patrick.net

Gotta love my partner. He rents that 4-bedroom house in Brazil for $1,150/month, and he's charging the visitors an average $100/night/room. He's almost fully booked. The "Beautiful and Spacious Suite" is his own bedroom. LOL! He's truly a business man.

https://www.airbnb.com/s?host_id=10133644

edvard2 says

Real Estate is perhaps a bigger risk since its value is heavily tied to the overall job market and in particular the success of the middle clas

Demographics is going to drive a lot. Unlike smartphones, we can't import land, and we're not building near enough new housing at any rate.

is the basic lay of the land, demographically from now to 2060. Blue is age 22-79, red is age 22-39, showing the induction of Gen Y (the echo boom) along with the original boomers, who are still going to occupy if not consume housing for the next few decades.

Our economy is a battle between rent-seekers, and landlords still have a very strong whip hand, even compared to doctors hospitals and corporate america overall.

If Coke raises prices, you can skip a week of Coke consumption or go store brand. You can't skip a week of paying the man for housing. Try it sometime at least.

Bellingham Bill says

Tons of land, but you've always got to outbid somebody else for the good locations

Now add in more warmth and rainfall from global warming plus off grid technologies like solar, hydrogen and greywater recycling.

You can go "off grid" all you want but if the nearest Trader Joes is more than an hour away, count me out.

Then again my big biz idea (the one thing I'd do if I had $10M of capital available) is a global Costco / Whole Foods / Trader Joes delivery service, since I do see reliance on weekly shopping to be the big pitfall of OTG life.

http://en.wikipedia.org/wiki/Pirate_Joes

http://www.theflyingpig.com/tfp/shop.asp

I here by am officially changing my position on a future of George Jetson flying cars. At first I thought man was too stupid and needed protecting from such carnage. Interstate off ramps would like the aftermath of a Hornets nest meets soap suds.
But Fuck 'em, put rocket launchers and pules phaser lasers to vaporize bad drivers veering off in your direction.

But of course that would still wouldn't make us neither immune nor impervious to wonton lust of the Liberals who want to tax every one for shit, because it gives them a hardon.

WOW! The UNtrustworthy are certainly in control of what information is apparent to the people!

Say hey! This was in the Wall Street Journal on March 30, 1999. Note "... how much it will buy."

Holy cow/interesting/compelling ...!

And where is it up to date??? Right here ... see the first chart shown in this thread.
Recent Dow day is Friday, May 9, 2014 __ Level is 104.8

WOW! It is hideous that this is hidden! Is there any such "Homes, Inflation Adjusted"? Yes! This was in the New York Times on August 27, 2006:

And up to date (by me) is here:
http://patrick.net/?p=1219038&c=999083#comment-999083

WOW! The UNtrustworthy are certainly in control of what information is apparent to the people!

And "ThePublic Be Suckered"
http://patrick.net/?p=1230886

What I find so so amusing about the bulls patting themselves on the back about how well they "understand the market" is their ignorance of the acts of the Fed and the Treasury. Yes Ignorance...ignore...ance! How in denial can you be? How can you even CALL it a market at all when the Fed has been spending up to one billion dollars a day on failed mortgage-backed securities for not just a week or two, but continuously, day in and day out, for up to SIX years, now.

One of the reasons the crash is so apparently coming is that even the dovish Fed hold-outs are are now warning of the dangers of stopping the tapering of QE. 9 figure per day sums have been propping up your favorite. "markets" for years and years.

Explain to us one more time which fundamentals are going to replace the 85 Billion dollar per month goose, as it is slowly reduced to nothing but a fowl dinner for two.

When I hear an RE bull bragging about his winnings on the back of mind-bogglingly massive money printing is not a thought of "rats...I wish I'd been more optimistic about that market too", but rather. "yeah well you're not really welcome, but I'll say it to be the bigger man. You're welcome. But our children's future pain on your behalf is hardly my pleasure."

And I'll take a cup of the java...as long as it's "ice" coffee.

Jeez, I'm sure glad the upper classes have so many arguments.

deepcgi says

ignorance of the acts of the Fed and the Treasury. Yes Ignorance...ignore...ance!

The steam is running out of em big time. Market forces will work its way out from here on cuz federal debt is simply unsustainable.

http://www.concordcoalition.org/issues/indicators/projected-debt?gclid=CMq4iNOCo74CFYJqfgodPXQA6g

In California we pay 78 cents per gallon tax, that's enough.

So not only do you pay taxes on every gallon you buy, you pay extra taxes on every mile you drive. As usual the bums and welfare cases will be exempted. The same fools will then claim they want progressive taxation and would want the rich folks to pay their "fair share" and increase the per mile tax for people with money to a gazillion percent. Then the bums will demand a new car with the extra money-while living in Malibu in sec 8 housing- all the while screaming about income inequality and how evil the 1% are.

No country for hard working folks. This country is only for people who know how to work the system-weather you are a bum or a billionaire.

clambo says

that's enough.

It's never ENOUGH.

deepcgi says

spending up to one billion dollars a day on failed mortgage-backed securities

while there is a strong correlation between Fed MBS buys and home prices:

http://research.stlouisfed.org/fred2/graph/?g=Amg

(MBS YOY growth is blue, Case Shiller is red)

"failure" has no meaning to the Fed, since it is the only entity in the dollar bloc that can print.

Plus you have to demonstrate how the Fed's MBS purchase have "failed" already; with prices well off the 2010 lows, no new borrower should be underwater now, even with a low-down FHA offering.

No doubt I have family a little outside Toronto. It's expensive up there. I don't know how they afford real estate. It's like Orange County Ca or San Francisco prices for everyone. Plus wages have stagnated like USA. I mean a movie costs you about $13 and that's couple years ago. It's plain expensive in Canada.

The Professor says

Buy now or be priced out FOREVER!

http://research.stlouisfed.org/fred2/graph/?g=AmB

blue is money supply

red is case shiller

showing money supply has doubled since 2005, while prices are just about back to 2005 levels.

I can't see the future, but I do know everything is predicated on higher home valuations, the system is totally biased towards enforcing that trend.

Bellingham Bill says

Canada, on the top half of the continent but with less population than California, has 60 acres per capita, but most of these acres have minimal community amenities.

Absurd. Most communities in Canada have space to build. The one in Yellow on your map have lots of space.

It is not a lack of space.
It is not that the price doesn't make it feasible to build. Prices are very high.

So why aren't they building?

Because of an evil scheme authorities are using to boost growth: make housing increasingly more expensive - by deliberately suppressing supply.

Not only it is evil, it totally fails to boost growth in the long term.

Vicente says

Yeah everyone wants to drive on the roads, nobody wants to pay for them.

We already pay for roads with the hundreds of other taxes we pay. When is enough enough? These politicians frivolously spend our money and when they run out of money, they simply invent new taxes instead of curbing their wild spending habits.

The average American is forced to work harder and cut their budgets just to get by because of higher and higher costs. Yet these politicians feel they its a good idea to put additional pressure on peoples budgets. BRAVO!!! When are we going to vote this idiot out of office?

epitaph says

If you drive a car, I'll tax the street

If you try to sit, I'll tax your seat

If you get too cold I'll tax the heat

If you take a walk, I'll tax your feet...

sounds like california..

Vicente says

That isn't earmarked for ROADS. You want to tinker with the structure fine, but to data it's been fairly simple, tax the fuel to pay for the roads.

So the fact that we have the highest gas tax in the country is not good enough?

http://www.bankrate.com/finance/taxes/states-with-highest-gasoline-excise-taxes-2.aspx

Why dont you focus your attention to the real problem, which is spending. If we actually spent the money earmarked for roads on the roads, then we wouldnt have this problem.

Bellingham Bill says

shows ~6 major metro areas. That's where the land value is.

A very similar story applies for Australia, alas

.Heraclitusstudent says

So why aren't they building?

Because of an evil scheme authorities are using to boost growth: make housing increasingly more expensive - by deliberately suppressing supply.

Not only it is evil, it totally fails to boost growth in the long term.

The land value is because Australia and Canada and others have chosen to not embrace American style endless suburban sprawl. There are urban boundries in both countries that constrain building outside the cities. Even smaller towns embrace carefully controlled building area's. I've rented in Oz and built a house in NZ so I'm real familiar with the urban boundary issues good and bad.

There's nothing evil, it's a societal choice that they are willing to pay for. The extra cost in housing is heavily offset by not having to extend expensive services, (water, sewer, electric, trash, roads, police, etc., etc.) endlessly. People overseas I've talked to about it think American suburban sprawl is horrifying and can't believe we allow it.

Bastille Day wasn't a holiday before it happened. The houses, which they do make more and more of all the time, are simply too expensive vs the average salary. The enormous growth in all cash purchases is an excellent sign of a market driven by speculation - but not speculation based on the fundamentals which SHOULD matter like new household creation or rising employment numbers in the under 35's demographic, but based on carry trades, derivatives, phantom banking in China and secret manipulations by the Fed. The baby boom wants to retire and the youth are unemployed, shacking up with family at 33 years old, and wholly not ready or willing to fund their own grandma's retirement, let alone someone else's. In fact, grandma is the one they hope to score zero interest loans from to payoff the student loans.

Ross Perot was right back then. He would have opposed Greenspan's fueling of the Tech Bubble and subsequent RE bubble, and I expect the pain that will visit our kids would be less debilitating than it certainly will be.

Just remember, I'm square in the middle of the target market of potential buyers with enough cash for big down payment on a sweet home, and I'm absolutely not going to buy. All bogus, manipulated, speculation-driven, fiat disaster.

I personally don't see hyper inflation at this point as the immediate danger. I see an event of economic punctuated equilibrium. Some ass world leader needs no one's permission to start the ball rolling away from central bank cooperation.

all bubbles crash eventually, Canada is in a MASSIVE real estate bubble and the longer it goes on the harder it will crash. Bubbles can go on for years without crashing so your data is virtually pointless. When the bubble will crash is something that is impossible to predict...it could be next week, it could be 4 years from now. As I said the longer it goes on the worse the outcome when it eventually crashes.

deepcgi says:
"All bogus, manipulated, speculation-driven, fiat disaster."
Let's keep this between you & me.

It is nice that Canadians can continuously overpay for housing.

I just renewed my lease here in Austin. Paying 1550 per month for 2600 nice (but slightly strange) square feet. :-).

RR is one of the best public school districts in the country. Elementary school is across the street. The crossing guard for the kids stands at the end of my driveway - although the girls have to walk across the playground to get to the entrance. Oh well.

The interesting thing though is that a nearly identical home only one lot away went up for rent for 2200 several weeks ago. There's been a big jump for a lot of people. It's why the current family is moving out.

Why did MY landlord not hit me with a huge jump in rent? Why are they allowing a bail-out of lease clause in the event of employment troubles? Because the real world isn't always as the numbers would lead you to believe. Imagine renting out a home for 4 years and the carpets are still spotless to the point where they wouldn't need a cleaning if you needed to rent it tomorrow. Imagine tenants who spot maintenance problems like pros, do all of the homework on repairs, pay rent early and keep the yard looking better than the neighbors who own.

Rare to impossible? Nope. You're just charging too much. Give a good deal to the most qualified.

Now if my current LL had played hardball and raised my rent 700 f-ing dollars a month, I would have been happy to let him know that i've always had enough cash to buy a home in this neighborhood outright, and would be happy to pass the place along to the Manson family who just answered his Craigslisting.

Reminds me that I've always liked the song Helter Skelter. Paul McCartney inventing Heavy Metal. How cool is that? Might be a good anthem for the new Bastille Day.

monkframe says

Jeez, I'm sure glad the upper classes have so many arguments.

Not sure how you classify the upper classes. Is it the top 1%, 5%, 10% or 20%? A lot of Bay Area families fit the top 10% and easily fit the top 20%, but that doesn't mean a whole lot around here with those 6-figure household income.

E-man says

We got a good deal. If we put it on the market now, PK believes we can sell it for $575k.

corntrollio says

That price seems very low for $2800/mo in rent.

Sorry, I missed your response earlier. I agree. I thought it was high too, but PK hasn't been wrong before with his numbers. He's extremely good at what he does, and he knows how much people are willing to pay.

The 1st place we bought for $117k at the courthouse steps, put $15k into renovation and rented for $1,550/month to a software AAPL engineer. I thought the max we could rent it for was $1,350/month while PK said it was $1,700/month. Since this was our 1st unit together, we met in the middle and listed it for $1,550. We had 29 inquiries on the 1st open house. Lesson learned. PK was right. I let him handle all the numbers after that. This was in early 2012.

We bought the 2nd place for $155k, spent $18k on rehab and rented for $1,750 to an IT manager at PWC.

3rd place bought for $150k, spent $2k on rehab and rented to a government employee at $1,650/mo.

4th place bought for $210k, spent $15k in rehab and rented for $1,950/month to a nurse at Samaritan Hospital. This place is identical to the 2nd property, but we bought it 10 months later. Apparently, prices have gone up a lot. The same units in the complex are selling for $325k now.

5th place bought for $265k, spent $4k in renovation and rented for $2,200/month to a Stanford employee.

6th place bought for $315k, spent $35k in rehab and rented it for $2,800/month to a gymnastic coach.

All properties were acquired over 1.5 years. If I had more partners, I would have been able to acquire even properties. There were deals that PK and I had to pass due to money constraint at the time. Now, there are hardly any deals to be had.

deepcgi says

One of the reasons the crash is so apparently coming is that even the dovish Fed hold-outs are are now warning of the dangers of stopping the tapering of QE. 9 figure per day sums have been propping up your favorite. "markets" for years and years.

Explain to us one more time which fundamentals are going to replace the 85 Billion dollar per month goose, as it is slowly reduced to nothing but a fowl dinner for two.

We already had the crash, and now it's over. We are in a slowdown, but still a recovery mode. The Feds pumping more money into the economy bodes well for real estate. Either as a recovery, or inflation.
Why do you even feel real estate cannot sustain itself without the $85 billion? Did they have fed intervention for the last 50 years? Real estate did pretty well, right? People need houses to live in, and with a rising population, we need more houses.
Housing is a necessity, don't underestimate it's value.

Bellingham Bill says

Land value comes from more than the natural amenity of location or just its natural productivity (ag or mineral), it is largely driven by what commercial, governmental, and cultural amenities are accessible in the local community.

Thats the reason Natural Gas enriched land far far from large cities which was cheaper had better value regardless of any amenities. It has made Billionaires out of low income familes. Old Jed Clampet is a rich ole right...

Bellingham Bill says

Germany is an exception I guess, maybe France too.

Japan is still hella expensive, 20+ years into their crash, with very marginal (for Tokyo) subdivision land with minimal utility service going for $1M an acre.

Both had their bubble...and wont repeat the mistake... as far as Japan, the high cost has driven job losses moving jobs overseas. Too expensive to design and manufacture in Japan/ You wont see "Made in Japan" anymore.

Is we learning yet?

might one day... when we find realtors spiking prices....

Ontario moves to protect consumer in real estate deals

http://www.thestar.com/business/real_estate/2013/04/18/consumer_minister_moves_to_protect_consumer_in_real_estate_deals.html

Ontario’s consumer services minister is moving to outlaw “phantom offers” and boost home sellers’ ability to negotiate a la carte payments for services rendered by realtors.

The proposed legislation, which realtors say is really just a repeat of protections that already exist in Real Estate Council of Ontario (RECO) regulations, would also step up prohibitions against so-called “phantom bids.”
All offers on a property would have to be presented in writing, rather than just verbally, so that bidders and their agents would have hard proof of the real competition they face for a property. The listing agent would be required to keep a record of each offer in case there are complaints later from losing bidders.

Some realtors have called for greater transparency in the bidding process, one citing a case last year where her clients bid $90,000 over the asking pricebid $90,000 over the asking price on a nearly million dollar home, under the impression there were other bids. When their agent found out later they were alone, the sellers agreed to accept $45,000 instead.

Strategist says

where the fuck were you?

Working on a very very long Merger and Integration project at work.
Its done now! Thank god ! Im not the young guy I was once...

thomaswong.1986 says

Strategist says

where the fuck were you?

Working on a very very long Merger and Integration project at work.

Its done now! Thank god ! Im not the young guy I was once...

LOL. You know how your comments can be interpreted?
I was working on having sex with the secretary, but the damn viagra took a long time to work, and "Its done now! Thank god ! Im not the young guy I was once..."

Strategist says

LOL. You know how your comments can be interpreted?

I was working on having sex with the secretary,

LOL! ah.. if only!

thomaswong.1986 says

Too expensive to design and manufacture in Japan/ You wont see "Made in Japan" anymore

http://research.stlouisfed.org/fred2/series/XTEXVA01JPM664S

or in real dollars:

http://research.stlouisfed.org/fred2/graph/?g=AoB

Bellingham Bill says

http://research.stlouisfed.org/fred2/series/XTEXVA01JPM664S

The downfall of "Made in Japan". Welcome to the global supply chain.
Not even your former employer can claim.. "Made In Cupertino"...

Bellingham Bill says

or in real dollars:

http://research.stlouisfed.org/fred2/graph/?g=AoB

in any graph, there is no clearity to source and final assembly...
its all global, not country of incorporation.

thomaswong.1986 says

Not even your former employer can claim.. "Made In Cupertino"

Never was, even the Fremont factories were glorified final assemblies, all the parts were really made in SE Asia and Japan.

But it is true that Japanese labor can't compete all that well with Chinese, since Chinese still do a day of factory work for an hour of Japan's factory wage.

Twenty-one-year-old Bai Yaojie, a Foxconn worker, says he isn’t impressed. “Sure, wages are higher here than in my hometown, but I have friends and family back there,” says Bai, a native of Gansu province who earns more than 2,000 yuan a month.

http://www.businessweek.com/articles/2014-05-01/chinas-young-male-factory-workers-change-the-assembly-line

100 yuan a day = 1600 yen / hr, about the factory hourly wage in Japan if you count their non-permanent labor force.

Back when the yen was 300 to the dollar, the Japanese were working for peanuts like the Chinese are now.

thomaswong.1986 says

there is no clearity to source and final assembly...

certainly; one would have a very hard time finding imported goods in Akihabara in the 1990s when I was there.

http://research.stlouisfed.org/fred2/series/XTIMVA01JPQ188S

imports quadrupling in 20 years.

Call it Crazy says

KCAL9’s Bobby Kaple reports that Sen. Mark DeSaulnier, D-Concord, introduced a bill to test out the vehicle miles traveled (VMT) tax because the state’s gas tax was no longer bringing in the revenue it used to due to people driving more fuel efficient vehicles.

Everyone wants to live here. No one wants to live or move anywhere else.

Every wonder why so many have left already ???

Miike says

We already pay for roads with the hundreds of other taxes we pay.

No you didnt... your paying for the State Employees salary and retire and the other extreme ... paying for illegal aliens ( aka Foreign Citizens).Perhaps we should sent the bill to Mexico and have them pay for their citizens.