International Currency Discussion, Casey Serin Edition

Jamba Juice is a iamfacingforeclosure unit of currency. 1jj equals one rasberry banana with wheat germ shot beverage purchased at full retail on credit including transaction fees. While a prudent investor would save store coupons and wait for "free shots" specialsthat isn't 1jj. You see inplicit with 1jj are the assumptions that anything below a certain financial threshold aren't worth expending any intellectual capital upon. Better to consume, indulge, spend, and otherwise pamper oneself rather than sweat the small stuff. The actual convertibilty of 1jj to dollars, even our weakening pesobucks is subject to much debate. In this Casey is like his own country. Subject to GAAP 1jj would be about $80 because of the list price, the overdraft penalties, subsequent carrying charges, paperwork, time lost in the consumption and subsequent time lost dealing with the consequences and most important; opportunity costs. Opportunity costs is often misunderstood and is certainly something Casey never heard of before attending some advanced courses. In those course they teach you that opportunity is knocking and you cannot afford to not answer the door. This even works in a rapidly rising market. But as readers suspect by now in a rapidly declining market worse than the opposite is true. Casey has a burn rate. By investing what will eventually total hours to his 1jj indulgence he has foregone the opportunity to stop or at least slow the bleeding.

Pagans! Pagans! Pagans!

Celebratory Saturnalia. Supposedly part of the Winter Soltice but observed several days later. Hmmm, what else is observed a few days after the solstice?

Happy Holy-days!

For Our Druish Friends

Wishing everyone a solemn Alban Arthan as we honor the souls of the trees we sacrifice then deify in our living rooms. Hang the revered kerm-oak, drink the blessed wassail. "Yule" feel so much better. The Norse had the right idea taking 12 days for Jole. Oh and all the recent religion adherents that have since renamed these Christmas, Christmas Trees, holly, sacramental wine and the 12 days of Christmas as if changing the name makes a difference; Merry Christmas.

Casey Fix Dec 23rd Edition

Casey is on sabatatical. Sabatical, an interesting word; a period of paid leave granted to a college teacher for study or travel, traditionally every seventh year. Of course 7 minutes seems to be our Gen-Y Nega-Hero's max attn spn so in order to keep his faithful followers (stalkers?) in full cheer, presented for your amusement Casey Channeled:

Wow, sometimes the whole thing seems to be pressing in on me. I know that the best thing to do is push right back. When life give you lemons, make lemonade! And boy do I seem to have a lot of lemons! So that's today's new direction; squeezing my resources of every drop of value. I promise, this time for sure, I'll follow this strategy to completion. It is the least I can do to set things right. I feel better already knowing that my thinking about making an effort is already making a difference! Time for a reward. No, not Jamba Juice, I've learned my lesson. Introducing Serinade! Yes, I've monetized my faults and turned them into virtues. Serinade is my fantastic new product. And I have my haters to thank for it. Hah! Anyway, you can click on my links to order your own all chemical lifetime supply of Serinade on my -real- website. Or you can just whip some up yourself. Not only are all the ingredients ABSOLUTELY FREE! but with careful deal structuring you can get cash back on the purchase of the ingredients.

First off you'll need some prarie oysters. You see it takes some large huevos to make this work.

Then you'll need.....

Oh, sorry. More on this later my 7 minutes of max atn spn are up and so are my 15 minutes of fame. More later after a quick power nap and slug some Serinade! The drink that keeps on taking.

Latest Casey (for posterity)

BK -sooner- is in his readers’ interests and his as well. BK is a forgone event. The discussion is one of sooner and voluntary versus later and involuntary.

Things Casey is stuck with:

Liability due to -proven- and -prosecuted- fraud.
Taxes.
Damaged relationships.

Things Casey can dissipate:

CCard debt.
Future debt accrual.

So far in these three extraordinary months by Tim’s estimate his efforts have yielded $60-80 thousand in additional debt. Freakin’ tax late penalties from Dec 11th are $600 alone. I know, noise, just like the $37 (1jj) Jamba Juice overdraft. The Jetta Junker (1JJ) barely qualifies as worth tracking. He shoulda “bought” a “business car” and tried to claim it as part of livelyhood. That’s the stuff a good lawyer coulda tole him in SEPTEMBER. Too late now, the best he can hope is to squirrel cash. Not advise, just sumptin’ I herd on da street.

I’m frankly tired of Casey running up a bill on my tab. Begs the ethical question; you see a robbery. Is it your problem? Jean Valjean Casey ain’t.
----

Good Idea: Clip coupons.
Great Idea: Open mail.
Absolute necessity: 30 minute spreadsheet.

Bad Idea: Movies.
Really Bad Idea: Collige to get “riche.”
Fatal Mistake: Full speed ahead.

Which ones have your attention? Better yet, why are you reading my recreational musings? You need to be working Excel like a hedge manager.

Here, I’ll save you the trouble. The spreadsheet needs only a dozen datum in a 3×4 matrix. Ignore all else and track three months of 4 properties’ realistic sales price. You “bought” futures contracts on margin. I don’t expect you to understand that tech talk but even if you paid cash for all your “assets” you are ummmm, in a difficult place. You have to pay people to stop the bleeding. You don’t even have any bandages. This isn’t all that bad… yet. It just seems you can’t make a decision until things do get that bad.

Lost Kitty, Please Help!

Sputnick, the launch has been postponed. It is safe to post again.

Homey says those pimp shoes were last years anyway. AIN'T NO BIG.
We have fishy treats and have disconnected the scrotal electrodes.

Promise. [Everyone else talkabout Casey here.]
Update:
My latest Casy bashing here for posterity as I expect him to go down soon.

Mornin' Sunshine. So, Casey... what's this about putting your wife's credit cards ~$30k into bankruptcy? It ain't a cafeteria, it's a courthouse. You don't pick and choose and besides, you keep acting like it is a choice you can make. You may have had a choice in Sept. not now. You are worse than bankrupt. Bankruptcy means you cannot go forward under current obligations. You are far worse off, you need bankruptcy for protection. At this point almost any scheme you try without court supervision is going to look like an attempt to defraud your creditors.

Right On Schedule, Casey Goes Silent

As I predicted on his blog a while back the late December "quiet period" to build suspense or something. Really, I don't care. I invest nothing except a few minutes per day in a sick form of voyeurism.

Of note is the fact that it appears he has moderated my comments that use Chris Record and the Phoenix "college." I thought he'd let them slip through but now I suspect the import of his lifestyle is finally sinking in.

Growing Up Los Angeles

KB Homes is dropping out of the downtown hirise venture. Apparently it no longer fits their core model of suburban sfr construction. Amazing how a whiff of economic reality can wipe out years of urban cheerleading.

LA is the embarrassing end product of every FOAMER (Forces Of Anti-Mobility) and SmUGLER (Smart Urban Growth LovER) and NUTSO (New Urbanist Transit Supporter) and TROGlodyte (Transit Only Groupies) plan. It’s amazing to hear every single time: “We don’t want to become like LA” and hear the solutions attempt to replicate every urban feature of Los Angeles. I
particularly recommend the insight of Mr. Cox in recognizing VMT/sq mi as agreat QoL and congestion indicator.

The advocates of SmUG avoid substance. They liken sprawl to pornography, they know it when they see it. They call SUVs, gas-guzzlers, ignoring the fact that they generally replace vehicles with poorer mileage. They decry the paving over of America despite 5.2% or less of the nation is even developed. They ignore 9 decades of sociological data that speaks to density and degree of urbanization. They manufacture crises such as affordable housing or global climate change and then claim to be the
solution. They misallocate limited public resources to transit. They confiscate huge swaths of private property for use as public space.

If there exists a public imperitive for afforbable housing then th4e taxpayers should pay for it. Truth is the taxpayers won’t pay and there is no public policy interest so would be social engineers posing as planners impose unreasonable demands upon developers.

ChurchSignGenerator dot com

More fun than a stations of the cross marathon.

All That IWas Old Is New Again

Someday, say about Jan 12th when the banks start getting keys in the mail instead of checks there's gonna be some confusion and running around. Hold off for a minute that you can't really mail the keys back, the people that will be doing this don't know that. So, the junior loan processor talks to the loans supervisor who gets the senond vp of consumer credit accounts to come down and look into this pile of keys where a stack of checks should be. After a minute of scratching his youthful full head of hair he says; "Hey, is old Smitherers still around? You know the guy that was with the company 7-9 mergers/takeovers/aquisitions ago from that company that used to lend their own money out to the community and the community would deposit their money with them? I think it was called something something b-a-n-k." "He is? Good, get him up here and see if he remembers." Crotchety old Smithers is actually an ancient 49, his hair has a funny whitish tone in places. The whole tableau resembles the final scene of Logan's Run. Smithers looks at the pile of keys, the upturned faces full of botox and worry and says... "Oh, 1991 except faster and deeper and longer. About time. Hmmmpf." Reaching over to the wall he scrapes away posters announcing in-house education classes for tapping 401ks, cash back at closing seminars in Maui, HELOC loans at the local Hummer dealership to reveal a door. Painted over and nearly invisible only the faintest outline of the name "Repos and Dispensations" is visible. As the seal is broken, like on an ancient tomb, a whiff of Aquanet and Grecian Formula curls the nose hairs of the onlookers. Smithers bursts in to a room full of sleepy 50 somethings and says "breakout the bong and disco ball fellas, it party time once again!"

Starter Home Price Revealed

272 Grandview Circ
Camarillo, CA 93010
MLS ID#: 612689
$548,000

Is it any wonder people think we are overpriced? $670/sf. What are people thinking?

Starter

New game folks. Guess the price. With Ventura County down 8.2% y-o-y time to see if the rest of the planet and my other readers who prefer to remain anon what this galactic gem is worth.

Single Family Property County: Ventura Year Built: 1956
2 total bedroom(s) 1 total bath(s) Approximately 821 sq. ft.
Approximately 0.17 acre(s)

No fair looking it up. Just guess and tell us where you are guessing from.

Rent v. Own

2780 Avenida De Autlan
Camarillo, CA 93010
MLS ID#: 614107

This baby rents for $3300. But what about buying?


2780 Avenida De Autlan
Camarillo, CA 93010
MLS ID#: 613868

$1,219,000
5 Bed, 4.5 Bath
3,510 Sq. Ft.
0.18 Acres

So, a million dollar mortgage at 5.5% is $5677.89, taxes another $1200.
Cost to own is twice the cost to rent. Or the house is worth $600k if you prefer.

Megaopoli & Diaspora

California is sending forth its best and brightest. The unspoken subtext is that the most productive segment of society are the ones that are moving. Who can blame them?

What's to attract top talent when the cost of living is so out of sync with pay? Davis ain't Boston. We looked at buying a place for my daughter to live in while attending the school of her choice. For about 15 seconds. $350/sf for the most modest of houses in Davis? Our local CSUCI "solved" this by getting into the real estate business with extensive planned developments preferential to faculty and staff with speculative caps on purchases.

As to "The OC." Unless you bought in a decade or more ago its got nothing. I mean really, you can't tell OC from SFV and except for 15 degrees the IE for that matter. They don't even grow oranges anymore fergawdsake. The OC is just another part of the teeming LA megaopolis. Ventura County might escape that fate if the housing bubble pop is large enough. Still, the traffic is miserable and there's no will to stop it from getting worse.

Latest Bit O'Theater

Our subject thinks a quick comment about his latest debt laden scheme will fire up the page views. 36% interest only loan, 6 months with a 10% surcharge at 6 months; $4500.

ANALYSIS: 6 pmts $150, 1 pmt $4950. Effective rate 60%.

Now of course Casey didn't really do this.. A stunt to build traffic, nothing more. Odds on after "reading the comments" he'll claim to have reconsidered. Pretty lame.

Unwrapped

I don't want to be a Shadow Earth to Casey's Amber but people have been asking for summary comments so they don't have to wade through and/or add to his click count so I'll up postings. Play nice. This means some scrolling as multiple threads will be active at the same time and really, nobody needs to know that he's an a$$hat or that it is all a scam, etc. That said, making fun of Jettas and other Gen Y epicaricacy is always welcome as is Baby Boomer Bitchin'. Jump in.

So, his illegal attempt to wrap the Utah house unwrapped. My take:

Robert Coté
December 8th, 2006 at 8:05 am
Wow, who saw this coming? [raises hand]

What would my morning be without my daily Sputnik? That damn cat owes me a few keyboards; coffee, beer sprayed all over the place. Thhhhpft. Hey, I think www.dailysputnik.org is available.

Anyway, let’s play good news/bad news. Good news, your conveyance wasn’t probably legal. Bad news, lawyers cost money. Good news, the agent isn’t owed the comission. Bad news, good luck getting it back. Good news, Utah isn’t too far to drive. Bad news; uhhh Jetta. Good news; the blog has an interesting topic. Bad news, not all attention is good attention. Good news, with so many actors the pentultimate courtroom scene is liable to resemble “What’s Up Doc?” Bad news, you’ll be playing the Striesand character and the judge won’t be your daddy.

Well enough, off to “work.” Got my tea (40 bags, 99 cents Trader Joes 2 for1), got my cup (free, some healthcare client promo), got my thumbdrive ($9.99 1Gb Frys), got my new office (TuffSheds $40/sf including granite countertops), got my laughs for the day and a new story to follow. I smell a roadtrip!

December 8th, 2006 at 8:51 am
It was so obvious I didn’t even bother to explain previously. The Utah “buyers” were in with the agent. The agent got a few percent and the “buyers” got the rest as cash back at closing. Sweeeet. Best part is they knew the wrap wasn’t binding. They got their money, got to live there for a few months and left Casey holding a bigger bag. Hey Casey, wanna buy some sweeeet tranches from Ownit?
----

Everyone understand about Ownit? The mortgage broker industry is bening killed. No, not dying, murdered. The secondary market is cramming back "bad" loans they know the originators a cannot cover. It's like forcing someone out of a poker game because they cannot match the raise. No split pots, just cover the bill or die. Good for the secondaries, bad for the brokers.

At the very least, if you laughed at the "What's Up Doc?" comment, tell me. Feedback will help determine future post content.

Mortgage & Housing Worksheet:

Robert’s Way Too Complicated Mortgage & Housing Worksheet:

1. How much do you make? $_ _,_ _ _.00

2. How much do you really make? $_ _,_ _ _.00

3. Is the difference between 1 & 2 greater than 10%? [y/n]
3a. If yes; forget it, rent.
3b. If no proceed to step 4.

4. Multiply #2 by 3.5 (4.0 in California). @2×3.5= $_ _ _,_ _ _.00
4a. This is the most home you can afford.

5. Is the median in your area 50% more than #4? [y/n]
5a. If yes; forget it, rent.
5b. If no proceed.

6. Pay off at least one car.

7. Pay off ccards and student loans.

8. Collect 3yrs of tax and employment records.

Congratulations you can now apply for a 30 year fixed rate conventional mortgage.

9. Any interst or questions about other types of mortgages? [y/n]
9a. If yes; forget it, rent.
9b. If no; continue.

10. Shop for the lowest fees and rates.

11. Go house hunting with your prequal letter in hand. Be careful to keep the sellers agents from smearing the document with drool.

12. Is there any doubt whatsoever in your mind that the sellers agent is not your friend? [y/n]
12a. If yes; bend over and pray they at least use vaseline.
12b. If no; continue.

Congratulations, you are a homeowner.

Oh, Alright Let's Talk About Casey

That silly performance artist seems to have our attention. As we all know for these types of personalities it isn't about good attention just any attention. Unfortunately that makes us enablers and his blog also gets so edited that any useful information is expunged. I also don't want him distracted from rescuing my money so let's talk about the whole thing here where there are no adds or agenda.

Save the Electrons

[_] Excellent post
[_] Whatinthehell are you blabbering about?
[_] I agree [_] Think you are drinking the koolaid.
[_] Unfortunately you cheerypick your anecdotes
[_] The volume of data precludes usefulness going forward.
[_] Too much data not enough analysis
[_] Your conclusions are leap from what you demonstrate.
[_] The plunge protection team will save their sorry butts
[_] The greatest story never told contnies to confound the nattering nabobs of negativity.
[_] Keep up the good work
[_] crawl back under whatever rock ...

Personally I'll wait for the posted data to be revised before believing anything.

Calendar of Events

January scary
February worry
March of the Lemmings
April Fools
May but probably won’t
June swoon
July to die for
August not so robust
September to remember
October all over

Golf Courses = Racism?

Once again if look hard enough everything is race based:
http://magazine.uchicago.edu/0612/investigations/golf.shtml

"[D]evelopers have turned to exclusionary amenities, which remain unregulated. The amenity of choice for the last two decades has been a residential golf course, Strahilevitz believes, because “golf participation functioned as a better proxy for race than income, wealth, or virtually any other characteristic.”

I have been told I am white. I live on a golf course. I bought in the 90's.

Here is why I bought:
Lot size. Other neighborhoods offered 1/4 acre or far less.
Quality of construction.
Early 1990s price squish-down" that made much better properties only slightly more expensive.
Land-use assurance. Golf courses don't go smart growth" or "new urbanist" or "transit oriented development" or "blighted urban upzoning" or ...
Taxes. No HOAs, no assesment districts, no Mello-Roos.
Privacy/traffic. Cul-de-sacs and winding tertiary dendritic narrow roads.
Potential for retained value/appreciation.
High civic participation.
Good schools.

Yep, racism just oozes from my list. And I'm sure that if someone of color had offered $100k more at the time it would have not mattered because what was impotant wasn't the green but the black/brown and white.

The author mistakes cultural factors for racial considerations. That makes them the racists in this situation.

Political Fallout

"__________"


"...the core goal of conservatism is to conserve the existing power structure."

I consider myself sympathetic to what was called conservative and I'm getting really tired of it being associated with the current Republican administration. Conservative is not deficts and spending. Conservative is not foreign adventurism. Conservative is small govt, constitutional authority, devolution of powers. Rightfully decry the current and impending power structure but please don't involve conservatism in the process.

Recall a time, ancient in the current political cycle but recent in the history of modern democracy; "The Conscience of a Conservative" by Goldwater was one side and JFK another. Today JFK couldn't even get the Republican nomination because of his extreme conservative positions.

What we have now is capitalism running ahead (evolving faster) than its democratic checks and balances in the field of economics. To compound the error we have politics outrunning its traditional constraints.

Creative Exurban Taxation: Gasoline

Excise taxes on vehicle fuels need to rise. This because inflation errosion and mission creep under funding are stressing the various trust funds. About 10 cents per gallon equivalents would be about right split evenly between States and Federal. I'd very much like to see the Feds offer to reduce the Fed Excise component 1 cent for every 1.2 cents of State increases up to say an 11 cents increase combined.

These are not sales/consumption taxes. Fuel taxes are a convienient form of use fee. They aren't perfect nor perfectly fair but they are taxes after all. I've no truck against shifting to other forms of use fees. The "gas tax" is simple and difficult to avoid. Most alternatives have the flaws of expensive to implement and subject to much political distortion.

What higher gas taxes will not do is anything to address the externalities Mankiw posits. Eurpoe has higher gas taxes and still sees the same general trend towards POV mobility choice. I am particularly enraged by the budgetary argument. These are TRUST FUND monies. Even now at both the state and Federal levels that trust is being abused and Mankiw advocates even further errosion. On the economic front mobility = wealth. Mankiw thinks that we can discourage mobility and become wealthier for it. I am not convinced.

Changing the nature of these use fees traditionally used to cover internalized infrastructure costs to one of a new general tax subject to state and federal whim is extraordinarlly poor public policy unless there's been a change in the trustwortiness of our electeds that I've missed and Mankiw has discovered.

Bucolic Pre-Planner America

A Craftsman movement would be great but not possible in today’s political environment. Planners will not allow 1100 sf homes on 1/4 acre and back alley services. Planners will not allow wide boulevards and muncipality mantained tree belts. Planners will not allow neighborhoods or communities to develop over time organically and naturally without their guiding hand. Nice but not possible unless we first kill modern planning.

Planner Victim? Deserving Idiot? Realtor Fraud?

http://www.venturacountystar.com/vcs/mo/article/0,1375,VCS_167_5032952,00.html

You gotta love these. Buys in a ridgeline near a major freeway interchange about land zoned for major retail for over a dozen years and gets a shock when major retsail is built.

Excerpt:
"The view from their hilltop home is much different today than the one they paid extra for in 2002. It went from sweeping views of the countryside to neon signs, concrete walls and lighted parking lots."

"The Realtor told us they didn't know what was going to go down there. If we'd known, we probably would have looked around somewhere else,"

What is Urban? Rural? Exurban?

5) In responding to Astrid, who said "Is .1 acre SFH really better than townhouse with good sound insulation and decently planned parking space?"

I replied: “No question. First 0.1 acre is a whopping 4300 sf. 40x100. Not suburban except in the minds of the planner classes.”

TOLurker expands and asks: My house sits on a lot exactly that size and it is considered a suburban lot around here. It’s not inner city Toronto, where they typically have houses on 15’ wide, 20’ lots. Even 12’ lots. 25’ is a big honking lot in the downtown core. So, if my neighbourhood densified, you could fit two houses on one lot and double my neighbourhood’s density. (which they more or less accomplished with all those stinking 30 storey condos. I would have preferred no high rises and lots of 20’ lots.)

Toronto is a bit of an exception eh? Even for Canada eh? We can try to work the margins and provide both an efficient and desireable environmentwith careful density planning. God is in the details. In the US the extent of careful density planning involves changing 16 DU/ac to 20 DU and approving the development with an exception to the city's General Plan. 10 DU/acre doesn't so like a lot. It is also 19,000 persons per square mile. That's a high school, two middle schools and 6 elementray schools. That's 120 of your 640 acres in that square mile. Roads, fire stations, shopping, commercial? Once the gross popualtion density is considered those 10 du/acre don't look so suburban anymore.

No Commentary Necessary

Exurban Energy

4) “What this means is that Kunstler has the entire end of suburbia as we know it exactly wrong. Higher energy prices will spur new energy efficient construction and demand for less congested (more) freeways and erode support for the cenurbs as jobs move to where the people live not vice versa.”

TOLurker expands; "Certainly higher energy prices will force new construction to be more energy efficient. (I’m all for that). But aren’t high energy prices connected with recessions (in the short run) which will kill new construction? If people facing $5 gas demand less congested freeways, will they, hurting in this recession, vote the tax increases for new and additional freeways? Don’t more freeways eventually result in more kilometers driven, more cars and more congestion? What is energy efficient construction anyway—are you referring to the buildings? Or the layout of the cities? Because I think the latter is just as important in reducing energy use as the former."

Building NEW energy efficient is easy and justified. Retrofitting outmoded cenurbs is prohibitive and doesn't pay. The biggest POV energy thief is congestion. I see a new under the radar movement that understands this. A recession reduces congestion; a buffered system to some extent. In truth it just buys us some time to fix the problems.

I think you are incorrect as to urban development patterns on the old fashioned density intensity mixed use modal being energy efficient even with new construction materials and methods. I'd like to hear your thoughts however. Me, I see with one exception the cenurbs and exurbs being similar in gross energy consumption. The exception? NYC which "reports" some 30% lower energy consumption per person than any other US city. That's just too extreme to be anything other than a difference in reporting.

ARM Twisting

3) “When the ARMs start twisting it is the cenurbs that will see the greatest impact not the exurbs. Transit costs typically increase much faster than general inflation and marginal ridership decreases in poor economies.”

TOLurker asks; The cenurbs will have greatest impact because of the ARM time bomb knocking out marginal home owners, or the cenurb TRANSIT SYSTEMS get knocked out by the crap economy? Because I’m sure the exurb marginal ARM home owners will get screwed, too, if not worse.

A little of both. Remember, the cenurbs had only recently and only statistically marginally demographically improved in the 1990s early 2000s. THe cities are going to have a cash crunch and transit/transportation is a likely victim. Without those continuing investments the reasons people were drifting back will go away. There are a lot of compromises with urban living, not a negative, just a consideration. A general recession will unfortunately change a lot of the components; transportation above but also crime rates and costs of living. An economic contraction will cause people to "age in place." That means the stream of younger people constantly replenishing the people who marry and start families and move to the 'burbs will slow. Then there's the last 90 years of exurban diaspora. This slowed in the 90s-00s but will re-acellerate. And college is on the cusp of major changes; not good for the Bostons of the nation. Non of these are urban fatal but enough small cuts and you can still bleed to death.

T-Shirt Suggestions Requested

HARM at partick.net andI need T-Shirt suggestions.
—————————–
Housing Checklist:
[x] Bucket of Money
[x] Box of Stupid
[x] 6% for Realtor
—————————–
A House is a Home with a HELOC
—————————–
Ask Me About My Equity
—————————–
PITI Me, I Bought in ‘05
—————————–
Broke is the New Paradigm
—————————–
My House Has Achieved A
Permanently High Payment
—————————–
McMansion
McJob
McScrewed
—————————–
My ARM is Bigger than Yours
… and It’s Still GROWING!
—————————–

Bubble "Goodliness" vice "Truthiness"

“As to the housing bubble; The housing bubble is a good thing. It is a voluntary mechanism to raise municipal revenues and assures more efficient use of existing housing stock thus reducing sprawl and stimulating the economy.”

TOLurker comments: More efficient use of housing stock – because people double-up in a house? More people in fewer houses? I thought that happened in a recession when young’uns move home and you have more housemates, intergenerational families under one roof. Last I checked, the housing bubble was exacerbated by restrictive planning policies demanding low density versus high density, a lot of speculators flipping empty houses (and causing more houses to be built than there is real demand for) which will (has?) result in many never-unoccupied houses in exurbia.

There's a bit of, okay a LOLT of tongue-in-cheek here. The housing market is indeed voluntary even as it is manipulated but those restrictive urban policies IMO exacerbate the bubble by pushing unnaturally high densities not low.

Recessions Hurt Transit

TOLurker asks several involved questions. I will use these spaces to address them.

I said; transit saw its’ highest usage in 40 years at exactly the same time gasoline was at its’ lowest inflation adjusted price ever. Real transit advocates should be pushing for cheap gas but their emotional desire to punish autos in a misguided belief in a zero sum game and will instead continue to shoot themselves in the foot.”

TOLurker asks; Why? Could this be directly a cause of a booming economy and more commuters, rather than low gas prices directly equals an increase in the number of transit users?

Acouple things come to play. People can only afford effective transit in good economic times. A recession is a qquadruple threat to transit. First as you note, fewer users. This means the same fixed costs and reduced incremental revenues. The 11th rider on a bus is nearly free to service, their incremental fare no matter how small is still above the average of the original 10 riders. Second, People don't have either thee time or money to utilize transit unless there is a good economy. Third, for the same reasons taxpayers are less willing to tolerate the extremely high expenses and inequitable provison of transit when they feel a squeeze. Finally, transit is slow and resistant to reducing costs thus a spiral of reduced services hetrodynes into reduced ridership and the cycle reinforces.

Higher -energy- prices are also a variable cost of transit provision. Since transit users pay none of the capital costs and a fraction of the operating costs, 1.4th to 3/5ths generally, a rise in energy costs disproportionally squeezes transit prices. On a cost basis transit and POV are a wash but that isn't the problem here. A 20% incrrease in fuel costs for a POV is something like a 5% increase in out of pocket costs but if passed on a 20% increase in transit energy costs would be a 15% increase in fares if actually passed on as increases. Transit being extremely elastic vice POV the 155 is usually delayed an rather expressed in delayed expenditures, reduced service, etc.

Hopefully this will stimulate the discussion. It is by no means pontification or tablets from the mount just my resonable take on asubject I know a lot about.

Not Peak Oil Again.

I've examined the reports of the last 148 years.

Cantrell II has -potentially- more oil than the Peak Oilers said could ever be found.

Jack II has -potentially- more oil than the Peak Oilers said could ever be found.

Recent extraction technologies have added to useable reserves more than were ever considered possible.

Peak Oilers don't get it.

VIRTUES

"A virtue is an habitual and firm disposition to do the good. It allows the person not only to perform good acts, but to give the best of himself. The virtuous person tends toward the good with all his sensory and spiritual powers; he pursues the good and chooses it in concrete actions."

No one was interested in the deadly sins or spiritual (heavenly) virtues so this is just to close out the subject. From the Catholic Catethism above it is self explanatory especially for my regular readers who display extraordinary accumen.

The question remains: Is it enough to say?; "I think it is time for me to sell." or is it necessary to say "All the signs I see indicate this is a terrible time to own real estate."

Is there a moral obligation to let people fail?

The Seven Hevenly Virtues

Things won't always be this bad. thee bloodhoundblog won't be around much loonger with his 21 reasons why Phoenix is special. The Bhuddist Realtor of Sacramento (delicious irony that) is already prursing other exciting prospects. The ethical Realtorslike Jim the Realtor of NorSD County are dutifuly reporting the truth. So, with the Seven Deadly Sins in full force but crumbling what are our options? There are two. roughly secular and spiritual. First the spiritual:

Ethical Action on the part of participants. From:
Truth - Truth is a comprehensive term that in all of its nuances implies honesty, accuracy, sincerity, integrity, and reality.

Respect for the life investment people are making. From:
Love - A deep, tender, ineffable feeling of affection, devotion, and/or compassion toward a person.

Courage to tell the truth when all around are lying.
Courage - The state or quality of mind or spirit that enables one to face danger, fear, or change with self-possession, confidence, and resolution; bravery.

Expertise and the skills to efficiently employ the best practices available. From:
Wisdom - Knowledge, and the capacity to use the best means for attaining the best ends; good judgment.

Creativity because a shifting moral and economic ground requires it. From:
Creativity - The ability to produce through artistic or imaginative effort, characterized by originality and expressiveness.

Compomise to achieve best outcomes for all.
Tolerance - The practice of recognizing and respecting the beliefs or practices of others.

Independence, beholden to none. From:
Freedom - The power to act, speak, or think without externally imposed restraints.

The Seven Deadly Aspects of the Housing Bubble

1. Confusing housing with lifestyle consumption. Lust (Latin, luxuria)
2. Aquiring more than is healthy. Gluttony (Latin, gula)
3. Conflating living costs with investment. Greed/Avarice (Latin, avaritia)
4. Money for nothing. Sloth (Latin, acedia)
5. TBD as the blame game has barely started. Wrath (Latin, ira)
6. Keeping up with the neighbors. Envy (Latin, invidia)
7. Mistaking ownership for personal validation. Pride (Latin, superbia)

Up next the Seven Heavanly Virtues and the Seven Cardinal Virtues of The Housing Restoration. Yes, The Housing Restoration. You heard it here first.

All around the equity ladder
The FB chased the HELOC

The broker thought ’twas all in fun.
Pop! goes the loan rate!

A penney for a pergraniteel top,
A penney for a bidet.
That’s the way the money goes.
Pop! see equity fly away.

Up and down the City Road,
In and out of the marketplace,
That’s the way the money goes.
Pop! goes the tax base.

Half a pound of tuppenney Pergo,
Half a pound of Pella,
Mix it up and make the flip go,
Pop! goes the FB fella.

What's truly amazing is that the 16th century original warned of the dangers of pawning ones' assets for prolifigate spending habits.

See Whaat Happens?

The local rag of plausible deniability has this article:

As housing prices in Ventura County are going up, enrollment in local schools is going down, and that means less money for education.
That's because most school funding is based on enrollment, so if schools have fewer students, they get less money from the state.
"As we're in this slow decline, it's difficult to balance the budget," said Charles Weis, Ventura County superintendent of schools. "It's difficult to keep teachers and programs in place."

Countywide, enrollment dropped by 1,500 students last year, Weis said.

Full Story: http://tinyurl.com/pg558

Of course there's a whole lot more than just housing prices but it is a piece of the picture.

Holy Freakin' Fresno

I'm in Fresno helping a friend execute an estate. Among the things necessary is vacating the current house and finding a rental after convincing him not to buy. We drove through just two small neighborhoods in the NW (Chance/Perrin) and there were 5 within 5 minutes. 3/2/gar $1200, $1450 w/gardener & water. That tells us the reversion to 120x rent is a 40% haircut. Nice Timeseries: http://www.consrv.ca.gov/DLRP/fmmp/time_series_img/fresno.htm

What Where When?

Robert, what area do you think of when you think of investment property?

Investment property:
1. Unrecognized value.
2. -Potential- for appreciation.
3. Proximity for personal oversight.
4. Stable community.
5. SFR/Townhouse/4plex. A personal preference.
6. Pool of renters.
7. Rational land-use regulation. Some would call this a personal foible but I call it putting my money where my big mouth is and voting with my feet.
8. Nowhere near transit.
9. No HOA.
10. No Mello-Roos.
11. No pending plans for rezoning, a freeway, etc.
12. Defects are okay but no unkowns.
13. There’s about a hundred “second tier” factors as well.

So, with all that in mind an casting out from my location the conclusion is obvious. I cannot find a property in the US that I personally consider a worthy investment property at this time. Spring ‘08and I’ll bee looking at maybe San Luis Obispo, Santa Clarita, Simi Valley, North San Diego, Big Bear.

Places I don’t consider; core urban areas, large metro conurbations, high end (Santa Barbara, Orange County), bad weather communities (Bakersfield, Ontario).

Places I wish would open up; Coastal California, Cape Cod, low density Gulf Florida pennisula, the next Sedona.

Do I paint a picture?

Bubble? No!

It isn't a Bubble, it is a pustule. Feel free to try for one upmanship.

"There is no way you can justify the math."

"Christopher Thornberg, who says the Southern California housing market is a bubble beginning to pop, has left UCLA Anderson Forecast to strike out on his own."

"Look at what your house was valued at three years ago and what it is now. Is it really worth 70% more? The answer is no," he said. "There is no way you can justify the math."

http://www.latimes.com/business/la-fi-thornberg15aug15,1,4462297.story?coll=la-mininav-business

Dumb Money

"Rhetorical question: Is private equity "dumb money"?"

Does Fortress taking Intrawest private for a 50% premium answer the question? All that debt won't go away but all the asset valuation backed by resort area land holdings will. This isn't a deal that has to happen unlike the Homebuilders who had their buyback programs to prop up the price while the insiders cashed out of Lyons who by going private can report awhole lot less. When Intrawest is carved up and sold off for debt repayment things will get interesting. There seems to be some weird bet that the Vancouver Olympics will enhance their BC holdings but I want the name of the bank that okayed this white elephant deal.

Quote-O-Note

"How about a "hard-soft landing?""

- PIMCO's Paul McCulley

FBs Need to Grow Up

It would be immoral and a hindrance to their development as responsible citizens to intercede and shelter them from facing the full consequences of their actions.

The problem with compassion in this case is that it isn’t compassion. I have an infinite supply of compassion. Anyone with a modicum of humanity can manufacture more at any time. No, what people are trying to pass off as compassion is actually spreading pain to those of us who don’t deserve it. Money handed to stupid people or even people with money problems is no more compassionate than give heroin to addicts. Worse, all the offers of compassion to date have been in the form of people offering these FBs my money. It is my money and calling its forcible confiscation “compassion” doesn’t make it compassionate. Look into my children’s eyes. Tell them we cannot visit grandma this year. Tell them they cannot afford the “free” California College education they earned despite being accepted. There, tell them about compassion and needing that money to resuce somebody who paid 4 times as much for a house as they could afford thus pricing these children out of their childhood communities when they grow up.

Go ahead, be compassionate. Just don’t call anything less than the necessity that they face the consequences compassionate.

Inflection Point

Nothing like disaster staring you personally in the face to sharpen the mind and narrow focus to the important facts. These things are “brainers.” The problem is so many people sleepwalking or in denial.

It is important to remember that housing is priced at the margins. That’s also why the bubble won’t be as injurious to the general economy as some here believe. Imagine getting a letter in the mail saying you won a million dollars. Next day you get another letter saying a mistake was made, you only won $400,000. Did you just lose $600,000? Only if you went out the night before spent it all (MEW). [Calculations below.]

I’m not too worried about the coming and needed recession even if it is late and thereby harder than necessary. The jobs that will be lost are largely parasitical and not ultimately productive nor are they the jobs we wish to have created in a modern economy. Obsolete jobs are best cleared out. A recession will ease our crushing immigration pressures here in California as well. Schools are already talking about closing buildinngs, saving billions. Lower taxes, less crowded schools; what’s not to like? Maybe the national psyche can find enough breathing space to heal as well.

How deep will be the declines? Anyone will be able to justify anything from 0% to 80% with careful work. Small Midwestern stable communities that missed the bubble will drop in real terms with inflation but prices will stay flat. Certain problem properties in wildly speculative areas, a mudslide in Califorina for instance will see 80% declines. A brutal winter or two in New England with home heating oil prices or a brutal summer or two in Phoenix with home cooling prices could literally leave empty unsaleable houses. That’s 100%+ declines where governments may be forced to pay for dispensation. But all these are extremes. I’m guessing 25% on the national median which is actually about 35% on any one house same sale and 40% in the bubble zones with some truly spectacular outliers. Why the small difference twixt BZ and normal America? The problem is/was a nationawide credit/lending issue not local real estate issues.

Just like any herd behavior at infection points and changes in direction individual chaos overwhelms underlying trends. There are still large numbers of sheeple in the Euphoria category. Witness the continuing negative savings rate and massive MEW amongst some while at the same time people like me have recently sold off every non personal piece of real estate.

At the top of a cyclical process this noise in wave terms is called froth. Hmmm, who in the highest levels of economics do we remember using that term? "Although a 'bubble' in home prices for the nation as a whole does not appear likely, there do appear to be, at a minimum, signs of froth in some local markets where home prices seem to have risen to unsustainable levels." - Alan Greenspan 06/08/05.

Likewise at the trough the disorderly behavior of individuals will in wave terms be likened to churn. This is indeed the point of maximum oportunity. Those of us with forward thinking perspectives will be able to take advantage of those still panicing.

I commented back in April on the closer resemblance to physical waves ratrher than mathematical waves: http://exurbannation.blogspot.com/2006/04/why-are-home-prices-still-going-higher.html

By my estimate $2.5T in MEW is unsupported by reasonable asset valuation. In total somewhere between $7T and $9T in phantom equity is exposed in any retracement to the mean. An orderly retreat will allow inflation to eat away much of this. A decline in the dollar may result in a disproportionate amount of pain to be taken by foreign investors. No matter how the pain is spread, there will be consumer pain. Likewise because of govt spending policies that resemble the proverbial cricket in summer we can expect massive deficits and even larger tax inceases. I hope everyone likes their neighbors because nobody is moving for a very long time. The new immobility class has moved in to stay.

Let's Go EV

Or not...

Oh dear. Where to begin? Okay, first we are comparing brand new, cutting edge, designed for efficiency, small, niche vehicles to the 8.8 year old average US automobile (23mpg) in this efficiency comparison. Second, don't fall for the lie of omission in comparing electricity to chemical fuels. Only 31% of the energy used to make grid electricity actually gets to the customer. When that electricity is used to charge a battery this can be 60% but never less than 20% losses. So, getting useful work out of an EV is about 25% efficient. the claims of 0.3-0.5 kW-h/mile is 1000-1700 BTU/mile. For conventional vehilces 1.58 kW-h/mile is 5,400 BTU/mile or 23 mpg as calculated but the equivalency ignores passenger loads. While there is no definitive information it is highly likely that EV useage resembles the average occupancy of the commute segment of road users; 1.2 passengers while the US average is 1.57 passengers.

You see where I'm going with this, EVs are not anywhere near as efficient (yet) as their proponents claim. Within the next few years as solar comes down in price and/or increases in efficiency and as technology improves maybe but not yet. Oh, and it is important to note that a huge portion of the claimed transportation efficiency derived from EV designs can be applied to IC primary movers; low cD, narrow tires, limited capacity, range, advanced materials energy recovery, etc.

In short, every bit of advancement helps but there's no magic bullet here swithing to electricity from hydrocarbons.

Californians use 414.4 gallons of gas per capita per year (8th lowest in the US). 14.5 billion gallons. How much electricty is that? 530,982,417,478.593 kW-Hours. California can generate at present 46,000 Megawatts. We'd need and additional 61,000 Megawatts of energy to make it into the battery. Let's not mince words, we'd need 3 times as many power plants as we have now. Too hard to grasp? How about 28 new Diablo nuclear power plants (2x9.5 million mW-H reactors). Actually more like 40 Diabos. [insert lame ; "better the Diablo you know" joke here] And what would that cost? Nukes cost about $2000 per kilowatt to build. $122 Billion dollars. How much does that gas we Californians guzzle cost? $47 billion. Surprised? Gets better. Anyone here doubt that an order for 40 nukes could garner a volume discount? Yeah, like half price. A 50 cent per gallon surtax would pay the capital construction costs in 7 years. And what would the electricity cost? Remember we don't have any capital costs to amortize. 1.5-3 cents likely. We pay 14 cents now.

We could do it and it would make sense but we won't do it because of a combination of boiled frog syndrome and the cognitive dissonance of the eco-warriors.

How FB can you be?

A fellow real estate investor is in a bit of a pickle:
http://www.realestatejournal.com/columnists_com/investorprofiles/20060727-hodges.html
Select quotes:

"...took out an adjustable-rate mortgage (ARM) with an initial 10.3% interest rate that will increase after two years... believed would be just over 7% but was actually 10.3%."

"Home appreciation could save him eventually, he says, if potential development of a year-round resort at Malans Peak and a generally strong market continue to boost Ogden housing prices."

"[H]e is marketing the home as for sale by owner."

And my favorite:
"in Ogden [Utah], there is little room left to build new housing near the mountains, where the home is located."
Happy Trails Mr. Klein.

Divorce 2008 Style

Guy talks to his coworker in 2008 about his recent divorce:

"Man, I just finalized."

"Tough times. I know, I've been there. How'd it turn out?"

"It was vicious right to the end. She got nothing and I got the house."

"Sh!t! You got screwed. You needed a better lawyer."

"I know. Trouble is hers was a former Realtor®."

[Nodding] "You never had a chance."

A Difference of Opinion

I was wondering if the Arizona Republic would be interested in running a story in the Real Estate Section over this little difference of opinion.

“Local Realtor® reiiterates claim that anyone who dares believe Phoenix houses are overpriced is a Brownshirt Nazi. Greg Swann, ABR, CBR, CRS, E-Pro, GRI, Realtor® and Designated Broker for BloodhoundRealty.com again repeated his description of internet bloggers that are asserting that there is a housing bubble in the Greater Phoenix are were “Brown Shirts or flying monkeys.” Attempts to contact Mr. Swann at his brokerage went unanswered but representatives of the JDl were quick to…”

Mr. Swann you’ve clearly violated both the ethical guidelines of your profession and the bounds of decent human behavior. It really is time to let Phonecians in general know just what your views are. An article would give you a chance to defend your repeated character assinations. A letter writing campaign to the Op-Ed pages would also work as the editors upon recieving hundreds of submissions from all over the country would certainly result in a requst for you to comment. Worst would be the insulted parties being forced to buy advertising space where you would be afforded no voice. Of course there’s always peer review where the local board of fellow Real Estate professionals can be calleed upon to rule on your ethical behavior and how it reflects on them. Then there’s the alternative, use this as a learning experience and apologize for calling me and the many others out there Brownshirts.

Quote-O-Note

"There never was a bubble, and there isn't a bubble now. We don't see a bubble in the future."- Larry Murphy, president of SalesTraq, which monitors real estate trends in Las Vegas.

WWTFFD?

Someone observed: "The Founding Fathers wouldn't recognize the place."
Another anon someone retorted: "Yes they would; as the place they rebeled against."

To this I add; Time for an event long overdue and wholly endorsed by the Founding Fathers; a Constitutional Convention.

The "rules" were deliberately left vague. I suggest the following:

No delegate shall have ever held Statewide or Federal Office. Indeed, aspiration to such shall be cause for suspicion.
Any delegate shall not be currently under due process procedure or conviction of any felony.
Delegates shall be of legal age as alcohol will not only be served but in some instances be mandatory.
Wives, mistresses, boytoys, etc. are not Convention expenses nor deductible.
The new 0th Amendment shall address the right to privacy explictly limiting any government(s) going forward.
Federal taxes are for raising necessary revenues. Nothing else.
The penalty for utterance of the word "fair" in the upper house shall carry the sentence of death at a minimum. No other sentencing guidelines are permited.
Other than that, no air conditioning or heating or security. Go boys (and girls).

Auger In?

I used to think a nice cleansing price decline would be enough. Now I’m entertaining the necessity of a “fall down, go boom” type of event to just set the stage for a merely painful protracted contraction following. I am honestly worried that papering over the “Event” (my new term) will only make things worse. I thought we could avoid The Event; steady increases in interest rates, gradual tightening in loan requirements, natural end to the business up cycle, public awareness. Now I’m not so sure.

sunsetbeachguy says it even better:

Hey Robert, I think all bears are struggling with what you mention.

Even housing bears that disagree with each other share that concern.

I think we may be in for a harder ass-whupping than we anticipated.

But that is OK, because my beating will be much more tolerable than an Fb’s.
------

For the record I am not a bear. I'll be out in front on the upside. I just don't see an upside anywhere in the near future and don't see any reason to see an upturn in a timeframe measured in years. The next 6 months are a time where we discover how bad things are. That will enable me to predict how bad things could get.

Bailey Acres

Aesthetics is the last resort of intellectually superior
urbanists who lack the FActs with which to advance density.

Supposed areas with the most sprawl:

1. Riverside-San Bernardino, Calif.
2. Greensboro-Winston-Salem- High Point, N.C.
3. Raleigh-Durham, N.C.
4. Atlanta
5. Greenville-Spartanburg, S.C.
6. West Palm Beach-Boca Raton-
Delray Beach, Fla.
7. Bridgeport-Stamford-Norwalk Danbury, Conn.
8. Knoxville, Tenn.
9. Oxnard-Ventura, Calif. <------ ME!!! That's ME!!!!
10. Fort Worth-Arlington, Texas

Cities with the least sprawl at least according to the SmUGLERs:

1. New York
2. Jersey City, N.J.
3. Providence
4. San Francisco
5. Honolulu
6. Omaha, Neb.
7. Boston
8. Portland, Ore.
9. Miami
10. New Orleans

Source: Smart Growth America

More silly science available at:

http://www.smartgrowthamerica.com/sprawlindex/sprawlindex.html

Smart Growth is by definition the "smart" thing. "Good" planning likewise. Only the most close-minded transit advocate would allow the discussion to devolve to the point where people who disagree should become demonized.

Only SmUGLERS (smart urban growth lovers) and planners are unhappy with the current process. Everyone else is content to let evolutionary land use policies develop. SmUGLERs like all malcontents claim the -need- to change the status quo. Planners are merely pursuing their life goals of shaping the developed environment to their will. Recent trends in land use regulation, notably Napa and Ventura Counties in California represent the greatest threats to the NewUrb/NeoTrad/SmUG fad du jour of the "professional" planning community. Surely Napa and Ventura counties are effectively promoting the -claimed- goals of those planner driven marketing progroms but their failing is in their inability to promote the agenda planners assumed would follow from such programs. It should be noted that every single planner at the city and county level publicly opposed the passage of Ventura Counties' SOAR initiative and one of the most visible skeptics, Bill Fulton, is now on a city council.

The supposed benefits have been promoted to no end and the technical literature are filled with the measured failings. It is hubris in the extreme to think there is any substantial body of pro SmUG evidence or that there is not a large body of measurable SmUG refutation already extant.

SmUGLERs are generally anti-POV for reasons of either religion or demonization in order to advance a competing agenda. It is also important to expose what misguided Nurbists refer to as "evidence" of unwieldy conspiracies and roads cabals and evil capitalist plans . The failure resides in not addressing the many legitimate social and economic forces that were responsible for reshaping society over the same timeframe. These forces are actually easy to tease out of the fabric of 1920-1960 if one is diligent. Transit usage was falling, mobility was rising, transit costs were rising at many times an already high cost of living rate, POV costs were falling in both real and relative terms, etc., etc. The pervasive success of the POV to address unmet societal needs is the effect and not the cause of social pressures for a different urban model.

Recall that classic bit of Americana; "It's a Wonderful Life." It describes exactly how miserable the "company town" old style density could be. This is the reality of presuburbanamerica. Only planners and SmUGLERS pine for the days of pre- WW-II urban patterns. An excellent example BTW of the urban legend syndrome among the planning class.

The politics of SmUG are all about mixed use and close proximity. SmUGLers are instead griping about the -results- of government meddling in the development process for reasons other than their responsibility to community (safety, compatibility, etc.).

SmUGLERs neither speak with a single voice nor even with a consistent voice. Even SmUG is nothing more than the latest incarnation of previously discredited Nurb and NeoTrad and whatever came before that. It is a "given" in any discussion of planning meta-principles that urban advocates will attempt to continually redefine the discussion and their public personas as the previous claims are refuted, disfavored and exposed for what they are. Recent outrages such as Monster housing are only targets because they aren't on the agenda not because they are bad. On the contrary, newly constructed super homes are nearly unique in one, all important, municipal characteristic; They pay for themselves from the beginning. Requiring
neither subsidy nor tax breaks and also needing fewer infrastructure investments and fewer social service burdens, McMansions are the moneymakers of the zoning for dollars racket. More taxes and fewer burdens, this is the formula for running a city like a business. We needn't get into the moral implications just by acknowledging the situation. To harken back to another buzzword it turns out that from a community perspective McMansions are "sustainable" by all the enumerable criteria usually associated with that concept.

Everyone -can- live in a pleasant exurban community. We just cannot all live in the -same- community. We know what happens when we allow infill at the city level; San Fernando Valley. Infill, of course, being a central tenet of SmUG. We'd have none of the problems if the "cities" (urban nodes) in the SFV had remained discreet. When they all grew together into a vast continuous urbanscape the inevitable congestion and inability to provide new, adequate infrastructure became obvious.

I propose the following bumperstickers for the campaign to change the hearts and minds of the people before "we" change their lifestyles:

"Density; Even rats get it" "Smart Growth; Simple Solution" "Club of Rome
Lives!" "Save resources; help China" "LEMs = Apartheid" "Transit is
addictive" "Freedom = Mobility" "Invest in Nature; Sprawl" "Congestion
first, transit later" "Light Rail, watch the first step"

SmUGLers (Smart Urban Growth Lovers) don't really care about transit mode. They advocate density and transit. They place their relative value of natural open spaces over the well being of people. They place their emotional hatred of autos above the rational provision of transportation resources.

Sustainability has replaced Smart Growth. Same fish different wrapper.

The problem is that when the sides are aligned along "Change vs. No Change" the compromise always involves "Change." The advocates for change can always start with an extreme position and negotiate down to merely radical positions. No Change is stuck with principles and no way to negotiate without losing. Perhaps the answer is in the zoning that you dislike. Make requests for rezoning , exactly that. A potential developer risks losing the zoning intensity they already have when they request a rezone.

At least the NUTS (NewUrbanistTransitSupporters) are left to clean up the mess left by the last round of social agendaists rather than impose their mandates on those of us fortunate enough to escape the borders of their inhuman experiments on unwilling subjects.

Redlining

Redlining or Location Discriminatory Mortgages are paid for through higher general interest rates and thus have the effect of reducing housing affordability.

Man walks into a bank. Fills out a mortgage application. Banker says, "Oooh, too bad. If only the house were the one next door we could give you a better rate or more money. As it is you don't qualify." "What?! That's redlining! That's illegal!" "Nope, that's transit math. You see, banks are not private companies, we are required to follow some rules that are contrary to our best financial practices. Not to worry, we are still allowed to make a profit so our mandatory exposure is covered by raising other costs. In fact, if it weren't for our being forced to be overexposed for the house next to yours we could probably afford to loan a fair amount to both houses. You see son, this is a push-pull business. Prices respond to the differences in affordability."

Location Discriminatory Mortgages decrease affordability. Not only that, but LDMs are the tail wagging the dog. There is nothing in any enabling legislation at any level of government that covers preferential treatment for the purpose of assumed transit effectiveness.

LDMs and their cousin, Subsidized Unaffordable Housing (SUH), are attempts by government to do to the American housing environment what they did to American transit. Not too worry, housing is only the next target and it may not be too late to avoid the bullet. Government is currently preoccupied with doing to the education system what was done to transit and housing still has some time before more tentacles come to strangle home ownership.

This is a campaign of resistance to being socially engineered versus the forces of social engineering and is not really one of a contest of equal competing interests.

LEM qualifying locations are generally riskier choices based on historical data. LEMs are in effect rewarding poor choices. Now clearly this is a generalization and some LEM locations are going to prove good investments but if there are such indications then an LEM wouldn't be necessary since the property and purchaser(s) would qualify under the regular rules.

"Location efficient mortgage" is like "smart growth." Who would want a location inefficient mortgage or who would support dumb growth. Meaningless catch phrases, nothing more. Location discriminatory mortgages are the exactly descriptive phrase.

More than any objection to the actual policy I'm distinctly surprised at the willingness of people whose entire premise is supposedly fairness to run to unequal treatment as a first step when they agree with the intentions. I'm also wondering about the unintended consequences shoe that hasn't dropped. We in PAD know that government with good intentions ALWAYS results in unanticipated problems. Speculation; people will buy near transit, use more transit, pay less taxes to local government and eventually get cars. Result, normal traffic in a deliberately under-road served area with higher transit subsidies and lower taxable base.

Funny how the old VA loan policies that inadvertently used to favor new suburban housing were struck down as unfair by the very same people advocating this new version of redlining. (Red Line as in Los Angeles and Boston, etc.)

In case it isn't obvious, I know and I am willing to say out loud that LEMs are evil discriminatory mechanisms.

Easy Terms

Whatinthehell are these people thinking? They've got and ARM that will reset to levels they cannot afford. Don't blame Greenspan. His comments about the benefits of Adjustable Rate Mortgages were misinterpreted as an endorsement going forward when in fact all he said was they were really helpful in the past. Anyway, say you are the bank and you've got the fish on the line with an ARM and a nice margin that protects you from swings in the economy. These fish can barely afford what they've got now and they come looking for a way out. Well the only way out is a fixed at an even higher rate! They caannot afford that either. Indeed many will need to cough up some income documentation under the newer rules. Now they really don't qualify. They are going to walk out of the bank with the same loan they walked in with. Who in the world wants to give 30 yr fixeds to subprimes and no equity who can't cover their current lower payments? Sell and rent? Who'll give them a loan to close with? And renting? Rents are going way up with inflation and all the other things I've bloviated on about ad nauseum.

I hereby cristen these unfortunate house prisoners: The Immobil Class.

Private/Mass/Public Transport/Transit

I love mass transit. Mass transit makes a lot of sense. Mass transport even more so. It is public transit that I've pretty much given up on and then only in US type situations. For a counterinstance, as near as I can decode the transit math; Sweden public transit seems not only energy efficient and timely but beneficial to the urban landscape and environment.

I love airplanes private and mass transport. I love shipping both private and mass transport excepting ferry services that are just waterborne public transit. public and private transport via pipelines are also wonderful. Coal slurry, NatGas, water; doesn't matter to me, all generaly good ideas. I don't even mind public transit. I object to running an operation so sloppy that even bribes are not enough to change behavior, we have to resort to punishing alternative behavior as well.

Attention FBs

Heeeello US Homedebtors. Dr. Evil here. This is my son Scott, Number 2, various henchment, yadda yadda… I’m interupting your tedious blogging act-tiv-ities to explain my latest Evil® plot. It seems you people have foolishly played into my hands. Those papers you signed? Those loans are {air finger quotes} a-just-able. OooohOoooohOoooh, heeeeheee… cough, cough, hem. Excuse me. Now; These “a-just-able” loans are not the innocent shortcuts to no effort prosperity you were led to believe. Noooo, these a-just-ables are an Evil® international conspiracy designed to enslave you! If you are hearing my voice it is already too late! ALL YOUR Bases... er EQUITY ARE BELLONGING TO ME! Now for the good part, I am holding your mortgages hostage and you will pay me MORE. Yes, every month I will extort dozens of extra dollars. OooohOoooohOoooh, heeeeheee… cough, cough, hem. And who are we? This Evil® international conspiracy? {air finger quotes} “We” are your parents, your neighbors, your government. “We” be using your money to make sure you never get ahead ever again.

_pinky to corner of mouth, fade to black. We now return you to your regularly unfettered blogging.

Civic Update

Just bought a Civic. Paid cash. Stupid? Maybe. Let's do da math:

Price $20,000 In a 1 yr CD that would earn 5%: $85/month.

Old car; 17mpg. Civic 38 mpg.
$3.25/gallon 1100 miles per month. Old, $210. New, $94.
Difference $116/month.

There's more to owning a car including depreciation but 4 year old Honda Civics are selling used at 90%+ of retail new. I fully expect the price of a Civic to soar and used prices follow new prices up and down.

Update July 11th 2006

6 weeks and 3600 miles. We've been driving more than we thought and we've tried to put the miles on the Civic as well. So, repeating the calcualtion:

Price $20,000 In a 1 yr CD that would earn 5.4%: $92/month. (up from 5%)

Old car; 17mpg. Civic 37 mpg. (down from 38mpg)
$3.25/gallon 2400 miles per month. Old, $459. New, $210. (steady gas prices.)
Difference $248/month.

Looks like a worthwhile deal.

The Blame Game

You cannot talk a bubble down, it is an irrational exuberance. You cannot do something to deliberately pop a bubble. If bubbles were subject to rational forces they wouldn't become bubble. Therefor whatever popped the bubble was accidental/incidental and emotionally based. Therefor it was the Democrats who in their disgust with the state of current politics have tried to inflame the passions of Americans by trash talking the entire nation until some people here and abroad actually started believing their rhetoric. Yup, it was the Dems and their lapdog mainstream media buddies.

Alright you didn't like that one. How about:
The markets are busy finding the best use of capital. The stranglehold the Republicans have on the Federal govt has allowed the normal checks and balances to go unattended. The Reps caused the bubble so in effect the Reps are responsible for the bubble popping.

Personally, its all those damn Libertarians on their blogs. Speaking in calm clear rational terms, they have managed to dislodge the emotional content from housing with the enevitable result that people have woken up and are pricing rationally now.

Nope, it was big oil. Think about it. Who is raking in the big bucks? Who was getting $15 and now gets $75 for the same damn thing? Who isn't being blamed for the whole mess? Yep, big oil.

Nina Flipped that House. Palm Springs Sells!

Nina and her partners have closed escrow. She has a.... ummm.... "general" accounting of her profits. Unfortunately she's turned off by some criticism she's received in the past so she has turned on blog approval. If you have comments then this is the place. Personally I'm offended by the unwilliness to admit to the loss. Sure as heck come next April 15th she's going to list this little misadventure as a loss to the IRS, why not now? Anyway I'd like to hear your unmoderated comments on the saga and the responses we've seen. Her post: http://sittingprettyfinancially.blogspot.com/

Here is the final installment. We sold it and I’m pleased to report that we closed escrow last Friday. Here is the final tally:

$613,000 Sales Price – July 2006
$475,000 Original Purchase Price – August 2005
$138,000 Subtotal

Minus Costs:
$75,000 Improvements
$31,000 Agent commissions
$32,000 Total Proceeds

The monthly carrying costs (mortgage, taxes, insurance, utilities) are not included in these numbers. If you factor in these then you can call it a “break-even” venture. But we used the house & pool on the weekends so we maximized our dollars and enjoyed the time in Palm Springs.