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FRIFY,

The Chicago Mercantile Exchange is now actively trading "housing futures". They have "puts and calls". True, the volumes aren't yet staggering but this is a relatively new development and I can easily picture a day when these Top 10 Market indicators will be used by everyone from builders and lenders to insurance companies down to the end user (homeowner). They've only been trading a few weeks so not much data to lean on but I think Robert Schiller knows what he's doing.

If I was (and I'm not) a lender doing 100%+ financing at the what I suspect may be the peak of the market at least having a "short" position in my target markets provides me with some downside protection. Let's not be so hasty here.

FRIFY,

I agree, it's not healthy to wish havoc on others so you can "reap" some sort of twisted benefit, but the "wealth effect" from housing had to end. I shudder to think what this country would look like if everyone with a min. wage job and can fog a mirror buying a jet-ski, boat and a motor home to pull it all with just b/c they "qualified" for a home! On a positive note, even on I-5 and 99E pretty much the length of CA I only saw a handful of out and out motor homes. Virtually none on 95/395 through the desert. Of course as this was my first opportunity to take that route I can't say if it's the norm.

On the healthiness of wishing for havoc...

What about the havoc the bubble has already wrought by making it impossible for rational people to afford a house?

What about wishing that your equity continues to increase by 20% per year, each year making it more certain your children will NEVER be able to own their own home?

What about the havoc of your taxes going up year after year because of inflated markets, to the point that even upon paying off the mortgagte debt, the mortgage slavery burden has shifted to the tax burden instead?

What about the havoc that was inevitable from suckering people with not enough earning capacity into suicide loans?

What about if you live in a non-bubble area, and would like to take a job in a bubble area, but won't because the housing cost discrepancy is so huge?

I hope it crashes, and crashes big. The FB's drank the koolaid of greed and speculation. I hope they gag on it.

On the healthiness of wishing for havoc…

It may not be healty... but hey... I eat unhealthy food all the time. :)

We all want to be bulls one day. As bears, when thinking about housing, we find ourselves wishing un-social thoughts (earthquake? bankruptcies? interest rate hikes? recessions? Hurray!). It’s not any way to live life, wishing misfortune on those around you.

I respectfully disagree. Many of us here would like to be HOMEOWNERS one day --which is not necessarily synonymous with "bull" or RE investor. I don't see the roof over my head as a sure-fire "investment". Big difference. And by "owner", I mean someone with some actual skin in the game and an actual chance of paying off the mortgage before the Grim Reaper comes calling for you.

As far as the Schadenfreude goes, don't you think perhaps after months (or years) of being attacked and insulted as JBRs merely for bringing up the POSSIBILITY that there might be something fundamentally wrong with vagrants and parking attendents buying 18 condos with NINAs, we MIGHT be entitled to a little "payback". After taking RE bulls/trolls shit for so long, why am I supposed to feel GUILTY for taking a little pleasure watching these arrogant fucks eat shit for a change? It's my turn and I'm taking it.

I agree that wishing misfortune on regular DECENT people is no way to go through life. By contrast, wishing just desserts & poetic justice on greedy a$$hats is not only healthy and morally just, it's fun!

By contrast, wishing just deserts & poetic justice on greedy a$$hats is not only healthy and morally just, it’s fun!

Way to go, HARM, Lord of Moral Justice!

HARM, Ric,

Good points! Very good indeed. My friend took his kids to see "Cars" this weekend and one of the lines was something like "having more fun than a tornado in a trailer park" which is pushing the bounds of dark humor. Hoping some asshat greedy specuvestor takes it dead in the gazingus is not quite the same thing. And you know HARM you're right! Buying a home for shelter and to raise children need not be construed as a sign of "bullishness".

For those who require sanction from a Higher Power in order to feel ok about witnessing Wrath visited upon the guilty (who richly deserve it), here you go:

I will execute great vengeance on them with wrathful rebukes; and they will know that I am the LORD when I lay My vengeance on them.
--Ezekiel 25:17

DinOR,

I don't think green investing means anything if its in the form of minority holdings. Scattered minority shareholders are unlikely to do much good. Furthermore, determining the criteria of green is hard. If those "green investors" were serious, they would invest in totally green new companies or companies turning green,

I agree that wishing misfortune on regular DECENT people is no way to go through life. By contrast, wishing just deserts & poetic justice on greedy a$$hats is not only healthy and morally just, it’s fun!

Yeah, I guess it's just that I have some pretty decent older neighbors (silent and even greatest Generation on multiple sides of us). Yes, they're sitting on too much house for their needs and yes they pay ridiculously low taxes, but they're good folk living modest lives.

I'd gladly call uninsured lightning down on the empty Palo Alto house that Patrick mentions on his Prop-13 page, but when I found my noggin rationalizing that bird flu would clean out some of the older dead wood, I realized I'd gone over to the dark side. It's easy to wish karmic justice on obviously maligned souls like the person quoted at the top of this thread. Either there's going to be a tsunami that's going to sweep over this land and claim both good and bad souls or else we savers will continue to suffer the long hard screw of unreported inflation while the guilty will continue to reap the benefits of a sinful life.

I reject both the hedonist party outcome and the Calvinist desire for hell and damnation for the sinners.

Yeah, I guess it’s just that I have some pretty decent older neighbors (silent and even greatest Generation on multiple sides of us). Yes, they’re sitting on too much house for their needs and yes they pay ridiculously low taxes, but they’re good folk living modest lives.

Collateral damage.

Maybe its paranoid to say so, but this price rise and equity cashout is supporting the Boomer's unsupportable lifestyle at the cost of all future generations. Price going back to what they paid in real dollar or even nominal dollars is just fair. People should never have treated their houses like a financial investment. A house is an investment/commitment to a lifestyle. Once ordinary people get on the equity appreciation train, they're playing with fire and getting burned is the likely outcome.

Maybe its paranoid to say so, but this price rise and equity cashout is supporting the Boomer’s unsupportable lifestyle at the cost of all future generations.

You are not paranoid. It is true. However, there is no conspiracy. It is a semi-free market at work. Prices go up. Prices go down.

Are you in the bay area already? Let me know if you want to have lobster sashimi.

FRIFY,

If your neighbors didn't irresponsibly take out equity, any bubble deflation is just returning them to their situation several years ago, sans the crazy 50% valuation on their house.

If people functioned responsibly and rationally, prices can go down 50% and most wouldn't be hurt or could bear the pain. The only exceptions I see are people buying in exurban areas and urban pioneers, because the areas might turn bad.

astrid,

I'm by no means an expert where "the environment" is concerned but what we see as the driving force behind "green" investment portfolios is it is a reflection of the impact of women joining the arena. I don't want to make this a gender driven issue but for generations males had and managed the money. It was all about "show me the money". Now that more woman are taking an active int. in investing things that were seldom an issue before have moved to the foreground. You're right, someone that has 100 shrs. of WMT isn't going to influence policy a lick! But collectively if a fund manager with substantial holdings says if you guys don't address your packaging issues there are other retailers we can buy then they have to at least listen. It's just a step in the right direction after years of indifference.

DinOR,

It looks like CME housing futures may be DOA. There has been no liquidity and very little interest at all. I realize that new products can take quite some time to become established. But wouldn't right now be exactly when the most interest should be seen in this market: a period of uncertainty? If there isn't enough liquidity to imply volatility during volatile times, then what will this market do during "normal" times?

http://www.humaneventsonline.com/article.php?id=15963

It looks like CME housing futures may be DOA. There has been no liquidity and very little interest at all. I realize that new products can take quite some time to become established.

It is so bad that there is no "market" price. It is much worse than HedgeStreet.

Randy H,

I must admit I haven't been tracking them all that closely but I felt they might be slow gaining traction out of the gate. I certainly felt there would be more interest but remember you still have major banks like Wells Fargo wanting to "get in" on the sub- prime lending market in a big way! Two years after the whole fannie/freddie thing has blown up and I'm just now seeing articles in Bankrate even acknowledging this HUGE event. So don't look for vision coming from the lenders until it becomes absolutely necessary! Most of us thought that Schiller may have rolled this out TOO late and couldn't visualize ANYONE wanting to take a long position!

SFWoman, I see that you go to socketsite.com.

Is Noe Valley as prime as Marina? What makes it prime? I am very ignorant about SF, so please forgive me.

Peter P,

That IS bad! But like I say when the lenders become more in tune with the gravity of their situation the liquidity will be there. Right now to take a sizeable short position would be like conceding defeat and no one wants to be the first (yet).

Right now to take a sizeable short position would be like conceding defeat and no one wants to be the first (yet).

I doubt it is even possible to take a short position at all in those futures markets. :(

After all, investors who’ve bought RE are still banking on more price growth. Only 1/3 people think there’s a housing bubble.

In this case, they should be going long on the contracts.

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Glen Says:
You may want to check out tejon.com.

i did. half their business is in real estate and property development of their land holdings. if you can't beat em, join em, i guess...

how they develop the land is up to them, zoning permits depending, but they will inevitably have to operate in a market where land prices are in a land speculation bubble, and their pricing patterns will follow suit. you are suggesting a market-based approach on an attempted risk management footing to bail yourself out of a land speculation bubble, and my 2c is that it ain't gonna work, and it's just trying to be 'clever' in a pure market mentality. of course, the received wisdom these days is that markets are everything.

However, I do not deceive myself into thinking that my abstention from purchasing defense contractors or tobacco companies will in any way hurt their businesses. Because for everyone like me who abstains from purchasing such stocks, someone else will be happy to step in to take the profits. Taxation and regulation are much more effective ways of policing the market than “ethical investing.”

the 'someone else will just do it' isn't really an argument for ethics. but do as you see fit.

risk of law suits is one thing. just trying to be ethical inasmuch as you can is another reason. they are two sides of the same coin -- the law suits come about from the legal system punishing unethical behaviour. sometimes the only way to convince people to do the right thing is to punish them financially, unfortunately.

i see our resident progressive who however dislikes corporate social responsibility and is a market neo-liberalist also thinks it's ok, and is anti-environmental and anti-sustainability to boot.

THIS WEBSITE OFFICIALLY SUCKS ASS
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I can understand your frustration (we discussed this at length in the "What Now?" thread), but, hey, none of the moderators here "owns" the site. That honor is reserved for the site founder, Patrick Killelea. If you have some constructive criticisms or suggestions, I recommend contacting him via his email (p@patrick.net). With the emphasis on CONSTRUCTIVE (and preferably polite) criticism.

skibum Says:
The funniest incident was this one: Santa Rita Ave, which by many accounts is the epicenter of the epicenter (Steve Jobs lives a block away, etc etc.) has a tiny bungalow on a tiny lot for $2.5M, DOM >60. This is the neighborhood where Google money buys adjacent lots, tears down beautiful old bungalows, and builds hideous manses with footprints covering 90% of the property. She proceeded to show us in excruciating detail the recent sales of similar lots for $3M, and how $2.5M is a steal after the “correction,” basically pointing out that the house doesn’t matter - it’s the property it’s sitting on for a teardown experience. She even hinted that the next door neighbors were old, and might kick the bucket soon…

good point. i think a lot of the speculation and the overpriced bungalows is meant to have an implicit redevelopment dividend -- after all, you might get a permit to build a 40 storey glass tower on it one day...

so you should buy it, then buy the place next door, coalesce the titles and build multi-residential to house google workers after you bribe the zoning authority to give you a permit! easy peasy.

the market got us into this mess, and, by golly, my faith is so great in markets that i'm going to find a way for the market to get me out of it... [dies in spent and frustrated old age trying...]

Peter P,

That sushi date will have to wait a bit longer. Thanks for offering :)

DS,

I've already explained time and again why I don't like government subsidies except in cases of market failures. As for corporations, I don't think it's the job of corporations to worry about responsible behavior. What they should do is have inspired leadership and long term thinking. A lot of what you call social responsibility is just smart long term thinking.

Social responsibility is best governed via proper government oversight. A perfect government needs to be able to be disinterested and lay down laws that avoid moral hazards by corporations and individuals. This is the polar opposite of the current government, where everybody is shouting for their own piece of pie.

I understand government oversight is imperfect, and figuring out the right level is a difficult matter. However, I can say with certainty that the current American system is FUBAR.

I don't believe problems can simply be solved by throwing money at problems. If that means I sound unprogressive to you, then I think I'm just going to have to live in the shadow of your disapproval.

As for corporations, I don’t think it’s the job of corporations to worry about responsible behavior.

I agree. Same for individuals.

However, corporations or individuals who put serving the world ahead of pure profit tend to do better.

DS said:
i see our resident progressive who however dislikes corporate social responsibility and is a market neo-liberalist also thinks it’s ok, and is anti-environmental and anti-sustainability to boot.

Sean,
It sounds like you are accusing me of hypocrisy. I would respond, except that I find your comment completely incomprehensible and nonsensical.

As for anti-environmental and anti-sustainable.

Can you back that up? Just because I'm not willing to support every harebrained "environmental" initiative out there doesn't make me anti-environmental. I don't even know where you got the impression I'm anti-sustainablity. I might be pessimistic about humanity's odds of surviving past the next 500 years (rapidly accelerating and powerful technology advances, backward and superstitutious thinking - maybe we can beat it, and global climate change, and diseases, and crazed zealots, and our exponentially ballooning population...)

This society is still in denial over the most fundamental issues of sustainablity. We, on this blog, are still talking as if population growth is the proper response to an aging population, rather than see if we can support the aging population with a smaller (thus more sustainable) population. Americans are governed by a political leadership who believe God has created Earth for humanity's benefit and provided just enough resources for the duration of our occupation. Can we even seriously talk conservation or sustainability when these people believe they'll be raptured up before all the oil is out of the ground?

Glen, astrid,

C'mon, social engineering & government paternalism is "for the children", remember? You... do.. like children... don't you?

Peter P,

Yeah, I just don't understand why, outside of bad government policies (esp. tax policy) and shortsighted corporate faddism, why environmentalism runs opposite to the financials.

HARM,

I've compared child rearing to pet parenthood here. I think I'm already totally screwed on that account :) Nah, I get along with pets and small children, I'm just not ready to commit to either.

Global climate change is the last thing we should worry about.

Yeah, I just don’t understand why, outside of bad government policies (esp. tax policy) and shortsighted corporate faddism, why environmentalism runs opposite to the financials.

Environmentalism is the reversal of cost-socialization.

The world will better if we respect each other. As simple as that.

Peter P said:
Environmentalism is the reversal of cost-socialization.

When you say cost-socialization, are you talking about the imposition of negative externalities by market actors? If so, then I would agree that good environmental policy can force market actors to internalize negative externalities (like pollution).

The best way to do this is through the creation of market mechanisms which incentivize less environmentally destructive practices (eg the creation of a market for pollution credits) not through direct intervention in the market (eg: subsidies for "clean energy research").

Market is not everything and cannot solve every human problem.

Government policies are never efficient, judged by the market's criteria.

But mixing the market and the government will most likely create new problems worse than the ones the mixture is designed to solve.

When you say cost-socialization, are you talking about the imposition of negative externalities by market actors?

Yes.

The best way to do this is through the creation of market mechanisms which incentivize less environmentally destructive practices (eg the creation of a market for pollution credits) not through direct intervention in the market (eg: subsidies for “clean energy research”).

I would love to see that. But I really doubt it will happen.