patrick.net

Now here's a topic covering some familiar old ground! I'm convinced the nesting instinct is a real factor in pressuring men to buy now (I've witnessed it among other married men in my age group). However, it is by no means the only one. Recall the "Psychology of Ownership" thread?

There is a powerful and pervasive pro-home"ownership" bias in American and most other cultures that cannot be fully explained by gender bias/instinct alone. In most societies, renter can usually be equated with "loser" and homeowner with "winner", regardless of rent vs. buy ratios, cash flows, opportunity costs and TVM calculations.

The shrill, harpy wife (and vouyeristic Realtwhore, Suzanne) has promoted this unfortunate gender stereotype, regardless of how common it really is:

http://www.youtube.com/watch?v=Ubsd-tWYmZw

People are emotional creatures, not simply rational calculating machines. "Nesting" is but one of many emotions that define the utility one gets from owning a home. For others it may be social status, self esteem, sense of security, or even totally illogical satisfactions like "a need to feel grown up".

While we can easily dismiss most or all of these things in abstract, or when evaluating the actions of others, we rarely acknowledge the impact of these less tangible forces on ourselves. Nonetheless, we are all impacted in some way by an "irrationality". In fact, someone who truly wasn't impacted by any emotional forces regarding home ownership would almost surely be borderline sociopathic, like superstar stock traders often are.

The best anyone can do in any big, critical, risky decision like buying a home is evaluate what is best for them. People are no more interchangeable products than are houses.

Anecdotally, I know of one couple that bought at or near the peak of the market because the wife was pregnant and wanted to have the nursery ready before the baby arrived. The husband was well aware of the bubble, but ultimately relented. They paid around $800K for a "starter" home in West LA, then probably spent at least another $100K fixing it up.

I'm lucky because my wife is at least as bearish as me on housing and, as a BK attorney, even more debt-averse than me.

The best anyone can do in any big, critical, risky decision like buying a home is evaluate what is best for them. People are no more interchangeable products than are houses.

Let's assume that houses were 10X their current prices but salaries hadn't risen (e.g 2BR/1BA 850sqft was $7M). The percentage of people for whom "now" was the right time to buy using simple objective criteria would be very few indeed. This would be true regardless of all that touchy-feely subjective irrational stuff or what they felt was best for them. I could have a nice subjective motivation to buy a house on $25K salary but there's a lot of objective reasons why this would be a dumb idea (although apparently there are a lot of mortage brokers who could "make it happen" for me).

At some price point, the objective reasons for not buying a house overwhelm the subjective motivations for all but the very wealthy. I would argue that for the majority (>50%) of people that was reached a while back in the BA. Negative amort ARMs allowed a lot of touchy-feely people to defy gravity and live their dream for a while.

When you cross the street, use your head not your heart. Buying a house won't kill you, but the same rule applies.

People are emotional creatures, not simply rational calculating machines.

We need to understand why humans have the burden of emotions. It is quite difficult to understand.

Is emotion a debt? Is it a gift, a curse, or both?

Buying a house won’t kill you

It will if the house has really bad feng shui.

Can you please invoke your fearsome threadmaster powers

This is Patrick's thread. I am just a minion.

Not so fearsome. Unless you are a cow. :)

Buying a house and starting a family can support each other but none is the condition for the other. The parents of my friends did like backwardselvis heard:
> So I called around and spoke to quite a few of our parent’s friends. Almost all of them started having kids while they were renting.

And so do we.

Glen,

I feel for the guy, really I do. What a shame, 900k for a starter? It makes a lot of my bubble complaining look really lame. Like a home selling here in the Portland metro area for 350K that would have sold for 225/250 just a few years ago. BFD! In a lot of ways for me to give in at the wrong entry point would be as much about principal as it is about money.

My big reluctance centers around "making someone elses day!" Some of the ugliest and greed driven sellers show up post peak. In fact the only thing I can think of is that these 11th hour sellers must be thinking to themselves that it is their right and duty to penalize you, the buyer, for your having created this situation he is now in.

I just don't know how else to describe what they must be thinking. It's like, Hey had I sobered up and listed pre-peak and been ahead of the learning curve we could've talked more reasonably! Now that it's post peak you're gonna have to pony up a little extra to cover my mistake.

You need to pay for my lost dignity/face! WTF? I just don't get it.

Peter T,

Absolutely. I can't remember ONE thing about my life pre-kindergarten. Not one. Is the outrageously over decorated nursery for the kid, or the parents? I'm told my folks rented until I was about 4 or 5 and I turned out mostly o.k.

"Mortgage lender reviews" spam now deleted.

Please mail me at p@patrick.net if spam shows up again. Thanks.

Patrick

How will "global warming" affect housing?

According to this article, the economy will be doomed.

http://tinyurl.com/yxrcw8

"Global warming" is still unsubstantiated. Even if it is real, I believe its effects will be mostly beneficial. New sea routes in the North Pole can be opened for post-panamax cargo ships. This will save fuel and time. On the other hand, heating costs around the world will go down substantially. This will also save energy and money.

FRIFY,

I don't diminish object criteria at all. I actually disagree with Peter P's assessment that psychology is 99%. More, I think that objective criteria provide the constraints with which we all must work. So, it is true that except for the very richest, objectifiable constraints limit the range of actions in your example of 10X house prices with equal salaries.

That's why I think housing prices must come down. Reversion.

But, where Peter P is right is that on the margins psychology is 99% of every market decision. So in your example, once all the objective variables line up enough to put a portion of the population in range, then people's price versus utility criteria become unique and difficult to predict.

People aren't marginal price takers. The undergrad econ supply and demand graphs basically don't work in the real world for anything except maybe a few futures markets.

People aren’t marginal price takers.

True. But psychology reinforces psychology. In the end, emotion creates reality.

Price actions do affect the fundamentals - people's so-called objective criteria - in significant ways.

Any pregnant woman thinking of buying in the Bay Area right now should tie her money up in some sort of bond that she can’t touch until the baby is born.

This sounds a bit like Ulysses and the Sirens (of real estate).

When I first saw the thread topic as "Sex and Housing," I thought it was going to be about something else...

OT, but another piece of liberal NIMBYism run amok:

http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/10/30/BAGMTM2HDE1.DTL

Only in the BA. Protesting a Trader Joe's in downtown Berkeley because it will "ruin the neighborhood." It turns out it's not the TJ's they care about - it's the 170+ housing units they plan to build above the TJ's!

Meanwhile, last I checked, there's not much neighborhood to ruin around University and MLK.

There should be regulations against zoning. The market will "zone" development better than any bureaucrat or naively self-serving voter.

If zoning is a necessary evil then a system like shareholders-of-the-city should be implemented.

I didnt want to buy the new Manola Blahniks, THE Hermes bag, or latest Gucci stilleto's but guess what? Easier than buying a massive depreciating asset.

Maybe this is the reason for those over-asking sales that ConfusedRenter likes to trot out:

http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2006/10/27/carollloyd.DTL

Speaking of the shill, has anyone with the authority (Patrick? HARM?) decided to ban him from this site yet?

I find it interesting that in both San Francisco and Berkeley, where a majority of people consider themselves progressives, the one thing that seems to scare people more than anything else is change.

I thought I was one of the few social conservatives here. :)

But somehow I embrace changes. Only change is permanent.

If I have the money, I would probably build a Victorian house with a glass dome and a partial copper/titanium facade. :)

SFWoman (or anyone else with knowledge of this),

Speaking of architectural intransigence in SF, I've heard that any low-rise housing structure in the city needs to have some kind of oriel (bay window that doesn't reach the ground) on its facade. Hence, the ridiculous and downright weird uniformity of buildings - from new loft in SOMA (like the ones on Mission near the Metreon, I think??) to the "Richmond Specials", they almost all have some variation of an oriel. What idiot came up with that rule?

No true social conservative would allow that unless cream tea is served inside.

(-) loft
(+) lofts

Perhaps I am a progressive conservative. :)

Is anybody else getting loads of calls from political robot machines today?

Jukubots?

Only in the BA. Protesting a Trader Joe’s in downtown Berkeley because it will “ruin the neighborhood.” It turns out it’s not the TJ’s they care about - it’s the 170+ housing units they plan to build above the TJ’s!

Would you like to live next door to a 5 story monstronsity that cloaks your house in shadows? For some idea of how this project started out see:
http://www.planberkeley.org/1885ua_files/1885ProjHmPage.html

The neighbors have managed to get concessions from the developers which will utlitmately make it a much better project, both for the neighborhood and the city.
Also, Berkeley calculates housing density per region (several blocks) instead of per parcel, so you end up with extremely high dense developments of "student ghetto" housing (as opposed to less dense, but more desirable family housing).

Would you like to live next door to a 5 story monstronsity that cloaks your house in shadows?

That is not the point. I do not like many things but that does not make it right for me to stop everything.

If you do not like what is going on in the neighborhood, you can always leave.

Would you like to live next door to a 5 story monstronsity that cloaks your house in shadows?

Yes, if the alternative is that Kragen's with it's ugly parking lot. Again, where's that University and MLK "charm" people are trying to preserve?

(-) it's
(+) its

RE: student ghetto

You mean the entire city?

Somehow Palo Alto is not a student ghetto. Instead, I call it Bumsville.

Would you like to live next door to a 5 story monstronsity that cloaks your house in shadows?

Meanwhile, these "liberal progressives" would rather drive the extra 2-3 miles each way to go to the Emeryville TJ's instead, despite the extra gas consumption.

For the record, I am the one who wanted to buy a house in the first place, but after doing the math in early 2005 and deciding that buying did not make sense for us, I am now the one who reminds my husband why we are renting rather than buying right now when he starts talking about what/where we could buy. . . .

Meanwhile, these “liberal progressives” would rather drive the extra 2-3 miles each way to go to the Emeryville TJ’s instead, despite the extra gas consumption.

I am under the impression that most vegetarians/vegans are urban white females. So there is a good chance that many of these pro-life (animal lives) activists are actually pro-choice (regarding abortion of human lives).

Which is more hypocritical: anti-growth progressive liberals or pro-choice pro-lifers?

Which is more hypocritical: anti-growth progressive liberals or pro-choice pro-lifers?

Then there's the old-school religious conservative pro-life (anti-abortion) pro-death penalty hypocrites. Or environmentalist SUV drivers (with the "Keep Tahoe Blue" stickers on the back of their Chevy Tahoes...

Wow, touchy crowd.

RE: student ghetto
You mean the entire city?
No, I would say the student ghetto extends about a mile west and south of the campus -- much less so to the north and east. Interesting tidbit, one of the most homogenous areas (read: whitest) in the BA is in Berkeley around Claremont.

That is not the point. I do not like many things but that does not make it right for me to stop everything.
If you do not like what is going on in the neighborhood, you can always leave.
Well, I don't think the people in the neighborhood want to leave as they were there first, and although they did move into a commercial district, they had reason to believe (ie - University Avenue Strategic Plan) that something this large would not be built. Personally, I think the project will go forward, but it will be much better than the original proposal.
Yes, if the alternative is that Kragen’s with it’s ugly parking lot.
Kind sir, Kragen's is a cultural resource (every neighborhood needs an auto parts store, so I will be sad to see it go). That said, the corner does take ugly strip mall to new heights.

Kind sir, Kragen’s is a cultural resource (every neighborhood needs an auto parts store, so I will be sad to see it go).

Excellent point! I'm all for progress, but I do personally hope that Everett and Jones never leaves the San Pablo + University location! mmmm...ribs.

Wow, touchy crowd.

Not touchy, just bored because there's not much discussion going on today's thread. ; )