patrick.net

skibum

I’ve also read somewhere that not only is the Midwest fault line “overdue”,

The New Madrid faults caused the largest earthquakes outside of the huge ones in Alaska, in the US.

1811-1812, 3 quakes all over 8.0:

http://quake.usgs.gov/prepare/factsheets/NewMadrid/

Survivors reported that the earthquakes caused cracks to open in the earth's surface, the ground to roll in visible waves, and large areas of land to sink or rise. The crew of the New Orleans (the first steamboat on the Mississippi, which was on her maiden voyage) reported mooring to an island only to awake in the morning and find that the island had disappeared below the waters of the Mississippi River. Damage was reported as far away as Charleston, South Carolina, and Washington, D.C.

These dramatic accounts clearly show that destructive earthquakes do not happen only in the western United States. In the past 20 years, scientists have learned that strong earthquakes in the central Mississippi Valley are not freak events but have occurred repeatedly in the geologic past. The area of major earthquake activity also has frequent minor shocks and is known as the New Madrid seismic zone.

I read somewhere else on the USGS site that the Midwest/plains are especially susceptible to quakes because the flat land allows the energy to travel further, where western mountains limit the range. There was another bit about how the skyscrapers in Chicago effectively "float" on the ground water, and are prone to complete failure in the event of any quake larger than about 7-something. I think the 1800s New Madrid quakes carried more energy than that into Chicago.

Also, according to my tour guide in Great Basin National Park, the Lehman caves are pretty secure from seismic activities (and just about everything else). He's speaking as a guy who survived Loma Prieta as a scout leader on top of the Half Dome, so I really HAVE TO believe him.

King_Cobra,

I have an appt. in a bit but I would strenuously debate that. LV was one of the first markets to go ballistic and the mood there amongst realtors is dour. Foreclosures are skyrocketing and "lease 2 own" offers are busting at the seams. LV is the birthplace of the "cash back at closing" offer along w/incentives out the ying yang. They're probably a year ahead of the rest of the country with realtors finding very little to celebrate about. More high-rise (and high profile) condo projects have been shelved or outright cancelled than you can shake a stick at. Ivana Trump and Michael Jordan come to mind.

I had a client buy in Henderson and they re-negotiated the price down TWICE during the process of closing! (Of course I insisted they hold off a little longer) but I'm just a financial planner so WTF would I know! Orig. 360K down to 297K. Probably could get identical home for about 260-275 now.

Prices haven't corrected enough for my taste but if I "were" looking to catch a falling knife I'd start here. Oh btw, rentals are abundant and oh so negotiable. Wait out the crash by the pool! (Snaps fingers).

King_Cobra,

I would have to guess that LV (like SD) may have actually peaked in 2004, early 2005 at the latest! True, the Strip and Summerlin seem to be holding up but the sheer amount of bad news for the greater area can be a little overwhelming. It's really sloppy and no one seems to be sure where prices should be.

I've noticed over on C/L that specuvestors are dispensing with the "bravado" and are speaking more candidly. "Take over my payments" is not exactly uh....... coming from a position of strength?

lunarpark,
In common interest developments (including condos), you own a percentage of the land that is part of the development. Not a specific piece per se, but an undivided interest (not sure if this is the right legal term) in the entire piece of property. HOA monthly fees usually include earthquake insurance premiums to avoid the situation you discussed.

I remember hearing Simon Winchester discussing his latest book on the SF earthquake. He made the point that most of the great cities of the world have stood the test of time. He was unwilling to bet that SF or New Orleans would still be here in 100 years.

EBGuy,

Thanks, that makes sense.

the only place with no apparent risk and fits my lifestyle is Las Vegas.

@King_Cobra,

LV has the problem of water supply, so I think it's also subject to "natural" calamity (severe drought).

I also agree that talking about uncontrollable natural disasters and housing is a bit of a silly idea.

REIC responds to Surreal Estate article:
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/11/19/REGRKMF60V1.DTL

Editor -- Reading the article by Carol Lloyd made me wonder what her motivation would be for trashing the real estate industry ("A buyer or seller be," Surreal Estate, Nov. 12).
.....
Now, consider the following:

When brokers bring a buyer and seller together, suddenly many people are employed and generate revenue. Inspectors, loan and insurance brokers, painters, termite companies, stagers, plumbers, engineers, roofers, title companies, just to name a few. City and county transfer taxes are generated.

What's my point? It's not all about our commissions. We help stimulate an entire segment of the economy. We don't want a medal, or even a pat on the back. We'd just like the public to know that our industry is not as self-serving as you are attempting to portray.

TIM Q. CANNON, broker
BerkeleyHome Real Estate

And from the Berkeley Daily Planet:

On the downside—for city coffers—home prices decreased from an average of $792,000 to $775,000 over one year and the volume of home sales decreased from 438 to 324 over a year causing transfer tax revenue to slip by about $1 million.

I also agree that talking about uncontrollable natural disasters and housing is a bit of a silly idea.

I agree. Instead we should be discussing the correlation between pirates and housing cycles. ;-)

Just for trivia, before you decide SF is a dangerous place to live. By the way, I remember hiding in my grandmother's basement when these monstrous F5 twisters jumped over Wilmington. I was 6 and absolutely terrified.

On April 3, 1974 a tornado measuring F5 on the Fujita scale cut a path directly though the middle of Xenia during The Super Outbreak, the largest series of tornadoes in history. The disaster killed 34 people (including two Ohio Air National Guardsmen who died days later in a fire), injured an additional 1,150, destroyed almost half of the city’s buildings, and made 10,000 homeless. Nine schools, nine churches and 180 businesses were destroyed. The city's plight was featured in the national news, and President Nixon visited stricken areas.

Indeed Xenia has a long history of severe storm activity. The area was referred to by Shawnee Indians as "the place of the devil wind" or "the land of the crazy winds" (depending upon the translation) before the white man appeared on the scene. Records of storms go back to the early 1800s. Tornadoes are more frequent than people realize; local records show 20 tornadoes in Greene County since 1884.

@EBGuy,

All I can say is, TIM Q. CANNON, broker, you are an idiot. I am impressed with how altruistic you really are. You really are doing real estate to help out all those other guys in the industry. It's not about the commission! Bless you, Tim!

As a former aerospace engineer who hangs out with a few civil engineers still, I don't believe the amount of structural steel used has a lot to do with how well it will withstand an earthquake. Depends on how it's deployed. From what I understand, it's how the structure is designed and how it floats (or doesn't) on the soil that determines it's immediate survivability. Designing some "give" into a structure can actually be a good thing. A willow will survive wind-storms that a tall oak will not. In any case, getting a good engineering assessment or two of your structure would be a good idea not just rely on the word of the builder/seller about how strong it is.

The best thing you can have is insurance. In any case even a structure that survives an earthquake could be damaged/destroyed by post-quake factors like fire or flood. Or the surrounding area that is destroyed could create it's own hazards for some years. If your neighbors are slow to rebuild you could be living on a block with boarded-up empty buildings and that's not good on several fronts.

what about plagues of locusts or frogs -- do we need to insure against that?

From what I understand, it’s how the structure is designed and how it floats (or doesn’t) on the soil that determines it’s immediate survivability. Designing some “give” into a structure can actually be a good thing. A willow will survive wind-storms that a tall oak will not.

Vincente,

From the little I know, I think you're right. I remember reading about super-tall skyscrapers like the Petronas Towers in Kuala Lumpur or the Taipei 101 building, both located in earthquake and typhoon-prone areas. They use very interesting damping systems to counteract extreme forces, sort of like humungous internal pendulums that counter the sway of the buildings during a quake or typhoon.

But, as you say, any reinforcement may not be good enough if the ground underneath completely gives way and shakes like a bowl full of jello, which is how they describe what happens to places like the Marina.

I’m in the market for a perpetual motion machine and an underground cave, 100 meters or more underground.

Locusts are good though - good famine food.

SFWoman Says:

> The strongest I have ever felt the ground shake was
> in an earthquake in about 1988 at my family place
> in the Back Bay (Boston, landfill, massive Edwardian
> stone townhouses).

The Brookline area of Boston has always reminded of Presidio Heights. Is Brookline considered part of the “Back Bay” (or is the Back Bay just the area east of Fenway Park and BU)?

The Brookline area of Boston has always reminded of Presidio Heights. Is Brookline considered part of the “Back Bay” (or is the Back Bay just the area east of Fenway Park and BU)?

No - Brookline is a separate town abutting Boston proper (by the Longwood medical area and Fenway). Back Bay is the neighborhood east of Mass. Ave., north of St. Botolph St (or for some, Huntington Ave.), west of the Boston Common, and bordered by the Charles River to the north.

How does Brookline remind you of Presidio Heights? I don't see the connection so much (having lived in Brookline for 2 years).

Off topic but does anyone buy these stats?

Randy H., any comments?
_____

A brisk rise in American wages:

Pay rose faster than the cost of living for the first time in years.
By Mark Trumbull | Staff writer of The Christian Science Monitor

American paychecks are rising again at a pace not seen since the 1990s.
The pay increase amounts to 4 percent on average over the past 12 months, and it comes at a very helpful time for millions of households.

For three years, pay increases haven't kept pace with the rising cost of living. Then came this year's housing slowdown, which has further squeezed family finances.

Those setbacks, however, are now being offset by rising income. Four percent may not sound like much, but you have to look back to 1997 to find a calendar year with a gain that big.

Equally significant, tamer energy prices mean that the "real" wage gains, after inflation, are above 3 percent for the past 12 months. That, too, hasn't happened since the 1990s, even though the economy has been expanding over the past five years.

"The striking feature of this expansion has been that ... real wages for the typical worker haven't risen that much," says Richard Berner, US economist at the investment bank Morgan Stanley in New York. But with real incomes rising, he says, "YOUR GET A PICTURE OF AN ECONOMY THAT CAN WEATHER THIS HOUSING STORM."

For the rest of the article:
http://www.csmonitor.com/2006/1120/p01s03-usec.html

Seems MBSs don't make the best property owners. Blight, coming to a foreclosure near you...

CLEVELAND - Some of the world's biggest banks are accused of owing the nation's poorest big city money for upkeep on vacant houses, a newspaper reported Monday.

The (Cleveland) Plain Dealer analyzed records detailing the more than $2.6 million the city spent last year mowing untended lawns, removing trash and boarding up windows on the homes owned by the banks, nonprofit organizations and others. It billed the landlords but recovered only $750,000, or 28 percent....

Most of the banks dispute the claims. They say that Cleveland tries to make them pay for properties they no longer own or have never owned.

The banks say Cleveland often considers them owners, when they are trustees.

"A corporate trustee for mortgage-backed securities where there is a pool of investors only serves an administrative role, but has no ownership stake," said Kevin Heine, a Bank of New York spokesman.
http://www.ohio.com/mld/ohio/news/16058889.htm

BTW, I finished watching "The End of Suburbia" on YouTube a couple of days ago. They have some snarky comments at the end about McMansions being "the slums of the future" and mention the possibility of two or more families taking up occupancy.

@Michael Holliday,

Real wages may indeed be increasing, but it seems the problem is this will increase inflationary pressures overall. Combine that with the recent reports of low unemployment, and you have a recipe for inflation. I don't know if any of these numbers are true, but if they are, it doesn't necessarily mean good things for housing. Increased inflation will put upward pressure on long-term mortgage rates, and the Fed will also have increased pressure to raise the rates as well.

And another thing about the data presented in the article you linked: if you look at 2 of the top wage increases by job sector, they are construction and financial (which would include the mortgage industry). We all know where those wages are heading!

I said:

> The Brookline area of Boston (where I have been a couple times)
> has always reminded of Presidio Heights (where I live).

Then skibum Says:

> How does Brookline remind you of Presidio Heights?
> I don’t see the connection so much (having lived in
> Brookline for 2 years).

Just a few of the reasons that Brookline (at least the area just west of BU and the Harvard Med School) reminds me of Presidio Heights are:
1. Nice area
2. West of downtown
3. Mix of Homes and Apartments
4. Nicer than average Homes and Apartments
5. Older than average Homes and Apartments
6. Nice homes just a few blocks from a big hospital
7. Big Jewish Temple with a dome on top
8. Lots of Volvos and Land Rovers parked on the street

7. Big Jewish Temple with a dome on top
8. Lots of Volvos and Land Rovers parked on the street

@FAB,

These are *definitely* true! Brookline's nicer parts are very nice, but they're not really that old in the Boston scale of "old." There is a very large Jewish population there, and more recently, Russians (including Russian Jews). The analogy falls apart (in addition to the fact that Brookline is a separate town) is when it comes to schools - they're excellent in Brookline, and they suck across the board in SF, except for Lowell HS.

The really annoying thing about Brookline is that they don't allow overnight on-street parking at all. In this way, it's more like Menlo Park, CA!

fargaud:

You are Jean-Baptiste Emanuel Zorg, and I claim my mini desk-elephant.

On a side note, does anyone know where the Foster City fake land ends and the real land begins?

fargaud,

Hilarious! :)

I dare you to send your response to Mr. Cannon's ("broker") letter to the Chronicle and see if they print it!

skibum Says:

"...And another thing about the data presented in the article you linked: if you look at 2 of the top wage increases by job sector, they are construction and financial (which would include the mortgage industry). We all know where those wages are heading!"
_____

Very astute observation. Yeah, that makes a lot of sense. I figured there were a few glitches to the wishful thinking on salaries.

SALARIES ARE UP HAIKU:

Salaries are up
in a down market. Go buy
more houses. Have fun!

farguad,

Good on ya!

That's been much of my problem with the "arrangement". Everybody gets a piece of the action. What makes it worse is that often as not they are working in collusion with one another!

King_Cobra,

Actually I'm a pretty fur piece from Hood River (closer to Salem, OR). HR is a great place (in the summer). Wind surfing is getting national attention and that's great! My understanding is that the rolling bubble has found Hood River too. Evidently views of the gorge are no longer the domain of carefree wind surfing vagabonds.

Due to the multitude of environmental groups and all of the "impact surveys" YOU have to pay for to build or develop there it's out of reach for the average guy.

SFWoman,

Thanks for the maps!

SFWoman,

Great maps --thanks! My only lament is that the first map doesn't seem able to pull up any data for SoCal zipcodes/cities and there is no SoCal analog to the second map (you click on the So. Cal. link and just redirects you to the State's website & it's old, poorly detailed grid map).

Once again (in yet another way), SoCal sucks compared to the Bay Area.

@Michael Holliday

I am probably in the minority because I believe those numbers and think they are understated, if anything. I have been claiming for a while that real wages are accelerating.

This is consistent with the quiet/unreported/underreported inflation that many have been claiming, myself included. My reasoning is simple. Rents are rising. Rents cannot rise if real wages are flat or declining for very long. Either rents must fall, which they aren't, or wages must rise. Then add in all the other inflation we've seen, namely energy and more recently food, and wages are under tremendous pressure even ignoring house prices.

Keep a couple of things in mind. These stats are very broad, so tiny movements in the rates are considered significant. The income distribution is heavily skewed, so small movements in the median mean there has been very large absolute wage inflation. Compare that to the past 5 years where the upper 5,10,20% (whatever you happen to measure) has experienced tremendous wage growth, but these stats just sat flat because that group couldn't move the median. However if you bump up minimum wage a few cents the median starts moving. (Not to digress into an anti-minimum-wage debate, but herein lies the math that macroecon opponents rely on).

If the big quaker comes in at 8, he will probably make plenty of mush all along the bayside. Liquefaction can then abound and shake down some prices. A six or seven if centered in just the right places might do much that same. Some of the faults are long overdue for a shake out. Given time they will show themselves, and then after the shake gravity might long last come into play.

The Alaskan quake of '64 was quite a spectacle and sent a tsunami into Crescent City, CA. California would be hard put to come up with something of that magnitude. There has been plenty of seismic retrofitting all about California which will probably stand up quite well to strong shakes.

Waterspouts out at sea are much more common in California than the rare tornado. Hurricanes happen in Baja California Sur where warmer ocean waters can support them. Hurricanes die out rapidly on reaching the deep and cooler ocean waters of Upper California.

Randy H.:

Good explanation of real wages & rent.

Is it possible, like housing, that instead of wages actually going up, what's really going up is one's percentage of take-home pay going to rent.

Are rent payments rising in some proportion to the rise in monthly mortgage payments?

In otherwords, is the higher percentage of income that is now going to mortgage payments actually pushing up the average household percentage of income going to rent payments, irregardless of a rise (or fall) in median salaries?

Is there a correlation? Is the higher ratio of income now going to pay mortgages causing the ratio of income to rent payments to go up?

Etc.

FRANKEN-HOUSE HAIKU:

Stupid, little flip-
pers flop hard as the house comes
to life, and hurls them.

Is there a correlation? Is the higher ratio of income now going to pay mortgages causing the ratio of income to rent payments to go up?

Most likely. In fact, if this _did not_ happen, then there would be a much bigger problem because it would mean that a landed-gentry class was emerging in the US. To a much smaller degree, this is happening to be sure, but we're still very far from a Western European style cast system. But if rent were to stay this far (or farther) below ownership costs for a generation or so, it would very profoundly alter the culture of American society. We're built on the Horatio Alger rule: work hard and you can get ahead. But a landed-gentry system would mean that no matter how hard you worked, if you didn't inherit land you can never hope to buy it.

He said they were holding onto boulders for dear life.

BAP33,

Nah, that would be too much hard work. One dirty bomb in a van in Pacific Heights ought to do it. Ditto Midtown Manhattan. Ditto Foggy Bottom in DC. And so on. Nothing needs to be destroyed or even killed, just rendered uninhabitable and worthless for 50 years or more.

http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/11/21/BUG5UMGNVT1.DTL

Housing article on sfgate.com.

lunarpark,

Even with as modest a decline as Mr. Rosen is calling for I'm sure that article has plenty of seller's blood boiling. LAY (is she STILL around) seems to concur, basically home prices will go down little if at all and within 18 mos. every thing will be back to "normal" in Berkley?

DinOR -

Yes, that article probably raised the blood pressure of many would be sellers. The articles keep getting more bearish.

Another one from Marketwatch:

http://www.marketwatch.com/news/story/commentary-psychology-favors-buyers-housing/story.aspx?guid=%7B49CC3F2B%2D9AB7%2D413F%2D809D%2D1E59F6E65CF3%7D&siteId=

Also, one of the commentators on CNBC this morning compared realtors to car salesmen.