patrick.net

Easy explanation of the NAR report: This is NATIONWIDE, and yes, houses are still very much affordable in a large chunk of the country, thus people can still easily buy( including people moving into those states). Perhaps the numbers for California are very diffrent, as I assume they are.

Owneroccupier Says:

> If you don’t like illegal immigrants, just shut down
> their access to schools, hospitals, etc. Require
> passport or proof of citizenship.

This will never happen since the people that write the big checks to the elected officials that run the country don’t want anything to change. The rich GOP business owners that give the most money to the party want the cheap labor (even if most of the rank and file Republicans want to enforce the laws and get rid of the illegals). The rich Dem. “limousine liberals” that give the most money to the party feels sorry for the poor illegals and will not stop the government from giving them free services or police the border (even if most working class Democrats want to enforce the laws since so many are forced out of jobs buy illegals that work for less money).

@Ray W,
:lol: Sounds like the punchline to a Valley girl joke.

But can’t there be some technicality that changes the citizenship law without opening up the constitutional debate?

For example, only citizens of the US who have lived here X number of years can enjoy the same level of benefits as others.

The problem here, as I understand it, is the Equal Protection Clause. The Constitution is very specific about rights and protections, except where explicitly called out, must apply universally and equally to *all* citizens. So, when Congress or lower courts try to put complex limits on stuff the Supremes tend to knock it down and say "if you don't like it, change the Constitution". Historically, they've applied this evenly to things, like blowing out all the Jim Crow laws and other voter limitation laws (some states tried to make the age higher, exclude bankrupt debtors, non-felon drug users, etc.), and citizenship limitations.

The guys who wrote the Constitution were really paranoid about giving legislators power to discriminate. These guys were very much into making laws apply to everyone, regardless of the politics of the day.

*IANAL

SGV Patience,

Your arguments are logical, but there is an inherent conflict between free enterprise in a loosely regulated free market and minimum livable wages or laws to enforce such.

Companies -- especially those in commodity* economic environments -- are driven entirely by marginal costs and marginal revenues. Therefore, they must pay marginal wages or perish in the wake of competition. There is no force other than government to establish a floor to the lowest marginal wage they are willing to pay. In other words, they must all pay the lowest wages the labor market will bear if at least one is willing to do such. Worse, consumers drive the prices that these companies can command (they are price takers), and consumers implicitly set the cost function. Economically, this is the old MR = MC equation. The producer gets only the marginal revenue that they can earn on price *regardless of their costs*, so they must produce at marginal cost = MR, or perish.

Not to get on a soapbox that will get me into trouble, but this is the entire driving philosophy and emotional force behind the CSR movement (corporate social responsibility). CSR seeks to change the basic MR = MC system by both pressuring consumers to be freely willing to pay higher prices (like Whole Foods using solar power, even though it raises the prices for all their customers "unnecessarily"**), and pressuring producers to be unwilling to produce at MC; or more precisely, making producers have a conscious where they say "we won't produce unless we can get at least X so we can pay our workers Y". This is an attempt to redefine MC.

My own personal opinion is that CSR is a misguided, doomed movement because it ignores basic game theory and our system of market democracy. Again, Whole Foods can do their thing all they want, but they will never survive *at scale, in the long run* so long as at least one direct competitor is willing to forgo self-imposed CSR behavior. CSR advocates say "wait, but people want to shop where they can feel good about it". I say, "fine, at a very small scale some consumers are price inelastic, but eventually competitors get better at pretending they're doing the same thing only without paying the real costs". And, without government regulations to verify, audit, and enforce compliance, there is no real cost associated with cheating. In fact, all the costs are associated with self-imposed compliance.***

* commodity here being the economic term, not the financial market term
** unnessessarily here meaning that companies are not explicitly regulatorily bound to behave in such a manner
*** I warned I would get myself in trouble. No I sound like a market fundamentalist (note to those who occasionally brand me a lefty)

Got the link from Ben's blog.

http://www.inman.com/inmannews.aspx?ID=50677

The California numbers are out for Feb. It will be very hard to give a +ve spin to this.

Addendum:

*i meant to say elastic, not inelastic consumers

Further:

The economic counter to the limitation of immigration as a source of cheap labor (note, not taking a stand on illegal immigration, just all immigration aside from how it gets here) is as such: Within a free market system, any limitations on the labor market, even as imposed by limiting the labor supply available for various jobs, will only result in forcing more imports because consumers have relatively inelastic demand for most non-luxury goods, even for goods that are not vital staples. This manifests itself in consumer price shopping selection behavior. Consumers will take competitor's goods based on price, even over quality. Or, they will find reasonable substitutes for the price they demand.

The bottom line is that cutting off illegal immigration is not enough. You also have to erect complicated, punitive trade barriers. You can see how well this is working in Europe at the moment. For the US, the effect of limiting cheap labor sources (cheap meaning workers willing to work below the rates immigrants are for the same jobs) would only benefit the Chinese and other global suppliers, and would rob the US of domestic economic activity and tax revenues.

My younger brothers friend insisted that there was no such place as New Mexico or Turkey.

I guess that Hungary is out of the question then.

Ray W Says:

"When I first moved to California from New Mexico I was at a party and a young lady asked me if I was from Texas because of my mild southwestern drawl. I told her no, I was from New Mexico. She looked quite puzzled and asked; “Like do you hafta have a green card to stay here?” "

I had a friend living in Los Angeles who had to go to another U Haul rental place since he could not convince the guys behind the counter that they would not be violating the "no rentals to Mexico" rule if they rented him a truck to take to "New" Mexico...

SGV Patience Says:

"I would pose to you the example of Costco that has so far been able to fend off Wal Mart’s Sam’s Club in the retail warehouse market. As a follower of finance I’m sure your aware of their business model and the benefits it offers their employees while they remain the market leader."

Costco "is" the retail warehouse market leader just like K mart "was" the discount store market leader...

Wal Mart under Sam Walton was a much different company than it is now and I would not want to try and compete with Wal Mart at any level...

Guys, here is the official defnition of *existing home sale* and *new home sale* from US Census Bureau

The devil is definitely in the details. Here you go:
http://www.census.gov/const/www/existingvsnewsales.html

New home sales and existing home sales are released each month at about the same time. Many comparisons are made between the two series, but before doing any comparisons, one must be aware of some definition differences that affect the timing of the statistics.

The Census Bureau collects new home sales based upon the following definition: "A sale of the new house occurs with the signing of a sales contract or the acceptance of a deposit." The house can be in any stage of construction: not yet started, under construction, or already completed. Typically about 25% of the houses are sold at the time of completion. The remaining 75% are evenly split between those not yet started and those under construction.

Existing home sales data are provided by the National Association of Realtors®. According to them, "the majority of transactions are reported when the sales contract is closed." Most transactions usually involve a mortgage which takes 30-60 days to close. Therefore an existing home sale (closing) most likely involves a sales contract that was signed a month or two prior.

Given the difference in definition, new home sales usually lead existing home sales regarding changes in the residential sales market by a month or two. For example, an existing home sale in January, was probably signed 30 to 45 days earlier which would have been in November or December. This is based on the usual time it takes to obtain and close a mortgage.

Effective with January 2005, the National Association of Realtors created a new monthly series to overcome the lagging effect of the existing home sales definition. This new series is called Pending Home Sales and is based on sales of existing homes where the contract has been signed but the transaction has not been closed, making it roughly equivalent to the new home sales definition. Monthly estimates are expressed as an index where the year 2001 has been set to equal 100.0.

Those of you who worked in RE and mortgage industry please chip in, does a tightening in mortgage lending standard lengthen or shorten the transaction process? By how much?

SGV Patience,

We are generally in agreement. I would counter that what Costco has accomplished is a strategic triumph more than a disproof to the economic fundamentals I proposed. Costco is thus far winning a defensive battle against Wal-mart, not an offensive initiative. It is much easier for Costco to defend it's markets against Wal-mart than the converse, especially since Costco has met or exceeded Wal-marts scale and logistic supply chain advantages. The CSR aspect is really a PR aspect, which Costco is masterfully doing well without really investing in CSR to the degree many companies like the apparel sector (namely The Gap) have been doing.

As to "on-shoring": I do think this is sustainable over the medium-term. What is great about America is our dynamism and fluidity. We are willing to move often and change jobs often. This causes social disruption, but makes us very hard to compete against over the long-term. I have never really questioned the long-term effect of global wage arbitrage: we will win more than we lose. It's happening now as the comparative advantages of places like India are eroded. India has not invested in restructuring old, rigid systems anywhere near to the level the US has always done. So, jobs come back, although in a different form. In fact, more GDP per capita results than would have if we'd just done things the old way and protected our markets with barriers.

The problem with manufacturing is that the US has progressed to a point of extreme capital-heavy manufacturing. That is, we utilize technology for productivity to a point that makes us more reactive, but less labor intensive. So, the minimum wage factory worker is a thing of the past. The new factories require far less labor per output, and that labor is much higher skilled. So, I do not see a return of manufacturing in its old form, ever. I see already a large flowering of micromanufacturing which is about 80% capital and 20% labor, and going more automated every day.

By the way, this is a great contradiction for the CSR advocates. We should be welcoming labor-poor, capital-rich manufacturing and happy to see the opposite leave. The former is environmentally more friendly, more efficient, and more flexible. The latter externalize much of its costs to the environment, illegal immigration and uneducated non-skilled workers. But CSR has gotten into bed with big labor unions, so they can't take this stand. Instead they are trying to protect socially irresponsible industry.

Well, onshoring or offshoring, the only way that this country will continue to do well in the long run is we educate our kids well so that even those working at U-haul knows that New Mexico is not another country.

Wanna disucss why school district has become such an important aspect in home purchase? I really don't remember it being this way before, it is a recent phenomenon within the last decade, and it is even more ridiculous that given such a RE value, CA is able to turn out such crappy schools. Where did the tax money go?

The bottom line is that cutting off illegal immigration is not enough. You also have to erect complicated, punitive trade barriers. You can see how well this is working in Europe at the moment. For the US, the effect of limiting cheap labor sources (cheap meaning workers willing to work below the rates immigrants are for the same jobs) would only benefit the Chinese and other global suppliers, and would rob the US of domestic economic activity and tax revenues.

I never see cutting off illegal immigration as a way to keep wage high. The Market has a price for every job and setting up barriers will prove counterproductive in the end.

However, there are two issues:

1) Selective law enforcement - those who ignore the law should not be given the unfair advantage of cheaper available labor over those who obey the law.

2) Massive undesirable immigration is a direct result of having a welfare state. We may need to approach the problem at the souce and reform the welfare system.

RE: costco, walmart, whatever...

To me, no business can be considered sucessful unless it has absolute pricing power.

Nice how a fucking troll who posts the typical tired drivel,

My condo is appraised (actually a lot of them got sold) at 170k. So I gained 50k in 9 months.

attracts our favorite SF troll.

Ok assholes, here is how it works, a gain is realized when sold, an appraisal means nothing. My dog's house got appraised last week at 1.5 million, yet I only paid $50 bucks for it, I've "gained" $1499950

On a different topic,"cheerful" use your fucking spel chek.

As a child of the welfare state and some less than stellar parents I say Nuke that MF’er to Kingdom Come! While morally I do support universal health care on some level. Hand outs need to die. If you can’t maintain in your local market MOVE and get a job somewhere else.

Help should be available to those who seek personal development or those who have just suffered setbacks.

Universal health care and education are good ideas, but they need to be executed correctly.

Look at this Marina House. You guys think it’ll sell for its $2 million asking?

I did not sushi in Russian Hill last weekend, but I did not find that particular restaurant. :( Nevertheless, it was very good. :)

I was typing fast and had a few typos. I would really love to hear from Peter P and Randy about my viewpoint as they can think rationally.

I don't know anymore. Currently, I care more about sushi than real estates.

I did not sushi in Russian Hill last weekend

not = have

SGV Patience ,

here is my Republican streak, this country is based on self-reliance. If government offers help, great, if not, fine, the only thing I gripe about is the government doesn't seem to have a lot to show for this much tax money. If they leave me alone and tax me less, excellent.

My best friend went through the Kobe quake in Japan, over 4,000 people died within seconds. Guess what, nobody sat on their ass waiting for government aid, they self-organized, share food and water, and by the time the rescue team came, the local residents have long started well coordinated self-rescue effort mobolising all driveable automobiles and tools there is left. Well, if some of the Katrina victims chose to sit on their ass and wait for help, that was ok with with me too. But shooting rescue team and police with looted guns? WTF is that? I am paying my tax money to sustain sorryful asses like that?

I always believe that god helps those who help themselves. If someone chooses to have 3 kids with three different guys when she is 15 and passes down this glorious tradition within the family, be my guest, just not on my tax dollars.

wowowow is just MarinaPrime, he always uses the same website for his reference. Why are you guys repsonding to trolls? Just ignore them, save the breath.

My best friend went through the Kobe quake in Japan, over 4,000 people died within seconds. Guess what, nobody sat on their ass waiting for government aid, they self-organized, share food and water, and by the time the rescue team came, the local residents have long started well coordinated self-rescue effort mobolising all driveable automobiles and tools there is left.

This is why they deserve the BEST BEEF in the world.

Kudo to the Japanese for bringing out the best of humanity in the face of a major calamity.

wowowow is just MarinaPrime, he always uses the same website for his reference. Why are you guys repsonding to trolls? Just ignore them, save the breath.

It's fine. Let's just try to make peace. We do not have to be confrontational. The truth will eventually assert itself over wishful thinking. He could be wrong, we could be wrong, it does not matter in the end.

Owneroccupier, who the heck is Marina Prime? What kind of name is that?

Too bad, I was planning to buy sushi for MarinaPrime. Oh well.

@Cheerful & wowowowow,

I've read your comments, and think I can help clear up something for you: you have the wrong blog. This one is called Patrick.net, aka "SF Bay Area Housing Crash Continues" and, while we welcome intelligent contrarian debate, contributors here are generally bearish on the housing bubble.

You might want to try out Condoflip.com or Craigslist. Or any site sponsored by NAR, CAR or MBAA. I think you'll find the people there a bit more sympathetic to your POV.

Please also feel free to visit some of our more bullish past threads, such as:
No Bubble, My Bad :-(
Jealous Bitter Renters
One for the Bulls

Cheers,
HARM

And while I know no social program can fix their general malaise this villanising of the poor disgusts me.

Overtime, education should help. On the other hand, we all need more spiritual lives.

Hi Peter P - Why would I deserve sushi? I’m confused.

I don't know. Perhaps you can buy sushi then. :)

I would like prices to come down of course, but at the same time, I don’t want negative repercussions for the economy and jobs as a whole.

Definitely. We can only hope. If a sustainable soft landing is at all possible, that is fine with me.

As an atheist I still believe in human spirituality, I just don’t need a little black book to define it for me. I find many of the Righty Evangelical types to be decidedly NON spiritual.

Did you mean that you are agnostic?

Hey wait a minute wern’t we supposed to be talking about Real Estate.

Real estate or sushi.

And, I was talking about the price that actually got closed and not the asking price but I know a dumb ass loser like you will not understand.

Hmmm I be's mighty confused, you said above.

My condo is appraised (actually a lot of them got sold) at 170k. So I gained 50k in 9 months. I am not selling as I am positive cash flow there.

Ok asshole here is how it works, your "gain" is not realized until you sell, until you are just some fucking jerkoff that took out a NAAVLP, congratulations on your financial acumen.

Randy perhaps you could shed some light on what a "gain" is?

You first read your post learn how to spell.

And, I was talking about the price that actually got closed

And while we are at it, learn some fucking grammmemmemememr,

There are blogs for you, kindly take HARM's suggestion and post your incomprehensible drivel there.

I believe in human spirit and the unknowable power of the universe (universes?) I do not believe that power is embodied by a singular sentient being. So I would be an Atheist.

Sounds good to me, although I do believe in an immortal being of infinite love.

cheerful, are you the same RUBEN GHOSAL that lives in Calcutta? Hmm funny above you list your age as 31, you list it here as 39, are you a moving star? do you live in Ballywood?

tinyurl.com/j969p

Anyhoo Ruben, enjoy your equity! You Sir are a money management wizard.

@ SGV Pat

crap

remove spaces for full effect.

You friendly neighborhood low-rider.

whoops, sorry less than followed by i then greater than, close with less than, /i and then greater than.

Would a bar called "The Black Hole" work in Calcutta?

@Bap33, I too wish the very worst to happen, perhaps if we shot enough of the greedy ones, the nice ones might return.

I want unethical loan writers getting fitted for chain bracelettes. I want developers that sold brand new homes to investors to be dragged through town behind a blind horse with the runs. I want house investors that rent their newly purchaced brand new home through the welfare program, Section 8, to be buried in an ant hill neck deep and honey smeared on their eyes.

Perhaps karma will get them.