patrick.net

-ed

Actually I did see in the last week, some more listings came online with raised pricing, even for the same house that were sitting for a few months. Peninsula, South Bay, East Bay, such whacky pricing does exist. Now, this is only what the sellers want, it doesn't mean jack until the house is cleared at that price.

We will see very soon if these sellers can be saved by the *spring*.

Which is more terrible: Katrina? Or Hiroshima?

I've been to both Hiroshima and Nagasaki, nice photos of dead babies etc. The only mention of the Japanese STARTING the war in the Pacific is in Nagasaki, and I quote, "The war in the Pacific was a direct result of the Marco Polo bridge incident".

The atomic bombings were bad, but the firebombings of tokyo were worse.

Oh come now, kindly delete email address from post

surfer-x, my apologies but I don't have the power to remove what I have posted.

[previous post edited]

I think what happens is that if you post a topic all replies get emailed to you, perhaps there's an issue on the wordpress end.

Unalloyed, no worries :)

Sean, I have asked many people if there EVER was a law requiring owner occupication in brand new sub-division homes here in Ca. The reason I ask is because this crud of investors buying up 3 or 4 single family homes in a brand new sub-division has never went on before.

This is like a new form of capitalism that has spread down to the middle-middle class. Spruikers are running courses telling people how to do this to 'get rich quick'. So people who have enough equity in their existing place can get an approval to buy more and more investment properties. It can backfire and burn them, however, if they pay too much for a place and can't get enough rent. Same as flippers can get burnt if prices don't go up. However, it's creating a wealth apartheid of sorts - a new class of life-long renters who missed the boom - it's as though the market is being manipulated by self-interested individuals buying up property to create a class of landlords and a class of renters - people who would ordinarily have been able to afford a dwelling. Affordability is still quite good in a lot of parts of N. America however, as posters and www.demographia.com have pointed out, and I'm not quite sure why the disease hasn't spread everywhere - the high demand areas like CA, NYC, etc seem to have most problems with this kind of investing.

I personnaly think the welfare backed section-8 program is covering the note on many on the “straight to rent” homes around here as the occupents happen to be full-on welfare folks using section-8 to pay their rent. That bothers me because that means tax payers are making the note payment for some rich investor. That kinda stinks. Section-8 is supposed to be for low income and not to support the wealthy.

I don't know how much of the note the Section-8 would cover. I assume landlords can only charge 'reasonable' rents and Section-8 may be capped at a limit? In which case the landlord has to make up any shortfall out of their own pocket - which is where they can come unstuck. Prices in Australia got so high that they calculated it would take 35 years just to break even on a 100% loan at, say, 6% interest, assuming you stayed in the country throughout to earn maximum tax deductions. What sort of 'investment' loses money for 35 years? But the bubble wasn't helped by the Federal govt allowing tax deductions on any losses (effectively being equal partner in a loss, and forking out Treasury money to the landlord) and also capital gains tax was halved...

Given that it's the nominal and arbitrary cost of land, not the cost of construction, that causes housing inflation, it's a rather cruel trick...

Unalloyed, Surfer-X

I edited the post with X's email. This is my thread and I'm not getting any bad email responses, but I use gmail like Peter P so maybe it's rejecting them as spam.

SFWoman had posted something in the previous thread about someone trying to use her email address to reach X too. It may indeed be that someone is trying to spoof email in order to email our favorite boomer sympathizer, but I'm inclined to think it's a worldpress config issue.

I would be really worried if the economic fundamentals like affordability weren’t so out of whack.

I agree. So long as the educated class can do as well or better by renting then there is little tension between them and the owning class. The worry would be that, over time, the land-owning segment acquires so much land that they can effectively charge "economic rent" in addition to opportunity over the renting classes. I don't really see this happening except in rare situations in the US. When things get that out of whack there tend to be reactionary backlashes politically and economically, as people leave the area or vote in restrictive tenant's rights laws (usually a bit of both).

It's probablay more cyclical than secular. The asset side of wealth accumulation in this country is not by-and-large land accumulation, but corporate accumulation (which includes commercial RE). I'm much more concerned that nearly all the future annuity cash flow streams are going into the pockets of 1% of the people in this country.

Randy H,

Thank you for the editing.

Section-8 is supposed to be for low income and not to support the wealthy.

I know a guy who has an administrative job at the local welfare office. He also owns rental property and brags about how he manipulates welfare to pay for upgrades. Here's how it works. He screens for tenants who qualify for Section 8 and/or CalWORKs (formerly AFDC) cash aid. Once the tentant occupies, regulations allow for the owner to apply for assistance to obtain repairs at government expense. He brags that he has had a new roof installed, windows replaced, new paint etc., all at taxpayer expense. You would think it was a conflict of interest, considering who his employer is. But then here in the central valley corruption is the rage.

Spring Bounce, Spring Bounce, now's your chance to get in before the normal 20-50% yoy appreciation.

Get in, buy now, Spring Bounce Spring Bounce.

Rannnnnndy H, tanks man! ;)

Come on ya'll go get your Boomer on, go see "Stoned" the riveting Biopic of debauched 1960s rock icon, Brian Jones, the charismatic guitarist who founded the Rolling Stones but was fired in 1969 and found dead at the bottom of his swimming pool a few weeks later. A travesty of the first order, to think of the orgies and drug binges this fine young boomer missed out on just saddens the heart.

I noticed this when I went to Hiroshima too. I asked a bunch of my Japanese friends when I was in Japan if they had ever heard of Pearl Harbor, and none of them knew what I was talking about.

They should know better now especially if they like Ben Affleck. :mrgreen:

I have only been to Nagasaki. Traces of the past can still be seen. That said, nuclear weapons kept us relatively peaceful for more than 60 years now.

It is interesting that in Japan the bombing of Pearl Harbor and the Rape of Nanking are swept under the carpet while in Germany Holocost denial or anti-Semitic statements can send you to jail.

I heard that in Austria you can say that what Hitler did was good but you cannot say that he did not do it. Is this true?

In general I think they’re a gracious people.

I do think they are an honorable people. Anyway, they did bring us sushi.

And we've come full circle...back to the California Roll!

And we’ve come full circle…back to the California Roll!

But the Japanese also invented horrible things, like imitation crab!

Did they invent chia pets?

Did they invent chia pets?

Huh?

But radiation levels are now higher in the earth’s atmosphere.

Source: Law & Order: Criminal Intent—that is how one can date a painting or see if it is a good fake post-1945.

Isn't this primarily due to the dramatic rise in coal combustion post WWII?

I heard that in Austria you can say that what Hitler did was good but you cannot say that he did not do it. Is this true?

The Nazi party and any related political activity are illegal in both Austria and Germany. Holocaust denial is specifically illegal in Austria; I'm not sure about Germany, probably in some form. It's rarely enforced unless it is an exceptional circumstance involving some popular or influential persona.

Austria is also the source of such lovely folks as Joerg Haider http://www.adl.org/backgrounders/joerg_haider.asp A guy who has made an art of pushing the very edge of nazi-like ultra-right nationalism. He was forced from official power in Austria due to EU pressures but is still enormously influential in Salzburg and Carinthia, and is even popular in Vienna.

At least in the US similar ultra-right groups are mostly marginalized. In much of Europe they are suprisingly popular and rapidly growing in most western countries outside of the UK; a fact not advertised by the current European leadership.

Carbon 12 (6 neutrons, 6 protons) 98.8%
Carbon 13 (7 neutrons, 6 protons) 1.1%
Carbon 14 (8 neutrons, 6 protons) trace formed when nitrogen 14 is hit by cosmic rays in the atmosphere

The ratio of C13 to C12 is often used to describe carbon pathways through ecosystems. It is also useful because petroleum is richer in C12 than C13 and so ratios are changing due to the influx of CO2 from burning of fossil fuels

Atmospheric atomic testing produced a huge amount of C14 and caused a spike in C14 levels in the atmosphere and consequently in vegetation, our tissues, the ocean, etc. There was a distinct cut-off of atmospheric testing in the early 1960's and so we have a really nice "tracer" to track such things as dissolved inorganic carbon in the ocean (think thermohaline circulation-- though CFC's are better for this).

So--
coal combustion-- fiddling with the C13/C12 ratio's
atmospheric nukes-- fiddling with the C14 quantities

now, back to my hobby of hoping for a real estate crash...
My old un-used realtor that I once had a high opinion of has been re-listing his house almost every two weeks since December. He just re-listed it for 30k higher a few days ago. Nothing in that neighborhood is going for that high. I think he's losing it.

I love this forum. Thanks for the clarification Sassy. Your realtor(tm) is exhibiting a classic case of MLS-monkey-business syndrome.

I know that in INDIA high paying computer JOBS pay more than some positions in US (75K versus 55K)

My friend in India makes $160K a year total compensation, salary, espp, 401K, bonus and has 150K in the bank.

True, but you need to compare jobs at the same level of talent and experience.

Or we could just let you tell us what it is since you are a pillar of knowledge in all matters.

I would be wary of claiming materials or land or labor alone drive the price of houses. And the price of creating the houses is just as important as the demand to buy those houses as many on this blog assert.

Yeah, sorry, my remark was a little too summarised. The point I'm making is that the bubble is pretty well exclusively due to land price inflation/speculation. Remember that the same Californian bungalow built in 1930 has gone up and up in price, almost regardless of the maintenance performed on it. Same old house. Valuers always separate out land value from building asset value. Land value has gone up, I dunno, 3x compared to construction value, despite temporal ups and downs in building materials and labour costs. I argue that technological advances have made it cheaper, quicker and easier to build a house than ever before, as you would expect.

Further, new housing as a proportion of all housing sold in a period is quite low. It all goes up equally with 'market rates' is the usual pattern.

If you can point to increases in materials and labour in all of the dozens of countries experiencing a housing boom right now, that would be interesting. (Apart from inflationary costs in labour forced so that building tradesman can afford to buy their own inflated house. Housing inflation eventually will flow on into everything inflation.) Especially given that the boom has much more to do with:

- liberalised credit products from lenders, prepared to lend much more to higher risks, based on their revised assessments of risk of loss to themselves
- historically low interest rates for long periods, due to 9/11, stock market crashes, slow economy, etc.
- increased activity of spruikers encouraging people to buy investment properties by gouging the next guy for a safe and secure retirement and to 'get rich quick' and 'be a property millionaire'
- new perceptions by investors (being just about everyone) that residential housing is a safe and guaranteed 'asset investment class' for retirement purposes, with no attempts by govts to limit this activity

It's a ratchet effect, or 'sticky' price-fixing effect.

Gaurav Agarwal of IIM-B’s Class of 2006 bagged the highest job offer from Barclays Capital, London, during final placements. His salary: $193,000

hmm, that's about £100,000 p.a. That would be possible in London for an absolutely exceptional graduate who impressed his employer heavily with his knowledge, leadership ability and future prospects with the organisation. Which would be expected from the absolute top graduands. That position would almost definitely be in London, which pays finance workers quite well. Finance and other services became the lifeblood of England, once they gave up colonialism as a way of getting loot... ; )

Why real estate commissions will fall
An industry insider itemizes the factors that will soon drive down brokerage costs.

Interestingly, there are large differences in the total cost of a property transfer between countries for purely parochial reasons. There's an article in The Economist comparing a number of countries I could dig out. e.g. in Australia it's about 7%, in the US 12%. Note that high transfer costs act as a brake on inflation as a natural 'barrier to entry'. You don't want to do it too often.

Note that RE agents in Oz only make about 2-3% commission, and mortgage brokers only make about 0.7% commission on each sale, compared to more like 5% for each in US. You can see where the 5% difference between Oz and US is going straight away, not counting differences in property transfer taxes...

Well, well, well...the condo that was priced "low" in my building is no longer sale pending. Financing fall through? Muwahahahahaha...bet mister second condo feels pretty dumb relisting at $10k HIGHER since mister first condo is back on the market. He was already listed $20k higher than the first condo - thought he would up the ante another $10k. I love it. Burn baby, burn.

Muwahahahahaha…bet mister second condo feels pretty dumb relisting at $10k HIGHER since mister first condo is back on the market. He was already listed $20k higher than the first condo - thought he would up the ante another $10k. I love it.

Perhaps it will go pending, just to fall through later and then be relisted yet 30K higher.

Gotta love it. :)

Debt = Wealth

There's a big disconnect between the cost of living here (S.J.) and the typical household income able to pay for the current house prices.

I see only two explanations: either folks are "well capitalized", ie, the very rich from places like Hong Kong, Singapore, Bombay. Essentially, their household income is just a consequence of their immigration ticket, "the job". But they were already rich without the job, - the elites from their country;

or the other group, folks who are very stressed, a paycheck away from disaster. Folks who are very stressed, if they are survivors and it in for the long haul, may eventually have a decent standard of living, if incomes rise, and housing prices rise, and they continue to service their mortgages and property taxes all the while. But it is stressful, and there's always a temptation to "opt out"to a cheaper region.

The point I’m making is that the bubble is pretty well exclusively due to land price inflation/speculation. Remember that the same Californian bungalow built in 1930 has gone up and up in price, almost regardless of the maintenance performed on it. Same old house. Valuers always separate out land value from building asset value. Land value has gone up, I dunno, 3x compared to construction value, despite temporal ups and downs in building materials and labour costs.

Indeed. Shiller basically proved this in his chapter on the housing bubble. While some construction related specialties and raw materials have gotten more expensive (thanks in part to bubble-related demand), these costs tend historically to fluctuate within a relatively narrow band around overall inflation. The recent doubling or tripling of RE values has little-or-nothing to do with the costs of construction or raw materials. When we talk about a "housing bubble", we're primarily talking about a LAND bubble.

When we talk about a “housing bubble”, we’re primarily talking about a LAND bubble.

What about the MILLION dollar Malibu mobile home? What land?

Essentially, their household income is just a consequence of their immigration ticket, “the job”. But they were already rich without the job, - the elites from their country;

This is one attempted explanation of why people can buy expensive real estate with seemingly inadequate income. However, this THEORY is turned around and is used as the CAUSE of the housing boom.

In the end, it is a bubble no matter how they spin it.

(The same "very rich" people in Hong Kong or Japan were somehow unable to prevent their own housing bubbles from bursting)

There’s a big disconnect between the cost of living here (S.J.) and the typical household income able to pay for the current house prices.

The cost of living in SJ is not high at all. Rent is actually very cheap among high-tech employment centers.

But no, housing bulls like to belive that renting is not an option, because people LIKE to buy regardless of price. OWNING in a transitional neighborhood in East San Jose is much better than RENTING a 4br house in Palo Alto. Because people WANT to own.

HA HA

" - thought he would up the ante another $10k."

That would have been understandable, since in the time it took for escrow to fall through, the property certainly must have appreciated at least 10K.

Peter P you have tact.
"transitional neighborhood" = transition from cheap $hithole to expensive $hithole???