patrick.net

Prat, It would take an amazingly competent group to secretly conspire in such large numbers. Power brokers secretly conspire, but a whole generation is incapable of such.

Besides the truth is that the Boomer generation has been the most debt ridden generation in history. So if it is a conspiracy, it is the boomers who are the target, and the Gen Xers are just getting hit with the stray bullets.

Girgl, Some areas will end up like Detroit, while others will end up like Beverly Hills.

Excellent article prat...I especially agree with the part:

"The next generation is starting their economic race 50 yards behind the starting line," says Elizabeth Warren, a Harvard Law School professor and author of The Two-Income Trap. "They've got to pay off the equivalent of one full mortgage before they make it to flat broke, in order to pay for their education. They can never get ahead of the game, because they're constantly trying to play catch-up.

"And once you've got accumulated debt, the debt takes on a life of its own. It demands to be fed, and it takes that first bite out of the paycheck. And it means the opportunity to accumulate a little, to get a little ahead, to maybe put together a down payment—it's just never there. It's just staggering to me that this is not a part of our national debate right now."

Zephyr says:
Girgl, Some areas will end up like Detroit, while others will end up like Beverly Hills.

I take it that means it's better to buy in a better (more expensive) area when the time comes?

Zephyr says:
Allah, There is hope. No generation will be priced out, other than on a temporary cyclical basis. I remember 30 years ago people were saying that young people would forever be priced out of the market. Then the cycle shifted. It happens about once every 10 years or so.

Even though it may be temporary, it's still painful, especially if it lasts 10+ years. Who wants to buy a starter home at age 45?

Girgl, "I take it that means it’s better to buy in a better (more expensive) area when the time comes?"

Yes, but the point of my comment is that some newer expensive areas will eventually decline like Detroit while others will continue to thrive.

Zephyr says:
70% of US households have a mortgage on their home. I would hardly call the I/O loans so prevalent here in the Bay Area “ownership”.

That is not what it says here. Looks to me like they are used mostly in the bay area....at least they were before the bubble popped.

[snip]
Two out of three Bay Area home buyers are choosing interest-only loans, and some experts warn that the popularity of the controversial form of mortgage debt is a sign that the overheated housing market is boiling over.

Girgl, The whole cycle typically lasts 10 years. The decline in prices usually occurs over a period of about three years. So the wait for better affordability should only be about three years from the very top of the cycle. During the 1990s it was six years. That was a major aberration from historical norms.

opps, Sorry I misinterpreted what prat had said....never mind Zephyr.

RealityBased says:
Blind greed and ignorance must eventually suffer. After being locked of the real estate market due to the combination of poor timing + a modicum of personal financial responsibility, I find that I have an insatiable appetite for the post-bubble sob stories that are coming.

Heh. I look forward to those, too.
Except the ones from folks who were never arrogant and greedy, but rather just naive or scared, and who are royally screwed nevertheless.

On the other hand, no one will admit to having been arrogant and greedy when the shit hits the fan :-)

On the other hand, no one will admit to having been arrogant and greedy when the shit hits the fan

No, but the stains from being hit by a flying turd will be there for everyone to see and to remind them of the stupid mistakes they have made. :lol:

Zephyr says:
Yes, but the point of my comment is that some newer expensive areas will eventually decline like Detroit while others will continue to thrive.

In your opinion, what characterizes an area that is more likely to thrive?

Lending normally becomes more liberal as the cycle progresses toward the peak. Lenders become increasingly optimistic as values rise and loan profits seem easier and less risky. This effect has been stronger during the current cycle than during past cycles.

Interest only loans and negative amortization loans are not new, but they are more widely used than before.

Prat, It would take an amazingly competent group to secretly conspire in such large numbers.

I know. I'm just kidding, my friend.

Cheers,
prat

Girgl, An area should thrive if it has a sustainable economic base that generates good paying jobs (in addition to the low paying jobs that are everywhere). Alternatively, the real estate can do well if the area is a preferred destination for people who have lots of money. If an area has both, even better.

Prat, Sorry. I missed that you were joking.

Girgl, Detroit should have been sustainable, but the big auto makers got complacent and built themselves into cost structures that could not be sustained.

Interest only loans and negative amortization loans are not new, but they are more widely used than before.

If you disregard their use during the great depression, Interest only loans are new as for the past 5 years....and none of these products have been time tested...and being that they are more risky, there is obviously much more likely that they will fail. When the dust settles after mass foreclosures, these loans will never be used again.

Zephyr says:
Girgl, An area should thrive if it has a sustainable economic base that generates good paying jobs (in addition to the low paying jobs that are everywhere). Alternatively, the real estate can do well if the area is a preferred destination for people who have lots of money. If an area has both, even better.

That would be the SF Bay Area, IMHO. Oh goody :-)

It’s not easy selling real estate.

...but in the same post you said: The proper attitude is this: the house sells itself.

There is no marketing strategy, no sales pitch or seller’s concession that is ever going to change the fact that she’s not going to buy the house.

This is not true.....people are talked into buying real estate all the time. You act as if there are no dishonest people in the business....almost as if you are sticking up for everyone in the business. There are dishonest people in all occupations....but some occupations are more prone to attracting dishonest people...especially salesmen, and realtors are salesmen!

Scott, you never answered my question "Is it ever a bad time to buy?" yes or no?

Maybe it’s just me, but something about your post expresses an odd fixation with women.

Here we go again ....and I'm not going to touch this one! :)

Just reported on the radio, “sales after Thanksgiving are flat” does that mean same as any other day? Or, no more/no less than expected?

Well you didn't think black friday was about great house prices did you?

SW has had a pretty good run on the east coast since 1992-ish. Even now, I think that good developers are making a bit over 100. I tend to think of the west coast as more hw-centric, so maybe that explains the drop-off that sunnyvale referred to.

This is totally not true..........they are not paying these kinds of wages on the east coast.

The Oct. issue of electronic design has a salary survey:

Typical EE is 46, white, makes 93k and works 53 hours/week.

This is so not true.......don't believe what statistics say...they always make salaries out to be much higher than they actually are.....I don't know why, but it is. Go to Salary.com and look up the salary for the occupation you are in....after you get really pissed, relax....they are not getting that much.

I am in Software and I make around 150K in Bay Area……

By the way I do not own a house and can not afford to own a house….

Ha Ha, I am an Embedded Hardware/Software Engineer...... I live on the east coast and while I have many friends that don't make as much as me, I make less than 100k.

Scott C says: “What I am not going to do is make fun of her, using a pretence to superiority to justify laughing at her, as some conceited asshole might.”

My my, a bit touchy aren’t we!

I understand your frustration, but did you really expect to get rich after simply taking a one month course in real estate at the height of the bubble? Lol.

I have absolutely zero sympathy for that “poor” girl because she was such a bitch during that open house. To sell the overpriced shit-box, she lied, tried to pressure us, played the fear card, and when nothing worked, she taunted us as we walked out the door - I’m sure you’re familiar with those tactics.

Scott, the bubble is over, done, finito. The sooner you accept that fact, the sooner you can find a job that serves yourself and our society better.

"It’s not easy selling real estate."

Wait till spring.

Allah says, "Scott, you never answered my question “Is it ever a bad time to buy?” yes or no?"

Isn't this like asking a barber if you need a haircut? ;-).

My theory (to repeat myself) is that engineers believe strongly in rationalism. Thus, they are profoundly offended by the irrational bubble. (”Can’t these idiots see that this is irrational?

How can a rationalist be offended by anything at all?

Very true. It’s sort of like we’re all becoming “collateral damage” regardless of how we did or didn’t participate in the current bubble. I find myself in an interesting position because I want the market to come down to a reasonable level but I also fear the outcome if it turns in to crash rather than a correction.

No fear. Just make sure other people get hurt more than you do. :twisted:

I think the goverment a) doesn’t care too much about expenses, b) is very short on competent engineers, and c) is still in the payscale mode of the .com era. Commercial work in the DC area is more constrained after the excesses of the late 90’s.

Maybe the DC area pays well, but I live on LI and the pay isn't as great as you think it is. The government probably pays very well to help inject liquidity into the market due to all the printing they've been doing..... Gotta get me a government job! ;)

My theory (to repeat myself) is that engineers believe strongly in rationalism. Thus, they are profoundly offended by the irrational bubble.

More like Engineers believe strongly in logic.....they have to know whether or not a project is feasible because their job depends on it and deadlines enforce it. Engineers(at least those who are looking to buy) know that housing prices will crash based on sound logic, yet they just don't know how much it will crash.....only that logic tells them they would be fools to buy right now.

Funny thing, several years ago, my sister knew of this older retired couple, the husband was an engineer and since they were retired, they wanted to downsize and move to FL, but the husband wanted to wait because he felt that the value of their house would soon increase greatly in value while the wife just wanted to move......well it was just before the boom, the husband died and the wife went ahead and sold the house....even below the current market value because she just wanted to get out of there fast....I was even thinking of buying it at the time. Right after that, the house just appreciated like crazy, I could just imagine her dead husband turning over in his grave! :)

An interesting analogy for this housing bubble, but who will be the cops and the EMTs?

The repomen will be the cops and the taxpayers will probably be the EMTs.

Allah says, “Scott, you never answered my question “Is it ever a bad time to buy?” yes or no?”

Isn’t this like asking a barber if you need a haircut?

That's pretty much it, I just wanted to hear what Scott would say but it looks like he won't dare answer it being that I asked him 3 times already without a response.

From this article what really cracks me up is this:

[snip]

Industry experts have mixed feelings about whether the boom is beginning to ease. The East and West coasts, parts of Nevada, Florida and the Northeast are recording strong sales where jobs and populations are growing. Other areas have seen the rate of appreciation slow, including parts of Colorado.

"I think that price appreciation will for the most part remain pretty solid for another three, four quarters," economist Celia Chen of Economy.com, said. "By the end of the next year into early 2007, we'll see substantial slowing in house prices."

One would think maybe 6 months ago this might be believable, but now! :roll:
They just don't want to stop! :lol:

Oh now they're being given a break....how nice, the bubble pops and they don't like it so they spill back some tax money........ this money should be going towards the bailout, not to the cause!

[snip]
Now homeowners are crying for relief, and many states and towns are responding.

Allah, Sunnyvale, pop, etc.. Re: tech salaries.

Tech salaries for workers in their 20s are adequate (really quite good) if you are able to live in or very close to the city, and either don't need much space, or can share with roommates or working spouse.

By the time you need space or time for your life or kids, etc, hopefully you've either risen to a senior level, or moved into management (both unusual before 30-ish). Otherwise, you'll probably have to commute (difficult in SF/SV, near impossible in NYC), or find a job further out, which will not pay the same rate. The problem comes when you're close enough that the COL is still high, but far enough that the pay scale is depressed.

Also, I think hardware designers are under more pressure than software. With the exception of ASIC design, (which itself is under pressure from cheap uCs), the better a hardware design is, the fewer jobs it supports going forward. (and the more of those jobs that will go overseas). The trend applies to software as well, but it's happening more slowly, probably because there are more applications, they can change more quickly, and the changes usually still start here.

But the simple truth is this: most technology jobs don't require any more intelligence or knowledge than any other job, and since the responsibilities require less physical presence, these jobs can move freely to telecommuters anywhere in the world, as long as they have the equipment ($500 PC) and a translator.

Outsourcing is here to stay. If you're in technology, they are coming after your job. You have a few options that will delay the process, but none of them allow you to be complacent. If you have family-raising responsibilities (or want them), it would be irresponsible to not be thinking about this problem today. And stop blaming other people. I'm old enough to vaguely remember the auto unions complaining about the transition to robotic car assembly, and how sadly anti-reality their arguments sounded. On a macro level, this is different, yes. But on a micro level, we either change or we go hungry.

And don't think there won't be a portion of the (dangerously ignorant) population cheering the tech industry's starvation.. Schadenfreude, jealousy echoes, hollow puffery, whatever. This blog is made up of a self-selected group of people who are at least thinking about the future...don't go down with the ship.

quesera says:
Outsourcing is here to stay. If you’re in technology, they are coming after your job.

Outsourcing will slow down a lot after a few stories about "copied" intellectual property make the rounds. It's starting already.
Remember, the folks in India and China have their own bigwigs who want to run companies. They don't need Americans to fill that role once they have the IP.
Be ahead of the trend: Make sure your job has some IP aspect to it. Produce quality on time.

http://www.cio.com/archive/111503/offshore.html

Outsourcing is here to stay. If you’re in technology, they are coming after your job. You have a few options that will delay the process, but none of them allow you to be complacent.

Actually, if you work for the government, especially a military company, you don't have to worry about outsourcing. The day they outsource those jobs will be the day that the world comes to an end!

And stop blaming other people. I’m old enough to vaguely remember the auto unions complaining about the transition to robotic car assembly, and how sadly anti-reality their arguments sounded. On a macro level, this is different, yes. But on a micro level, we either change or we go hungry.

Problem with this is that assembly work doesn't take years of education and experience. Leaving an assembly job to find something similar is far from leaving a highly technical job for something similar....and don't forget, as these tech jobs disappear, many teaching jobs will also disappear. ...and this is not a matter of just changing jobs, there is no job that can be quickly learned that will pay anywhere near the same. This is having a strong effect of shrinking paychecks. Inflation rises year after year due to a growing economy.....people are maxed out on credit more than any other time in history and part of it is due to outsourcing. There is now a tug-o-war with a bungee between inflation and shrinking salaries and at some point, one way or another it has to give. Companies want to grow but at the same time they are hindering their growth. This is a topic that could use a thread of its own, maybe even its own blog.

Remember, the folks in India and China have their own bigwigs who want to run companies. They don’t need Americans to fill that role once they have the IP.

I have always said this myself........... intelligence is power, give it away and you become powerless! Losing brain-less jobs while gaining brain jobs is a step in the right direction and goes along with evolution......going the other way will have extreme consequences in the future.

quesera says:
But the simple truth is this: most technology jobs don’t require any more intelligence or knowledge than any other job, and since the responsibilities require less physical presence, these jobs can move freely to telecommuters anywhere in the world, as long as they have the equipment ($500 PC) and a translator.

The reason why people have been, are and will be doing business in the U.S. is that there are educated people with moral integrity to be hired here, and their rights are reasonably protected.
The very last thing the U.S. needs is degradation of moral integrity and education, or (worse) pervasive pessimism like the folks in Europe who don't seem to know what they have.