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We will see if global wage arbitrage allows this.
That may be more sticky than home prices. And there can be stagflation.
Randy H,
I'd heard the Fed's comments described as "tightening lite". Obviously the markets liked it and even the builders rallied but with subprime effectively cut off it's tough to script upside for recent home buyers. :(
Randy,
Agreed with your interpretation of the FED decision. This was a preparation for the rate cuts coming in future meetings.
To extend your analysis of its effects on housing, I can say that the near elimination of subprime, credit tightening WITH reduced rates might be favorable to some Patrickiites. You will pay less nominal value in 2008-09 than in 2005, and still get a good low rate. That is if there is no recession. If the recession is severe, the prices may fall more, but our risk appetite may be tamed due to employment uncertainties.
Obligatory note. On the other hand, if inflation keeps increasing, FED will have a tough time reducing more than 100 bp. I don't think they can do that again as they did after the dot com crash. That WILL make the USD suffer more than what the policymakers want.
And there can be stagflation.
Stagflation had been my call for sometime. (Uninformed, uneducated guess. But that's how I am positioning.)
StuckinBA,
Not only that but in addition FB's will do all of the property tax re-negotiation for us as well! Believe me I'm way past laying awake nights worrying about what the Fed does or doesn't do (as they're painted into a corner on this one) but of equal concern is the fear of re-igniting the speculative bubble. Trust me there's plenty of people out there that think they're owed and they'll be looking to make it back. Fast.
We will see if global wage arbitrage allows this.
It's my opinion that "global wage arbitrage" is in it's late phase. There are still more knowledge jobs being created globally, including in the US, than there are graduates in the pipeline.
I also think we're at the end of a free-market bias period, and we're likely to see growing protectionism. Mostly, at first, in the form of bi-lateral agreements and regional trace blocs. I'm expecting there will be both wage growth and wage inflation over the next couple decades.
This is not necessarily good news, btw, if you don't like stagflation and you think freer markets are the best path to world prosperity.
DinOR :
Believe me I’m way past laying awake nights worrying about what the Fed does or doesn’t do
Same here. Has the FED ever delivered a surprise ? Their actions are quite predictable. (I am sure they must have surprised a few times, but the fed funds futures is a very reliable indicator.)
Sanity check please:
http://www.burbed.com/2007/03/15/how-to-lose-272-dollars-a-day-on-a-san-jose-townhouse/#comment-7333
What will you do with the California state tax savings?
Property and Mortgage Interest are -NOT- deductible from California state income tax, right?
It's only deductible from Federal Income Tax, right?
Just heard from a friend: bidding wars (15+ offers) still exist in Sunnyvale.
Looks like school addicts have laser visions and they see no housing bubble.
An old friend of mine in Sunnyvale who bought a little place in 1998, expanded it in 2001 after having a child, and did more upgrades through 2004 just sold. They had put it up in Spring 06, but only got (as he put it) "joke offers". (funny, because that could have been me making the lowball offer in another timeline)
Anyway, the point is they only paid something like $475K, probably put about $150K in, maybe $200K at most. He listed in 06 at $1.2m, and got no where. They didn't mark down like the realtor pushed them to. They delisted, let the agent contract expire and decided to ride it out (being they had lots of equity and low payments).
Come Spring 07 and they got 3 strong offers, 5 total, and the house went over $1.3m. And they're leaving the state, but still decided not to sell down even a little, rather stay here a year or more longer to "get their price".
This is why prices are sticky. Not everyone is a panicky Casey FB. People are *irrational* and *creative* when it comes to trying to manage their pocketbook.
I've got other friends who are a dinc couple in the hinterlands of the East Bay in a McMegaMansion which is well under their purchase price now (they bought in late 05). They have probably 30-40% equity, and can make payments so long as both work. They want to move because now they're both commuting well over 1.5 hours each way. They won't even consider selling until they "get back to even". They think they can't afford to. Mental accounting is very powerful, and people who don't have NAAVLP loans will follow their intuitions, not our rational calculations.
Peter P.,
I think the UN and WHO vaccination projects are pretty decent. The UN also brokered an agreement in Darfur two years ago to get the rebels to agree to a 21 day cease fire there to vaccinate children for polio. I'm not sure why people would agree to stop fighting for 21 days so kids can get vaccinated, then go and burn down their village and kill the inhabitants, but they did.
I was actually approached on the street one day in Mexico City by UN polio vaccine workers offering to vaccinate my kids for polio. My kids are vaccinated, but with the injectable vaccine we use here, not with the live vaccine, which I think is better. I was tempted, because I'm not getting the live vaccine in the US.
I have used an overseas vaccination programme to get my kids immunized for TB (with BCG). SF has a high rate of TB, and with the xDR TB that's out there now I'm quite glad I did.
I have used an overseas vaccination programme to get my kids immunized for TB (with BCG). SF has a high rate of TB, and with the xDR TB that’s out there now I’m quite glad I did.
Is BCG any good? Doesn't it gives false positives for skin tests?
Mental accounting is very powerful, and people who don’t have NAAVLP loans will follow their intuitions, not our rational calculations.
True, but not as powerful as fear when bubbles are popping everywhere else.
Most people follow their whims and wishful thinkings, not intuitions.
After being rational for 20+ years I have decided to take a vacation from logic. :)
meaning you have to get a chest xray every time you get tested
Yep. It annoyed the heck out of me.
PS - nobody is interested in free veggie seeds? I have 30+ varieties of tomatoes.
Astrid,
I have no yard in which to plant them. I BLAME GREENSPAN FOR MY LACK OF TASTY TOMATOES!
I don't argue that there won't be a lot of good values hitting the market. I'm betting on it, in fact.
But I see that more like the SFH rental market is playing out. Good deals pop up, and are sometimes as low as half the monthly rent for similar houses. But those deals go very fast, and you have to be prepared and ready to pounce.
I'm already seeing easily a $1.3m - $1.5 even $1.6 spread in prices for very similar houses in S Marin. The problem is the 1.3s only make it about 2 weeks on the market, and the $1.5s often get delisted after months of sitting there.
I can't cite my source, but I've recently seen some big agency in-house data and they've got twice as many "canceled" and "expired" listings as they do "reduced".
The good news is the lower-rangers are getting closer to 2004 prices, which many of us less-doomier types here called as a signal. Not a signal to buy, but a signal to start drying out the powder.
It is possible to grow tomatoes without garden soil. You can make a self watering planter with 20 gallon rubbermaid containers.
It is possible to grow tomatoes without garden soil. You can make a self watering planter with 20 gallon rubbermaid containers.
My cats will destroy the plant by eating though the leafs. And then they will throw up. :(
Grow some wheatgrass and catnip for your kitties.
Tried. They somehow overturned the pot and it got messy. :(
Astrid,
I have no place to put said planters that would get any sort of light. :(
I need to rent me a place with a yard. Seriously.
I grew up in Sunnyvale and find it funny that people would be willing to pay that much. $1M for Los Altos Hills, Saratoga or Los Gatos (Much Better Schools too), Yes that anyone can understand.
But ... (im dying laughing here) $1M+ for Sunnyvale... Oh man! There is a sucker born every minute. You can count seeing those home down in value pretty deep. There is nothing extordianary about Fremont School District. Its a working class school district many of its graduates turn out out to be junky addicts. Besides SV and Sunnyvale will not have booms like we had before. IPO market is dead and Private Equity/M&A is the path many are about to take... Palm is rumored to be a buy out candidate. No Sunnyvale employer is willing to subsidize that kind of conspicuous consumption by their employees. That was tried and failed badly by late 80's. That why we have tech recession that are seperate from national recessions.
Yea! I know .. Google this google that.. but even when you had Intel AMD National boom years prices never went that far. Maybe check up on Zillow and find that homes in 1993 were around $250-30K in Sunnyvale.
$1M+ what a joke!!! Fortress Sunnyvale has thin walls! Watch it pop!
Anyone who was born and raised here will tell you that.
SFBB,
There are HD lights that could mimic the sun (and stave off winter light deprivation)...however, even I recognize that's going too far for tomatoes.
There's always the local farmer's market or CSA.
No, you actually move the AGI line from the federal income to the state, so if it is deductible from the Fed, it is deductible from the state.
That is how CA does it, anyway.
The only time it becomes sticky is when you pay AMT, then you actually get to deduct some things from state taxes, but not from federal.
I don't know of any situations where it is the other way around.
I am not an accountant, though, you should talk to an expert.
I grow tomatoes in my back yard in Noe Valley, but I have to grow them in pots on the second floor deck so that they get enough light. I tried growing them in the garden last year and none of them produced fruit.
What kind of seeds astrid? Early girls? I like early girls...
I second that Space Acer. I grew up in Mountain View. I remember thinking of Sunnyvale as really gross when I was a kid. Oh wait...
Actually the part the borders Los Altos is pretty nice, but that's a thin slice.
Jimbo,
I'm a tomato snob so no Early Girl. You can read my list at http://dazrulz.blogspot.com
No, you actually move the AGI line from the federal income to the state, so if it is deductible from the Fed, it is deductible from the state.
Right, but the AGI is -before- deductions. Right?
1M+ in Sunnyvale? I rather get a condo (with elevator) in San Mateo or Burlingame.
Right, but the AGI is -before- deductions. Right?
Huh? Isn't AGI "adjusted"?
Fortress Sunnyvale has thin walls! Watch it pop!
Anyone who was born and raised here will tell you that.
It's different this time. All the old people in Sunnyvale will be fleeing just like in Cupertino.
Look at: http://wsjclassroom.com/teen/teencenter/05nov_whiteflight.htm
Right, but the AGI is -before- deductions. Right?
Huh? Isn’t AGI “adjusted�
On the 1040, AGI is computed at line 37.
Deductions happen at line 40 in "Taxes and Credits" (38-57).
It’s different this time. All the old people in Sunnyvale will be fleeing just like in Cupertino.
Sunnyvale has way too many kids. Do people realize that kids have poor ROI in the Bay Area? I prefer mature neighborhoods.
C'mon everyone, tell this realtor on his blog why buying is not a good idea. He wants to know why people choose to rent instead.
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Is the Fed really responsible for the housing mess? They definitely contributed through their interest rate cuts, but buyers and realtors must also have some responsibility.
And is the Fed as wicked as the non-mainstream press believes? There are dozens of sites accusing the Fed of keeping the rest of us down through inflation and various shady deals, but I've never heard a really convincing explanation. As I understand it, a little inflation is good because it encourages people to invest or spend rather than simply sit on their money.
Patrick
#housing