patrick.net

Randy H,

Again, a picture of mid-western sensibility! Is it too much to ask that some semblance of objectivity be put in place? Since many here like to keep the segregation between RE and Wall St. strong I'll follow suit as well. Most people that were daytrading their own accounts through ETrade in the 90's were not doing so with money that should have went to their mortgage payment. Most of this was "disposable" income and in the end I do mean disposable. Very few if any of those people got a dime of their money back. Why? Because they signed a "cash account agreement" which binds them to arbitration first! The avg. size of an ETrade acct. in the 90's was 2K! The damage was limited. With a mortgage re-setting some guy who works at a loading dock could be out that much per month! What if you're house declines 2K (or more) a month? There is just so much more at stake here to treat this so casually.

I’ve tried the reverse psychology angle and it’s extremely difficult! Firstly, I have a tough time finding anything at all positive to say about this “greater fool” pricing model.

Oh, DinOR, you have to turn off certain parts of your brain. Sometimes, you just need to resort to rhetorics like real estates never go down, or, everyone wants to live here.

When they ask me why I am renting, I can jusy say that I cannot afford it at this point, BUT I am thinking of getting a real estate license. You will see them smile again. :)

Don't get me wrong! I'm not rushing to the defense of some idiot that bought the most expensive home he/she could swing with a NAAVLP at the height of the market! We can't legislate out stupidity. What we can do though is create an environment that fosters accountability among those in RE to not be able to get away with saying WHATEVER it takes to close the sale! Discussing flaky, frivolous lawsuits is fun and all, but real people will get real hurt as the housing bubble unravels.

Peter P,

Note to self: Turn off part of brain that controls nausea due to B.S overload. Check.

Vipers: Great for selling in flashy hi-rise urban areas. (Wilshire, downtown, NoHo)

Hummers: Best for white-flight suburban/exurban areas and "God 'n Country" conservatives. (OC, Simi Valley, Fontucky)

Escalades: Terrific for selling to soccer moms & middle class aspiring to be upper middle class. (see 'Hummers' minus the conservative slant).

PS,

Good call! True, I lost my money in a ponzi/pyramid scheme. I am responsible for believing someone could bring me a 50% ROI per year, month, week. But that doesn't make the "promoter" any less of a thief! That's why we have laws that make ponzi's illegal.

Another aspect that hasn't been getting much air play is; if we have such a level playing field and realtors DON'T run a monolpoy then why is the whole FSBO end of the market nothing more than a "cottage industry"? No need for regulations here! Nothing to see. Move along people.

Well, a lot of us would buy quality, reparable products if they were available. I spend quite a bit of money on work shoes, for example, becuase the good ones last much, much longer than the cheap ones. I've tried them all, from the cheapest to the most expensive, and have learned without a doubt that it is better to spend $250 on a pair of shoes than $100; the $250 last maybe 8 times as long as their cheaper cousins, and they look better and are more comfortable. You can only resole the cheap shoes once; after that they'll fall apart. The expensive shoes can be resoled 6-7 times before overall wear and tear does them in.

But with some consumer products, you don't really have a choice. TV's are a good example. The $70 Sony DVD player doesn't really last longer than $40 generic model. And there's no way to repair the Sony when it breaks, you pretty much just have to buy another one.

I would gladly pay more for stuff that can be repaired and taken care of, but it isn't always an option these days, which is sad.

I just hate plastics. I would like to see more products using aluminum, stainless steel, magnesium alloy, and titanium. Plastic is a destroyer of culture.

The NAR, their subordinate state associations like the CAR, the MLS boards, et al are a de facto monopoly. That said, being a monopoly is *not* illegal in the US, despite common belief to the contrary. What is illegal in the US is using mopolistic power to the harm of consumers. This is why things like collusion, price fixing and conspiracy are illegal.

The manner in which MLS boards operate exclusively is illegal. Whether this time around the DoJ and FTC will finally break up that cartel is yet to be seen. If you care about this, then support the OpenMLS Act initiative in California (for CA voters). http://www.lao.ca.gov/ballot/2005/051017.htm

I contend that the way residential real estate transactions are conducted in the US today is flawed on many levels, the Realtor(tm) monopoly being but one. As DinOR has pointed out, *every single other* type of complex transaction has faced regulatory leveling, open competition, reduced prices/costs, and increased efficiency. What makes RE so special that it is singularly excluded? The American Dream(tm)?

I would gladly pay more for stuff that can be repaired and taken care of, but it isn’t always an option these days, which is sad.

It is very difficult and expensive to set up a support network for existing products. For most consumer products, it is simply not profitable. This is why things are now pretty much disposable. At least they are cheap enough that most people do not want to get them fixed.

What is illegal in the US is using mopolistic power to the harm of consumers. This is why things like collusion, price fixing and conspiracy are illegal.

How are consumers harmed when homebuyers are making "millions" while renters stay "poor"? :)

I just hate plastics. I would like to see more products using aluminum, stainless steel, magnesium alloy, and titanium. Plastic is a destroyer of culture.

I agree that disposable consumables should favor tin. In fact, few people realize that the metals are the *only* category of recylables that produce a net resource+energy benefit. All other types of recyling cost more than they save.

But for some applications, plastics are a miracle. I rather like the use of plastics in medical environments, for example.

But for some applications, plastics are a miracle. I rather like the use of plastics in medical environments, for example.

Including scalpel? Or do you mean post 9/11 airline "steak knife"? :)

This must be what the American auto manufacturers had in mind.

Perhaps. Expect plastic engines soon. ;)

I did a project some years ago for a major global consumer electronics company (you can probably guess which one). I tasked with logistical optimization for one of their midwestern national refurbishing centers; the place where broken stereos, etc. were sent to be fixed or scrapped.

The depressing thing was that they were adapting to the Wal-Mart effect. Wal-Mart and others were increasingly returning massive quantities of unopened merchandise, using their supplier power to force the returns. The "optimized" solution was to scrap (literally crush in giant compactors) a huge portion of the perfectly good, unopened product that came into the facility. I could go on and on about why this is so economicly, logistically, cost-accounting wise, and linearly optimized mathematically.

But it just felt like such a f@cking waste.

Speaking of repairability,
I collect antique radios and televisions. Some go back as far as the 1920's, with HUGE light bulb shaped vaccum tubes. Many of these sets were used for decades, and the backs often have penciled in repair notes, such as when a tube was replaced, or when a condensor was wired in a series to equal out what the old one was. These things get hot, have to warm up for a few minutes, and are often heavy and clunky. But ironically, I have found some of these in barns, attics, and basements that look as if someone ran over them with a car. Yet more often than not, they fire right up with little to no work being required, and that's on something that sat for 30 years or more. Amazing. I completely restored a large GE tabletop set from 1937 that picks up shortwave( international) channels. I listen to it about once a week, and get this- tune my watch to the nuclear clock channel.Things weren't neccesarily built better back then, but built in a way that was easy to keep running or working, and from a pool of mass produced commonstock parts. These days you can buy a Chinese made scooter at Tractor Supply company. Great. Well once the clutch goes.. too bad. The company will probably be gone, or the model discontinued.I wonder if the landfills are filling any faster.

The “optimized” solution was to scrap (literally crush in giant compactors) a huge portion of the perfectly good, unopened product that came into the facility. I could go on and on about why this is so economicly, logistically, cost-accounting wise, and linearly optimized mathematically.

Well, optimized solutions are not always intuitive, right? ;)

Hey Randy,
A long time ago, I worked at one of the two big-box home improvement cebters When I was in high school, We had a return policy that stated that unless the manufactor was willing to take back a defective item, we would have to throw the item into the crusher.Most often than not, the manufactor wouldn't accept the items back. The reason was so that employees wouln't do something like take a defective item home. I can recall countless times this would occur. At the time, Theysold Stereo equipment. One person returned a Kenwood Stereo system, with 12" subwoofers, a record player, CD player, and a dual tape player. The only problem it had was that the "loud" button didn't work. It would've been easy to replace the 50 cent button, but I had to lift that whole unit up and upend it into the compactor. We threw everything in there too. water heaters, lawn mowers, furniture, and so on. Just so that we employees wouldn't be "tempted" to take broken, sometimes non-broken merchandise home with us- supposevly so we wouln't use it? I'm not sure whats so bad about someone using something that still works Vs throwing it away. It made me sick sometimes to see what we had to discard.

O.K! So I've had my "pound of flesh" today! Thank you, I feel much better.

Nomadtoons2,

I have been a fan of tube powered amplifiers my whole life! Back in the late 70's transistors were finding their way into more and more applications and then finally the last place they belonged! Musical instrument amplifiers, transistors were touted as lighter, more reliable and with all the warmth of a tube. Wrong. They were just about as heavy, just as unreliable and sounded like hammered dog turds. It's taken years, and will take many more before I "de-digitize" my personal life! I've stopped buying CD's years ago and have now dusted off, yes, my old Teac reel to reel. Blows away CD's. I've gone back to vinyl LP's and am scrounging for an old tube amp. It has been well worth it! I don't find myself "listening more and enjoying less" and Johnny Winter and Buddy Guy sound like they used to. Yes I can live with the "hissing" in between songs. There I said it!

An old TEAC reel to reel huh? I used to have a TEAC.. don't recall the model. But it came in a huge suitcase configuration, and had 4 parts that all folded more or less out of a cube. The reel to reel part with the heads and reels of course, and a unit that attached to it that was the same size with a graphic equalizer, volume control and VUE monitors. Then there was a speaker on each end. It sounded really great for something as old as it was. But I was in college and the thing just weighed a ton. Sold it for 50 bucks. Wish I hadn't.
I do have one old tube amp, one that came out of a church, so it's around 100 watts per channel. I've blown up several sets of speakers because even though it' 100 watts, you have to have electrocoil speakers to do the job right, and those damned things are expensive. Yay. another tube guy for once./
sorry I got off the subject folks.

nomadtoons2,

The reasons these guys were destroying perfectly good merchandise were many fold:

It protected the brand-equity and marketing strategy. When they used to allow resale of repaired or returned items, it ended up eroding their "brand".

It discouraged employee theft (although this was a red herring, because they had security like Fort Knox). Moreover, it discouraged employee resale-rings. They used to let employees actually buy (for a deep discount) returned/repaired items like $700 multi CD decks, TVs and such. But they found that a few employees would start side businesses getting all the other employees to buy their allotment of "company store" stuff, then they'd flea market the goods. (today it would be e-bay)

It was actually cheaper to overproduce items and ship them to Wal-Mart even knowing that up to 20% would be returned unopened. They made more money on peak order fills then they lost in overproduction and disposal.

It ensured upgrades. They very specifically sought to limit the quantity of in-use models so they could drive their marketing strategy of planned obsolescence.

...but here was the reality. You got to watch some outter suburban 25 year old with limited education, working for $8/hour, put a $2,500 deck into a compactor and pull the desctructo button. Actually, this was a mega operation, so you got to watch this poor guy put like 40 $2,500 decks in the ubercompactor; an amount more than his annual net pay, and his job was to destroy it.

Nomadtoons2,

Mine is the XR1000 so it's from the early 1980's which alot people at the time said was crazy b/c CD's were just coming on line. I shelved it and got on board w/CD's. Mistake. What could be wrong here? A client (in his 70's) career IBM guy got me started "reverting" back in the late 90's. True, CD's don't snap, crackle or pop but you are giving up so much warmth and tone. For me it was a bad trade off. Will I have to replace a tube, or drive belt in the "reel" once in a while? Sure, but by then I plan on having a nice tube radio to hold me over until my equip. gets back from the shop. What's the big? For me, CD's are for when you're stuck in the car. Please resume the "piling on" of realt-whores.

(it was actually that gig that helped to put me over the edge and get out of management consulting and into telecom software, where at least i could sleep a little better at night)

Actually, this was a mega operation, so you got to watch this poor guy put like 40 $2,500 decks in the ubercompactor; an amount more than his annual net pay, and his job was to destroy it.

Well, two guys in an ICBM silo can, upon authorization, kill millions of innocent people. Yet their job is to maintain peace through the balance of terror.

Well, two guys in an ICBM silo can, upon authorization, kill millions of innocent people. Yet their job is to maintain peace through the balance of terror.

True enough. But at least it wasn't *me* who put them there.

True enough. But at least it wasn’t *me* who put them there.

Don't worry Randy. Perhaps we can share some new insight on morality and humanity over sushi.

Good god, I must be feeling my corporate social responsibility inner liberal side today. I think I'll go listen to an old Roger Waters solo album now and take a nap. Ayn and Milton would be so disappointed.

Peter P.- aren’t most plastics petrolium based? Perhaps they will become too expensive to be used for disposable crap in the near future.

I thought plastics are by-products. Unless the demand of gasoline drops and other primary products drop significantly, I do not see much problem.

Since the print media gets so much of their revenue from the Real Estate machine it seems a little conflicted to me.

The RE machine needs the printing media at least as much as the other way around. Newspaper will say whatever that increases readership.

We do not need any rebuttal, current and future events are on our side.

Ray W,

Every day Ray, every day. I call this "willing" a market rally.

Albeit, a Mercedes is nicer than a Civic, but Some of the New Lexus and Acura models are catching up real fast, and if Mercedes and BMW do not improve their product, they will start losing market share.

I will take a comparable Lexus over a Mercedes any day (LS - S Class, GS - E class) Even if Lexus becomes more expensive than Mercedes, it will still sell better.

Lexus keeps improving. Mercedes keeps de-evolving. I do not know what is the the appeal of MB anymore. (If you want a status symbol, you really need a Bentley anyway)

Ray W,

It's worse in Las Vegas. I'm doing a little scouting for a friend that just sold his SoCal home and looking for good "lease w/option" deals for the guy. I kind of look after him since, well since I can remember. Anyway, all of the realtors I speak with when responding to an ad on C/L or whatever get downright militant when you challenge their view on the market. Doesn't bother me. Some threaten to hang up, but never do. I'm just looking for a lease w/option where at the end of 1-3 years my friend can have the home's value appraised 12-36 months from now, not a "buy-out" based on today's still ridiculous prices! And what thanks do I get? Guest Editorials.

These people need to be challenged. Your blog and other blogs are good but this different view needs to be in print for people to see also.

Do you want to be a guest blogger here? We would love to have more rebuttal threads here.

I’m just looking for a lease w/option where at the end of 1-3 years my friend can have the home’s value appraised 12-36 months from now, not a “buy-out” based on today’s still ridiculous prices!

Do not use a future "appraised" value, because it can be a fake.

Try to broker a deal based on a relationship with the OFEHO price index.

For example, if the OFEHO price index for a region is 400K, and the house "worths" 500K now, try to peg the exercise price to something like "125% of OFEHO index price". This way, there is an objective and official target for both parties.

Ray, you can also register (using the link on the right column) yourself and Patrick will give you permission to post threads.

Peter P,

Thank you and I don't know how any reasonable person could object to that! Suffice it to say I'm bearish on residential RE, in particular Las Vegas but I wasn't sure how to structure the deal so as to get maximum bang for the buck out of the price correction. I did get a few realt-whores to agree to having 3 appraise-whores and take the average of their findings though. I just can't see how these guys could possibly be deluded enough to believe they have any leverage in the deal at all. When it's said and done I think we're talking about a short sale anyway! I guess that's what they are trying to prevent?

Hey Ray,
good for you. I'm glad someone else is writing to newspapers about the utter happy face they seem to put on housing. I've written to the San Jose Mercury, The SF chronicle, The Alameda Sun, and most recently- the East Bay Express, which of all publications I would never expect to run an article like they are this week entitled" The adjustable rate mortgage", where couples are shown buying a house over getting married. Hell- one of the first thing the article says is a quote from a young couple that says: "Homes could be 2 million bucks, I have to buy now." or something like that.The article is amazingly rosey and is written as if the obvious insanity these couples are participating in- placing a crappy stucco house first- are perfectly normal and all is hunky-dorey. I was really surprised to see this in an "alternative" publication until at the end it said:" and yes- the author just bought a house in the Oakland Laurel neighborhood" It was stupid. An article written by an author who probably wanted to write something justifying something he did that makes no sense- buying a house at the peak.
I also have written to local officials, most of whom never respond, or do so with simulfaxed copies with generic replies. I have written to the mayors of Alameda, Oakland, and SF.. again with no response. I always stress the harm this housing bubble will have on the future economy and social class structure of the state and area unless more is done to reverse it. I also mention that HOA's( homeowner associations) need to have less power over local government since we are now at an almost 50/50 homeowner ratio and the non- homeowners don't get to participate in community planning. Again- No answer.
After doing this for almost a year, I have gathered that no politician, business leader, or publication wants to even touch the subject, that is unless they can spout about how good things are in housing. It was only recently that the SF chronicle posted a story about the 36% decline in Home sames last month, but only after the numbers make it painfully clear that the sales of homes last month is point-blank proof that the bubble is either collapsing or very close to doing so. Keep writing!

SFWoman, Lexus is truly amazing. It has the power to raise prices, enough said. Trust me, it will last.

We bought a used 2003 Lexus. The only regret is: we should have bought a 2000 and paid less. :)

I'm trying to contact Mr. Barry to see if he'd be willing to author a guest blog-thread here. Below is a Feb. attack piece from the Santa Cruz Association of Realtors(tm) "Legislative Watch":

---

FEBRUARY 2006

Trial Lawyer Seeks to Qualify “Open MLS Act” for 2006 Ballot

A proposed ballot initiative, called the Open MLS Act of 2006, has been submitted to the Office of the Attorney General for the State of California for preparation of a title and summary. The initiative’s proponent is Mr. David Barry, a San Francisco attorney. Mr. Barry has a long and contentious history with organized real estate and has been the attorney of record for several lawsuits involving both NAR and C.A.R., including attacks on the MLS and the REALTOR® trademark.
June Barlow, Vice President and General Counsel for C.A.R. has said that she believes Barry’s effort is “ill-conceived.”
“There’s no need for an effort like this because free enterprise has worked well for a number of years,” Barlow said, adding that it “shows a lack of confidence” in attempting to place the issue before the voters.
The purpose of the initiative is to establish a “California-wide residential multiple listing service open to the public and realty agents alike.” The proposed open MLS would contain listings of homes for sale and rent and provide free access to buyers and renters.
Under the initiative, any licensee entering into a contract with a seller who requests a MLS listing would be required to list that residential property in the open MLS. The operator of the MLS would not be able to claim any copyright protection in the listing compilation or any part of the data. Any person, upon written request, could receive any or all of the non-confidential data in the MLS once every 24 hours at no charge. The initiative also establishes sanctions, fines, and the right to “bring an action…in any superior court” for damages and/or attorney’s fees. An individual need not sustain damages to bring suit.

The initiative currently is pending at the Office of the Attorney General. To qualify for the ballot, initiative supporters would need to gather the signatures of approximately 373,700 registered California voters.