patrick.net

Most people are willing to pay whatever the banks are willing to lend them. So prices are determined by lending.

Good call.

tatupu70 says

I'll pass on the belly button lint.

Just remember, you're passing on that belly button lint for the exact same reason people are passing on houses. The price is greater than the value.

tatupu70 says

but how in the world can you use it to determine the "value" of an individual house?

Detailed knowledge of the housing market, the neighborhood, competing houses, the cost of rent, historical sales that pre-date the bubble. There's no single formula to use, you just got to learn your local market or get suckered.

I'd recommend checking the tax appraisal website of your county. You'll have to Google it, since every county has a different site. If you are lucky, the tax appraisal site will allow you to type in an address and get the entire sales history. That helps a lot for determining value.

It's amazing how prices doubled and tripled during the boom. I'd say the fair market price is what the house sold for in the 1990s. You may have to do a bit of extrapolating by comparing sales of other houses around that time if you don't have a sale in the 1990s.

In my opinion, the fair market price for most housing in south-east Florida (Miami to West Palm Beach) is about 1997 prices. I can't say what's fair market for other regions because I don't have local knowledge, and that's critical.

Here's a concrete example. I rented a house back in 2008-2010. The owner, a retiree, was trying to sell it for $385,000 back in 2007. He couldn't, so he rented it for two years to me at $1600/month. Generally, the rule of thumb is 100x rent is sales price, but that varies a bit depending on numerous things. So you might estimate the fair sales price to be $160,000.

Given that it was a 1970s house, 2 bed, 2 bath, I'd have say the fair sales price is a bit less than $100/sq.ft., but he ended up selling to to the daughter of the person who lived next door. She was willing to pay a bit of a premium to live next to her mother.

Here's the vital info:

Personally, I think she overpaid, but at least she didn't pay the ridiculous 2007 price. I'd say the real value of the house is $140,000

Dan8267 says

Just remember, you're passing on that belly button lint for the exact same reason people are passing on houses.

Uh, OK. Not sure what that analogy is trying to say. People don't buy things that they think are overpriced? Wow--thanks for that pearl of wisdom.

Dan8267 says

I'd say the fair market price is what the house sold for in the 1990s.

I have to disagree with that. Fair market price is whatever anyone (really 1 person) is willing to pay right now. That's pretty much the definition of market price. Just because you wouldn't pay it, doesn't mean it's not the market price.

I do agree with Patrick that rental parity is a good way to avoid overpaying though. You just have to make sure you account for all the costs and savings in the calculation--Bill does a good job with his spreadsheet. It's a little tricky to estimate the present value of the savings when the house is paid off. Inflation, life span, etc.

Market price is whatever the greatest fool is willing and able to pay. Fair market price is what informed buyers who are not under pressure can and will pay.

Dan8267 says

Market price is whatever the greatest fool is willing and able to pay. Fair market price is what informed buyers who are not under pressure can and will pay.

The house sells to the greatest fool though... Fair market in your sense is an imaginary number.

tatupu70 says

The house sells to the greatest fool though..

Not if there are a plethora of houses and few fools left. The fool can only buy one house.

Sometimes when I'm in a foul mood I always enjoy reading the comments in the political section- especially those made on behalf of right-leaning folks, and always get a good hearty chuckle. You can't write comedy as good as this.

Judith549 says

It's YOUR decision if you want to change how you feel!

Not really - I feel that you're trolling & that your attempt has failed. FYI, anyone can lose weight if they starve themselves.

Dan8267 says

Market price is whatever the greatest fool is willing and able to pay. Fair market price is what informed buyers who are not under pressure can and will pay.

Um, what's the logic behind someone "disliking" the above comment?

Anyone who wines about Obama, bailing out/bankrupting Chrysler and GM. Should back up and remind themselves about the crap show that Paulson and Bush did with AIG. Flat out thievery, they didn't bankrupt the company, so all the executives still got their ill gotten bonuses, and Goldman and a bunch of foreign banks got 100 cents on the dollar for their loads of craptacular credit default swaps. I and my grandchildren just got the bill.

The whole euro/Greece bailout is a huge fiasco, but in allot of ways it's working out OK. If you lend money or a buy a financial product from a bunch of numnutz's you deserve to get pennys back on the dollar. It's called capitalism and a free market. The GOP go on and on about it, and they make me play by those rules but when it comes to their .1% buddies it's all bailouts, no bid contracts, and juicy earmarks.

How fast we forget
What will Obama's 2012 campaign slogan read ?

CHANGE WE CAN BELIEVE IN - AGAIN ?

OBAMA has taken trillions from the coffers to fix real estate prices.
Is there a soul alive that ever believed that might be accomplished ?

OK, I should have said "It seems wrong to them that a black man with a Muslim name should be sleeping in the White House." I don't have a problem with it myself.

Black, white, purple, never never trust a Chicago politican
You should know this by now, they are all liars and corrupt !

unstoppable says

Anyone who wines about Obama, bailing out/bankrupting Chrysler and GM. Should back up and remind themselves about the crap show that Paulson and Bush did with AIG. Flat out thievery,

AIG is a fairly large insurance company.. which includes insurance on good chunk of the small and large transportation carriers that goes on every day.

If a company has no insurance coverage, because AIG went under, they could not do basic day to day business like making timely deliveries.

Basic food and durable goods supply chain would halt.

Other professions like doctors, lawyers, dentists, etc etc would not be able to perform their services to consumers because they had no insurance coverage... imagine what the results would be if AIG went under.

Did the light bulb go on yet ? Yes, too big to fail.

thomas.wong1986 says

If a company has no insurance coverage, because AIG went under, they could not do basic day to day business like making timely deliveries.

Large corporations don't poof disappear. They go into bankruptcy court. The business continues to operate while the courts sort it out. If they are truly too big to fail and cannot operate under a bankruptcy court then they should be nationalized and dismantled, not given an endless supply of taxpayer money. AIG should be a bad memory by now. Any company too big to fail is too big period. Obama hasn't done anything to fix the problem, if anything the too big to fail players have gotten bigger.

thomas.wong1986 says

Did the light bulb go on yet ? Yes, too big to fail.

So you're admitting that we need "socialism"?

Too big to fail = socialism
Too big to fail = corporate welfare

I have no particular fetish for "socialism." But I can't stand it when the far right complains about "socialism" but has no problem with bailouts.

TMAC54 says

How fast we forget
What will Obama's 2012 campaign slogan read ?

Change Part 2, this time it's for reals.

thomas.wong1986 says

Other professions like doctors, lawyers, dentists, etc etc would not be able to perform their services to consumers because they had no insurance coverage... imagine what the results would be if AIG went under.

We might just find out, we don't actually need all of this insurance.
What ever happened to be bonded?

TMAC-

Here's what I found on the site you referenced:

The State of the Bailout
OUTFLOWS: $601 billion This includes money that has actually been spent, invested, or loaned.

INFLOWS: $357 billion Money returned and paid to Treasury as interest, dividends, fees or to repurchase their stock warrants.

So, where exactly is the $8.5 Trillion?

tatupu70 says

So, where exactly is the $8.5 Trillion?

In the parallel universe of far right propaganda.

Obabama's approval rating is 41%. Anyone care to run that though the Spin Cycle?

The Real Gas crisis, for MILIONS of poor Americans, is going to be Obama and this Democrats own undoing.

These poor saps are going to get the picture, that the California Liberals are NOT like them, and the poor people in America and their plight, are NOT their priority. The poor want more than a monthly Walefare check. They want stability, a steady job, affordable energy prices, and low inflation. All of that other Liberals crack smoke dreaming bullshit, doesn't mean dick all to the poor ASSHOLES that the Liberals will be looking across the pews wondering will they vote for them.

Mittler is going to take you to school and show you how it's done.
Promising a better economy, not promising free hotdogs for everyone on Bingo Tuesday. But tangible results poor people can believe in.

Romney will win, even if he put this on his tour bus.

"Mittler 2012, because the other Asshole has got to go"

tatupu70 says

So, where exactly is the $8.5 Trillion?

Without any real time researching, you can find trillions. Gubmint isn't exactly advertising ALL their tricks. I consider low interest rates and money printing as stimulus or bailout assistance.
Did any of the programs cure the principal problem ?
http://www.againstcronycapitalism.org/2011/12/bailout-list-some-banks-got-over-2-trillion/

TPB says

Obabama's approval rating is 41%. Anyone care to run that though the Spin Cycle?

Not suprising. Will Mitt "Yes Man" Romney do a better job?

wthrfrk80 says

Not suprising. Will Mitt "Yes Man" Romney do a better job?

It's not about Better anymore in this petty tit for tat politics era.
Was Obama better than Bush?

Can Batman beat up Superman?

Who makes a prettier Jesus Christ, Ted Neeley or Robert Powell?

If you wasted time answering any of these questions, you should have your voting rights revoked.

TPB says

It's not about Better anymore in this petty tit for tat politics era.

Don't we want the best possible candidate for the job? I have no particular fetish for Obama, but I don't know if Romney will be all that much better. I think he'll just do the bidding of Big Business, w/o even thinking. Not that Obama has stood up to Big Business either.

TMAC54 says

I consider low interest rates and money printing as stimulus or bailout assistance.

So, the answer is you pulled that number out of your ass then, huh?

Money printing is not a bailout. When the money is actually GIVEN out to an entity, then that is a bailout. And as the website YOU provided the link to shows, the money that was actually given out is nowhere near the ridiculous amount you keep stating.

The Fed lowers the Fed funds rate during every recession. This is nothing new. They buy treasuries during every recession. It's old hat. That is not a bailout. It is SOP for fighting a recession.

TPB says

Was Obama better than Bush?

Yes.

And now it's time for a...

Flame War!

tatupu70 says

The Fed lowers the Fed funds rate during every recession. This is nothing new. They buy treasuries during every recession.

But they never bought private debt before. Now they have -- mortgage backed bonds.

tatupu70 says

The Fed lowers the Fed funds rate during every recession. This is nothing new. They buy treasuries during every recession.

But they never bought private debt before. Now they have -- mortgage backed bonds.

Agreed--that qualifies as part of the bailout in my mind. There was actually money paid out.

TPB says

It's not about Better anymore in this petty tit for tat politics era.

Well, at least you are admitting that petty vengeance is more important to you than fixing our collective problems.

TPB says

Can Batman beat up Superman?

I don't quote me on this, but I believe that Batman owns a pair of kryptonite-brass-knuckles and once used them to beat-up Superman.

leoj707 says

Well, at least you are admitting that petty vengeance is more important to you than fixing our collective problems.

Oh and you want Me, to believe Obama can fix our problems? What he's just been waiting for the right fucking moment to do all of the shit he made folks like you believe he even can, let alone has gumption to do so, in the first place.
In your mind, Obama is this great Liberal leader, that has lead this country to greatness, and Glen Beck the most revered person in the Universe has polluted my perception of Obama, that if it weren't for him and Rush Limbaugh, then Obama would have an approval rating of 100%. Oh and I'm racist is the back up plan, just in case all other sensible logic fails.

Cloud, are you still bitching about Obama and Goldman Sachs?

Because the media is in the tank for Obama.

Yep. And the largest media networks are right-leaning. So what media are we talking about?

edvard2 says

Because the media is in the tank for Obama.

Yep. And the largest media networks are right-leaning. So what media are we talking about?

Air America, oh wait...

thomas.wong1986 says

unstoppable says

Anyone who wines about Obama, bailing out/bankrupting Chrysler and GM. Should back up and remind themselves about the crap show that Paulson and Bush did with AIG. Flat out thievery,

AIG is a fairly large insurance company.. which includes insurance on good chunk of the small and large transportation carriers that goes on every day.

If a company has no insurance coverage, because AIG went under, they could not do basic day to day business like making timely deliveries.

Basic food and durable goods supply chain would halt.

Other professions like doctors, lawyers, dentists, etc etc would not be able to perform their services to consumers because they had no insurance coverage... imagine what the results would be if AIG went under.

Did the light bulb go on yet ? Yes, too big to fail.

yes AIG is important to business I get it, It needed to be bailed out and bankrupted. That doesn't mean liquidated, the world economy would have kept on going if none of the executives got bonuses and Goldman et. all got 70 cents on the dollar for their paper. It's called Moral Hazard and crony capitalism. Did the Light Bulb go on?

Cloud, I agree it's a shit show at the top, but the fact that Republican appointed justices wrote the disaster, that is the citizens United Decision, I'm voting for the dems as the lesser of two evils.

Chart posted by TMAC54:

That is pretty much consistent with this Nov 2008 article: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/11/26/MNVN14C8QR.DTL

That confuses the heck out of me. Out of the $8.5T, $5.5T comes from the Federal Reserve. I don't see a $5.5T spike in the U.S. debt in 2008. Perhaps my Google-fu is weak.

tdeloco says

I don't see a $5.5T spike in the U.S. debt in 2008. Perhaps my Google-fu is weak.

I bet I know. I remember someone linking an article throwing out huge numbers like this in the past. They are summing all of the credit extended by the Fed, but not discounting the amount paid back.

That is, if the Fed overnight loaned BOA $1B, but BOA paid it back (with interest) then borrowed another $1B a few days later and paid that back, they are counting that "cost" as $2B. Even though the cost to the budget was zero since it was paid back. (Again with interest so net cost was actually negative)

The reason why you don't see the increase in the Fed Balance sheet is because the Fed's risk at any one time was minuscule campared to the 5.5 trillion number because they didn't and wouldn't lend all of that at the SAME TIME.

I don't know the point of reporting the number other than it is just pure sensationalism.

"CHANGE WE CAN BELIEVE IN - AGAIN?"

I didn't believe it the first time. I suspect that many in the OWS movement did and that is why they won't take part in the election farce any longer. They now finally realize that both "political parties" are owned by the same moneyed special interests who don't want "Change" from the status quo they've spent so very much time and money creating.

Obama Wins! ... Ad Age's Marketer of the Year
At ANA Gathering, Marketing Pros and Agency Bigs Tap Barack Over Apple, Zappos

http://adage.com/article/moy-2008/obama-wins-ad-age-s-marketer-year/131810/

Wake up, people. THIS is the game being played:

wbblair3 says

Obama Wins! ... Ad Age's Marketer of the Year

That makes sense, Obama's image is a powerful advertisement.
Sex sells, and Obama has been fucking us for 3 years now.