Why California Is Doomed

[danielwis]

[quote=paramount][quote=scaredycat]what i envision is a much, much greater and stricter divide between haves and have-nots. For years we’ve put a world-record-setting percentage of people in prison. Some argue that’s not just about law and order, but that imprisonment is big business — provides a solution to what to do with some of the unemployable, while making money from their misery. I expect that trend to cotinue, and to expand in unexpected ways. Not sure what it will look like. I doubt we can physically imprison 20-30% of the population. but perhaps home detention, electronic monitoring, defined boundaries, greater restrictions on liberty for law violations, like trespassing,food theft, homelessness related crimes…so much so that the nature of the way we live and relate to each other changes. I know this is pretty negative and creepy and probably unlikely…[/quote]

I’m not so sure it’s that unlikely…[/quote]

Let the pot smokers out, and put the property crime delinquents behind bars.

[jameswenn]

I don’t know why some of you guys are complaining, San Diego is the heart of socialism in California. The top 10 employers in the county are various branches of the government.

[jameswenn]

I don’t know why some of you guys are complaining, San Diego is the heart of socialism in California. The top 10 employers in the county are various branches of the government.

[jameswenn]

I don’t know why some of you guys are complaining, San Diego is the heart of socialism in California. The top 10 employers in the county are various branches of the government.

[jameswenn]

I don’t know why some of you guys are complaining, San Diego is the heart of socialism in California. The top 10 employers in the county are various branches of the government.

[jameswenn]

I don’t know why some of you guys are complaining, San Diego is the heart of socialism in California. The top 10 employers in the county are various branches of the government.

[DWCAP]

[quote=cabal]

You need to consider two other factors in terms of sustainability. First, the 625K house is worth a lot less today, maybe 400K? Second, during normal times, home builders can create wealth above and beyond the cost of raw materials, land and labor. However, all subsequent transactions are governed by the “Zero Sum Game” rules. In other words, for every person who paid bubble prices, an equal number of persons sold at bubble prices and that so called “credit bubble” money is now sitting in their bank accounts. Here the number of qualified people does not really change, perhaps marginally due to changes in stricter lending standards, interest rates, etc. Only their identities have really changed and these people with their sideline money are tired of renting and salivating at the opportunities. You can call this shadow demand. Only potential buyers at the entry level were reduced with bubble pricing. But this has also changed since low end corrections from peak exceed 50% restoring prices to historical norms. Lastly, the people who sat out the bubble years were unaffected. In summary – has the number of potential qualified people really changed due to bubble prices? No, the reductions are primarily due to unemployment and consumer confidence.[/quote]

I disagree with this. Three points:

One, you are assuming a national, if not international market. Housing in San Diego is not interchangable with housing in Iowa, and so is a different market. I personally know of 5 people who sold at bubble heights and moved to other markets, some instate, others out of state. ( and I am in my 20’s, I dont know that many people who own homes) That money has left this market, and will not continue to supply demand here. You can argue that bubble money from other markets replaced it, but demographic trends dont support that thoery. Californians leave for other areas of the country, it is international immigration and birth rates (first time buyers both) who support our population. Though I know atleast two couples who bubble $ is supplying a nice retirment in the midwest.

Second, I dont know anyone really ‘salavating’ at the current market oppertunities with the exception of some strong RE perma-bulls who had the exact same glandular problems back in 2006. Prices are near normal levels, at the uppper end of normal levels. Mostly because of alot of market distorting actions taken by our government to restrict supply while generating demand and driving down interest rates to generational lows lower than those that set off the bubble in the first place. All of these will need to be unwound and paid for, one way or another.

Lastly, people who sat out the bubble years are most certainly effected. Many have been devisted in the stock declines of 2000 and 2008 and are all the poorer for it. They are now plowing their money more and more into bonds, which will likly give them lower returns in the long run, lowering the quatlity of life in the future. Not to mention that taxes WILL have to go up, on everyone, to pay for the programs inacted to deal with the fallout of the housing bubble.

I am not a doom and gloomer, never have been. Ca can have the same bright future we have had in my parents generation. But I do think that there are real problems facing this state. Problems without easy solutions. We are not becoming Detroit in state form, atleast not currently, but we do have problems.
This glossy, all is well if I just wish upon a star mentality isnt helpful either though. It gives people comfort to ignor real problems, and scammers room to rape our economy again. Just because we did ok last time doesnt mean we will this time. ‘Past performance is not indicative of future results’, no matter how much we want them to be.

[DWCAP]

[quote=cabal]

You need to consider two other factors in terms of sustainability. First, the 625K house is worth a lot less today, maybe 400K? Second, during normal times, home builders can create wealth above and beyond the cost of raw materials, land and labor. However, all subsequent transactions are governed by the “Zero Sum Game” rules. In other words, for every person who paid bubble prices, an equal number of persons sold at bubble prices and that so called “credit bubble” money is now sitting in their bank accounts. Here the number of qualified people does not really change, perhaps marginally due to changes in stricter lending standards, interest rates, etc. Only their identities have really changed and these people with their sideline money are tired of renting and salivating at the opportunities. You can call this shadow demand. Only potential buyers at the entry level were reduced with bubble pricing. But this has also changed since low end corrections from peak exceed 50% restoring prices to historical norms. Lastly, the people who sat out the bubble years were unaffected. In summary – has the number of potential qualified people really changed due to bubble prices? No, the reductions are primarily due to unemployment and consumer confidence.[/quote]

I disagree with this. Three points:

One, you are assuming a national, if not international market. Housing in San Diego is not interchangable with housing in Iowa, and so is a different market. I personally know of 5 people who sold at bubble heights and moved to other markets, some instate, others out of state. ( and I am in my 20’s, I dont know that many people who own homes) That money has left this market, and will not continue to supply demand here. You can argue that bubble money from other markets replaced it, but demographic trends dont support that thoery. Californians leave for other areas of the country, it is international immigration and birth rates (first time buyers both) who support our population. Though I know atleast two couples who bubble $ is supplying a nice retirment in the midwest.

Second, I dont know anyone really ‘salavating’ at the current market oppertunities with the exception of some strong RE perma-bulls who had the exact same glandular problems back in 2006. Prices are near normal levels, at the uppper end of normal levels. Mostly because of alot of market distorting actions taken by our government to restrict supply while generating demand and driving down interest rates to generational lows lower than those that set off the bubble in the first place. All of these will need to be unwound and paid for, one way or another.

Lastly, people who sat out the bubble years are most certainly effected. Many have been devisted in the stock declines of 2000 and 2008 and are all the poorer for it. They are now plowing their money more and more into bonds, which will likly give them lower returns in the long run, lowering the quatlity of life in the future. Not to mention that taxes WILL have to go up, on everyone, to pay for the programs inacted to deal with the fallout of the housing bubble.

I am not a doom and gloomer, never have been. Ca can have the same bright future we have had in my parents generation. But I do think that there are real problems facing this state. Problems without easy solutions. We are not becoming Detroit in state form, atleast not currently, but we do have problems.
This glossy, all is well if I just wish upon a star mentality isnt helpful either though. It gives people comfort to ignor real problems, and scammers room to rape our economy again. Just because we did ok last time doesnt mean we will this time. ‘Past performance is not indicative of future results’, no matter how much we want them to be.

[DWCAP]

[quote=cabal]

You need to consider two other factors in terms of sustainability. First, the 625K house is worth a lot less today, maybe 400K? Second, during normal times, home builders can create wealth above and beyond the cost of raw materials, land and labor. However, all subsequent transactions are governed by the “Zero Sum Game” rules. In other words, for every person who paid bubble prices, an equal number of persons sold at bubble prices and that so called “credit bubble” money is now sitting in their bank accounts. Here the number of qualified people does not really change, perhaps marginally due to changes in stricter lending standards, interest rates, etc. Only their identities have really changed and these people with their sideline money are tired of renting and salivating at the opportunities. You can call this shadow demand. Only potential buyers at the entry level were reduced with bubble pricing. But this has also changed since low end corrections from peak exceed 50% restoring prices to historical norms. Lastly, the people who sat out the bubble years were unaffected. In summary – has the number of potential qualified people really changed due to bubble prices? No, the reductions are primarily due to unemployment and consumer confidence.[/quote]

I disagree with this. Three points:

One, you are assuming a national, if not international market. Housing in San Diego is not interchangable with housing in Iowa, and so is a different market. I personally know of 5 people who sold at bubble heights and moved to other markets, some instate, others out of state. ( and I am in my 20’s, I dont know that many people who own homes) That money has left this market, and will not continue to supply demand here. You can argue that bubble money from other markets replaced it, but demographic trends dont support that thoery. Californians leave for other areas of the country, it is international immigration and birth rates (first time buyers both) who support our population. Though I know atleast two couples who bubble $ is supplying a nice retirment in the midwest.

Second, I dont know anyone really ‘salavating’ at the current market oppertunities with the exception of some strong RE perma-bulls who had the exact same glandular problems back in 2006. Prices are near normal levels, at the uppper end of normal levels. Mostly because of alot of market distorting actions taken by our government to restrict supply while generating demand and driving down interest rates to generational lows lower than those that set off the bubble in the first place. All of these will need to be unwound and paid for, one way or another.

Lastly, people who sat out the bubble years are most certainly effected. Many have been devisted in the stock declines of 2000 and 2008 and are all the poorer for it. They are now plowing their money more and more into bonds, which will likly give them lower returns in the long run, lowering the quatlity of life in the future. Not to mention that taxes WILL have to go up, on everyone, to pay for the programs inacted to deal with the fallout of the housing bubble.

I am not a doom and gloomer, never have been. Ca can have the same bright future we have had in my parents generation. But I do think that there are real problems facing this state. Problems without easy solutions. We are not becoming Detroit in state form, atleast not currently, but we do have problems.
This glossy, all is well if I just wish upon a star mentality isnt helpful either though. It gives people comfort to ignor real problems, and scammers room to rape our economy again. Just because we did ok last time doesnt mean we will this time. ‘Past performance is not indicative of future results’, no matter how much we want them to be.

[DWCAP]

[quote=cabal]

You need to consider two other factors in terms of sustainability. First, the 625K house is worth a lot less today, maybe 400K? Second, during normal times, home builders can create wealth above and beyond the cost of raw materials, land and labor. However, all subsequent transactions are governed by the “Zero Sum Game” rules. In other words, for every person who paid bubble prices, an equal number of persons sold at bubble prices and that so called “credit bubble” money is now sitting in their bank accounts. Here the number of qualified people does not really change, perhaps marginally due to changes in stricter lending standards, interest rates, etc. Only their identities have really changed and these people with their sideline money are tired of renting and salivating at the opportunities. You can call this shadow demand. Only potential buyers at the entry level were reduced with bubble pricing. But this has also changed since low end corrections from peak exceed 50% restoring prices to historical norms. Lastly, the people who sat out the bubble years were unaffected. In summary – has the number of potential qualified people really changed due to bubble prices? No, the reductions are primarily due to unemployment and consumer confidence.[/quote]

I disagree with this. Three points:

One, you are assuming a national, if not international market. Housing in San Diego is not interchangable with housing in Iowa, and so is a different market. I personally know of 5 people who sold at bubble heights and moved to other markets, some instate, others out of state. ( and I am in my 20’s, I dont know that many people who own homes) That money has left this market, and will not continue to supply demand here. You can argue that bubble money from other markets replaced it, but demographic trends dont support that thoery. Californians leave for other areas of the country, it is international immigration and birth rates (first time buyers both) who support our population. Though I know atleast two couples who bubble $ is supplying a nice retirment in the midwest.

Second, I dont know anyone really ‘salavating’ at the current market oppertunities with the exception of some strong RE perma-bulls who had the exact same glandular problems back in 2006. Prices are near normal levels, at the uppper end of normal levels. Mostly because of alot of market distorting actions taken by our government to restrict supply while generating demand and driving down interest rates to generational lows lower than those that set off the bubble in the first place. All of these will need to be unwound and paid for, one way or another.

Lastly, people who sat out the bubble years are most certainly effected. Many have been devisted in the stock declines of 2000 and 2008 and are all the poorer for it. They are now plowing their money more and more into bonds, which will likly give them lower returns in the long run, lowering the quatlity of life in the future. Not to mention that taxes WILL have to go up, on everyone, to pay for the programs inacted to deal with the fallout of the housing bubble.

I am not a doom and gloomer, never have been. Ca can have the same bright future we have had in my parents generation. But I do think that there are real problems facing this state. Problems without easy solutions. We are not becoming Detroit in state form, atleast not currently, but we do have problems.
This glossy, all is well if I just wish upon a star mentality isnt helpful either though. It gives people comfort to ignor real problems, and scammers room to rape our economy again. Just because we did ok last time doesnt mean we will this time. ‘Past performance is not indicative of future results’, no matter how much we want them to be.

[DWCAP]

[quote=cabal]

You need to consider two other factors in terms of sustainability. First, the 625K house is worth a lot less today, maybe 400K? Second, during normal times, home builders can create wealth above and beyond the cost of raw materials, land and labor. However, all subsequent transactions are governed by the “Zero Sum Game” rules. In other words, for every person who paid bubble prices, an equal number of persons sold at bubble prices and that so called “credit bubble” money is now sitting in their bank accounts. Here the number of qualified people does not really change, perhaps marginally due to changes in stricter lending standards, interest rates, etc. Only their identities have really changed and these people with their sideline money are tired of renting and salivating at the opportunities. You can call this shadow demand. Only potential buyers at the entry level were reduced with bubble pricing. But this has also changed since low end corrections from peak exceed 50% restoring prices to historical norms. Lastly, the people who sat out the bubble years were unaffected. In summary – has the number of potential qualified people really changed due to bubble prices? No, the reductions are primarily due to unemployment and consumer confidence.[/quote]

I disagree with this. Three points:

One, you are assuming a national, if not international market. Housing in San Diego is not interchangable with housing in Iowa, and so is a different market. I personally know of 5 people who sold at bubble heights and moved to other markets, some instate, others out of state. ( and I am in my 20’s, I dont know that many people who own homes) That money has left this market, and will not continue to supply demand here. You can argue that bubble money from other markets replaced it, but demographic trends dont support that thoery. Californians leave for other areas of the country, it is international immigration and birth rates (first time buyers both) who support our population. Though I know atleast two couples who bubble $ is supplying a nice retirment in the midwest.

Second, I dont know anyone really ‘salavating’ at the current market oppertunities with the exception of some strong RE perma-bulls who had the exact same glandular problems back in 2006. Prices are near normal levels, at the uppper end of normal levels. Mostly because of alot of market distorting actions taken by our government to restrict supply while generating demand and driving down interest rates to generational lows lower than those that set off the bubble in the first place. All of these will need to be unwound and paid for, one way or another.

Lastly, people who sat out the bubble years are most certainly effected. Many have been devisted in the stock declines of 2000 and 2008 and are all the poorer for it. They are now plowing their money more and more into bonds, which will likly give them lower returns in the long run, lowering the quatlity of life in the future. Not to mention that taxes WILL have to go up, on everyone, to pay for the programs inacted to deal with the fallout of the housing bubble.

I am not a doom and gloomer, never have been. Ca can have the same bright future we have had in my parents generation. But I do think that there are real problems facing this state. Problems without easy solutions. We are not becoming Detroit in state form, atleast not currently, but we do have problems.
This glossy, all is well if I just wish upon a star mentality isnt helpful either though. It gives people comfort to ignor real problems, and scammers room to rape our economy again. Just because we did ok last time doesnt mean we will this time. ‘Past performance is not indicative of future results’, no matter how much we want them to be.

[Author]

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