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follow astrid 2006 Nov 12, 9:24am
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Per Bruce's request:
Please discuss your views about building a house from scratch v. buying and remodeling. Please share first-hand experiences and second-hand knowledge about building dream homes from scratch. Tips, tirades and dire predictions welcomed. Discussions about kitchen counters and adobe v. steel and glass even more welcomed.
And yes, Peter P, discussions about bathroom layout are most welcomed.
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We had a lively debate a couple threads back on whether or not MDs were underpaid for the schooling, lawsuit risk & debt load required vs. other professions. Put me down firmly in the "underpaid" camp.
We had a lively debate a couple threads back on whether or not MDs were underpaid for the schooling, lawsuit risk & debt load required vs. other professions. Put me down firmly in the â€œunderpaidâ€ camp.
Yeah, that was the debate where DS agreed with the side that MD's are overpaid and only care about making money. :)
I don't think that USNewswire/demos article is necessarily right in attributing borrowing from home equity to 'pay for basic needs due to declining salaries', that sounds a bit pious and pursuing an agenda to me. I think a lot of it has been discretionary spending on home renovations, new cars, etc. There is no question a lot of borrowing has been going on, as per the graph, but to imply that it's all to meet living expenses is drawing the long bow and being a bit ultra-left. Did they ask everyone in the country who has drawn against equity for their reasons? And the lender's ads haven't influenced anyone to go out and splurge on luxuries to look good to the neighbours? And those who draw down from home equity are often in their later years of salary earning with a home almost or entirely paid off, I doubt whether they were in financial distress prior to drawing down...then there's the question of reverse mortgages. Cost of living hasn't risen that much, and salaries haven't fallen that much.
that sounds a bit pious and pursuing an agenda to me.... to imply that itâ€™s all to meet living expenses is drawing the long bow and being a bit ultra-left
Ok, this is getting weird now. First, DS implies MDs are underpaid, then he accuses a news article of having a leftist slant? Has someone hijacked Different Sean's screen name??
Thanks for the chart.
Do youk, or anyone else, have a chart showing net MEW. That is, in spite of the proliferation of IO loans, I presume that most Americans continue to pay some principal down each year.
It would be interesting to subtract the amount of principal paid down from the MEW numbers to find out how much net equity Americans built, exclusive of market appreciation--I am wondering if this might actually be a negative number? That is, are Americans withdrawing more equity, in the aggregate, than they are accumulating through payments of principal?
Yeah, that was the debate where DS agreed with the side that MDâ€™s are overpaid and only care about making money.
heh. To the best of my knowledge, Oz and UK doctors are paid, I dunno, maybe half of a US doctor's rate doing the equivalent specia1isation. I believe there is a certain amount of money and status chasing in becoming a doctor, although the reality on graduation may be different. I remember talking to the 'doctor's union (AMA) representative' on campus a while ago, who was breezily talking about making 'half a mill, or a mill' (so much for the role of unions), altho she will get a rude shock on graduation, unless willing to spend many years further specia1ising to make $150K-$200K at best. I think she was quoting US rates and doubling them in her febrile imagination... A recent report pointed out that increasing numbers of medicine graduates are chasing specia1isations for the money, and abandoning the idea of community general practice.
Have to get after those plumbers though, heh, I heard someone saying tradesmen are all making over $100K these days -- and they get quite a bit of interesting variety and challenge in their work without really being responsible for too much... certainly no-one's lives... and the plumber completely misread the plans for my nominal g/f's kitchen and botched it...
@Glen, no, but it shouldn't be too difficult to plot as long as you have relatively comprehensive mortgage data (which I don't at the moment). The "exclusive of market appreciation" part might be a bit tricky. A ton of people refinanced (I think we concluded a while back that virtually EVERYONE with an outstanding mortgage has refi-d within the last 5 years), and their "equity" at the time was based upon current appraisals. If that appraised value has fallen since refi time, "net equity" would be hard to precisely calculate.
Ok, this is getting weird now. First, DS implies MDs are underpaid, then he accuses a news article of having a leftist slant? Has someone hijacked Different Seanâ€™s screen name??
heh, no, maybe I'm in a right wing mood this morning. No, nothing's changed, I'm a realist in the centre left, and try to be evidence based, rather than conjecturing about whatever. Being a realist in the centre left in the US probably puts you somewhere on the lunatic left fringe tho, relatively... have to make the US phase-shift adjustment on every comment...
Interesting wrinkle. I have pondered how to calculate that but I'll be honest. It would be primarily just to prove how paltry that sum is. I've read mortgage studies that show even w/ a 30 yr. FRM it isn't until year 23 the home debtor reaches the 50/50 level in the amoritization of the loan.
Given that affordability is defined as refinancing at every turn once it's time to pay the piper......?
HARM, I'm getting really tired of your crap. This whole hate thing has really got to go. I'm sick of hearing you degrade the fine institutions of realtwhoring and loan sharking, of course you can borrow you're way to prosperity. Why the hate HARM, why the hate? ;)
When you get done with your Photoshop "art project", please post the results here.
I may be a REIC "hater", but (to borrow spelling from my favorite FB) I'm no "looser". :mrgreen:
Your assessment is correct. Many in university/college who want to go into medicine are in for a rude awakening. In the US, you can decide to practice in a state with high demand and low malpractice, like many states in the South and make lots of money in a subspecialty, but anyone who wants to live in a major urban center will be compensated much less. The desire to go into subspecialties is also about "controllable" lifestyle and better hours, too.
Casey's trolling his own website with a troop of "looser" identities.
Oh wait, I think someone provided this link before, which sort of answers my question:
So, in 2000 American homes were worth $11.4T and were encumbered by $4.8T in mortgages. In 2006, American homes were worth $20.3T and were encumbered by $9.3T in mortgages.
Let's be generous and assume that the natural rate of growth for aggregate home prices should be around 5% (to account for inflation and new construction). That means that if the prices in 2000 were reasonable, then a reasonable price today for America's total housing stock would be around $15T.
Now consider that 1/3 of homeowners have no mortgage. So they probably account for around $4T of equity (even assuming their houses are worth less than the average home). Thus, you have $11T in equity, encumbered by $9.3T in mortgage debt. At that point, I suspect that at least 1/3 of homeowners would be underwater. Massive liquidation time.
Thanks for an excellent question. I see the difficulty in arriving at a net equity figure, but it would help us to estimate a sense of scale when discussing equity extraction. I have no intuitive idea if $715 billion is significant unless I know whether it represents 9% or 90% of current equity.
HARM? Got a rough estimate?
It's kind of a personal ambition of mine that if I raise a son, he would be a plumber/slacker/rockclimber in summer/skibum in winter in his teens and early twenties. (before he is discovered as a financial genius at 30 and buys his mum a genuine midcentury modern house.)
...aha! See what happens when I take too long away from the thread? Can't mix this with playing chef de cuisine, I see.
This is not an exact figure, but $11 Trillion is a number that has been getting thrown around lately.
So, $715 Billion would represent 6.5% of "equity". Problem is, how much of that equity is really peak-of-the-bubble-valuations vapor-equity? If prices continue to decline by significant margins, much of this vapor equity will disappear, and that percentage will balloon even if no additional equity is "liberated".
Another thing to consider: Homeowner equity expressed as a percentage of market value has dropped to its lowest level (55%) since they bagan tracking it, despite one of the biggest run-ups in house prices in history.
In other words, owner equity would be even lower if not for the sky-high bubble valuations.
Let me try posting the chart:
Sadly, no one except higher-level moderators can post images in the thread comments, though any author can post images in their own thread topic. Plus, the procedure is complicated pain in the a$$.
I think this image is fine here. It's a bit large for the header though.
So, HARM, what you show is vast numbers of people having removed a reserve of assets which might otherwise have been tapped in hard times.
Income had better be pretty solid, by the look of it.
A bit OT, but given that most of the mountains around Tahoe will open next week, I wanted to pass this GEM of an alpine retreat to all skiers.
Don't miss the pix.
"Retro" appliances, forsooth. That one needs to be added to the Realtor Spin Hall of Shame.
New thread: Patrick.net Photoshop Extravaganza!"
Hey, what's wrong with a tradesman making $100/hour? They don't work consistent 40 hour weeks (a bad thing) and they provide a valuable service. There are plenty of BA software folks who are the equivalent of Wally from Dilbert, drawing $50-60/hour to drink coffee and scratch out an occasional bug fix.
And let's not even get into seller's agents. Take a couple crappy photos, write a hackneyed introduction rife with spelling errors and then rake in $5000+ for sitting on their butt and letting the buyer's agent sell the house.
That had to be the best damn job in the world during the RE bubble. :(
I don't object to tradesmen who are "worth" $100/hr but I do object to tradesmen as a group. The vast majority are not worth even $40/hr and their unions are essentially price-fixing mechanisms unleavened by powerful union-breaking employers.
I'm not so sure about the $50-60/hour Wallys...if they exist at all, they're probably reminants from the tech boom. My dad is a systems administrator in DC metro area and most jobs paying that range demand rather specific skillsets, are often contract jobs, and require some evidence of competency. There's lots of Wallys in the $25-40/hr range though.
A bit OT, but given that most of the mountains around Tahoe will open next week, I wanted to pass this GEM of an alpine retreat to all skiers.
Thanks for the link. Depressing place, although it is in a convenient spot. Maybe I'll check it out in the next few weeks for kicks!
Doh, there are two thousand hours in a year! [blush] I meant the $20-30/hour range for Wallys. Wallies? Wally's!
I guess plumbers charge whatever they can get, and they aren't necessarily working 40 chargeable hours a week, altho they also charge call-out fees on top, etc. The 'clean' work I guess is fitting new kitchens, bathrooms, and doing new contruction in general, which eliminates much of the 'gross' factor. (Similar to electricians having to crawl around in dusty, cobwebby crawl spaces and ceilings vs new work). My NGF got 2 quotes, 1 charged $88/hr, the other $66/hr, but the final quotes came to the same amount, hmm.
Sure, any skilled trade that requires a licence (license) inherently commands a sort of monopoly, where they've arranged that no-one else is allowed to do a certain sort of work by law. Such monopolisation is enjoyed by a number of trades, and medicine. Even the possession of the right tools gives you an advantage, a la the locksmith. The question of what everyone is worth goes around and around, I'm one of the ones who sits around drinking coffee and grinds out the occasional bug fix...
highly related on topic post:
Looking at aftermarket car alarms, an Oz company called Dynamco make the Cyclops range, award-winning, well-priced, blackwire alarms that are hard to crack, etc, based in the US in Los Angeles. Exchange rates work in US purchasers' favour. Seem to be much more reliable and hi-tech than Black Widow etc. Well worth a look...
Docs underpaid or overpaid....it is what the market will bear. The major issue is the "loss" of about 12 years of real earnings and life experience due to the demands of medical training. The UK MD's have a pretty good deal; make close to what MD's make here and work much much less and with lower stress. And they dont have to deal with 300k in debt when they start practicing. My neighbor is a PAINTER with a 3 man crew. He never went to grammar school! But he is sharp and makes 180k/year. Much more than many MD's. MD's cant really organize or price collude. But it will happen eventually..... The AMA? Worthless.
Can you believe they are still doing stuff like this? I hope Casey Serin doesn't see this!
MDâ€™s cant really organize or price collude. But it will happen eventuallyâ€¦.. The AMA? Worthless.
can't organise or price collude? hmm, it's already happened... the AMA here is held to be the country's most successful union of all time in terms of gaining conditions and remuneration for its members... quite a few politicians used to be doctors also... the last act of one MP here who was a doctor and the minister for health was to grant $5M to the Board of GPs and immediately became the chair of the board as his next job... but we see that all the time...
40% of US MD's are foreigners. What is the % in the legal, accounting, plumbing, electrical, air-conditioning, automotive rackets? There is no MD union and certainly not in the mode of the teachers, firemen, police unions. Nor is it organized as well as federal employees (avg 110k/year) who face none of the free-market rigors.
A part of the problem is arguably because many MDs are overeducated for their purpose and that Med school takes too long and is too costly.
Outside of some fairly esoteric sub-specialties, MDs pay is tied to medicare/medicaid and insurance payouts. The sheer economics of the current system guarantees bad experiences all around - brusque and rudimentary care for patients, lots of paperwork for doctors and great inequity of care.
Maybe MDs should look into national healthcare and see how they can change the dialogue to their advantage. Working for insurance companies can't be much fun.
The state of malpractice somewhat contradicts your impression that MD's are overtrained. I would actually say that there are many instances where additional training would be beneficial. Lets take the example of nurse practitioners ro physician assistants. Would I let my family receive treatment from them? No. National healthcare will further bankrupt the US but many MD's would welcome it- similar pay, 35% less work and 50% less stress. Bring it on. How many years of training would a medical practitioner require in your mind? Some of the best and brightest go into medicine (they dont all become mortgage brokers and investment bankers), but this is changing very rapidly. Very qualified people are either retiring prematurely or seeking alternative careers(I know some who have quit family practice to become car salesmen).
Hey, I believe in cheap post-secondary education too! (except maybe law school and biz school). As a country, in the long run, we really can't afford anything but nationalized healthcare and education, along with a realistic assessment of what we can and cannot do without.
This country simply can't afford to have a dysfunctional system where simple illnesses in the uninsured young people become costly chronic illnesses and where the taxpayers are paying hundreds of thousands to keep the comatosed or terminal patients on life support - if their family wants them vegetating for 3 extra weeks, they can pay for it out of their own pocket.
no sign of life for a couple days -- thread closed