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My standard deduction comment was more along the lines of rent vs buy decision where the renter is taking the Standard.

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If you are currently taking the Standard Deduction, the tax benefit is even less.

Another thing to consider is that those $400K currently will pay you $1666/month (minus taxes) @ 5% A.P.R. If you want to be absolutely fair about how much buying the house will cost you, you should add this amount to your payments.

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I found the below article about the subject.

http://www.cis.org/articles/2005/back1305.html

Link Here

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I believe we do have enough engineers. There are not enough US engineers so we give 65,000 H1-B visas per year to foreigners plus 20,000 per year to international graduate students of U.S. universities. In the late 90s the quota was 140,000. With the current economy I see no reason to increase it to that level again. Keep in mind that the H1-B visa is not limited to engineers. The visa is for “specialty labor” and the minimum requirement is to have a college degree. Back in the late 90s with such a large quota and pre-9/11 it was fairly easy to get one if you had a job offer and a good lawyer.

From Homeland Security:

What is an H-1B?

The H-1B is a nonimmigrant classification used by an alien who will be employed temporarily in a specialty occupation or as a fashion model of distinguished merit and ability.

What is a specialty occupation?

A specialty occupation requires theoretical and practical application of a body of specialized knowledge along with at least a bachelor’s degree or its equivalent. For example, architecture, engineering, mathematics, physical sciences, social sciences, medicine and health, education, business specialties, accounting, law, theology, and the arts are specialty occupations.

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The H1-B quota should be kept at a level to provide just enough engineers to maintain US companies competitive. As of right now, there is absolutely no need to increase the quota.

It is true that the H1-B and similar visa programs allow the best to come to the US. Unfortunately the quality of engineers and scientists that use most of them is not great when compared to what US universities produce. Picture them as “generic” engineers vs. brand name engineers (US graduates).

For most companies the cost of hiring a foreign engineer vs. a US engineer is about the same. Even if they are paid less, the visa and lawyers fees will even out the cost. The reason companies hire foreign engineers is primarily that there not enough US engineers. The US for years has been producing very few engineers. Engineering is hard and there are easier ways to earn money. If you remove the supply of foreign engineers the demand and thus wages will go up. This may motivate more people to study engineering but it will take several years. In the mean time companies may be required to go were the engineers are. A well managed H1-B visa program could avoid this.

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Reminds me of the movie Boiler Room. Its about young guys illegaly trading stocks during the stock boom of the late 90s. You can see a clip here:

Link Here

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Last year when TOL was close to $60 many people on Ben’s blog shorted the stock. Even the brothers Toll were cashing out. Today TOL is at $26. It may be a little too late to short the builders but about the right time to short the lenders.

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In the last weeks the media has been all over the place about the housing bubble. CNN.com has this on Friday:

“But the argument that prices can’t fall in a good job market doesn’t make economic sense: To be sure, a strong employment picture helps demand. But if far more houses are pouring onto the market than can be absorbed by households lured by the new jobs, and if the sellers are pressured to sell, prices will fall. That’s precisely what’s happening now in good job markets such as San Diego and Northern Virginia.”

“Builders are still pouring out near-record numbers of new homes as sales decline, assuring a further fall in prices. “Buyers” are walking away from deposits on houses that were supposedly pre-sold, forcing developers to throw them back on the market at a discount.”

“A year ago, the reigning cliché was that real estate had entered a new world of “no supply.” Now, a record 3.85 million homes are up for sale, and buyers are getting scarce.”

http://money.cnn.com/2006/08/27/real_estate/pluggedin_tully.fortune/index.htm?cnn=yes

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The best “gimmick” a developer can use:

“Developer Maisel Presley is selling condos online by dropping the price by $1,000 a day until a unit sells.”

Source:

http://news.yahoo.com/s/ap/20060813/ap_on_bi_ge/condo_slowdown

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I meant Citgo not Cisco. Ha, Ha. Imagine Cisco being owned by Venezuela! Hugo Chavez could turn off the internet, then what would we do? Can’t imagine a worst scenario.

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Yes, the US oil companies are charging much more now than just a few years back while their costs have remained the same. This applies to their domestic and international production. The Saudis and Venezuela are doing the same. Venezuela just bought 3 billion dollars of military equipment from Russia. Most of that money came from the US. Cisco is owned by Venezuela. Americans need to support the US oil industry so less oil is imported. The worst that can happen to a country is to have a goverment that is funded by oil and not by the economic progress of it’s citizens (e.g Iran, Libya, Iraq and now Venezuela).

This article details how the oil industry will ramp up:

http://www.washingtonpost.com/wp-dyn/content/article/2005/07/29/AR2005072901672.html

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12 largest oil fields in the US

Field, State Cumulative Production + Est. Reserves

1. Prudhoe Bay, Alaska 13+ billion barrels
2. East Texas 5.1-6.0 billion barrels
3. Wilmington, California 2.8 billion barrels [or up to 3.0]
4. Midway-Sunset, California 2.8 billion barrels [or up to 3.5]
5. Kuparuk River, Alaska 2.6 billion barrels
6. Thunder Horse, Gulf of Mexico 1.5-2.0 billion barrels
7. Kern River, California 1.95 billion barrels [or up to 2.5]
8. Yates, West Texas 1.95 billion barrels
9. Belridge South, California 1.9 billion barrels
10. Wasson, West Texas 1.8 billion barrels
11. Elk Hills, California 1.5 billion barrels [or 1.3]
12. Panhandle, Texas 1.4 billion barrels

24 largest oil fields in the World Field

Country, Size estimate

1. Ghawar, Saudi Arabia
Saudi fields overall are in decline at 2% to 8% a year. Source 75-83 billion barrels
2. Burgan, Kuwait • in decline 66-72 billion barrels
2a. Cantarell, Mexico • in decline 35 billion barrels OOIP
18 billion recoverable (often listed as a large complex
of multiple smaller fields)

For oil industry info go to:

http://www.gravmag.com/oil.html

I work for a company that makes industrial equipment for big oil. BP and most other oil companies in the world are our customers. Currently we are producing equipment almost at maximum capacity, our suppliers and even our competition are also reaching capacity. The oil industry is ramping up big time and in a few years supply should catch up with demand. When this happens oil prices will come down in price but we are still a few years away.

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Even if they pause, the long end of the curve will keep rising. Lately it has been inverted or flat. My take is that the curve will return to it’s normal shape. Long term interest rates will keep rising.

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I wouldn’t be surprised if the decline in home prices leads to people leaving San Diego. Home prices, taxes, gas prices and other services are more expensive in SD but could be justified by the appreciation of real estate. It was like “getting paid to live here”. If you remove that incentive, many middle class people may not find the “great weather” enough of a reason to stay.

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This news is also in the NBC 739 website. It may make the TV news. I have the brochure from 2005 and it says below each floorplan:

“Actual floorplans, illustrations, square footage are aproximate and dimensions may vary.”

Also below each floor plan it says: “Approx. XXX Square Feet”

The question is, how approximate can a developer be? Off by 1-2 feet? 10-20? 25-50?

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