patrick.net

DS,

Because all Americans are the same. 300 million plus Americans, with all kinds of backgrounds and all kinds of belief system, with political and social dynamics that vary hugely region by region, with economic situations that even the experts on America (foreign and domestic) are constantly going back and forth on -- and you decide to judge us all based on your observations of a couple tourist (BTW, Buddhist monasteries are walk-ins, they're not like churches with a regular body of attendants) and your religious relations?

It doesn't matter how you view us, that doesn't mean your view is sufficient to form an informed judgment about Americans, anymore than Americans witnesses some radical Muslims committing terrorism is able to make informed decisions can make decisions about the best government for Iraq or Iran.

BTW, Buddhist monasteries are walk-ins, they’re not like churches with a regular body of attendants

yes, you know that, but the white american with the camera visiting HK didn't.

it's more than enough that i get news feeds from speeches by george dubya and condi rice...

my best mate in australia was from LA, in fact, but he preferred the lifestyle in oz to the US, as it was generally easier and more 'real'. compared to australians, he was always frantically rushing around, altho not always in the most productive way. he was also fatalistic, etc.

i've worked with other americans, they're a bit too dogmatic and black-and-white thinking for my liking, and i think that's where a lot of your foreign relations problems come from. i'm also a sociologist, so observing cultures and their quirks comes fairly easily to me.

every country has its pros and cons, i prefer england to australia, except for the weather. my orderred choice of preferred english-speaking countries to live and work would be UK, oz, US, but i would be happier working in france or germany or elsewhere in europe before US and oz, in all honesty.

While posters like ahj and tsusiat often posts valid and well informed critique about the US situation, you’re the one who is constantly telling us that you KNOW how US can be better runned.

they seem much the same to me, i think you're just having a go for the sake of it. i suppose i have views on gun control and a number of other social issues, but that's my training as a sociologist and work as an activist. i have views on how a whole lot of things can be better runned in the laissez-faire anglo-american economies, and i haven't shrunk from posting them here.

astrid, i can't address all the longer posts above, there's too many points, and not enough time or space in this forum, along with the appropriateness of the digression.

i'm familiar with the problems with the great leap forward, etc, there's just no space to go into why errors the CCP have made and dodgy ethics in the USSR and PRC in general don't make 'pure communism' impossible and don't live up to the ideals of marxist or indeed anarchist communism. many ordinary americans in fact unwittingly subscribe to a form of anarchist communism in their world view, including many libertarians. so could debate philosophy forever. just on definitions alone, the very notion of describing something as 'pure communism' when in fact it's a cluster of ideas to address the problems of 19th C. capitalism shows some rigidity of thinking and an unreflexive and unworkable 'modernist' framework of thought and analysis.

in the meantime, i have to write 800 words on the housing affordability crisis for publication, and have a series of meetings this week with an expert group and finally the state minister for planning on reuse of an industrial site -- and further meetings on crime and public transport solutions. so, sorry about that...

discussing the ethics of organ harvesting will have to remain for another time. i don't think they should be 'sold' in a 'market'. many live donors are often very near relatives making a willing sacrifice. others have indicated harvesting is OK on their accidental death. the ethics of bribing someone to make their health worse and bodies incomplete in other countries for money makes no ethical sense. there are still problems with organ rejection which make organ transplantation less than wholly desirable as a medical intervention. sometimes you just have to take what nature deals you when it comes to personal health until such time as we can ethically generate organs from DNA, etc. did anyone say 'stem cells'?

Astrid,

My refutation to stagflation –> higher rents/house prices is the industrial midwest. The wages have been stagnant there while commodities inflation has dropped their real wages. Housing prices there have been stagnant since the 70s.

Real rent prices have risen in the Midwest since the 1970s, and rose sharply during the stagflationary cycles. In the upper midwestern rustbelt, what has given way is the standard of living due to stagnant and shrinking real incomes, not stagnant or real shrinking prices. This is largely why home ownership has been a financial advantage in the Midwest for so long: it has been a strong inflation shield of those who were able to keep up with their fixed mortgage payments. This also kept real prices of homes from inflating too much in most areas.

I am primarily refuting the suggestion that rents won't rise but actually fall this time. That would be an extraordinary event and essentially break all the rules ... that is unless we enter another Great Depression. For everything to fall as some seem to insist, there would be no inflation, but general deflation. In that case, all bets are off.

HARM,

Thanks for having the maturity and patience to deal with a baseless and ignorant claim. To say that patrick.net goes back to 1995 is to imply that we "invented the information super highway" to dissuade would be "homeowners" from their rightful California Real Estate Lottery ticket!

Additionally to say that you bought a house/stock/pork bellies etc. at multiple entry points over a decade and a half and then flaunt your profitability is just that much more ignorant. It's called "dollar cost averaging" and no, "buddy puddy surfer" you did not invent it! This "concept" pre-dates clay tablets. If you throw enough crap against the wall, some of it is going to start sticking. Don't be sore! Buy some more! Dollar cost averaging (while effective in say owning company stock over the course of a CAREER) is a great way to get fired and draw unwanted scrutiny upon your head in my business. "If you liked the stock at $40 a share you're going to LOVE it at $10! When people do this to themselves it's considered "smart investing". When I do it to YOU I'm a j@goff! Basically you're saying, I can't properly estimate fair market value, have no IDEA what I'm doing so I just keep buying! In the case of real estate you keep buying with borrowed money! For someone that works the 3rd shift at a turkey processing plant, this is a great strategy.

george, send it to my address,which you can get by clicking my name. i'll put it on my blog and send you the URL

The current sentiment is 20% chance of rate hike, so they are definitely full of it.

George,

I have a buddy that worked as a mortgage broker and he said the "leads" from these guys were an absolute joke! They re-sell the list time after time! He would get responses like, "I just went to their stupid web-site once b/c I was shopping for rates and I must have gotten calls from 20 of you guys"!

Yet another shining example of "ethics" from these "internet based" companies! Their "economist" is a joke too. All during the "re-fi frenzy" he was ejagulating all over himself. I can't wait to see these a$$clowns take it dead in ying yang!

Remember all of their "ETradesque" commercials? The ones with the FB couple lounging around their house eating ice cream and having impeccably attired "bankers" falling all over themselves to get them the lowest rate and best possible deal?

As this thing continues to evaporate MB's will pay more for leads initially but further on into an extended drought advertising budgets will dry up and Spendingtree.com will become another domain name for sale. Have fun squinting, wincing and mumbling "ouch" fellas!

Wow.. Lots of people jumping in on this one.
As far as the " view" of California as seen through the lens of a hollywood camera, I never looked at California as a place that was accuratly depicted by the media.Prior to moving here, I didn't think much about the way people lived in California. I figured they lived about the same way as I did. There would be rich people, poor people, and lots of average everyday Joes. I expected there would be a wide range of creative people like myself- more so than back home. Even so, I was surprised at what the state of the area really was like.
What I did find was that people live lives with entirely diffrent views on what most of us in other parts of the country consider the basic essentials. Housing of course is a MAJOR issue to longterm residents. A house here is what gives a person status. The younger you are, the less likely you are to own. A person in their 30's who owns in Cali is a rarity. I thought that was pretty interesting since most people back home go to college, get a job, get married, go to church, buy a house... simple. easy. done.
So in the spirit of this topic, I'll agree that the cost of housing has caused the deterioration of the middle class. At the same time it has been a benefit to the upper classes. They get to " clean up" the poor impoverished areas by gentrifying neighborhood after neighborhood. They ruin entire towns like Nevada City, Grass Valley, Marin, and a hundred other small places by turning them into little rich person getaways full of candle, paintings, and expensive cheese shops. That aspect alone disgusts me because it displaces the very people that made that town what it was.These people that take over simply move and and make-believe that they too are really part of the town.let me get this straight... people that cleaned sardines in Monterey drove Bimmers?

I'm to the point now where I'll take a Wal-Mart anyday to some damned richperson hovel. The point I am making is that I feel uncomfortable being in wealthy areas and these former towns that housed working Joes and people that cared about their community. To me, feeling out of place is what makes me dislike this state more and more. I can also see right through the veiled lies that they have become.
At least where I'm moving to, there are more people like me. Interesting people with a million diffrent stories to tell and places they've been. People that go to chuch, people that don't go to church. People that eat Japanese food. People that eat hamburgers.
"regular" people in the sense that people that have a decent job, aren't absolutly loaded, or come from some euro-pedigreed family simply don't exsist here anymore. At least there aren't any that are having an easy time of it. I see a sea of unhappiness all around.
As the weeks have passed and I check out sites pertaining to TN, GA, NC.. these states I'm picking to move to, I see literally hundreds of posts on Craigslist sites in these cities of people asking questions like: " I'm a native californian moving to Asheville.... what's it like?" I find this funny because while the country gets a healthy dose of california crammed down it's throat every day on the TV, most people moving out of here because they can't afford it know NOTHING about these other regions, which speaks volumes. It also scares me because if that's the way they think, then they'll probably try to import their california habits- house mongering included- with them.

There is definitely a rise in RE-related advertising. I am coming across it everywhere from internet-radio to AM/FM radio to the little bit of TV I actually watch. A lot of it is awareness and position advertising. Things like "aren't you glad you used an agent" kind of stuff.

(emphasis added)

July Real Estate Prices and Activity Decline in Fallbrook/Bonsall, Says Kalman

BONSALL, Calif.--(Business Wire)--Aug. 7, 2006--
Two prime real estate markets in North San Diego County
showed sharp decreases in activity and prices in July, Jerry Kalman,
RE/MAX United, reported today.
"Average selling prices for 36 homes that closed escrow in
Fallbrook and Bonsall dropped 16 percent to $640,286 after posting a
slight increase in June. Average time on the market, however, declined
to 61 days, which continued an improvement spanning the prior three
months. We also experienced a 53 percent drop in selling activity from
July of 2005, and 32 percent from June of this year," he said
Homes in escrow dropped to 61, which mirrored a statewide decline
in selling activity. The average asking price of those in escrow
increased to $738,799, or $304 per average square foot. During the
month, only 37 sellers received acceptable offers to enter escrow with
an average asking price of $686,837, or $293 per average square foot.
Five of those that entered escrow were listed in July.
Active inventory on Aug. 1 ballooned to 517 homes; however, the
average asking price declined again to $868,486, or $340 per square
foot, as sellers and their agents tuned into buyer demand. He added
that 135 new listings came on the market averaging $809,401 or $330
per average square foot. One fourth of the available inventory
continued to be priced at or above one million dollars.
"Not one condo closed escrow in July, and only one was in escrow,
which indicated an almost complete cessation of activity in single
family attached homes here in the month," he said. The average price
of the 48 condos still on the market showed a slight increase to
$377,043. Of the two North San Diego County communities, Bonsall has
more than half of the condo inventory.
Kalman is a Realtor(R) in the Bonsall office of RE/MAX United

SHTF,

My town was at one point home to the world's largest lumber mill. Gone. Now we have trendy little shops that peddle freaking "art". In fact daughter #1 works at one and gets paid jookie. I always tell them that our town is just big enough to give young people the illusion that there is a future here! Move on. The 2004 survey performed by OSU concluded that almost 40% of the people here are retired. A few are actually from here. (Having worked in a lumber mill means social security IS your "retirement"). The equity locust found us and now I live in "boomertopia". How do I know this? We just had Homer Davenport Days and there was more "tie dyed" sh@t than you could shake a stick at. The "band" was playing Steve Miller's "Big ole jet air-a-liner" (a two chord song from a "one hit" wonder that always made me a little queasy). as we were making our way through town cluttered up with all the Porsches, Lexus', vintage street rods and of course their beloved Harleys'.

I am primarily refuting the suggestion that rents won’t rise but actually fall this time. That would be an extraordinary event and essentially break all the rules

Care to wager a bet? I don't know about having another Great Depression, but a recession is already baked in the cake. I know, I know, I'm just Allah and I don't have tons of numbers and formulas to back me up, but there are others like Peter Schiff who believe the same thing I do and I'm sure he has tons of data backing him up. If you listen to this whole audio, he will tell you how the rents will rise over the next 6 - 12 months before nose-diving into a recession. Then, like I said before, the rents will drop.

SP,

The lowering of domestic inflation is not "artificial" but real. China has been eating US inflation for quite some time now. They do this by pegging the RMB to the USD.

China cannot do this forever, but they have no choice but to continue for quite some time. It may take decades for them to invest enough in internal capital to ween themselves off of the US consumer as a source of GDP growth. For now, the cynical view is that it's a great deal for the US: we get flat/deflating consumer goods and an increasing "standard of living" while all they get is pictures of dead presidents.

But as to the Fed, they wouldn't be wrong to use this macro aspect in their decision.

Randy H,

"Not one condo closed escrow in July"

Does it get any deader than that? Why, I don't believe I've ever seen anything that dead! Now what do you all suppose might remedy this situation? Hmm.

Allah,

I don't make specific predictions because I don't claim to be smart enough to read the future. I just apply what is known about data past and present to the best current models and theory, and from there make general assumptions about what is likely for the future. There is always the chance that anything might happen.

he will tell you how the rents will rise over the next 6 - 12 months before nose-diving into a recession. Then, like I said before, the rents will drop.

Then this would be general deflation, and for rents to "nose-dive" during a deep recession, the deflation would be pretty bad driving CPI and PCE negative. I wouldn't cheer for that. Two likely results of that scenario would be (1) the Fed cuts rates back to 1% or lower, extending general asset inflation and most likely further ballooning housing prices and (2) the "landed gentry" phenomenon starts becoming entrenched as income disparity accelerates.

DinOR,

I just posted that blurb from the wire because I think it shows the sticky, clumpy nature of the correction. Just reading his micro market observations you can see that things are definitely dead, but prices aren't reflecting that yet with only minor declines and even some segments showing increases. It's the part of the cycle where sellers are deciding if they want to be sellers or holders-and-waiters, and buyers are just not in any hurry.

I also think San Diego is a bit of a leading indicator for CA, SoCal at least.

Conor,

I'm with you most of the way too. I don't know when/if inflation will enter everyday consumer goods. I can say this, I believe if/once it does then the current "funk" we're in will be labeled "Stagflation". That is because once Joe Everyman cannot afford those cherished consumables anymore, he'll start getting really pissed off about his stagnant salary. This will bring a lot of political volatility both domestically and internationally because a fall in US consumption really screws a lot of other world exporters.

Randy H,

I got the impression from the article that the "buy side" has completely dried up. They've totally pushed the envelope of affordability. Didn't Fallbrook used to serve as U.S Navy bombing range? I hear they still find shells out there from time to time.

I don’t make specific predictions because I don’t claim to be smart enough to read the future. I just apply what is known about data past and present to the best current models and theory, and from there make general assumptions about what is likely for the future. There is always the chance that anything might happen.

Same here.... I just make educated guesses about what most likely will happen. Actually it would be a bad bet for me because when we're in a recession and money is tight, you probably won't make any effort to pay me back :lol:

SP,

do you have the link to the report? Thanks.

I don’t make specific predictions because I don’t claim to be smart enough to read the future.

You don't need to be smart. You just have to be psychic. :)

"he'll start getting real pissed of about his stagnant salary"

Well it's about time!

During the "boom years" having a job was just a necessary evil one endured for a few hours going through the motions so they could secure a mortgage! That's the REAL road to wealth! DEBT=WEALTH.

Now that Joe Schmuckitelli's check won't cut his newly adjusted PITA mortgage payment he'll start paying a little fucking attention to what's really been going on in his life between the hours of say......... 9 to 5?

Delta needs out from under their pension obligations further burdening an already strained PBGC but you didn't notice b/c you were at Home Depot loading up on pergraniteel that was just replaced about 3 years ago!

Overtime? You're kidding right? My HOUSE makes ME rich! Why would I waste my mutha fuckin' time doing overtime for da man when any fool knows re-installing pergraniteel (messed up the first batch) is what makes you RICH!

I wouldn’t cheer for that. Two likely results of that scenario would be (1) the Fed cuts rates back to 1% or lower, extending general asset inflation and most likely further ballooning housing prices

I highly doubt that the FED will bring interest rates down to 1% again in our lifetime. In fact, if they even put out a message that they are going to start cutting rates, there will be a panic selloff of the dollar and long term interest rates will rise to the double digits. The FED cutting short term interest rates will not make mortgages cheaper, not at this point anyway. FB's will still be FB's.

but prices aren’t reflecting that yet with only minor declines and even some segments showing increases. It’s the part of the cycle where sellers are deciding if they want to be sellers or holders-and-waiters, and buyers are just not in any hurry.

Only because many FB's are putting their mortgage payments on their Capital One cards. Once there time runs out and it will be soon enough there will be nothing they can do to keep their houses. Some were banking on these energy prices to fall so they can breath a little, but we all know that isn't happening any time soon.

I accidentally started reading the last thread and there were a bunch of comments about Atlanta as a city with decent RE prices and QOL.

Saw this ad on craigslist--unbelievable:

http://atlanta.craigslist.org/rfs/191035894.html

RE: return of stagflation

One aspect that may be somewhat "different this time" compared to 1970s stagflation, is the relative lack of power labor has to demand compensatory wage increases. Given much weaker unions, much more pervasive (and easy) global outsourcing and workers today having been conditioned to accept meager to nonexistent COLAs, I don't see private sector wages shooting up anytime soon, or being tied to any meaningful inflation index on a significant scale (CA prison guards union aside, of course).

Randy, please correct me if I'm wrong here, but isn't it possible to define "stagflation" as a period of stagnant GDP + overall rising consumer prices (as in, rising wages are not necessarily a requirement)?

I accidentally started reading the last thread and there were a bunch of comments about Atlanta as a city with decent RE prices and QOL.

http://atlanta.craigslist.org/rfs/191035894.html

Glen, that's nothing! Go to realtor.com and look in the suburbs north of atlanta and you will see tons of houses with pictures in and around that price range. Many of them are new 2000-2006. You get alot of value for the money there for sure. ...and the taxes are much lower.

RE: property tax

I love seeing people being driven out of their houses because of high property tax.

This means only one thing: they have no business there and the land should be put into better use.

Don't feel sorry for them. Their homes must have appreciated significantly and they can move to areas more suitable economically.

The free market ought to be brutal.

Peter Coy of Business Week is on crack.

"Superstar Cities"?

Where does this guy come up with this stuff? If I see ONE MORE article about the "billionaires moving the millionaires out" I swear I'll.............

Here is an article that offers another reason that prices are not declining in the SFBA, despite rising interest rates, rising inventory, etc.

However, it does not explain the still-wide rent-to-buy ratio..

Yes, people in the past also offered reasons why the sun revolves around the Earth. However, they did not explain why planets go into retrogradation.

Here is an article that offers another reason that prices are not declining in the SFBA, despite rising interest rates, rising inventory, etc.

Err... that looks a whole lot like the "They aren't making any more land." argument, and most of SF does not consist of cliff-side ocean-view homes for 24 million. (I can only see that argument holding water in some /very/ limited locales, and the city of SF is not one of them.)

Allah,

Pretty surprising how cheap it is in Georgia. I wonder if this could have anything to do with it:

http://www.bankrate.com/brm/news/mortgages/20030121a.asp

If so, it goes to show what can happen when loose credit dries up.

Too often people only look at one side of the equation — for every poor old person protected by Prop 13 there are dozens and dozens of younger families who are negatively affected by it.

This is an example of compassion getting in the way.

Glen,

Well there's something you don't see everyday! I'm all about getting the bad actors out of the lending biz but how is it possible for a borrower to sue not only the lender, the institutional bond holder and individual investors? Now that's what I call far reaching!

SFWoman: Interesting... I wonder if they don't want to sell, and just want a price tag attached to their home instead. (Yesterday I heard about a wedding that was being thrown by people in the "not only do we have money, but we want to be incredibly tasteless about showing it off" category.)

I'm guessing Peter Coy (the author) hasn't been around SF lately. More likely, he's just thinking "everything must be fine" and is scrabbling for explanations.

HARM

Randy, please correct me if I’m wrong here, but isn’t it possible to define “stagflation” as a period of stagnant GDP + overall rising consumer prices (as in, rising wages are not necessarily a requirement)?

You are correct. I was responding to objections regarding rent price levels, not so much wages. Wages are a lagging indicator, even in the 70s they were lagging, no more so. Rents are a leading indicator. I believe it unlikely that a stagflation scenario would not include rising real rents -- that is the real cost per dollar earned is more expensive to the average renter. Probably, this will be largely because of stagnant wages. Wages have always been sticky too, btw. They probably are less sticky now, but there is evidence both ways. Some economists claim wages are actually stickier now than under big labor of the past. The reasons are pretty complex -- stuff like the shift from employee-focused to role-focused employment.

TN

I suspect if the Fed doesn’t offer a decent interest rate differential, support for the dollar will tumble, driving consumer products up.

Are you suggesting the Fed will begin recognizing dollar-policy as a factor again? It wouldn't surprise me but I haven't seen anything specific suggesting that anywhere -- but then again I'm not a Fed watcher or a Bond trader.

Allah,

If so, it goes to show what can happen when loose credit dries up.

Yes that is part of what will help drive prices down there a bit. Houses were never really expensive there to begin with. When they started building there, people from the bubble areas started buying up the houses left and right causing the builders to build more and the prices to start rising. Being that there is so much land over there, the builders were buying up land and overbuilding there. There are over 22,000 houses for sale in atlanta, many due to foreclosures.

Now that the bubble areas are suffering appreciation in the opposite direction, they can't sell their houses and move there. If you look at the pictures of the houses there, you will notice alot of houses from 2000-2004 that are up for sale. You will also notice that the insides are empty so nobody is living in them. Why would brand new houses not be lived in for years? Speculators? People torn between two mortgages (feeling like a fool). I don't know why they don't just photoshop things in there to make them look like someone is actually living in there. I'm sure eventually the RE agents will start doing that next. You will also see alot of houses that aren't even completely built.

I don't know though, at the rate that they were building these houses, what kind of quality could there be in them? I guess when a realtor states "won't last", we really know what they mean!

Too often people only look at one side of the equation — for every poor old person protected by Prop 13 there are dozens and dozens of younger families who are negatively affected by it.

You have to realize who the #1 voting block is: retired people. Hm, are they going to vote for better schools, or lower taxes for their fixed income?

Where I grew up in NY, the seniors would always tend to vote against tax hikes to pay for better libraries. The district would try to appease them by offering more lowcost "adult" classes (dancing, knitting, etc) and asking non-retirees to go vote.

Here though, it's the opposite - the default is "Yes, please keep schools crappy." and you have to take action to counter it.

I was at the Santa Clara County fair last year and there was a senior holding up a sign asking people to sign a petition to "Protect The Seniors! Protect Prop 13!" - and there wasn't even any anti-Prop 13 ballot measures!