Sep302015
What distinguishes homeowners from renters? (Hint: It’s not what you think)
What separates homeowners from people who don’t own homes? The answer is not as simple as you might think.
If you go back to antiquity, the person who “owned” a house was generally the strongest warrior who was capable to taking it and holding it against all rivals. Over the last 500 years the development of government and stable laws of land ownership made it possible for ordinary people to have claims to real property stronger than the edge of a sword or the barrel of a gun.
One of the first attempts to establish property title was the English Doomsday Book of the 11th century. The King set out to establish who owned what so he could better establish and collect taxes. This was the beginning of the chain of title in the British Isles. Here in California, many locations can trace back chain of title to the original Spanish land grants. Each land owner through history is listed in chronological order, and for most properties, no gaps exist in the chain creating clouds on title. Clearly, holding title is a strong claim to home ownership, but is it the definitive claim?
Is the person holding title the one who owns the property? Not necessarily. In some states, the lender on a property actually holds title until the promissory note is paid in full. In land installment contracts, the seller retains title until the contract is paid in full. Also, people can usurp the rights of titleholders through adverse possession. And obviously, even in states where the borrower holds title, such a claim can be extinguished at an auction if the borrower fails to repay a mortgage. In many circumstances, the person who possesses the property with intention of becoming the unencumbered owner either does not hold title, or they may have a tenuous claim to it.
I described this further in Money rentership: housing and the new American dream:
In a pioneer society, people go out and stake a claim to real estate by using it and occupying it. If property is not capable of producing food (income) and providing shelter, it has no value, and people do not compete to own it. Canadian and Siberian tundra is a modern pioneer expanse of thinly populated land of little value. Owning is occupying and making use.
With society comes division of labor, and fewer people live a subsistence life. Ownership becomes more complex and people enter into agreements where they exchange stored wealth (money) for shelter. Ownership is a special right of ongoing use, whereas rental is a contractual right of finite use followed by a reversion to owner. In societies of inherited multi-generational wealth, real estate is the best vehicle for transferring wealth because it provides a perpetual cashflow. With exception of low-yield savings accounts, no other asset class provides this feature.
One of the key features of true ownership is a lack of encumbrances. The more restrictions a property has on it, the smaller the bundle of rights an owner controls. For instance, if you pioneer a property in Northern Canada, nobody is going to review and approve your cabin’s front elevation or limit your exterior color choices as they will in Irvine. We give up many individual freedoms for the harmony of society, and the ever-dwindling bundle of property rights is among them. Historic properties are at the extreme as owners often feel as if the property actually owns them.
One of the most common encumbrances on property is the mortgage lien, and it is among the most restrictive. For instance, if you own a property not encumbered with a mortgage lien, you could demolish any structures on the property (within legal and practical constraints) and nobody will care; it is your property. Once a property is mortgaged, the “owner” no longer has the right of demolition because a lender has claim to the real estate and has interest in preserving its value. In fact, the lender will even require a borrower to carry insurance to prevent loss. If the lenders is not the owner, how can they require insurance, and why do they care?
Lenders want to protect the value of their collateral, the property they may force sale of at auction. At a public auction, the lender, standing in first lien position, bids the property up to their outstanding balance in an attempt to regain their loan balance from a cash buyer. If the house is worth less at auction than their loan balance, lenders often buy the property at auction and sell in the resale market were prices are usually 15% higher. In short, through a complicated chain of events, lenders know the collateral may become their house, so lenders make borrowers care for collateral as if the lender owned it even though the lender doesn’t…
legally…
Hey, if it walks like a duck and quacks like a duck….
Since lenders behave like owners of a borrower’s real estate, and since lenders have right to force sale if a borrower defaults, lenders are owners, and owners are money renters.
Money Rentership (Loanership)
Over the years, the slow erosion of property rights has made the distinctions between owning and renting less dramatic, particularly in renter-friendly cities in California. Owners have few rights renters don’t, and with exception of equity participation, owners obtain few benefits to outweigh the burdens of ownership. And during the housing bust, equity participation was NOT a bonus.
The mortgage encumbrance gets to the core of the unnoticed change in people’s concept of property ownership; people who have little or no equity stake in a property have no ownership despite what legal documents may say. What they have is money rentership and the illusion of home ownership. Emotionally, they still feel like homeowners; they still behave and believe like homeowners, but they’re not home owners. They own a loan; they’re loan owners.
At some level, people know this, and we observe high default rates once borrowers fall underwater. Despite the Government’s best efforts, people walk away because once they no longer own, they see money rentership for what it is, and unless the cost is less than a comparable rental — which it rarely is — then people walk.
Money rentership — the antithesis of owning — is the California conception of home ownership.
Do these people own property?
Renters clearly do not own the properties they occupy. Renters acknowledge their status in the lease agreement, and renters make no claim to ownership of the real estate. Renters do obtain beneficial use of the property for the term of the lease, but they have no claim beyond that. Obviously, renters are not owners.
Do loan owners own property? They are on title, so if you asked a loan owner, they would certainly answer yes, but what do they really own? At least as long as they continue to make payments, they retain control of their ownership destiny, so emotionally they still feel like homeowners despite having no equity, and if they keep paying — and if their loan is amortizing — eventually they will become homeowners.
What about loan owners with interest-only or negative amortization loans? Do they own? Eventually, all toxic loans have a time of recast when the loan amortizes over some period of time down to zero. So eventually, if they can survive the transition, even those who possess the most toxic mortgage products may eventually own their homes. However, the road they have to travel is an extraordinarily difficult one, and very few survive the journey.
What about people who sign loan papers and take possession with no money down and never make any payments? Do they own? I know this sounds far fetched, but we have met homeowners like this recently in the post, Grifters for God: fraudulently occupying a $1.3M home for five years.
Obviously, they feel as if they own the property. However, I’m not so sure. If they never paid even a single penny toward the debt used to acquire the property, does it matter what the title shows? In my opinion, their claim to home ownership is fraudulent, but it’s been nearly five years, and the courts haven’t been able to extract them.
A guy in Montana forged documents deeding properties over to him so he could be on title. The courts did recognize this as a fraudulent conveyance, and they threw that guy guy in jail.
So it appears getting on title makes the person on title feel like a homeowner, and it also makes it very difficult to get them out of the property.
So what does it take to be a true homeowner? Clean title with no encumbrances? If so, only about a third of those who claim to be homeowners really are. Someday, I hope to join them.
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The thirty-year mortgage is an abomination. The 30-year, together with ZIRP, have grossly distorted housing prices and available housing stock. Prices are beyond insane, especially in heavily taxed, heavily indebted states like CA and NJ.
And it is beyond stupid to indebt yourself for a third, and possibly half, of your entire life to own a stucco box you live in. Worse, you are paying interest for 30 years, throwing away money hand-over-fist.
If you want real wealth, live as cheap as you can, save until it hurts, and pay cash for a modest home. Then you will have real wealth and economic independence.
“If you want real wealth, live as cheap as you can, save until it hurts, and pay cash for a modest home. Then you will have real wealth and economic independence.”
The problem with that plan is that it will still take 1/3 to 1/2 of your life to pay for a house, and you will be paying rent during that time. You won’t have the benefit of the MID reducing your tax bill. Your rent will increase over the time it takes you to save for 100% down, but your mortgage won’t. I spent at least 10 yrs to save up 30% down. Meanwhile prices doubled. Good luck with your plan…
Your basic point is why financing real estate is a must. It simply takes too long to save enough to obtain a property in a timeframe where you can enjoy it.
I like the idea of 15-year mortgages, but in California where people borrow to their maximum capacity with 30-year mortgages, if you use a 15-year mortgage, you will be forced to substitute down in quality to accommodate your budget.
So how cheaply are you willing to live to build wealth as quickly as possible? Do you live with your parents rent-free, or do you live in a cheap apartment in a terrible neighborhood and have multiple roommates? Do you take public transportation to work?
I’d prefer to live a balanced life. For me, that means spending ~20% of our gross income on housing expenses, investing/saving 20%+, and spending the remainder on living well and providing for our kids. The wealth will build for our future, yet our present won’t be severely restricted.
If you think ~60% sounds excessive to spend living well, remember that Fed/CA income/payroll taxes consumer ~40%. So, my ratios are really balanced: 20%/20%/20%.
So how cheaply are you willing to live to build wealth as quickly as possible?
You save half your income and invest it in the stock and bond markets. If you start in your teens or early twenties and buy in your thirties it should be no problem.
You don’t need to live in a terrible neighborhood to live cheaply. Many people rent out rooms in their homes for low cost and they are in very nice neighborhoods. Driving a car is expensive so dropping that is a sure way to save money. You can use public transportation but a bicycle is much cheaper and more convenient.
The Newport Beach home featured today is already pending even though it suffers from excessive airport noise. This similar home in that area could have been purchased in summer of 2013 for about $1,400,000, which translates into a price increase in the mid 20% range over the last two years. In the summer of 2011, $1,200,000. Prices continue to move up in a steady pattern. In the last week or two, a surge of pendings are sweeping through the Newport Beach area in the lower price range, which is under the low 2 million point. There also appears to be welcome activity in the above 4 million price point.
There was a stall in the market after the Dow slid 1000 points. Now, there appears to be money coming out of the equity market that is being moved into Newport Beach real estate. Early indications are the drop in the equity market will fuel the Newport Beach real estate market. People are pleasantly surprised.
Thanks for sharing your observations. The ongoing low mortgage rate environment makes these sky-high prices affordable to high wage earners. Today’s featured property is affordable to a family making $350,000 a year, and it’s less costly than a $6,000 per month comparable rental. That will prompt buying among those fortunate families who make that kind of cash. Plus, with the equity gains over the last three years, more move-up buyers have equity they can port into these homes and get the payments down.
It will be interesting to see how these neighborhoods react to rising interest rates.
When someone learns how much you’re spending on an Irvine house, the typical reaction is, “You could buy in Newport Beach for that much money!” Saying you live in “Newport Beach” might be nice, but it ain’t perfect, as you noted.
To me the tradeoff was always between the lifestyle of the beach and the conveniences of Irvine. When you live in Irvine, you are never more than 5-10 minutes from any consumer good you could possibly desire. If you live in one of the beach communities, it may take you 10 minutes just to get to a main road or commercial center, and that is likely to be full of overpriced luxury goods rather than the necessities of daily life.
IMO, the beach communities are best when you’re an empty nester, but while you are working and raising a family, the Irvine lifestyle is much better.
What does Irvine offer that other inland cities don’t though? Large swaths of South OC have similar amenities yet don’t sell for nosebleed prices.
Nothing you haven’t heard before.
The better communities in South OC do carry pretty hefty premiums as well. Ladera Ranch or Talega aren’t much less expensive than Irvine, and much of that difference can probably be attributed to Irvine’s superior location. It’s far easier to commute to most employment centers from Irvine than it is to commute from SJC or San Clemente.
Question is, why the drop in the equity markets?
A: The longer interest rates remain down, the less believable an economy becomes, which would explain why the stock market has recently been selling off.
Also, price is a lagging component. Re mispricing, liquid assets are ALWAYS the first to respond. On deck: Illiquid assets.
OWN
[ohn]
verb (used with object)
a. to acknowledge as one’s own; recognize as having FULL claim, authority, power, dominion, etc.:
Thus, the word ‘own’ is really nothing more than a sales pitch from the financial industry/State; ie., even if you don’t have a job or income, you have to pay property taxes every single year IN PERPETUITY to stay put, or the State (property rightful owner) will kick you out.
So when a small business owner has 50% debt to equity ratio he doesn’t own the business?
Way to deflect. As expected.
It’s the same simple concept.
It depends on how you define “business.”
A store owner who uses debt to purchase inventory owns that inventory subject to the debt obligation, just like a house. An “owner” can’t destroy that inventory because the lender has claim to it. Further, if the business doesn’t own the real estate, which most don’t, then they are in no stronger position than a residential “owner.”
A business owner may own the business, but what does that consist of? If they have debt on their personal property and real estate, they don’t actually own anything substantial.
By far the strongest claim to ownership anyone in business has is the claim to their debts. If they have no debt, then they own the business and all its possessions both personal property and real estate.
It’s foolish not to own the property as a business owner. Every business I have had I own the property.
The only reason you don’t own the property is if you don’t have enough resources.
The business pays for that asset, you should have no debt on the property in 5-6 years. If you choose to fold the business you lease the commercial property.
The idea of ownership in perpetuity is a ridiculous concept. We are all borrowing time.
That depends on if the business is the collateral or the small business owner’s home.
Try missing payments on rent, just one of the features of home ownership.
Try telling the landlord you really didn’t want to move in October when your lease is up because he wants to sell the house.
One of the main features of home ownership seems to be that you own the home when you have positive equity.
If no positive equity the feature of allowing the bank to own the home and live in it for free seems to kick in.
Yes. The new squatter’s entitlement is a major plus to home ownership. If you rent, and if you can’t pay the rent, you get booted out. If you “own,” and if you can’t pay to own, you get offered a loan modification, and if you don’t like the terms, you can simply quit paying and squat for a long time.
It’s a much better deal if you get your name on title.
Have you ever tried to value this in your rental parity calculations?
I want to believe that most people would never do this… You, me, people with good ethics. I just could never do it.
However there is clear value to someone who would.
Some intangibles simply can’t be measured. Like “pride of ownership,” the squatter’s entitlement is difficult to pin down.
The idea of ownership in perpetuity is a ridiculous concept to begin with.
We are all just borrowing time here.
Everything is consumable, nothing is forever.
This is just a shell game of managing resources better than your fellow man… if you choose to play the game.
A person –with or without a mortgage– MUST pay an annual fee (property tax) to the State to stay in a home or they will get kicked out. That predicament alone does NOT equate to the person having FULL claim, authority, power, dominion etc.
As a result, the idea of home ownership is a ridiculous concept to begin with.
You don’t have to have full ownership to enjoy the benefits of ownership. Renters also pay property taxes as part of their rent. Ownership isn’t about “owning”, it’s about have more control over your living accommodations and costs. It’s a bundle of rights that are different, if not superior, to those of a renter.
Ridiculous, I know. Far better to pay someone else’s mortgage, their tax bill, their insurance, and let the “owner” get the appreciation when they sell. Oh, and the bank thanks you for paying the interest on the investor’s loan too.
Not to mention the positive cash flow and the constant rent increases that are quite high in SoCal
“ownership isn’t about owning”
Dude, that is rich LOL. Good one!
Nonetheless, please explain how the ever-increasing costs to maintain the structure..interior/exterior, landscaping, insure, property taxes, UPGRADE, and sell over time equates to “more control over your living accommodations/costs”.
Thx in advance.
Maintenance is typically about 0.5% of the home value per year. Landscaping is just time and a few tools. Good exercise. Insurance is about 0.25% of the home value per year. Property taxes are 1-1.25% of the property value per year, but the MID takes this down to .65-.80%/yr.
Add it up and carrying costs are about 1.5% of the home price per year. Prop 13 limits the rate of property tax increase to 2.0%/yr, regardless of home value. Maintenance and insurance will rise with home values. So the 1.5% of home value per year spent on carrying costs will decrease over time if inflation exceeds 2%.
Over 30 years, the average carrying costs as a percentage of the home price falls to 1.1% of the value of the home. On a $1M home the monthly carrying costs rise from $1281/mo. to $3890/mo. over 30 years as the price rises to $4.3M (assuming 5% appreciation).
Compare that with renting the same house with 20x rent multiplier, the rent would be $4167/mo in yr 0 and $18008/mo in year 30.
Changing this to 3% and the yr 30 carrying cost are $2704 vs $10114/mo. for owning vs renting.
Any questions?
Tell that to the common man who has made hundreds of thousands of dollars off real estate ownership.
Tell that to the wealthy who have millions of dollars off real estate ownership.
Just like a business with a debt to equity ratio there are expenses to sustain ownership.
Just like a business who chooses to operate with a zero debt to equity ratio there are expenses to sustain ownership.
I will break it down so you can easily understand it. You may own your 1994 Honda Accord, but that doesn’t mean you don’t have expenses so you can continue to drive to work everyday. Ownership has expenses associated with it. Ownership is never in perpetuity.
The dress shirt you have that has a hole in it…. You own it, and eventually you will throw it out.
Remember, for every positive of homeownership, someone endured the opposite extreme from 2006 to 2012.
Existing-Home Sales Expected to Pick Up As Market Shifts to Favor Buyers
Existing-home sales had a less than promising performance in August, but Auction.com’s Real Estate Nowcast projects that they will pick back up in September.
Auction.com predicts that existing-home sales for the month of September will fall between seasonally adjusted annual rates of 5.23 and 5.57 million annual sales, with a targeted number of 5.4 million, an increase of 1.7 percent from August and 5.9 percent from a year ago.
“While the modest growth that the Auction.com Real Estate Nowcast predicts for September will not be enough to completely recoup all of the losses experienced in August, it shows that sales are expected to move back in the right direction and maintain solid year-over-year progress,” the report said.
Apparently, Auction.com doesn’t believe that either mortgage rates will rise, or if they do, it won’t be a problem.
“All the right underpinnings are in place to support continued demand, from improving labor markets and wage growth to a more approachable lending environment,” said Peter Muoio, Auction.com chief economist. “That said, we’re expecting growth to assume a much more modest pace as we approach the end of 2015.”
Did Dodd-Frank Achieve Its Stated Goal of Ending ‘Too Big to Fail’?
“[T]he central bank ensures that the entire banking system has enough liquidity (base money) to prevent a panic from spreading to the broader economy,” Michel wrote. “However, the classic prescription made clear that a central bank had no duty to save specific firms. To avoid sustaining insolvent private banks, the central bank was to provide temporary, high-interest-rate loans only to borrowers who could post sound collateral.”
The Fed carries out the role of LLR for the U.S. economy through three functions: emergency lending, discount window loans, and open market operations. Broad-based emergency lending programs resulted in the Fed lending a total of $16 trillion during the 2008 financial crisis, which is a type of lending that perpetuates the too big to fail problem, Michel said. Despite this, Dodd-Frank allows the Fed to conduct that type of lending.”
“Congress should restrict the Fed to providing system-wide liquidity on an ongoing basis,” Michel said. “Emergency lending authority is unnecessary for conducting monetary policy.”
To achieve this, Michel said Congress should:
* Revoke Section 13(3) of the Federal Reserve Act, which authorizes the Fed to lend to “any participant in any program or facility with broad-based eligibility” in “unusual and exigent circumstances.”
* Close the Fed’s discount window, which is a “relic of the Fed’s founding and is no longer necessary,” according to Michel.
* Improve system-wide liquidity by replacing the primary dealer system, which currently requires the Fed to depend on a small number of large firms, thus reinforcing the tag of “systemically important.”
* End the FDIC’s authority to provide guarantees. The FDIC used its systemic risk exception contained in Section 13(3) of the Federal Reserve Act to guarantee hundreds billions of dollars worth of loans immediately after the 2008 crisis. Michel said the systemic risk exception should be eliminated.
* Retain and expand key Dodd-Frank transparency improvements, such as the provision that authorizes the Government Accountability Office (GAO) to audit the Fed’s emergency lending programs and requires the Fed to post the results of key GAO audits on its website.
“Little evidence suggests that Federal Reserve emergency lending to individual institutions is either necessary or proper, but such lending clearly politicizes the Fed’s monetary policy,” Michel wrote. “Merely restricting the Fed’s emergency lending leaves intact the notion that the Fed should bail out firms—a dangerous view, to say the least. Title XI of Dodd–Frank failed to end the too-big-to-fail problem largely because it retained this belief.”
San Francisco proposes plan to address skyrocketing housing costs
The city of San Francisco is moving to combat its rapidly rising housing costs with a new plan that will offer more moderately pricing housing in exchange for allowing builders to exceed the city’s current building height restrictions.
According to a report from the San Francisco Chronicle, San Francisco Mayor Ed Lee is set to propose a plan to encourage the building of more affordable housing in the city.
From the Chronicle:
Neighborhoods across the west side of San Francisco could see thousands of new housing units under a measure Mayor Ed Lee is proposing that would allow builders to exceed current height restrictions in exchange for including more affordable units.
The affordable housing bonus program, which will be introduced at the Board of Supervisors Tuesday, would allow an extra two stories of height on projects that include 30 percent affordable units and an extra three stories on 100 percent affordable developments.
Unlike state and federal affordable housing programs, the measure is primarily directed at encouraging builders to provide units for middle-income families rather than low-income. It calls for 18 percent of the units to be affordable to families making between 120 and 140 percent of area median income, which is $122,000 to $142,000 for a family of four. The remaining 12 percent would cater to low- to moderate-income people.
And with San Francisco housing looking potentially bubblicious, more affordable housing can’t come soon enough.
Just adding more units will drop prices. There doesn’t need to be a link between approval and affordability. Even if luxury properties are built, overall demand will decrease and ease rent pressure.
Yes, it doesn’t matter what price points units are built to accommodate when there’s a shortage. Over time the market will discover the true value. When supply is short, adding more supply is always the answer. Messing with rent subsidies or rent control simply doesn’t work.
I hope they included parking/garage spot provisions per home…
Redfin clients made fewer offers in August
House hunters shrugged off stock market volatility and unsteady overseas economies in August, with the Redfin Housing Demand Index up 9.6 percent to 103 from 94 a year ago. The number of Redfin customers touring homes held steady from July to August, but fewer people made offers to buy.
[BTW, probably in response to my complaints, Redfin now adjusts their data for their own growth. Kudos to them.]
The Demand Index is based on millions of visits to Redfin.com home-listing pages and thousands of Redfin customers requesting tours and writing offers in 15 major metro areas. It is scaled to equal 100 on January 2013, the first month of the estimation period, and adjusted for Redfin market share growth.
The fall housing market is holding steady. While the usual seasonal slowdown is under way, homebuyer demand is still strong. However, there are warning signs.
Tours are outpacing purchase offers by a wide margin, suggesting that it takes more effort to find a home. In 2014, one in six Redfin customers who requested a tour eventually made an offer. So far this year, it’s one in seven.
“Buyers are worried about too-high prices and are more cautious about making offers,” said Karen Krupsaw, Redfin vice president of real estate operations. “We’re seeing that sellers are getting the memo, as more people are dropping their prices in the past few weeks.”
Many properties have been asking non-market values over the last six months. There is a large disconnect between asking and pending/sold listings. Well-priced properties go pending almost immediately. Over-priced properties are sitting. No surprise.
Luxury Home Prices Essentially Flat in the Second Quarter
Sales of homes priced $1 million or more surged in the second quarter, increasing 14.2 percent from a year earlier. But home values in the luxury market, which Redfin defines as the priciest 5 percent of properties, barely budged, increasing a mere 0.4 percent from last year, following just a 0.6 percent increase in the previous quarter.
In contrast, prices in the bottom 95 percent of the market grew 10 times faster than the high-end, increasing 4 percent in the second quarter compared to a year ago.
Biggest Winners
Despite the price slowdown nationally, there were a few cities with big luxury price gains in the second quarter. The biggest winner of the quarter was Palm Beach Gardens, FL, with average luxury sale prices up a whopping 42 percent from a year ago. Other popular vacation destinations with sizeable shares of investors and second-home buyers like Huntington Beach, CA, Delray Beach, FL, and Palm Springs, CA, also made the top 10 list.
The breakout city award goes to Reno, where luxury prices soared 20 percent year over year after plummeting 3 percent in the first quarter.
Recent expansion of technology companies like Tesla and Apple into Northern Nevada has led to an influx of relocating buyers who are purchasing high-end homes.
“The majority of the clients I’m working with are tech workers moving from L.A. and the Bay Area,” Reno Redfin agent Jaime Moore said. “We’re also seeing an increase in the number of buyers looking for vacation homes here. Many live in the Bay Area, but are buying a second home in Reno. They appreciate the lively local culture and proximity to Lake Tahoe.”
In other parts of the country, strong economic growth drove luxury prices up in the second quarter. After rebounding from the housing recession, Bend, OR, is now one of the nation’s fastest-growing metro areas. Bend’s luxury market has benefited, with home prices increasing in value 33 percent compared to last year.
In Colorado, Boulder’s burgeoning startup community has helped boost luxury home prices 36 percent year over year. In The Woodlands, TX, where nearly a third of jobs are tied to energy market, luxury values have withstood a slowdown in oil prices, due in part to a boost in jobs from Exxon Mobile’s newly constructed nearby campus.
“Recent expansion of technology companies like Tesla and Apple into Northern Nevada has led to an influx of relocating buyers who are purchasing high-end homes.”
Ties in nicely to our discussion yesterday about relocating tech out of Silicone Valley.
Places like Reno that are still close to Silicon Valley but the prices are about 1/4 as high must be very appealing to startups that want the best of both worlds.
You could probably commute from Reno to San Jose on Southwest Airlines for far less money than the additional cost of ownership or rent in Silicon Valley.
High speed rail = appropriate for commuting every day
Airlines = appropriate for commuting max 1-2 times per week
My wife used to be a flight attendant for Reno Air before they were bought out by American. She used to frequent a commuter flight between San Jose and LA, and she said it was surprising how many people commute daily between those cities.
With Southwest, you can get your commute costs down to about $100 per day if you book way in advance. The $2,000 per month commuting cost is offset by lower rents for nicer properties. Plus, it’s doesn’t take any longer than someone who commutes from San Francisco to Stockton, which many people do.
High speed rail is a better solution, but the US has been notoriously slow implementing these lines.
I’m Southwest preferred… Unfortunately.
There is no way that commute would be equivalent to a 100% driving commute. There are plenty of cost you are missing as well.
That may be true, but the commute would be horrendous…. And you would have none of the esteemed cache of living in the Bay Area LOL… Nobody would take you seriously in Silicon Valley.
The Middle-Class Squeeze
Since the financial crisis of 2007-08, which Western leader could boast of spreading ownership in any important way? In the U.S. and Britain, the percentage of citizens owning stocks or houses is well down from the late 1980s. In Britain, the average age for buying a first home is now 31 (and many more people than before depend on “the bank of Mom and Dad” to help them do so). In the mid-’80s, it was 27. My own children, who started work in London in the last two years, earn a little less, in real terms, than I did when I began in 1979, yet house prices are 15 times higher. We have become a society of “have lesses,” if not yet of “have nots.”
In a few lines of work, earnings have shot forward. In 1982, only seven U.K. financial executives were receiving six-figure salaries. Today, tens of thousands are (an enormous increase, even allowing for inflation). The situation is very different for the middle-ranking civil servant, attorney, doctor, teacher or small-business owner. Many middle-class families now depend absolutely on the income of both parents in a way that was unusual even as late as the 1980s.
In Britain and the U.S., we are learning all over again that it is not the natural condition of the human race for children to be better off than their parents. Such a regression, in societies that assume constant progress, is striking.
More…
House committee grills CFPB director on TRID, HMDA and more
http://www.housingwire.com/articles/35187-house-committee-grills-cfpb-director-on-trid-hmda-and-more
Hensarling charged that Dodd-Frank and the CFPB are the prime reason the big banks are bigger and the small banks are now fewer.
“This has eliminated competition, stifled innovation and given consumers fewer choices,” Hensarling said. “Dodd-Frank and the CFPB have raised prices, eliminated free checking for millions, and are cutting off access to mortgages, bank accounts and credit cards.
“This tragically makes it harder for low income Americans living paycheck to paycheck to improve their lives and achieve financial independence,” he said. “Regrettably, still more harmful consequences are just over the horizon.
This is an SNL parody, no?
It’s embarrasing to see what a sock-puppet Hensarling has become for financial interests. There is no lie he is not willing to tell, no emotional appeal he is not willing to make in service of his masters.
Speaking of sock-puppets for special interests:
Clinton calls for repeal of health care law’s ‘Cadillac tax’
http://finance.yahoo.com/news/clinton-calls-repeal-health-care-laws-cadillac-tax-214036403–politics.html
This is exactly why the populist fervor is so high in this election.
If you don’t want to be reamed by the financial elites, whom do you vote for?
We live in CA. We needn’t get worked-up about whom we’re supporting for President. Our Electoral College votes will go to the Democrat nominee. However, I always support/vote for the lesser of two evils, which will be the Democrat. I won’t be too disappointed if a Republican wins though, because maybe with majorities in both houses we’ll get major tax reform with cuts – might not be good for the country, but good for me.
Elizabeth Warren may be positioning herself as a potential running mate for Hillary. She brings and enormous populist appeal and energizes the base.
Elizabeth Warren takes to the streets against REO, NPL investors
Affordable housing advocates led by Sen. Elizabeth Warren, D-Mass., and Rep. Mike Capuano, D-Mass., will hold a rally in front of the Federal Housing Finance Agency at 2:30 p.m. ET Wednesday to protest REO investment.
Protesters say they oppose the “sell-off of mortgages to Wall Street speculators,” which they say disproportionately has a negative impact on blacks and Hispanics.
At issue is the sale of foreclosed properties to investors, who often turn those properties into rental housing.
This is not the first time affordable housing groups have put on highly visible protests over the issue.
“These speculators often turn the properties into rentals — bundling them into securities for investors, like they did with mortgages,” the protesters say in a releae. “The sell-off of these mortgages is hiking up rents and contributing to the growing displacement of poor and working families – particularly people of color.”
They want a stop to FHFA’s sell-off of homes and neighborhoods to investors.
The protestors also have a problem with the fact that Fannie Mae and Freddie Mac, along with their overseer FHFA, don’t mandate principal reduction.
HUD and FHFA were contacted for this story, and it will be updated when they respond.
“Fannie Mae and Freddie Mac … have refused to help homeowners with principal reduction on their mortgages, and instead are selling troubled mortgages to Wall Street speculators at a discount, as is HUD,” the release says. “As a result, struggling homeowners are getting foreclosed on.”
Warren will be joined Washington, DC Councilmember Elissa Silverman, New York City Councilmembers Daneek Miller and Donovan Richards, San Francisco Board of Supervisors Member John Avalos, Baltimore City Councilmember Bill Henry, Philadelphia City Council Candidate Helen Gym, Chapel Hill, North Carolina Mayor Mike Kleinschmidt, Urbana, Illinois Mayor Laura Prussing, and Richmond, California City Councilmember (former Mayor) Gayle McLaughlin.
As noted in the New York Times today, private equity and hedge fund firms have bought more than 100,000 troubled mortgages at a discount from banks and federal housing agencies.
But HUD already gives state and local governments and nonprofits participating in the Neighborhood Stabilization Program preference to buy its REO at 10% below the appraised value.
The NSP initiative also gives these buyers a 14-day first-look period to consider buying the property ahead of investors.
There are also other programs that favor non-profit purchase of non-performing loans.
Notably, Fannie Mae announced the winner of its first sale of non-performing loans as part of its “Community Impact Pool” program at the beginning of September, which consists of smaller pools of non-performing loans and is designed to attract diverse participation by non-profits, small investors and minority- and women-owned businesses.
Basic economics again eludes Elizabeth Warren…
i.e. More rental inventory leads to higher rents.
She should really be ashamed at manipulating her constituency into believing this nonsense to win votes. I’m sure the outrage from Perspective and IR will begin in 3, 2, 1 …
No outrage here. She is clearly pandering to her clueless base. She’s just far more skilled at it than most politicians.
I vehemently oppose many of the issues she champions (principal reduction among others), but I would still vote for her simply because I believe she would take a hard line on the banks.
I would vote for her as well because I believe our financial industry is the greatest threat to our future prosperity.
IR – I was surprised to see you use the term “climate change deniers” yesterday considering how much time we spend on this blog debunking the MSM and housing economists that routinely ignore housing fundamentals or manipulate data to forward a political agenda.
People like Mark Zandi and David Lereah have been pilloried for their atrocious records of bad predictions. I would expect somebody like you that doesn’t believe their bullshit would be similarly skeptical of the climate change fear complex to educate us about the “science” when their track record of predictions is equally bad.
http://www.thenewamerican.com/tech/environment/item/18888-embarrassing-predictions-haunt-the-global-warming-industry
Not only that but the climate change fear complex has repeatedly been caught either fudging data, or using outright improper statistical techniques to make the models fit their predetermined conclusions. The infamous hockey stick graph that was the crux of Al Gore’s movie and really jump-started this climate fear mongering has been thoroughly debunked:
If 95% of home price models fail to give an accurate prediction and without exception overstate future home values by double, we write that off as agenda-driven carnival barkers that should be ignored, yet when the same thing happens with climate models, you don’t question that at all?
I really am in shock.
I don’t think you have to study and accept climate change science/theories as indisputable, in order to accept the idea that limiting greenhouse gases has benefits that might outweigh the costs, no?
By definition science IS disputable, so when somebody uses terminology like “climate change deniers” it indicates they are trying to shut down the debate and marginalize those doing the disputing. I find it odd coming from somebody like IR who generally challenges the media/government consensus spoon fed to the masses.
As for the cost benefit analysis of limiting CO2 gases, what is the objective? Is it to preserve as many lives as possible? Is it to maximize economic prosperity? I think a compelling case can be made that limiting CO2 has more adverse outcomes for people in terms of lives lost and suppressed economic opportunity, especially for poor people, than letting the status quo continue.
At the very least, I want to see some correct models and data analysis techniques before I go running a cost benefit analysis, that could have dire consequences for millions if the wrong assumptions are used.
If all CO2 generated in a city/state/country were to stay in that city/state/country then yes, it is in the best interests of that city/state/country to limit CO2 emissions.
When 99% of your generated CO2 ends up in another city/state/country than it is not in the best interest to limit.
When you take the world as a whole, it is in the best interests to limit emission.
But when will the countries agree on anything that is a cost to individual countries?
CO2 is the “gas of life”. Limiting CO2 is the same as limiting oxygen.
Using opaque models that are indecipherable to even those indoctrinated into “mainstream” climatology in order to justify a flawed premise (that providing plants more of a fundamental molecule required for photosynthesis, and oxygen production, is bad for human life), is a stretch for even the militantly enviromentalistic.
Any scientist of merit, at some point has to step back and say: wtf?
If environmentalists were talking about limiting noxious byproducts of combustion like CO, NOx, or particulate matter then that would be worth discussing. The most complex system on modern cars is the emissions control system, by the way, so real scientists and engineers are already addressing this problem (except for Volkswagen, ahem.)
I have no desire to return to the brown skies California used to have all summer long during my childhood. I believe many environmental regulations we have passed in the state have been for the better but there is no reason to doctor the evidence. So many scandals have been uncovered with these quacks about climate change (used to be global cooling (70’s) then warming (90’s)).
The fact they have now changed their dogma to climate “change” just goes to further reinforce their motives. Of course the climate is changing; Earths climate has been dynamic during it’s entire existence.
Peer reviewed global warming research articles far outnumbered those of global cooling articles going as far back as the 1960’s. It was the media that incorrectly reported on the scientific consensus.
The problem with calling it global warming was that many people just didn’t care. “So what if it’s 2 degrees hotter in the future, I’ll just turn the AC higher.” It didn’t speak to people who knew little about the issue.
Global climate change speaks to real issues much more. More storms, hurricanes, floods, droughts, change in global sea and air currents, change in micro-climates, etc. It still doesn’t speak to acidification of ocean (death of coral reefs), sea level change, and extinction of species though.
Yep, the change for global warming to global climate change was re-branding.
“Global climate change speaks to real issues much more. More storms, hurricanes, floods, droughts, change in global sea and air currents, change in micro-climates, etc.”
Here is the problem. Just because there are more storms, it doesn’t mean that these storms are caused by higher temperatures. If these storms are caused by higher temperatures, are the higher temperatures a natural consequence of normal heating/cooling cycles seen on earth over the last several million years, or are higher temperatures a result of pollution? If they are the result of higher CO2 levels does the benefit of better food production offset the burden of more intense storms and storm surge? If the benefit outweighs the burden, then we should be putting resources into dealing with the storms and storm surge instead of trying to limit greenhouse gas production.
What happens if we spend trillions of dollars fighting global warming only to find that the sea level rises anyway due to non-anthropogenic global warming? Getting the root cause right matters.
Guess how your weather is forecast? By supercomputers crunching away at models of our planet’s weather.
With a computer model it is very easy to change the global temperature and see what happens…
More storms, hurricanes, floods, droughts, change in global sea and air currents, change in micro-climates, etc.
That’s evidence through modeling right there.
The best weather models fail at about 10 days. It’s called the butterfly effect. Small variations in air movement (like the fluttering of a butterflies wings in Asia) can cause systems instabilities that defy prediction.
So when you talk about predicting the weather with supercomputers crunching the data they are only as good as the models. And the models could be perfect, and still fail due to unpredictable effects. Validating the models against past predictions can either demonstrate the models as good predictors of future weather, or, as has been seen with climate models thus far, invalidate the models.
When the climate models have been consistently wrong over two decades, and the model supporters can’t say why, that is sufficient, in my mind anyway, to question those models predictive ability.
Mello Ruse,
With this particular issue, I believe it’s clear that the only people on the planet who don’t believe in global warming is a small segment of the political right in America, a group being duped by the interests of polluters who want to continue to make a profit while passing the costs on to everyone else.
There is no disagreement among the scientific community as to whether or not the earth is warming up, or whether or not this is due to the activity of man.
The tactics of the polluters exactly fits the description from the post yesterday:
I don’t have the inclination to provide specific examples of each of these, but the two articles you posted fit nicely withing that framework.
We can debate the policy implications of what to do about this problem, and I think many proposals of the political left go too far, but debating the science is a diversionary tactic from a group that believes they will lose the policy debate if it’s allowed to go forward.
“There is no disagreement among the scientific community as to whether or not the earth is warming up, or whether or not this is due to the activity of man.”
Think so? Read the Senate Minority Report on Global Warming (2008 and 2014) and see if you still think this is true.
https://www.cfact.org/wp-content/uploads/2014/09/SenateCriticalThinkingonClimateReport.pdf
http://www.inhofe.senate.gov/download/?id=c94cb1b0-747e-4d6b-984a-f27664a23831&download=1
The great George Carlin on global warming.
NSFW!