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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Something to think about (or maybe argue about):
Two expenses in our society that are not considered expenses at all but rather are considered to be investments are:
1. Houses, and
2. Higher education.
They are considered investments because each one of these expenses is expected generate a return of some sort to the investor.
The buyer of the house will stop “throwing money away on rent” and instead will “start building equity”. The seeker of the college degree will look for a return on his investment in the form of generating higher earned income after graduation than otherwise would be generated without the degree.
Because they are investments there is little outcry if they are expensive as long as the degree of expense is seen to be justified by the investment’s ultimate return on invested capital.
The term “affordable” is thrown about but this term is not seen as something that should be addressed by lowering the price, rather it is seen to be best addressed by spreading out the cost over a period of time - as in years.
Choosing to make houses or higher education affordable by lowering the price is really not a consideration because these two things are considered to be investments and not expenses. Food and gasoline and utility bills are seen to be expenses - and so does RENTING a place to live - but because BUYING a house or BUYING a higher education is not seen to be an expense but instead an investment high prices for these two things are considered to be normal - are even seen to be desireable.
So if not lowering prices to make these two things affordable is not offered up then just what is offered up? Well, debt seems to be the answer, the solution. Borrow money today to finance the investment and pay back the borrowed money tomorrow as the investment generates a return.
And this concept works well IF the investment pays off. And in an expanding economy it most likely will. But in a contracting economy it most likely won’t.
In a contracting economy the high debt and the high interest rates on this high debt (while probably was seen as a good idea to take on when the economy was expanding) will end up destroying the futures of the debtors as the economy contracts.
Which, IMHO, is what we are seeing.
About a week ago, was talking to a sales clerk. She was talking about her 20 something daughter who was about to embark upon law school. She already had about 30k in student debt and is anticipating another 250k in debt by the time she’s done(was accepted at a prestigious school). Her plan is to work for as long as it takes to pay back the student loans and then fulfill her dream of flipping houses! Her mother was beaming as she told me this. Me, being a weenie, couldn’t respond, other than to nod and say “that’s nice”.
I heard Armando will teach her all she needs to know for ~$41k.
“They are considered investments because each one of these expenses is expected generate a return of some sort to the investor.”
There is also something about paying a lot up front in order to enjoy a long-term stream of returns going forward.
The availability of loans to finance investment makes this possible for the masses, who borrow today in agreement to repay their loans with interest tomorrow out of the returns on the investment.
Confusion arises when a ginormous amount needs to be borrowed to invest today (say between $500K-$1m for a California starter home, or $100K+ for a decent college education), seriously calling into question the borrower’s future ability to cover the debt payments out of investment returns.
This is a natural consequence of the current low interest rate environment we find ourselves in, and will end once interest rates adjust upwards to better balance the cost of investing today against reasonable expectations for future investment returns. Right now this present-future balance is completely out of whack.
I think it’s high time for “debt amnesty”. Why not?
Sweep the board. Absolve everyone, start over.
But one person’s debt is another person’s money.
If someone who owes me money doesn’t have to pay to me the money he owes then I’m the one who has to somehow get by.
Which could lead up to the subject of pensions.
How many people have some of their short term savings in a Money Market fund?
Where do these Money Market funds invest their shareholders’ funds?
If you declare debt amnesty on loans used to secure notes that are held by Money Market funds, doesn’t it follow that the investors will have to take a pro-rata cram down since the secured debt has been forgiven?
Be careful of what you wish for, because unintended consequences have a way of coming back to bite you in the ass.
Project Mayhem!
The best…
http://www.youtube.com/watch?v=vVof0qj7SOw
Housing and college are often referred to as “good” debt, probably for the same reason.
“referred to as “good” debt…”
It is an example of the perversity of the credit mania to label debts “good”, based on how the borrowed money is spent. A “good” debt is one that has been repaid. The borrower makes good and the lender is made whole.
A “good” debt is a debt that generates a return that is greater than its cost. A “bad” debt is one that doesn’t.
A good debt is something that one might easily find in an expanding economy but is rarely found in a contracting one.
A debt is made good by paying it back, regardless if there is usury.
Making “good on a debt” is not the same thing as taking out “good debt”.
I agree that they are not the same. A debt made good is a real thing. A “good debt” does not exist. Let’s take the extreme; you borrow to save your life. Is it good? It is good that you have your life, but it is not good that you are now the servant of the lender. I am glad you are alive but sorry for you now being in debt. Call it a good debt if you wish, but that is a delusion.
But if you borrowed to save your life then that implies that if you did not borrow then your life would not be saved.
The return on invested capital (ROI), borrowed or not, doesn’t get any better than this. And the “goodness” of the borrowed money doesn’t get any better than that either.
“It is good that you have your life, but it is not good that you are now the servant of the lender.”
If this is the case then you owe the lender not only the money you borrowed from him but you also owe him your life. If you are a servant to this lender then, in this case, you should be extremely grateful.
I guess we would have to agree on what the $ value of your life is!
There is no “good debt” no matter what wacky world you live in.
Consider that for some, getting a degree or buying a house is not considered an investment, and there is no expectation of return other than a place to live or a body of knowledge gained.
To them, buying a house or going to college is merely something that is done. It’s expected, therefore resources are allotted to it. Noting more, nothing less.
Not everyone makes their life decisions based on profit.
“To them, buying a house or going to college is merely something that is done. It’s expected, therefore resources are allotted to it. Nothing more, nothing less.”
If this is the case then buying a house or going to college would, to these people, best be described as an expense and not an investment, no?
Is the China slowdown already over? I had the impression that the Chinese economy was on the brink of slowing down earlier this year, but the new growth numbers indicate the near-miss crisis was successfully averted.
New Data Suggest a Pause in China’s Slowdown
By BETTINA WASSENER
Published: August 9, 2013
HONG KONG — China’s economy faces major structural challenges in the coming years, but for now, the slowdown of the recent past may have bottomed out.
A new batch of economic data released Friday provided additional signs of buoyancy in an economy that has been weighed down by lackluster international demand. The Chinese government has also taken a tough-love approach, eager to wean the country from its reliance on exports and cheap credit.
Industrial output growth, which had been languishing around 9 percent for the past few months, jumped to 9.7 percent in July, the National Bureau of Statistics reported. The figure easily beat expectations for a rise of 9 percent, and helped support tentative signs that conditions in the country’s manufacturing sector were starting to show a moderate improvement.
Retail sales grew 13.2 percent from a year earlier, slightly less than the 13.5 percent that analysts polled by Reuters had expected, but in line with the performance of the past few months.
And investment in fixed assets, like buildings and machinery, in urban areas also was in line with expectations, growing 20.1 percent in the first seven months of this year.
Together with unexpectedly solid import and export data released Thursday, this week’s data appeared to show that the Chinese economy has stabilized, at least for now, and prompted some analysts to project a modest pickup in the coming months.
‘’The better-than-expected July activity data has largely dampened the concern of a hard landing of China’s economy,’’ economists at Australia and New Zealand Banking Group wrote in a note. It suggests that China’s economy ‘’is bottoming out.’’
…
The Chinese government wouldn’t lie, would they?
+ 1.5 billion
Sorry. + 1.36 billion.
They’ve been lying for decades.
I heard about how the State Statistical Bureau was fudging data during my Chinese Economy class at the University of Michigan. Prof was a world-renowned expert on China, and even he couldn’t get the straight story on the numbers. That was back in the late 1970s, and I see no reason why China would have changed since then.
What happens to an economy when all data is fudged?
Seems that we are close to a defacto Libertarian “everybody for themselves” world, when it comes to money.
Everybody fudging/lying about financials. Everybody fudging employment stats. Everybody writing sales contracts to make sure that the payments keep coming in, no matter how crappy the product is.
(My newest cellphone contract is as long as my first mortgage. All of it written to limit my options regarding payments and cancelling the contract, no matter how bad the cellphone company’s service is).
People with enough money (short sellers among them) can afford to pay researchers to ferret out the truth.
Joe Q Public does not have that luxury, unless he quits his day job.
Seems that we are close to a defacto Libertarian “everybody for themselves” world, when it comes to money…People with enough money (short sellers among them) can afford to pay researchers to ferret out the truth. Joe Q Public does not have that luxury, unless he quits his day job.
Yes, that is indeed one of the key problems with libertarianism.
This, to coin a phrase, is fudge packing.
The economy has been fudge packed.
Is the China slowdown already over? I had the impression that the Chinese economy was on the brink of slowing down earlier this year, but the new growth numbers indicate the near-miss crisis was successfully averted.
Sounds like something tiny passengers on a slowing top would say. “That bobble made me nervous but now everything seems good”.
Nice image!
Watch out for that last bobble, it’s a doozey!
Did the spring U.S. bond market swoon set up Mr Market for a nasty October surprise? Or is it safe to assume the stock market has reached a permanently high plateau at this point?
Do boys who cry WOLF! ever get it right? Or is it safe to ignore stopped-clock gloomster predictions, on the presumption the Bernanke put is alive and well, and stands ready to buoy the stock market at the slightest hint of a correction?
It’s different now, as all manner of circuit breakers have been installed in the market to avoid a repeat of Black Monday, October 19, 1987.
Why Marc ‘Wolf’ Faber still thinks a 1987-style crash is coming
August 9, 2013, 3:00 AM
Dr. Doom is doomish again.
Marc Faber, the author of “The Gloom, Boom & Doom Report,” says investors need to brace for a drop of 20% or more by the time 2013 closes, predicting a market fallout similar to what was seen in 1987.
October 1987 marks a period no investor could easily forget. The S&P 500 is up around 20% for 2013 so far. Faber compares that to 1987, when stocks rose more than 30% up to the same point. But it was in the latter half of 1987 that things fell apart. On “Black Monday,” Oct. 19, 1987, the S&P 500 fell 20.4% in the biggest single-day loss for Wall Street in history. It marked the end of a five-year bull market, and stocks ended up just about where they’d started that phase.
He noted that during a two-day period this week, as the S&P 500 nears an all-time high of 1,709, there have been 170 new 52-week lows. That means just a relatively few companies are driving the market higher.
Of course, the 1987-crash theme is not a new one for Faber. He made similar predictions in May and February. So how many times is Faber going to cry wolf before we see this happen?
…
“Markets can remain irrational a lot longer than
you and IMarc Faber can remain solvent.”Is it normal for a week when record highs are set to be followed by a huge drop in trading volume?
Aug. 9, 2013, 4:14 p.m. EDT
Stocks fall; Dow breaks six-week win streak
After last week’s all-time high, this week sets record for low volume
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By Kate Gibson, MarketWatch
NEW YORK (MarketWatch) — U.S. stock indexes declined Friday, with the Dow Jones Industrial Average halting its longest weekly winning streak since August of last year.
“It’s difficult to attach a great deal of meaning to today’s action without volume, which is lackluster. We’ve tried to make the stories fit the market action, and that’s a dangerous game, especially in low volume,” said Art Hogan, market strategist at Lazard Capital Markets.
…
The Dow Jones Industrial Average (DJIA -0.47%) halted a six-week winning stretch, its longest since one that ended Aug. 17, 2012. It declined as many as 152 points Friday, but ended with a loss of 72.81 points, or 0.5%, at 15,425.51, leaving it down 1.5% on the week.
After rising to a session high of 1,699.42, the S&P 500 index (SPX -0.36%) fell 6.06 points, or 0.4%, to 1,691.42, off 1.1% for the week, with telecommunications leading sector declines and materials faring the best.
“We’ve seen another attempt at taking that 1,700 level and failed, which may have fueled some technical selling. Those that watch from a technical basis think that’s significant,” Hogan.
The S&P 500 index last Friday closed at a record 1,709.67, a day after finishing above 1,700 for the first time. It’s up nearly 19% for the year.
“This week, we’re only setting records for our lack of volume,” said Hogan, who noted that Monday marked the lowest full-day volume in 12 months.
…
Not to worry: A CLOSELY-WATCHED POT NEVER BOILS OVER.
Aug. 9, 2013, 1:03 p.m. EDT
One way to prep for a market crash
By Thomas H. Kee Jr.
I have been conducting extensive evaluations of all fundamental and technical aspects of this market, and almost everything points to an eventual crash. They key word here is eventual, but I think that sentiment resides with almost everyone I talk to as well.
Most investors believe the market will eventually pull back aggressively again, most investors have a very cautious tone, and over the past two trading sessions, it also seems that institutions have been taking profits.
The interesting part of this recent drawdown is that it happened for the same reason as the last drawdown, concern over tapering. However, the last drawdown was followed by one of the most aggressive increases we have seen all year, and this has been an aggressive year, so that means it was very significant. The last time concern over tapering faded, the market surged, so some traders are expecting the same thing again.
That past pattern of drawdown-then-surge has many traders interested in buying the market after the recent pullback, so the eventual correction that may eventually turn into a crash may not happen imminently. We are still in the middle of summer, the market can still easily be manipulated by a handful of aggressive traders and hedge funds because volume levels are light, and it has been easier to manipulate the market higher than lower this entire summer, so I do not expect them to turn sides easily.
More likely, they may try to push this higher yet again, they may try to let the market surge again, and at Stock Traders Daily we are taking advantage of that, but in the back of our minds is that eventual crash-concern, and therefore we are not holding our breath.
…
Not to worry: A CLOSELY-WATCHED POT NEVER BOILS OVER. LoL!
That is what happens when all roads lead back to bernanke. Eventually analysts run out of any technical data to go by.
…and when the realization comes that the Bernanke is the the only game in town , it’s game over folks!
Is there anything to the dire prognosis for a 15% cut in Wall Street investment banking jobs over the next 18 months?
I wonder who is getting the ax? The little people who can be replaced by much cheaper offshore workers? Or will bigger fish land in the frying pan this time?
Is the Detroit bankruptcy a canary in the coal mine for other U.S. cities in a state of ongoing, irreversible decline?
And what are the implications for the rich guys who assumed municipal bonds were a safe, if low-yielding, investment?
How much has Detroit cost the municipal-bond market?
August 8, 2013, 3:03 PM
The municipal bond market, already the victim of rising rates amid monetary policy uncertainty, sustained a second blow when the city of Detroit filed for bankruptcy.
So how much has it cost municipal bondholders? By one estimate, the tally is at least $13.8 billion.
…
Pictures ??? I there a Flicker or some sort of site that has numerous pictures of the Bubble & Bust. I think there was on on here a few years ago, but it got spammed out. Thanks - P.S. NO hot girls links … please, I left those days in High School
HBB founder Ben Jones went to DC a few years back. He posted photos from his travels. Think they were on Picasa.
“some sort of site that has numerous pictures of the Bubble & Bust. I think there was on on here a few years ago”
On the right side of the blog is a link to the HHB Photo Gallery, that one?
what will Obamas HARP3 do to the future of home lending?
What will reducing government backed mortgages do ?
I never thought I’d be taking the side of Clarence Thomas in any policy discussion, but must agree with his dissenting opinion in Kelo vs New London arguing that Public Use (as guaranteed by the 5th amendment) is not the same thing as Public Purpose (the key distinction here being “potential” to fulfill a conceivable public purpose as opposed to an actual one.)
He reasoned that without title guarantee, the growth of capital cannot continue. Our recent governments have takent this a step further by making economic growth *contingent* upon title rights – and suffered the consequences when that title wasn’t secure and accountable.
With the Kelo decision, private property can no longer be assumed secured, and the next logical assumption is that The People have the right to appropriate whatever physical property “they” deem developable.
Ironic sidenotes:
As of today, the 24-acre Pfizer redevelopment upon which the Kelo decision hinged is still a vacant lot, the developers have declared bankruptcy, and after investing $78 million in the project, the city and state have traded homes (and their property taxes) for weeds.
Also, 43 states have now limited the power of eminent domain to squeeze out the less affluent.
The city of Richmond, CA. (among others) is considering using Kelo in a “reverse-discrimination”-type argument to benefit its poorer citizens rather than its big developers.
Stay tuned….
Interesting. I never took the time to read up on any of that. Thanks for posting…
Thomas said the plan was “a costly urban-renewal project whose stated purpose is a vague promise of new jobs and increased tax revenue, but which is also suspiciously agreeable to the Pfizer Corporation.”
Imagine that; Thomas criticizing a major corporate interest. Will wonders never cease?
Reading behind the lines:
Urban renewal benefits poor persons and their proxies. Can’t have that….
I’ve been putting on my amateur “quant” hat, and trying to figure out a more sophisticated formula for determining a fair value for a specific house, so a true comparison can be made for renting vs. buying.
Selling price comes into play. So do interest rates, if higher interest rates mean lower selling prices. Property tax rates need to be included. So do driving distances from work, because transportation costs come into play. And for people with kids, the cost saved by being in a good school district, vs. the cost of sending kids to private school if the public schools are bad.
This is the dilemma I’m having trying to locate a rental house/apartment.
I still need a car, but I’m having a problem deciding how much I should trade off in travel time and hassle/transportation costs, against the extra housing expense of living close to work.
IMO, a homeowner should be getting a discount for owning compared to renting, since the homeowner is taking on a whole bunch of risk. That’s the way people used to look at home prices.
Paying a premium for the “privlege” of owning is buying a ticket to the poorhouse.
Unless of course, you are a flipper, who can get out before the house of cards implodes.
This is the dilemma I’m having trying to locate a rental house/apartment.
I still need a car, but I’m having a problem deciding how much I should trade off in travel time and hassle/transportation costs, against the extra housing expense of living close to work.
All I can say is that from 05-09 I lived within walking distance of work, and basically just parked the car. Weird stuff for a car guy, I know. I didn’t miss the car lifestyle nearly as much as I thought I would…I now understand the city people who are perfectly happy without one. I enjoyed it enough that I’d recommend at least giving it a try once to see what it’s like.
My problem is the trunk full of aerospace related repair tools sitting in my trunk, for my part time stuff.
And in my storage unit for my car/airplane projects (Mig welder, Tig welder, floor jacks, roll aroud tool boxes (2 each), engine hoist…..)
Sometimes it seems like my part time stuff is a break-even proposition at best. (If I could get a discount/”jobber” price on parts from the OEMs, I’d be making a lot more money). But unless things change, I’m convinced that keeping the part time stuff is good insurance against the full time deal going blooey.
Got laid off in mid-2009, didn’t get full time work (and a “contract” position even then) until February 2010. Anyone who thinks that you can live high on the hog on unemployment should give it a try. The unemployment I got would have covered the COBRA payment, if I had the choice to take it (the company went down the tubes, so no COBRA).
My part time stuff made the difference between paying the bills and going Chapter 11. And keeping me in the loop in the job grapevine.
My problem is the trunk full of aerospace related repair tools sitting in my trunk, for my part time stuff.
Yeah, I know. Just saying, it’s an interesting way to live.
You would have yoked risks if you buy a house. If the economy tanks again, you would likely lose your job and the value of your house would nosedive at the same time. It is better to hedge your risks than align them. Just sayin.
I know Ben just made a statement yesterday that there is no housing shortage anywhere. Here is my simple question:
If there were a housing shortage in a particular market (physical homes vs. people who want to live there), how would that condition manifest itself in the data? In other words, what data should we be looking for in order to see if there IS a housing shortage in a market?
I think the more specific question could be, “Is there an organic housing shortage, versus an engineered housing shortage?”
What does an organic (market-driven) housing shortage look like?
What does an engineered (government, large financial entity-driven) housing shortage look like?
Enron was able to make it seem like there was an electricity shortage in California. Goldman and JP Morgan are doing that sort of thing with certain metals.
There is no shortage of housing nationwide, assuming we were in a “free market”, and people could take their jobs with them.
But in a country where jobs are being concentrated, governments at all levels are pulling out all the stops to artificially keep housing prices high (and to keep out the riff-raff), there are going to be areas with manufactured “shortages”
NYC apartments……$3 million??????
http://tinyurl.com/m8spjid
Compared to not untypical prices in typical BFE (in this case, Eastern Colorado):
Strasburg……1996 1500sf modular home, on 20 acres, with 2 car attached garage and 30 x 50′ metal barn/shop. = $275K
Byers…….1919 built, remodeled in 1960 1600 sf house (IOW, a fixer)
with 40 acres and outbuildings = reduced to $215K.
I don’t know about you, but if we go full-on Zombie Apocalypse, I’ll take my chances in Eastern Colorado.
Maybe I’m old fashioned, but 3 mill for an apartment is defacto evidence that somebody is insane. Of course, $3 million is cheap, if you are a Goldman Sachs blood sucking squid, stealing $150 million a year from Grandpa’s pension funds.
There is an alleged shortage here in Pinellas County, FL.
I drove through a neighborhood today that had several abandoned properties.
One had kudzu growing through and about the entire pool cage, roof, and front.
What will $150,000 buy in Pinellas County these days?
Liar,
Keep twisting and distorting words and reality for yourself. But we all know you’re a liar.
Does no one want to answer the question? From what I understand of markets, what you should see are ALL of the following conditions:
1. High prices;
2. Low vacancy rates (including vacant homes held by financial institutions, and vacant homes that are in the middle of foreclosure);
3. Problems with overcrowding; and
4. A high ratio of population to housing units (related to #3).
If you do NOT have ALL of these, then whatever perceived “shortage” is due to circumstances that can easily change.
Can anyone think of other conditions that should also be true?
“Does no one want to answer the question?”
The only satisfying answer you will get is the one you have already made up. As the largest housing mania in history unwinds, none of the changes will make any sense to you.
Overcrowding? You are really all tied up in your undies.
I met a couple in their 60s on the Canadian waterways. They had given up their retirement home to move to Kingston, so as to “help” their two sons. The boys are rising RE speculators and are buying up houses to rent and flip by the hundreds. Everyone wants to live in Kingston. There is a housing shortage in Kingston. Prices are high in Kingston.
Down along the shore a few miles is Toronto, from which a shock wave is emanating. Kingston just can’t feel it yet. More properties for sale along the Rideau waterfront than I have ever seen. Numerous whole islands for sale, which hasn’t been seen in my lifetime.
Nobody has an interest in your flawed and corrupt BS.
Is seizing mortgages and transferring them from holder to borrower:
• Legal?
• Prudent?
So, on the legal front, it seems legal:
• Kelo affirms its legality it seems to me.
• Justice O’Connor in her Kelo dissent said, “In Midkiff, we upheld a land condemnation scheme in Hawaii whereby title in real property was taken from lessors and transferred to lessees” to mitigate an oligopoly.
She said the same thing happened in Berman. Both property transfers were designed to directly mitigate an immediate social harm (ibid, p.34).
Is it prudent?
• The entire wrath of Wall Street will be arrayed against any politicians who attempt this maneuver. Everyone from FHFA to Pimco and Blackrock have promised a fight.
• In any drop in real estate prices, in an area with willing politicians, this could occur. This would undermine the entire (bailout) mortgage business model.
• A politician who could successfully execute this would likely reap massive political rewards from his constituents.
• A politician who could successfully execute this would like reap extreme ire from federal politicians.
It’s fascinating to consider the similarities between bitcoin and dollar savings accounts.
Both are just logical constructs. One difference is that I can turn a savings account into slips of paper which represent it. Can’t do that with bitcoin.
Currency itself is a durable (been around for a long time) logical construct, slugs of metal or slips of paper to which value is ascribed. With digital accounts, we’ve added another layer of abstraction to the construct.
If there were some sort of bitcoin stamping press I wonder if the adoption would be higher. I haven’t really delved much into it but I heard some bitcoin story today got me to thinking.
“Both are just logical constructs.”
Both are logical constructs implemented in a digital form, in a computer.
This housing bubble is only the tip of the iceberg in evaluating the desperation on a world level that is occurring. I hate to sound like I know it all since I certainly don’t know very much, but the bubble is only a symptom of a greater world disease that encompasses politics, the Fed, the international crises recently seen such as the Arab Spring, the Chinese expansion, global warming, peak oil, fracking, jet lag (just kidding), the international housing bubble, the gold run and decline, just to name a few
I have been trying to protect my large family through all of this and provide them with a basis of wealth that will live long past my passing from this Earth.
That is why I am concerned with the housing bubble, and that is why I wish to warn anyone who will listen because the unintelligent and naïve are going to get hit hard in the near future.
I have no ax to grind
God bless you all.
the unintelligent and naïve are going to get hit hard in the near future.
Bingo.
Those who paid a grossly inflated price for a house(basically anyone who bought a house 1998-current) are in for the ride of their lives.
Who does not get injured in a credit collapse?
Some people would be very wise to buy a house this very second if life circumstances dictate that that is what should be done. I have nothing against women, but the nesting instinct is very strong, and with the wrong gal, you could be under horrible pressure to buy when she wants to lay down roots, and establish a social center from which to run her life. As a man, I like being in the same town for nearly 20 years, but I also travel widely. So having roots is a great drive for both male and female. How long does it take in a town to know where the speed traps are laid? Being a gypsy, which I have been, has it’s real disadvantages. I rented 3 houses in the last 7 years, and I was paying the other fellow’s mortgage, so how did I do better by selling in 05. I merely broke even doing the timing absolutely right. Housing is a need that will never go away. Although I must say, I lived in pretty fancy digs as a renter.
Hence, all the more cruel that trusting people bought at the height of the frenzy, but lets face it, this is 2013 and new frenzies have arisen. I am much more interested in stock investment personally than I am in housing because it’s so hard to cash out once you’re in. I was digging the trenches for the sprinklers in my own back yard today and it felt so good. I lost 7 pounds of water in the hot sun. Good day!
Housing a loss no matter if renting or buying. In the current environment renting costs are dwarfed by the massive losses associated with buying.
If you’re paying more than $35-50 per square foot for a used house, you’re getting ripped off.
Housing is only 20% of the problem. What about food quality and obesity? I was in Washington state for four days last week, and most of the people look much more fit that many in So Cal. Two weeks ago, I was in Rosarito Beach Mexico handing out food to the poor, and I was surprised to see a good number of obese people living in abject poverty in Mexico. It’s almost as bad as here in the states where the poorer you are, the fatter you are.
I ate at one incredible Vegan restaurant at the Doe Bay Resort at Orcas Island, and it was so much fun. The organic eggs and potatoes were incredible. Maybe, they weren’t completely Vegan. A few Velosoraptors like myself come in and demand dairy so they have to cave.
I thought of Olympia Gal once again when I passed by the store that sells fried geoducks on the Olympic Peninsula