patrick.net

Heraclitusstudent says

tatupu70 says

Heraclitusstudent says

Explain why in a free market a widget that can be mass-produced for $250K is sold used for $500K in San Luis Obispo.

The cost of the land.

Yeah, because we all know land is RUNNING OUT in San Luis Obispo. It's surrounded on all side by water and every square inch has been built.

Look at it this way....If someone is willing to pay $500K for a home that cost $250K to build, wether there is a lot of land or not, how are you gonna prevent that? It's their money.

Strategist says

Location location location.

That 250K house is standing on a lot that is worth $250K. Therefore the price is $500K.

No $250K is the price for the land and the house.

You are saying a piece of land in San Luis Obispo is as precious for the same reason land a Malibu lot above the ocean is precious, or maybe an apartment in Paris. i.e. all rich people want to live in San Luis Obispo.

Get a grip of yourself.

Who wants to live in San Luis Obispo?
What industry do they have?
What attraction?

Strategist says

If someone is willing to pay $500K for a home that cost $250K to build, wether there is a lot of land or not, how are you gonna prevent that? It's their money.

Yes it is their money. I'm not going to prevent it. I don't want to prevent it.

I'm just saying it's ridiculous to expect it to appreciate 6% a year.

Heraclitusstudent says

Strategist says

Location location location.

That 250K house is standing on a lot that is worth $250K. Therefore the price is $500K.

No $250K is the price for the land and the house.

You are saying a piece of land in San Luis Obispo is as precious for the same reason land a Malibu lot above the ocean is precious, or maybe an apartment in Paris. i.e. all rich people want to live in San Luis Obispo.

Get a grip of yourself.

Who wants to live in San Luis Obispo?

What industry do they have?

What attraction?

People who are willing to pay $500K certainly want to live there.
Buyers and sellers determine the price of a house. You cannot dictate the price.
You tell me, why are they willing to pay that high price?

Heraclitusstudent says

Strategist says

If someone is willing to pay $500K for a home that cost $250K to build, wether there is a lot of land or not, how are you gonna prevent that? It's their money.

Yes it is their money. I'm not going to prevent it. I don't want to prevent it.

I'm just saying it's ridiculous to expect it to appreciate 6% a year.

So why has it been happening for the last 50 years?

Strategist says

We kicked out the Native Americans didn't we?

Yes, by force.
You do realize there are immigration laws with a ceiling on the number of immigrant visas that effectively prevent millions of Asians to come to California?

Heraclitusstudent says

I'm just saying it's ridiculous to expect it to appreciate 6% a year.

What sold for ~$30,000 in 1975 sold for $420,000 in 2014

That's ~9% pa appreciation (in Salinas, CA).

The condo my bud's parents flipped in Westwood CA -- bought for $185k in 1986. sold for $735,000 in 2008 -- 6%.

The beauty -- and terror -- of exponential curves is that you never know where you are on them, since their rise is self-similar at every point.

http://research.stlouisfed.org/fred2/series/MZMSL

shows that in 1986 MZM was under $2T. Now it's over $12T.

In 2036, will it be $70T? Why not?

Strategist says

So why has it been happening for the last 50 years?

For one thing it started low. Debt levels started low.

You can't claim things are the same now as they were 50 yrs ago.

Heraclitusstudent says

effectively prevent millions of Asians to come to California

it only takes dozens of well-heeled buyers to affect a local market, not millions.

http://www.cnbc.com/id/101225345#.

and we're not going to close the door to them.

Strategist says

You tell me, why are they willing to pay that high price?

not helping matters:

http://research.stlouisfed.org/fred2/series/CUUR0000SEHA

rents have more than tripled since the 1970s.

that, combined with low interest rates:

http://research.stlouisfed.org/fred2/series/MORTG

has pushed up the housing cost curve immensely.

http://research.stlouisfed.org/fred2/graph/?g=EJc

shows the average wage has risen from $13,000 to $50,000 since the 1970s.

Housing is our primary life need, it's easier to live without food for a day than tenancy in housing.

Now, if you'll excuse me, there's a beach calling me. : )

Heraclitusstudent says

Strategist says

We kicked out the Native Americans didn't we?

Yes, by force.

You do realize there are immigration laws with a ceiling on the number of immigrant visas that effectively prevent millions of Asians to come to California?

Lots of loopholes too. If you're illegal no laws apply.

Bellingham Bill says

Now, if you'll excuse me, there's a beach calling me. : )

At 7.00pm on a Tuesday? Enjoy the sunset walk...take your dog with you.

Strategist says

Lots of loopholes too. If you're illegal no laws apply.

So Chinese millionaires will come - illegally - with their millions (after all it's easy to open a bank account in the US without a ss number) - and then spend their millions to buy the precious real-estate in the San Luis Obispo global metropolis.

Do you realize the number of weird rationalizations you have to make to justify your belief?

Bellingham Bill says

it only takes dozens of well-heeled buyers to affect a local market, not millions.

So you are saying a few dozens platinum-shitting Chinese will come and buy half of California?

Why? How?

jazz music says

Think about this: the game only ends because the currency is not expandable, no credit to keep it alive.

Humm... I think it ends because someone has all the money and all the assets, and the other players die the mouth opened.