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The "I really miss 'America's Overvalued Real Estate'" thread


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2006 Jul 5, 6:36am   31,506 views  377 comments

by HARM   ➕follow (0)   💰tip   ignore  

As many of you know, we recently had a casualty in our extended bubble-battling blog family. Sadly, it looks as though the founder of one of my personal favorites, "'America's Overvalued Real Estate", has sold out to the highest bidder --a commercial RE company :-(. (Note: previous rumors to the effect that the site had been hijacked/sabotaged by the NAR have proven to be unfounded.) As Different Sean might say, "there's the perfect free market at work again." ;-)

This site --an instant classic-- hosted hundreds of examples of absurdly overpriced wrecks sent in from all over the U.S. and Canada, along with the satiric and often hilarious commentary from the blogmaster. It was wonderfully cathartic and priceless for its comic relief and real-life illustrations of how unhinged sellers have become, thanks to our Fed & GSE-blown liquidity bubble. I spent many a Friday afternoon perusing the latest submissions, often reading them aloud to Mrs. HARM. Truly fun for the whole family.

In honor of this fallen giant, I dedicate this thread as a tribute to A.O.R.E. Please post local examples --with photos and/or MLS links if you have then-- of the most outrageously overpriced $hitboxes in your local neighborhoods. International submissions are also welcome. I shall kick things off by re-posting one of the most egregrious and well publicized examples from last year -- the infamous $1.2 million shack from "Naked City", Las Vegas:

naked greed

Post & enjoy...
HARM

#housing

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120   astrid   2006 Jul 6, 7:49am  

HARM,

Wow, if that's the best face the realtor can find on the place, maybe it's better not to have a picture at all.

Let's see. Dangerous neighbors, bad schools, only space for 2 migrant families, tiny lot, ugly. Well, it's a great starter home with investment potentials.

121   requiem   2006 Jul 6, 7:52am  

@PeterP

That works for me then; While I'd oppose amnesty on principle, I think the greater good calls for some sort of guest worker/amnesty program to lesson the economic shock.

(Strange... a friend just told me that two members of the Tonga royal family were killed in an accident on the 101 last night. SUV, tapped on the side by a mustang trying to change lanes, no points for guessing what happened next.)

122   Glen   2006 Jul 6, 7:53am  

All this nonsense about "rewarding lawbreakers" is silly. If we change the law, then we can redefine certain kinds of immigration as being "legal" instead of "illegal." Problem solved.

The real issue is to try to determine how many skilled and/or unskilled immigrant workers should be admitted to this country. Like it or not, we actually need quite a lot of immigrants, both skilled and unskilled, to keep our economy going The baby boomer demographic is getting older and someone will need to pay for their social security benefits. Legal immigration is a part of the answer, but we need to make legal immigration much more readily available.

The US currently allows only 25,000 Mexican nationals to immigrate legally to the US per year. This number is ridiculously small given our proximity to Mexico, our seemingly insatiable demand for unskilled labor and Mexico's surplus of unskilled labor. If the number were more realistic, then we might have some hope of actually processing people through the normal system, collecting taxes (and social security) from them, and assuring that they are not abused or mistreated by black market employers, instead of creating an entire class of people who are unable to work within the system.

We also need a lot more skilled immigrants. Why not let a computer programmer come to the US and pay taxes to the US government, rather than having a multinational hire them in India, so that they can pay taxes to India's government? We should be competing to make the US a hospitable place for educated, productive citizens.

On a related note, our government wastes a good chunk of your tax dollars to subsidize US agribusiness. This makes provides an incentive for US agribusiness to bring undocumented workers to US farms (so they can collect US subsides and take advantage of cheap foreign labor). Subsidies also makes farming much less financially viable in poor countries which can not afford to subsidize their farmers. Remove the subsidies and ADM would do business just as easily in Mexico or Brazil as they do in the US. And the workers will have the ability to stay home.

123   Peter P   2006 Jul 6, 7:53am  

I have always beleived that the illegals would be sent home if a really bad depression were to occur.

Only if minimum wage is abolished or an underground below-minimum-wage economy develops.

124   Peter P   2006 Jul 6, 7:54am  

That works for me then; While I’d oppose amnesty on principle, I think the greater good calls for some sort of guest worker/amnesty program to lesson the economic shock.

Yes, greater good sometimes means lesser evil.

125   astrid   2006 Jul 6, 7:55am  

Peter P,

Sorry. I think of this country taking on new immigrants as a parallel to me having kids. It's not something to be taken on at the spur of a moment or without serious thought. Once they arrive, it'll hard to get rid of them again.

126   skibum   2006 Jul 6, 7:58am  

Red Whine,
Funny as hell!

127   tsusiat   2006 Jul 6, 8:03am  

Astrid -

but you arrived, what if someone wants to get rid of you?

Its a bit patronizing to assume that your upwardly mobile subset of the immigrant experience is different and more beneficial than that of say, the boys in the barrio.

There are many reasons why a lot of the problems associated with particular immigrant groups would just move over to other groups if they weren't around, not the least of which is MONEY.

128   astrid   2006 Jul 6, 8:03am  

Glen,

I can see where you're coming from, but it's a slippery slope. By the same logic, if we grant amnesty for murderers and rapists in the future, does that make that sort of lawbreaking okay? I know illegal immigrants are alleged victimless criminals, but cumulatively, they have a big impact on society.

Let's just look at who is benefitting and who is hurting. It's overwhelmingly the rich and the businesses who benefit from undocumented workers and guest workers. It's the poor who are suffering the consequences by having to compete with those workers for jobs and social service funded by the middle class.

As for boomers. Wouldn't it be cheaper just to outsource them to cheaper countries rather than try to support them on American prices?

The bigger issue to this population growth stuff is to deal with the fact that we have to start practicing population control or the Malthusian nightmare, long deferred, will come.

129   Peter P   2006 Jul 6, 8:04am  

(Strange… a friend just told me that two members of the Tonga royal family were killed in an accident on the 101 last night. SUV, tapped on the side by a mustang trying to change lanes, no points for guessing what happened next.)

The mustang was alledgedly racing. Young people are so troublesome. If they have so much energy they should serve the community. The driver should be extradicted and face whatever penalty.

130   requiem   2006 Jul 6, 8:08am  

Young people are so troublesome. If they have so much energy they should serve the community.

I get the feeling this one is going to end up "serving the community".

131   Glen   2006 Jul 6, 8:09am  

I think it is a mistake to assume all guest workers will be at McDs, as I have said before, some want Mr. Newsfreak’s skilled job as an electrician. Which is fine to want, but I truely believe Mexican immigrants do not want to assimilate into Amerikan culture that much, and it is horrendous to propose new laws, when the ones we have are not enforced.

What is your basis for assuming Mexican immigrants do not want to assimilate? Do you think they like being treated as second class citizens? People have made the same claims about every group of immigrants through history. Mexicans who come to the US want their children to learn english and get an education (even if they themselves are unable to do so) so that their kids' lives will be easier than their own.

132   astrid   2006 Jul 6, 8:10am  

tsusiat,

Believe it or not, I also do take some time to talk to poorer Latino immigrants (my mom worked in Chinese restaurants for years) and Chinese immigrants. I don't see the same rate of merging into American society.

You also seemed to missed my main point, which indeed is money! Or rather, resources in the form of jobs and social welfare. The native born poor are very much suffering from the influx of foreign competition, and consequently are worse off than they would otherwise be.

Maybe this sort of stuff is not so obvious for Canadians. You guys have a much more selective and intelligent immigration policy than Americans. For me to immigrate to Canada requires me to either make a large financial investment or find a job in place. But Americans have completely idiotic immigration policies based on family reunification, and pretty much gave up the initiative of policing immigrants.

133   astrid   2006 Jul 6, 8:16am  

Glen,

The solution to Mexicans unable to live comfortably in Mexico is not for them to break the law of the United States.

134   astrid   2006 Jul 6, 8:19am  

Glen,

I already said why, very clearly. That's how societies are organized. We care about those who are close to us more than those who are further away. This is altruistic as well as selfish. If the poor nearby are disgruntled, they're more likely to turn to crime and welfare, rather than try to be productive and climb the ladder up to middle class. We, as a society, do better when the disparity between the rich and the poor are not extreme.

135   Peter P   2006 Jul 6, 8:19am  

All I can say is WAAAA, WAAAAAAA.

I agree that the Fed should stop, not pause, ...
... blowing bubbles!

136   astrid   2006 Jul 6, 8:23am  

SFWoman,

Given that Joe spent a part of his life trying to help immigrant Chinese and married the daughter of immigrants, I don't think he belongs that xenophobic group. Sadly, American history, esp. 1920s to 50s, was full of xenophobia and fear of the "wrong" kind of immigrants, whether Italian anarchists, Europeans Socialists, or Mexican day laborers.

137   astrid   2006 Jul 6, 8:24am  

SFWoman,

Given that Joe spent a part of his life trying to help immigrant Chinese and married the daughter of immigrants, I don’t think he belongs that xenophobic group. Sadly, American history, esp. 1920s to 50s, was full of xenophobia and fear of the “wrong” kind of immigrants, whether Italian anarchists, Europeans Communists, or Mexican day laborers.

138   HARM   2006 Jul 6, 8:24am  

The US currently allows only 25,000 Mexican nationals to immigrate legally to the US per year. This number is ridiculously small given our proximity to Mexico, our seemingly insatiable demand for unskilled labor and Mexico’s surplus of unskilled labor. If the number were more realistic, then we might have some hope of actually processing people through the normal system, collecting taxes (and social security) from them, and assuring that they are not abused or mistreated by black market employers, instead of creating an entire class of people who are unable to work within the system.

Glen,

I can buy this argument up to a point --particularly the point about immigrants with legal status being much more beneficial to ordinary working American citizens. Legal immigrants pay taxes, SS, etc. Legal immigrants cannot be so easily abused, intimidated, underpaid or discarded and have recourse to the law. This is obviously good for you and me. This is, of course, precisely why corporate Amerika does not want more legal immigration. Above all else, they want to maintain the status quo. Failing that, they'll settle for a liberal guest worker program (like that being debated right now) which still keeps low-skill immigrants in a quasi-legal limbo, although they will have to withhold taxes & SS.

Where I take issue with you is the part about "our seemingly insatiable demand for unskilled labor". I have to wonder exactly why there is now so much demand for low-pay/unskilled jobs vs. 50 years ago? And why these jobs cannot be filled by Americans who managed to fill them in the past and probably would fill them again today (for a living wage)? Could it be that a giant pool of dirt-poor unskilled labor has in effect created it's own demand and displaced higher skilled labor?

Let me pose another question: How is it that low-immigration countries (Aus, NZ, most of Europe, Japan, etc.) with far more restrictive policies manage to grow food, build housing, staff hotels & restaurants and maintain gardens/lawns? Could it be that they AUTOMATE a lot more of these functions (as in mechanical harvesting machines, factory-produced pre-fab housing, etc.)? Could it be that many of the unskilled low-pay jobs that cannot be automated are transformed into skilled higher-paying jobs? Just a thought.

139   Glen   2006 Jul 6, 8:27am  

The solution to Mexicans unable to live comfortably in Mexico is not for them to break the law of the United States.

Has it occurred to you that maybe it is silly to have a law prohibiting someone from working as a nanny or a gardener in the US? Are these jobs really off limits to poor Americans? Or do poor Americans just decide that such work is "beneath" them? Do you really think the average homeowner would pay union scale wages and benefits to have their yardwork done by a poor American if all the illegal immigrants were suddenly deported? I doubt it. We should allow for the *legal* hiring of immigrant workers in a well-regulated way.

Access to low cost labor contributes to the American quality of life. Not just because of the often-cited cheap lettuce and grapes. It also makes it possible for more professional couples to maintain two careers (since housework, yardwork and childcare can be outsourced)--thus higher productivity. The cost of a variety of household goods and services (and probably houses themselves) would inflate if immigration laws were more strictly enforced (as if house prices weren't high enough already).

And in spite of what you may think, the public benefits provided to immigrants are meager, at best. Most immigrants don't go to the hospital until they are on death's door. A well-functioning system of expanded legal immigration would do a lot to rectify this problem.

140   Peter P   2006 Jul 6, 8:28am  

Could it be that many of the unskilled low-pay jobs that cannot be automated are transformed into skilled higher-paying jobs? Just a thought.

Excellent point.

141   Peter P   2006 Jul 6, 8:28am  

Marcie sounds like she wants a free market, but she wants someone to protect the value of her investment. Maybe she bought during the bubble?

She wants her Greenspan Put back.

142   requiem   2006 Jul 6, 8:29am  

From The end of the article: Would smashed housing markets be preferable to higher prices?

Umm... Yes?

143   HARM   2006 Jul 6, 8:30am  

Why do you care more about the plight of poor Americans than that of poor people in other countries?

Hmmm... let's see... maybe because I'm an AMERICAN? Maybe because as a U.S. citizen I cannot (and should not) have any say in how another country manages its affairs or citizens, while I have an obligation (and duty) to care about my own?

144   skibum   2006 Jul 6, 8:30am  

tannenbaum Says:

All I can say is WAAAA, WAAAAAAA.

Marcie Geffner's inane "commentary" sounds like it was written for a high school Social Studies report. More to the point, her arguments hold no water. She finishes her book report with the dramatic rhetorical question, "Would smashed housing markets be preferable to higher prices?"

Actually Marcie, the answer is resoundingly yes. Inflation out of control will wreak more havoc than you can imagine through your little brain. "Smashed" housing markets would merely be bringing prices back to historical norms.

145   GallopingCheetah   2006 Jul 6, 8:31am  

Boy, boy, boy,

Only the oppressed complain about poor immigrants taking their jobs, competing for their jobs, blah blah blah. But you forget that many sons of the poor immigrants go to join the army and die for you.

If you are afraid of dealing with working-class immigrants, because they are unclean or dangerous or illiterate, you will NEVER make it to the top. At best, you will become a rich upper middle, but still wondering why with so much money you still have no power in this society.

On a late night dinner run in Chinatown, I walked past by two black drug dealers. I actually made a point to talk to them. They were just OK fellows.

The only people I've had real problems with, barring criminals, are the middle and upper-middle class A(sshole) students.

At grad school, a white guy (taller and bigger than I) from Chicago suburb assaulted me, under the pretense of play, because he was jealous of my success and easy way of attracting women. I counter-attacked, floored him on the ground, and nearly broke his ankle.

There were other incidents. All problems came from freaking people from middle class background feeling insecure and trying to act out. In all cases, I smashed them down.

I've never found poor working-class people to be a threat, nor folks from established families.

146   Joe Schmoe   2006 Jul 6, 8:37am  

And in spite of what you may think, the public benefits provided to immigrants are meager, at best.

You could not be more wrong about this. Consider a day laborer, landscaper, or factory worker who earns $25,000 per year, and pays approximatley 25% of his income in state, local, and FICA taxes (we won't count the EIC.), or $6,250. Let's be incredibly generous and assume that he pays half as much again in sales and use taxes, taxes for phone service, etc. This person is generating a total of @$9,500 in tax revenue for the state and federal governments.

He has three kids. LAUSD spends about $11,000 per pupil per year. The state is already spending more than it receives to educate just ONE of his kids.

Let's assume that our alien never makes a trip to the emergency room or gets an infected tooth; he never sets foot inside a hospital or sees a doctor. His kids are required to get checkups and vaccinations for school, and these things are paid for by the state. His wife got prenatal care, again at the state's expense.

Then there's the cost of public transportation, additional police and fire protection, etc., etc. -- the illegals are unquestionably a big drain on public finances.

We can absorb some illegals, and I hope that we continue to do so, sinc they are good people and we are a rich country. But it's got to stop. They really will bankrupt us if they all come here.

147   GallopingCheetah   2006 Jul 6, 8:41am  

N.F.,

It was like this in this country 100 years ago. Now you know that it is not your government but some other rich men's. Your government will not let this happen.

Industrialization does have its tolls. You can't have everything.

148   Glen   2006 Jul 6, 8:43am  

HARM said:
Let me pose another question: How is it that low-immigration countries (Aus, NZ, most of Europe, Japan, etc.) with far more restrictive policies manage to grow food, build housing, staff hotels & restaurants and maintain gardens/lawns? Could it be that they AUTOMATE a lot more of these functions (as in mechanical harvesting machines, factory-produced pre-fab housing, etc.)? Could it be that many of the unskilled low-pay jobs that cannot be automated are transformed into skilled higher-paying jobs? Just a thought.

According to the CIA factbook, the net migration rate is 3.18/1000 in the US, 3.63/1000 in New Zealand and 3.85/1000 in Australia. So NZ and Aus have *more* immigrants than the US. But they regulate the flow better than we do. As for Europe and Japan--declining populations, stagnant economies, unsustainable welfare states, etc...no thanks.

The big picture is that we need more immigrants (skilled and unskilled), not less. If we didn't need their labor, they wouldn't be coming here. People tend to migrate to the place where their labor is most highly valued. In order to have an efficient market, labor (like capital) should be mobile.

149   Randy H   2006 Jul 6, 8:46am  

Let’s be incredibly generous and assume that he pays half as much again in sales and use taxes, taxes for phone service, etc. This person is generating a total of @$9,500 in tax revenue for the state and federal governments.

And illegal immigrants have figured out a way to avoid use-taxes? I'd be interested to know how. Then again, my mother in Ohio insists that Mexicans are issued special tax-exemption cards which they can show at 7-11 to avoid paying sales taxes on cigarettes and slim jims.

150   GallopingCheetah   2006 Jul 6, 8:51am  

My biggest worry about immigration, echoing sentiments in some earlier posts, is that massive immigration will permanently alter the culture in this country. Not there is a splendid culture here: At grad school, my American co-advisor told me bluntly, "There is only money and movies in this country." But there is still the celebration of rugged individualism -- that almost borders barbaric -- which seems to be a cardinal virtue (and feature) of the Northern European races.

Many immigrants come from cultures that celebrate closeness and togetherness: India, Communist China, Latin countries, South America, etc.. My former Indian colleague -- I've since distanced myself from him after discovering him to be a blatant liar -- once commented that if I were in India they would break down my barrier of cold aloofness. I hope US won't turn into another Latin country.

151   Peter P   2006 Jul 6, 8:52am  

And illegal immigrants have figured out a way to avoid use-taxes?

There are many "cash" businesses around.

This is why I use credit cards whenever possible, even if they may give incentives for paying cash.

152   Glen   2006 Jul 6, 8:53am  

Joe Schmoe said:
He has three kids. LAUSD spends about $11,000 per pupil per year. The state is already spending more than it receives to educate just ONE of his kids.

In this sense, I suppose all poor people with kids are a drain on society. But we don't generally deny education to poor kids. Maybe we should be exploring ways of paring down our ridiculously bloated government expenditures. $11,000 per pupil is unconscionable. But it is not the immigrants' fault that we engage in such largesse. I'm sure they would continue sending their kids to public school even if we spent 1/2 or 1/3 as much. The public school system is an inefficient, wasteful, monopolistic anachronism. But that is an off-topic subject for another day...

153   Peter P   2006 Jul 6, 8:53am  

But there is still the celebration of rugged individualism

It is completely a pluto-in-leo thing.

154   astrid   2006 Jul 6, 8:53am  

Glen,

We already have a guest worker program for skilled workers, HB-1s have been around and been fully exploited by big companies. (And the ex-HB-1 complain of employer abuse even though they are legal and highly educated)

As for Europe and Japan, firstly, they're not that badly off. Secondly, how does the immigration situation affect those conditions you've cited?

It's really pretty simple: net cost of unskilled laborers > net benefit of unskilled foreign laborers. Just because much of the costs are hidden does not mean they're not there.

Randy,

Huh? I thought Joe added the use taxes to the mix.

155   skibum   2006 Jul 6, 8:54am  

So NZ and Aus have *more* immigrants than the US. But they regulate the flow better than we do.

It probably helps that they're both surrounded by water.

156   Joe Schmoe   2006 Jul 6, 8:55am  

I am not worried that the illegals will change the culture of this country. Not at all. They all become Americanized. Our culture is like a virus that infects all who come here, there really is no cure. The first generation or two may retain some vestigal immunity from the homeland, but eventually everyone succumbs. And heck, our culture is already invading other nations. People in other nations are becoming more American with each passing day without ever setting foot on our shores.

The thing that worries me is the short-term econimic pain caused by the illegals.

157   astrid   2006 Jul 6, 8:57am  

Glen,

Any society has some poor people and for their sake and ours (so they don't rob me at gun point), society tries help them. That's no reason to add more poor people to this society.

If you don't like government, then you can move Somalia or Haiti, they're very light on governments, and I heard immigration is easy so long as you bribe the customs.

158   GallopingCheetah   2006 Jul 6, 8:59am  

Joe,

The mass culture you referred to is indeed contagious and dangerous. But is it really the essence of Americanism? I thought the quintessential (and old) Americanism is the way of the WASP. No judgement here.

159   HARM   2006 Jul 6, 8:59am  

Has it occurred to you that maybe it is silly to have a law prohibiting someone from working as a nanny or a gardener in the US? Are these jobs really off limits to poor Americans? Or do poor Americans just decide that such work is “beneath” them? Do you really think the average homeowner would pay union scale wages and benefits to have their yardwork done by a poor American if all the illegal immigrants were suddenly deported? I doubt it. We should allow for the *legal* hiring of immigrant workers in a well-regulated way.

There's the old "Americans won't do the jobs that our Mexican slaves immigrants will do" argument again. Poppycock. Americans used to do such jobs, Europeans, Aussie, Japanese manage to do these jobs now, and so would Americans --if they paid a LIVING WAGE.

Access to low cost labor contributes to the American quality of life. Not just because of the often-cited cheap lettuce and grapes. It also makes it possible for more professional couples to maintain two careers (since housework, yardwork and childcare can be outsourced)–thus higher productivity. The cost of a variety of household goods and services (and probably houses themselves) would inflate if immigration laws were more strictly enforced (as if house prices weren’t high enough already).

The two-income trap in which most Americans now find themselves is nothing to celebrate. What's more, economics 101 tells us that neither the cost of goods nor labor is a constant. Both can and do adjust in response to changes in aggregate supply and demand. If low-skill illegal immigration were drastically curbed, we would see wages for those jobs begin to rise. We would also see much more automation in previously labor-intensive jobs, which itself creates more demand for high-skill occupations (robotics, automation, SW, manufacturing, etc.). A virtuous cycle --in contrast to the vicous cycle/race to the bottom we now have.

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