patrick.net

Food can cost more than housing for many people.

I think that completely socializing the housing industry would be a very hard sell in this country. I think that a better model is what has happened around the Chicago area. CHA (The Chicago Housing Authority) built big government housing projects many decades ago and put only poor people in those big buildings without any other real assistance or programs to help them change their lot. This failed miserably. The projects became crime and gang ridden and largely condemnable before they all were torn down.

The dismantiling of the housing projects in Chicago marked a major change in policy and a major shift in how the City handled its poor and homeless. The homeless problem is far from solved but there are some creative things that have been happening in the Chicago Area.

As the projects were being torn down, the people who were still living in the projects were offered section 8 housing and were moved out to suburbs and other areas of Chicago. This way they were moved to better school districts that had more money. Their children could receive better educations and live in safer neighborhoods, in general. Most people are faring better who have moved out of the projects. So, private landlords got their rent paid for by the CHA and were assured of the income. The tenants had, mostly, better housing opportunities. It was a better cooperation between the private sector and government.

The negative side of this was that the neighborhoods where the projects were (i.e. Cabrini Green) were now prime real estate. These properties were sold to private investors and they built luxury condos and apartments on the land. Thus they priced out the people who once lived in these neighborhoods forever. A very small percentage of apartments in those new neighborhoods were set aside for former poor residents. Thus these neighborhoods were gentrified. In Chicago, gentrification means moving white yuppies in and pricing all other poor people out.

Now, the city of Chicago benefits from the property taxes collected from the new property owners in these newly gentrified neighborhoods. Some of the people who were displaced were moved too far out from the City to keep their low-paying jobs. They became jobless in the far out suburbs where they were moved to. Also some of the suburbs used zoning to force only certain lower priced neighborhoods in their respective towns to take these new section 8 people being shipped out of the City. Thus some of the suburbs created new ghettos for urban poor, merely displacing the problems from the City to the suburbs... And this time, the newly arrived were woefully unprepared for what they would find there. No public transportation exists in many of these suburbs. Therefore, there is no way for some of these people to get around to go out and find work, let alone get about to go to work once a job could be found. No education was provided for the displaced people so that they could get jobs that would pay them enough to get a car so that they could get around to find work and maintain stable employment.

So, this solution wasn't perfect. It is better than the government project system that existed before though. So there's more work to be done between the private sector and the government if homelessness can be solved in this country. A more realistic solution in this country is to find a way that government and the private sector could work together to help people help themselves. This would require an organized plan to create better infrastructure, like creating better and more affordable public transportation systems (trains, buses, light rail, etc.) largely run by the government, with cooperation from businesses to train and hire poor people paying them a living wage, and for private land owners to cooperate with business and government to provide affordable housing where land owners profit and tenants benefit from housing they can afford.

This is a very tall task. It takes will, moral fiber, determination, cooperation, and hard work. These things seem to be lacking in our country today. People would rather make a quick and easy buck on markets like, say, real estate or the stock market than actually WORK together to create a just society where everyone wins.

The best way to solve the housing problem is to build, build, build.

We should build until there is no question that housing will be readily available in the future. The society will quickly self-organize into all kinds of neighborhood. Housing will be very affordable in some. Problem solved.

Note that if housing is scarce, higher-income people will have to move into lesser neighborhoods, driving up costs there. The result will be a metropolitan-wide ghetto like the Bay Area.

Bruceb:

"@simcha
nice to hear your story,tks for sharing . Those kids are fortunate to have somebody like you as a compass
@space age
35 to 40bux a week on groceries?"

OK, I live off of $40 per week for groceries. Honestly, I can't afford to spend more. I don't eat out very much at all. If I do, it's under my "entertainment" section of my budget (which is a small item too).

I go to Grocery Outlet for most of my food. They actually have some amazing things there for very little money. Of course, you have to be careful not to buy something that might go bad fast or looks too old... Honestly, I can't afford Albertsons or Safeway. Berkeley Bowl is actually reasonable for green things... fruits and veggies... Most of the rest of their stuff is too darned expensive.

I eat very little meat, because it's expensive. If I do, I make sure that it's a good cut and on sale...

Oh, and if I have to go to Albertsons or Safeway, or even Berkeley Bowl, 90% of what I buy is on sale. I'm not an extremely picky eater so buying what's on sale gives me variety every week.

Would I rather be able to spend more and not have to rely only on what I can scrounge around and find for less? Sure... But I don't have it, and neither do my clients... So, yeah, sad to say, I only spend about $40 per week on groceries.

Also, I grew up in a family where we had very little money. We were broke at the end of every week. My Mom taught me how to squeeze every penny and shop the bargains. So, I'm more used to having to budget very carefully.

Would I rather be able to spend more and not have to rely only on what I can scrounge around and find for less? Sure… But I don’t have it, and neither do my clients… So, yeah, sad to say, I only spend about $40 per week on groceries.

Wow. You are enlightened.

This is the problem of setting everything up as a money-making exercise for some f&cking capitalist pig at the top who thinks they have a ‘right’ to gouge everyone for their own wellbeing for taking the ‘risk’ of building a retirement village or trailer park or whatever

Just when I thought we were making some progress in opening DS's mind... Oh well.

DS,

As you know, most of the regulars here don't particularly care for greedy, self-serving anarchists who call themselves "free market capitalists" (but aren't). But to call every single builder a 'gouger' and say that building never entails any risk (though that's been broadly accurate for the last 6 years or so) is ridiculous.

Any venture that requires up-front capital investment has risk, and real estate development is among the most capital-intensive investments out there. There is a risk of market declines (witness recent builder financial problems with slow sales & land option write-downs). There is regulatory risk, including dealing with unexpected easements, title problems, regulatory zoning hurdles, local politicians who want their palms greased, etc. Builders expect to be compensated for this, just like any other business. Then there is lawsuit risk (witness class action suits pending against Lennar, Toll, Beazer, KB, etc.).

Remove the profit motive and you remove the incentive to build. If you want to cut down on RE price-gouging, why not start by eliminating government manipulation of interest rates (a biggie), reduce direct government subsidies for flippers (limit mtg. interest deduction & cap. gains to just primary house), eliminate government risk underwriting in mortgage markets (GSEs), and encourage competition by removing needless barriers to entry (MLS). Oh, and something the government might do MORE of would be to (a) stop taking massive bribes from the REIC, and (b) actually start policing the banksters and prosecute mortgage fraud. *

(*Not holding my breath on any of these)

But let me tell you something. You will be in a much better position to help people if you are resourceful (i.e. rich). This society revolves around money and that is exactly what you need to get anything done.

If you ignore a few hundred people now, work hard and get rich, then you may be able to help a few thousand people in the future.

Speaking of jobs, Astrid, we are actually looking for a junior associate, a rare thing for law firms nowadays.

I don't know if you all would consider relocating to SoCal, but if so, email me.

Well I don't have a job anymore....because of the BA real estate bubble.

In 2005 I was a corporate patent counsel for a major tech company, making fairly good money. I had a crummy 1040 square foot (but paid off) SJ house and was saving feverishly to afford that nice place in Saratoga. I had about a half mil. in the bank in my "nice house" fund.

But then...

I woke up one day and asked why would I put all of my money - and I mean ALL of my money - into a single asset. I did my books and decided to pull the plug.

I sold my SJ house for a huge amount of money in April 2006 to some Mexican immigrant who took out a no-doc 103% loan. Poor guy.

I bought a luxurious place in Boise for $270K. The rest of my money is invested in CDs and Index ETFs. I never need work again. I retired comfortably at age 53.

Peter P:

"But let me tell you something. You will be in a much better position to help people if you are resourceful (i.e. rich). This society revolves around money and that is exactly what you need to get anything done."

Actually, it's my dream to open my own agency one day. My colleagues and I have talked about how we can pool resources together and do it. First we have to finish the licensing process. You can't do anything in our field without a license. That requires working for peanuts as an intern until you earn the 3000 hours of experience that earns you the right to sit for the two big bad tests.

"If you ignore a few hundred people now, work hard and get rich, then you may be able to help a few thousand people in the future."

So, the end justifies the means?

And, I thought I made my point that working hard does not necessarily equal getting rich. So many people think that it does. But alas, that is just a pipe dream. I've worked by a$$ off for decades, I have a graduate degree, I've always been careful with my money, and I only have $40 per week for groceries.

There are several ways to get rich. One way is to be born into a rich family. All other ways seem to involve some recipe of good luck and hard work. Being at the right place at the right time isn't all about planning and foresight either. You can only make so much luck for yourself, some of it comes down to plain old "dumb luck."

I think the experience of this decade is proof that the job market is not the driver of house prices around here. Probably, it affects the rents a lot, but not the house prices.

When the job market was hot, rents were going up like crazy. When the job market tanked, the house prices went up like crazy. Some self identified JBRs here have shared a lot of anger about that because they voted on the job market timing model and (at least till now) it turned out to be the wrong vote.

We probably lost more jobs here in the first half of the decade, than any region in the USA ever did in such a short time, and the house prices shot through the roof.

I am not saying that it means a bad job market in the B.A. is always good for house prices. I am just saying that we have proof that there's not always a strong correlation between the house prices and the job market. At least not here.

It doesn't make sense to me, either, this decoupling of the real estate to the job market.

What does make sense to me though is how I see the demographs of the home buyers change. I noticed two Saturdays ago in the S.J. Mercury News weekly listing of real estate transactions that all but a couple or so of the names of listed buyers were Chinese. Probably, increasingly crowded Cupertino looks like the wide open spaces in the Big Sky Country to rich people from places like Hong Kong, Taipei, Shanghai, Singapore. In fact all three of the people I know who bought in the past few years in Cupertino are wealthy Chinese from (guess what): Singapore, Shanghai and Taipei.

@dennis
congrats but be careful there--i just googled "boise scam"
and got back 240,000 results
@simcha
you said you worked in Paris. Did you enjoy that ? If I were your pyscotherapist I would tell you to file chap 7 on those consumer debts, take some time off work , and go where you think that you would be happier as I don't think it is in the BA which is unfortunately going to be like you predict. You seem bright intelligent and focused and imho you deserve a better life than the self imprisonment that you've commited to. The world is your oyster

Joe,

Thank you, that is a truly generous thought! During the last year, I realized that I would make a terrible lawyer and would have been pretty unhappy into the bargain.

The money in my current job is pittance compared to the crazy first year salaries (almost a Ha Ha, ha ha), but the hours are quite civilized and it's a great perch to observe the legal community. My law librarian position is surprisingly interesting and challenging, and I am learning a lot about office politics and business development (internal and external).

However, my firm does have an LA office. If I ever visit there, I do very sincerely hope we can have lunch together.

Peter P says

"If you ignore a few hundred people now, work hard and get rich, then you may be able to help a few thousand people in the future."

You are correct.

A young person should live cheap and have fun. Modest apartment, roommates, standby travel. Save the money for later. Nobody expects the young to have pricey toys, just to be attractive. Don't need fat stacks to get babes.

When you are older, in the prime earning years, make as much as you can and pack away for old age. Babes do expect you to have assets by now, so splurge a little.

When you are retired, you can use your life's earning to really give back to society. You'll have the time and cash for items like Habitat for Humanity, Doctors Without Borders, give scholarships, or use your talents for other stuff that needs doing that nobody can pay for. Can't do nothin' for nobody if you are broke. Even worse if you are needy.

I could probably survive on $100/month. It would involve a lot of frozen corn, chicken thighs, canned tuna, and pasta with peanut sauce...

The bread selection would suck though, I would be restricted to lean doughs like French bread and sour dough. I used $3 worth of artichoke and pine nuts on my last bread.

simcha,

I wish you lived nearby. I like feeding people but everybody I know seems to be on a special diet or some kind of dietary restriction.

Simcha,

I have done limited chartity work over the last few year with elemenatry school kids of welfare parents. With the small resources I am willing to donate at this time, I don't waste any on adults as I think they are beyond help (except I give cooked food to the Union Mission).

Since you have much deeper experience, I have a question for you.

How do these mothers and children fall through the net? All the children I have worked with have a mom who does not work, but is provided with either apartment (city owned) or Section 8 house. They also get money and food stamps. Some even have cable and callers id. I have not seen the families living in cars, but I wonder how they could be turned down for services based on who I have seen accepted.

I admire people who give so much of themselves to charity, they are better men than me. The best charity I have seen, though is the small businesses that hire someone they really do not need, but that person needs work. Another is when a family adopts a child.

So, the end justifies the means?

I would tend to think so.

I think it is important to be street smart. My husband and I are ready to retire in 5 years. We did well in the Bay Area with our primary residence. Our children are less fortunate to be in this area because of housing costs in comparison to their salaries.
If you are young even if you have young children, you can go anywhere in the U.S. to find a good ratio of salary to housing costs. Why bang your head against a wall for the rest of your life?
Make life an adventure and think outside the box ! The Bay Area is soooo overrated !

HARM Says:
Just when I thought we were making some progress in opening DS’s mind… Oh well.

yeah, it's a shame...

As you know, most of the regulars here don’t particularly care for greedy, self-serving anarchists who call themselves “free market capitalists” (but aren’t).

hard to tell the difference, if there is one, which i doubt.

But to call every single builder a ‘gouger’ and say that building never entails any risk (though that’s been broadly accurate for the last 6 years or so) is ridiculous.

but i didn't call every single builder a gouger, you just did. i am a fan of using PPPs with building contractor firms to get results, in fact.

Any venture that requires up-front capital investment has risk, and real estate development is among the most capital-intensive investments out there. There is a risk of market declines (witness recent builder financial problems with slow sales & land option write-downs). There is regulatory risk, including dealing with unexpected easements, title problems, regulatory zoning hurdles, local politicians who want their palms greased, etc.

all that will go away with my govt-backed, govt-paid for, cost controlled PPP approach to providing essential housing. therefore, no risk. and therefore, no excuses.

Remove the profit motive and you remove the incentive to build.

you are offering honest workers a job, just cutting out the 25% profit developer layer.

I was talking specifically about retirement villages there, but also about lower end affordable housing and public housing and so on. simcha made soem good remarks about how various things have been tried in the past, in chicago (as well as sydney and london and everywhere) such as tower block 'projects' and so on. I think govts lose their bottle every time in the pro-capitalist anglo-american societies and do poor work to begin with, then follow it up with bodgy fixes, and so on and so forth...

If you want to cut down on RE price-gouging, why not start by eliminating government manipulation of interest rates (a biggie), reduce direct government subsidies for flippers (limit mtg. interest deduction & cap. gains to just primary house), eliminate government risk underwriting in mortgage markets (GSEs), and encourage competition by removing needless barriers to entry (MLS). Oh, and something the government might do MORE of would be to (a) stop taking massive bribes from the REIC, and (b) actually start policing the banksters and prosecute mortgage fraud. *

(*Not holding my breath on any of these)

that's certainly something to be getting with... in the private residential market...

If you ignore a few hundred people now, work hard and get rich, then you may be able to help a few thousand people in the future.

yes, same good ol' american fatalism and individualism. the most likely outcome of every ostrich putting their head in the sand is:

1) you probably won't get very rich, in all statistical likelihood -- there is only 1 bill gates
2) even if you do, you probably won't give much of it away -- after all, you were willing to ignore the hundreds in your youth
3) you have done nothing to really change the overarching system for the better

however, what that thinking does do is let you ignore every problem 'until you become rich', which might be never, and conveniently put off doing anything for decades while giving yourself a convincing sounding moral sop and excuse at parties...

Yes Just Me ...
We have forgotten how much talent and disciple these mavericks have.
What would Apple be if Jobs didnt return?

Simcha - your background mirror mine.

bruceb -
Banquet Dinner 10 for 10 bucks Safway frozen dinner
Milk half gallon
Crystal Light
Some soups on sale
Frozen Chix breasts in bulk
Some fruits and veg from farmers market Sat AM half block away
and drink Tap Water....

Sorry No Booze

Space Ace, I meant that I work in "b2b" only in the sense that it ain't a consumer play. I don't work for Ariba or CommerceOne...

Funny DS, and here I thought philanthropic ideals were an American invention. Let me ask you this, which major country has the highest per capita private donation rate? How much of the percentage of their wealth earned do the great American "oligarchs" give away? How much is Bill Gates giving away? Warren Buffet? By contrast, how much have the monarchs or ruling political classes of Europe given away?

This may be construed as spam

I decided to set up a cafepress site for my blog - but I just wanted to run it by you guys first:

http://www.cafepress.com/burbed

There are basically 2 slogans there - and they're our favorite Realtor slogans. But I can only offer 1 slogan per product. Do you like the current product selection I have there? Do you prefer one slogan over the other?

How much of the percentage of their wealth earned do the great American “oligarchs” give away?

that's something to research on a holistic, rather than anecdotal, basis, yes. i don't deny the american tradition of philanthropy. philanthropy is optional and discretionary, of course. for instance, how much did wall st stock brokers give away after the last round of bonuses?

there are some fundamental differences in welfare arrangements, tho, where it's probably more important to look at gini coefficients and poverty levels, both relative and aboslute, in any given society, after post-welfare and post-philanthropy transfers.

for instance, it is possible to stay on unemployment benefits for many years in some countries, although efforts are made to get people into work.

the interesting thing in places like sweden is that many jobs that rely on voluntarism and charity in the anglo-american systems are paid-for jobs, which can lead to less dedication in the job being undertaken, but the state has assured that the job will at least be done.

the bill gates/warren buffett phenomenon is A Good Thing, tho, and the Foundation can operate transnationally and without political fear or favour, unlike the national and local focus of governments driven by voter appeal and lobby group influence.

In the next thread that I start, I will list a few keywords that will trigger deletion. Some of these are "libertarian", "social*st", "capitalist" and any largely irrelevant claptrap ranting from DS. Thanks for understanding. :-)

SP

SP Says:
In the next thread that I start, I will list a few keywords that will trigger deletion. Some of these are “libertarian”, “social*st”, “capitalist” and any largely irrelevant claptrap ranting from DS. Thanks for understanding.

SP

tell it to the north european welfare states... *nobody* knows what SP stands for...

for instance, how much did wall st stock brokers give away after the last round of bonuses?

A lot actually…

numbers? graphs? international comparisons? post-transfer poverty figures? why is the crime rate so high? and so on... i'm willing to be converted if it can be proven that this approach works as well or better than the 'citizenship guarantee' approach of the social democrat welfare states.

the discussions around the ongoing cost and delivery of healthcare, lack of insurance etc don't inspire me however. as per the previous cited article on medical (non)insurance and this article for the 3rd time... not to mention the quality of public schools i'm hearing about. so i'm waiting to be impressed...

JOB related - highly germane to the thread:

MEDICAL EMERGENCY / Neglected for a decade, health care is metastasizing into a new crisis / Live sicker, die younger: The plight of the uninsured

When Bob Wessenberg was laid off, he had no idea how fast the down escalator traveled. "Our life used to be different," says Bob, whose voice betrays the stress he's under. "Our life was comfortable. We had a little left over for nicer things and enough to start saving for a rainy day. Then we got a rainy month, and now we got a rainy year."

After going through all their savings and receiving an additional $10,000 in support from their family, the Wessenbergs had nowhere left to turn. Sheila works a few hours a week doing bookkeeping for Avery labels, earning $14 an hour, and Bob finally landed a menial job scanning documents for $11 an hour. As a 51-year-old Lotus programmer, Bob has become obsolete in today's job market. He has interviewed for more than 300 positions without a prospect in sight.

Good post. I have a feeling there's rampant age discrimination in the Valley. It's not even conscious discrimination - it's just a fact of life.

http://online.wsj.com/article/SB117702825463476245.html.html?mod=home_personal_journal_left

From today's WSJ:

Still, the new crop of "blingdexes" offer further proof the wealthy are increasingly creating their own consumer economy. The number of millionaire households in the U.S. has more than doubled since 1995, according to the Federal Reserve. The total wealth held by the nation's richest 1% has increased more than 50% since 1998, to $16.7 trillion in 2004, the latest period measured by the Fed.

With incomes and wealth soaring for those at the top, spending by the rich has also jumped. Mr. Kapur, in a 2005 Citigroup research note, said that the top 20% of American earners now account for between 37% and 70% of total consumption.

"Today, the good life is defined by the assets you have," says Margaret Mager of Goldman Sachs, which has created the Goldman Sachs High-End Consumer Index. "It's your homes, your cars, how you look, what you wear, who you socialize with, what you eat and drink and ultimately, how important your art collection is. This is definitely fueling the growth in the luxury market and these indexes."

DS,

You've got to date these things. At first I was shocked that a person was recently laid off from a Lotus (presumably Lotus Notes) programming position, then I realized the story was from 2002.

good ol' Lotus Script...

It's a bit like being a VBA programmer... i.e. not very hard... I remember programmers trying to create a DMS in Lotus Script in my govt job...

Sorry about the dated post, somebody else posted it further back as a tiny URL, and I though it was a current article... oh well, principle still applies, they haven't fixed the US health system since...

I'm starting to appreciate Randy H's perspective regarding "group think" as well as Malcom's disdain for "hot button" words slung about for effect.

Do you realize this was nearly an entire thread about employment, the economy and generational differences without ONE mention of the dreaded "B" (b**mer) word? Very productive, very informative thread.

http://www.nytimes.com/2007/04/20/business/20hedge.html?_r=1&ref=business&oref=slogin

Lawyers and hedge funds, what's not to like? :)

bruceb,DennisN

I actually did Google (Boise+Scam) and got a similar number of hits but didn't see anything specific? I happen to think it's your retirement and if you want to spend it shoveling snow who am I to say anything? I fear though he may have missed the main thrust of Patrick.net.

Just b/c you were able to cash out (and become and equity locust) with CD's and Indexed ETF's doesn't necessarily mean you got a great value? Boise, like many other far flung areas have had a rolling bubble all their own. Again at the risk of "group think" I believe the consensus would have been to: rent for awhile, see if you like the area, find out if your relatives will actually go that far off the beaten track to visit, spend a winter there and wait for prices to fall. IMHO

@astrid,

Enjoy it while it lasts! Patrick has a great link today "The Future of US Housing" with Ken Heebner of CGM Realty Fund on Bloomberg's. Pretty sobering look at HF's.