patrick.net

I survived the '89 Loma Prieta quake. That was a 7 on the Richter Scale.

That was one BIG motha'. Scared the sh-t out of me! Damn!

No quakes in Arizona, though.

Drought is an interesting one. NSW is in a long drought now which has halved local primary agricultural production in recent years. Sydney is on the edge of NSW and has easily the most expensive real estate in the country, fuelled mostly by the service sector (finance, entrepot activity, tourism, etc). You wonder how long it will take for the downturn in farmers' earnings to feed into the broader local economy. You will also see, as a result, staple food prices going up, not counting higher oil prices working their way through the economy. (Both these things are inflationary.)

All the indicators therefore are tipping towards a housing price crash or else loads of wage rise claims, disregaring the fact that the boom inevitably has to play out or stabilise regardless of the economy.

Could we throw together a housing price (real or income multiple) and earthquake events chart?

JBRs could work on a Dr Evil-type death ray weapon (e.g. a "laser") that will trigger the earthquake, thus lowering prices, and then snap up bargains and become property moguls. Ha! That would turn the tables! You don't even have the messiness of telling anyone or holding govts to ransom with the fearsome weapon, just use it! Just don't accidentally split the world in half with it. And, if a handsome govt agent breaks into your plant, don't, under any circumstances, tell him all your plans while he is tied up, or leave him in a pool area full of bikini-clad girls. Or set off a fiendish roundabout way of killing him then leave him alone while you wander off to make a cup of tea...

I just hope a big one does not rock SF/LA or any other place in CA too badly. I get a feeling a big one is coming, but like everyone else, I sort of ignore that feeling.

By the way, have folks seen this?

http://www.nytimes.com/2006/11/19/realestate/19nati.html

I wonder if the number of sign twirlers can be used as a lagging indicator? Kinda like forclosure, but funnier.

In all seriousness, I consider the potential of a severe quake in the Bay Area to be a part of San Francisco's romantic appeal - that every year the city is spared is possibly its last.

Those of us who think of it as one of the world's great cities - even if we live somewhere else - always have the subliminal idea tugging away at us that your beautiful city is never out of danger.

earthquakes? Great, that means more waterfront properties.

I don't know. By a large proportion, flooding causes the most real damages in the US every year. Most of that is not in CA. Earthquakes seem pretty bad because of the nature of them -- sudden, without warning, and lots of instantaneous damage. But the largest dollar damages in the US have all been hurricanes, which are still impossible in the SF Bay Area (it'll take a lot of global warming before I'll worry about hurricanes here).

Certainly a big one is coming due here. But that could be today or in 150 years. More likely sooner than later, but these things can come hundreds of years late. Isn't the New Madrid fault in Missouri much more overdue? And that fault has caused the largest quakes ever recorded in the lower 48. Manhattan is on a fault that's overdue too. One could go crazy worrying. Hell a little town of about 5,000 that begins with an "X" a few miles from where I grew up got practically wiped off the map in the late 70s by a series of killer tornadoes when I was a kid. Maybe tornadoes are causing the housing bubble too.

(or in other words, I believe systemic risk is always priced into the market and largely has no effect on speculative prices, which is the sole cause of an asset bubble)

Randy

Re: killer tornadoes - Xenia, Ohio?

Re: earthquakes - I've always wondered what happens if you own a condo that is destroyed during an earthquake, since you don't technically own the land. What if the structure cannot be rebuilt?

Randy H,

Agreed. There's a lot of things that keep me awake at night and this just isn't one of them. Many of us have seen the studies that show several fault lines that snake their way through downtown Portland as well. I believe we've been told we're overdue as well. We have 3's and 4's with regularity and I manage to sleep right through them!

I don't mean to make light of the possibility of devastation but I'm just trying to make it to Friday.

SF Woman - Interesting. I wonder if the same holds true for Santa Clara County. I'm thinking about multi-level buildings, not townhouses.

Randy H Says:

> I don’t know. By a large proportion, flooding causes
> the most real damages in the US every year.

I bet if we added up the total damage since WWII from the Russian River flooding and total damage to Bay Area Residential Real Estate from earthquakes that the cost to repair the damage caused by the flooding would be higher… I’ve lived in California my entire life and I don’t know a single person that has had any more that very minor (like cracks in plaster) earthquake damage…

> Earthquakes seem pretty bad because of the nature of them —
> sudden, without warning, and lots of instantaneous damage.

Modern homes and older homes that have been retrofitted will have almost no damage even if we have the biggest earthquake on record again. People around here to need to remember to bolt heavy items to the walls and store wine and crystal in a way that it will make it through some shaking. Every time there is an earthquake there is some significant damage to structures with poor design (like the East Shore Freeway) and serious damage to the few buildings on unstable ground (like the Marina). People forget that we have significant damage to buildings with poor design (like that shopping mall that collapsed in Indonesia) or buildings on unstable ground (homes sliding down hills in Marin and the home that fell in to the sinkhole in Seacliff) on a regular basis without earthquakes.

> But the largest dollar damages in the US have all been hurricanes,
> which are still impossible in the SF Bay Area (it’ll take a lot of global
> warming before I’ll worry about hurricanes here).

It looks like the increase in Hybrid sales and the decrease in Hummer sales has stopped global warming since we have not had any major hurricanes this year…

Just like right after Loma Prieta, an earthquake will certainly make Marina not so prime anymore.

I'd also be worried about other "landfill" communities like Foster City and Redwood Shores.

Other than the immediately impacted areas, though, I don't think earthquakes have a huge impact on housing psychology. People still seem to want to live here. I wonder what people were saying about SF after the 1906 quake.

"the decrease in Hummer sales has stopped global warming"

LOL! So it's conclusive right? Who would have imagined reversing global warming would be so easy! Next!

SF Woman wrote:

> I wasn’t here in ‘89. Did people flee the city after Loma
> Prieta because of the earthquake, or was the slide in
> prices due to other, economic factors?

Prices in SF (and Northridge) actually kept going up in to 1990 after the (7.1 October 1989) Loma Prieta Earthquake then prices started to drop in both SF and Northridge with prices dropping a lot more in Northridge (that didn’t have an earthquake).

Prices in both SF and Northridge started to rise after the (6.7 January 1994) Northridge Earthquake with prices going up a lot more in San Francisco (that didn’t have a major earthquake in the 90’s)…

Areas like Marina are subject to liquefaction where the ground can turn to mush like oatmeal. Structural failures follow. A quake in the Central Valley could break the levies and bring flooding. Landfill areas certainly do not do well in quakes.

It looks like the increase in Hybrid sales and the decrease in Hummer sales has stopped global warming since we have not had any major hurricanes this year…

Well, then God bless Ed Begley, Jr.!

skibum Says:

> Just like right after Loma Prieta, an earthquake will
> certainly make Marina not so prime anymore.

Many of my friends in the Marina have so much structural steel in their homes that they may be the only buildings standing in SF if we have “the big one”…

> I wonder what people were saying about SF after
> the 1906 quake.

When people see the photos taken after the 7.8 1906 earthquake most forget that very little damage was done by the “earthquake” with most damage caused by fires that started after lamps and other open flames tipped over (and damage when the Army came in with dynamite to blow up hundreds of buildings to make fire breaks)…

@FAB,

Yes, I've heard of folks with super-reinforced buildings in the Marina. I still wonder if the liquefaction of the land underneath will still create such tremendous forces that steel reinforcement will not do a whole lot. This is especially true if your immediate neighbor(s) didn't bother to reinforce.

I've also read somewhere that not only is the Midwest fault line "overdue", but that the East Coast (Boston area) has a fault that can move anytime. Imagine all the 150-200+ year-old brick buildings standing on wood pilings in even a moderate quake. Now THAT would be bad.

Is there any part of the country that doesn’t have some nasty risk assciated with it?

How about Dick Cheney's underground bunker in the Rockies?

SFWoman,

That was known as the "Spring Break Quake" and utterly demolished the HS my daughters "would" have gone to. It was deemed to be unsafe and later taken apart brick by brick. The epicenter was in Scotts Mills about 7 miles from our home in Molalla, OR. Your husband is absolutely right though, many here simply treated it as a "one time event"!

The Molalla HS (I believe) was built in the 1930's and was not updated. It's now a park, but no, we do not have earthquakes in OR.

SFWoman -

Collectively I *assume condo owners do own the land, but if units are built on top of each other, they must also own "the sky" - what if some have earthquake insurance in the building, but others do not? These are the things I wonder about.

King_Cobra,

I'd have to describe Salem as an "echo bubble"? Due to Portland's NIMBY UGB stance McChateaux's are sprouting up up on the south end of Salem (40 miles to the south of the Rose City). For many years Salem (our capitol) was inhabited by low paid state workers and had for the most part VERY modest homes.

The sheer amount of development south of Kuebler Ave. is mind boggling. They have a few nice golf courses there but much of Salem looks like the many towns along 99E south of Sacramento. Now that many of the former working class neighborhoods in SE Portland have somehow become magically "exclusive" areas (and pricey to boot) Salem has in ways become the "new" SE Portland! Due in large part that Salem had remained hidden from the equity locusts until 2005 the price reductions haven't really begun in earnest. I expect that in the spring when it becomes all too obvious that state workers can't afford 4,000 sq. ft. homes and there aren't enough locusts to go around!

I've had people in CA tell me they've rec'd e-mails and flyers touting Salem's "invest-ability". So builders there are actively "trolling" for equity locusts in a last ditch effort to keep this thing alive.

"It looks like the increase in Hybrid sales and the decrease in Hummer sales has stopped global warming since we have not had any major hurricanes this year… "

LOL!(appreciatively)

SFWoman,

DC suburbs is pretty low risk from natural disasters, as long is your basement is properly placed (so flooding is not an issue). There's the occasional tornado, but that's that's pretty rare.

However, there is a relatively high danger from domestic and international terrorism.

Australia is seismically inactive and probably too small to be attract international terrorists, but I don't know how it fares climatewise.

skibum

I’ve also read somewhere that not only is the Midwest fault line “overdue”,

The New Madrid faults caused the largest earthquakes outside of the huge ones in Alaska, in the US.

1811-1812, 3 quakes all over 8.0:

http://quake.usgs.gov/prepare/factsheets/NewMadrid/

Survivors reported that the earthquakes caused cracks to open in the earth's surface, the ground to roll in visible waves, and large areas of land to sink or rise. The crew of the New Orleans (the first steamboat on the Mississippi, which was on her maiden voyage) reported mooring to an island only to awake in the morning and find that the island had disappeared below the waters of the Mississippi River. Damage was reported as far away as Charleston, South Carolina, and Washington, D.C.

These dramatic accounts clearly show that destructive earthquakes do not happen only in the western United States. In the past 20 years, scientists have learned that strong earthquakes in the central Mississippi Valley are not freak events but have occurred repeatedly in the geologic past. The area of major earthquake activity also has frequent minor shocks and is known as the New Madrid seismic zone.

I read somewhere else on the USGS site that the Midwest/plains are especially susceptible to quakes because the flat land allows the energy to travel further, where western mountains limit the range. There was another bit about how the skyscrapers in Chicago effectively "float" on the ground water, and are prone to complete failure in the event of any quake larger than about 7-something. I think the 1800s New Madrid quakes carried more energy than that into Chicago.

Also, according to my tour guide in Great Basin National Park, the Lehman caves are pretty secure from seismic activities (and just about everything else). He's speaking as a guy who survived Loma Prieta as a scout leader on top of the Half Dome, so I really HAVE TO believe him.

King_Cobra,

I have an appt. in a bit but I would strenuously debate that. LV was one of the first markets to go ballistic and the mood there amongst realtors is dour. Foreclosures are skyrocketing and "lease 2 own" offers are busting at the seams. LV is the birthplace of the "cash back at closing" offer along w/incentives out the ying yang. They're probably a year ahead of the rest of the country with realtors finding very little to celebrate about. More high-rise (and high profile) condo projects have been shelved or outright cancelled than you can shake a stick at. Ivana Trump and Michael Jordan come to mind.

I had a client buy in Henderson and they re-negotiated the price down TWICE during the process of closing! (Of course I insisted they hold off a little longer) but I'm just a financial planner so WTF would I know! Orig. 360K down to 297K. Probably could get identical home for about 260-275 now.

Prices haven't corrected enough for my taste but if I "were" looking to catch a falling knife I'd start here. Oh btw, rentals are abundant and oh so negotiable. Wait out the crash by the pool! (Snaps fingers).

King_Cobra,

I would have to guess that LV (like SD) may have actually peaked in 2004, early 2005 at the latest! True, the Strip and Summerlin seem to be holding up but the sheer amount of bad news for the greater area can be a little overwhelming. It's really sloppy and no one seems to be sure where prices should be.

I've noticed over on C/L that specuvestors are dispensing with the "bravado" and are speaking more candidly. "Take over my payments" is not exactly uh....... coming from a position of strength?

lunarpark,
In common interest developments (including condos), you own a percentage of the land that is part of the development. Not a specific piece per se, but an undivided interest (not sure if this is the right legal term) in the entire piece of property. HOA monthly fees usually include earthquake insurance premiums to avoid the situation you discussed.

I remember hearing Simon Winchester discussing his latest book on the SF earthquake. He made the point that most of the great cities of the world have stood the test of time. He was unwilling to bet that SF or New Orleans would still be here in 100 years.

EBGuy,

Thanks, that makes sense.

the only place with no apparent risk and fits my lifestyle is Las Vegas.

@King_Cobra,

LV has the problem of water supply, so I think it's also subject to "natural" calamity (severe drought).

I also agree that talking about uncontrollable natural disasters and housing is a bit of a silly idea.

REIC responds to Surreal Estate article:
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/11/19/REGRKMF60V1.DTL

Editor -- Reading the article by Carol Lloyd made me wonder what her motivation would be for trashing the real estate industry ("A buyer or seller be," Surreal Estate, Nov. 12).
.....
Now, consider the following:

When brokers bring a buyer and seller together, suddenly many people are employed and generate revenue. Inspectors, loan and insurance brokers, painters, termite companies, stagers, plumbers, engineers, roofers, title companies, just to name a few. City and county transfer taxes are generated.

What's my point? It's not all about our commissions. We help stimulate an entire segment of the economy. We don't want a medal, or even a pat on the back. We'd just like the public to know that our industry is not as self-serving as you are attempting to portray.

TIM Q. CANNON, broker
BerkeleyHome Real Estate

And from the Berkeley Daily Planet:

On the downside—for city coffers—home prices decreased from an average of $792,000 to $775,000 over one year and the volume of home sales decreased from 438 to 324 over a year causing transfer tax revenue to slip by about $1 million.

I also agree that talking about uncontrollable natural disasters and housing is a bit of a silly idea.

I agree. Instead we should be discussing the correlation between pirates and housing cycles. ;-)

Just for trivia, before you decide SF is a dangerous place to live. By the way, I remember hiding in my grandmother's basement when these monstrous F5 twisters jumped over Wilmington. I was 6 and absolutely terrified.

On April 3, 1974 a tornado measuring F5 on the Fujita scale cut a path directly though the middle of Xenia during The Super Outbreak, the largest series of tornadoes in history. The disaster killed 34 people (including two Ohio Air National Guardsmen who died days later in a fire), injured an additional 1,150, destroyed almost half of the city’s buildings, and made 10,000 homeless. Nine schools, nine churches and 180 businesses were destroyed. The city's plight was featured in the national news, and President Nixon visited stricken areas.

Indeed Xenia has a long history of severe storm activity. The area was referred to by Shawnee Indians as "the place of the devil wind" or "the land of the crazy winds" (depending upon the translation) before the white man appeared on the scene. Records of storms go back to the early 1800s. Tornadoes are more frequent than people realize; local records show 20 tornadoes in Greene County since 1884.

@EBGuy,

All I can say is, TIM Q. CANNON, broker, you are an idiot. I am impressed with how altruistic you really are. You really are doing real estate to help out all those other guys in the industry. It's not about the commission! Bless you, Tim!

As a former aerospace engineer who hangs out with a few civil engineers still, I don't believe the amount of structural steel used has a lot to do with how well it will withstand an earthquake. Depends on how it's deployed. From what I understand, it's how the structure is designed and how it floats (or doesn't) on the soil that determines it's immediate survivability. Designing some "give" into a structure can actually be a good thing. A willow will survive wind-storms that a tall oak will not. In any case, getting a good engineering assessment or two of your structure would be a good idea not just rely on the word of the builder/seller about how strong it is.

The best thing you can have is insurance. In any case even a structure that survives an earthquake could be damaged/destroyed by post-quake factors like fire or flood. Or the surrounding area that is destroyed could create it's own hazards for some years. If your neighbors are slow to rebuild you could be living on a block with boarded-up empty buildings and that's not good on several fronts.

what about plagues of locusts or frogs -- do we need to insure against that?

From what I understand, it’s how the structure is designed and how it floats (or doesn’t) on the soil that determines it’s immediate survivability. Designing some “give” into a structure can actually be a good thing. A willow will survive wind-storms that a tall oak will not.

Vincente,

From the little I know, I think you're right. I remember reading about super-tall skyscrapers like the Petronas Towers in Kuala Lumpur or the Taipei 101 building, both located in earthquake and typhoon-prone areas. They use very interesting damping systems to counteract extreme forces, sort of like humungous internal pendulums that counter the sway of the buildings during a quake or typhoon.

But, as you say, any reinforcement may not be good enough if the ground underneath completely gives way and shakes like a bowl full of jello, which is how they describe what happens to places like the Marina.

I’m in the market for a perpetual motion machine and an underground cave, 100 meters or more underground.

Locusts are good though - good famine food.

SFWoman Says:

> The strongest I have ever felt the ground shake was
> in an earthquake in about 1988 at my family place
> in the Back Bay (Boston, landfill, massive Edwardian
> stone townhouses).

The Brookline area of Boston has always reminded of Presidio Heights. Is Brookline considered part of the “Back Bay” (or is the Back Bay just the area east of Fenway Park and BU)?

The Brookline area of Boston has always reminded of Presidio Heights. Is Brookline considered part of the “Back Bay” (or is the Back Bay just the area east of Fenway Park and BU)?

No - Brookline is a separate town abutting Boston proper (by the Longwood medical area and Fenway). Back Bay is the neighborhood east of Mass. Ave., north of St. Botolph St (or for some, Huntington Ave.), west of the Boston Common, and bordered by the Charles River to the north.

How does Brookline remind you of Presidio Heights? I don't see the connection so much (having lived in Brookline for 2 years).