patrick.net

This also happens to be one area where government on all levels (federal, state/local) has been horribly negligent. Witness recent waves of title/mortgage fraud, selling to illegal immigrants/dead people, appraisal fraud, MLS bogus re-listings, etc.

absolutely, housing is a gold mine involving huge sums of money. it's only a matter of time before the sharks come circling. another reason it shouldn't be trusted to the private sector without a lot more checks and balances.

5. Massive GSEs market intervention, allowing private mortgage lenders to shift default risk from themselves onto taxpayers, FCBs & institutional investors (using the magic of MBS/CMOs)? Check

6. Complete erosion of lending standards, thanks to Fed’s easy credit + GSE’s MBS/CMO mortgage risk transfer? Check.

you'll find booms taking place in a dozen other countries, however the US Fed setting interest rates very low flows on into international markets, so could perhaps be held to blame for the effect in other countries also...

20. Irrational optimism of the Boomers.
21. Irresponsibility of the Boomers.
[...] etc

and that is why markets cannot be 'perfect'. not perfect in terms of allocating social resources and providing a reasonable outcome, anyhow.

and that is why markets cannot be ‘perfect’. not perfect in terms of allocating social resources and providing a reasonable outcome, anyhow.

Yes, you are right. However, there is really no way to make a perfect world. Whatever needs to happen will happen.

Let's try to help as many people as we can.

you’ll find booms taking place in a dozen other countries, however the US Fed setting interest rates very low flows on into international markets, so could perhaps be held to blame for the effect in other countries also…

Bingo. The international carry-trade via ultra-cheap $USD was a huge factor in spawning RE bubbles all over the globe. Maybe not the only factor, but definitely a big one.

@DS,

I liked your point about the international carry-trade so much, I added it as item #11.

New York Times article on the 1906 earthquake.

http://tinyurl.com/zcps9

Plethora of hysterical rhetoric appealing to people's greedy, base nature such as, "Housing never goes down!"
CHECK.

Every uneducated-schmuck and his brother quitting his day job washing dishes and shining shoes to make a million as a genius mortgage whiz.
CHECK.

Dudes who invested in themselves, putting prime-time and substantial money into obtaining college degrees being locked out of overvalued housing market.
CHECK.

Being locked out of your old neighborhood because the middle-class,
two-story house you grew up in, in South San Jose, is worth almost a million bucks, such that now only a high-priced lawyer or doctor can afford to live there.
CHECK.

Etc., etc., etc...
CHECK

Haha

very nice intro...

I know this Margaret Hwang woman, before she got married. Haven't been in touch for years.

Let me put it this way, she is not the brightest bulb in our circle of friends, but definitely a climber. Used to intern for some big name senator or something, tried politics, didn't work, wanted to do ibank, didn't work. Kinda surprised to find her in academia. One should check who sponsored that study, I bet it is some realtor/builder-related interest that is doing so.

SFWoman Says:

"I make a little one inch long measurement with my fingers when I see a man in a Hummer. Apparently this is common. I read an article in Harpers just yesterday about a Hummer owner and it said a lot of people do that."

There was an e-mail joke floating around a while back that said:

Porsche Turbo = I have a small dick

Ferrari F430 = I have a very small dick

Lamborghini Murcielago = I have no dick

I have personally noticed an inverse relationship between the height of the 4x4 and the height of the guy (and you know what they say about short guys with small hands):

Stock Land Cruiser or Land Rover = Avg. Height 6'

Chevy Tahoe or Dodge with 2" lift kit = Avg. Height 5'8"

Hummer H2 with 6' lift kit and huge wheels = Avg. Height 5'6"

Given that she ended up marrying a plain looking college professor, I guess her pitons weren't very good :P

FAB,

LOL, I can't imagine the state of a McLaren F1 owner.

99. Someone you know creates the Bubblizer in an attempt to help educate "marks" before the become the next F!#cked Buyer and perhaps worse and yet a greater fool.

My timing couldn't be better seeing the reappearance of MP.

hate to rent,

Buy a Mini Cooper or a VW GTI. Then they'll probably think you're gay.

Skibum,

"#18 already happened years ago."

What? I thought we were doing the lead up to the bubble.

I drove a 1978 Ford Granada. What did that make me? John Holmes? (yea right)

What happens when girls buy a nice "fun" car?

For example, I want to buy a green mini cooper S convertible or a red Honda S2000 as soon as is practicable. Does that make me the lady in the Century 21 commercial?

I wish my daddy had the money to buy me a NSX when I was in college...I'd probably total it in 6 months...

Skibum,

Seriously? I don't know. I had a very good public school education in this country. Probably a better one than the pricy private college I attended afterwards.

Hate to rent,

Actually, high on my wish list would be a Honda CRX in good condition. But Peter P and my parents would probably call that a death trap.

SFWoman,

Sorry, I know. I'm actually a fairly sensible and cautious driver. But something the NSX really gets under my skin. It's just such a beautiful car.

"yes, my del sol is also a death trap. how about a volvo"

That reminds me, I knew a pretty cool guy in high school who had a Volvo. He was obsessed with the Smiths.

But could any VW or Volvo ever be considered a cool car?

Friends don't let friends drive exotic cars? :P

hate to rent,

I wasn't thinking a car would make me cool (God knows I've made my peace with being a dopey nerd wall flower), I was just afraid it would make me even less cool than I am.

astrid Says:

> LOL, I can’t imagine the state of a McLaren F1 owner.

Anyone that pays well over $1mm for a 10 year old car and another $250K to make it street legal is not a poser overcompensating for a small dick, but a serious car guy (I’ve met about 1/3 of the American F1 owners)…

astrid Says:

> What happens when girls buy a nice “fun” car?

Guys assume she has a rich husband or boyfriend…

hate to rent,

Hmm, my random advice on looking for a girl... I don't know, just fool around and don't be in a hurry to get tied down to a girl, until you're absolutely sure she's right for you. You got at least 15 more years and you'll probably be more desireable with time.

And even if you plan to buy her a diamond ring and give her the big wedding, at least first toss out the idea of eloping with a gold band. If she's okay with that and is without bitterness after two weeks, then she's halfway to being a keeper.

FAB,

"Guys assume she has a rich husband or boyfriend…"

You know, the Mini is known as the mistress car in Shanghai. It's so identified with being a mistress car that no self respecting woman would drive it.

SFWoman Says:

“Last year where I grew up in upstate NY a guy gave his 16 year old a Ferrari. The kid wrapped it around a tree killing one or two friends in the car. Do you know what my fifth grader will get to drive when he is old enough? That ‘92 Mercedes wagon in my garage. “

Giving a boy under 21 a super fast car is more dangerous than giving a 5 year old a loaded gun. I was at a table full of guys in Monterey after spending the day at Laguna Seca last year when one guy told us about a kid that got a 400hp Corvette ZO6 for his 16th B-day. The kid flipped off the road and died a few weeks later. Every one of us agreed that we would have also died before making it to 17 if we had a 400hp car at 16…

hate to rent,

And if you're just interested in some companionship rather than serious commitment, female friends can still work for that purpose. They might not be able to see you as a romantic interest, but that doesn't mean they can't see you as a friend with benefits and hanging out.

@Randy H,

"The Bubblizer" --sweeet! You obviously spent some time on this --thanks from all of us non-financier types.

Am I the first to notice that the default income & down payment is exactly ONE HAHA ?? :mrgreen:

hate to rent,

I don't think you really can. You can talk about blood diamonds. You can talk about how much that money can grow into in 30 years. You can talk about the de Beers cartel and the retail mark up for diamond jewelry.

But really?

Just stay away from the one with stars in their eyes. A diamond ring is no biggie, but marrying a materialistic harpie is a lifetime of emasculation.

Thanks HARM. There's still quite a bit of work to do on it, but once we get this thing settled I hope to turn it into a more accessible web-page for the masses.

And yes, I tried to use HaHa as inspiration when setting the defaults. Hey HaHa, you only need about 156% appreciation in a condo over 7 years to justify purchasing a home on 1-HaHa salary with 1-HaHa downpayment.

Bap33 Says:

> so FAB,,,,, what does that say about guys like me that lower their cars???

Guys that lower the car they drive every day usually fall in to a few different groups (guys that lower their M3s or GT3s with H&R coilovers don’t drive them every day) :

Lowered older American car = Hispanic Guy

Lowered late model car = Asian kid (or younger white kid who saw Fast and Furious too many times)

Lowered Mini Truck = White guy who worships Eminem

Lowered Full Size Truck = Older White or Hispanic guy who didn’t go to college (90% chance that a the truck has either a Raider or Harley sticker)

Ughh, good question. Get them while they're young and don't want to be tied up. Be reasonable generous to them. Be a good listener. At least hold out the option for more...

Lots of girls are lonely too. You just need to figure a way to tell them that it's better have a good time and have a trusted friend, until they find "the one."

skibum,

"I’m sure you received an excellent public education, but one andecdote doesn’t refute overwhelming data. We’re in deep doo-doo."

No, I was just giving my personal opinion. My personal experience is with mainly with other people who also received excellent public school educations. I guess I can't make a judgment on the matter so I'll go with your assessment.

Regarding the literacy issue of this country, or this state, here's a real story for you.

I walked into a Post Office the other day to ship off some packages and replenish my stamp stock. The postal worker at the counter asked me which stamps I would like to get, I said, the Ben Franklin collection would be nice. He was like, huh? Franklin What?

Judging from his accent, he was either born in the US or came here very early in life. I don't know what the school teaches these days.

Thanks HARM. There’s still quite a bit of work to do on it, but once we get this thing settled I hope to turn it into a more accessible web-page for the masses.

Randy,

I played around with the Bubblizer a little, and noticed a couple of small bugs:
1. You can't get an IAR figure if you hold property longer than 15 years (shows as "#DIV/0")
2. The columns on the right don't self adjust to show numbers greater than column width (shows "#######")
3. It's possible to enter a holding period longer than the mortgage itself (which produces a bunch of "#NUM!" errors).
4. The data on left only allows you to go up to year 30 (no 40 or 50-yr mortgages).

Howdy fellow bubble-heads; I have not posted in quite some time mainly because I've been really focusing on my CFA studies and consequently gave up my blog addiction for quite some time. And also it is quite clear that the housing bubble is on the way down, so not much to debate anymore!

Quick observation for you all that prompted my stop back: I checked the San Francisco MLS today, screened for condos under $350K in all SF Districts. There are 17 of them out there; last time I checked 2 months ago there were only 3. SF is still not budging much at all on prices but inventory is building; I'm not surprised that SF will be the last city in CA to take the hit as we are the strongest economically (yes it is true even though that is the favorite RE bull statistic).

And finaly, I'm sure pretty much everyone noticed the 30-year bond top 5% over the past few days, 10-year not far behind! With the interest rates further eroding affordability we are almost fresh out of buyers that can afford anything here in the Bay Area.

HARM,

Mind copy/pasting this to my blog for the record. I'll incorporate into the next rev.

The intent is only to allow for 30 year mortgages and 30 year holding periods, as it would require a two-step model to handle the "after the home's paid off" period.

Anyway, no one should ever get 40 or 50 year mortgages, so I don't want to encourage this.

(Anyways, you'll see the carrying costs of financing make it such that you should never carry an expensive home for very long on financing anyway. They are actually more affordable with shorter mortgages, which makes sense if you really think about it all from a high level and account for interest costs and alternative uses of those funds).

"the right one is suppose to be like"

First of all, I'm all of 25, so take all this with a big lump of salt.

Things to watch for unless you become fabulously wealthy and just want a trophy wife...or want to become a trophy husband.

Remember that a spouse is a life partner. You guys need to be able to communicate with each other, or at least figure out a pecking order so one person isn't constantly questioning the other person's decisions.

I'd say go with someone who is not materialistic, especially in their desire to have things just so. Apparently some materialistic wives drive their husbands to perform better...I'd say it's not worth the stress.

Get married because you love each other and are amazingly happy to be in each other's presence. Must have connections in your heads or your heart. Good sex is great, but don't trap yourself into a marriage where sex is the only thing that works.