November 17, 2005

• Is that U.S. dollars or Canadian?
• your theory does not, I'm afraid, take into account the bursting of the real estate bubble... We'll then be living in the streets and tearing the bungalow down for firewood to stay warm.... The best thing that Canada could do is build a tall wall running east and west and pretend then never even met the neighbors to the south! We've ruined the neighborhood! but...please let me sneak over to Windsor first, I just need about 35 minutes warning before ya close the gate!
• Perpaps. But they will have lopped off a couple zeros by then. This has happened in several countries already. In Mexico, three zeros were cut off from currency in the 90s; most consumer goods' prices were in the millions range.
• Oh...you little possum...you better play dead! To clarify, I mean a relatively stable currency historically; not referring to various United Momentary Republic of This Guy coup d'etat dollars.
• "pretend then" meant, of course "pretend THEY" Every post I've done in the past two days has had major typos, left out words, etc... getting old or getting crazy, not sure which.. /typo rant derail done, please return to your normally scheduled post...
• they will have lopped off a couple zeros by then That makes sense. I'm getting used to houses costing one point something, so you can lop off the millions in speech.
• This is totally eponysterical post.
• I hope the housing bubble bursts. I'd like to buy a place of my own one day. You know, to live in. If, as a result, some of the speculators are left out in the street rubbing sticks together for warmth, that's just a bonus.
• I hear you 3DM - oh my do I hear you.
• Me too *sigh*. Though at what I'm making now, and with the housing market as it is, I seem destined to remain in the student ghetto (even past my student days).
• I hate those damn video games where the smallest scoring total is a thousand points. Why waste the three zeroes? These companies are wasting three fucking zeroes when there are starving children in Africa!
• From the Wikipedia's article on the Weimar Republic: The value of the Mark had declined from 4.2 per US dollar to 1,000,000 per dollar by August 1923 and 4,200,000,000,000 per dollar on November 20. On December 1, a new currency, the Rentenmark, was introduced at the rate of 1,000,000,000,000 old marks for 1 new mark. I travelled to Mexico before and after the peso devaluation in the '90s mentioned by Flagpole. I remember seeing menus at restaurants where first extra zeroes had been inked in by hand onto the prices to reflect the skyrocketing inflation then the zeroes crossed out after they were no longer needed because of the new peso.
• I don't see how the housing bubble will burst. They aren't making more land. (OK, so there are volvanoes and stuff, but you know what I mean) as long as the population doesn't start to decrease, then there won't be any substantial bursting of a housing bubble, will there?
• The housing bubble has a lot to do with the wealth of the baby boom generation. And its enourmous numbers so a lot of houses were needed. And their children (one boy, one girl) are even richer and will be extremely rich when their parents die. But if they don't die young because their unhealthy lifestyle (drugs, nicotine, stress) those parents will get older and older and maybe don't want gardens with swimming pools anymore but small luxury condos instead. So the price of suburbian dwellings will go down while condos will get more expensive. Maybe.
• That's my point of view -- land's what god's not making any more of.
• Of course the bubble will burst. The main factor in this will probably be increased construction of new homes. In the current market it seems a good idea to develop land. Of course, everyone and his mother thinks so :-). I cannot comment on the effect of zoning laws, but my guess is politics will follow the money. Thus it is only natural that a period of shortage will be followed by a period of relative overproduction.
• House prices are rising faster than salaries. House prices are also rising faster than rents. Not sustainable.
• I'm quit happy to rent...I figure it's something like the hooker axiom "They pay us to leave". I pay rent so I never have to deal with crazy mortgage payments and permanent asshole neighbours. I mean, you grind your guts out paying for a house for 25 years, then what? Stay there and stare at each other for another thirty years until a neighbour phones in about the nasty stink? Or you can sell it. You'll get loads more than you paid for it, but unless you go back to the trees, you'll have to buy another one which is also worth loads more. I don't know...people say you're throwing your money away renting. But then again, don't you do the same thing buying, over the long run? As they say, you can't take it with you. If you want to save a little something for the kiddies, remember, nothing says I love you like a safety deposit box or eight jammed with krugerrands.
• A tripling in price over 30 years, at least in the US, is not amazing. It depends on how individual income has kept step. It's the shorter term ups and downs that are scary, today. And, yeah, how much income is enough is a function of what you can buy with it. My father, in the 1930s, made $25 a week and lived very well. My first job, in the early 60s paid $200/month, just a bit less than he made, but I could just survive on it, which was ok, since I had few skills. When I got a job for $500/month, a few years later, I could buy a small house. And, some years later, when I made $1,500/month, the house I could buy was very nice. When I moved to the SF Bay ARea in 1996, and was making more than $100K/year, I had a hard time even finding a place to rent. So, it;s all relative.
• Let the bubble grow for a few more years, please. I just overpaid for my home 6 months ago and want to not feel like a total dumbass.
• hey aren't making more land...then there won't be any substantial bursting of a housing bubble The concern is that hype is greater than true demand, as elrick already alluded to. Take condos in my current town... A new generation of young professionals starts showing interest in the downtown core. Developers build a few condos. These sell well, so all sorts of developers start building condos all over the place, trying to grab a chunk of the young condo buyers. Simultaneously, real estate investors start buying these condos, planning to rent them to the young workers interested in living in the downtown core. Keep in mind that the investors are trying to rent to much the same people the developers are trying to sell to. At what point do developers realize they've built more condos than there are young workers buying? And how many of the condos already sold have gone to investors who suddenly realize all potential renters have already bought condos? What happens to condo prices at this point, with surplus units and investors trying to dump empty rental properties?
• people say you're throwing your money away renting You are only throwing away your money renting if your rent is essentially the same as you would pay for a mortgage. In which case, the mortgage essentially returns a portion of your rent to you when you sell the house. The house is acting as a savings plan. If rental rates in your area, for a similarly satisfying property, are lower than mortgage rates, thus allowing you to invest the difference, then you could do as well or theoretically better financially than as a mortgaged owner. It's theoretical because I am under the impression that historically there have been few locales where rental rates were significantly lower than mortgage costs. Quality of life issues can, of course, make this decision significantly more difficult than pure financial concerns suggest.
• I grew up in the oil bust years of TX, so I always view real estate as an iffy investment (even if it has been a fabulous investment for the past decade and a half :) ) I'm starting to see the signs of downturn, though. There are lots of houses for sale in my TX hometown (in neighborhoods of various income brackets) that have been for sale for a long time. Up here in OH, there are several strip malls with more vacancies than filled spaces (I don't see the same problem with selling houses because I live in a college town, where real estate will always be at a premium. However, I have been seeing lots of houses that were single-family owned dwellings turned into student rentals. And there is beginning to be a small glut of rentals, as well.) To me, this says real estate downturn coupled with recession. But I'll admit that I'm basing this on idiosyncratic personal observations.
• As far as inflation, it should be noted that moderate inflation is not automatically a significant concern. It is often a sign of a productive economy and an increasing quality of life. The problem is when wages/incomes do not rise with inflation. Wages/incomes have generally been stagnant, or have actually declined, over the last decade. While the economy has continued to grow, the benefits of that growth have flowed almost exclusively to the top 1% of the income spectrum. CEO (and top executive) compensation is a much, much higher percentage of corporate profits than it was a decade ago, while most workers have seen few wage increases that usually have not kept pace with inflation. The North American economy continues to move away from manufacturing and towards work that does not lend itself readily to labour organization, which was already out of vogue. Without organized labour, it is virtually impossible to ensure that the benefits of corporate growth are distributed evenly without relying on the virtuous behaviour of top executives. (You are allowed one minute to laugh uproariously at this point.)
• will the number continually get bigger to infinity? Yes - yes, it will. I've recently returned from the DISTANT FUTURE, traveling in a steam-powered mechanical contrivance of my own design. Ah, steam-power! Truly we live in an age of wonders. Well - actually it's not all that wonderful, compared with the DISTANT FUTURE, which is where I went to, in my mechanical contrivance, powered by wonderful STEAM. Anyway, in the future (2005, to be precise) everything costs precisely INFINTE dollars and NON-FINITE cents, which is why everyone wears such baggy pantaloons, to house their baggy pockets, required for the carrying of infinite coinage. I returned to 1897 in a mechanical contrivance of my own de-hang on I'm still in the future. OK, maybe this "steam-power" isn't all it's fucking cracked up to be.
• Let me guess...you just finished watching Steamboy? That was one seriously belaboured movie.
• I am afraid I do not understand your far-future mode of speech, strange being of another time. Please take these few infinite coins to purchase some crumbs of hyper-bread - or whatever it is you people eat - and remove yourself swiftly from about my personage, lest I be forced to motivate your departure by applying to your hairy form the scalding vapours of my steam gun (powered by nature's miracle substance, i.e. the aforementioned STEAM).
• You had best watch your tone, you ignorant troglodyte, lest we commit you to the re-education program. Behave yourself and we might even throw you a grant, to write a book about your fevered 'adventures'. And watch where you point that steam gun or my personal squadron of SWAT lawyers will take possession of that ridiculous collection of gears you call a 'time machine' and you'll be shipped off to a lovely little vacaction spot us future denizens like to call Gitmo. You'll fit right in, it's very rustic.
• How much in taxes, insurance, and upkeep would you have spent on that Surrey house in 30 years? What if the money was invested in some fiancial instruments instead? I don't have the answer, but I think that it would show similar increases. Of course, the taxes are deductable and the financial instruments are taxable and all of that. A favorite quote of mine is "Property is the enemy of leisure" - Garrison Keillor. What price leisure?
• How you babble on with your incomprehensible gobbledygook, strange future-time person! How you grunt and squeak in your ridiculous post-contemporary fashion, flailing your limbs hither and yon! By Jupiter, one would almost think that the cacophonous tintinnabulation you eject from your anachronistic insides represents some vague form of "language" - though what bizarre ear-hole could decipher same I know not what. Possibly a mechanical aural receiver powered by STEAM could affect a translation. Ah, steam! Is there no fixed boundary to the gaseous wonder thereof?
• Klankity Bing! Whack! Grrr-rr-rr-rrzzWHoOP!
• God's woundikins, transport this uncouth fellow to a steam-bath, toot sweet. He is in urgent necessitation of the healing steamy vapours of STEAM (a balm to the afflicted and the only true friend of personagekind).
• Sex Them Erotically - Alto Momenti!
• I am under the impression that historically there have been few locales where rental rates were significantly lower than mortgage costs There are many places in the States where rental costs can be greatly lower than mortgage costs, mainly because people insist on taking out gigantic mortgages. On a $500K 25-year mortgage at 6.5%, you end up paying $490,000 in interest over the life of the loan. I'm oversimplifying but that's about $1600 a month in interest expense (not talking about principal payments). Factor in additional expenses like property taxes and the renter is waaaay ahead.
• Holy crap! I'm doing something right...with money. Have to say, that rarely happens. I'm liking my tiny rented Floozy and Cat Lodging Hut better by the minute. One disadvantage? The manager is on a hunt for mystery cats...presumably mine. However, thanks to Modernism, I am saved. How, you ask, is that? Well...glad you asked. I have a set of artfully staggered white painted shelves on an all-white wall. The top shelf, just above eye level of your average six foot dude has a white pot growing oatgrass, a tall square blue glass vase filled with river rocks, and a wide flattish square pottery dish. This all looks very arty. In reality, it's where I feed the cats. Cats eat oatgrass, the vase is weighted with the rocks so the cats can't knock it off the shelf, and the wide low-profile pottery thingy has cat food in it. Their litter box is hidden from sight as well, and they have a cupboard they run to if someone knocks on the door. OK...the smart one does; the other one gets the ol' scoop and shove. Lastly, I put a note on my door asking people to knock loud and at least twice because I use headphones a lot, thus giving me scoop time. It should be noted that getting kicked out of this joint would be a huge nightmare...hence the moderately freakish amount of problem solving.
• Moneyjane, I actually don't know if you're overlooking anything or what you could be overlooking. But if you scoll to the bottom of this Economist.com overview of housing prices you'll see that (presumably inflation adjusted) house prices in Canada have risen 5% since 1980. Maybe surrey is just an exception. Houses in a area in a city might change more dramatically up or down depending how badly people want to live there. Direct link to the chart
• One last important factor often overlooked, re: renting vs mortgage, for those still checking this thread. It is even more important for renters to make secure investments than it is for owners, because of the instability inherent in renting. Many renters use their lower costs to travel, for entertainment, or buy desired goods that are more pleasurable to them than houses. There is nothing wrong with this. It is one of the major benefits to renting vs owning. However, the renter must keep in mind that they do not have secure housing. Their landlord may always choose not to renew the lease, the property may be sold, or the property may be rendered uninhabitable by disaster (fire, flood, etc). In those cases, the renter cannot assume that they will be quickly able to find new housing at the same cost, and must have a cushion of ready investments that will carry them in more expensive immediate housing until better accomodations can be found. The home owner, in contrast, has little risk of being kicked out and has insurance in case of disaster, if only because the bank won't sell them a mortgage without it. Plus the owner can always take out a second mortgage if necessary.
• ...house prices in Canada have risen 5% since 1980 The cautionary note on this statistic is that it's 5% annual growth to *2002*. A lot of the madcap price increases have been in the past three years, if i remember right real estate has been going up by double digits in the cushier urban areas of Canada and the US.