The Housing Bubble

You have some gloves I could borrow?

Yeah, me too. My gloves aren’t heavy enough to handle barbed wire.

I keep an old steel BBQ smoker full of all sizes of new and used leather work gloves, gardening gloves, riding gloves, rubber lab gloves, heat-resistant gauntlets, fencing gauntlets (epee and barbed wire) latex AND nalgene bio gloves, AI elbow gloves (don’t ask)– and that’s just for OUTSIDE…. Quite literally must have fifty or sixty pairs to choose from. How are you ladies with a chainsaw?

(Our fingers are our friends.)

How are you ladies with a chainsaw?

I used a Sawzall back when I was a Habitat for Humanity volunteer. Does that count toward my chainsaw qualification course?

I was terrible with a chain saw back in college, but I wasn’t half bad with an axe. And I can snap a line for shingles too.

As a convicted felon, nothing was available except ??

Theres that old criminal justice system again….How many acts are there now that constitutes a Felony ?? Is it thousands ?? Ten thousand ??

So, get your felony wether it be at 18 or 40 and your life, as far as work goes, has changed forever…And with todays information technology, you will never run away from it…

So, you criminal, go work digging ditches or run you own hot-dog vending cart…You no longer qualify as a up-right citizen in our society…

Yep. Another life shot to hell by our idiot drug laws. And this guy is a rabid Fox Limbaugh Republican.

Another life shot to hell by our idiot drug laws.

As John Mayall once sang, the laws must change.

(That was from his 1969 live at the Fillmore East album “The Turning Point.”)

At the risk of sounding facetious, why doesn’t he do what the lucky duckies do? You know, work 3 P/T near minimum wage jobs, the kind where they won’t do a background check.

Or are those jobs beneath him?

He’s sixty-five years old, Colo. You can only greet on so many 8 hour shifts a day.

Let me expand on P-bear’s sarcasm.

Rabid Foxian Limbaughian Republican philosophy demands that your friend pull himself up by his bootstraps, 65 or not.

And that he pays for his own health care, 65 or not.

And as a reward for being thankful to have a low-paying lucky ducky job, your friend must also undergo constant derision for being one of the 47% who doesn’t pay taxes.

He’s sixty-five years old, Colo. You can only greet on so many 8 hour shifts a day.

Lucky for him Foodstamps, Medicare and Social Security haven’t been repealed yet.

“As a convicted felon, nothing was available except–working for a loan broker as an originator.”

Did he consider working as a Realtor®?

“Yep. Another life shot to hell by our idiot drug laws. And this guy is a rabid Fox Limbaugh Republican.”

Couldn’t have happened to a better candidate.

Wait a couple of decades and they’ll probably get there.

Its not a lie. Housing can be a good investment, and it can be a bad investment. Just like many other things. It can also be somewhere to live.

OK, now you can accuse me of being a UHS or whatever.

Housing is a LOSS, year after year until you’re in your grave. Housing is NOT an investment.

I don’t need to accuse you of anything. You indicted yourself.

Robert Shiller, of Case-Shiller fame, just the other day said that housing was a “terrible, loser investment for the past century.”

“Historically, there’s a huge difference between the housing market and the stock market. If you’re going to live in a house, and you don’t want to, and you’re doing it just for the investment, that is a loser investment, a terrible, loser investment and has been for the last century.”

Video link (03:45 minutes):
http://www.bloomberg.com/video/shiller-says-don-t-buy-a-house-just-for-investment-nXSc8TnVRMa26VKK_koGDQ.html

I’m willing to bet there are many people who have made money investing in housing (some maybe on this board). Like any real estate asset, you need to make sure that the location is good, there are no problems with the physical nature of the property, and MOST IMPORTANTLY, the rental income (after taking off appropriate offsets for maintenance) more than supports the price paid.

However, because most people who are real estate “investors” don’t buy for cash flow, and only speculation that prices will rise, and that for owner occupied housing, the MID and government subsidized interest rates tend to artificially raises prices over most time periods, most housing over most time periods is not priced such that it could be a good investment.

It’s like saying that over 10-years the stock market has been a terrible investment, and therefore concluding that there were no people that made money in the stock market during that timeframe, or no stocks that were attractively priced during that timeframe.

Careful now with that truth and reality Neuromance…… You might bore someone.

And I’m willing to wager that you’re misrepresenting the truth by exchanging the SFR residence with a rental unit….. a cheap counterfeit……

Now why would you do that?

However, because most people who are real estate “investors” don’t buy for cash flow, and only speculation that prices will rise…

And we have a bevy of such people in Tucson. When the house prices don’t keep rising to the sky, they ditch their in-VEST-ments and leave the rest of us to deal with the consequences.

My neighborhood has been hard-hit by such consequences.

Of the ~40 million renter households out there, ~14 million are in single family homes turned rentals.

Does Case Schiller exclude rental homes from their analysis?

“Housing is a LOSS, year after year until you’re in your grave.”

I know a family that bought a house in Huntington Beach about 25 years ago and rented it out. They were lucky and had a good long term tenant. They cash flowed negative at first, but with successive refis to lower rate loans it’s been cash flow positive for a long time. Plus the house is worth about 4x what he paid for it.

Of course it helped that he bought itwhen it was semi reasonably priced. So, long story short, it’s almost paid for and he has about 500K in equity.

That said, in the current environment, with SoCal housing being insanely overpriced, it would be next to impossible to replicate his experience..

If what you are saying is that owner occupied housing is a poor investment, but that rental property can be a good investment, then I think we are in agreement…

And let’s get a show of hands of how many people are here because they want to buy “rental property”..

….

Owner occupied housing can be considered an “investment” only if you measure the return based on:

cost of rent for the years you live in the house minus all costs of ownership (including time) of the house over all those years

You can also add or subtract something about the value on sale.

The fact that you can’t measure any of those three numbers makes is a very, very odd investment and one that can be positive or negative, but it has some value (positve or negative) because it substitutes for another major cost in your life.

And let’s get a show of hands of how many people are here because they want to buy “rental property”..

Not me. Here’s what dissuaded me from ever contemplating such a thing:

1. Twelve years of living out at Dysfunction Junction. Where the landlady regaled me with stories of her other rental properties. Most of those stories were horror stories. I was of the mind that she should liquidate most of the rental inventory, put the proceeds in something nice and conservative (like Treasuries) and live off the interest. She wasn’t into that.

2. Leigh Robinson’s book, Landlording. If you know anyone who’s considering the purchase of a rental, your HBB Librarian recommends this book as part of your intervention process.

If you buy something at one price and sell it at a higher price that is a good investment*. Sometimes you can do this with real estate, despite anything RAL claims.

*Obviously this is a simplification for RALs benefit, there are taxes, financing and other costs, etc, to be taken into consideration.

Raise your hand if you are trying to buy a single family house to live in, but are competing against people and institutions who are trying to buy the same homes as rental properties.

You cannot separate the market, since a single family home could be either a rental or owner-occupied.

And JoJo, unlike the common real estate catch phrase, what makes a real estate investment a good one is not “location, location, location”, but “price, price, price”.

Location does matter of course as it relates to what makes the price attractive, and you’ve got to the outlier locations of course (where no one wants to live or occupy the space), but in virtually any situation, what matters most is the purchase price in terms of what will make a good real estate investment.

“Sometimes you can do this with real estate, ”

Oh really!!! And hows that working out for you?

Raise your hand if you are trying to buy a single family house to live in, but are competing against people and institutions who are trying to buy the same homes as rental properties.

Wrong again. You’re the one drawing the distinction.

Remember this gem?

I’m willing to bet there are many people who have made money investing in housing (some maybe on this board). Like any real estate asset, you need to make sure that the location is good, there are no problems with the physical nature of the property, and MOST IMPORTANTLY, the rental income (after taking off appropriate offsets for maintenance) more than supports the price paid.

Nice try.

“And I’m willing to wager that you’re misrepresenting the truth by exchanging the SFR residence with a rental unit….. a cheap counterfeit……”

You called it a misrepresentation of the truth by exchanging a SFR with a rental unit. YOU attempted to draw a distinction. Nowhere have I ever drawn a distinction.

THEY ARE INTERCHANGEABLE, so the value of one affects the value of another, which is the point I’m trying to make.

Sigh…

As is becoming abundantly obvious to anyone in the market, the price of a single family residence is the greater of a) what an owner occupant is willing and able to pay or b) what a person buying it to rent it out is willing and able to pay.

The predominant view of this board during the bubble years was that prices would only reach fair values when “a” was approximately equal to “b”, and that “b” should be approximately equal to 100-120x the monthly rental amount.

Because of the MID and government subsidized interest rates for owner occupied housing, it has been quite common (with the most extreme case being the bubble years) for “a” to be greater than “b”.

When you get yourself wrapped up on your own twisted logic in order to discredit the obvious, you look foolish.

Drawing a distinction when it supports your lies and then it’s a distinction without a difference when it supports your lies.

Typical realtor. Lies lies and more lies.

“If you buy something at one price and sell it at a higher price that is a good investment*. Sometimes you can do this with real estate, despite anything RAL claims. “

Sometimes you can do it with tulips.

I like Polly’s answer; i.e. housing is an investment only relative to the opportunity cost of renting. If it is cheaper to rent the bundle of services associated with home ownership, then home purchase as an investment is a looser.

“However, because most people who are real estate “investors” don’t buy for cash flow, and only speculation that prices will rise..”

We had a brief deflation in housing prices, then a massive second wave of specuvestors rushed in to buoy housing prices.

How so?

isn’t it based on a bunch of banksters’ rates?

It’s based on a poll which asks banksters, “if you had to borrow money today, how much interest do you think you would have to pay”? I couldn’t make this up. See the latest issue of The Economist for the gory details.

““Housing is a LOSS, year after year until you’re in your grave.”

Sometimes it is, and sometimes you sell it a year or two later at a profit. Why is this so hard for you to understand?

Buying a retail item and selling at a higher price a year later?

Hows that working out for you?

I’m curious Truth, are you a renter, or a hypocrite?

I’m curious Pimp…. are you a realtor or do you work for NAR media?

Neither.

But you are either renting, homeless (which I doubt since you have a computer), or own your home (and thus a hypocrite).

Which is it?

And you’re lying.

Don’t feed the Troll

Don’t wind the crank.

“LIBOR by its nature is a conspiracy.”

And guess who was involved way back in 2008?

Surprise, surprise, surprise…

D.M. Levine
Libor Scandal: As New York Fed Chief, Timothy Geithner Had Multiple Meetings With Barclays
Posted: 07/10/2012 4:16 pm
Updated: 07/10/2012 4:21 pm

As president of the New York Federal Reserve before and during the financial crisis, Treasury Secretary Timothy Geithner met repeatedly with Barclays officials, according to documents released by the bank and the New York Fed.

Though the subject of those discussions is unknown, they came at a time when Barclays was also talking to New York Fed officials about problems with an interest rate known as Libor, some five years before the bank agreed to pay $450 million to settle charges that it manipulated that interest rate.

The meetings raise questions about just how much Geithner, now the U.S. Treasury secretary, knew about the alleged manipulation of Libor, a critical interest rate that affects borrowing costs throughout the economy — questions he’ll have to answer at a Senate hearing later this month. They could also renew criticisms of Geithner as being too chummy with the banking sector he was charged with regulating in his role at the Fed.

According to The Huffington Post’s review of Geithner’s calendar during his time at the New York Fed, originally obtained by The New York Times, Geithner repeatedly spoke from April 2007 to October 2008 with senior executives at Barclays, including at an Oct. 10, 2008, morning meeting with Bob Diamond, the former Barclays CEO, who stepped down last week amid the ballooning Libor controversy.

Atimeline of events released by Barclays ahead of Diamond’s testimony before British Parliament last week also indicates that an Oct. 10, 2008, meeting took place between bank officials and unnamed Fed representatives. According to Barclays, the meeting that day was part of a series of discussions between the bank and the New York Fed during the financial crisis about the process of determining Libor.

Libor is set every day by a group of banks, including Barclays, JPMorgan Chase and Citigroup. It is based on the interest these banks say they have to pay to borrow money for short periods of time. Regulators are investigating charges that several banks, in addition to Barclays, misreported their borrowing costs to manipulate Libor higher or lower, depending on their needs, possibly affecting the borrowing costs for millions of individuals and businesses. During the crisis, the banks might have reported lower borrowing costs in order to avoid the appearance that they were suffering financial hardship.

The details of what was discussed during Geithner’s October 2008 meeting with Diamond are not listed on Geithner’s calendar nor are the topics of his other discussions with Barclays officials. Some meetings likely concerned the bank’s September 2008 takeover of Lehman Brothers at the height of the financial crisis. But the meetings raise further questions about how much Geithner and other U.S. financial regulators knew about alleged manipulation of Libor by Barclays and other banks years before Barclays admitted to wrongdoing in a $450 million settlement with British authorities and the Justice Department last month.

A Barclays spokesman, Chris Semple, said the bank could not confirm whether the Oct. 10 meeting noted on Barclays’ timeline was the same as the one listed on Geithner’s calendar. In its pre-testimony materials, Barclays wrote that the chronology “shows clearly that our people repeatedly raised with regulators concerns arising from … Libor settings over an extended period.”

On its timeline, Barclays lists a total of 12 meetings with Federal Reserve officials from August 2007 to October 2008.
…

“I’m curious Pimp…. are you a realtor or do you work for NAR media?”

I like this line of inquiry: Guilty until proven innocent!!!

My very specific question is how much have they spent on upkeep for homes that were off the market, AND not being prepared to put on the market.

Invariably, there is going to be some inefficiency in such an operation, even pushing the homes to market as quickly as possible–I can’t even guesstimate what that number should be…although I would imagine it would be the small fraction of the total for an operation that was working with expert efficiency.

I’m reminded of the whaling captain in the Michener book Hawaii, who starts out by ruthlessly exploiting the Hawaiian people, only to later become one of the leading citizens of the town he helped establish.

Since the mispricings no longer exist naturally, then the market destroyed itself. But since millionaires were at stake, they used their control of politics and media and even academia, to keep the market validated in the public eye. So that suckers could now feed market action.

The stock markets are pretty much totally corrupt. Nobody who understands this, should put their money in that rigged casino. But the public head is denser than Osmium. The common mind can’t handle the idea that such a big money machine can’t spare any winnings for them.

Wall Street has been transformed into a totally damaging entity. It should really be made illegal. Information technology is more than mature enough to allow real investors to join up with companies and they can hammer out agreements between themselves. But even there, investors and companies are lazy. So the Wall Street class continues to intervene, and they let them.

I say we should even get rid of the SEC, since it obviously has no beneficial effect whatsoever on the market’s victims, and in fact contributes to the victimization, since it gives the market’s victims a false sense of, er, security. The SEC’s mere existence, functions as propaganda. Look at how many times people warned the SEC about Madoff. Look at how the SEC totally panned Enron. The agency is damaging. Get rid of it. In fact, get rid of all regs on Wall Street, since those obviously have no effect on saving victims from the banker guillotine.

“All it take for evil men to exist is for honest men to do nothing.”

They stay in business until they aren’t.

They say that people who drive drunk do so 100+ times before being caught once. It doesn’t make driving drunk a smart thing to do…because at any given time, it can come back and bite you (or someone else).

Acting unethically is like not buying insurance. You’ll probably get away with it for a time, but eventually there will be a house fire, and you’ll wish you had acted differently.

All of the people with whom we have not done business, or ceased to do business are still in business…and some people may even make lots of money with them…it just won’t be us.

Exactly.

All of the people with whom we have not done business, or ceased to do business are still in business…and some people may even make lots of money with them…it just won’t be us.

Hey, I hear you, Rental Watch. The person I described above, the habitual liar, is a CEO with close to a six-figure salary.

One of the people with whom we won’t do business is a real estate broker. When confronted on a lie, he said he wasn’t lying, but he was “brokering”. We now use “brokering” in our everyday business language as a replacement for “lying”.

Nice. I’m gonna steal that one Rental.

“Someone mentioned the US isn’t a can-do type country anymore.”

That would be me. I forget what I was referring to, but the whole victim mentality has become VERY pervasive in the society on many levels. So it’s all “can’t-do”, no responsibility. Everyone’s a victim and gets rewarded (or seeks to get rewarded) for being a victim. The whole philosophy is to win by being a victim. Or by helping people who are victims, as in the burgeoning “hacktivist” industry. Nothing wrong with being an activist, necessarily, activists are needed in a number of areas. But it’s becoming a crowded field, seems like. I take note that being an “activist” seems to be something that quite a number of immigrants aspire to. And why not? Stoop labor and factory work sucks and there just aren’t a lot of job alternatives. We’re not building railroads anymore.

Now, the upshot of this sort of thing is that sooner or later there just aren’t enough people doing productive stuff and all the victims are looking around all pitiful going “Help me. Heeeellllpppp meeeeee.”

“Someone mentioned the US isn’t a can-do type country anymore.”

Favorite of mine is “US is not a serious country.”

When the people who control ALL the money, jobs and resources and laws are crooks, everyone IS a victim.

And that’s just Wall St.

Most Americans ain’t real bright, but they do know when someone has screwed them over… eventually.

Churchill said best: “You can count on Americans to do the right thing, after they have tried everything else.”

But yes, why they/we never learn is a mystery and certainly a strong case for lack of responsibility.

Maybe because the business of America is business?

When the outsourcing reaches higher and higher up the food chain to where no other jobs are available, victimhood becomes a viable career.

Can you blame people for being victims? Cry foul and the govt will be there with oodles and oodles of freebies to help you out.

Does it work the other way? The weight pushes down on the mattress to a certain depth, then it stops?

Yes, IMHO, that point is when the values are low enough, and perception is sufficiently positive to attract the capital to support the weight of the foreclosures (which could be different in any market).

For the VAST majority of hard assets (with the exceptions being places like Detroit), there is a cash clearing price for an investor interested in the product type.

The lower the price goes, the more interested buyers there are…at some point, there are enough interested buyers to stop the prices from falling further at a given level of foreclosure flow into the market.

And once that bottom is reached, the dynamics can shift considerably and quickly. If there are x interested buyers with prices generally considered to be falling, there will be x+y interested buyers once the perception becomes that prices have stopped falling, and x+y+z interested buyers once the perception becomes that prices are rising off the bottom.

By the way, to be crystal clear, the x, x+y. and x+y+z in my opinion are different numbers of potential buyers all at the SAME home price, with the difference only in predominant perception of price direction.

So Rental/Realtor Pimp, does that mean everyone should go out and buy? Because prices are heading up right?

No. It does not.

If you have paid any attention to anything I’ve said, it is that we can only reach a normal market at a point in time when foreclosures have been cleared from the market (the inclusion of large numbers of foreclosures brings in differently motivated buyers and sellers). This is not happening at any appreciable pace in judicial states. This has only been happening in non-judicial states…and while those states have made much more substantial progress than the judicial, they are not yet done.

What happens once the distress has been cleared from non-judicial states has a clean test case in Nevada…they artificially stopped the foreclosures by passage of a law…next thing you know, there are virtually no sellers, since a large majority of sellers were foreclosure related, and non-distressed sellers are not putting homes on the market (either because they are underwater, or they believe values are too low). Once the distressed sellers left the market, supply of sellers went down, the balance tipped in favor of sellers and prices began to go up.

Nevada in particular is at risk of prices dropping significantly again if the law is reversed…however, since their legislature only meets every two years, this may not happen until late 2013 (if at all).

Arizona and California have had massive distress (pushing prices down quite a bit from the peak), but they have also been clearing their shadow inventory of distress over the past two years at a pretty steady pace. California appears to be a bit behind Arizona in this clearing process, and supply shortages appear to be starting along the coasts.

If you look at Zillow by county in CA, and look at the percentage of homes sold that were foreclosed in the last 12 months, you would see that the numbers are far lower along the coasts than inland. The pattern appears to be:

1. Distress brings in lots of differently motivated sellers, which pushes prices down;
2. Once distress burns itself out (or is artificially stopped), there are significantly fewer sellers;
3. With low supply of traditionally motivated sellers, there is a strong likelihood of prices bottoming as demand outstrips supply.

Where prices go from there depends entirely on whether additional supply can be added (either through new construction, or through additional distress entering the market). In California, much of this has to do with the price and availability of entitled land (which has been in short supply as far back as I can remember). In Arizona, I have heard a few independent sources that new lots are being graded…what this new supply does to prices is entirely dependent on the depth of demand–AZ still has a high vacancy rate, so there is excess physical space for people to occupy, which is a natural dampener on price increases.

To sum my views:

1. Judicial states (and Nevada) have a large backlog of shadow inventory, so despite what the prices appear to be doing, they are at risk of falling if that backlog is released onto the market. If it is not released, it will take YEARS for them to get through it all–and where prices go in that case is a giant crap shoot.

2. Non-judicial states (CA and AZ in particular) are on pace to get through their excess shadow inventory in the next 18 months or so based on their pace of the past couple of years. Certain markets in these states are already showing signs of supply shortages. In Arizona, supply will be added pretty readily. In California, less so. Based on the fact that California has lower vacancy rates currently, and a more difficult entitlement environment generally, California will be slower to add supply via new construction and, IMHO, will have an imbalance of supply/demand (more demand than supply) for a while to come. I do think that prices will begin to rise in CA and they will rise for a while. How high? I don’t know. How fast? I don’t know that either, but I suspect the initial move up with surprise people before price increases taper off.

Prices IMHO will have everything to do with supply and demand, and in particular at this stage of the cycle, the supply of distressed properties being released onto the market. In states where there is a lot of this distress that CAN be released at any given time, there is risk of prices getting pushed down. In states where there is less distress available to be released, the risk of substantial falls in price from here are significantly lessened.

When I bought my house, I did not do so because I thought prices were going up. I did so because I was tired of a cramped, rodent infested rental, and though that if prices were going to go down any more, it wouldn’t be by much–after renting for my whole life, the time was right for me and my young (and growing) family. I bought a place that I could afford, live in for a long time, was in the right school district, and in good proximity to both my wife and my jobs. Housing is consumption. Buying because you think prices are going up is speculation. Buying because you are comfortable prices won’t go down much more is a different philosophy.

LOL!

And you haven’t camped with jolly Canadians until you’ve camped with Québécois. They know how to have a good time.

And you haven’t camped with jolly Canadians until you’ve camped with Québécois. They know how to have a good time.

True but you “get tired of hearing from us”.

PFGBest, Brokerage Firm, Missing Over $200 Million In Customer Funds As Founder Attempts Suicide

http://www.huffingtonpost.com/2012/07/09/pfgbest-brokerage-customer-funds-suicide-wasendorf_n_1660673.html?ncid=webmail20

And this is how it ends, I think. The “crisis of confidence” mentioned in the article. By definition, “fiat” money is only as good as the confidence in it. When that goes, it is indeed worthless.

I will go one step further regarding the confidence game .
In my opinion ,it’s not enough that people just have confidence in a market or a asset . People had confidence
in the real estate market until it crashed when it became apparent tha the market was fraudulent and artifically inflated by faulty lending and mania hype .

I think a asset has to have true value based on some objective weighting of value and risk ,not just speculation of its value ,not just confidence in what the cheerleaders are saying ,while people are deprived of real facts .

For instance the real estate bubble was based on the notion that real estate always goes up ,and people had confidence in that notion ,but giving people loans they couldn’t afford was a underlying fact of fraud or faulty lending that was underlying that mania or confidence in the market .

palmetto said: “And this is how it ends, I think. The ‘crisis of confidence’ mentioned in the article.”

Oh, we’re nowhere near a crisis of confidence. There have been more than enough indications that if you put your money into the Wall Street Casino, you’re taking a big risk of losing it. We’ve seen that for years.

The problem is that the public has been so heavily indoctrinated that they are still deeply afraid of hyperinflation. So they keep tossing their funds into the casino so that they can “beat inflation”. They will continue to do this for many more years.

The housing bubble isn’t over. It’s merely in the phase of False Recovery. In terms of “stages of grief” (denial, anger, bargaining, depression, acceptance), we’re still placing the peak of the bell curve of participants on the denial phase. Some are getting deep into anger. A few are attempting to bargain, and the government’s ‘reflation’ efforts are trying to extend that. Actual depression is a long way off. Acceptance isn’t even on the horizon or on any media’s radar.

Sure, WE people on the HBB understand these stages, and have accepted it, but we’re 6th sigma or something. We’re heavily outnumbered.

“People had confidence in the real estate market until it crashed when it became apparent tha the market was fraudulent and artifically inflated by faulty lending and mania hype.”

And after the crash, the government stepped in to try to reflate the market, in order to continue the confidence game a bit longer.

Can anyone show me any evidence whatever that the government can legally get involved in real estate price inflation? I will believe it when I see some convincing evidence.

Maybe I should become a gangbanger and get a voucher, there is not much help for people with no criminal record.

Whether you rent from the bank, or rent from a landlord, it’s an expense, ALWAYS. Neither pay you back. It’s a loss ALWAYS.

If a factory owner buys something to offset an expense, it’s an investment. Just as buying a house is an investment to offset the expense of renting. But housing comes with expenses such as interest, property taxes and insurance. So yes there are always expenses associated with shelter, but one method includes buying an investment.

A house isn’t a means to earn money, a factory is. The house will never cover it’s own expenses. A factory will(if there is demand for the finished product).

Earn money or offset a mandatory expense. What’s the difference? We all need shelter. If we can purchase an asset that provides shelter and allows us to avoid a recuring expense, then it’s an investment.

Rent is an expense, as we pay it to accomplish something (have shelter.) A house in an investment because it’s an asset that provides an economic benefit. Just because an asset has expenses associated with it doesn’t make it an expense itself.

The difference is one earns money and the other is an expense. Housing doesn’t pay you back whether you rent it from the bank or a person. One may be less costly than the other but both are expenses. At this point in time, renting from a person is a small fraction of owning(renting from the bank) at current inflated asking prices of resale housing.

You realise that by arguing that housing is an expense you’re only going to get agreement from hard core housing bears who don’t have any knowledge of finance or accounting. Most people will roll their eyes at your misguided ranting. Assets are not expenses, and assets that provide an economic benefit (income or reduced expenses) are investments. It’s the truth.

Now if you argue that houses are bad investments you’re going to get somewhere. Often enough the interest expense is greater than rent without even considering insurance, property taxes or maintenance. Don’t let your hatred of the REIC blind you to the truth or effective means of educating people.

If a house isn’t an expense then you suspended the 2nd law of thermodynamics.

If the 2nd law of thermodynamics is to apply to housing as you’re suggesting, then everything is an expense. Absolutely everything, and as such there are no assets or investments of any kind. However most people are more inclined to use GAAP than physics in defining assets and investments.

“It’s even more glaring from the context that the average home “owner” sells in 7 years. People don’t “own” what they think they “own.””

So how do you sell something you don’t own?

Back in the day, my family vacationed for a month in the same seaside resort favored by William Simon, who was the Treasury Secretary under Nixon and Ford. We used to see him at the beach, sitting near the water in one of those old aluminum frame low beach chairs with plastic webbing, reading a book. There were always a couple of Secret Service guys posted a few yards away, sitting up awkwardly on skimpy hotel sized towels, wearing shorts and shirts, and some sort of briefcase type thingie and other stuff around them. Stuck out like sore thumbs.

A couple of years later I ran into a gal at college who told me her brother had been assigned to that detail.

“Secret Service guys posted a few yards away,”

And if memory serves, sometimes they even seemed to be talking into their wristwatches.

ME has more trees. ND is mostly flat and treeless.

Not funny. He’s the leading Repub candidate.

Mitt Romney. Bain Capital. Clear Channel. And dozens of other large businesses Bain bought and “re-organized” almost out of existence along with thousands of lost jobs.

Nonsense! That just stuff proves he’s a success and that he’ll know how to run a country. Those lost jobs? Probably a bunch of lazy ne’er-do-wells!

(It’s been stomach-turning to watch people line up behind this guy.)

“It’s been stomach-turning to watch people line up behind this guy”

I dunno, seems to me as if the guy doesn’t really have the support he appears to. I think there’s a lot of folks like myself who will vote for a third candidate in protest.

No way Romney’s the next president. No way.

Sorry, I shoulda said “to watch certain people line up…” I’m talking about the seemingly hard-core types who are crying about jobs/economy and hate Obamacare, but who plan to vote Romney. I realize it’s an “anybody but Obama” thing but if those are your biggest issues, I can’t begin to understand how Romney is a qualified replacement.

I’ll be doing the same as you, for the first time in my life, and I couldn’t be happier about doing so.

Hmmmm who is better equipped to run a $3T operation with millions of employees, thousands of departments spanning 50 states with outposts all over the world?

a) The guy who ran Bain Capital for 10 years

b) The guy who was a community activist in Chicago for 20 years

I’ll have to think long and hard about this.

“I think there’s a lot of folks like myself who will vote for a third candidate in protest. ”

If you vote for a 3rd party you’re voting for Obama. I know a lot of you have these pie in the sky illusions about Ron Paul and Gary Johnson and whatever other fringe candidate is out there that will get 0.1% of the vote.

Reality is this. You have two options. Obama and Romney. One of these two will be president on Jan 20, 2013. If you choose to vote for a fringe candidate, what you are doing is taking a vote away from the non-Obama option, which means you are giving Obama your vote indirectly. Which is fine, if you’re comfortable with 4 more years. But then don’t come back and bitch about Obama when you voted for him indirectly.

Well, I’ve thought about this, Smithers.

“If you vote for a 3rd party you’re voting for Obama.”

If I vote for a 3rd party, I’m voting for a 3rd party. Period. I’m sick of this effing canard put out by sore losermans.

And in that I’m actually a registered Republican who remains so because I believe in the republic, and not necessarily the party, I believe this is the only way of expressing my protest to the party that has been hijacked by the neocons and couldn’t give a crap less about me.

You don’t have a crystal ball anymore than I do. We can’t be sure who will be president in 2013, or even IF there will be an election. Anything can happen before then.

I’m not voting for Obama. I’m not voting for Romney.

Period.

I believe this is the only way of expressing my protest to the party that has been hijacked by the neocons and couldn’t give a crap less about me.

You too, huh?

Yes. The Neoconican party has screwed the pooch big time. The whole Bush/Rove thing was its death blow, dealt by the likes of Bill Kristol and the whole merry band of seethingly insane hijackers.

Romney is not going to win the election, barring any unforseen circumstances. This is the end of the Republican party as we know it. It’s all over for that party but the whimpering and thumbsucking. It’s gonna get buried by the Dems. And eventually they, too, will go down, since they cannot exist without the opposition of the Republican party. Heck, they’re already savaging each other internally, according to various reports.

As someone who has been on the receiving end of a screwing from a Bain alumnus (not Romney), I’m happy to project my ire onto Romney.

“Reality is this. You have two options.”

If you believe that, you’ve already lost. Frankly, it’s sad to see voting Americans think “you have only two options.” If you’re not voting your true conscience, what’s the point?

“I’m not voting for Obama. I’m not voting for Romney.”

THAT is the reality. Suggesting that not voting for MR is a vote for BO is a total cop out, since you’d never vote for either of the Big Two.

What if I voted for BO in 2008 but won’t now? By Smithers “logic” isn’t that a vote for MR, or is BO still getting my vote somehow?

You might, MIGHT, be able to make that accusation if RP enters the race as an Independent. But I’ve come full circle and now agree with Nader and Perot on this one. If Romney is so great, and offers a true differentiator, he won’t need all those votes that go to RP. He’ll win hands down. So, tell me again why I should vote for him.

I see no difference between the two candidates. If no viable third-party candidate emerges, I will sit this one out. First time since I began voting in 1984.

Voting the Obamney ticket is madness and I cannot believe that people still buy into this one-party system.

“I’m not voting for Obama. I’m not voting for Romney.”

THAT is the reality.

Amen! Testify! (brothah or sistah?)

b-hamster,

Please consider which supreme court justices you would like to see nominated. There is no question that there is a significant divide between the candidates in that.

It always makes me laugh when I hear people say there’s no difference between the two. You may not like either, but to say they’re identical is ridiculous.

“fringe candidate is out there that will get 0.1% of the vote”

If it is truly 0.1% of the vote, then what are you worried about?

The problem with electronic retailers is internet sales. Best Buy is basically the showroom for Amazon…find out what you want in BB then buy on Amazon, with no sales taxes and likely at a cheaper initial price as a bonus.

The retail estate and sales force costs, plus sales taxes, mean their cost structure is 10-15% above Amazon.

Its a tough problem to solve

Well, that and the terrible service at Best Buy.

I always feel like I am doing THEM a favor by shopping there.

That’s EXACTLY the crappy attitude that drives me to the competitor every time.

I quit shopping at BB back in 1996. They became way overpriced since. Without best prices, there was/is no incentive.

I keep hearing that rumor. It’s all over the Internet.

Amazon Marketplace is great for buying food items or sundries or other things that local stores no longer carry.

Are there any electronics retailers that are unionized?

Like most flyover stuff, it’s OK if you’re from there.

But its a low tax paradise! All those east coast richies should be making tracks to Laramie or Cheyenne, right?

They don’t seem to appreciate the local entertainment as much as I do.

Well, Wyoming is the low tax state in the country. It should be a paradise.

You couldn’t pay me to move to Laramie or Cheyenne.

If I could have my job in Laramie I’d move there, and not for the low taxes. When you grow up in Wyoming less people feels better.

I love DumbA$$ Country NY. I miss it.

Kills me every year: https://www.google.com/search?q=finger+lakes+fall&um=1&ie=UTF-8&hl=en&tbm=isch&source=og&sa=N&tab=wi&authuser=0&ei=79b8T-K0BYG69QSp6PjYBg&biw=1210&bih=648&sei=8tb8T7SFJ4qi8QTz463yBg#um=1&hl=en&safe=off&authuser=0&tbm=isch&sa=1&q=finger+lakes+fall&oq=finger+lakes+fall&gs_l=img.12…0.0.0.1999.0.0.0.0.0.0.0.0..0.0…0.0.vDs0Z2kcG6U&pbx=1&bav=on.2,or.r_gc.r_pw.r_qf.,cf.osb&fp=d0e5a18a645dec20&biw=1210&bih=648

Think 2x dude.