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Rise of the Bandos!*


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2008 Feb 19, 3:27am   28,457 views  201 comments

by HARM   ➕follow (0)   💰tip   ignore  

*pun courtesy of CalculatedRisk

Intractable social problem: meet opportunity.
Some homeless turn to foreclosed homes

There have been several posts from yours truly contemplating this very idea, and now it looks like the word is out on the street and being put into practise. Could there be a more perfect, complementary "market-based" solution to the twin problems of: a) homelessness, and b) housing bubble oversupply?

Personally, I wouldn't object to having some of my tax dollars diverted to formalizing the "Bandos" into a legitimate form of public housing (with appropriate oversight by law enforcement and building inspectors, of course). It sure beats maintaining the status quo on both fronts: skid row/downtown areas overrun with stinky homeless people urinating, shooting up, and prostituting themselves in public; and depopulated suburban Specuvestor cities replete with mosquito-infested swimming pools and McMansions being turned into gang 'safe houses' and crack/meth factories.

HARM

#housing

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106   justme   2008 Feb 20, 6:07am  

Apparently I can't type president. Maybe I have to go military style and start calling him POTUS.

107   Peter P   2008 Feb 20, 6:08am  

Wouldn’t mind hearing how to short it, though.

Shorting gold? Isn't it like shorting homes in 2003? :)

Disclaimer: I hold GLD

Not investment advice.

108   DinOR   2008 Feb 20, 6:09am  

@justme,

Oh I realize you didn't intend it in ALL seriousness! The truth is that things weren't always so smooth between us. Not long after the fall of the Spanish Fleet at Manila Bay there was a rather hasty rebellion and ongoing skirmishes for years.

After WWII the majority of the $'s for rebuilding went to Japan (more bad feelings) so just b/c we're both primarily Christian and english-speaking let's not be fooled. It's been a rough road. So yeah, it's been about a hundred years and we're STILL working on our relationship!

109   DinOR   2008 Feb 20, 6:18am  

BayAreaIdiot,

Thanks, I only wish! Actually Dick Morris www.dickmorris.com probably has the best read on this. He's been incredibly accurate (with the exception) of declaring Hillary the next Pres. to wake people TFU!

I will say although I'll likely be voting McCain (because of my slavish devotion to the staus quo... :( and my nature to be assured that we're kicking @ss "somewhere") I could certainly live w/ Obama as POTUS than HC any day! Besides (and here's a little tidbit in his favor) the guy's a White Sox Fan! We'd have THAT in common!

110   thenuttyneutron   2008 Feb 20, 6:48am  

@Harm

I do see the issues on the Second Amendment and see that Barrack only has made 3 votes. The vote for the Firearm Confiscation Prohibition Amendment did surprise me. This was a big thing that angered me after the Katrina/N.O. screwup.

In practice, this law will not be enforced in the courts. It will be enforced when civilians give the same treatment to the cops as they do to the looters. This vote by Clinton seals the deal for me. I will vote for the devil over her.

111   BayAreaIdiot   2008 Feb 20, 6:56am  

DinOR
and my nature to be assured that we’re kicking @ss “somewhere

in the end, that might be the deciding factor for me too. But it's still too soon (for me) to dismiss the possibility of voting Dem.

112   DennisN   2008 Feb 20, 8:11am  

DinOR,
I really like that "Condi vs. Hillary" book that Dick Morris wrote.

113   Paul189   2008 Feb 20, 8:17am  

@justme-

Pretty sure you were joking but if not here is the information on shorting. GLD is an easy to borrow ETF so your broker should have no problem letting you short (just like a stock). Go ahead and sell short all you want - it will be that much more for the rest of us to buy.

XAU is diffrent as it is an index of gold stocks - not a tradeable ETF. For that you might look at GDX.

Not investment advise.

114   Paul189   2008 Feb 20, 8:19am  

advise = advice

115   Peter P   2008 Feb 20, 8:36am  

XAU is diffrent as it is an index of gold stocks - not a tradeable ETF. For that you might look at GDX.

XAU has index options, though they seem to be not as liquid as GDX options.

Why doesn't GLD have options??? :(

Not investment advice

116   northernvirginiarenter   2008 Feb 20, 10:44am  

"The Next Slum? Turning America's McMansions into tomorrows tenements"

Interesting article in the Atlantic positing a new exodus from the burbs into the town. Nice points on reflection of an attitude change in TV and Hollywood I had not considered, and a vivid, disturbingly dark painting of the "new slums". A rather shocking vision actually, changed my viewpoint of what the landscape might look like in a few years.

http://www.theatlantic.com/doc/200803/subprime

117   Malcolm   2008 Feb 20, 11:41am  

DinOR Says:
February 20th, 2008 at 10:38 am
Malcom,
"With escalating housing costs most of my retired buddies have been driven inland. Temecula, Murrieta etc. I lived in Imperial Beach and still check prices there from time to time. That aside it just seems SD has this legacy of corruption (Duke Cunningham and a number of mayors?)"

Encinitas is one of my favorite areas. Duke was a real disappointment for me since he was a childhood hero of mine. Roger Hedgecock is a weeney who has a radio talk show. The smoke was still clearing from his time in office when I moved here in 90. I've actually been on his now off the air TV show before I knew his past. My favorite scandal is probably the city council people who were bribed to change nudey bar laws. Too bad your friends are out in Riverside, that is a real pit. I hope they didn't buy houses there, we have friends who just announced they are walking away from a house that they are now 200K under water.

118   PermaRenter   2008 Feb 20, 1:06pm  

NEW YORK (Reuters) - A rapidly deteriorating U.S. economy will cause home prices to drop by 20 percent peak-to-trough, a leading economist said on Wednesday.

Mark Zandi, chief economist and co-founder of Moody's Economy.com, said he also expects a recession in the first half of this year.

Zandi, speaking at the Reuters Housing Summit in New York, said this is a "significant" change from the Moody's Economy.com outlook published in December, which called for a 13 percent drop.

He expects home sales to hit bottom this spring, housing starts to reach a nadir this summer, and house prices to trough in the spring of 2009.

119   Eliza   2008 Feb 20, 3:26pm  

Malcolm said:
Someone buying today will have a smaller tax bill than someone buying the same house 2 years ago. It doesn’t just go one way, although those people can appeal and have their taxes lowered to today’s rates they still were paying more than someone buying now.

When the price of a car goes up is it fair that the person buying the car later pays more sales tax and higher registration fees? Just curious about your opinion, I’m not trying make a point.

An interesting observation, our taxes go up a max of 2% per year. For the last 10 years it seems that inflation has been published at about 2%. It is interesting that property taxes for someone like me who bought in 2000 do seem very low which sort of shows how misleading the government figures are.

~~~~~~~~~~~~~~~~~~~~
Yes, I agree, the inflation numbers are cooked. No way it has been 2%.

The car analogy does not work for me, quite, because sales tax and initial registration of a car would be more analogous to a transfer tax on a house. Transfer taxes and sales taxes are one-time events and do not concern me.

Prop 13 concerns me because it keeps on going--even into subsequent generations--and because I view property taxes as yearly fees for basic community needs eg. schools and roads and firefighters and ambulances. If I bought a house in 1985, and you bought a house in 2005, I will pay a fraction of what you pay every single year forever, as will my child, though we will all have the same access to services. It does not matter if I make more money than you, I get this gift from the state simply because I bought before you and did not move. Hey, maybe they can do that with income tax, too--if I work for the same company for years, shouldn't I be taxed only on the amount I made the first year I worked, plus, say, 2% a year? That would be really nice. Let's do that. Then the people who insist on graduating college after I did, or who insist on changing jobs--well, they can pay most of the taxes, no? It'll work out fine. At some point, it ceases to make sense. Especially given that we are running seriously short on state funds, despite the fact that sales tax and income tax are on the high side here in Cali. I reckon there must be rampant mismanagement, but this property tax piece does not sit well with me.

Rant: This is the 7th straight year my community has seen major cuts in funding for public schools. Given that the PTA is already paying for the music teachers and front office staff, and that parents act as art docents and assistant teachers, and the teachers don't make much money at all, I honestly don't see what more can be cut, and I really feel for communities that lack the private resources to make the public schools work. But heaven forbid healthy employed people who were clever enough to buy their houses in the 80's or 90's should be asked to pay market rate property taxes so that all the kids can be literate and we can have firefighters available when the hills are burning. Yes, I am cranky about this.

120   justme   2008 Feb 20, 3:57pm  

Paul,

Thx for advice. I'm not suggesting shorting gold, I'm just saying it may become profitable in not too long. And I think gold will exhibit much less "stickyness on the way down" than real estate has been showing.

121   justme   2008 Feb 20, 4:01pm  

Eliza,

What you said. I'm all for getting rid of prop13, and reducing the property tax rate while we're at it. One of my favorite causes -- and I am repeating myself.

122   HelloKitty   2008 Feb 20, 7:43pm  

Every percentage point the house prices decline, is 1 point more I am in favor of prop 13.

Hopefully I can maybe, possibly buy near the 'bottom' and then in 10 years brag to young people and newcomers, and those who move or upgrade thier home how low low my tax rate is. oh how sweet it could possibly, maybe, be to be p13 rich! *mentally rolling money while cackling*

Housing in CA is now a fookin casino game. And weve done it to ourselves....passing selfish laws that only screw the other guy....p13,nimby measures,rent control, endless tax breaks for REICestate, just like the curse of Indian casinos which are predatory on the weak minded (why not take money from them?)

123   revengeofaone   2008 Feb 20, 8:27pm  

----"Auction is the best way to correct housing oversupply."

is there really an oversupply of housing in the bay area?

wasn't there really an undersupply driving prices up (along with overexuberant demand, of course), which is partially improved as a result of increased building the last few years.

I would agree that auction is a wonderful way to set prices both in settings of oversupply and undersupply.

124   justme   2008 Feb 20, 10:21pm  

If houses are sold by auction, at least there is a relatively simple way to assess whether the competing bids are for real or not. Of course,there also must be an ironclad rule that the reserve price must be published information, if there is any at all.

125   DinOR   2008 Feb 20, 10:41pm  

NVR,

Thanks for the article. That's what was so quizzical about this latest round of unabated sprawl? Why? Even here in PDX the trend has been toward an urban lifestyle for at least the last ten years.

A friend explained that Moreno Valley (N and E of SD) was spawned during the last boom and quickly degenerated into "Thug Haven" in the 80's. I think it's the place where car-jacking was born?

126   DinOR   2008 Feb 20, 10:46pm  

DennisN,

I'll have to read that. Polling (like stock picking) is often said to be "more an art than a science" but Dick takes a lot of the mystery out of it for us non-politicos.

The reason I found the Tamarack story interesting was that there are several companies touting fairly substantial spin-offs and you find yourself wondering just who it is that will be able to finance them to get the deal done? Speaking of which MSFT is said to have an announcement (?) in about 2 hours. What... could it be?

127   Malcolm   2008 Feb 21, 12:12am  

Eliza Says:
February 20th, 2008 at 11:26 pm
"The car analogy does not work for me, quite, because sales tax and initial registration of a car would be more analogous to a transfer tax on a house. Transfer taxes and sales taxes are one-time events and do not concern me. "

Yes, but the registration is an ongoing thing based on the original purchase price of the car and adjusted each year. I'm just gauging the principle of the thing on a different example.

"if I work for the same company for years, shouldn’t I be taxed only on the amount I made the first year I worked, plus, say, 2% a year?"

Forget the tax rate, you're on to one of my problems with these entrenched boomers in these corporations who produce less, require more, and somehow have made themselves a protected class. They basically are doing a prop 13 but on the salary side.

"Rant: This is the 7th straight year my community has seen major cuts in funding for public schools."

This is where we disagree. For some reason schools keep needing more and more money, and they keep cutting and adding new bonds etc. Yes maybe 2% is low but owners are not paying less, they are paying more and more in real money each year. The fact that schools are still suffering even during the boom when revenues should have been gowing through the roof (lots of houses were sold, and even resold causing 2 to 10 fold increases in assessments) is proof positive that it is not an income problem, they simply won't spend the money properly. Using your own stat 7th straight year, that is basically describing the bubble period. Were they not cutting before the bubble when assessed values were much lower?

128   DinOR   2008 Feb 21, 12:54am  

DennisN,

If you're near a TV tune in to CNBC, I guess they're ready to reveal Steffi and Andre's involvement in Tamarack shortly.

129   Peter P   2008 Feb 21, 1:45am  

I’m not suggesting shorting gold, I’m just saying it may become profitable in not too long. And I think gold will exhibit much less “stickyness on the way down” than real estate has been showing.

"Not too long" can mean 1 month or 15 years.

The rise of gold has been relatively mild.

Rhodium was trading below $450/oz in 2003. It now costs over $8000/oz. Yes. More than 17 times.

130   Peter P   2008 Feb 21, 1:48am  

BTW, Randy H is the resident expert on housing price stickiness.

131   Peter P   2008 Feb 21, 1:49am  

RE: schools

School voucher is the answer. I have yet to see a rational argument against it.

I would also like to see more tax incentives for home schooling.

132   OO   2008 Feb 21, 7:44am  

Jeff Bezos just unloaded 1.8M+ shares at $70+.

Time to buy puts on AMZN.

133   Peter P   2008 Feb 21, 7:47am  

Who is Jeff Bezos?

134   OO   2008 Feb 21, 7:51am  

Founder of AMZN.

135   Paul189   2008 Feb 21, 7:58am  

@Peter P,

The COMEX/NYMEX does not like competition-

Why doesn’t GLD have options???

136   Peter P   2008 Feb 21, 8:00am  

The COMEX/NYMEX does not like competition

Gold is also traded on CBOT anyway.

137   Peter P   2008 Feb 21, 8:07am  

Anyone has experience with YG/ZG on CBOT? I heard it has good activities at night.

138   FormerAptBroker   2008 Feb 21, 8:41am  

Peter P Says:

> RE: schools School voucher is the answer.
> I have yet to see a rational argument against it.

Liberals in general hate vouchers because it will allow poor people to take their kids out of public schools where they learn important things like “white men are evil” “SUVs kill polar bears” “government programs are the way to succeed”.

Liberals in the teachers union really hate vouchers since private schools don’t pay as much and actually expect you to teach vs. sitting at your desk e-mailing friends while the kids watch DVDs of current movies.

139   Peter P   2008 Feb 21, 8:46am  

Free Market is the only feasible solution to education.

140   HARM   2008 Feb 21, 8:54am  

Liberals in the teachers union really hate vouchers since private schools don’t pay as much and actually expect you to teach vs. sitting at your desk e-mailing friends while the kids watch DVDs of current movies.

I was about to express offense at this (I was a public school teacher back in the '90s), but then I realized: a) I was never unionized, and b) it accurately describes some (though certainly not all) tenured teachers I knew.

141   OO   2008 Feb 21, 8:58am  

I am not aware that private school teachers aren't paid as much.

I know in other parts of the world, the private school teachers are paid a LOT. For example, for the private schools in Hong Kong, a teacher with 10+ years experience was paid on average US$75K+ a year, and I am talking about the early 80s. My aunt-in-law was a private school teacher, and when she retired in the mid-90s, her gross salary was already close to US$120K (plus housing allowance). She also enjoys generous pension after retirement which was almost half of what she made right before retirement.

142   Peter P   2008 Feb 21, 8:59am  

Most liberals are genuinely kind-hearted people who want to help.

Most teachers genuinely want the best for the kids.

However, mixing liberalism and human nature gives interesting chemistry.

143   OO   2008 Feb 21, 9:03am  

Just out of curiosity, how much do these teachers at Harker make?

What about the real elite boarding school teachers at Philips Academy?

I believe that public school teachers only make about $50-80K in the Bay Area, which is really not a lot given that such positions require certain certification/training beyond undergrad education. It is hard for me to imagine that you can recruit any quality teachers at Harker at a salary below that.

144   Peter P   2008 Feb 21, 9:07am  

Moreover, home-schooling should be encouraged.

145   Peter P   2008 Feb 21, 9:14am  

I believe that public school teachers only make about $50-80K in the Bay Area, which is really not a lot given that such positions require certain certification/training beyond undergrad education.

In a relatively free job market, why would they choose this profession?

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