patrick.net

PITI or RENT,

You might find the NY Times rent vs. buy calculator helpful:

http://www.nytimes.com/2007/04/10/business/2007_BUYRENT_GRAPHIC.html?ex=1177732800&en=130ba5207ce7376e&ei=5070

Of course much of this decision is very personal in that there is a financial calculation for renting vs. buying, but there's also personal utility. For you, it sounds like staying put in one place, particularly in the same school district is very important. This makes buying earlier than the numbers would tell you to perhaps more worthwhile in your case.

The numbers you supply roughly make sense if you buy and stay put for at least 5-7 years. On a gestalt level, those rental prices vs sale prices are much more favorable towards buying than they are here in the Bay Area.

Jon, even the smallest things suck me into long discussions here just because I love the angles. Your suspicion of the 85% made me think of the Muslim polls saying 75% of Muslims don't believe in attacking civilians. The press was trying to spin that as a good thing, let alone explaining the 25%. Holy crap!

PITI, my only support for a decision to buy would have to be based on your certainty of staying put for the 10-15 years you are talking about. I live in California, so I am very suspicious of people saying they would stay put for 5 years, but hey it's California.

Anyway, your numbers have some overlap, so buying is not so easily shot down as a good option in this situation. My caution here is that why not try to time it a little better? People on the buying side are so quick to throw in an extra $10,000 in purchase price but don't realize how much it can suck if you are trying to get out from under a negative 10K equity. It seems to me it is roughly a push now, I'd like to see you weigh the freedoms that come with renting a place, verses basically what the tax break will be with a gain in equity through owning. I'm leaning to continue renting until you really see a deal, I know it's tough because it is a pretty close call.

Remember on average you need to have an increase of 10% in the value of the house just to be able to walk away from it.

Jon,

Yep. We already have the safety nets for these people. I don't see why they should get anything more than that.

SF Bubble,
I agree, proveable fraud is a legitimate civil tort to charge in court. Fraud is its own area so I try to caution people about emotional terms like predatory lending. It is really being hyped up, and blurrs the real issue. Like you said, we want to punish fraud.

The problem becomes circular because in contract law normally the written contract takes precidence over verbal promises, and oral contracts don't hold up with property transactions so what exactly would the fraud be? The fraud would have to be something in the contract that is not delivered, or is illegal in some way. I try to stretch to sympathize with ignorant people who don't understand loan documents but somewhere we have to draw the line and say to people, you are responsible for your side of a contract.

1800/mo verses 200K purchase price would be a true push. Remember taxes and maint.

"let alone explaining the 25%"

I remember in one of the Philippine elections Marcos got 4% of the vote. Nothing remarkable there (other than that he was dead). So... you can always count on at least a certain segment of society to do unpredictable things.

What we "should" be doing (as evidenced by the "warm and fuzzy" poll posted above) is to recruit mainstream home owners toward our way of thinking. If you're none to excited about your home dropping in value how do you feel about propping up someone else that never really could afford their's to begin with?

Bubble bloggers: 1 :) F@cked Borrowers: 0 :(

Hey, I'm one of them, and I'm on your side.

If 200K sounds extremely low, keep in mind that just a few years ago that's what a house that rents for that much would have sold for.

I turned my nose up at a duplex for 130K which had $1200 per month coming in. I had even better deals going on back then.

FormerAptBroker,

My favorite is from “RentsAreUp” who says “Come back and ask that when your rent has tripled and the house is valued at 3 million.”
At 5% per year inflation in “only” about 25-30 years rents will triple and $770K homes will be selling for $3mm…

Actually, I know that this house was bought with $260K 15 years ago. So assuming the $770K sale price, it has roughly tripled with an annual appreciation of 7.5%. If housing price continues to grow at the same rate in next 30 years, it will actually be about $7 MILLION. :)

Jon

There was a ponzi called 12dailypro which was hot news a couple years ago. I think it took in over 50 million from around 300,000 people. They even had a message board and used ‘plants’ to say how great the whole thing was and how people who tried to call the whole thing a scam were just jeolous of their financial success.

You can also google ‘HYIP’, which stands for ‘high yield investment program’. They’re all scams.

If you haven't already, click my name and read my articles on "Second Life". In my opinion, the game/virtualworld/whatever is a clear case of a HYIP. All the same factors come to play, which I detailed in my 3rd article on the subject. They have a devoted following (the people who have made money -- all 20 or so of them), and a huge army of shills who infiltrate every forum and attack critics. In fact, there is an outside chance one will google this very comment I'm writing now and appear here to counter my claims.

I can buy the 911 distraction theory. There seems to be almost *no* enforcement of scams, cons, ponzi and pyramid schemes. Just watch CNBC about midnight on a Saturday night. There are essentially guys on there telling you how to take business loans, buy pickup trucks and boats with the money, then walk away from the obligation. Right afterwards you'll find out how 3 easy payments of $79.99 will double the size of your choad. People who get scammed are too ashamed to admit it, so they just pay the 3 payments and move on in life. Meanwhile the average infomercial run grosses something like $0.5m - $2.0m. And these are guys working out of a garage who know how to rent a studio stage and a camera crew for a weekend.

In my opinion, the game/virtualworld/whatever is a clear case of a HYIP.

Randy, are you still in the business of enraging people with more time than senses?

IMO Peter P is going to get burned in a sushi pyramid scam, in Second Life. :)

tinyurl.com/2bbb72

ahahahah, my cup runnith over, does this make me bad? Or does being bad make me bad?

Randy H,

I've seen a lot of HYIP scams but fail to see how that necessarily fits with what SL is doing? Classic HYIP scams offer outrageous returns that can be paid out "daily" with minimal investment. Supposedly this money (or "e-gold") is yours. Whenever they're pressed as to how they can offer such high rates of return the answers are garbled at best. Usually something along the lines of "The Fed (or the wealthy) have been doing this for years. Now you too can...."

SL OTOH makes no such pretense!

Surfer-X,

Don't get too excited about broke boomers. They'll just vote themselves more Social Security. I.E. taxes on employed people.

HelloKitty,

They put the 'tool' in Toolbox over there.

This particular bank has, like others, been expecting losses post-housing boom and has stepped up reserves to make up for the problem loans. “Oh, I’ve seen this all before,” said the career banker. “We always have some losses, but it’s contained. The banks are going to be just fine. In fact, I see business picking up by summer.”

This to me, is where it gets interesting... what business will be picking up by the summer? Seems like the calm before the Alt-A storm. I keep getting (ir?)rational urges to short WaMu, even with their 5% dividend yield.

DinOR

I’ve seen a lot of HYIP scams but fail to see how that necessarily fits with what SL is doing? Classic HYIP scams offer outrageous returns that can be paid out “daily” with minimal investment. Supposedly this money (or “e-gold”) is yours. Whenever they’re pressed as to how they can offer such high rates of return the answers are garbled at best. Usually something along the lines of “The Fed (or the wealthy) have been doing this for years. Now you too can….”

SL OTOH makes no such pretense!

Oh, but they do. That's what I detailed. Look at the hundreds of comments I got back from "shills" claiming they were running Second Life "businesses" which were growing at 30% PER MONTH, and they were pulling thousands of $ per month. That's a pretty outrageous return for maybe $20 investment, no? The entry "fees" are very low. The only difference here is that there is a real *game* going on at the same time. There are people who just go there to play and have fun.

But I was specifically talking about the "businesses", which the company and all their cultists have pushed and pushed and pushed. The CEO said "Play Second Life, have fun, and pay your rent at the same time". USA Today said 'Quit your job and earn your living in Second Life'.

But I proved there are only a couple dozen people making net positive profits -- and HUGE net positive profits, while everyone else loses money. And the game makers make millions per month "printing" all the fake money.

HYIPs are increasingly wrapped in some legitimate facade. I have no argument that Second Life as an online game platform isn't interesting and legitimate. But the business model isn't to charge people to play the game. The game is free. The only money anyone makes is from the company printing fake money, and a bunch of "businesses" try to hit the virtual gold mine.

And their claim as to why they can earn something like 12,000% returns? "It's no different than the real world economies. The dollar is worthless, rich people are always at the top, this is how they make money. Come into Second Life and you can be one of those rich people at the top".

And Peter P, that probably answers your question too, lol

On a serious note, I am starting a new company right now in an entirely different area of interest. In fact, anyone local to SF who's very good at RoR and is startup-compatible is welcome to email me.

And Peter P, that probably answers your question too, lol

And I will try to protect you with my remote-influencing virtual light shield*. :)

*not guaranteed to work

this jeff guy and the sdcia remind me of these mark davis quotes:

'the measure of good government has become an ability to encourage its citizens to ruthlessness'

singular sorry

Jon,

Only 350K! It's a steal!

Governments have by and large abandoned their traditional role of taking responsibility for the equitable redistribution of wealth and privilege in a democratic society, and have increasingly left that job up to the markets, a policy which has been complicit with the sort of inequity the politics of division are designed to cover. The outcomes of such strategies deserve to be more highly publicised. When it comes to Australian young people a few statistics are worth mentioning. Australia has one of the largest gaps between rich and poor of all OECD countries, with higher levels of poverty in regional areas. It also has one of the highest rates of child poverty. It has historically high rates of youth unemployment, and one of the world's highest rates of youth suicide, especially in regional areas.

One of the items on most conservative agendas in Western countries in the 1990s has been an attack on the idea that democracy should be radically inclusive, and should reach across the broad spectrum of social difference. Instead, democracy is being re-imagined as an assimilatory mechanism that excludes those not willing to enter a fairly narrow, often backwards-looking, social contract - as opposed to the traditional idea that democracies exist precisely to ensure that minorities don't suffer and marginalised groups have access to the same range of educational, health and welfare resources as the wider polity. The ideas that democracy is always already a level playing field where no adjustments need to be made, that everyone is already the same because they have the same rights and freedoms (and therefore the same privileges), and that no interventionist concessions should be made to disadvantaged groups, are popular in Australia at the moment.

There have been recent concerted and widespread attempts by both politicians and the media to discredit those statutory and semi-government organisations that have anything to do with redistributing social justice. Wedge politics and attacks on minority groups have tended to translate into attacks on legal aid funds, the independence of the judiciary and the work done by bodies such as The Equal Rights and Opportunity Commission, as well as undermining the commitment of governments to International charters, especially human rights charters. This, too, is a function of a conservative, anti-welfarist turn in politics. It's also a function of an increasingly competition- and efficiency- driven society that tends to see individual interest as paramount, to the point where the measure of good government has become an ability to encourage its citizens to ruthlessness.

Sick, wicked culture: the global politics of regional youth - Mark Davis
http://www.renewal.org.au/markdavis/sick.html

Governments have by and large abandoned their traditional role of taking responsibility for the equitable redistribution of wealth and privilege in a democratic society, and have increasingly left that job up to the markets, a policy which has been complicit with the sort of inequity the politics of division are designed to cover.

I think many on this site would argue that that's not government's role at all.

See all the libertarian threads before this. :)

Nice find on the oakland house - i'll add it to burbed!

That said, I still hold this house is worse than that one:

http://www.burbed.com/2007/03/26/affordable-starter-home-or-fallujah-replica-in-the-bay-area-you-decide/#comments

I think many on this site would argue that that’s not government’s role at all.

of course they would. they frequently do. the view in australia, as a fairly recently settled ex-colony in a hostile environment, was that govt should be present to correct deficiencies and lend a hand when times are hard. hence, people traditionally turn to govt for solutions here more so than in the US, for instance. (and think about what a 'governor' does on a steam engine.) however, public opinion and the US national trait is one of individualism and fatalism, for better or worse. (i would argue it is often for the worse, and at best fatalism is just a coping or ego defence mechanism.)

i would hate to think that the american view of the role of govt is limited to making war, spending inordinate amounts of taxpayers' money on armaments, harassing other countries for advantage, and so on. traditionally, americans somehow see politics and their govt as being there to facilitate business.

Governments have by and large abandoned their traditional role of taking responsibility for the equitable redistribution of wealth and privilege in a democratic society, and have increasingly left that job up to the markets, a policy which has been complicit with the sort of inequity the politics of division are designed to cover.

Because someone did tear down that wall?

Oops, it shouldn't have had the #comments thing at the end. Here's a tinyurl:

http://tinyurl.com/2v9cpt

Because someone did tear down that wall?

what's THAT got to do with anything?

That role of the government was proven to be inappropriate.

Peter P Says:
That role of the government was proven to be inappropriate.

if you say so... they're your ghettos, after all...

@SP,

My pleasure.

they’re your ghettos

Fair description of the Bay Area.

[quote]I keep getting (ir?)rational urges to short WaMu, even with their 5% dividend yield. [/quote]

I have a large cash position right now, and I'm not keeping it in banks like WaMu for similar irrational urges.

SP

You just invoked a lot of memories. Man.

See if you can find me in this old archive from the day (when SLIP PPP was a big deal).

http://scout.wisc.edu/Projects/PastProjects/NH/95-02/95-02-16/0023.html