patrick.net

This is pretty good:

http://www.npr.org/templates/story/story.php?storyId=5046551

It's David Gardner interviewing Charlie Wheelan on Motley Fool radio--he summarizes the current macroeconomic situation problems, housing bubble, high debt, possibility of sustained high energy prices. Good stuff.

@Seattledude

My wife is bugging the hell out of me for a baby, I bought her a Boston Terrier instead. Worked wonders.

SoCalRenter.

Count Surfer-X in the zero debt club. Bought the Hyundai cash, remember hyundai's slogan "you can drive the shit out of this bitch".

What continues to amuse me is those out there that think this party is never going to end. And yes, I realize for you boomers the party has yet to end. But come on, there are profound structural problems in the US. Take a look at the stuff you buy, how much of it is made here? I'd wager 99% programmers who make >190K. But come the fuck on now.

The business with old timers owning houses that they wouldn’t be able to afford if they had to do it now is standard stuff. It happens all the time as locations develop and mature.

Actually it doesn't happen all the time. Do you have any examples you'ld like to share?

Sure, luck helps, but it doesn’t tend to favor people who aren’t in the game.

And RE only goes up, correct?

Just sitting there collecting even a $100K salary doesn’t cut it here anymore. That’s reality, and you have to face it.

Actually it does, and once the McDebtors run out of financing options life may just be good again.

just doesn’t seem like the grown-up way to deal with it

And your fucking tired diatribe is part of the grown-up way? Here's a quote from someone who has got to be related to you.

I think people who have work-force jobs are going to have to resign themselves to living in a place that doesn't meet the standards we have," San Luis Obispo Mayor Dave Romero

I think what you and Dave mean is, Let them Eat Mother Fucking Cake.

Shit I keep forgetting that this is the "SF Bay Area Housing Crash Continues" blog. I'm sorry, RE does indeed only go up, and those of you, this counts you losers who are natives, just need to shut the fuck up and suck massas wang, there are so many people out there that are just plain smarter and better than you are, of course they would choose to move here. Simple economics. This area attracts the best and the brightest and there is a critical housing shortage, this combined with the outstanding salaries your superiors earn, equals ever rising housing costs, nothing out of the norm here. What you say, you went to college and did everything correct only to be sidelined by the fact you aren’t willing to take fucking stupid financial risks? Quit being a whiner and wake up, face reality, and realize that it is evolution in progress; lower life forms like you should just face reality and move to fucking Nebraska. Losers.

3) I have firmly believed since 2003 that prices will come down (sharply)

Dude, I apologize, I must have misread something, sorry for all the tyranical hun references. For some reason I misread you as a full on housing bull. Seems you are not. I am glad you were able to buy when you did.

@SoCalRenter

Your friend should hook-up with my ex girlfriend in San Diego, she has a real estate empire that stretches from Del Mar to the border. All on her 58K a year Cal Trans salary.

Sorry, but I'm not quite ready for the defeatist attitude quite yet.

You mention areas which have had a significant run up due to the easy money fed policy, easy credit, crazy loose lending standards and out right fraud by the agents and appraisers. Show me some hard data, historical data, that indicates that the RE markets in those areas won't return to their respective historical norms and I might just be willing to put the knee pads on. That is, only if the McDebtors put on the elbow pads first.

California has always been expensive; think 4-5X income when the rest of the US is ~3X income. I'm more than able and willing to pay this. But housing is now upwards of 20X income in some parts and 12X income for the majority of the state. Me I'd rather hope for the crash to continue, make no mistake it is crashing right now, than to just accept the dick in my ass.

no ex-surfers among my neighbors” and suggestions like “buying trailers and renting them to ex-surfers”…

No dude, it's not ex-surfer, I surf all the time, it's Surfer-X

I immediately questioned this math and I looked over his numbers a few times, knowing there had to be mistake - conceptual or in the size of assumed numbers..

I could not figure out what it was, that’s why I showed the math based on my own example.

Yes, that's why I took the time on those (loose) calculations too. I wanted to see how their specific real estate transactions figured into a "break even," considering all the costs I could scrape together. Granted, my commision estimates may be off (low?), or the fact I did not offset those costs to that inevitable alternative (renting), or declined to include the tax benefits too--or perhaps some other oversight. Just looking at the expense side to real estate.

Not to dismiss PTiemann's calculations, because he's obviously made this work in his situation. But, whether we're in a bubble or not, I was simply beginning to wonder about the talk I hear where people own a home for just a few years, then sell and casually claim all those gains (without mentioning the hidden costs). I suspected it was more complicated than that, hence that itemized (and rough) analysis.

To be truthful, I have a great life, so fucking what I rent, I live about 2 blocks from the Ocean and buying the house I live in would be 5X times the rent, fuck it. I make scads of cash, and I'll get a house eventually. What gives me so much fury is seeing my amigos get screwed, so what if they didn't have the drive to go to graduate school, they shouldn't have to. There should be room for all, not just the elevated few who make 100K plus. Makes me sick. What raises my ire even more is the swaggering McDebtors who think debt equals wealth and who think having all this debt makes them somehow above everyone else. This is a new behavior here that I started to notice during the bling bling dot.bomb era. That whole shitbomb dovetailed into the housing crap and 10 years later it finally looks like the US consumer might just run out of people to borrow money from.

Now we're going to get into the M3 paranoia again? Read this link

The only reason why the fed would stop publishing this data( on what grounds? ) is because they don’t want people to know something. Why else would they cease to publish a report that they have the facilities for?

Read the article I sent:

In actuality the FED has been printing money like hell for decades and Gold hardly reacted; it only started moving recently. So the fact that they are not going to publish this data in a way is redundant since everyone with a brain knows there is no way in hell the Fed is ever going to stop printing money; in fact they will continue to do this till the very. So what’s going on here? It comes down to fear the masses are letting fear run wild. It’s funny when the Feds were busy debasing the currency at the speed of light and publishing this data no one cared but now that they won’t tell you how fast they are destroying it everyone starts to worry. What a bunch of fools is all that we have to say to those who fall under this category. Here is something else to consider what makes anyone think that they were ever publishing the right figures anyway. They control the data so they could for all intensive purposes just put in any figure and print several hundred billion more dollars. In fact we think this is what has been happening all along. Jim Rogers shares this way as he basically states all government data is manipulated and he is one very astute investor. Its human nature to want what one cannot see or what one can longer have anymore. If a glass contains poison no one asks the question is the poison in there enough to kill me or not? The moment poison is mentioned everyone flees. Hence worry not about the speed of currency debasement but the fact that they were ever allowed to debase our currency in the first place.

I thought the Saudi's threatened to denominate oil in Euros and that's when we invaded Iraq. Whoops I meant, that's when we free'd Iraq

"my post was a reply to something KurtS had posted a few posts higher up." - Ptiemann

Oh. Ooops, sorry. :)

"Someone posted above may house prices fall hard so that us bubble sitters can own one day..
My comment is.. be careful what you wish for."

My comment is that one should simply look at our current situation in a cold and logical manner. An emotional response to the situation is not called for, rather a rational one is called for. What this means is if you don't own now, you don't buy right now because you'd be buying in at a market peak so betting on future appreciation is stupid, and it would be stupid to buy regardless since renting actually SAVES money in the current environment. So what you do is you simply take all the steps you need to take so you are less likely to get fucked: you don't leverage yourself with revolving credit, you pay down any debt you might have at an interest over 6% or so, you save up a good sized cash cushion, and you invest the rest of your income in a prudent and sensible manner (i.e. value/income stocks & short duration fixed income). Getting emotional about an economic disequilibrium solves nothing. Preparing yourself to not get fucked by the correction is what the wise man/woman will do.

"Here is a little story. I just talked with a client who wants to stop contributing to her 401k plan. The company gives her 2400 for just putting in 5%. She makes 60k a year. SHe says i need all the money she can get. She owns a home worth roughly 800k and owes 600k she is paying 4k a month in IO. So i did the math she makes 60k a year and pays 48k a year in IO…" - Joe

Damn, this is the kind of stuff that really frustrates me. $60k is decent money, well over the National median income, and yet this lady is likely to go bankrupt if she doesn't sell that albatross (I mean house) ASAP. She should be renting, funding that 401k, and saving plenty of cash otherwise instead of burning it all on mortgage interest. Are you an RIA Joe? If so, how many people do you see who are way over-leveraged on housing like this?

"you can extrapolate how much foreign dollar holdings there are through m3. this guy seems like he has something to prove/sell." --Schmend

It seems this is his only point:
"It’s funny when the Feds were busy debasing the currency at the speed of light and publishing this data no one cared but now that they won’t tell you how fast they are destroying it everyone starts to worry."

Yeah, that IS kinda funny, but it doesn't tell me anything I didn't already know. Sounds like he is just another gold bug, but if so, he might have made more sense by just saying "here's another reason to buy gold."

1) M3 is BS so who the hell cares if they stop publishing it

He's not saying it's BS, he's just stating that they have always published it and they have always been printing money...and if people are suddenly worried because they are going to stop publishing it, they shouldn't be. If the fed was to stop publishing M3 just to hide the fact they they are printing, they could do it alot easier by not publishing the correct numbers.....this would cause alot less paranoia, don't you think?

2) the money supply and the inflation rate do not correlate to m3( not true )

Where in the article did you got this from?

I saw Saddam on 60 minutes and he was dumbfounded that the US wanted to invade he said "Iraq has threatened America". Yeah you're correct, personally i could give a rats ass about the rest of the world, as I am sure the rest of the world could give a rats ass about the USA. What pisses me off is that the Shrub lied and when he got caught in a lie, he did a "look over there". I could respect, "look you fat ass SUV driving fucks, you want $2/gal gas, this is what it takes to get it". But going in under the pretense of WMD and then finding none? Come the fuck on again, at least have the good sense to plant some for fuck sakes.

picked up by the american left. see Syriana.

I typically get most of my "news" from Hollywood, makes life easier and much more entertaining. Plus Matt D is just plain hunky.

I would like to see OPEC start selling oil in Euros, what would be the harm in that? Afterall, the US has a robust, multifacted economy, a very strong RE sector, and is the technological superstar in the world, home to world beating companies like IBM, GM and WorldCom. Clear innovators with an eye on the future. Let OPEC start selling their black gold in EURO who cares, the US can wear faggy eyewear as readily as anyone.

Seems Mr. Penn is taking himself just a bit too serious. I think all he needs are some tasty waves and some cool buds and he'll be ok.

I strongly resent the notion that 100K is a lot of money.

Now that's just plain wierd. Take a look at the data, there's plenty available, 100K a year is a ton of money, if you can't live on 160K perhaps you should re-balance your moral portfolio.

Ahh but I used to live in Pacifica, then alameda, worked for Bayer, made 92K, did fine. Couldn't "buy" a house, but no matter how you slice it 6figs is a ton of money. The point is that costs in the BA are so inflated that it doesn't seem like a lot, but trust me, it is. Imagine all those other folks who eke out a living on 50-60K, which is the majority of BA residents. My God, what kind of cheese to this people eat, velveta?

Try living in Bay Area with 100K…

I ASS-ume you are trying to point out how fucked up the median income to median home price ratio is in the Bay Area? Because other than home prices there is no problem living in the Bay Area on 100k unless you are a serious spendthrift.

"My God, what kind of cheese to this people eat, velveta?"

Mmmm yes, I do postulate that those peasants positively MUST eat Velveta cheese with their Franzia boxed wine. Mortimer, warm up the car post-haste; we're going for a drive to have a look at investment property in Mill Valley.

Ha Ha, have you considered buying a BMW? They come with all maintainence included, beyond price, there's value. And BMW's have value like none other, plus you'll save money on the maintainence.

Face, according to the U.S. Census the median CA household income for 2003 was $48,912. There are plenty of families earning above that, sure, and there are plenty earning below that.

http://www.census.gov/hhes/income/histinc/h08a.html

Yes we can argue that some more income is "off the books" (not reported/taxed), and it probably went up a tad in the last two years, etc. Even so, 100K is WELL above the average teacher/plumber/electrician/police/firefighter/nurse(insert your regular-guy job here).

You'll notice that virtually every poster here makes that or close to it, and yet we still acknowledge this is well above average. Sheesh, dude, do you HAVE to go out for nouveau cuisine every night in your shiny new Escalade? Boy, must be tough scrapin' by like that!

Ha Ha,

Have you been hanging out with Bull$hitter lately? ;-)
The estimated Bay Area median household income in 2004 was $64,611 and median "family" income was $77,697. Either way, $100K is little better than just "average Joe", and $160K is WAY better.

http://www.bayareacensus.ca.gov/bayarea.htm

You should feel good about it --you're way above average and still can't afford an average house! What does this say about how seriously f&#%ed up the market is today?

Need 2 Leave CA?

Typical Bay Area income is 200K …. I believe this people can afford a house

And typical person make 160K huff bong so much typical person think average wage in BA 200K. Typical person be so very wrong not funny.

Face Reality,

Ok, so your plumber and contractor are pulling in some big bucks --good for them. You must move in very exclusive circles. And??

The point I (and many others) have repeatedly tried to make is, (a) $100K is well above average --even for the Bay area and (b) if you "can't" make it on that, you're priorities are seriously screwed up.

For the record, I am 100% supporting a wife, with baby on the way, for slightly LESS than $100K (*gasp*), though I have excellent healthcare benefits at my current job.

@Need 2 Leave CA,

Thanks for the props!

Housing is the main source of financial stress in the Bay Area.

Housing the the main source of slef-inflicted financial stress in the Bay Area. Housing in the Bay Area is rather affordable unless one tries to chase it as an asset when it is extremely overvalued.

The thing to remeber too is that 5 years ago (at least in Sac) you could buy a house on the median income. Now you can’t. You will never convince me that is normal or ok.

You can still "buy" the highly creative payment structure of a house on the median income. ;)

I tried to post the links, but got put in moderation.

SQT, I checked for any greyed out comments from you (the "awaiting moderation" link never works for me) but didn't find any. What was the timestamp on your post?

Housing in the Bay Area is rather affordable unless one tries to chase it as an asset when it is extremely overvalued.

Exactly --why "buy" when you can rent the same house for 50-60% less and bank/invest the difference. Again, that irritating common sense driving my decision making. Life would be SOO much easier if I could just drink the condoflip Koolaid and join the lemmings. What the hell's wrong with me??

My plumber certainly makes more than $100K (and so does the contractor who painted the outside of my house, but the way).

Yes but self-employment = no benefits. After you factor-in health-care and insurance the net is qute a bit less. Also, business is highly cyclical. If they are not making at least this much during the height of this bubble I would feel sorry for them. :)

I didn’t make comments until recently. I hope mine have some value.

Need 2 Leave CA, of course your comments have value. :)