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Again

I am not sure if the NAR ad on TV has been running for a while or not but I saw it tonite and was taken back when it said that REALTWHORES have to follow some ethics code or some BS like that. It shows some home buyers trusting the ethics of the REALTWHORES for their home purchase decisions. I guess NAR is feeling that the bad press about their hefty commission for not doing anything worthwhile are getting to the people and they have to do something about it.

www.har.com/HARTV/

Bunch of funny REALTWHORE ad's...

I believe the correct phraseology for leaving a present in an adversaries commode, that they will remember for weeks is, Upper-decker.

Peter P,

Lovely home, great setting!

However; saying "east of La Grande" is like, well........ saying "East Jesus". Unless you want to teach EOU the only other employment is with the US Geological Survey. I have a client out there that moonlights taking pictures (and I am not kidding here) of rodeo clowns. The fact that the seller requires a blogspot should tell us something. Bring money, b/c you will not find it here. I've often tinkered with the notion of having a place in EO as a "perk" to clients that would somehow skirt the NASD issue of "excessive gifts" issue. Me? My blogspot entry? Try selling it as a time share and "buy" yourself a job as the manager. And in the end that's what people that invest in "income property" do. They "buy" a job! Hell I've even considered it. When I get too old and too cantankerous I could just buy an apartment building just like on "The Ropers" (an abysmal spin-off) from Three's Company. Anyone here that thinks I am too far gone to interface with equity markets (and clients) please let me know when it would be more appropriate for me to buy a job.

Mike/a.k.a Sage,

Oh great! It's not enough that I have the permanent image Surfer X has emblazened in my brain, now I will never again be able to hear a sports announcer say "that's an "upper decker" home run ladies and gentlemen! Let's add that to: "Mental images I could live without"

Kidding.

What did the smut shop attendant say in the movie 8 MM say ? "There are things out there that you can't un-see"!

Was it Norman Fell that played Mr. Roper? Yeah, I think that was the guy. When I grow up I want to be just like Mr. Roper.

SFWoman,

I'm all for taking this blog to the "next level" We have our very own CBA (Certified Bubble Analyst)!

Another nail in the MLS monopoly coffin? Google's home search.

HARM, kindly delete the troll above.

Nuclear terrorism and the Bay Area, two great tastes that taste great together.

Well I can have a dream can't I?

This show’s that it is a SELLER’S Market! What type of buyer would agree to a 90 day close? You realize now the seller bought on 6/2/04 if you look on Zillow for $1.2 mil, which means the seller made a cool $460,000 TAX FREE in two years. And guess what? The sellers have gone and upgraded to a Single Family House for over $2.5 million in prime Marina. That’s how you do it guys.

No you maggot piece of fucking shit they didn't make $460K.

tinyurl.com/mrh84

Look at the sales history

06/02/2004: $1,205,000
07/01/1996: $385,000
06/28/1996: $385,000

They made a total of about 100K after PITI, and reatwhore commisions, the person that made the money was the one who sold it to these suckers. Hey one other thing, could you tell your Mom to lay off the corn? I was buggering her quite proper last night (I'm sure a fag like you can appreciate this), and well as i was reaching to give her a bag of meth as payment I notice way way too many kernals on my quite ample staff.

Is it just me or is the SFMLS bullshit starting to get a bit tiresome? I love zillow as it offers a counter to these fuckknobs. No, you didn't make $460K, you made exactly fucking squat, and you have to fucking move, great, and you'll do it again in what two years?

The biggest fucking mistake was the $500K tax free every two years. What the fuck is the point of this again?

I edited the Troll's comment. The best strategy to dealing with Trolls is simply to not feed them. Eventually, without an audience, they'll return to the theatre known as Craig's List.

I tend to agree. There isn't much evidence for the tax deduction being a primary motivator for buy/sell. It is probably a marginal motivator, meaning if one has other reasons for wanting to move anyway, the tax deduction might make the difference. But clearly in CA with rapidly rising prices it did not pay to give up tax base for tax exemption.

LILLL

None. It was a life-situation and quality decision entirely. The decision to not buy again right away and rent for awhile is an opportunistic one given that we had to move from the Peninsula to Marin anyway. We would have made the move even if we had to pay cap gains, which wouldn't have been anywhere near enough to replace the "value" of moving. The fact we didn't have to pay cap gains was a fringe perk.

before May 7, 1997, the only way you could avoid paying taxes on your home-sale profit was to use the money to buy another, more-expensive house within two years. Sellers age 55 or older had one other option. They could take a once-in-a-lifetime tax exemption of up to $125,000 in profits. And in all instances, there was tax paperwork (Form 2119) to fill out to show that you followed the rules.

The way I see it the current exemption is better than the old system for two reasons:

1) The old system was discriminatory in favor of people over 55, and acted as a direct income redistribution mechanism from young to old.

2) The old system still allowed all the behaviors occurring under the existing system except for the small percentage of cases where people did not buy a new home within 2 years and/or the new home was less expensive.

Sure, there are some cases of people selling and not buying again within 2 years, and there are cases of people downgrading. But the old system only afforded those options to old people, and essentially helped to prop up the housing market by excluding the "I'll rent as long as I want until I buy again" option. Although I don't buy the tax-as-a-prime-motivator argument, assuming it is then the old system would have forced people to rebuy after selling at the same or greater price within 2 years. That means that even in a down market people would be driven to buy homes for the same nominal value. Certainly what we have today isn't worse than that, and probably is better if we want a free flowing market for home prices.

All that said, I favor no exemption, but that's because I favor no capital gains on anything.

LILLL

A bubble isn't one until after the fact. We say all bubbles are ex-post. One has no way of knowing if a bubble is a cycle, a trend, or a cycle inside a trend ex-ante (before the fact). Worse, bubbles are really an artifact of charting, which is notoriously "interpretative". While charts work really well for the human mind, and help us to see what appear to be obvious patterns or events, they are simplifications which hide a lot of nasty details in the functions that define them.

In 2002 things certainly looked like a bubble to many observers as a relative comparison. Then again, 98 looked like a bubble as a relative comparison. Maybe they were. Maybe they were all steps up to a much bigger bubble. We won't know until later. In fact, it could be that 50 years from now history books talk about the great 1980-2010 "30 year bubble". It could also be that there are no bubbles at all, and everyone forgets about this in 50 years.

Randy H,

One of my old teachers told my class on day one "the first student that says that's not fair (regarding taxes) is going to get bounced out on their ear". What about our tax system isn't age discriminatory? From start to finish nearly every aspect is age/income tested or both! Are you over 65 and blind? How many dependents in your household are under the age of 18 are unmarried and are full time students? The very year your children turn 17 you can no longer claim them under the "additional child care tax exemption". Yes, even if they were born on DEC 31st! Take $'s out of your IRA prior to age 59 1/2? you've got a problem! Retain $'s in your IRA after 70 1/2 you've got a problem. If NOT having to pay capital gains was a fringe perk at best please remit the dollar amount you would have paid to the DinOR/Surfer X Let's Stamp Out Sobriety in our Lifetime Fund.

DinOR,

Fair enough. I certainly am happy for any tax break afforded to me. For the record, I think all these societal engineering tax policies are ill founded. I am for an absolutely agnostic system of consumption taxation or a pure flat-tax system as a fallback, with zero deductions of any type for anyone. If the gov't needs to help 65 year old blind people then they should set up a program to dispense cash/resources to them directly, not through the tax system.

My point about cap gains on home being but a fringe perk was relative to the value I placed on my wife not having to commute 3-3.5 hours per day, thus effectively turning her into a weekend mom. Given the value we place on our family, any tax break of any ilk is but a fringe perk, and would never prevent us from making a decision in favor of our family's happiness.

WWAD

What would Alan Do?

The man is a legend, he deserves a Nobel

__________
Sarcasm off

LILLL,

Well I must admit, I never thought of that! "Serving up" Fannie and Freddie would kill several birds with the same stone and effortlessly I might add. It absolves the FED of any wrong doing or indiscretions. They are on a tight rope and many of us are aware of it. Right now the PPT's primary objective (along with our newly appointed Sec. of Treas.) is to restore faith in the dollar. Or should I say our "housing dollar" as RE has become what our currency leans most heavily upon. THE UNITED STATES OF REAL ESTATE! In Real Estate We Trust. (Is there anyone out there comfortable enough w/latin to translate that for us?) Since we have now and forever linked the value of our currency directly to Zillow perhaps it would be appropriate to Home Depot's founders on the dime and the quarter.

Notwithstanding reasonable differences of opinion on where we're at in this whole housing bubble scenario, one thing's for sure: Surfer-X's tirades against the mothers of his enemies definitely gives new meaning to the word Corndog.

LILLL,

SOMEONE has to go to jail on this one. When all of these FB's (most everybody) are upside down in their soon to be/already adjusted mortgage that they can no longer use as an ATM Machine (about to be reposessed) "someone" has to go down. Who will it be? Doesn't much matter. But we will need a whipping boy and that's for sure. Will everyone get exactly what they deserve in the end? Bet on it.

Boston Transplant,

It's pretty difficult to predict the speed and depth of mortgage burden related effects on the economy as a whole. It's certain that all the resetting ARMs will have some impact, but how is yet to be seen. If the job market remains reasonably firm, and incomes continue to slowly inflate, then it could be that a mini refi boom occurs with a huge portion of that $1,000B mortgage debt refinancing into fixed rate loans. Granted, these loans won't be happy loans. They'll be higher rates, and probably longer terms. After all, there's no real limit on the industry that prevents them from creating 50+ year products so long as there are buyers for those loans on the debt market.

I tend to agree that we're in for a period of "grumpiness". A long period of no one being happy: home owners unhappy they're now spending 50+% of their AGI on PITI and effectively are slaves to their houses without even enough disposable extra income to go to Disneyland. Renters unhappy that home prices refuse to come down by much or very fast in most price categories.

FNM does look pretty bad. The accounting scandals primarily bother me because we can't really make a fair assessment of their solvency because we can't trust their publicly reported numbers. I will say that they seem to not be matching durations all that well and are heavier in short debt than in long assets.

But I don't know a lot about how the financial engineering of their assets really works.

I think we may well see some jail time out of the investigations. I don't think there's a chance in hell FNM will be allowed to fail. The government will bail them out and provide liquidity by buying all their assets if it comes to that. The gov't bailed out LTCM (actually bailed out the banks that provided LTCM's leverage), so they'll certainly bail out FNM.

By the way, anyone been following gold? It seems like just yesterday every thread here was being hijacked into a gold gold gold discussion. I find it incredibly interesting that those pushing gold so hard the past couple of months are now claiming that the recent volatility and drops in prices are "government manipulated". As if somewhere there is a shadowy international agency purposefully crashing the gold market. Nevermind this conspiracy would require the collusion of most of the world's major central banks.

The only good advice about commodities (including gold) is that if you need any advice, you shouldn't be investing in them. No matter how well you've thought out your position, for every retail investor there are a dozen professionals (even more now due to hedge funds) waiting to take the other side of your bet and (99.9% of the time) screw you.

Boston Transplant, this whole housing bubble reminds me so much of the Nasdaq bubble & crash. I know they are different creatures, but like any mania, once the cold, hard realization settles into the consciousness of the masses the worm will turn.

It all comes down to fundamentals. Low paying jobs. Real wages down. Price to income ratio too high. Rent to buy ratio too high. No real reason beyond psychological mechanisms to account for rapid appreciation of assets. Trend towards globalization and outsourcing of US jobs, etc.

Too many empty calories and not enough financial protein. Sooner or later the muscular body economik on steroids will have liver failure and be exposed as the unhealthy animal it truly is.

***Warning: metaphorical analysis not financial advice***

Bap33,

"Investulators"? I'm seeing a glossary inclusion here!

Unlike the ever present "specuvestor" that actually knows they are putting both of their b@lls on a chopping block, the investulator is in deeper denial. "Oh, we didn't buy our home as an investment" ilk. "Investulators" (by all outward appearances) exude an aura of financial sensibility. No momentum players here. Contribute to their 401K (up to employer match) with the balance going to either the Roth or regular IRA with much diversification. But when we dig even a little bit deeper we learn that their "30 Year" is anything but fixed, and they have been secretly absconding equity for yet another "sensible" RE investment. (Which btw crumbles under even the slightest scrutiny).

Outstanding Bap!

Michael Holliday,

"not enough financial protein" LOL!

Reminds of the time George Costanza gets his desk raided by Steinbrenner!

"Nothing but empty calories and male curiousity eh' Georgie boy?"

Randy H,

I do believe we are perhaps already in a "period of grumpiness".

LILLL,

No worries! I can usually find "something" to be grumpy about. I'd rather be grumpy on the sidelines with "big fat stacks" then b-hole deep in a mortgage on a depreciating asset. Yes, I said depreciating asset.

New thread: The Bay Area rental market

It all comes down to fundamentals. Low paying jobs. Real wages down. Price to income ratio too high. Rent to buy ratio too high. No real reason beyond psychological mechanisms to account for rapid appreciation of assets. Trend towards globalization and outsourcing of US jobs, etc.

True, rent to buy ratio too high. However, I will not count on a correction of price to income ratio.

Randy H should be Sainted, well that is I was a believer in Jeebus. But never the less he patrols his thread like a dobermann, good job Sir. ;)

As a long only position, gold is fine as an ETF.

I'd still keep one's gold position to a very small portion of their total net worth, and only representing capital that they are comfortable losing. That way, when gold is on the upswing they should be re-balancing and taking profits along the way. IMO, this is the only sane way for a layman to hold a commodity position. Try to speculate and you'll lose your shorts.

For those who want to hold physical gold, all I can say is "good luck, hope you can keep your mouth shut, and when you want to use any of it you plan to use all of it at once (or pay huge storage costs for someone else to protect it for you)".

My dabbling in Metals was primarily restricted to physically buying 5 oz gold and 100 oz silver which I bought in the middle of the dot-com meltdown (NASDAQ 3500 and falling). At the time, $1300 for the gold didn't seem either too dangerous to keep around the house and post 9/11 the coins offered a certain amount of comfort when tormented by visions of NYC or DC getting nuked. I will confess that I also bought Vanguard's precious metals index last August (yield around 1-2%) and sold 2-3 months later for a quick 10% return thinking THAT was a bubble spike (missing the 100% run up that followed). Selling the coins: 3 oz at $640 on the positive slope and then the last 2oz and most of the silver at $740 and $15 respecitvely was simply due to inertia rather than any genius; it took that extreme price spike to get me to dig the coins out and make the trip to the coin store.

With 6 month CD rates at 5%, gold has to appreciate at that rate just to tread water. What is it really good for? Platinum at least has lots of catalyst applications and could soar if the winning fuel cell technology, but we've gotten pretty good at using very small quantities in Catalytic Converters.

The biggest problem with commodies (other than crazy beta values compared to historical returns) is that they're produced and used by such a diverse market that you're unlikely to really understand what forces are driving the market. With stocks, if you're a value investor, aren't lied to by corporate accounting and if you buy and hold to avoid transaction costs, you're normally treated to a nice slow and steady return above cash.

Unfortunately, I'm still heavily in cash and have been for 5 years waiting for the housing bubble to burst... sigh. At least its returning 5% again and should finally start outperforming houses as long as Bernanke stays the course...

(NOT INVESTMENT ADVICE... BLAH-BLAH-BLAH. IF I REALLY KNEW WTF WAS GOING ON, I WOULDN'T BE RENTING...)

Thanks DrChaos RE numerical optimizations. Actually, my first real job was as a SAS programmer while still in undergrad. It's been a long time though; so long all that code was on an Amdahl. It's funny now to think about SAS programs that needed JCL headers. I'm still a fairly hardcore software geek, but entirely focused on object/event paradigms -- not exactly the Nirvana of optimizations. I have an older academic version of the FrontLine "Solver.com" optimization libraries for Java, C++, and C# (1.0). Perhaps I need to take another look.

I guess my main question is whether all that is more or less efficient than just turning the problem into a linear approximation and using straight forward matrix algebra.