patrick.net

On boomers and sidewalks.

As you stroll down a sidewalk and someone approaches common courtesy dictates that you move to one side, and the person approaching you should do the same. Each of you pass with no contact and go about your merry way. This however breaks down if the person approaching isn't aware you exist and is accustomed to pissing on the help. Here's what polite society calls for in such situations, give your half, when you determine that pisser-on-er is going to in fact make contact with you, slightly dip shoulder and as contact is made (mind you, you have already been polite, now it is time to defend yourself), straighten out legs and spin pisser-on-er around. It helps if you are 6'2" 190, but if not the abruptness of the leg straightening can more that make up for any size differential.*

Note: not investment advice.

Here's a classic anti Gen-X/Y rant by smug, arrogant (boomer?) columnist, Daniel Gross over at Slate:

http://www.slate.com/id/2134007/?nav=tap3
The It-Sucks-To-Be-Me Generation
Twenty-somethings who can't stop whining about how the economy is screwing them.

Basically, the upshot: all you Gen-X/Yers are a bunch of whiny children. How come you're not all rich and comfortable like me? It's easy, you know, I did it so it *must* be that easy for everyone. Stop being so jealous! Now, where's that bong...?

Hey again Davis Renter,
Well as far as Red State Blue state business, I think the whole concept was a fabrication of the press in order to try and shake up the results of the last election. As far as the bare basics of where similiar minded and politically oriented tend to live, I think the real diffrence here is between urban and rural areas. There are a surprisingly large number of what you might call more liberally minded areas in the southern US. Such areas include Nashville, Memphis, Raleigh, Chappel Hill, Knoxville, Asheville, and Atlanta, and Franklin. I can go on, but you get the drift.I remember taking trips to Asheville and seeing the hippies on the street corners. To me that was pretty far out.They live up in the mountains too. Very much like Humbolt County here.
As far as religion, well religion is everywhere too.Go to Oakland and sometimes the streets are clogged with hispanic immigrants going to Mass. People back home don't try and make you believe as they do. There are more churches, but as a liberally minded person, I would expect that to be perfectly ok.Nobody is going to make a blatent statement about your lack of or adoration of a particular religion unless of course you get into a debate about it. My dad always told me that a wise person talks about everything except 2 things: religion and politics.
I can think of many places in California that reek of what one might define as redneckland, namely Redding. I grew up in the middle of nowhere, and boy.. Redding is about as hick to me as you can get. People cruin' in big honkin' trucks up and down the strip with nothing to do except hang out at In N' Out. I am always reminded that CA turns into stripmall-anywhere USA in about 5-10 minutes outside of SF. Perhaps that's why property costs so much inside the cities because the majority of the state looks like crap.

"I am always reminded that CA turns into stripmall-anywhere USA in about 5-10 minutes outside of SF."

So true...

"Perhaps that’s why property costs so much inside the cities because the majority of the state looks like crap."

Have you seen prices out in San Joaquin, Stanislaus, Fresno counties lately? They are absolutely ridiculous for those areas that do, frankly "look like crap" as you eloquently point out. Not only that but the local economies of those places in NO WAY warrant those kinds of prices. It is speculator, investment property HELL out in the valley.

Face,
Yes, He has a few points:

And so, here we are again. Now, today's twentysomething authors are clearly onto something. College is more expensive today in real terms. There's been a shift in student aid—more loans and fewer grants. The Baby Boomers, closer to retirement, are sucking up more dollars in benefits. There's more income volatility and job insecurity than there used to be.

But then he jumps off the deep-end with non-sequiturs like this:

Draut argues that "with the possible exception of having a larger array of entertainment and other goods to purchase, members of Generation X appear to be worse off by every measure" than prior generations. Huh? How about the Internet and Starbucks coffee and Lipitor and not having to worry so much about AIDS or crime or Mutual Assured Destruction or getting drafted into the Army and getting sent to Vietnam?

"Huh?" indeed....
Yes, now we have Lipitor, the Internet and Starbucks. Big deal --I'd trade any of those (except maybe the Internet) for a speculation-free housing market any day. And BTW, Boomers can't really take credit for the Internet --it was an outgrowth of post-WWII DARPA research.

"Not having to worry" about AIDS anymore? Who the hell does he think he's kidding? HIS was the generation that invented "free love" and didn't have anything deadly to worry about. Mine is the one where casual sex=death sentence. Sure, you can take an endless cocktail of drugs and survive a long time if you're insured and live in a wealthy western country. Sorry poor people & Third-Worlders!

No, we don't have to worry about Vietnam. Instead, we have a constant stream of shithole Third-world countries to fight for various reasons (got nukes, want nukes, got oil, want to annihilate us for naughty cartoons, etc.). Come to think of it, I doubt Daniel himself had much to worry about --wasn't the draft over by early 1970s?

Russian-American M.A.D. No, we don't have that anymore, but nuclear proliferation has actually gotten worse since the Cold War in the sense that even small, unstable countries are more likely to have them. This makes the odds of a terrorist obtaining one --and using it-- that much more likely.

We are supposed to buy into an enterprise that layed our parents off, layed our friends off, and then layed us off. I find that most of these slackers are productive, but not necessarily in the way that the ‘dominant powers’ want them to be.

Why do you hate Amerika?*

*Been laid off in the early 90's (aerospace), and the mid 90's (semicon capital equip). Most of my friends have been laid off at least once. The key is to avoid debt like the plague so you can travel on the unemployment money.

May I assume you suggest that aging people purchase a Dodge Magnum because it can double as their hearse when they die?

Your keen insight infers an encyclopedic knowledge of boomerdom.

May I assume you suggest that aging people purchase a Dodge Magnum because it can double as their hearse when they die?

Your keen insight infers an encyclopedic knowledge of boomerdom. Whoops, nope, sorry, I was mistaken, couldn't double as a Hearse, as the boomers are never going to die.

Boomers are the last generation to get pensions. The big corporations are freezing the gen-x and gen-y out in the cold.

"Some people make it happen with RE investment…"

It's WAY too late in the game for Joe Schmo investor to start purchasing negative cash flow properties. There are now so many cooks in the kitchen they will (are?) trip(ping) over each other to get the hell out.

Mutual Assured Destruction

I love MAD. It means peace. Only through the peaceful threat of annihilation can we achieve peace.

AIDS

Can anyone here guess the probability of infection though a single known sexual exposure to HIV.

Russian-American M.A.D. No, we don’t have that anymore, but nuclear proliferation has actually gotten worse since the Cold War in the sense that even small, unstable countries are more likely to have them. This makes the odds of a terrorist obtaining one –and using it– that much more likely.

Exactly. The chance of a nuclear even has gone up since the end of the Cold War.

It is still possible to make money in RE.

It is still possible to win a lottery.

You can’t really estimate the risk of HIV infection from a single exposure because of the number of variables. Amount of and pathogenicity of virus the infected person is shedding, exact method of exposure, intactness of exposed epithelial tissue, other infectious (particularly ulcerous) diseases, being circumsized or not, even such things as epithelial exposure to detergents before the exposure to the virus can increase the risk of exposure.

Good answer. :)

Are you a medical professional?

Also, with MAD or not, the world has not become safer. How many people were killed by MAD ever? How many people were killed by drunk drivers last month?

This is a false analogy. Lottery is pure luck with a very remote chance of success. RE is a business. There’s an element of luck in business (like in everything else), but it’s only one of many factors (and typically not the dominant one).

Successful business people like yourself with always over-emphasize on their own merit.

When you are winning, it is because of you. When you are losing, it must be bad luck!

It is all about expected value. We maintain that buying negative-cashflow properties at this point of the cycle will bring a negative expected return.

The lottery analogy is not inappropriate.

Moreover, only a statement can be true or false. My analogy as a statement is true. :)

On the boomer vs X gen issue: I’ve seen some pretty egregious behavior all around. I’ve ammended my philosophy to SAS “selfish asshats suck”.

I'll buy that for a dollar!

Well, people like to think that they have much control over their own lives. I know, it is just a comforting thought.

FACE

SOMETHING WICKED THIS WAY COMES...

Fed Focus
Paul McCulley
Managing Director PIMCO
February 7, 2006
mcculley@pimco.com

“…When the cyclical turn comes, it will be a wicked turn, our guts say, as conventional policy gives way to unconventional property market weakness….”

Paul also mentioned something about reflexivity.

Perhaps this life lesson in reflexivity is a freebie that comes with my purchase of The Alchemy of Finance. :)

As far as the Dodge Magnum goes…nah.

Why would anyone possibly want a Dodge Magnum?

What if I buy a negative-cashflow property in an up-and-coming area, invest in major improvements (such as tear down and rebuild), and sell?

The market discounts more information than you think. Up-and-coming areas are especially overvalued already.

I know many people who have been doing this successfully for years - long before this bubble and even during downturns.

The keywords are "long before this bubble". Hindsight is always 20/15.

Let’s take the example which I described before of the church in SF that was turned into a 14-unit condo development during 2003-2005.

How much would that church be going for if the developer is buying it today? I bet the market would already have discounted a large portion of the expected profits.

Land prices are very highly geared. The smart thing to do is to buy land when the market is not discounting high expected appreciation and the competition for land is not feverish.

I was a molecular biologist doing tropical medicine stuff. I know nothing about real estate other than that it is soooo overpriced in San Francisco at the moment.

No wonder. :)

That’s why “major improvement of the property” is a key element of the strategy.

You still have to make more profit than what the market has already discounted.

True enough, but there are such opportunities out there, even now.

I do not disagree. But I think the risk/reward is not favorable.

Where is Prime anyways?

Technically, the Troll-Whose-Name-We-Dare-Not-Speak has been banished, but has reappeared under different names from time to time to heckle us.

Technically, the Troll-Whose-Name-We-Dare-Not-Speak has been banished, but has reappeared under different names from time to time to heckle us.

It is legal to depict the troll in a cartoon?

This just in:

http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/02/09/BUG0QH5NHD5.DTL

Oracle layoff double what was initially expected.

Well, I keep hearing about how wonderful things are again for tech, but the recovery seems to be, shall I say, uneven?

Oracle layoff double what was initially expected.

When I was still working at Oracle there was a layoff. I was so excited because parking would become easier. Indeed, I was able to park (on average) 0.5 floor closer to street level.

I think most affected employees live in the Bay Area. They should probably look for jobs soon or they will have to compete with unemployed realtors.

Oracle hires a lot of fresh grads. Younger people tend to have bought houses later. As a result, an Oracle layoff probably has more effect on the housing market than, say, an HP layoff.

New thread: MBS/CMO data & links, please

There is a reason why the standard commission is 6%. Real estate companies could not survive on less. Some seller lists a home with a Realtor. The Realtor markets the house, advertises it, shows it. That costs money. But if the house doesn’t sell, does the Realtor get paid? No.

That is fine than. If they worth 6%, free market will give it 6%, no less.

Open MLS, banzai!

Since ScottC is so defensive I have to wonder if things aren’t exactly as rosy as he claims.

He claims that RE companies cannot survive with commission below 6%. Yet he says that he made 3% commission this month (as if there is no costs).

So perhaps the profit margin of RE companies can be compressed?

Or he made less than 3% _net_ last month?

If we count only revenue, weird things happens. Remember that right before its bankruptcy Enron was top 5 or 7 among Fortune 500 companies?

I never could figure out why anyone in RE who has no reason to worry about a bubble would bother searching for a ‘housing bubble’ website.

Perhaps they googled "Bay Area Real Estate". We are the first link. :)

Petrick.net, banzai!

For the record, I'm 43 and I suppose that's the tail end of the boomer Gen. I dont take it too personally but I think the generalizations are incorrect. The people that are causing the problems are not so much the boomers as they are the super wealthy. Boomers had the same complaint about the "establishment". It's a pretty weak . Certain people in society gain wealth and others dont. If wealth was suddenly distributed evenly it would be back in the hands of the wealthy in a short period of time. It's a personality trait that has little to do with how old you are.
If you doubt this, just look at the gen X real estate agents.

I seem to see a bunch of young poor stupid people driving SUV's. They have a low resale value and the 20 boppers love em with those 20 inch rims. And what the hell is up with those spinners. I think idiot everytime I see those.

I say lay off the boomers. You will be that age someday too if you are lucky. Show some respect for your elders. You might learn something from them.

When you are clearly so good at your job, you should not let a non-competitive system hide such talent. I say you blaze a path, throw down the gauntlet and challenge other realtors to compete with your service and price. That will show them who is who and what is what.

In humble awe of your sheer tumescence

PS,

You, sir, are a true gentleman and visionary! How could ScottC not help but be inspired by such eloquence and good spirit? I expect a favorable reply from him forthwith.

@iceman,

Well, I thought we had pretty much settled the stereotyping "Us vs. Them" thing with Bay Area Homeowner above. But, since you're bringing it up again, I certainly don't hold being age XX against anyone and I'm sure you're a decent guy. I guess "Boomerdom" is really more of a symbol for greed and corruption than an age range to me.

Suffice it to say that Surfer-X and I would agree with this: "The people that are causing the problems are not so much the boomers as they are the super wealthy."

Not quite sure where you're going with the rest of it, though. Sure, unequal distribution of wealth to some extent is a given in any society, given people's varying talents, business acumen, advantages of birth, etc. I don't recall ever denying that or advocating a communist dystopia. Would be nice to have a more level playing field, regardless of one's age, though. I always thought the American ideal was supposed to be meritocracy, not generational wealth transfer through a de facto nobility.

As far as having "respect for my elders" goes, I most certainly do. My father is one of the greatest men I ever knew. He grew up during the Great Depression, fought the Japanese in WWII, and managed to raise a family on a civil servant's salary. I try my best to practice the lessons and good habits he taught me to this day.

Now, as to respecting some smug, greedy, narcissistic ex-hippie for having achieved the amazing feat of of growing old without O.D.ing...

Well, let's just say we've already covered that ground ;-).