patrick.net

You have a pine table?

"I laughed, I cried, I fell in love all over again! An enthusiastic two middle-digits up!"
--HARM

JJJ posts a link to a graph of the overall drop in rates over the past 20 years and says:

> Read why 20-year gains cannot be repeated because
> the housing bubble is two-fold, short AND long rates.

One more thing to remember is that in the last 20 years the inflation adjusted household income of most Bay Area households has doubled since the number of full time workers in most households has doubled. Unless we repeal the current child labor laws we are not going to see inflation adjusted household income double any time soon. When I was a kid (going to public school in the 70's and playing soccer with kids from San Francisco to San Jose) I can't remember a single kid who had a Mom with a job...

Supervisor Sophie Maxwell has an initiative that would require private developers to sell 64% of their condos/houses/townhouses in the eastern part of the city at below market rate, which means that in SF they would actually lose money on each unit, and therefor build none in the entire eastern half of the city.

Wow. I have nothing to say. Absolutely nothing.

The best way to improve home affordability is to eliminate all BMR programs.

The best way to improve economic competitiveness is to eliminate minimum wage.

The best way to fight poverty is to eliminate welfare.

These are all paradoxes. But the free market will work things out.

I thought the Soviet Union was no more.

But People's Republic of Kalifornistan is still here. :-P

Please click the link and send a note to the supervisors and mayor urging them not to adopt this housing stopping legislation. It’s best from city residents, and you can alter the letter as you see fit.

I'm not a city resident, so I'll decline.

But if I were a homeowner, I'd totally support this. It'd be like supporting Prop 13 - a no brainer.

But if I were a homeowner, I’d totally support this.

Do you want to live amongst low-income families who have just won the housing lottery?

But if I were a homeowner, I’d totally support this.

Do you want to live amongst low-income families who have just won the housing lottery?

But I thought the net result would be that nothing would be built. Isn't that the goal of any homeowner? to stop development?

But I thought the net result would be that nothing would be built. Isn’t that the goal of any homeowner? to stop development?

Me bad. You are right!

I guess is that the plan might actually succeed and that the developers find a way to make money, so they build those houses. Then my evil homeowner scheme would backfire.

FAB,

uhhh, actually there might be some ways to "fix" the household income so that it will keep doubling in the next decade even after inflation adjustment. I am not kidding.

Solution 1:
pile more households under one roof, make a "household" bigger. It has always been the case of the developing nations. Why can't it happen here? Our living standard will have to keep dropping until we reach an equilibrium with that of the developing world. Move in with parents, 3 generations or even 4 under one roof, move in with siblings, now you have a household with triple the income, sharing a McMansion.

Solution 2:
more dividing line between the good and bad neighborhoods. On the whole, the household income may not rise much, but the households that can afford to move into say, portola valley, will need to double their income fast or they will just need to move away.

Solution 3:
more tax cuts so that we can import the rich households from overseas, particularly the European countries with high tax burdens. Since technology makes it easy for a person to pick and choose where he wants to live and work, it is not inconceivable that those who've made their money the shady way in China or those with big inheritance in UK struggling to get away from the IHT may want to consider the new low-tax California as their haven.

Why stop at forcing below-market sales? Why not simply repossess rich developer/Boomer property and redistribute to deserving, priced-out Gen-X/Yers?

Hey, wait a minute --that doesn't sound so bad! :twisted:

Everyone I know in retail is moaning and groaning and limping along.(except those that sell cheap Chinese imports)

RMB is rising against USD. It will only be time when even "cheap" Chinese imports are no longer cheap.

Supervisor Sophie Maxwell has an initiative that would require private developers to sell 64% of their condos/houses/townhouses in the eastern part of the city at below market rate,

SFWoman,

This is common practice in Boston, and the end result is that buyers game the system to their advantage, depending on the income cutoffs for qualifying. Many if not all of the newer "loft" buildings there have BMR units, and there were stories in the local press about how many of these were occupied by perfectly well-off people with reasonable incomes who found a way to get around the requirements. In Boston at least, the income cutoff would be considered squarely middle class in the rest of the country, BTW.

RMB is rising against USD. It will only be time when even “cheap” Chinese imports are no longer cheap.

I think that time may be a long way off. Even if it's not, once wages and the cost structure of Chinese manufacturing rises to the point that WalMart shoppers are deprived of dirt-cheap clothing, electronics and plastic toys, they will pick up and move operations elsewhere. India still has a long way to develop, as does Indonesia, most of Africa, etc...

There *always* a lower bidder in the game of global wage arbitrage.

The Sacramento Bee reports:

“The nation’s largest publicly traded home builders overbuilt and then jostled for a shrinking share of area home buyers last year. They turned the boomtown suburb of Lincoln, population 39,000, into one of the Sacramento region’s most ruthless sales battlegrounds.”
“It’s no surprise in Lincoln to see advertised price cuts on new homes of $96,000, $103,000, $150,000, even $221,000.”"

I'm glad I didn't buy in Lincoln last year...

Supervisor Sophie Maxwell has an initiative that would require private developers to sell 64% of their condos/houses/townhouses in the eastern part of the city at below market rate ...

Why does this remind me of Fountainhead ?

One of Patricks Brownshirt’s, a creature so loathsome he goes by the name “HARM”, went so far as to call the skilled these skilled wordsmiths, “trolls” ...

Hah. But these buddies Patrick and HARM, they don't have any equity in their home ? Do they, do they ? They don't have any equity. Na na na na na na, they don't have equity, na na na na na na !

DinOR and SP,

Yesterday and today (first 2 business days of the new year), I received automated mails from Zip Realty for the areas I track. For example in Sunnyvale about 4 new houses came on the market.

I don't know what happened last year. But so soon after holidays doesn't sound like common practice. I was reminded of your posts on this.

Happy New Year ! ;-)

I received my first rent increase today after living in the same place for 3 years. My rent went up $50. LOL, rents are skyrocketing! I'm signing for 12 months. I love my landlord.

Cheers.

For a long while these magnificent edifices to all things boomer grew and grew in “value”, this of course was expected from Mr. Boomer and his second (third?) trophy-wife.
_____

Then these magnificent edifices (Mc Mansions) were exposed for the giant, money-sucking orifices (a--holes) they really were, and then the party was finally (and mercifully) over!

Please turn out the lights.

And don't let the door hit you in your greedy Boomer a-- on the way out...

FYI, the otherside is upping the bet amount in the old thread:

http://patrick.net/wp/?p=375

Not everybody who wants a regression to the mean here in the Bay Area is a jealous bitter renter.

Some of us are homeowners who hope that a correction will also correct some of the distortions around here. I remember the years between the Bush I base closures at the beginning of the decade and the rise of Netscape, there was a nose to the grindstone ethic in Santa Clara Valley. Unfortunately the dotcom bubble burst didn't finish the job to wrench us free from the arrogance that came up again with Netscape. We need another real estate correction like the one in 1991.

I am Enthralled with , A Bay Fable.

sybrib, exactly!

I can't afford real pine... mine is all Ikea chipboard coated with 'lacquer'. Some of it is pine veneer for that luxury feeling...

The best way to fight poverty is to eliminate welfare.

But they brought in welfare to eliminate poverty, poverty far worse than you see today in modern welfare state countries...

> Supervisor Sophie Maxwell has an initiative that would
> require private developers to sell 64% of their condos/
> houses/townhouses in the eastern part of the city at
> below market rate, which means that in SF they would
> actually lose money on each unit, and therefore build
> none in the entire eastern half of the city

This isn't so bad, if you do it the right way. The trick is to cool off land price speculation. What has been done can be undone. It just means land vendors will have to take less when they sell their land, not that the developers will have to go broke. And many land vendors are making windfall profits right now, if they bought back in 1970, or bought a 5-acre chicken farm in 1970, or whatever -- they will just make a lot less of a windfall. But, you can use so-called 'not for profit' developers also, as Bridge Housing in SF do, where the construction workers get paid but no-one walks off with 30% profit from the deal. The other thing you do is limit selling prices down the track with price covenants locked to the CPI or a similar measure, which stops people buying low and selling high -- kind of like rent control, but purchase price control instead. It's all doable with a little regulation, no-one has to go broke, and a reasonable social settlement can be reinstated. (See my blog. And please leave copious fawning comments, nothing disagreeing.)

SFWoman Says:

> Different Sean, No private developer is going to
> build houses where you lose money on 64% of them.
> That is the job for the government, not private business.

For years I have (seriously) been working with elected leaders to get the government out of the housing business. I know that some people can point to the rare “nice, clean and safe” government housing project, but most (as I mentioned above not ALL) housing projects around the world are violent, gang infested dirty and dangerous places. In San Francisco year after year most (well over 50%) of the murders happen in and around our housing projects. A few years back over 50% of the murders in the city were in or within a block of just ONE (the Double Rock in Hunters Point) of the cities many housing projects.

In San Francisco we spend about 200% to 300% (it’s hard to gat accurate numbers) on public housing than private landlords in the city spend to operate much nicer units on average. The city could reduce the tax money they spend on housing and improve the quality of the housing by giving Section 8 vouchers and getting out of the business. The city could provide housing for all the poor in the city without spending ANY tax money if they would just give away land (or even increased density in exchange for a deed restriction that required a landlord to house low income people on the site in perpetuity…

pa renter,

Absolutely correct! theotherside's antics are only one of many attempts by realtors (TM), owners trying to sell, or anyone with a vested interest in the market not reverting back to the norm. These morons come here (and other boards) and loudly proclaim that real estate is booming, or, if it's not, it's the fault of the media and the worst is behind us. It reeks of desperation.

Speaking of spinning the bad data, the NAR's pending home sales numbers are out for November, and of course, they are down YoY, and they are slightly down MoM:

http://money.cnn.com/2007/01/04/real_estate/home_sales.reut/index.htm?postversion=2007010410

Check out the massive spin job from the NAR and the "journalist" who wrote this article.

palo alto renter

Exactly. "theotherside" is about as clear example of a provocateur who stays right on the line of being a bona fide Troll. The only reason I say he isn't a Troll is because (this time around*) he threw out numbers and calculations we could reconstruct and falsify.

But you're right, who's going to enter into any kind of agreement with an anonymous blogger who won't even answer the simple question: "What do you do for a living?" Can you even have a legal agreement with an anonymous counter party?

--
*I'm fairly sure TOS is MP is FR. Just a kid who dropped out of the investment banker track to become a realtor during the late bubble, now grasping at straws. This is why he thinks his math works. Unlike the standard issue realtor, he carries around a HP12c.

skibum,

The "Pending Home Sales Index" is a hell of a lot more important to realtwhores (TM) than it is to homeowners, sellers and buyers! The only home the average FS (TM) cares about is HIS! As a buyer, it means even less. For NAR this "all important" gauge is all about what NEXT month's commissions will look like.

DinOR,

Exactly! The NAR would be ecstatic if home prices dropped 50% AND sales volume tripled - that would net them more commission than they currently have, while Joe Homeseller would be ecstatic if home prices tripled and sales volume dried up to nil, as long as the tripling of home sale prices includes his own!

Hence the moral hazard inherent in being a realtor (TM), which is why the current system of real estate transactions needs to be thrown in the dumpster.

DinOR,

Exactly! The NAR would be ecstatic if home prices dropped 50% AND sales volume tripled - that would net them more commission than they currently have, while Joe Homeseller would be ecstatic if home prices tripled and sales volume dried up to nil, as long as the tripling of home sale prices includes his own!

Hence the moral hazard inherent in being a realtor (TM), which is why the current system of real estate transactions needs to be thrown in the dumpster.

The current system by which real estate is bought and sold through "agents" is a textbook example of "The Agency Problem" (aka "principal-agent problem").

Or a specific reference to real-estate agents and this moral hazard from an economics perspective:

http://econpapers.repec.org/article/kapjrefec/v_3A4_3Ay_3A1991_3Ai_3A2_3Ap_3A99-125.htm

Randy H,

As always good points and great having you back!

In all fairness though for most realtwhores (TM) for better or for worse their own personal residence is kind of their "business card". I personally wouldn't have any problem dealing with one that said, "Yeah, I used to have a big trophy house but w/the kids off to college/divorce/spouse career change I decided that selling and renting just made sense at this time".

I want to stress, "I" wouldn't have issues w/that. Actually, I don't think most people would. What's really funny is that where it seems to matter most is in the minds of the realtors themselves.

skibum,

The dumpster indeed. I can't count how many studies I've read where realtwhores (selling their own homes on their own behalf) typically sell more quickly and on avg. for 3% more than clients w/comparable homes.

It's funny though b/c that's what a lot of sellers on say C/L seem to be saying. "I don't give a rip about decline in sales volume, decline in median etc. I just KNOW there's a sucker out there just for me and "I" only need to get lucky once"!

SFWoman said:
"This is clearly a political move to maintain a political base in certain neighborhoods."

If they want to see how the experts do it.....visit N.O.

The Cresent City would have already been rebuilt if they didn't figure out a way for all the "evactuees" to vote, and vote often, from Houston, Atlanta, and all points distant.

It's about political power....always has been.....always will be.

There's been some head scratchin' about how Nagin was re-elected even though he's completely incompetent. Doing some checking with friends, here's what I was told:

1) Republicans hate Mary Landreiu (D-Senate)
2) Her brother, current Lt. Gov and pretty sharp guy, runs for mayor
3) To send her a message, they send it through her brother
4) Repubs funnel support to Nagin
5) Nagin wins and "owes them"

Strategy for defeating her is to have Nagin "sit this one out" during her upcoming campaign. Neutralize N.O. and she has no chance of winning.

The enemy of my enemy is my friend......