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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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HA says he can build a complete house for $55/SF, including land, permits, financing, construction costs and profit.
If that was true, all these out of work builders would be building millions of houses and selling them, solving the housing cost problem.
The average home in the Sacramento market is selling at about $175/SF. Even if you could find a land parcel for $75,000 (which is difficult) and built a 1500 SF house, the land portion alone equals $50/SF before you build the improvements.
It is simply not true.
It simply is true because we build them 5 days a week.
Sorry J._Fraud. You’re neck deep in your own BS and debt.
HA, if you can do it, I applaud you.
Provide us an example of a house you just built and sold for $55/SF. You must have hundreds of them if you build them 5 days a week.
We’ve already posted our work J._Fraud. You just didn’t like it.
Step up to your own claim of being a “general contractor” and show us some of yours.
Sacramento Business Journal reports this morning:
In many areas, building fees are over $50,000 per house.
As homebuilding resumes in earnest, Roseville is getting much of the action. Why? Low crime and good schools, of course. And the city is famously cooperative with builders.
Also, there’s this: It’s still relatively cheap to build there. A Business Journal comparison of estimated fees finds Roseville is one of the least expensive markets for home construction in the capital region.
But even here in Roseville, the fees are breathtaking: Builders would pay an estimated $55,000 in fees to put up a hypothetical standard home in the West Roseville Specific Plan area, for example.
Here is more from the same article on building permits:
The Business Journal asked selected planning departments for estimated fees on a hypothetical home of 2,200 square feet with three bedrooms, two bathrooms and a two-car garage on a standard lot. According to the North State BIA, that home size is the most common for new construction.
City officials stress that fees vary considerably depending on many factors, including location, size and volume of units being built. But clear differences quickly emerge.
The lowest fee among communities compared is in Folsom, where the estimated total is about $35,000. But — unlike Roseville, for example — lots there are in short supply.
Just a few miles away, western El Dorado County charges the highest fee of communities compared here. More rural, hilly and water-deficient than other communities, it charges nearly $85,000 per home.
$50k for permits, trenching, pipe, corp stop, meter, inspections and connections for water sewer and electric within city limits is a far cry from your $90k building permit tall tale J._Fraud.
HA, you should learn how to read….let me post this again for you:
Just a few miles away, western El Dorado County charges the highest fee of communities compared here. More rural, hilly and water-deficient than other communities, it charges nearly $85,000 per home.
Let me repeat for you.
$50k for permit, trenching, pipe, pipe diaper, backfilling, corp stop, meter, inspections and connections for water sewer and electric anywhere limits is a far cry from your wild claim of $90k building permits.
And always post a link to substantiate your claim.
HA says he can build a complete house for $55/SF, including land, permits, financing, construction costs and profit.
Dude it is not very difficult to figure out that a house is made up of sticks, drywall, electric wiring, insulation, plumbing, ducts and a heating system among other things. The labor rate is $80 to $120 per day in most cases. How can anyone figure out that the cost per square foot for the above will ever reach above $55 per sq ft is beyond me? If someone pays $150 per sq ft fits the expression that there is a sucker born every minute.
Sorry HA, here is the link you requested:
http://www.bizjournals.com/sacramento/print-edition/2014/03/28/where-to-build-homes-permit-fees-can-make-all-the.html?iana=ind_rre
Dateline and Headline:
Mar 28, 2014, 3:00am PDT
Where to build homes? Permit fees can make all the difference. In many areas, building fees are over $50,000 per house.
HA, I posted the link but it does not seem to be showing up on the blog. Google “Sacramento Business Journal, Building Permits”
And all that work for $50k is a far cry from your $90k piece of paper claim.
When it gets right down to it, you don’t have the slightest idea how to bid or price anything. You’re not a “general contractor” as you previously claimed so why make the claim?
I guess it pays to take the unconventional path. I let someone else put in the basic infrastructure a century ago on the Reno I bought for my shop/studio/apartment. I used the old survey. My building permit was $40. The utility put in service and meters for free. My predecessor was a wannabe flipper and tore it down to the sticks literally. Steel roof, wiring and insulation surpassing code, new windows and doors, flooring, drywall, all of it including purchase price about half what HA claims. The Amish work cheap and fast and it is done right. OK, I haven’t put up any trim yet, and I won’t right now because boating season is at the doorstep.
When there are millions and millions of empty houses, why anyone would pay for built new at 4x cost is beyond me. Why they would pay some city $50K in permits for the privilege is a box of stupid.
I like your thinking Blue. That is why I bought foreclosures. Someone else’s sunk capital is another person’s opportunity.
And you still paid a 200% premium.
Your lost capital amounts to what? 300 or 400k?
HA, hahahahahahahaha. You are confused. That is my capital gains.
By now, anything you say is called into question.
Topic suggestion: how does a family man gets as close to the BILA/Goon/Blue plan as possible?
The boy is 6 and the l’il lady is 4. We’ll be emptynesters in about 13 years. I’d like to provide a stable childhood for my kids, while balancing my urge live as a nomadic hermit, while stashing loot.
The old lady and I are in our late 30’s now… I’m thinking, even without the bubble, we missed any meaningful timeline to buy a “family” house. If we stay in Pinellas County for the next 13 years, I’m not sure buying makes sense unless we know we will stay here (unlikely). Even if we stayed, we’d want to downsize ASAP.
“Empty nesters in 13 years”
Good luck with that plan….
They will be 25 before that happens (at least financially). I’m still helping with money issues, and fixing cars (for free).
The -fixr was invited last summer to help pick out a wedding dress for daughter #2…….mainly because I paid for it. At least she bought something reasonable. That, and the CZ-75 I got her for her birthday.
Of course, by then they may have figured out a way to kill the Vampire squids, and we can get back to the time where an eighteen year old could support him/herself if they worked full time.
And monkeys will fly out of my butt.
If you have a daughter who wants to get married to today’s young man, I suggest you have him post a bond to ultimately pay for the divorce, relocation and associated expenses. $50K would be a good starting point for negotiations. If they make it to sending kids to college, they will have a fund ready.
Don’t ask me how I know.
Been there, done that.
OTOH, you can save quite a bit of money, even while paying child support, and getting laid off for 6 months at a shot in 2004 and 2009.
All you have to do is:
- Look reality in the face, and admit to yourself that you are now part of the “wretched refuse/taker/scumbag” class.
- Forget about any notions of “self-respect”. If our society thought you were worth anything, you would be getting paid more that your typical MLB/NFL benchwarmer.
- Have no social life whatsoever. Your former friends that are still in the middle class don’t want to be reminded how fragile their position actually is.
- Any middle class female think you are a loser, because you aren’t pulling in six figures. Dating women in your newly assigned social/economic class is fraught with it’s own problems/pathologies. All you have to do to see this illustrated is watch Jerry/Maury/Judge Judy/Joe Brown/etc.
Only the USA would have a policy spending gazillions of dollars prolonging life on one hand, while also promoting policies making that life as miserable/crappy as possible.
Could be worse. Certain advantages of being able to pack a bag and go at the drop of a hat, without worrying about the ex-/kids/dogs/cats/fish/etc.
Got a call late last week, inviting me to watch the Jayhawks/KSU Wildcats/Wichita State play over in St. Louis on Friday. In a skybox/suite. with some guys I’m acquainted with. With free food and booze (not that I had any booze).
Lets just put it this way…….anyone who saw the Jayhawks play Friday night weren’t surprised they got their azzes kicked on Sunday.
“Been there, done that.”
My pops had to bail out my oldest sister and pay to sell their POS house in Indiana + take in the kids + all kind of other nonsense.
“Certain advantages of being able to pack a bag and go at the drop of a hat, without worrying about the ex-/kids/dogs/cats/fish/etc.”
My first 6 mos. in NYC I basically couch-surfed with a small travel bag. It was a great feeling.
That is my idea of retirement.
“couch-surfed with a small travel bag…”
Consider an RV.
“- Any middle class female think you are a loser, because you aren’t pulling in six figures. Dating women in your newly assigned social/economic class is fraught with it’s own problems/pathologies. All you have to do to see this illustrated is watch Jerry/Maury/Judge Judy/Joe Brown/etc.”
+1 Fugg’n true!
If you have a daughter who wants to get married to today’s young man, I suggest you have him post a bond to ultimately pay for the divorce, relocation and associated expenses. $50K would be a good starting point for negotiations.
Spot on! I love that post of yours!”post a bond” LOLZ! Funny but dam true in Marriage 2.0
You don’t. Not if you like your wife and your kids and want to live with them. Even then, you can’t maintain a dirt cheap residence where you pretend to live (and they actually live) while you live someplace else as a contractor and getting untaxed “on a business trip” expense money.
Your other choices are to change careers to make a lot of money, win the lottery or work until you are in your 70s.
Don’t envy Bill. He is financially secure, but your life is much better.
I have an alternate lifestyle that is not miserable in the least. There is plenty of room for a partner, but not for kids, crates of books, pianos and stuff like that.
“change careers to make a lot of money”
What is your ballpark figure for this statement?
I have considered going brass knuckles capitalist. I would basically buy as many 2brs I could get my on hands, and then rent them to new teachers from the midwest, knowing that they’d only be in them for 1-2 years + day trade like a clown.
I’ve also considered ramping the music business back up now that I am not changing diapers, and therefore have back about 2 hours a day to write/record. It’s like sales: I need to write about twenty :30 second pieces for a $5-$8k hit. I can produce a good :30 every 6-8 hours.
Maybe a combination of all the above…
I wrote a screenplay that generated some interest, but nothing serious. I know people that have taken a script all the way to the big screen, but only made scale, which is $50k. That’s silly considering the amount of time a decent script takes.
I couldn’t believe Flappy Bird made $50k a day in ads. That is basically the same as winning the lotto. I do occasionally think about coding games.
I had an idea for a them park in Orlando that I ran by an attorney friend about 10 years ago, and he thought it was a good idea. I may pursue that, but I’d need to research funding and all of that nonsense.
Basically I’ve been dormant for the last 7 years while tending to babies and grad school. I’m ready for action again. Get rich or die tryin’. If I had my druthers, I’d write a tart-pop hit for someone like Kesha, then plow those earnings into a Blue-like plan.
Here’s what I am thinking right now:
Plan to stay in Pinellas for the next 13 years and rent/be nimble, while simultaneously planning to pay cash for a foreclosure/toe tag house somewhere in upstate NY.
If Florida weren’t such a CF, I’d plan to buy a little 2br. toe tag house here, but that’s not a good move IMHO.
I think the music is the way to go. My dad always said you get paid in this world for rare skills or taking huge risks. I doubt you have the capital right now to take care of your family and take huge risks. Rare skills it is.
Just remember that there is very little in the world more fun than a 4 year old. I love that age.
“Rare skills it is.”
Thanks for the input. I enjoy the process, so it’s a win-win.
I’d trade places with Bill without thinking twice.
If you are young and healthy and you are a renter, you got nothing to lose but consider the 48 states your job market. Most people consider their job market a radius of 60 miles (in Los Angeles) and maybe 30 miles in other cities.
With such a larger pool of jobs out there you can easily shop around for the best pay. Never start low in your negotiation because you cannot ever go back up.
Don’t mind the school marm post, folks. School marm hates it when people use her government system against the government system.
You can certainly live very cheap in Indiana and work in California and get full tax credit from California for the Indiana state taxes you pay on all the income you earned in California.
You can certainly live very cheap in Ariizona and work in California and get full tax credit from California for the Arizona state taxes you pay on all the income you earned in California. - I rented a place for $300 per month in Tucson when I first started consulting. It happened to be also where my girlfriend lived. It is not against the law to live with someone as your main residence and work in another state.
School marm gets off on big government - I know that. She loves all the government laws and the more the better. But in my case I followed the per diem law to a t.
Google: “What is a school marm?”
schoolmarm:
“The schoolmarm, running the old west one-room school, is a stock character in western movies. A person, male or female, who exhibits characteristics attributed to schoolteachers of the old times (as strict adherence to arbitrary rules, is strict on those who don’t comply to those rules, etc.) ”
LOLZ - Arbitrary (whimsical) statist rules and gets off by rules/order/strictness.
IOW: I always think of the “Ms. Grundy” character in the old “Archie” comics when I see a school marm post. I betcha Miss Grundy was a “progressive” too! LOLZ
The Blog Hallway Monitor is big govt.
Ha Ha! She’s the Washington D.C. Hallway Monitor.
Probably wears a plastic helmet with a revolving blue light on the top and has a sash across one shoulder.
Her hero is the “Soup Nazi” on “Friends.”
No soup for you.
No tax cut for ANYONE
Oh Miss Grundy
Topic suggestion: how does a family man gets as close to the BILA/Goon/Blue plan as possible?
It is very difficult. I have seen snapshots of this happening at least twice though.
1) A colleague in his mid 40s working in the NYC metro area where I was working. He flew to Florida every other weekend to be with his 30-something wife and her 11 year old son. On alternate weekends she would fly up to NYC. I lost track of him a few months after he was done with his gig.
2) A colleague from Phoenix who normally consults in the southwest from New Mexico to Southern California. Has a wife working in Phoenix and they have a son who should be around 11 years old by now. I knew them for several years and lost contact with them in the 2006 time frame.
3) My sister’s boyfriend goes back and forth between Austin and Portland (Oregon), works in IT and does most of his work wherever he is with his laptop and blackberry.
4) Back when I was turning 30 I hung out with a large group of engineers around my age. One was a consultant who earned some outrageous sum (at that time) and I was envious because his wife was 20ish and very beautiful. But he was average and in his mid 30s. I was a feral employee. I knew more contractors but was very uneducated on how to get into the business.
5) Another category is the 1099 contractors where you (Muggy) should look into. It’s preferable for family men. Forget the long distance travel. Live in a large metro area with great diverse jobs. Tampa / Clearwater / St. Petersburg is pretty big and diverse and has all sorts of engineering jobs for instance. A 1099 consultant means you don’t have to work more than 50 miles from home to get the “Bill in LA” tax break. You can live next door to Honeywell and work there. Also your tax break does not disappear after one year, making you want to jump to Northrup Grumman in the middle of an important project. You can stay as long as the client wants you there. However you have to pay all your social security. You have to file taxes quarterly. You need a separate credit card account to charge all business expenses on that card. You also should get a tax accountant. Your best tax break is that you can do your own SEP IRA and put over $50,000, (probably $60,000 now) into it/ It’s a traditional IRA and you can deduct it all off your Income and reduce your tax bite (but it’s still a deferred tax). You get all sorts of other ways to deduct expenses, more than what I was able to do. Best of all (for you), you can stay at home with wife and kids and not have to fly thousands of miles home. And another huge thing is that you have less overhead. You don’t really have to go through a job shop and can keep most of the hourly rate you charge.
I almost went for a $100 per hour 1099 in Clearwater in 2012. But I was not confident it would last very long. The guy in the small company insisted he had a big market for the FPGA product but I did not know him too well. Still, I was looking at gulf view houses for rent in the Palm Harbor thru New Port Richey area, since I would be able to afford to pay out more moolah on better surroundings.
For me I was always better off not being a 1099 contractor, but a CON-W2 contractor. The tax breaks were far better for me. I had to move around a lot more though.
Forgot to add for item 1) the consultant from Florida told his wife before marriage that he is a consultant and will travel a lot, be away from her five days at a time. He was honest and upfront. So they maried anyway. That’s the way to do it.
Off topic. Once he told me he bought a fixer upper in, I think Ft. lauderdale for $70,000. He told me there were canals all over. People would bring boats, well he got in early. Back in 2002 this was, he told me his place was worth $500,000. And he would see big multi million dollar yachts in the canal. In my last communication with him he sent a pic of him after catching lobsters (or was it crabs) and with a whole bunch of em on the dock. He knew how to live.
Some people get the balance right. In my case I love to eat. If I ate far less I would not have to exercise at wierd hours and could sleep in and have time for a girlfriend. But I like food and I like to say in shape. The morning crowd at my gym works out longer than me.
1. Relax.
2. Build a diversified portfolio of financial assets.
3. Only go long “house” when and if the price is right and you have personal reasons why owning makes more sense than renting.
Muggy in imho you are mixing a business move and family together. It should not be that way. If your wife’s income can support the family then you can take risks. Don’t you want to make money to make life better not only yourself but also for your family? Having a spouse on board with starting a business is one of the most difficult tasks. Women by nature are more cautious then men in my opinion and I have been franchising businesses close to 28 years. When starting a business I recommend going into an area you know something about rather than an area you know nothing about. It should also be very lucrative with limited competition in an area that has high incomes.
Are a super star salesman, know exactly how to generate leads and have a business that can make decent bank each and every week? Just as it is not a good time to buy an overpriced shack similarly this is not the best time to start a business and prove to yourself how to lose money. Good luck with your decision. I hope it works out for you.
Just my 2 cents
“If your wife’s income can support the family then you can take risks.”
+1 Wisdom.
Are your bitcoin investments delivering?
China demands all banks cease trading in Bitcoin
Summary: The cryptocurrency has suffered an extreme blow in China as the government bans banks and payment service providers from dealing in Bitcoin.
By Charlie Osborne for Between the Lines | March 28, 2014 — 11:43 GMT (04:43 PDT)
China’s central bank has enforced a crackdown on Bitcoin trading, demanding that all banks and payment service providers cease their dealings in the digital currency.
According to Chinese business website Caixin, the People’s Bank of China (PBOC)’s latest ruling, taking effect April 15, means that banks and payment companies must close “all the accounts opened by the operators of websites that trade in the virtual currency.”
In other words, all cryptocurrency trading websites—the equivalent of Mt. Gox or Polinex—operating in China must shut their doors. In addition, cash will be the only way for investors to purchase Bitcoins, according to one analyst who spoke to the publication.
“The only one way out for Bitcoin websites is moving their servers abroad and using the service of foreign banks and payment companies,” the analyst said.
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Bitcoin Prices Plunge on Report PBOC Orders Accounts Shut
By Carter Dougherty
Mar 27, 2014 10:08 AM PT
Bitcoin prices plunged almost 10 percent today after a report that China’s central bank ordered banks and payment companies to close the trading accounts of more than 10 exchanges.
Accounts must be shut by April 15, preventing investors in the commodity that advocates promote as a digital currency from doing fund transfers to the exchanges, according to a Caixin news report citing a notice sent to banks and third-party payment companies this month.
“I’m aware of the rumors circulating on the topic,” Bobby Lee, chief executive officer of BTC China, one of the largest bitcoin exchanges in the Asian nation, said by phone today. “I haven’t heard of anything else to confirm that. We are still waiting to see what happens.”
The price of bitcoin was off 9.38 percent at $524.77 at 12:06 New York time, according to the CoinDesk Bitcoin Price Index.
The restrictions would be the latest on the commodity from the People’s Bank of China, which has sought to limit dealings that may be used to launder money or evade capital controls. The central bank issued a notice on Dec. 5 barring financial institutions and payment companies from buying and selling bitcoin or dealing in linked products.
The Chinese monetary authority didn’t respond to a faxed inquiry about today’s report. In a March 21 statement on its microblog, the PBOC denied unspecified media reports that it had banned bitcoin trading.
Hard Hit
Bitcoin has been hard hit since Tokyo-based exchange Mt. Gox, once the world’s largest, halted withdrawals on Feb. 7, sending prices tumbling more than 8 percent. The exchange filed for bankruptcy weeks later after about $470 million in bitcoins belonging to its customers and the firm disappeared from its registries.
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Taxes
The IRS Takes a Bite Out of Bitcoin
Mar 28, 2014 5:12 PM ET
By Megan McArdle
Longtime readers know that I’m a bitcoin skeptic. Even if bitcoin meets the fondest hopes and dreams of its early adopters, governments are likely to make it unviable as a currency.
Even if the government isn’t directly trying to shut bitcoin down, its actions can make it harder for the virtual currency to survive.
Case in point: The Internal Revenue Service has just ruled that bitcoins are assets, subject to capital-gains tax when they’re sold. Among other things, that means that you — or your bitcoin exchange — will need to track the price at which each one is acquired, and the price at which you sell it, and pay capital-gains tax on the difference.
Now, maybe you’ll say that you have no intention of doing any such thing; you’re going to keep your transactions off the books. And true, there is no way to force you to move your bitcoins off a personal computer and onto a U.S.-based exchange. But the government can prevent most merchants from accepting bitcoins unless they come from an exchange that issues tax returns. They can also keep exchanges that don’t issue tax returns from doing business with legitimate financial institutions. You start having to engage in rather elaborate money-laundering operations in order to turn your bitcoins into easily available cash. And if you do get caught, bitcoin’s public blockchain will provide law enforcement with a nice ledger of all your illegal activity, the better to subject you to stiff penalties for tax evasion.
The government isn’t doing this because it hates bitcoin; it’s doing it because whenever there is a financial gain, the IRS is in the business of analyzing it, categorizing it and making sure that the government gets its cut. If the IRS had ruled that bitcoin was a currency instead, it would have alleviated some of the these problems, but created others, because gains and losses from currency transactions are also what’s known as a “taxable event.” A different ruling would simply have meant slightly different rules about tax treatment.
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