patrick.net

Were you the Peter P mentioned by the Mogambo Guru in this week’s edition on the Daily Reckoning?

Nope. Unless I sleepwalked and sent in some articles.

Oh how I wish it were so, but I have to disagree. The new CA high speed rail line will render a 2 hr. auto commute to a 45 minute extension of work time.

High speed rail? In the USA? Oui? Non!

Concrete walls and floors can only be soundproofed with additional thickness. This works, but it gets heavy (expensive) quickly.

In a distant former life, I used to design broadcast studios and performance spaces, including acoustic isolation. It was the simplest, fastest, and cheapest part of the job, because the requirements were always perfectly understood.

There are two "big tricks" to soundproofing: elimination of direct conduction (air flow, single layer solid materials, etc), and using voids to dampen diaphragm action. Both are easier to do when you're building new, and neither are really options for renters. :-)

But it doesn't have to be expensive. If you're only worried about loud common-wall or upstairs neighbors (and not, say, friday night at 1015 Folsom...) then it's almost free as long as you design for it from the beginning. I did some renovation work on a multifamily built in 1912 and was impressed to discover that the building was built with a proper dampening void between floors. (Actually, my cat discovered it when I had a wall open to replace some knob & tube wiring...when I found her with a flashlight, her reflective green eyes were about a foot below floor level, and she had full range of the floor. Good thing she didn't find anything to eat, or she might not have come back!)

I shouldn't be surprised, but I still am, that new construction soundproofing is substandard.

Lots of alternitive energy going into homes…..The biz to be in in about 5 years (IMHO)

I have faith in cold fusion.

Don't count on cold fusion, my physics professor friend says. Not in a forseeable future.

Blue states will crash, blue states will become more affordable, more Democrats will come to blue states, higher concentration of Democrats in blue states, blue states go independent, the united states of Canada is born.

Blue states will crash, blue states will become more affordable, more Democrats will come to blue states, higher concentration of Democrats in blue states, blue states go independent, the united states of Canada is born.

Huh?

Don’t count on cold fusion, my physics professor friend says. Not in a forseeable future.

But I thought someone was able to reproduce the experiment. I do not really care about science of how/why it works. I just want that someone to build a commercial reactor.

God bless your mom and all mom’s, and God help anyone who lived below you.

Vertical neighbors...

cold fusion currently requiress much more energy to initiate than it produces...that's about all I know...other than there are great challenges in keeping the atoms very, very still (hence 'cold'). I think "don't count on forseeable future" is about right...but of course when was a sci./tech. revolution ever predicted?

Oh, and WHO here tore themselves away long enough to post this CL ad???
http://www.craigslist.org/sby/rfs/102202129.html

Hmmmmmm?

1. Market value = what a willing buyer and a willing seller agree to, with full disclosure.

2. A house in always only worth what someone is willing to pay for it.

You are aware that markets (yes even real estate markets) are _not_ perfect, and they are prone to occassional market failure. During periods of failure market value is not accurately measured by settlement price, but by future expected *rational market equilibrium* settlement price. The problem with your definition is that (2) is not true unless "what someone is willing to pay for it" is *rational*. When the buyer is irrational, the settlement price is not reflective of longer term market value.

Check out the Glide Houses:

http://tinyurl.com/9xktk

I don't think they're all that aesthetically pleasing from the outside, but inside, they look nice, seem very liveable, and the windows are great. I could live in one.

Of course, the problem in CA with all these innovative designs is finding land to build them on. I imagine that over time, crappily built houses will have to be torn down and can be replaced with more eco-friendly ones.

"Suburbs will become Disney-esque facsimilies of small towns, with artificial “main streets” and private police forces. These will be large expanses of land with the “little boxes made of ticky tack” that are so famous in the suburbs. "

These are TND's, or Traditional Neighborhood Developments, and they are having a huge influence on the way many developers are building houses now, but they are mostly bastardized versions of the concept. There are some developments in the BA that are some version of TNDs. Offhand, I can think of a new one in Alameda. In the So Cal town where I live, a new TND is being built now.

I firmly believe in the values that inspired this movement. Higher populations density, greater sense of community, wide sidewalks that encourage walking and biking instead of driving, alley-facing garages to eliminate the hideous aesthetic quality of most garage doors, communities that mix business and residential, apartments, condos, townhouses, and single family homes.

In practice though, it's true that they can take on a weird Stepford quality. They face various obstacles, like the fact that it's hard to build a downtown-style neighborhood in the burbs and make it feel anything but fake, and it's hard for some people to buy into the idea that having a smaller yard, living closer to the neighbors, and having businesses down the street from one's house could be good things, it's hard to establish a thriving business community in the midst of what is essentially a subdivision...

And since people need to live near where they work, and that usually means living near an urban area, TND developers have to find land to build on, and that's usually not all that close to big employers. So they end up being just a different version of the burbs.

Here's one site that discusses some TND issues:

http://www.tndhomes.com/phd02.htm

If nothing else, I hope the neo-traditionalism movement at least brings about a public acceptance of development that resists suburban sprawl, and an awareness that suburbanism does not generally encourage a higher qualityf of life.

Here's another link about TND's:

http://www.newurbannews.com/AboutNewUrbanism.html

"The here and now is that they are trending toward “life style centers”, where one can shop, walk, eat, and socialize. I build them, and I really dislike them."

Malls are monuments to the shallowness and pointlessness of our popular culture. I always feel wierd and hollow when I go into them and see all the shiny crap for sale...even more weird and hollow when I drive through neighborhoods with vast green lawns and no one is outside, except maybe the people who work for the lawn service. WTF!?

Sorry for the flurry of posts...Don't mean to make this the Jamie thread. :-P

But I was just thinking, post-housing-bubble, as people are forced to live in smaller spaces, the concept of flexible space will be embraced. For instance, do we really need a separate room for guests, a formal living room and a family room, a separate room for an office, a separate room for crafts, a separate bathroom for every family member, a separate workshop for twice-yearly woodworking.... Of course there are some people who do need the spaces mentioned above because they do wood-working every week or have a live-in relative or whatever.

But for the most part, the "need" for larger spaces is really just a mind-trick of consumer culture that causes us to go out and buy more and more stuff.

My husband grew up in a 1000-sq-foot house, where his parents still live. I'd like a little more space than that (we currently live in a 1700-square foot house that has more than enough space), but staying with his parents over the years has taught me some lessons about how some space is needed and the rest is just luxury.

I think the most popular post-crash house will be the 1988 Chevy full-size van.

I love those tiny houses! Someone else posted a link for the Tumbleweed houses here a while back...KurtS, maybe?

"It seems that so much of what makes a design successfull (or not) depends on the site. Whether it be nature or what’s built next to it, it’s hard to judge a design without seeing it in the context of a site. "

Jack, I agree. I actually saw a Glide House featured on TV recently. It was set on a hillside in the BA, and since the focus was on the view, the design of the house made sense and it looked nice in its location. If I were to live in one, I'd want the 3 or 4 bedroom version. I think the designer did a great job of creatively dealing with the narrow modules.

LOL on living in separate tiny houses...sometimes my kids make me think this would be a great idea.

Jack, our names are too similar--I keep looking at your posts and thinking they're mine. :-)

I love that wee-house! What a beautifully simple design. I'm going to go check out the rest of their designs.

If I have a small rock and someone is willing to pay me 200k for it (of course they will have a deal), I will collect 200k so it was worth 200k. Of course if he told me he wanted his money back, I would say it’s not worth a penny to me! …too bad sucker!

Then there is no market for the rock, therefore its market value is not 200K. Good for you for getting the 200K!, but you cannot reasonably expect to repeat this event.

A willing buyer + A willing seller are NOT SUFFICIENT to define a market, only a price settlement. A MARKET requires that other willing buyers also have the ability to participate in the price function, which of course would have the effect of driving down the market value of your rock.

I think the most popular post-crash house will be the 1988 Chevy full-size van.

Those will be Prime(tm). Most people will have to settle for a Yukon/Exploder/Tahoe/LandRover/Canyonero, which should be affordable for the average 2-income family. I realize, not as many sq ft as the Prime EconoVan, but still enough room for the sprouts and a small pet.

allah,

The problem is you've violated the *rationality* requirement. Markets require an assumption of rationality, granted that the interpretation of rationality is fraught with its own hazard. But the point is that a functioning market should result in the displacement of _overtly_ irrational actors, like the 200K rock buyer.

Logically, your line of reasoning leads to coercive price functions, which is why we have the rationality requirement in the first place. And, if we allow for unmitigated coercion, then we declare that market value is any price I can obtain by any means. You can see where this ultimately leads, and why we don't consider this a market.

I don’t know what dictionary you get your definitions from? If you go to onelook.com, you can select many different ones to look up what the word “market” means….

To me a market is a place where people sell vegetables in baskets and shellfishes on ice.

shellfishes

Huh?

With all due respect, I don’t know what dictionary you get your definitions from?

My references are: Pindyck, Rubenfld, Besanko, Brandenburger, Sustow, among others.

From Pindyck: A market is the collection of buyers and sellers that, through their actual or potential interactions, determine the price of a product or set of products. Both buyers and sellers are assumed rational, and their participation in the market is assumed voluntary.

Further, [...]market price is equivalent to the term market value. Market price is the price prevailing in a competitive market. Therefore, there must exist either competiting buyers, competiting sellers, or both for a determination of market price to be possible.[...]

And, for the guy who said there is only microeconomics...this is from a classic micro text.

Okay, let's play "Guess the bull quote". Which (in)famous RE bull (REd bull? lol) recently said this:

"Even so, national sales should stay close to record levels over the next two months and housing will continue to support the economy."

Give up? Here's the link:
http://www.car.org/index.php?id=MzA0NDc=

The irony of the last phrase in that quote is just too much...it's probably lost on the speaker.

I don't know about future house design; but currently, at least in california, we definitely have the kind that "supports the economy."

I don’t know about future house design; but currently, at least in california, we definitely have the kind that “supports the economy.”

Gotta have 32" concrete walls.

I wish your Mom would move…if I hear that vacuum again after midnight I might go insane….

Mom hasn't had vertical neighbor's in over 25 years. But I thought I'd give a potential reason for the nocturnal vacuuming. Btw, try being the kid who's bed she vacuumed under. That'll drive anyone nuts.

"Assuming this thing actually gets built"
Hmmm, what happens when property tax revenue dries up? Just vote for a bond? yeah, that would be typical.
.
.
.
I still wonder who pocketed all the tax revenue generated during the tech-boom yrs. It certainly wasn't used to improve (much) the state's infrastructure.

which by the way is irrational, the houses that are sold today will be worth less a year or 2 from now according to my (I like to believe) rational expectations.

I admitted from the start that *rationality* was a term fraught with hazard. If you replace *rational* with *not overtly, blatently irrational*, then perhaps it works better for you. The 20K rock was overtly, blatently irrational. A $1M $itbox may or may not be rational. Rational buyers could indeed think the market pricing is correct. Rational buyers can and do disagree on price; this is why economics cannot predict a settlement price, only describe the optimal equilibrium price. Nonetheless, both pieces of data are useful, because when they diverge by too much the risk of "correction" rises.

If we run out of black gold, it will be the opposite…Noone will live in the city. You cant grow food…We will look like Cuba, where they grow their
food in their back yard.

The great cities arose long before industrialization and the oil-energy economy. There were very large cities in antiquity. I suspect cities will find a way to survive well beyond oil and steel.

High-speed rail in California will be no more successful than light rail in the silly valley.

allah,

Of course not, you just rationilzed the rock story, making it reasonably believable it could be more valuable to willing buyers. By applying unique attributes to any arbitrary item you could plausibly raise its value to potential buyers. I realize this is circular, which is what most people have an intuitive problem with, but I assure you that dropping either the rationality or non-coercive requisites render market theory entirely useless.

...

easily categorized as irrational: you go to a "rock auction" and buy a rock for $1M not knowing if it does or does not have any special features of value. No one has told you the rock might be special. You have no secret information about the rock giving you an edge. Of course, you never know, anything is possible...

very likely rational: you go to a "rock auction" and buy a rock which you and other buyers believe has special features making it valuable to you and at least some others.

arguably rational: you go to a "rock acution" and bid on a rock which you know MIGHT have a chance of being special; you're not absolutely sure if it's a fake or geniune special rock, but you determine that the caluclated risk is reasonable because of the potential value of the rock if it is authentic. You are also rational to assume that other buyers have made the same or similar conclusions about the rock.

So if I acquiesce to what you're driving at, we can stop all this. I still maintain that buyer-seller price arguments are the equivalent of insisting that "all mathematics can be explained by addition". Although the statement is not untrue, it is not very useful either.

Randy H, Allah, you two should try out for an obscure british comedy ;) Man your posts are so far over my head I need air traffic control to understand them.

"The Now House is something we’ve been thinking seriously about. On a small plot of land, but large enough to grow some fruit and vegtables.I do my"

Moonvalley, have you visited the Now House? I am curious to know what the quality is like inside. I too love the design and the other designs at http://www.cleverhomes.net and would love to find a nice little plot of land to have one built on.

Does anyone know how land prices behave during real estate corrections? Do they mirror regular real estate prices? I was just checking and found what seemed to me to be relatively affordable lots (around 300K) in Santa Clara and Marin County, but I'm not knowledgable enough to know what the catch is...toxic waste on site? (The ones I'm looking at have utilities present and are zoned residential.)

Similar to the dome houses, check out these houses made of dirt:

http://www.calearth.org

This place is not far from where I live. I'll have to check it out some time in person.

My guess is that the implied land price is the sale price of a house minus its replacement cost. Since the construction costs is realitvely constant, I would think that loand prices are much more volatile?