patrick.net

Wow... NEW down 65% in one day so far? Jeebus!

Real Estate Trivia

Only two cities in the 20 cities covered by the S&P Case/Shiller Home Price Index showed gains in December. One of the cities was Seattle which barely eked out some appreciation. Name the other city.

Charlotte?

EBGuy,

Miami?

Astrid said:
Charlotte?
No. Charlotte is one of the more "rational" markets, though, so the downtick could be seaonal.
As a side note (and clue?), the Indices do NOT include condos.

Dinor said:
Miami?
What, are you insane? You are also correct! It is probably the last place I would have thought of (maybe because condos aren't tracked?)
I also figured out why you are so angry :-) Portland has the lowest index of the markets that are tracked back to 1987 (Index @ 41.05 -- remember, all cities are normalized to 100 for Jan. 2000).

Jon,

The landlord own the property. As such, LL has the right to future rent increases/capital appreciation and bear the burden of an empty building/burst water pipe. Rent control takes away the LL's property rights and arbitrarily gives it to a tenant, even though that tenant paid virtually nothing for the rent control rights. If you want to go about your goal in an economically rational way, the tenant could negotiate for a longer term lease and restrict rent increases.

Let me try different analogy - how would you feel if you were just offered a great new job, but your current employer told you that he/she had a property right in your current position and that you have to stay in your current job?

good article in slate, cited earlier:

"David Lereah, who published a book in 2005 telling readers how they could get rich participating in the endless housing boom, published a book in 2000 advising readers how they could get rich from the endless information technology boom."

Rent control is evil.

astrid Says:
Jon,
The landlord own the property. As such, LL has the right to future rent increases/capital appreciation and bear the burden of an empty building/burst water pipe. Rent control takes away the LL’s property rights and arbitrarily gives it to a tenant, even though that tenant paid virtually nothing for the rent control rights. If you want to go about your goal in an economically rational way, the tenant could negotiate for a longer term lease and restrict rent increases.

Yes, but none of this is operating in the real world. How many LLs are prepared to sign leases restricting rent increases and making longer terms? My LL specifically says they don't want to do either of these things. Some countries have 5-10 year leases, this is not one of them.

This particular apartment block was built 'wholesale' by a developer years ago, before the boom, with minimal maintenance requirements. Some parts of the complex are 5 storeys with no lifts installed, thus saving on annual maintenance fees. There are no HOA fees to pay because the developer owns the whole lot. He does maintenance from his pool of builders on other projects, thus reducing costs. There's no pool or gym or other luxury features. However, he wants to charge marginally *above* market rates right now because he thinks he can, at a time when rates are supposedly rising rapidly. This all goes back to my constant remarks in the past of what represents a fair and healthy social settlement. I have currently amassed about 6 emails from other tenants also protesting the steep rise.

The fair social settlement notion is what underpins all rent control systems, and attempts to protect people from exactly this sort of behaviour. The whole rental system is somewhat flawed in fact, it's just an accident of history.

Ironically, I suppose I'm from a family a little like FAB's, who has amassed a pile of investment properties -- I can move interstate and be given one at any time I like for almost nothing...

Peter P Says:
Rent control is evil.

Markets are evil.
Peter P is evil.

When I went to university, it was necessary to back assertions up with some sort of reasoned argument.

DS,

I think if I offered 10% above the market rates and sign a 5 year contract, some LL will take me up on the offer.

To force below market rent down LL's throat amounts to a taking, from the LL to the tenant. In the long run, such economically inefficient transactions are in no one's interest - except that of the lottery winners who got in before the rent control laws went into effect. That's not a fair system.

When I went to university, it was necessary to back assertions up with some sort of reasoned argument.

Duh, this is a psychic thread.

Peter P is evil.

:twisted:

SP,

Your obscurely scatological comment inspired me to make my own obscure meta comment about your employee interview technique (asking the question, telling the (right/wrong) answer, asking for justifications).

Different Sean Says:
March 5th, 2007 at 1:26 am

I agree. Unfortunately, it’s the ’system’, and this particular LL is too scheming and too big a player to negotiate too much. He already owns a ‘discount’ property by building it himself. We should all become property developers, obviously, and secure our futures. But I’m either 1) leaving, or 2) negotiating or 3) passing it on to my employer as a wage rise…

DS,

It sounds like (a) your LL is asking WAY above market rate for your place and (b) you are ready to exercise your right of refusal, and (c) you have some real options/alternatives to choose from. It doesn't sound to me like your LL can demand whatever arbitrary amount he wants and get it -- with or without your consent-- unless there is really some kind of cartel/Mafia/shadow government-like gang that controls rents in Oz.

That's precisely how well functioning, transparent markets (note I avoid the use of politically loaded term "free") are supposed to work. OTH, if rent control were introduced to Oz, you would find a very different situation within a generation. Over time, rent control would mainly act to discourage new rental construction (limiting new supply and further driving up rents), and of course people would learn to game the system from both ends --just as is happening today in rent-controlled areas of SF (re-read FAB's many examples of illegally sub-let RC apartments, people who take over leases from dead relatives, etc.).

If your LL tries to stick you with a rent hike far above market-rate, then move. When s/he is unable to fill the unit for the sky-high "wishing rent' and must carry the costs of a vacant unit, s/he will quickly learn that "owners" cannot unilaterally dictate market prices.

I don't think good or evil are objective measurements. They're subjective matters that do not require further proof. If Peter P thinks rent control is evil, he's stating his feelings about rent control.

Or

Peter P is evil? AWESOME!

People here are complaining about problems with the rent control system as implemented, not the notion of rent control itself. And there is some fairly controrted logic even there as well. Apparently there are a few dysfunctions with the implementation of schemes. Similarly, public housing here used to be granted almost for life, when in fact it should be granted on an assessed needs and means basis. They are attempting to change that now. However, rent control systems in Oz are almost non-existent.

The question is, do people receiving rent control benefit from it in terms of quality of life, without disadvantaging others? I would say yes.

I don't have any problem with the notion of rent control, in fact I think of it as the very first step in a band-aid solution to providing affordable housing.

SP Says:
That’s interesting. When I went to university, reasoned arguments had to be backed up with observable, independently verified data gathered through a rigorous, repeatable scientific process.

Which course did you do? How do you do that in Sociology or Philosophy or Econ or English Lit 101? The very notion of logical positivism or empiricism as the answer to everything as you are proposing has been questioned at universities as unreflexive modernism, by the way. It works in physics and chem, up to a point, not in the humanities. However, are a series of newspaper articles and reports by RE managers enough to 'scientifically prove' rents are rising? Where does the hypothetico-deductive model come into play here? Come on, guys, get a grip, all sorts of para-autistic nerves are getting hit here for no reason...

People here are complaining about problems with the rent control system as implemented, not the notion of rent control itself.

No. The very idea of rent control itself --like price controls-- is an anathema to efficiently functioning open markets. Unless there is some sort of Mafia-esque cartel colluding together, eliminating competition and thus creating a genuine supply constraint, LLs cannot arbitrarily charge more than market rate forever.

If you implement rent control, then who gets to decide what constitutes a "fair market rent"? Is it LL carrying unit costs + 5%, +0%, -5%...? And what about inflation? Do LLs that only recently bought their property (at a much higher cost-basis) get to charge a lot more per SFT vs. long-time owners (that have far lower carrying costs)? Can a committee price rents more "fairly" or "accurately" than open markets?

Prop. 13 was voted in 30 years ago, supposedly to try to make property taxes here more "fair" and "protect" poor, old grandmas from the mean, nasty tax man. And look how well that's worked out for California...

Prop. 13 was voted in 30 years ago, supposedly to try to make property taxes here more “fair” and “protect” poor, old grandmas from the mean, nasty tax man. And look how well that’s worked out for California…

Actually, it's worked out great for established Californians.

For non-established Californians, like children, people who move here, etc - not so great.

When you are hungry, anything edible tastes good. The path to gourmet bliss is paved with starvation.

I saw a show on anorexia on HBO - apparently after a certain point, you don't get hungry anymore. So... that's not really true to a certain point.

From WSJ:
But Chief Executive Officer Michael Geoghegan defended his company's decision to offer subprime loans. "This is not trailer park lending," he said, claiming the typical HSBC Finance customer has average household income of $83,000 and a home worth $190,000.

Uh... where are HSBC's customers that they have incomes of $83k, and homes of $190k? A 2.3x ratio?

Can I move there?

efficiently functioning open markets.

Elevating 'markets' as the be-all and end-all is just a discourse in itself. Who says what is even 'efficiently functioning'? This whole frame of reference and meta-narrative can be critiqued to death, and often is, on a very many levels.

Were the conditions in Paris just prior to the French Revolution an efficient market? Probably they were. People were starving, however, bread was too expensive, and aristocrats ignored them to their detriment.

One argument put forward to the existence of the welfare state in the 20th C. was that if govts didn't address poverty at least a little, communist solutions would look more and more attractive to the population, and more revolutions would inevitably ensue. With the demise of Russia and China, and the threat gone, there will be more calls to wind back welfare such as family benefits and health care.

Unless there is some sort of Mafia-esque cartel colluding together, eliminating competition and thus creating a genuine supply constraint, LLs cannot arbitrarily charge more than market rate forever.

Effectively there *is* a Mafia-esque cartel colluding together, using asymetrical power arrangements and arbitrary ownership to oppress others. These arguments are operating too much inside the square for my liking, there is just too much self-referentiality and failure to see what's going on, in terms of exploitation and conflict theory. Just who is benefitting from this system exactly, that is the question you need to ask...

Prop. 13 was voted in 30 years ago, supposedly to try to make property taxes here more “fair” and “protect” poor, old grandmas from the mean, nasty tax man. And look how well that’s worked out for California…

As I said, implementation has to be thought out carefully...

Effectively there *is* a Mafia-esque cartel colluding together, using asymetrical power arrangements and arbitrary ownership to oppress others.

If this is true, then good luck with imposing rent control. Anyone who proposes or even vocally supports such controls will probably wind up dead in a ditch.

I saw a show on anorexia on HBO - apparently after a certain point, you don’t get hungry anymore.

I'm trying to reach that point, to shed a few pounds... nachos always look too good tho, and I start hallucinating about food...

HARM Says:
If this is true, then good luck with imposing rent control. Anyone who proposes or even vocally supports such controls will probably wind up dead in a ditch.

But you've got them. There's loads of rent control in NYC... What's wrong with a decent social settlement with reduced uncertainty?

What’s wrong with a decent social settlement with reduced uncertainty?

Utopia! Wait, don't utopias usually have at least one fatal flaw?

don’t utopias usually have at least one fatal flaw?

no, then they're not utopias... our current system, tho, is highly unequal and inequitable, is ravaging the environment and consuming non-renewable resources apace, and causing a lot of unnecessary suffering...

You can make alot of money by listening to David Lereah; just do the exact opposite of what he says and you will prosper.

as i mentioned above Rent Control was deemed necessary. If you have a entire city of renters, you have high crime, low respect for the environment, wacky voting patterns, essentially you have NYC circa 1978.

Huh? Who "deemed" it necessary? Has it successfully worked its "affordability magic" and turned NYC from one of the least affordable places to the most affordable?

As far as "renter = polluting criminal" or "wacky voting patterns" goes, I'll leave that for the locals to deconstruct.

Has it successfully worked its “affordability magic” and turned NYC from one of the least affordable places to the most affordable?

well, it must be more affordable than it otherwise would be, surely...

That is an EXCELLENT reasoned argument in response to my earlier comment.

yes, it is. it's the content of modern social science studies. sorry if you're out of the loop...

Oh, I see that you ARE talking mostly about intellectual wanking, (with the possible exception of economics). In which case, I retract my earlier comment about data and scientific observation.

I've done both a science degree and an arts degree, and excelled at both. I value the content of the arts degree far more highly in terms of 'enlightenment'. Your background is unknown, and your comments are purely subjective now, and not worth disputing further, as you clearly know nothing about questioning the logicial positivist project, and critiques of modernist thought (in fact, you are unwittingly presenting such thought). Being a technologist only is extremely limiting in attempting to form a balanced world view. Technology gives you the ability to blow the crap out of Iraq for resources. Post-modernist theory allows you to critique the discourses and lies of patriotism and fear-mongering that took you there on a pretext.

it was a contingency of broader interests at the metro and state level. They had “determined” “that” RE “value” would be in decline should the situation continue, because it was actually detracting from the general job market. These interests were involved in the construction of the WTC. and yes it did work its magic, NYC was very prosperous during the 80s and 90s.

Shmend,

What is your control group here? Are you certain NYC in the 80s and 90s would not have been as "prosperous" w/out rent control? NYC has long been the financial banking hub of the U.S. (if not the world). How would this have been changed significantly (if at all) by the absence of rent control?

Aside from the ex-post facto guesstimations, who's to say the NYC rental market would not have eventually self-corrected due to the general lack of affordability (as we are now seeing happening in the CA, FL, AZ housing markets)?

Of course - that is one of the premier fields for intellectual hand-pulled noodles, so to speak.

that's a very informed and scientifically rational series of arguments you are making. i can see the benefit of all your training now...

People who want an absence of regulation usually have specific economic motives.

exactly. i just can't be bothered writing a critique outlining how it is always the vested interests who want 'free markets' and subsidised american farmers who want 'level playing fields' and so on and so forth. and the other million criticisms of free market ideology that have been made out there, all easily obtained...

The goal of players in a free market, as many economists have shown, is to put an end to the free market by eliminating all competition.

Right, cartels and monopolies are inherently anti-free-market. Which is why competition must be preserved with anti-trust, pro-market regulation. Since when does being anti-price/rent control automatically make one an anarchist and/or plutocrat apologist?

Efficient, transparent "free" markets are neither "naturally occurring" nor good for plutocrats and monopolies.

Hmm... why am arguing with a guy who just accused me of being retarded?