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HARM to Peter P and Randy H: I find your lack of faith disturbing.


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2006 Jun 4, 7:50pm   16,953 views  238 comments

by HARM   ➕follow (0)   💰tip   ignore  

Darth Bubblehead

Seriously, guys, just when public psychology and the market is finally starting to turn to such an extent that --even the brain-dead, NAR-bought MSM has to acknowledge it-- NOW you guys have decided to puss out and capitulate??

Yes, the recent uptick in asking rents since March is significant (and as Surfer-X continues to point out, that's ASKING rents, not ACCEPTED rents, boys). Even so, didn't Mr. H himself predict this very phenomenon several threads ago, when he (accurately) applied the "escalation of commitment" theory to increasingly desperate FBs? Aren't the many testimonials by renters in the previous thread (while not statisticially significant) evidence enough that landlords have not repealed the law of Supply and Demand and can dictate rents at will? Not only that, but we've only just begun to see the barest start of apartment-to-condo conversions that are slowly reverting back to apartments. This alone will help flood the rental market with new inventory, right as Joe Homedebtor begins to give up on the concept of house = sure-fire investment.

As John Haverty FRIFY, To BA Or Not To BA and countless others have pointed out, there is just not going to be much in the way of real rent inflation UNLESS WAGES ALSO GO UP. This is for a very good reason: you cannot pay your rent with an NAAVLP. And what's more, rent-to-income ratios for most major metro areas of California are already hugely above the median/mean for practically every other state. It's already not unusual for CA working class households (or what's left of the middle class) to pay over 50% of take-home pay on rent. Exactly how much more can people possibly devote to rent --are they going to pay 90%? How about 100%? If this is true, I think I'm going to invest in the companies that make Ramen Noodles and peanut butter, becuase that's all people are going to be able to afford to eat after paying the rent. Or better yet, I'm going to heavily invest in housing OUTSIDE California --because that's where people will be headed in droves if this really comes to pass.

Peter P, tsk, tsk, tsk... Aren't you the guy who Face Reality used to call "Darth Bubblehead"? For shame.

Look, I'll be the first to admit that in my early phases of Bubble investigation, I was far from certain, and that I've experienced occasional bouts of self doubt. We all do, and it's really quite natural for sane people (only megalomaniacs, zealots and idiots lack the capacity for self doubt). Even so, I would recommend taking a moment to set aside all your complicated NPV/cash-flow discount models for a minute and reconsider the current situation in terms of old-fashioned COMMON SENSE. There is such a thing as being "too smart by half" and missing the forest for the trees, my overeducated gentlemen!

Now, suppose the perma-bulls' ultimate wet-dream "soft landing" scenario actually happens: price/rent correction ENTIRELY through wage & non-housing inflation. So what?? We all just got a 100-200% pay raise, boys --woo-hoo! And now we can all afford to buy a decent home for our families without taking out an insanely toxic loan. Is this an outcome I'm supposed to be afraid of? Hardly.

Personally, I don't care whether prices correct entirely through wage inflation (while nominal RE prices stay flat) or through big, nominal price drops --or some combination of the two. Either way, I win. I get the opportunity to purchase a depreciated asset tomorrow at a much lower real cost.

Have a little faith, gentlemen. The housing market moves excruciatingly, glacially slowly --but move it will.

#housing

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212   DinOR   2006 Jun 6, 5:38am  

Peter P,

I can't say for sure. Never really had one. But if I was going to go neg. am. this would be the time. Unless there is some sort of acceleration clause?

213   Peter P   2006 Jun 6, 5:46am  

Right, no one in Palo Alto, Los Altos, Menlo Park, Atherton, etc. etc. has even SEEN a black person except on the WB.

Have you been to the part of Menlo Park that still has SFHs for under 750K?

214   Peter P   2006 Jun 6, 5:47am  

We need a world in which people of all races work together. However, forced diversity will not work. We must get to the root of the problem in order to fix it.

215   Randy H   2006 Jun 6, 5:52am  

about how racially progressive they are as compared to people in Toledo?

The BA area is far more progressive on every dimension than Toledo. Trust me. If not, I can arrange for a personal reality tour for you. Bad example.

216   DinOR   2006 Jun 6, 5:57am  

I was unaware that there was any significance to 6/6/06. It's strange b/c I consider myself something of a an expert in theology. Well, I've seen all of the "Exorcist" movies and a great many of the "Omen" franchise as well.

217   Red Whine   2006 Jun 6, 6:00am  

"The BA area is far more progressive on every dimension than Toledo."

That depends on your standard of measurement. If your benchmark is having more German cars, Mexican busboys, and designer Italian sunglasses than Toledo, then the Bay Area is most definitely more progressive and diverse.

218   FRIFY   2006 Jun 6, 6:01am  

HAHAHAHAHAHAHA. Right, no one in Palo Alto, Los Altos, Menlo Park, Atherton, etc. etc. has even SEEN a black person except on the WB. They love to brag about how racially progressive they are, but then scurry behind their gate and start fretting when one actually walks by. They love diversity — just not in THEIR neighborhood.

This is definitely a fair charge. Coming out here from the east coast, I was shocked at how white everyone was (although you have to confess that Asians and Indians are pretty well integrated).

The big difference is the automobile and NIMBY property rules. People can get in their car in their white neighborhood, drive to their white workplace and never engage with the invisible latino population. In the denser east coast cities where it's easier to get around in mass transit than in cars, people don't freak when they see a black face in their neighborhood.

At least out here, they freak and then feel bad about it. Everyone from every race has latent racist tendencies; the degree with which you fight to keep yours in your ID and out of your actions can be thought of as "progressive". Anti-development NIMBY rules qualify as non-progressive by this metric.

219   Red Whine   2006 Jun 6, 6:05am  

The only black community south of SF was East Palo Alto, and the last time I drove by Whiskey Gulch it had been bulldozed in favor of luxury condos with BIG GATES around them, and some sparkling new big box stores.

Palo Alto Diversity = Having both Best Buy and Circuit City.

220   Randy H   2006 Jun 6, 6:09am  

Were they as freaked out in DIES IOVIS A.D. VIII ID. IVN. MDCCLIX A.U.C.?

For those unfamiliar with the Roman style Julian Clandar, that would be in Latin:

Dies Iovis vi Junius MVI.

221   Randy H   2006 Jun 6, 6:12am  

newsfreak,

Toledo is just a real bad example. Race riots there just a couple months ago. Lots of rural farmers who are up in arms about invading foreign immigrants.

They're talking about Dutch farmers. But they don't blame anyone but those "Dutch", who must be ethnically and morally inferior to themselves.

222   FRIFY   2006 Jun 6, 6:12am  

if you are married, how many kids, which to my mind is illegal.

It is. Report them.

223   Randy H   2006 Jun 6, 6:13am  

Red Whine,

I'll go the mat with you on Toledo. Pick another example. Either you are a proud Toledan, or you have never spent any significant time there.

224   FRIFY   2006 Jun 6, 6:22am  

Newsfreak,

quick seach:

http://www.workplacefairness.org/index.php?page=file_CA&agree=yes

How will he get his if nobody slaps him silly?

225   Red Whine   2006 Jun 6, 6:23am  

"I’ll go the mat with you on Toledo. Pick another example. Either you are a proud Toledan, or you have never spent any significant time there."

I'll go to the mat with you, but not over Toledo. I've got to pick my battles. I'll concede this round -- and I'll even let you pick the replacement. Pittsburgh, or Wichita?

226   Randy H   2006 Jun 6, 6:24am  

newsfreak,

No, real live just landed Dutch. They are moving into many rapidly depopulating Midwestern Counties, buying the land up cheap, and setting up large dairy farming operations. It's a long, complicated tale, but my wife's home county (outside of Toledo) is the 2nd largest recipient of these newcomers. Google it, you'll see there's a whole "thing" going on, and that the response from locals is pretty openly bigoted.

227   DinOR   2006 Jun 6, 6:25am  

Randy H,

I had a client in "Cincy" and a few years back they actually had to enforce a curfew or some kind of marshall law. Ugly stuff. This much I can tell you is that I have cold called all over the U.S and no where are they more rude than in the BA! Well except maybe Seattle.

228   Randy H   2006 Jun 6, 6:26am  

Red Whine,

I’ll concede this round — and I’ll even let you pick the replacement. Pittsburgh, or Wichita?

I'm ambivalent about either of those cities. I can only speak authoritatively about the Ohio cities, and I would have even let you slide with Cleveland.

Let's pick Pittsburgh, and I'll say: "Your charge is a fair one".

229   Randy H   2006 Jun 6, 6:29am  

DinOR,

Cincinnati is a pretty scary place, with some of the nastiest racial problems in the country. And I'm saying that as someone with fond memories of going to Riverfront Stadium with my grandfather once a week every summer to watch the Big Red Machine.

230   DinOR   2006 Jun 6, 6:35am  

newsfreak,

So then we have 09/09/09 up to 12/12/12? Man, that is freaky! None of this was ever mentioned in the Exorcist or the Omen. Are you telling me I wasted my time? I'm certainly not prepared for this. What is it exactly that I should be doing?

231   DinOR   2006 Jun 6, 6:38am  

Randy H,

Yeah, the guy was one of those pawn shop owners that paid for everything in cash and was used to carrying it. I'm sure his wife didn't know about the account. He was a pretty tough guy but after those riots he talked about moving some of his shops.

232   DinOR   2006 Jun 6, 7:12am  

newsfreak,

Yes I suppose that's true. It would only follow reason that at the start of each century this strange occurence would take place. But is there any chance that it's different this time? Hmmm.

233   HARM   2006 Jun 6, 7:16am  

Newsfreak,

I was just trying to be "cute". My views on illegal immigration by now are well established (I'm definitely NOT in favor of importing unlimited wage-undercutting, infinitely exploitable, social services free-riding, illiterate peasant labor).

234   HARM   2006 Jun 6, 7:17am  

New thread: Helpful Post-Bubble Negotiating Tips

235   OO   2006 Jun 6, 11:02am  

I prefer class segregation to racial segregation any time. Race is something you can't change, money is something that can be made with enough effort paid.

236   HARM   2006 Jun 6, 5:12pm  

John Haverty and Jon,

I was gone for most of the evening so missed most of your "spirited" exchange, which I deleted beyond the point where the debate degenerated into childish name-calling.

Please refrain from engaging in personal attacks and/or responding to personal attacks from others. Violating this rule in the future may lead to having your posts quarantined in moderation or banned altogether. Consider yourselves warned.

If you both wish to continue your flame war, please consider a more appropriate venue for this sort of thing, such as Craigslist.

And now back to our regularly scheduled programming...

237   Jimbo   2006 Jun 10, 6:46pm  

At what point do all of you who predicted a 25%+ downturn for 2006 throw in the towel? Is this it?

Home prices have held steady, and even gone up a bit this spring in Noe Valley and Rockridge, in Oakland.

This is a soft landing, just like I predicted. From where I am standing it is not even a landing at all, just a slow down, but I understand that some places like Sacramento are really experiencing home price deflation.

newbietobayarea I am not really willing to repost all of my analysis as to why you should be willing to spend a larger portion of your income on housing here than you would in other places, but you can google for it if you are interested. You can certainly afford a starter home in a nice neighborhood on that salary. A 3/2 is not a starter home.

The secret to happiness is lowered expectations 0:-)

238   HARM   2006 Aug 20, 5:56pm  

@Kerry Beauechrt,

Ahhh... another perma-bull/troll. Welcome to the blog. Your "points" are so original.

--More straw-man arguments: (we are all hoping that "Armeggen [sic] is coming"; we all "WANT some sort of economic catastrophe", etc.)
--More Gratuitous, baseless personal insults ("Creepy people. Sleazebags to be sure.")
--More complete falsehoods and made-up "facts" pulled out of your ass: ("Well, those who advised people to rent because rents were so low can’t use that argument anymore. Rents are increasing at rates larger than the increase in hosuing [sic] prices ever did. They’re topping 13% so far this year and there’s no end in sight... Only during very short periods over the last century did it make economic sense to rent if there was a choice.)

*Yawn*. Whatever dude...

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