Looking for Bottom?

It came up a couple of times in the past couple of weeks "this is the bottom of the housing market" or "Rebecca, do you think this is the bottom?"

the answer is, depends, probably on where you are. Here? No.
Here's the NUMBER ONE reason why: Unemployment is out of control.

Also consider: Delinquencies on mortgages are still growing, and in the previously "safe" Prime territory

If you're at all interested in economics, and have not yet added Mish's blog to your reader, you are really missing out on good stuff.

Also, where I live anyway, houses are still way too expensive to rent the money from the bank to "own" them.

Paul and I desperately want to move. Yesterday I saw a listing on craigslist that looked workable for a place we might want to live for two years or so (not longer-- it was too small for permanent roots) The rental listing is for $1700/month. Later the same day, I saw it listed on the MLS for a price of $499,000.
Everyone who's interested in housing and renting, bookmark this fun calculator.
I realize the calculator is an imperfect picture (also has lots of inputs for tax rates and whatnot, so I tried to use a best case scenario but your results will vary), but it does show that buying will not be better than renting at these prices ever, unless the house appreciates at 5%/year, and in that case it is better after 5 years. (I believe 5% inflation in house prices over the next 5 years is a fantasy scenario.) Without belaboring the specifics of this particular house:

• This is a big IF: how many people have $100K sitting around for that downpayment on a tiny little house like that? (not to mention closing costs and cash reserve for repairs and what-ifs) If they do have $100K cash, are they a new family that will fit in such a small house? (2/1, with 790 square feet) Are they planning on staying there many years to break even?
• Based on other homes prices in the area, my strong suspicion is that this has been priced "low" to generate bids upwards of the listed price so that will make these numbers even more ridiculous if I am right.

This sort of thing will probably hang on a little longer in the Bay Area, but it can't go forever. It's not possible to have a housing market where there are no entry-level homes that make any sense. Most importantly, job losses are not finished, and further job losses will hit homeowners with foreclosures, and will hit prospective homebuyers with less access to money and credit, creating further downward pressure. Deflation is a good thing in this case, as the current pricing levels are stretching people way too thin, and out of control inflation has caused terribly risky behavior.



What really matters
That being said, if you have found something and have the means to buy it and hold on to it, by all means, do it. Where you live is where you live-- it is not a financial vehicle.

If you can buy an iPhone the day before the new one comes out and the price of your model drops the next day, ask yourself: "yesterday, I decided this phone was worth X dollars to me, and I bought it. Does tomorrow's price drop mean I don't enjoy the phone at X dollars anymore?" If you can't live with that, don't buy. But there's no reason that tomorrow's price drop should change the fact that yesterday you said the phone was worth X dollars to you. Once you've made your decision, don't look back. Live in your home, love your phone, and move on. If you think your phone or your home is an investment, beware of your market right now.
And get ready to be stressed out all your life about things that are marginally outside of your control.

My house is finally on the market!

When I lived in downtown San Francisco, there was a little building crammed in amongst the others that always caught my eye. I mostly loved its garage doors and the quiet sense of mystery to it. Once or twice, I stood on a planter to try to get a little peek inside. (hi! I'm your stalker, building!)

Now it is on the market, and I'm quite sure someone wants to loan me 2.4 million dollars so I can run back up to the City. It's really the perfect property. Garage, downtown loveliness, but a quiet-ish street. Hello, Sailor!

another bad realtor, and also a good one (wait, the world is NOT black and white?!?!)

My post about the realtor(tm) and "creative" listing the other day drew a few comments. One from another couple who is in a similar boat, another from a friend offering a referral to his agent, whom he liked, and one, that I'd like to highlight, from a REALTOR(tm). Who happens to be my uncle.

Before I talk about that, though, I should mention that I got trapped in a conversation yesterday with a starry-eyed realtor, who emphatically and repeatedly told me, and I know this will sound shocking, "Now is a great time to buy a house." Oddly enough, every realtor (that doesn't know us) we've encountered in the past two or three years since I've started watching the market, has said "Now is a great time to buy" and frequently this is paired with some of my other *favorite* real estate platitudes "Houses will always go up" or "renting is throwing money away" or, and this was a San Francisco staple "Buy now or be priced out forever."

Thankfully, we did our reading, and didn't take the bait. We did actually qualify for way more loan than we even wanted (we told the mortgage lady that no, actually we didn't want that much, and she dutifully explained that it was best to maximize leverage), and had I not seen a glimpse of housing bubble, we could have ended up stuck in an upside-down mortgage right now.

Back to the point. Not all Realtors(tm) are bad. However, the huge (huge. really.) influx of real estate agents in the years of the bubble really diluted the pool with people who were badly educated at best, and in many cases just plain shady, trying to make a buck on the bubble.

Think about all the idiots who thought they were stock market geniuses because they were going to make millions on pets.com stock. oops. It doesn't mean no stock adviser is smart, it just means the good ones were lost in the noise.

And by that same token, anyone who tells me I should buy a house two minutes into a conversation? Also obviously screwed up. Without knowing my finances, how long I want to stay here, what family needs I have, my tolerance for risk, how much money I have and how much I save by renting... "Now is a good time to buy" displays a lack of understanding of, or a lack of respect to what ought to be a delicate, complex equation. And to me it really sounds like "Now would be a good time for me to have you buy a home, through me." Or, at all. Because housing prices are stalling and we need buyers to come to the table.

Which brings me to my next point. Part of yesterday's realtor(tm) conversation went like this:

Are you in the market for a house now?
Not right now.
What are you waiting for?
We're waiting for fundamentals to be more in line.
Well, housing prices aren't going to go down any more. They've already had their big drop. I mean, maybe incrementally, 3%, 5%, at most 10%, but then they're going to start going up again

(I am not making this up. He seriously told me that--as if he knows what the market will do, and at what percent.)

Bull. Again, macroeconomics. We are in a deflationary environment. (others may disagree, but this is my strong opinion) Housing was probably, across the board, one of the most uniformly overinflated assets, and certainly in the Bay Area. (your area will be different). Job losses are mounting, and there is no end in sight (your area probably won't be very different there). Shipping orders around the world are down drastically, factories are shutting down, and retail is crashing. People, a lot of people, are going to lose their jobs. Financing standards are tightening (as they should), and the credit that allowed people to drive up prices beyond their means, will have to come down.

And they should come down. A house is a place to live. When housing prices are astronomically high, it hurts people and families, who have to work harder and take on way too much risk and financial hardship just to put a roof over their heads. So I think it will be a good thing when a basic need (shelter) is not a huge hardship, nor a golden ticket of speculation. And in the Bay Area, where I live, we are just not there. Houses here are still wildly overpriced. If the average family can't afford that house based on 33% of their average-family income, those prices can't hold across the board. (clearly there will always be regional differences, and pockets of wealth and pockets of poverty) Considering the economic conditions and the fundamentals of salaries, these prices cannot, and should not, remain this high.

Your situation is your situation. Any agent that tells you it's a good time to buy, without knowing your situation, is not your agent. They are their own agent. They may want you to buy, but not necessarily for your own good. Again, yesterday's agent: rattled off reasons why with all the tax incentives, it would likely mean it was actually cheaper to buy than rent. (tax incentives that I don't agree with, but anyway don't really help me-- the CA one, I didn't have the heart to tell him, only applies to new construction, and the federal one, at 8K, is nothing, literally, in the scope of the local pricing. $8000 is a rounding error here. A 1% reduction is still cash in pocket, but not enough to make me want to buy anything. Besides, like other subsidies, it will, some economists would argue, and I agree, just raise the price of housing by $8000. Great.)
But back to the agent, and his assumptions.
Quick back of envelope guesses:

I just looked at the MLS listings for my neighborhood. Houses in my 'hood range from (current listing price) 899K-975K.
Let's say we get a "great deal" at $850K for a 2/1 (Oh boy!) or maybe a 3/2
Assuming I put 20% down ($170,000 and I don't have that right now), living in that 2/1 in my neighborhood is going to cost me on the order of $4K per month (maybe a little less) The mortgage tax deduction won't come close to bringing me in line with my current rent: $1475.

The point? He might have been right, about someone else (someone with higher rent in a neighborhood with lower house prices, perhaps). But a good agent wouldn't be trying to convince me to buy something without knowing my situation.




But that's all a rant about an agent I had the misfortune of talking with yesterday. I've met a lot of other agents like him, and I've gotten a really bad taste in my mouth from some of the more egregious liberties I've seen in MLS listings and real estate cheerleading. But "reasons I never trust a real estate agent." was an overstatement. There are good and there are bad. So let's look a little at what Mike said.

Many of us are honest and helpful, all of us have studied the laws and machinery of real estate, many from a different perspective than yours, and just having that perspective can make a big difference on the CYA aspect of what is most people’s biggest purchase of their lifetime.

This is a good point. It is not impossible to buy a Nolo Press book and process this transaction without an agent, but even though I am somewhat independent and adventurous, I probably wouldn't want to do that. I would like someone with experience for that aspect. Paul and I have discussed this in the past and generally I think we would like the process help.

I think the real estate industry could be greatly helped by being a lot more transparent. People are used to transparency and freedom of information now, and lots of people who are used to managing information will want to manage the search themselves and use a trusted agent for the paperwork and legal and, as Mike called it, the CYA bits (think inspections, permits, etc.) There will still be people who want the whole shebang, but then there are still people using travel agents for simple trips. Most of us are used to booking air travel now, and would only call a travel agent for the really complex bits.

Before you are in the market to buy, and only you will know that, do yourself a big favor and find an agent that you can trust. I highly recommend a real live agent, who can explain fiduciary duty to you (that might be one good litmus test). Being a member of the National Association of REALTORS® among other things means making the commitment to upholding the best and most in-depth set of ethical standards that I have seen in the industry. I know that not all Members (REALTORS®) do a great job of keeping to the standards, but many do.

I do believe that my family members have a higher standard of holding up commitments than average Americans, and I think there must be a lot of realtors who don't take this commitment seriously, or just have a very different idea of what ethical means. Either way, the NAR's reputation in my mind is severely tarnished by the likes of David Leareh, and the constant cheerleading during the bubble. I realize Mike likely won't agree with me on that. But, then, like any professional organization, it's made up of a lot of people who are all very different. Of course, anecdotal evidence is usually defined by outliers, since they make the most impression. Meaning, I remember bad experiences more than good ones.

As to the definition of a bedroom, believe it or not this is not quite nailed down. Most counties permit and collect taxes based on bedrooms as a room that is big enough (the county sets that) and has not been excluded from being a bedroom in the permit process. Some say it must have a closet, some a window, some give minimum sizes of door and window openings. Owners will sometimes dodge paying property tax and service fees by calling a room something other than a bedroom even when that is what you or I might call it. On the other hand, the same owner might call a walk-in closet or landing, a “bedroom” if they think that will sell the house. Make no mistake here, I said OWNER. The agent is just that an agent of the owner. And all to few are immune to the temptation to “puff” especially when the listing might depend on it. Each agent draws his or her own line, a point that having a pro working for you can counter.

On this, no, it was not a bedroom. Bedrooms typically have doors, or at least a doorway with a beaded curtain. Or, at least three or four walls. You had to see it to believe it. (embarrassing) But it's a good point, maybe the owner was being a real pain in the ass, and maybe the agent just had to take the listing as it was. It surely doesn't reflect well on her, though, so she might not want to do that in the future. As a consumer, I am now way less likely to trust her, and somewhat less likely to trust realtors(tm) in general. Consumers are unlikely to think about whether the perceived dishonesty is coming from the owner, whose name and face aren't in the marketing. So as an agent, this is not something I'd compromise. But maybe she really needs the work. I don't know. (or, and I'm not taking this off the table, maybe she's got a loose grasp on truthiness.)

Then Mike gives a bunch of math about return on the agent's time, which is detailed and thoughtful. In summary, the agent would rather sell the house quickly for a little less, than waste their time showing a house repeatedly for a slightly higher price. (better ROI) I agree here 100%. I think the inflated list prices generally come from stubborn owners. A good agent would tell them the price was too high, but I think a lot of owners would just go to a less-good agent who'd take the listing with the price they wanted. (likely to their detriment later) Owners are stubborn, and I think there is also a lot of emotion wrapped up in admitting your house isn't worth what you wish it was. Another downside of listing high, in this market, is that you can end up chasing the downturn. I've seen it on a few properties, that have languished, being dropped every so often. If they'd sold it a year ago, it would have gone for more than now, but they were stubborn. I'm sure all but the worst agents know and understand this.

He goes on to talk about relationships with agents and some interesting tips (one that I will try next time we visit an open house). Worth a read if you're interested in housing, but I'm not going to cover it all here.

And in conclusion of this longwinded post, I should apologize (especially to my two beloved and smart, trustworthy uncles-- and for once I am not being facetious) for "never trust a realtor" as it was a flippant overgeneralization. I do know a few agents that I really would trust to handle a transaction, and do understand the value of that service.
However, realtors(tm) should be aware of the tarnished image that comes with these behaviors (particularly dishonest listing practices, and ridiculous claims that you should buy a house! now! even though I don't know anything about you!) because regardless of whose fault they are, it is the agent whose name is on it, and their reputation on the line.



And lay off the fisheye lens, people! I have no idea where I could buy curved appliances to fit in that spherical kitchen.

Realtor(tm) vs. Reality

Paul and I have had an eye on the real estate markets for a couple of years now, and like to visit houses for sale when we can. We are sort-of in the market, though not really at today's prices.

A couple of weekends ago, we visited one that reaffirmed my "reasons I never trust a real estate agent." Bells went off in my head when I read the ad anyway. Listed as a 3/3 (that's 3 bedrooms, 3 bathrooms) in a nearby neighborhood that I actually like. Sure, it, like all other listings around here, was waaaaaaayyyyyy overpriced for the local fundamentals, but that doesn't seem to matter to a lot of people.

But the ad, it read "one bedroom currently configured as loft." Which? Made no sense to me. There are rooms that are structural, and there are rooms that can be swapped out. Garages, kitchens, bathrooms, and lofts have structural qualities. Bonus rooms, dens, bedrooms, maybe an office, these I can see interchanging. But hey, I can be wrong, and we went to see it.

First, the 3 bathrooms were actually 2.5, a fine detail, but second, this was a two bedroom house. The third "bedroom currently configured as loft" was indeed a small loft, open on one side to the living room below (it really had two walls, and no door), not big enough for anything but maybe a twin bed and nothing else, had no closet, had to be walked through to get to the actual bedroom, and most importantly? WASN'T A GODDAMM BEDROOM AT ALL, AS ANY PERSON WHO'D EVER LIVED IN A HOUSE COULD TELL YOU. It was the landing at the top of the stairs. The landing at the top of the stairs of the house I grew up in was bigger, and had more walls, and closet space.

Who cares? I do. We've been looking at really dishonest listings for a long time now. All the relisting to hide price changes and days on market, the insulting abuse of fisheye lenses to try to make a kitchen look bigger (bigger, and spherical), and, the classic fake furniture to trick you into thinking full-sized furniture would fit in the room of the house they are trying to sell you for 40-50% too many dollars is totally out of hand. And I wonder how much longer people will take it.

At this particular house, for the first time since we've been visiting open homes (a few years) another party also snuck out in outrage at the overpricing. (there have been multiple occasions where Paul and I have snuck out the back exit of a property to avoid having to face the real estate agent on the way out) Too embarrassed to face the agent in the face of an inflated price for a not-up-to-the-listing house? Me too!

When we are ready to buy, I am not sure we'll want anything to do with a real estate agent. I've just been too fed up with the loose interpretation of reality and shady practices. Will Realtors(tm) go the way of the travel agent? I hope transparency will cut through the worst of them and put them out of business. For us, a little research and sunlight on the housing bubble a few years back kept us out of the market, even as we had a loan officer trying to convince us to "use more leverage" based on our qualifications. We are those fabled solid buyers that everyone is seeking right now, and hell no, we won't buy your overpriced 3/3 with "bedroom currently configured as loft." I suppose the attic is currently configured as sky, and the basement currently configured as dirt?


(ps, since visiting, this listing was updated to show 2.5 baths, and the price was dropped $50K. Which is still way too much)

sniff, sniff.

It is the end of an era.

Bernanke, you have failed!

"It is not the responsibility of the Federal Reserve -- nor would it be appropriate -- to protect lenders and investors from the consequences of their financial decisions,"

That was what Bernanke said on August 31st of this year.

Today is the day the Fed sent a notice to specuvestors that it's OK to abuse credit and housing bubbles.

A jubilant Wall Street barreled higher Wednesday after the Federal Reserve cut its benchmark interest rate a larger-than-expected half a percentage point. The Dow Jones industrial average was up more than 200 points shortly after the Fed announced its move.

Although some investors hoped for a large rate cut, most were betting on a smaller quarter percentage cut in the federal funds rate. The Fed responded to the spreading impact of credit market problems on the rest of the economy, saying, "the tightening of credit conditions has the potential to intensify the housing (market) correction and to restrain economic growth more generally."

The Fed cut the benchmark rate to 4.75 percent after keeping it unchanged for more than a year.

Of course, even Greenspan is admitting that the problem was caused by keeping rates too low, too long. so why drop now? Easy!

"Privatize Profits, Socialize Losses"

On the upside, were all these speculators offering to share their funny money with me? I don't remember it. Now? they want government bailouts, they want the FHA to insure worse loans (and by "FHA" they mean me) they want lower interest rates (which? historically are already way low), they want HELP! Help with their foreclosures. Why? Propping up inflated asset prices is only hurting the economy and American families.

Is it good for America that young families can no longer afford to live somewhere without working several jobs? Is it good for America that our workforce is completely tied down by overpriced houses, unable to relocate to respond to changes in the workforce or their lives, too busy working to improve their skills, too worried about their mortgages to take on new careers or entrepreneurship? Is it so great that people in the Bay Area can't have children because they can't afford the home they are in, let alone a larger one? WHY does everyone think that housing prices going up is such a great thing? a 20% increase in your house price? HOLY CRAP! 20% inflation ought to be alarming, not pleasing!


So? If I lose $1000 in Las Vegas, will you bail me out too?
Because, really? If you do? I'm just going to keep going back to Vegas.

Moral hazard in finance

Financial bail-outs of lending institutions by governments, central banks or other institutions can encourage risky lending in the future, if those that take the risks come to believe that they will not have to carry the full burden of losses. Lending institutions need to take risks by making loans, and usually the most risky loans have the potential for making the highest return. A moral hazard arises if lending institutions believe that they can make risky loans that will pay handsomely if the investment turns out well but they will not have to fully pay for losses if the investment turns out badly. Taxpayers, depositors, other creditors have often had to shoulder at least part of the burden of risky financial decisions made by lending institutions.

If I win, I keep the money! If I lose, ummmm, someone else softens the financial blow, so I sort of win. I like those odds!

Unamerican!

If only I could get a loan to buy more tulips

The Fed is leaving rates where they are today!

Am I worried about the credit crunch and recession? Yes.
Do I recognize that sometimes we have to take our medicine even though it's unpleasant? yes.
Do I feel bad for all the speculators ("homeowners") who will be stretched to or past their limits? Not really.

Rates were too low, too long. We put off reality for a long time with easy funny money. But now it's time to take the medicine. There has been a lot of bad news in the mortgage sector this past week, and credit is tightening everywhere. It may be painful, but it's far past time for this.

Fasten your seatbelts! Tulips do NOT always go up.

The Renters are Coming! Hide Yer Wimmins!

More stupid people!

The couple bought in 2002, as the boom was beginning. At its peak, the house was worth more than three times what they paid for it. But they refinanced and took cash out to do upgrades on the house, and then they refinanced again because — well, Quinlan isn't sure why.

She's learned this about lenders and loan agents: "They make it look like they are trying to do all this for you, but the reality is that it was mainly for them. They got their chunks out of you, and then they put you out to the wolves."

now I understand why we should bail these "homeowners" out-- how were they to know that nice loan shark was out to make money off of them? He seemed like such a nice guy! You mean he wasn't really just cold-calling because he cared about my self interests?!?! You mean *I* was supposed to read those forms, that, um, well, *I* signed?!?!

Wait, this gets better:

At the top of his street, next to the charred shell of a house that mysteriously burned a few months ago, is a house for sale. The house immediately next door is on the market too. A few doors away from De Leon's home in the other direction is a third house looking for a buyer. Some owners are trying to rent their places out, advertising with little signs on the front lawn.

De Leon fears what will become of his neighborhood if it becomes dominated by renters.

"You get people who don't care about the neighborhood and don't take pride in it," he says.

He's hardly alone in that view.

"If people start to rent, that's when you start to worry," says De Leon's next-door neighbor, Jose Serrano.

Serrano, 34, grew up in Long Beach. He saw friends die in Long Beach. He still commutes there every day to work on the docks for Toyota Motor Corp. It's an hour in the morning and two hours coming home, a grind he suffers for the sake of his three young kids.

Oh, so the following people are good for the neighborhood:

• People who commit mortgage fraud (Not enough income? Just "State" it!3)
• Gamblers (I'll take out the most loan I can't really even afford, since this house will triple in value in two years!)
• People so totally irresponsible that they lose hundreds of thousands of dollars of equity
• People who "mysteriously" burn their house down
• People who forsake time with their kids for the ability to "own" their homes. (3 hours/day is 750 hours/year! 31 days you could have spent some other way?)
• People who don't repay debts ("you are in default")
  
• People who rent money from the bank to "own" homes.

The following people are BAD for the neighborhood:

• People who rent houses from people

Keep an eye out for those bastards. Once they start moving in... there goes the neighborhood!

No. Just NO.

U.S. homeowners with subprime mortgages struggling under payments need federal government help to ease them through the crisis, a leading consumer advocacy group said on Wednesday.

EXCUSE ME?!?!?!
So people who saw nothing but greed and financial irresponsibility now are in line for BAILOUTS?

The group, which represents hundreds of low-income housing advocates across the country, said Congress should immediately step in to aid subprime borrowers.

Wait a minute. Two years ago, when these same people stretched themselves out, took out irresponsible loans, and said "housing only goes up," they were not looking to share their profits with the rest of us. Why in the hell are they entitled to shove their losses on us then?

Oh, yeah, it's called "privatize profits, socialize losses."

As I understand it, these same greedy "housing always goes up, I'm making tons of money doing nothing by buying a house" (and by "buying," they really mean "renting money from the bank to live here") are now crying about the downside of their risks? And the gubmint is supposed to bail them out? So WE should pay for their poor gambling mistake? Let me see... so it follows, that if it had gone the other way, and they had made money, they would have happily given that money to the rest of us, right? I mean, they wouldn't ask for us to pay their downside, if they weren't willing to give away their profits too, right?

I will be absolutely outraged if we have to pay for these idiots, and thereby prop up home prices to keep financially responsible people out, by subsidizing the gamblers. I'm offended that it's even up for discussion.

You gamble, you lose, you pay.

Home ownership is something you save for, and do responsibly. In the past few years, it has turned into an "investment" vehicle for the masses who were unwiling to consider the long-term reality and fundamentals. Guess what? "Investments" sometimes go up, and sometimes go down. Don't play if you aren't willing to pay. Now it's time to pay.

Bailing these idiots out punishes the financially responsible, by wasting their taxes and artificially propping up home prices instead of letting them fall to levels in line with fundamentals.

Ugh.

But, but! Tulips ALWAYS go up!

And because I've been telling people about this, and often they just don't seem to believe me, yes. There was a Dutch tulip bubble.

http://www.businessweek.com/2000/00_17/b3678084.htm

http://www.damninteresting.com/?p=469

Oh, I know, "It's different this time." It's always different this time.

Sleeping Dragon, Indeed!

Interesting NY Times article about the Chinese stock market, "slot machine," as they apparently call it:

“I don’t know how to choose a stock,” says a 61-year-old retiree who gave her name as Miss Hou at a local brokerage house a few weeks ago. “But I trust those technology companies. Maybe the names of some companies sound lucky to me, so I choose to buy these stocks.”

oh, my. This is worse than I thought. Maybe they are as stupid as we are?

I'm Doomed

OK, so everyone knows about Gavin, right" Blah blah blah.

Who cares, right?

However, Gavin has decided to personally pay his (ex)friend's salary until he can get a new job. Oh, that's sweet. Nothing wrong with that.

Tourk is not talking to the press. His representative, Sam Singer, said that Newsom was following through on the commitment he made to Tourk, 35, who has a 3-year-old son. "Alex needs this assistance until he finds whatever he's going to do next. He has a son, a wife and a mortgage," Singer said. "He's highly respected and has many job offers right now, so it shouldn't take long."

Oh, Gavin's thinking of the kids. Don't want that three year old and wife to starve (well, maybe the wife, I mean she is a cheating skank wot outed her adultering partner for reasons I can only guess involve a need to stir shit up and get her name in the paper). 3 year olds eat a lot, and you gotta buy them new clothes all the time. And the mortgage. So how much does it cost to keep your (ex)friend's three year old off the street, Gavin?

San Francisco Mayor Gavin Newsom has agreed to personally pay $15,000 per month to his former campaign manager, who abruptly quit last week after learning his wife had had an affair with Newsom.

Holy CRAP! $15-THOUSAND DOLLARS?!?!? A MONTH?!?!??! THAT is what it costs to have a small family in these parts?!?!?!?

I am doomed.


As a sidenote, I suspect that makes Ms. Ruby whatever her name is, one of the most expensive "ladies" in town.
I wonder what it costs to bang your buddy's wife in Crockett?

Credit whores

Hello Houston, we have a problem:

2006 Personal Savings Drop to 74-Yr. Low

The Commerce Department reported Thursday that the savings rate for all of 2006 was a negative 1 percent, meaning that not only did people spend all the money they earned but they also dipped into savings or increased borrowing to finance purchases. The 2006 figure was lower than a negative 0.4 percent in 2005 and was the poorest showing since a negative 1.5 percent savings rate in 1933 during the Great Depression.

OK, this really bothers me. What the fuck are you people buying? What could be so important? Big screen TVs? Hermes handbags? The new iPod? Cable TV? All of this crap is more important to you than, oh personal and national security, retirement, responsibility?

Economists have put forward various reasons to explain the current lack of savings. These range from a feeling on the part of some people that they do not need to save because of the run-up in their investments such as homes and stock portfolios to an effort by many middle-class wage earners to maintain their current lifestyles even though their wage gains have been depressed by the effects of global competition.

Oh, I get it, you don't need to save, because your house is "worth" 5x what you paid for it (with your stated income, option-ARM loan, but details, schmetails!)

My savings rate is well, well into double digits, more than a little. OK, so my salary is low, so maybe a normal Bay Area salary would only have to save a few percent to keep up with me.

I don't have cable TV. I find the idea that I should PAY to watch TV, utterly ridiculous. TV is a waste of time anyway-- I will not pay for that. Hey, when I was a kid, cable TV didn't have commercials-- that's why you paid for it. Now? Um? Why should I pay to watch this crap? My television is the size of a large toaster, and it was given to me about ten years ago since I didn't have one at all. Again, why have a larger one? I don't want TV to be the focal point of my life, so why should it be the focal point of my living room?

I live in a place that's small and won't move until I can do so responsibly. Everyone who bought into "housing can only go up" is in for a rude awakening if they bought with an irresponsible financial plan. "I'll just pay interest-only and sell it in two years for a profit" is not a financial plan. It's called speculation, and you will get burned. Median incomes haven't gone up much, what makes you think there will be a greater fool to buy your overpriced specu-home? I mean, I'll be happy to buy it from the bank, later.

I rarely have the latest thing. I finally bought my bottom-of-the-line iBook (with a student discount) after like 8 years with the old Mac. That's a dinosaur, considering I do use it for graphics and all. I will ride my motorcycles into the ground and then buy again and repeat. I can't tell you how many times I've been in a conversation with some dingus that is trying to keep the miles off of their zooty new bike so the value doesn't go down. Hey, dumbass, how about buying a bike you like, that you will ride for a while, instead of trying to turn it over and buy the latest one every year? Bikes don't retain much value anyway. STUPID.

I have a credit card, which I use frequently. Most people would tell you to look for a low rate card, but I could give a shit. Who cares what the rate is when you pay it off every month? Paying interest on crap you bought is stupid. You should only pay interest on important purchases (education, a solid home purchase, maybe a car), not clothes you've already gotten tired of and gadgets that are already broken and outdated by the time the bill comes. Anyone paying the minimum due on a credit card is an idiot. You are making some rich guy richer, at a great detriment to yourself. Congratulations. Enjoy the big-screen TV. Remember how you got such a screaming deal on it before Christmas? Guess what, you're going to pay three times that amount in interest. Yay.


Why this upsets me is that our central bank and other guv'mint institutions are, I have little doubt, going to try to bail your sorry asses out come judgement day. Did you lie on your mortgage form about your income and sign up for a loan you didn't bother to understand? Oh, POOR YOU! Did you use this funny money to drive up home prices to the point where responsible people couldn't buy homes? Did you use that extra "equity" to buy an SUV or a trip to Maui? BOO FUCKING HOO. Are you now complaining about gas prices? Get a bicycle! Live responsibly for once, buy what you can afford. No, buy LESS than you can afford. If you feel that savings bothers you, give the extra to charity. Please for the love of god, sock it away for your retirement, cuz I do not want to pay for your sorry, freeloading ass.

Whatever the reason for the low savings, economists warn that it the phenomenon exists at a particularly bad time with 78 million baby boomers approaching retirement age. Instead of building up savings to use during retirement, baby boomers are continuing to spend all their earnings.

Boomers are only a few years from retirement. What the hell are they thinking? Instead of healthcare and security in their golden years, they would like to have some crap from Chinamart? A Precious Moments figurine collection, a surround-sound stereo, a breadmaker machine, a BMW... oh, and: Why on earth are kids this age even driving BMWs and Lexuses?

(01-30) 10:30 PST PETALUMA -- A 24-year-old Petaluma man is in the hospital with major injuries after a fight Monday afternoon involving two couples, a car chase, a baseball bat and, finally, a car crash.

The incident began shortly before 4 p.m., when two Petaluma women, a 17-year-old and a 22-year-old, got into a physical fight on the 400 block of Ely Boulevard South, Petaluma police Sgt. Matthew Stapleton said. Police are not naming the women.

The 22-year-old left the scene of the fight in a BMW sedan, closely followed by the 17-year-old, who was driving a Lexus sedan.

What is wrong with you people? Spending money does not make you cool. Keeping up with the Joneses just means you are constantly one step behind them anyway. Did you ever stop to think maybe the Joneses have more money than you? Or perhaps that they are also destroying their own lives with credit abuse? Hope you and the Joneses repay your debt all the way to the poorhouse together.

PUT THE CREDIT CARDS DOWN, PEOPLE! YOUR HOUSE IS NOT AN INVESTMENT. A FLASHY CAR IS NOT WORTH YOUR RETIREMENT FUND.

And get the hell off my lawn.

Where should you go, if your home won't have you?

I've come, again, to the conclusion that I cannot afford to live here.

On a day-to-day basis it's all fine, but I know that it can only be day-to-day. Yes, including living in the same apartment, now 11 years, and having to stay here for another 11 or 22, or maybe more like 55?

Rents are too high to move; homeownership is a joke. I have no meaningful gains in earnings in sight.

Staying here means just living day-to-day.

Last year I made a goal and laid groundwork to clean up my financial house. And then I did. But I can see that things being as they are, I can't make any real progress.

About a year ago I started thinking about buying a place. Everyone seemed to be doing it. I guess I figured I was around that age or stage in my life...

But a little research showed something much weirder going on. The majority of these people took out toxic loans, or are living in buildings they bought with strangers... I'm too financially conservative to consider either of these options.

But it will take a long time to correct itself, and I do think prices will remain sticky on the downside, for a long time. I don't know enough for this to matter, but my uneducated guess would be winter of 2008 would be a nice time to buy. Maybe even later.

In case you don't know, wages have been stagnant for several years.
The US savings rate dipped below 0% recently.
Millions of dollars of ARMs are set to adjust next year.
Trillions the year after that.

So it has to come down.

But this is life, not investing. If the best time to buy is in 2011, shall I put my life on hold until then? What if it isn't until 2015? I'll be 38 before I can move out of this apartment?


I don't see any future of much better salaries in my current career path. I don't have a clue what else I can do. I assume I'd have to go back to school, but I don't even know for what? Could I afford to go back to school? Would it be another mistake?

I know there are a few manufacturers in the Seattle and Portland areas I could pursue, but I don't know how the salaries stack up there. I really couldn't see myself living in LA. New York would probably be a similar problem, although I know the salaries there for my position would be nearly double.

The vision I have for my ideal is working in downtown SF, living in the downtown or Potrero Hill or possibly Hayes Valley/Duboce areas... Mainly, specifically, walking to work or taking a bus down Market St. if needed.

But it's meaningless if wages and housing can't line up. I really can't stay.

word for the day

I just learned a new work that makes me giggle:
pergraniteel

pergraniteel :: your crappy overpriced loft
as
carbon fiber :: your crappy squid bike

why not just use the bubble as a floatation device instead?

real estate hilarity

Subzero

and really what I need is to figure out what the path is.
what steps to take to change careers or put this one on track. I can't afford to live in the Bay Area, which is where I want to be. I see places I want to park my bike and furniture, but I don't see how on earth I could get them.

it all seems very frozen right now. Patience comes and goes, ebb and...
today I want it all, tomorrow I'm willing to let it all go for just a little something, anything. The next day I am inflexible again. Then it seems possible, but upon another look, not at all. It's all water on the horizon of a vast desert. Or a mirage, or maybe just little piece of broken glass left from a different time.
Now it's just for investors and flippers, people who were given a little more, people who made better choices earlier, people who don't have bikes to wrench on. I'm at once above you and beneath you; spiteful, self-righteous, and deeply envious.

And it's all I want.
In this job that, just one generation ago, would have been a fine job to build a life on. A job that now means I'll always be poor, never able to put down roots in the place I belong.

Fuck you very much luxury people. I hope your 24 hour concierge sneaks in in the middle of the night and steals your precious granite countertop. Maybe one day I'll be ducking through an alley and find you clutching your stainless steel faucet, all that's left from the recessed-lighting-induced fire that burnt your condo-hive to the ground.

We'll always have our stainless steel.

Today's Not-Really-Guilty Pleasure

omigod, so funny:
America's Overvalued Real Estate

...except I happen to LIKE houses that are dwarfed by their garages. Other than that, right on.

Not moving after all

which, I guess, is good. Historically, I've never liked change, so I don't know why I was so gung ho about moving. I have a pretty great apartment. I shouldn't be so quick to give it up.

That's right, look on the bright side.

Sunday we went to James and Tara's house in the Santa Cruz mountains for Tara's birthday. They have a very cute house (and BARN) and are super sweet people. Saturday we got a little Christmas shopping done, and I worked at New Wave City at the DNA Lounge at night. Friday, we ran into Daniel at Lanesplitter and went to see some EBR people and actually a bunch of my friends too. Seeing Daniel's house after two years of work really makes me wonder what people are getting into when they buy real estate around here.

Earlier this week, I picked the DRZ up from Paul's house, where it had been sitting for several months. I missed my good bike! We need to go dirt riding, but who has time? Plus I think there's something wrong with the XR again? Something about a seized bolt or something. Anyway, who has time? We have a Chinese final, and our Chinese is bu hao. Tai4 bu4 hao3.
Indeed.