What to Say to People Who Tell You Now’s a Great Time to Buy a House

Not that we’ve ever been very tempted, or really been in any position to buy a house here, but after the last year or so of watching the economy and housing markets fist-fuck themselves, I’ve been reminded time and time again that I’m infinitely grateful to not be tied down to the Metro Detroit area by a house that no one wants.  And reading this has reminded me once again:

Woe unto the person who is young and single and makes a reasonable amount of money and yet for some reason does not own a home. As soon as your status as a renter is revealed to a friend, relative, neighbor, or cashier, inevitably it starts: “But now is such a great time to buy. Don’t you want to build up some equity? Aren’t you tired of throwing your money away?”

Whenever I heard this in the past, I would always smile politely and say that, sure, someday I hoped to own a house. But the economy being what it is, and journalism being what it is, I couldn’t justify taking the risk of being pinned down in a city that might not have a job for me. This response never satisfied my friends and cashiers, of course. And I never really knew what else to say. Until now.

Richard Florida, the influential author of Rise of the Creative Class, had many provocative things to say in his terrifying look at America post-whatever-the-F-this-is. But the one that caught my attention was his point, persuasively argued, that our focus on homeownership is a large reason why we found our way into this mess to begin with. Says Florida:

“The solution begins with the removal of homeownership from its long-privileged place at the center of the U.S. economy. Substantial incentives for homeownership (from tax breaks to artificially low mortgage-interest rates) distort demand, encouraging people to buy bigger houses than they otherwise would. That means less spending on medical technology, or software, or alternative energy—the sectors and products that could drive U.S. growth and exports in the coming years. Artificial demand for bigger houses also skews residential patterns, leading to excessive low-density suburban growth. The measures that prop up this demand should be eliminated.

If anything, our government policies should encourage renting, not buying. Homeownership occupies a central place in the American Dream primarily because decades of policy have put it there. A recent study by Grace Wong, an economist at the Wharton School of Business, shows that, controlling for income and demographics, homeowners are no happier than renters, nor do they report lower levels of stress or higher levels of self-esteem.

And while homeownership has some social benefits—a higher level of civic engagement is one—it is costly to the economy. The economist Andrew Oswald has demonstrated that in both the United States and Europe, those places with higher homeownership rates also suffer from higher unemployment. Homeownership, Oswald found, is a more important predictor of unemployment than rates of unionization or the generosity of welfare benefits. Too often, it ties people to declining or blighted locations, and forces them into work—if they can find it—that is a poor match for their interests and abilities.”

Is California About to Legalize Marijuana?

I read this rather sensational headline at John C Dvorak’s blog.  Of course, these things usually have several false starts before they’re actually passed, but given the State’s economic situation, it could be the right bill at the right time.

The proposal would regulate marijuana like alcohol, with people over 21 years old allowed to grow, buy, sell and possess cannabis – all of which is barred by federal law.

Ammiano said taxes and other fees that accompany regulation could put more than a billion dollars a year into state coffers at a time when revenues continue to decline. He said he anticipates the federal government could soften its stance on marijuana under the Obama administration.

Time, Value and Opportunity

It was about 2 years ago that I last did a thorough evaluation on my market value and career opportunities, relative to my experience and skill set.  At the time, I was woefully underpaid (as compared to average national market value for what I do), and upon realizing this, went about preparing an argument to request a raise – after all, I was an incredible bargain.  And then it got weird.  Totally unprompted – almost magically, even – I was called in to my manager’s office, given a pep talk about my worth, along with a raise and a promotion.  And while this didn’t necessarily align me with my market value, there is something to be said for loyalty both on my and my employer’s part.

One of the key factors that drove my decision to evaluate my career at that point was my experience level.  At just over 2 years in, I had surpassed the restrictive “entry level” barrier and crossed into that oh-so-wonderful “experienced/non-manager” territory, and that’s a pretty massive step, in terms of responsibility, pay scale and the like.  And now here I sit, two years later, in an almost identical situation – evaluating my market value and opportunities.  And while some might scoff at the notion, given the economic downturn of the Country, I think they’d be surprised at the potential out there, for those with the right skill set.

So, I’ve begun looking at opportunities again, and I’m very pleased with what’s out there – if I wait for the right opportunity, I could double my salary!  So long as I’m open to relocation throughout most of the Country (I most definitely am), its almost as if there isn’t a recession going on, and this is especially true of the energy and IT/software/web fields.  It feels dirty looking for work while still securely employed, because I’m loyal to my employer because they’ve been loyal to me, and its a great place to work.  That said, business is business, and I’m sure part of my infatuation with working here has to do with it being my first white-collar job (its easy to be impressed by free coffee and paid time off after delivering pizza in college).

Despite the recession and otherwise shaky economy, there are opportunities out there.  Its time to find them, and realize my potential.

Why the Bailout Sucks My Balls

From ClusterStock.com

• Hank Paulson & Co. survey the banking industry and decide who will stay and who will go. JP Morgan (JPM), Citi (C), Wells Fargo (WFC), and Bank of America (BAC) will stay. Goldman (GS) will probably stay. Morgan Stanley (MS) might stay. Everyone else in trouble could go. The government doesn’t need to save all banks. It just needs to save some.
• Within a month or two, Paulson buys $250 billion of crap assets. He pays more than market value, but not an egregious amount more (because the public will be watching these early rounds). Over the next six months, he buys $700 billion of assets…and then he–or his successor–asks Congress for more money.
• Confidence improves modestly, but banks continue to hoard capital and credit markets stay tight. Loans stay expensive and hard to get. This keeps pressure on the economy.
• The credit crunch filters through to consumers: Credit cards, home equity loans, mortgages, car loans, etc., get more expensive, putting more pressure on consumers and forcing them to cut back further.
• The economic news continues to get worse: American consumers continue to pull back, housing continues to fall (as of July, the year over year declines were still accelerating), companies begin to cut back, which leads to layoffs–which puts more pressure on consumers.
• The global economy continues to weaken: Europe, Asia, and, eventually, emerging markets.  This is already happen, and everyone else is later in the cycle than we are.
• The stock market continues to fall, as corporate earnings come under increasing pressure and hope for an early 2009 recovery fades.  Analysts are still expecting huge growth in S&P 500 earnings for next year.  These estimates will get cut by at least a third.
• The government enacts further measures to try to stop the fall in asset prices (stocks, houses)–including an expansion of the bailout plan–but these don’t work. Governments always try to do this. They never succeed. All they do is delay the inevitable.
• A new round of white-collar prosecutions send a new posse of corporate villains to jail. Some will be guilty. Some won’t. All will be hated.
• The government announces a new New Deal, finally investing in the country’s infrastructure, in the hopes that this will stimulate the economy (which it will). Investments include broadband, green tech, wireless, physical infrastructure, et al.
• Eventually, asset prices will bottom: Housing down 40% in real terms, the stock market down at least 50%. With luck, this will happen by early 2010, so the recovery can begin.  Warren Buffett loads the boat with stocks, but by that time, most people are too depressed (and poor) to follow him.
• Unlike Japan, we finally force our banks to write down assets as far as they need to be written down…and then recapitalize them. This is what we should have done in the current bailout, but we’ll get it right next time (we hope).
• We gradually begin a long-term economic recovery, one in which consumers save a greater percentage of income, thrift and saving again become admirable qualities, we gradually begins to wean itself off international oil, and the bacchanalian decades of the 1990s and 2000s become an embarrassing memory.
• The stock market finally begins a new, long-term bull market, in which stocks once again return 10%+ per year.  Unfortunately, most Americans will be so sickened by the stock losses they’ve sustained since 2000 that they’ll miss many years of it.

The red-highlighted item above is precisely where this $700,000,000,000 should go now, not later.  This is nothing more than a fucking money grab, and its disgusting.

Comeuppance is a Bitch

I’ve long loathed the Hummer brand.  It represents so much about what is wrong with the US – ignorance, excess and self-centeredness.  So, with gas prices rising so rapidly lately, it shouldn’t be surprising that I’ve often smiled to myself when I see one driving down the road, which, not surprisingly, has been less and less often recently.

I was reading an article in the Detroit Free Press about General Motors’ plans for the Hummer brand, since its very quickly gone from a money maker to a financial liability, and rightfully so.  They discuss that GM essentially has three options: sell, kill or transform it.  Part of the article focuses on the suddenly-tough market for these things.

Dave Harmon, 38, of Cedar, Minn., said it will be hard to find a buyer.

He’s sure having a hard time, and he’s trying to sell only one Hummer, a 2003 H2, for what he owes on it: $26,900.

Holy hell!  A 6 year old* Hummer and he still owes $26,900?!?  That guy must have an incredibly tiny penis.

His SUV, jacked up with a 7-inch lift, gets just 6 miles per gallon, and his hope of finding a buyer is dwindling.

Wow.  Yeah, what a bargain.  You too can have this 6mpg marvel of technology for more than the price of something that is 8 times more economical to drive.  And brand fucking new to boot.

“I called our local Hummer dealership, to see what they’d give me to get rid of the darn thing,” Harmon said. “They laughed at me.”

And rightfully so.  Jackass.

When he bought it, Harmon said, he couldn’t imagine the day when the home-building business would grind to a halt and gas would cost more than $4 a gallon.

Really?  I mean… really?  You never stopped to think that a non-renewable resource whose production is about to peak might become more expensive?  Really???

Seriously, as much as I try, I can’t be anything but happy that this guy is getting his due.  He and all the other “look at me” bastards who value their image over practicality and environmental responsibility have this – and more – coming to them.

Now I’ll admit that straight out of college, I leased a 2005 Dodge Ram Quad Cab, and I didn’t necessarily need to.  However, I did use every inch of that thing, both in terms of cargo space and hauling/towing power, to move my stuff from 600 miles away to where I’m living now, and used it to move 3 times between then and when I gladly turned it back in at the end of the lease.  I also used it several times to haul my 4-wheeler around, which will be much harder to do in my Stratus (see also: impossible).  But even that beast of a truck got about 15mpg in mixed-use.  And I still felt guilty.

*2003 model vehicles hit showroom floors in 2002, just as you’ll see 2009 models in showrooms right now.