out via the free market.

FAB,

My mom worked many years as a waitress and did tons of other near minimum wage jobs. It is possible to barely support a small family on two minimum wage jobs in the middle of the country. Definitely not the case in pricier areas though. My mom got a summer job at Costco one summer. Even though they paid a starting wage of $10/hr and pretty good benefits, a lot of her co-workers were working two jobs and stacking on overtime just to stay above water. A lot of these people were forced to live an hour from work and they end up sleeping like 5 hours a day and never seeing their kids.

yeah, what the existing holders want is to keep RE prices high. the next generation wants to get them back down to something sensible.

govts are too afraid to do anything, and have always left it in the open market so they can't get the blame for anything.

i'm offering them an out position of developing 'affordable housing' for the masses but saying they are leaving the existing market arrangements alone... altho a few people will complain their place is losing value cos of the govt. sometimes govts have to show some outright leadership, preferably of the right sort...

A well organized government housing scheme, with the proper restrictions and oversight, might do very well. I’m more dubious about the government as a mortgage holder. Wouldn’t housing estates that evolve into pseudo-property be treated like property by the renters?

doesn't freddie mac or fannie mae effectively hold mortgages? regardless, it's just a hypothetical. these would be low-priced places, so not too much downside for any lender OR borrower. currently, the state govt acts as landlord to a bunch of pretty wild tenants, and wears the loss...

e.g. the bridge housing people would have some suggestions for obtaining finance...

we have to be careful to distinguish between low-middle income earners trying to get a foot on the ladder vs traditional public housing tenants -- remember a lot of low-middle income earners could easily handle a $150K mortgage, it's the $500K mortgage they can't do...

Someone wrote:

> But I don’t believe problems can be solved just by throwing
> money at problems, and I am weary of too much government
> intervention because I’ve seen law of unintended consequences
> work a little too often.

Different Sean Says:

> this is just silly. i’m proposing govts don’t throw money, rather
> that they control expenses and curb expenditure using
> covenants and legislation.

I can tell that Different Sean Does not does not live in San Francisco…

My cost for renovation of a SF single family home = $26,000
Government cost for renovation of SF apartment unit = $220,000

Recent cost for a private developer to build 350 units = $73,000/unit
Recent cost for the new North Beach 341 units = $316,000/unit

P.S. the private developer cost per unit includes the cost of the land while the government project does not….

hmm, we'll edumicate you eventually, astrid -- might start you on the communist manifesto... :P

DS,

It depends on how much you think you can change people and engineer society. However, if your definition of progressivism means supporting a solution that leads to more and more people relying on government subsidy, then I am not your kind of progressive.

DS,

Sorry, read it already, and read tons of Mao's writing too. You'll have better luck with me if you quote from the Labor movement.

Economic rights and legal rights are different things. You've confuse the two when you talk about economic rights for the poor in response to my comment that the poor have only legal rights. I personally think all rights are mallable according to the society's resources, but I know others will disagree with me.

yeah, you keep saying that FAB, altho the govt here regularly renovates and constructs public housing cheaply.

you recently claimed it cost Willie Brown $250 M to renovate 100 apartments in SF in an existing building -- that's $2.5 M an apartment! do you expect me to believe that it cost $2.5 M to renovate each simple little apartment in a public housing project with new carpet, paint and some light switches? you can source your claims from now on...

absolutely the govt project excludes the cost of land -- that's the beauty of the whole thing. the govt would partner with a responsible construction firm to do the work in a PPP, but cut out the fat 25-30% developer's profit -- i'm sick of seeing billionaire developers driving mercedes maybachs off my back... just pay honest workers for an honest day's work...

the land is owned by govt, and gifted to the people at a nominal cost. they may even exercise eminent domain over a few people if they like the look of an area...

did i mention real estate agents and apartment brokers wold be excluded from the deal as well? sorry about that...

I wrote:

> There are two reasons why people in America are poor:
> 1. They are Lazy
> 2. They are Stupid

Then Different Sean Says:

> what if they couldn’t pay a $100,000 medical bill due to
> unexpected illness and no insurance…

It is stupid not to have health insurance (I don’t think that even Different Sean can argue that it is “Smart” to be uninsured)…

Then astrid wrote:

> My mom worked many years as a waitress and did tons of
> other near minimum wage jobs. It is possible to barely
> support a small family on two minimum wage jobs in the
> middle of the country.

Not to give astrid’s mom a hard time (since it sounds like she was not lazy), but it is not smart to have kids when the only income is coming in is from near minimum wage jobs…

the communist manifesto IS the labor movement. but not so strong on mao tse-tung, leninism, etc. things have to tempered with human rights after the glorious revolution. altho FAB might be the first against the wall before the human rights kick in... :x

It is stupid not to have health insurance (I don’t think that even Different Sean can argue that it is “Smart” to be uninsured)…

maybe they couldn't afford it? i wouldn't know, because here health care is free and guaranteed as a citizen's right for all by the govt...

FAB,

Hmm, except the part where my mom is an electrical engineer and she had me while holding a good job in Shanghai. She was working those minimum wage jobs because my dad was working on his Ph.D in the US. My dad was university lecturer on the fast track to a full professorship when he left China for grad school here.

Unlike lots of women, my mom continued to work even after my dad got a pretty good IT job. Her English was never good enough for white collar jobs, so she worked various blue collar jobs, including her current one. Her current job, because it came with good health insurance and was stable, came back to save both of them when my dad got laid off and took about two years to find another permanent position.

It depends on how much you think you can change people and engineer society. However, if your definition of progressivism means supporting a solution that leads to more and more people relying on government subsidy, then I am not your kind of progressive.

why not? the role of govt is arbitrary... they have a duty to regulate, i.e. 'govern' in the sense of a regulator. they have a duty to the 'commonwealth' and the 'welfare' of the people -- the common wealth and to fare well.

would you rather see a society where a handful of people screw more and more out of everyone else? those people only have the same 24 hours as you and me -- they don't work 10 000 times as hard as you and me in order to get 10 000 times as much, so they're hardly deserving, are they? they've just learnt the trick of leveraging suckers like you and me -- and then created a myth around how important 'hard work' is, etc. capital begets capital. etc.

i'm not actually proposing that govt spend any more than it already is, as a matter of fact, just to create a space for affordable development. it would be pretty well cost-neutral to the govt, that's why it's such a great idea and will work so exceptionally well.

about reading the communist manifesto or any other labor movement thinking -- i met someone who was raised as a buddhist who never 'got' buddhism, just learnt to recite the whole thing without thinking -- and they hated it, it was like forced piano lessons as a child...

DS,

Marx was only a part of the bigger labor movement. His idea of the revolution and utopia was also fanciful and didn't quite work out. He didn't have deep insight about how the mass of humanity worked. Marxism is more useful as an analysis tool for what has occurred than to predict what will happen.

Different Sean Says:

> FAB, altho the govt here regularly renovates and
> constructs public housing cheaply.

That’s great, but the government her in the US NEVER EVER builds ANYTHING cheaply. It does not matter who is in charge or what they are building. Every time the government has a big project the politicians use it as a way to pay off the people that put them in power.

> you recently claimed it cost Willie Brown $250 M to
> renovate 100 apartments in SF in an existing building

In the late 90’s Willie spent about $250,000 per unit (not $2.5mm) to renovate a crappy WWII era housing project that was and still is one of the worst high crime areas of SF. I did a little Google searching but could not find the numbers from 10 years ago.

> you can source your claims from now on…

Below is info on the newer over $300,000 per unit housing project in North Beach that did not include the cost of land (it was built on the site of an older housing project). Private developers can buy land “and” build a luxury homes for less than $300K but in SF it costs over $300K/unit just to build the apartments…

http://tinyurl.com/zqduz

you know that marx was knocked back at the 1st international with his proposal for a state-based communist economy -- everyone else said that it would create a totalitarian regime every bit as unpleasant as the capitalist one they were replacing -- and they had more foresight than marx ;)

the other option was a kind of 'communist anarchy', from memory, as a sort of velvet revolution which would abolish centralised govt altogether instead...

DS,

I already conceded that some public housing schemes could work and work very well. I'm not saying government is never the solution (though good oversight and properly aligning the administrators' interests to that of the public's best interests is necessary).

I just don't think government redistribution is the best way. A government that works best ought to leave as few marks as possible, doing as much as possible via regulation and the market.

FAB,

I think the problem with SF housing authority is with the incentive structure. That doesn't mean that public housing can never work. It has worked relatively well elsewhere without the same kind of cost overruns. SF does tend to be a city where liberal excesses run extreme, so perhaps you have an exaggerated perception of the overall problem.

DS,

Is that agreement I'm hearing ;) Marx was not a good clairvoyant, Communism ended up taking hold in the less advanced European and Asian countries, he is probably still spinning in his grave from the agarian nature of the Chinese Communist Revolution.