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House prices (off-topic)

Just passing some time thinking about the future.  There seems to be a house price bubble in most of the western world (UK, Europe, USA), which has existed for the past 15 years or so.

Looking at house prices in San Francisco, there seems to be a total lack of quality housing in the bay area for under $400K, and nothing in the city for less than $500K.  I would guess that the average tech persons salary there is ~$70K.

Looking at New York City, I saw this advert:
http://newyork.craigslist.org/mnh/rfs/34924430.html
310K for a decent (looking) 1 bedroom apartment.  Where I would guess the average salary is more like $100K.

Is NYC really more affordable than San Francisco?  I currently live in London (but have lived in San Francisco)where being able to buy an apartment for 3x you salary is impossible.

Things that make you go hmmm...

Furious George
Monday, June 28, 2004

I know that I can't find a decent home in Connecticut for under 300K, and the average developer salary here is probably around 70K, but I'm not making that.

A three bedroom apartment here goes for $1500/month for something without bars on the windows, but for that much, I could get a 300K, 30 year mortgage at 6.5.

Here's hoping the bubble bursts soon.

muppet from madebymonkeys.net
Monday, June 28, 2004

It will burst if Greenspan raises interest rates.  Which he REALLY should do to cut back on the inflation.


Monday, June 28, 2004

how ridiculous that that's what our economy comes down to.  It's all a big sham.

muppet from madebymonkeys.net
Monday, June 28, 2004

The increase in house prices is more solid than a bubble. It may not burst, though it may slump.

The key drivers are social. There are many more families where both partners work. At the same time, houses are starting to become multi-generation investments. People are now prepared to invest more and that drives prices. The value of a home is aspirational, it's not simply a commodity. What price would you put on a place to relax and bring up your kids in safety ?

Woodentongue
Monday, June 28, 2004

That's all well and good, but if only the upper middle class can afford relaxation and safety, there's going to be some sort of backlash/market force that'll correct it sooner or later.

muppet from madebymonkeys.net
Monday, June 28, 2004

It all simple supply and demand.  More demand and decreasing supply.  The supply isn't keeping up with the demand which is causing the price to go up.  The big problem with the supply is available land to build on.

Bill Rushmore
Monday, June 28, 2004

The big problem with the supply is that any builder who gets his hands on land to build on turns around and builds a Plastic Mansion instead of affordable housing  because Hell, who wouldn't?

They're still finding plenty of land in CT.  In fact, they clear cut some of the forest surrounding a nature preserve in my home town in order to build half a dozen Plastic Mansions, practically on top of each other.

muppet from madebymonkeys.net
Monday, June 28, 2004

All housing is affordable housing,  just depends on how well you stick to your budget.

Most buyers are liers and don't even know it.  They know a price they can afford and search months and months for a house to no avail.  The problem their housig tastes are 10's of thousands of dollars more than thier budget, thus the concept of unaffordable housing.

Yo
Monday, June 28, 2004

Yo,

It's also nice to own a place without bars on the windows, with enough bedrooms for my family, where I can let my 5 year old out in the yard without fear she'll be kidnapped or shot accidentally in some drive by.

Try and find a 3 bedroom home in a decent neighborhood in CT for less than $250K.  You can't.

Your assertion that all housing is affordable is ridiculous. Yes, all housing is affordable to SOMEBODY.  The way affordable housing is typically meant, however, is "reasonably affordable to an average middle class person".  No such housing truly exists in this state right now.

muppet from madebymonkeys.net
Monday, June 28, 2004

Unless your assertion is that middle class folks in this situation ought live in the slums, which is nonsense.

muppet from madebymonkeys.net
Monday, June 28, 2004

Muppet:

It seems to me it's not that you can't afford housing.  It's you can't afford housing in an area where "undesireables" cannot.  If those "plastic mansions" were available for $200/month you could live in a really nice house but you would find that the dangerous people had followed you because they too could afford it.

name withheld out of cowardice
Monday, June 28, 2004

Coward:

Ok, that's a fair statement, but it's not quite that.  It's not just that I can't afford a home where the 'dangerous' folk live, it's that I can't afford a home that's not falling down/roach infested/insert-serious-problem-here.

Moving out of state is looking better all the time, and if not for my daughter and worry about moving her away from her family (single dad, here), I'd have already left.

muppet from madebymonkeys.net
Monday, June 28, 2004

*don't live

muppet from madebymonkeys.net
Monday, June 28, 2004

It's worth noting that housing prices in many US cities have not risen so dramatically. For instance, we're buying our first house (in two days!) in Pittsburgh, Pennsylvania, for ~$130K. The house is nearly 100 years old and in great shape: three floors plus a basement, four bedrooms, two and a half bathrooms, not much of a yard but near the park and elementary school.

That said, I agree with some earlier posters who talked about so many parts of the market being a sham. A recent NYT story on interest-only loans and speculation  should strike fear into your hearts:

http://www.nytimes.com/2004/06/24/business/24housing.html

Chris Winters
Monday, June 28, 2004

>thus the concept of unaffordable housing

Not true I'm afraid. I earn a decent living, I have about 50k GBP in savings etc. (basically that I could use for a deposit) and about the only type of property that I could afford to buy in any part of the UK where I would be able to get a decent job is a small rabbit hutch. I'd have to supply my own straw. I suppose on the plus side someone might come and clean it out every week or so.


Monday, June 28, 2004

20 years ago i thought there was a housing bubble
in the bay area too. Didn't happen. For a little bit
we had a little dip, but that's it. A limited quantity
of houses combined with people who make decent money
drives demand. Recently we have had people take
stock market money out and buy houses, i am not sure
how long that will last. But that will slow growth, it will
most likely not burst the bubble.

son of parnas
Monday, June 28, 2004

It is my opinion that the trend of lending agencies allowing buyers to take unreal risks has been one of the biggest factors in the surge in housing prices. The fact that someone can buy a house at a half a million or more with less then 20% down or even nothing down is stunning. While the possibility of default on such loans is a huge future risk, the biggest effect you see right now is based on the market bearing the higher then traditional inflation. If the buyers were limited in the amount of a loan they could take out based on the onwers income to levels from 15 years ago I wonder if the market would be supporting this suburban boom?

Combine that with famers/land owners becoming smarter about selling their properties, as a builder you now need to build a large house out of the cheapest materials possible. (This is also why valuted cielings and 10 foot ceilings are so popular now, it is cheaper to build vertically compared to horizontally.) Where I live central NJ a 14 acre lot just sold for 5 million, the builder is allowed to place 17 homes on that property, the house now starts at $470,000 just for the property. Figure a 2,500 square foot house costs $180,000 in labor and materials, the house then costs $650,000 + profit for the investors. That is where the McMansion in NJ comes from. The days of buying land cheap because the farmers did not know how to purge their land of liens and other chain of title problems are long gone.

Jeff
Monday, June 28, 2004

I live in CT, also.

And although muppet has a point about the housing, I think it is a skewed opinion.

You CAN find really, really nice housing for less than 300K in CT.  But, it's not in the "desirable" cities.

Let me explain further:

About 2 years ago, I was looking for a house.  At the time, I (and my now wife) was living in my parents house in Waterbury (saving).

I work in Norwalk, but I work from home most of the time.  So, I don't mind a 45-50 minute commute once or twice a week.  We started looking all down Rt. 8: Seymour, Shelton, Statford, Ansonia, Derby etc.  I looked at this area because along the gold coast: Fairfield down to Greenwich - you aren't getting a house for under 300K.

In Shelton, the closest we came to finding something we liked was: $260K.  Raised Ranch w/ basement finished (so no storage whasoever - but that's the typical house).  3 bed/2bath. 1900 sq. ft (including finished basement).  In a nice neigborhood, but houses were mis-matched (old, new).

A nice house, for sure.  But I'm not the type that wants to get into a 260K mortgage on my FIRST house, and I just have a hard time paying almost 100K more than what I could buy my parents house for (which was much nicer).  But, my parents house has the stigma of being in "Waterbury".

Waterbury is equivalent to Bridgeport in the sense that there ARE nice neighborhoods.  Really nice.  Except that no one wants to live there because of the city.  [scared CT people]Too many minorities, you know.  There's projects in some parts![/scared CT people]

I'll admit, it is a problem once you want to start sending your kids to school (school systems aren't the best).  But, I don't have childeren right now...and it won't be for another 6 years that I might have children that are school age (and is it really an issue during K-5?).  Plus, the taxes do suck in these towns because there is a higher ratio of poor people.  But, these ARE nice neighborhoods.  As nice as any of the "nicer" towns.

I chose to buy my parents house.  For $180K.  2100 sq. ft.  A 500 sq. ft. cellar.  3 (huge) bed/3bath.  Really nice area.  Yeah, it sucks that I'm paying $600/month in taxes.  But after my down payment, my mortgage is $140K.  Not $300K.

So, I think you can find something really nice.  Muppet's just complaining that he can't find himself something in the area's that everyone wants.  Well, live in a Bridgeport or Waterbury ... or pay that money.

William Campbell
Monday, June 28, 2004

Below is the best article on the housing bubble that I've read.  It has convinced me to wait out the market for cheaper prices.  I've actually been meaning to start a thread like this here.

"There Goes the Neighborhood" by Benjamin Wallace-Wells

http://www.washingtonmonthly.com/features/2004/0404.wallace-wells.html

sd
Monday, June 28, 2004

I think the comment about lending practices is the correct attribution. It is much easier to qualify for a loan today than it was in years gone by. The buyer then pays for this extra risk to be laid off through PMI.  One could look at this as a market efficiency, I suppose. This feeds demand for more affordable housing. The owners of this housing take their profits and go bid up the next tier of houses, etc., etc.

In my area anyway, most of the people who live in the more expensive areas, cannot really "afford" to live the way they do. They are leveraged to the max. One false step and it all comes crashing down. I have chosen to live a different lifestyle. I will not "compete" with people who've chosen to take what I consider to be unacceptable risk with their financial futures. I have a longer commute, (and I don't drive a Mercedes) but I can afford a safety net so that if I were out of work for a while, I get to keep my house.

Rob VH
Monday, June 28, 2004

*** (and is it really an issue during K-5?).***

Yes, it is.  It's a huge issue.  One you apparently do not understand, because you do not have children.  Living in Bridgeport or Waterbury is not a realistic solution.  If I can't feel safe sending my kid outside, then it's no solution at all.

It's nice that you were able to buy your parents' house at an artificially low price.  Not all of us have that option, nor does it indicate that there is not a HUGE problem with the cost of living in this state lately.

If not for concerns over school, or the safety of my kid when she wants to go down to the playground down the street, I'd happily live in Waterbury or Bridgeport.  I'm not afraid of minorities, as you appear to be suggesting.  I work in downtown Hartford.  I walk most of the places I go here.  I drive home down New Britian Avenue.  This neighborhood doesn't scare me.

Sending my 5 yr old out in it, however, does.  This is a perfectly legitimate concern and your attempt to paint me as some sort of elitist racist is just ridiculous.

muppet from madebymonkeys.net
Monday, June 28, 2004

I just don't understand how people can afford to live on the coasts anymore.

The average IT salary here in Omaha, NE is probably around 50-60K, yet you can get a good two bedroom apt. for around 500-600 a month, or a good 4 bedroom house for around 100-120K. You can build a new house starting at the same price.

To top it off, the people are extremely nice and courteous.

QTExtender.com
Monday, June 28, 2004

Believe me, I'd LOVE to move.

Trouble is convincing the SO, and uprooting my daughter.

muppet from madebymonkeys.net
Monday, June 28, 2004

Many issues.  The housing price problem is different in different areas.  In NYC and San Francisco where there are serious barriers to building new housing units you get an exaggerated inflation.  In cities like Chicago where they just keep building and building, it is much less a problem.

As for people shocked that one can buy a house in the US for 5% down instead of the traditional 20%, someone did a study and found that the downpayment has far less predictive value for mortgage default than a buyer's credit rating, thus the change.

As for high prices of houses in desireable suburbs, one should note that the increase in prices in these places has outstripped those in the city over the past two decades.  Why?  Because, crappy schools are caused by crappy students and in the US we can vote with our feet.  A decision to move to the suburbs is a decision to put your kids in a better school.  Call these parents racist if you must (I have no kids BTW) but it seems to me you only get one chance to raise your kids and few people are going to put them in a bad school just to prove they aren't racist.  That's what happened to Howard Stern BTW and he seems to resent it.

As for waiting out the housing bubble, I wouldn't try it.  Housing bubbles tend not to pop as dramatically as equities bubbles.  Often they just stay flat until inflation has caught up.  Meantime you aren't living in your own place.

name withheld out of cowardice
Monday, June 28, 2004

Hmm, that washingtonmonthly article was very interesting.

Anybody know of a comparable article for the Canadian market? I wonder if the Canadian market is heading the same way.

In my neck of the woods, at least, rent is growing just as fast as home prices, and vacancy rate is at all-time lows. Hopefully the bubble burst won't hit us too hard.

Mtl_Dev
Monday, June 28, 2004

Y'all need to move to the midwest.

We got our house for around $80K.  3BR, 1 bath, 1 acre lot.  It's not that fancy, but it's in good shape and suits us.  Nice quiet neighborhood just outside a quiet suburb.  10 minutes away from Wichita, hardly a blazing metropolis but 300K people is enough to support some jobs or clients or customers.  50-60K per year is usual advertised rate for full time salaried development.

You won't be working on anything cool out here, though.  Depending on what your tastes are, the local culture might be totally unacceptable (tech, hip, society, beautiful people stuff is pretty thin and sketchy).  But it's a good place to raise a family, barbeque on the back patio, go see a movie on the weekend.

Matt Conrad
Monday, June 28, 2004

Hey, I have an idea. Everyone time-warp back to 1984 so you can get a 4 bedroom suburban home on a 1/4 acre lot for well under $100K. Of course the interest rates were in double digits then, but not to worry, just time-warp forward to 2024 and pay it off with spare change.

I must admit housing is much more expensive today than 20 years ago. I paid roughly twice my annual salary for the last house I bought. You can't do that now. It would be more than 3x, perhaps as much as 4x salary for the same house today.

old_timer
Monday, June 28, 2004

The crappy neighborhood problem can be changed, and it's something that one or two people can fix.  The solution is to buy up a house in a crappy neighborhood that has some potential and fix it up.  If you don't want to live in it yourself, you sell it to somebody who plans to live in it and will keep it up.  You buy another one on the same block and play the same game.  Your neighborhood starts to look better, a better class of people start to move in who will fix up and keep up their property.  I've seen it done in neighborhoods and the turnaround happens within a couple of years.  Yes, the first couple of years are a little ugly; buy a big dog and make sure it likes your kids. Get to know your neighbors, which is one of your best defenses against having trouble with them.

The school problem is a lot harder to deal with.  Your best bet is to find a good private school. A lot of religious schools have tuition assistance programs that let you pay for part of the tuition by doing work around the school at fundraisers and sporting events.

My point though is that the problem can be fixed, and there's a profit potential.  A friend of mine from high school gave up a successful career to do this; he's making more money doing this than he did in his high power job, and he's making sure that it's a good neighborhood that he lives in.

Clay Dowling
Monday, June 28, 2004

The housing bubble isn't like a stock bubble.

You need a house. You don't need a dot-com stock.

Don't expect house prices to crash. They may dip slightly in some overvalued markets, but not a massive reduction.

Jorel on Software
Monday, June 28, 2004

You can't simply say that the whole US has a bubble.

I live in Tulsa, Oklahoma, and I pay less than 15% of my income for housing. That's just my income, that doesn't include my wife's.

We manage to live in a nice middle class neighborhood, our house is a 3 bed/2 bath/2 car garage, 1710 square feet.

We could've bought a brand new house for a couple thousand more, but we wanted to be closer to our work.

not mr. johnson
Monday, June 28, 2004

There are several factors at work having a bearing on inflated housing prices in prosperous areas.

First of all, there has been and still is an "investment" mania about real estate ownership combined with a "balloon going up" mentality. These two attitudes started in the US, as far as I can tell, in California in the late 1970s, and spread to most of the big cities in the US with decent economies by the early 90s.

With this you get the phenomenon of housing prices in certain cities such as SF or NYC being 4-10 times the price of equivalent housing in the non trendy areas of the midwest or northeast.

You have to understand that this is a different thinking and mindset about real estate than our parents and grandparents had from the end of WWII until the 1960s. In that time span, real estate was a mere commodity. People bought houses to live in, not as flaky investments secured with incredibly high mortgage:income ratios bought in an act of desperation.

Also, the gross multiple disparity in housing prices between flyover country and the coasts didn't yet exist when real estate was regarded as a commodity. To me this indicates a long standing investment mania.

Here is a concrete example of this phenomenon. In my hometown in Ohio, a decent ranch 3 BR ranch in 1972 would cost $20K to $30K. I know this because my parents were looking to move then. When I worked in the Bay Area in 1980, one of the ladies in my group reminisced that her house, then at the "inflated" value of $200K in 1980, was bought in 1972 at around $32K.

So a house in Dayton, Ohio was maybe .8 of the value of a similar house in Sunnyvale in 1972. By 1980 that "multiplier" was a factor of 3 - IE, the house in Sunnyvale was about 3x the price of the house in Dayton.

This multiplier has stayed constant or increased, but is present whever you're talking about a trendy coastal city compared to flyover country.

Now, to the other aspect of housing prices - economic opportunity. The housing is "affordable" (on the surface) in flyover country because the highly paid jobs simply don't exist. However, at least in the late 1990s, it may have been well worth paying inflated housing prices in the Bay Area just to maintain a career presence in whatever was available; while back in Dayton, the jobs sucked, were low paid and scarce, and mobility was non existent.

I say "affordable on the surface" because if you can't find a decent job, any housing is unaffordable and you can't even think about investment.

Historically low interest rates have only been gasoline on the fire of "investor mentality".

Now lastly, we have a fascinating phenomenon today. Salaries and contract rates in the coasts are today (at least in IT and tech) not a lot higher than in the interior US, and suitable tech jobs may even be quite scarce.

With offshoring on the rise, declining discretionary income, and little support for rising salaries, it's going to be REAL interesting seeing if NYC can continue to support its $1 million average townhouse prices....

Bored Bystander
Monday, June 28, 2004

I doubt anywhere in the US (except perhaps downtown NY) approaches the silliness of prices in London, Paris or many European capitals.

London in particular is completely over the top. I'm a reasonably well-paid technical architect, but to afford a three-bedroom house in a reasonable area I'd be looking at ten to fifteen times my annual salary. Flats are more affordable (house conversions less so than purpose-built blocks because, naturally, they're more desirable) but even so I'd be looking at £250K minimum for anything decent.

Where I live now is not a great area (although it's far from being a slum, it's just relatively run-down compared to some neighbouring areas, a legacy of its 'rough' past) and even here I'd be looking at £180K for a decent two-bedroom flat in a house conversion.

The housing market today discriminates against single people, too - dual incomes is basically assumed.

I'm resigned to another few years of renting until the bubble bursts - and it will.

Neil Hewitt
Monday, June 28, 2004

Parnas, There was a bubble in the SF Bay Area 20 years ago. Housing prices peaked and then declined more than 20%. What tends to happen, at least around here though, is that people don't sell their houses. They hold on the the fiction that their house is worth what it was at the top of the bubble and when they sell, try to get that or more. This just means that houses sit on the market for a long time.

I have been expecting the same scenario to take place for the last few years. Perhaps when mortgate rates increase it will happen.

I know a guy who sold his house in the Berkeley hills and is living in a condo because he is waiting for the prices to come down. He's been there for three years and may be there for a lot longer.

MilesArcher
Monday, June 28, 2004

Furious, there's a catch to the New York listing you link to: it's a co-op. That means that in addition to buying your own unit, you are buying an ownership interest in the building itself -- and the debt that goes along with it.

Note the part labeled "Maintenance: $1357". That's the per-month fee you pay to the co-op for debt service and other costs. Assuming you make the 25% required down payment and get a 6.5% 30-year fixed rate mortgage, that leaves you with total monthly costs of about $2,600 before property taxes. Elsewhere, a $2,600-a-month mortgage would let you borrow close to $500K.

John C.
Monday, June 28, 2004

I suspect that a drop  in house prices is limited by the fact that the purchace is done through a loan.

For example, if you purchased a house for 250K (with a 200K) loan, how much drop in price could tolerate since you still owe 200K to the bank?

I suspect that the "bursting bubble" in housing prices will mean that the prices will drop a bit when interest rates spike but, basically, stay flat for a long while.

njkayaker
Monday, June 28, 2004

njkayaker, the fact that loans are owed has nothing to do with the market tanking.  Assuming you're from NJ, you may remember the early-mid 80's price correction, where many people owed more on their houses and condos (those were particularly hard hit) than they were worth, and many people mailed in their house keys instead of mortgage payments, credit rating be damned, because they were upside-down.

However, I don't forsee another correction in this area (NYC area).  Simple supply and demand:  more people want housing, and they ain't making anymore land.

GML
Monday, June 28, 2004

Neil, I'd guess you're right that few U.S. cities compare with London (or for that matter Tokyo) in terms of cost of living. Manhattan and San Francisco might be close. In the first quarter, I'm told, the average 2-bdrm apartment in Manhattan sold for just over US$1million.

Yes, the urban coastal U.S. is far more expensive than areas like the Midwest. Personally I'd rather pay the extra costs and have access to the amenities, at least up to a point, but I know many people's priorities vary.

John C.
Monday, June 28, 2004


In a complex system "everything" is possible. That is, you'll always find contradictions.

There were people who ""mailed in their house keys" but why?

What percentage of house sales involved this kind of situation? Was it, more often, a case of selling the house for less than the purchase price? How much equity was built up? Was it really "often" a case of owing more than the sale?

In one case I "personally" know of, a buyer sold their (single bedroom) condo for much less than the purchase price because they, with a new child, needed a bigger place. I suspect that, in this case, their salaries were large enough to offset the loss. (I wonder if it would have made more sense to rent the condo instead of selling it).

There is always some portion of the population that has to sell in an "unfavorable" market. I suspect that many people stayed where they were.

It's possible that a close ratio of house-price to salary makes eating a loss more likely and a larger ratio would make it less likely.

One interesting theory of a contribution to the recent rise in prices is parents giving money (for example, through inheritance) to their children to buy big expensive houses.

njkayaker
Monday, June 28, 2004

There is one advantage to the rise in property values.  Properties (such as my house) that weren't worth much 10 years ago are being completely remodeled and updated.  That is a lot back fill in neighborhoods that were left to fall apart.  To me it is vicious cycle.  Once a neighborhood goes into disrepair it is hard to get enough entropy to bring them back.  It usually takes a real estate boom to do it.

I think most Americans have unrealistic expectations to what is reasonable housing.  My house is a 1300' three bedroom two bath.  I love it personally, but many people think I have a "small" house.  After a couple trips to Europe I saw nothing small about my house.  Hell I find it rather luxurious as it is an easy walk to an alpine meadow and 5 minutes to a major ski resort.   

To most americans square footage is all that matters.  I went to a bbq at a new tract house in Reno yesterday.  It sold about 300k and is far bigger than my house.  But the kitchen was 1/2 the size of my house.  The reason is the kitchen is them most expensive room/foot in the house.  The builder saved thousands by putting in a tiny kitchen and a huge entry way instead of a reasonable kitchen and small entry. 

I think in my area, Tahoe and Northern Nevada, the real estate market has legs, but it pretty much depends on what the fed does with interests rates and how the market responds. 

One thing that bothers me is that silly consumer finance mags and websites like CNNfn keep talking up the real estate boom with "retire by age 35" type stuff.  That might be happen unless the market runs against you get upside down on a bunch of properties.  You are pretty much looking at bankruptcy in that case. 

christopher baus (www.baus.net)
Monday, June 28, 2004

To clarify a bit, finding a contridiction does not prove that something else has "nothing to do" with a phenomena.

One thing "nice" about complex systems is that many contradictory statements about then are all true at the same time. Merely pointing out a contradiction does not invalidate an argument.

I suspect that, if one does not need a bigger house, does not need to move, still has a job, one would tend to stay where they are rather than take a loss.

njkayaker
Monday, June 28, 2004

"One thing that bothers me is that silly consumer finance mags and websites like CNNfn keep talking up the real estate boom with "retire by age 35" type stuff."

Oh look, there is another one today!

http://money.cnn.com/2004/06/22/real_estate/investment_prop/tycoon_becherer/index.htm

You too can make millions speculating on overpriced real estate.

I hope they follow up on these people in 5 years.  I'd be interested to know how many of them will have declared bankrupcy.

sd
Monday, June 28, 2004

muppet, when you flee your problems, unfortunately they tend to follow you. but i don't know how the flight-from-undesirable-areas-because-americans-all-drive-cars affects the housing bubble. i do know that lots of undesirable neighborhoods are seeing dramatic price increases because of the bubble.

mb
Monday, June 28, 2004

>>>>>>>>>>>>>
Yes, it is.  It's a huge issue.  One you apparently do not understand, because you do not have children.  Living in Bridgeport or Waterbury is not a realistic solution.  If I can't feel safe sending my kid outside, then it's no solution at all.
>>>>>>>>>>>>>

What I'm saying is that this is bullshit.  You are not being realistic and letting some stereotypical fears about these cities run amok.

I went to High School (albeit just my senior year) in Waterbury.  I wasn't in fear of "getting shot by drive by's" ever.  Ever!  In fact, the only trouble I ever had was my first month at the school where a white kid that lived in my area started throwing rolled up paper at my head while I was sitting on the bus (this led to an eventual fight, unfortunately).

NOT EVERY SECTION OF WATERBURY AND BRIDGEPORT IS GHETTO.

Try the "near trumbull" section of Bridgeport, the "near Watertown" section of Waterbury, etc.  The outskirts of these cities are every bit as nice as the cities that they border.

My children, when I have them, would be playing in a very nice neighborhood.  Very nice sidewalks, very nice houses.  I see tons of kids and family walking these hills every day.  The park that they just opened up with nice baseball fields, playground, and basketball court is another place they would be playing.  All of this is very nice and rivals other "more desired cities".

It's not an issue (K-5) because my children would be going to school with other kids from the neighborhood I live in.  Right there in the neighborhood (a mile from my house).  A VERY NICE NEIGHBORHOOD!

The issue that most parents worry about is when you have to go to middle school and high school.  This is when they bus you from Bunker Hill all the way to the other side of town (I went to Wilby HS even though Kennedy HS was closer).  It's then that the "white kids from suburbia" are mixed with the "spanish and black kids from the projects".  And that scares the shit out of most of the parents in Waterbury...WHETER IT IS FOUNDED OR NOT!

I've lived in Waterbury for 15 years (since my senior year of high school).  I think I'm a better judge of it's character than you and your irrational fears.

>>>>>>>>>>>>>>>>>
It's nice that you were able to buy your parents' house at an artificially low price.  Not all of us have that option, nor does it indicate that there is not a HUGE problem with the cost of living in this state lately.
>>>>>>>>>>>>>>>>>

Artificially LOW PRICE?!?!?  Are you f'ing kidding me?  The evaluation of the house was $190K (that's the city's assesment).  Because there was no realtor involved, they gave it to me for $180K.  In other words, this house could have been had for less than $200K.

Even the house in Shelton was $260K.  LESS THAN 300K!

Dude.  You are scared of these towns based on stereotypes and headlines.  If you can't see that you aren't being realistic.

William Campbell
Monday, June 28, 2004

I don't want my daughter going to any high school in Waterbury.  The school system there is in dire, dire straits.  If you deny this, it is you who is being unrealistic.

My credit/finances are such that, if I get a mortgage, it will likely be my last for awhile.  That means I can't count on a "quick escape" once my daughter reaches High School age.

The freaking Mayor of Waterbury was impeached/arrested for doing cocaine and molesting 11 and 13 year old girls.  That gives you an idea of the character of the city.

Give me a break.

muppet from madebymonkeys.net
Monday, June 28, 2004

> Oh look, there is another one today!

>http://money.cnn.com/2004/06/22/real_estate/investment_prop/tycoon_becherer/index.htm

I hate this crap!  It is no different than saying:

Look a Bob.  See Bob buy internet stocks on margin.  Look Bob is rich!  You too should be like Bob. 


The thing that scares me is I see a lot of smart people (ie work in the finance industry) buying property they can't afford.  A friend of mine who's credit was so bad that he was forced into a high interest loan on his primary house, has refinined to an ARM with the equity he has made in the house in the past year, is now buying a rental property, and is looking at another.  He's exactly the type of person that will end up bankruptcy court and I can't really feel sorry for him.  It is a big gamble. 

christopher baus.net
Monday, June 28, 2004

>>>>>>>>>>
I don't want my daughter going to any high school in Waterbury.  The school system there is in dire, dire straits.  If you deny this, it is you who is being unrealistic.
>>>>>>>>>>>

dire, dire straits?  Are you kidding me?  What do you even KNOW about the high schools in Waterbury.  Then compare that knowledge to mine:

a) someone who WENT TO HIGH SCHOOL IN WATERBURY (and is a pretty successful).
b) someone who graduated with someone that is now a TEACHER at the same high school we graduated from.

The issue here is: people don't want to send their kids to a high school that has inner city kids in it.

>>>>>>>>>>>>>>>
My credit/finances are such that, if I get a mortgage, it will likely be my last for awhile.  That means I can't count on a "quick escape" once my daughter reaches High School age.
>>>>>>>>>>>>>>>

But, I never suggested a "quick escape".  I'm just giving you ... as someone that has lived in Waterbury for 15 years ... the reasoning as to why most kids from Waterbury's white suburbia end up at the private catholic schools (Holy Cross, Sacred Heart) or at the Technical school (Kaynor Tech).  And that reasoning is that no one wants to send their kids to school with inner-city kids.

I never said that I wouldn't send my kids there.  In fact, I went there.  You should only worry if you are a parent that relies on the school system to be a parent to your child.

>>>>>>>>>>>>>>
The freaking Mayor of Waterbury was impeached/arrested for doing cocaine and molesting 11 and 13 year old girls.  That gives you an idea of the character of the city.
>>>>>>>>>>>>>>

You are just dumb or being fecetious.  How about or GOVERNROR????  How's he doing?  I guess I can use his example as the character of our state, right?

And guess what?  That FORMER mayor is now in jail and we have a really good mayor in there now, that's turning things around.  So, give ME a break.

William Campbell
Monday, June 28, 2004

actually, yeah.  Rowland DOES give you a pretty good idea of the character of our state. 

I'm sorry that you're offended that I call Waterbury on the armpit that it is.  I'm sorry you had to grow up there and somehow believe that there's any value in being there.

Enjoy your armpit, I don't want any part of it.  :)

You're right.  Most people don't want their kids going to school with inner city kids.  Just like most car insurance companies don't sell insurance to drunks.  It's all about the numbers.

muppet from forums.madebymonkeys.net
Monday, June 28, 2004

I went to crappy public schools. I don't want my daughter to have to put up with it like I did. So, I pay an outrages sum to live in a better school district. I don't think I'm alone in this.

MilesArcher
Monday, June 28, 2004

Miles:  EXACTLY.

muppet from forums.madebymonkeys.net
Monday, June 28, 2004

>>>>>>>>>>>>
So, I pay an outrages sum to live in a better school district. I don't think I'm alone in this
>>>>>>>>>>>>

Now, there we go.  That's a little bit more reasoned than muppet's rant and ravings.

Here's the thing, I almost got caught up in that but chose a different route.

I lived at home and saved money and then put 20% down on my house to leave myself with a mortgate of $140K.  I don't buy brand new cars (the cars I do have are paid off and I plan to keep them for at least 10 years).  I don't run out and buy plasma tv's w/HDTV.  We (my wife and I) cut out coupons and shop-around.  We have no debt (wedding paid off in cash) besides a mortgage.  We're a two-income "family" living on 1 income (mine).

Knowing all that, don't you think we can obviously afford a house in Wolcott or Watertown (more desirable areas to live that border Waterbury).  Of course we can.

Here's the mistake people make: they act like they are going to be paid their current salary (or greater) for the next 30 years (mortgage length).  It may work out that way, and that just may be the case for us.  But, then again, it may not.  So, why gamble?

What if a layoff occurs?  What if I want to change careers?  What if one of us wants to go back to school?  Maybe I just want to have "fuck you" money (e.g.  My employer wants me to do what?  F them.  I'm out of here).

So I take advantage of people's fears when it comes to Waterbury.  I live in a gorgeous neighborhood.  Really nice.  Also, knowing what I save now...in four years (very conservatively) I will have enough money to pay off my house.  Four years (I've got half the money of the mortgage in the bank now).  You think I'd be able to do that with a 300+K mortgage?  Nope.

Now, in four years, when my kids still aren't in school yet...I'll be saving that mortgage payment (another 10+K year, plus what I'm saving now).  You know what I could do with the money I'm saving, and especially the money that once went to a mortgage payment, if I don't want to send them to public school (which very well may be the case) ... send them to private school.

So, I'd be living IN WATERBURY ... IN A NICE NEIGHBORHOOD ... and my kids would be going to A VERY NICE SCHOOL.  And I didn't have to pay out of my ass for a ridiculous mortgage and I don't have the pressure of maintaining my current lifestyle/salary to do it!

It's all about finanical flexibility.  Sure, I'm not Donald Trump.  Sure, I'm not a millionare.  But it seems like I'm rich.  Because I don't have any money issues.  Buying 300+K houses and maxing your credit cards and killing yourself so you can be there in the city with the "best school system" (aka. no inner-city kids there) is dumb.  Well, it's dumb when you have to stretch yourself to live there.

Sure, I agree, Waterbury can be a dumb place to live.  But, that's if you don't have the mindset that I do.

My kids will go to a good school.  I live in a nice house.  And I'm not killing myself financially.  All because I live in Waterbury.  Gee, choosing Waterbury (which I did) is pretty smart now, huh?

And if the worst case scenario happens?  At least my house is paid off.  And, ok, maybe I'd have to pull them out of private school and put them into public school.  But we are talking some major, drastic "worst case scenario".  At least we have the house, though.  And the "worst case" becomes a child not being in private schoo.  Oh, the horrors!

But, in "rich town, USA".  Worst-case scenario becomes foreclosures, moving, divorce, spats, anger, and so on and so on.

William Campbell
Monday, June 28, 2004

I don't have any luxuries either, save my car.  I'm no mechanic.  Buying a used car for me means shelling out an average of $3000 per year in repairs and maintenance.

So I have a new car.  That's it.

Otherwise I have a $300 TV from Wal*Mart and a $600 Dell laptop to do my coding on.  I live in a $600/month apartment.

I'm still flat broke.  I don't go out to eat.  I don't do shit.  I buy groceries and school clothes and gas for my car.  I have an internet connection and a website.

I'm broke.

Connecticut is simply an expensive state to live in.  Insurance is high here, taxes are high here, etc.

Trust me, I'm in no hurry to go drop $300K on a house, but if it means not living in a hole, then it's what I've got to do.  You go ahead and live in Waterbury.  It's not for me.

muppet from forums.madebymonkeys.net
Monday, June 28, 2004

"I don't have any luxuries either, save my car.  I'm no mechanic.  Buying a used car for me means shelling out an average of $3000 per year in repairs and maintenance."

That is a gross miscalculation.  Buying a well kept-up used car is always more economical than buying a new car.

sd
Tuesday, June 29, 2004

>>>>>>>>
I don't have any luxuries either, save my car.  I'm no mechanic.  Buying a used car for me means shelling out an average of $3000 per year in repairs and maintenance.
>>>>>>>>

Yeah, I got to agree with the above poster.  This sounds like a gross exageration (or rationalization).

I could replace my tires ($300), timing belt and water pump ($800-$1000), and breaks ($300-$500??) EVERY YEAR and not crack $2000.  Throw in 6 oil changes ($25 each), and some air filters and spark plugs...and we're getting a little bit closer.  But, of course, you don't replace your tires and timing belt and water pump every year.  I was just trying to think of things that get replaced through normal wear and tear.

On top of that, your car insurance on a newer car is more than a used car.  So, there is an extra cost that you aren't considering when discussing your new car.

William Campbell
Tuesday, June 29, 2004

my new car insurance doesn't cost me much more than my old one did (unless you mean you should only get liability on a used car, which is folly in my opinion).

The last used car I bought was very well maintained, as it was a former fleet car.  It had almost nothing but highway miles, was serviced regularly, etc.

In the first year, I put a new ($1800) transmission in it, followed by replacing the struts ($600) and a CV joint ($300).

The next year it was a steering arm ($750), the radiator ($150), and two brake calipers.

Older cars have problems.  Period.  The above doesn't even include lost time at work or rental car expenses.

With the new car, I pay for tune-ups and oil changes.  And of course a slightly higher payment.  That's it.  I'd much rather pay a little more each month up front than unexpectedly drop nearly a grand when something falls off.

In my experience, gained through empirical observation, used cars are money pits, and my new car is not.  Your mileage may have varied, but that doesn't discount my experiences.

muppet from madebymonkeys.net
Tuesday, June 29, 2004

You are forgetting depreciation, which for new cars is a hugh amount - way more than the repairs / maintenance on a used car. Face it - a used car, when ALL the expenses / depreciation is added up, is way cheaper than a new car.

DJ
Tuesday, June 29, 2004

depreciation is fictitious.  I'm not worried about my net worth, I'm worried about paying my bills.  If I can buy a new car, pay almost nothing to maintain it (except for slightly higher payments than a used car) and then sell it for even a quarter what I paid, I'm still ahead compared to a new car that I pay out the a$$ for and drive into the ground, and maybe sell for $50 to a steel recovery yard.

muppet from madebymonkeys.net
Tuesday, June 29, 2004

"depreciation is fictitious"

Hard to argue with that one...

DJ
Tuesday, June 29, 2004

muppet: It sounds like your last used car was a lemon. Dare I ask what make it was?

Regarding the economics of new vs used, you are not making good sense. A good used car (say 2-3 years old, low milage) should cost about half the same car new, hence half the payments. It should come with a mechanical warranty, and if you buy wisely it should come with a low expectation of major repair bills. Also, if you keep that used car for 3 years and sell it on, it will return much more of the original investment than a new car owned for the same period.

I agree with you about the expectation of low maintenance on new cars, which is why I like to buy new cars myself--but I don't kid myself about the economics of it. I know I am losing money by buying new.

Ian
Tuesday, June 29, 2004

It was a '95 Chrysler New Yorker and it was a piece of trash.  :)

Oh yes, I know I could get a 2 year old car cheaper, but I would also get a 2 year old car's problems, and have no real idea of the car's history (ie, was it owned by a drunken college student with a lead foot?).

I'll still take the higher up front expense of a new car over the constant maintenance and lost time of a used one.

muppet from madebymonkeys.net
Tuesday, June 29, 2004

"The last used car I bought was very well maintained, as it was a former fleet car..."

Sadly, you learned a truth the hard way, by personal experience. A fleet car is absolutely the last car to purchase used. It has had no personal ownership, see? It's keepers will have abused it, thrashed it and taken no care of it at all, because after all, it's not their car is it? It just belongs to the company, and what do they care?

The right car to buy used is the ubiquitous "Low milage, one careful owner from new." You want a car that someone bought with their own money, and that had pride of ownership along the way. A car that someone cherished, washed an polished every Sunday.

Well, you are now that fabled owner that the wise used car purchaser seeks, so whoever buys your car in the future should be getting a good deal.

Ian
Tuesday, June 29, 2004

"...no real idea of the car's history..."

But you can find out. You should be able to examine the invoices for all the regular servicing and maintenance that was carried out by the last owner. You can contact that owner and ask them if they wouldn't mind confirming the details of the car and what milage it had when it left their hands. If the owner is kind enough to answer those questions for you, they probably took good care of the car.

Conversely, any car with no history is a car you don't want to buy. It's like Joel's interview maxim: "Any candidate who isn't a yes is an automatic no."

Ian
Tuesday, June 29, 2004

Oooh.  That's painful.  But, you are talking to someone that pretty much purchases japanese vehicles.

I've bought two cars in my lifetime.  Two.  And I still own the both of them.

I bought an 89 Honda Civic in 93.  It currently has 241,000 miles.  The only things I ever do are:
a) change the oil, air filters
b) change the tires every few years
c) change the timing belt ever 60K
d) get the breaks fixed when they are worn
e) get a tune up every now and then.

In fact, the original clutch on that car lasted to 170,000 miles!

I've beat the shit out of that car, and it runs like a champ.  I love that car.

I'm no mechanic, but I think that when you have a manual transmission, and no power steering (it's a small car), etc.  There's less to go wrong, so that's part of it.  But, like I've said, that car is so inexpensive to maintain - and it's the reason I kept it once I bought my parents 97 Mazda 626 in 2000.  That car was coming off a 3 year lease and my mother drove it (and garaged it) ... so I couldn't pass up the opportunity.

William Campbell
Tuesday, June 29, 2004

Actually, in the UK it's worth buying ex-fleet cars if all you want is a car. For one thing, there's a habit here to get rid of them after a couple of services, so they've only done 20K miles. They're cheap, have a service history and have mostly done motorway miles.

The only grief is that they're nearly all silver Vauxhalls...

Since I wanted a red car[1], I bought a new Hyundai coupe. The depreciation of which I care not a jot about, because it's fun to drive...



[1] And, much more importantly, after the experience of having owned a Vauxhall Tigra, "absolutely, in no way in hell another Vauxhall. I know the VX220 looks nice, but I'm not going through that again." Actually the problem is that the Tigra was never designed properly and never built in enough numbers to get the bugs out of it. And owning one from the second year of manufacture is just asking for trouble... the hyundai is a new body shape and suspension, but they've been making the engine for a while.

Katie Lucas
Wednesday, June 30, 2004

My question is who is going to buy all these houses as the boomers retire and eventually sell their homes?  With the way the demographics are moving in the USA, it seems like there will be fewer buyers relative to sellers in the future absent a lot of immigration because the population is aging and the birth rates have been declining for quite awhile.

I live in the Seattle market and am in no hurry to buy a home here.  Fortunately rents are pretty cheap, especially compared with buying here.

Housing can be an investment but is foremost an expense.  I'd like to one day own a house that's completely paid for rather than a more expensive place that the bank says I can afford but makes me dependent on maintaining my present level of income for the next 30 years.

Jeremy
Wednesday, June 30, 2004

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