Why California Is Doomed

[desmond]

[quote=Nor-LA-SD-guy]hmmm,

I guess we will have to wait and see if the State goes into a black hole of no return or rebounds.

I just happen to believe the state will rebound in the next five years. But if you believe it’s doomed maybe you should move to another state.

There are Plenty more to take your place.

I don’t think anyone will block your exit.[/quote]

Your brought up another reason why California is doomed:
http://www.sacbee.com/2010/03/07/2586557/the-conversation-as-golden-dreams.html

[Nor-LA-SD-guy]

Well Good Luck on your move,

Write if you find work !!!

You notice it did not say we lost population…

[Nor-LA-SD-guy]

Well Good Luck on your move,

Write if you find work !!!

You notice it did not say we lost population…

[Nor-LA-SD-guy]

Well Good Luck on your move,

Write if you find work !!!

You notice it did not say we lost population…

[Nor-LA-SD-guy]

Well Good Luck on your move,

Write if you find work !!!

You notice it did not say we lost population…

[Nor-LA-SD-guy]

Well Good Luck on your move,

Write if you find work !!!

You notice it did not say we lost population…

[cabal]

[quote]
In other words, you can’t afford the $500,000 mortgage on the $625,000 house you bought in 2008 because the guy before you paid $550,000 for a house which sold for $140,000 in 1997.

These numbers are drawn from reality: our friends bought a small home in a desirable suburb in the San Francisco Bay Area for $140,000 in 1997. Yes, it was a fixer-upper and yes, our friends completely remodeled it. The fair value of the house after renovation was probably in the $175,000 to $190,000 range, tops.

They sold the house in 2005 for $550,000, and that buyer unloaded the house in 2008 for $625,000.

This represents approximately $235,000 of actual value (the $175,000 adjusted for inflation from 1997 to 2010 as per the BLS inflation calculator) and $390,000 of “credit-bubble” excess.
[/quote]

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.

[cabal]

[quote]
In other words, you can’t afford the $500,000 mortgage on the $625,000 house you bought in 2008 because the guy before you paid $550,000 for a house which sold for $140,000 in 1997.

These numbers are drawn from reality: our friends bought a small home in a desirable suburb in the San Francisco Bay Area for $140,000 in 1997. Yes, it was a fixer-upper and yes, our friends completely remodeled it. The fair value of the house after renovation was probably in the $175,000 to $190,000 range, tops.

They sold the house in 2005 for $550,000, and that buyer unloaded the house in 2008 for $625,000.

This represents approximately $235,000 of actual value (the $175,000 adjusted for inflation from 1997 to 2010 as per the BLS inflation calculator) and $390,000 of “credit-bubble” excess.
[/quote]

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.

[cabal]

[quote]
In other words, you can’t afford the $500,000 mortgage on the $625,000 house you bought in 2008 because the guy before you paid $550,000 for a house which sold for $140,000 in 1997.

These numbers are drawn from reality: our friends bought a small home in a desirable suburb in the San Francisco Bay Area for $140,000 in 1997. Yes, it was a fixer-upper and yes, our friends completely remodeled it. The fair value of the house after renovation was probably in the $175,000 to $190,000 range, tops.

They sold the house in 2005 for $550,000, and that buyer unloaded the house in 2008 for $625,000.

This represents approximately $235,000 of actual value (the $175,000 adjusted for inflation from 1997 to 2010 as per the BLS inflation calculator) and $390,000 of “credit-bubble” excess.
[/quote]

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.

[cabal]

[quote]
In other words, you can’t afford the $500,000 mortgage on the $625,000 house you bought in 2008 because the guy before you paid $550,000 for a house which sold for $140,000 in 1997.

These numbers are drawn from reality: our friends bought a small home in a desirable suburb in the San Francisco Bay Area for $140,000 in 1997. Yes, it was a fixer-upper and yes, our friends completely remodeled it. The fair value of the house after renovation was probably in the $175,000 to $190,000 range, tops.

They sold the house in 2005 for $550,000, and that buyer unloaded the house in 2008 for $625,000.

This represents approximately $235,000 of actual value (the $175,000 adjusted for inflation from 1997 to 2010 as per the BLS inflation calculator) and $390,000 of “credit-bubble” excess.
[/quote]

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.

[cabal]

[quote]
In other words, you can’t afford the $500,000 mortgage on the $625,000 house you bought in 2008 because the guy before you paid $550,000 for a house which sold for $140,000 in 1997.

These numbers are drawn from reality: our friends bought a small home in a desirable suburb in the San Francisco Bay Area for $140,000 in 1997. Yes, it was a fixer-upper and yes, our friends completely remodeled it. The fair value of the house after renovation was probably in the $175,000 to $190,000 range, tops.

They sold the house in 2005 for $550,000, and that buyer unloaded the house in 2008 for $625,000.

This represents approximately $235,000 of actual value (the $175,000 adjusted for inflation from 1997 to 2010 as per the BLS inflation calculator) and $390,000 of “credit-bubble” excess.
[/quote]

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.

[Aecetia]

We are doomed if we do not do something about the above factors. We need to stimulate the small business community with real incentives and not silly ones. We need to control the growth of the unions and get more bang for our bucks. We need to outsource our prisons to China. I think those would improve the economy substantially.

[Aecetia]

We are doomed if we do not do something about the above factors. We need to stimulate the small business community with real incentives and not silly ones. We need to control the growth of the unions and get more bang for our bucks. We need to outsource our prisons to China. I think those would improve the economy substantially.

[Aecetia]

We are doomed if we do not do something about the above factors. We need to stimulate the small business community with real incentives and not silly ones. We need to control the growth of the unions and get more bang for our bucks. We need to outsource our prisons to China. I think those would improve the economy substantially.

[Aecetia]

We are doomed if we do not do something about the above factors. We need to stimulate the small business community with real incentives and not silly ones. We need to control the growth of the unions and get more bang for our bucks. We need to outsource our prisons to China. I think those would improve the economy substantially.

[Author]

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