[Escoguy]

I lived in 5 former USSR republics for 15 years plus 5 years in the former GDR.

First trip to Moscow was in ’86 as a student.

I married a lady from the region, a child of mine was born there and have investments there. A genius surgeon operated on one of my children and did things that US doctors were unable or unwilling to do.

Needless to say, there is much positive about Russia which gets overlooked.

If you go through life easliy believing only the good or the bad about any particular place or culture, you put on blinders and that can severely limit your ability to see opportunity or put things in perspective.

The Russian economy is very dependent on oil, but there are many very intelligent people over there. A fair number are content with the “fair to very good” opportunities they have. Yes many would like to immigrate but that can also be very disruptive if not done at the right time in life.

Alcohol and drug abuse are major problems, but one can live a normal life over there without that getting in the way.

State control of the media is pervasive, but free information is available online for those who want more sources.

Many Russians of mid-upper economic status travel abroad and are quite aware of their relative status in the world.

The period from 2003-2007 was good one, the past few years have been rough but not nearly as much as the 1990s when many basic items were in short supply or the final days of Communism when there were regular lines for food. (which I personally saw in Moscow in 1986).

For a person who wanted to learn the language and deal with some hardship, places like Chekassy, Bishkek, Chisinau, Odintsovo, Kazan, Baku and Moscow were a great way to gather a wide range of experiences and earn enough to come back to the US and have a good degree of economic freedom.

Of course, the Russian intervention in Ukraine and Syria are not helpful and many innocents have died, but no side in any of these messes is perfect. The US should more carefully consider potential outcomes when arming even “moderate” groups.

Russia will likely muddle along if not seriously provoked. Albeit, their media can’t seem to let up on the anti US propaganda. This is one potential silver lining of a Trump presidency in that the Russian leadership may well realize that focusing more on their internal development is needed to fully modernize the economy, but that will still take decades in spite of the progress that has already been made.

Their current president will likely stay on as long as his health will allow which could be at least eight more years.

I could go on, while the war in Ukraine did cause some sleepless nights, and Aleppo was tough to watch. I’d like to think that Russia may lose some of it’s appetite for adventurism (or using force to protect it’s vital interest) depending on your perspective.

In some ways, the US-Russian relationship is like a dysfunctional family which somehow wants mutual respect but can’t agree on certain things. As long as the occasional tussle doesn’t become suicidal, we’re ok but we’ll always need to stay vigilant.

The West in general could have done more in the 1990s to lessen the hardship in the region but the political leadership wasn’t there. Perhaps going forward, we can learn to engage in a manner which fosters some degree of real trust.

It hasn’t been helpful that the current administration has been learning on the job the past eight years.

[Escoguy]

CA renter

I don’t know what your life experiences are and how many countries you’ve lived in/languages you speak or people you know.

What I can say after living in 8 countries over 20 years and knowing multiple foreign languages is that zero hedge is designed to look real to a person who has a critical eye towards the US but in actuality is little more than sophisticated propaganda. I could take any articles’s “facts” and depending on the direction I want the reader to go, portray the US or Russia as evil/the victim/succeeding etc.

Once you realize that “fake news” is often about how “facts” are used to support a biased view, then you can look at everything more critically and have a happier life as you won’t need to take such sites so seriously. I was a regular reader for years but finally realized that my desire to get an alternative perspective wasn’t worth the negative effects such articles had on my thinking so I just cut it off and get other sources. A good one to consider is Calculated risk as they did a good job of calling the housing bubble but are grounding in facts.

For a while I read the housingbubble.com but they had a hard time realizing there would be a real recovery. If you join the permanent doom camp, it’s like putting on blinders and you won’t be ready when there is a recovery.

ZH is someone like that in the economic/political sphere.

[Escoguy]

Rich

There is considerable reason to believe that Zero Hedge is an agitprop site.

A handful of “facts” presented in a way to show the problems with the US: high levels of debt, potential for a weakening currency.

With topics such as Ukraine, Zero Hedge is clearly in the Russia camp.

How Do You Know That Zero Hedge is a Russian Information Operation? Here’s How

Best thing you can do is just not read it to lower their traffic/clicks/ad revenue.

This kind of website epitomizes why discerning what is fake news is difficult but in essence the theme of the site it to take “facts” and push an agenda in a particular manner rather than showing any balance. Somewhat comparable with “Fox News” saying “Fair and Balanced”, when 70-80% of the coverage is center right and the center left coverage is done in a halfhearted/weak way.

[Escoguy]

What bonuses were you thinking of in particular?

My plan is below:

I was considering paying 14K in property taxes which would cost $280 then invest the funds in DSL DoubleLine Income Solutions Fund which is a closed end fund which yields about 9%.

I have 18 months of interest free period so in that time would earn $2050.

I’ve owned this fund for a while and it’s pretty solid.

The credit card would pay back the 2% of the 2.17% so the net cost of the funds would be $24 or 0.17% so net earnings (in taxable cash) would be $2025.

I would use the citibank double cash. I opened a new account to get a fresh 18 month interest free period.

[Escoguy]

http://www.businessinsider.com/history-of-federal-reserve-tightening-2013-1/#ly-1999-july-2000-28

Look at the cycle from 2004-2006

Beginning Fed funds rate: 1.00 percent

Peak Fed funds rate: 5.25 percent

Change in 10-year Treasury yield over entire tightening: 0.36 percentage points

We’ve already gone from 1.37 to 2.49 which is a bigger move in the ten year than most cycles.

An argument could be made that Bernanke was trying to show who was in charge (his own man vs Greenspan) and went too far. With the ARM loans of that era, this was one reason many mortgages reset and partly feed the negative feedback loop with foreclosures as those with ARMs couldn’t keep up.

More recently ARMS are used more for high end purchases: so if interest rates spike, foreclosure risks would be with a different market segment:

http://www.wsj.com/articles/SB10001424052702303546204579439171591130740

[Escoguy]

more like 0.8% growth last year,

http://www.cw6sandiego.com/san-diego-was-number-2-in-population-growth-for-california-in-2015/

30K population growth has been very typical the past few years.

The region, with a current population of about 3.3 million residents, grew by an estimated 28,000 people — or 0.9 percent — between July 2014 and July 2015, according to estimates released in December by the state’s Department of Finance.

I think the 3K net migration is poorly written as the net growth is much higher.[img_assist|nid=26113|title=population|desc=|link=node|align=left|width=100|height=83]

[Escoguy]

bg

I’m simply pointing out reality. This market has tailwinds which we haven’t seen before. There are some negatives, but before anyone makes a decision to cash out of the market and hope for prices to collapse, they need to be aware of the overall environment.

Respectfully, perhaps the title bearishgurl is outdated. There was a time to be a bear but that time is not now. If you wish to ignore facts and want to imply that being bearish is a rational position, that’s up to you.

For many readers, the flood of Chinese capital into the US may not be immediately obvious, so I’m pointing it out as a reason to be careful when transacting. Please have a plan if you sell, as the market may not offer meaningful bargains in the future. The key idea is that with this level of capital coming in, any downturn would be short lived and nothing near the scale of the last downturn.

Do keep in mind that many immigrants marry locally and get correct papers either via family or with green cards, H1B visas. There are numerous investor programs which Trump also profited from to bring in Chinese investors, so don’t be naive and think this will slow down any time soon.

I really feel like this is a shoot the messenger situation and I don’t understand why you’re reacting to a normal discussion about the real estate market. Today it is the Chinese, tomorrow India or one of 20 other countries with populations over 50 million. The simple point is that of the 7 billion people in the world, many want to live here and will find a way to come, when they do, they will buy property and prices will continue to rise.

I’d suggest you drive for Uber a few weeks and meet some of these people coming here from all over the world, it may broaden your perspective of the positive impacts when you see the quality of the people.

[Escoguy]

bg

the source of the data is:

UC San Diego’s Office of Student Research and Information is part of the university’s Academic Affairs division, and the official source for all undergraduate student admission, enrollment, and graduation statistics.

http://studentresearch.ucsd.edu

[Escoguy]

bg,

I’m not trying to say the number is good or bad. The discussion I was prompting was the impact on local real estate.

As far as who got it and why, that’s a whole other universe of discussion.

The link was from UCSD and it showed the number of non resident students.

Your claim that it was 16,000 is off by a factor of 4. It is about 4500 including foreign and out of state.

Yes college is expensive and housing is a key part of the cost, thus the inflated demand for RE as the student population grows and more affluent students are coming in. I do disagree with the idea that students should be admitted based on ability to pay. The spots should go primarily to California residents based on academic achievement.

Looking more broadly, the number of students here is but a drop in the ocean in the sea of affluent people who may decide to buy here or elsewhere in the US in the coming years. I expect this wave of investment to continue for years and possibly decades. This may not be a comfortable proposition but it is today’s reality and even D Trump will not be able to significantly turn the tide in spite of all the fear. In fact, once it becomes clear than even he can’t slow immigration, the speed will likely pickup again (hopefully mostly of legal immigration).

So you know what I do agree with: college should be affordable, locals and out of state students should pay their fair share, administrators and overheads should be kept to a minimum. Student debt loads should be capped to avoid overspending and students should be given financial counseling before taking on debt.

I could go on but the discussion is about real estate.

Cheers,

[Escoguy]

bg,

before you make a statement that someone is wrong, please do some basic research as hard data is not difficult to get:

http://studentresearch.ucsd.edu/_files/stats-data/enroll/ughome.pdf

18% are international and 5% are out of state

Please take this the right way but 23% isn’t so unreasonable given it was just 8% 10 years ago.

Don’t get me wrong, I’m not really for or against foreign students. I’m just pointing out today’s reality and the impact on real estate. I have met a few of them and they enjoy being here and plan to stay if possible.

If they do stay, then the likelihood of a significant price drop is lower.

[Escoguy]

2015 data point: 22 Trillion:

http://nationalinterest.org/blog/the-buzz/45-trillion-reasons-why-china-cant-challenge-america’s-14087

But need to acknowledge that even with the short comings, there is still a lot of money that can come here and will, even if it comes in unevenly.

A few billion here, a few billion there.

I remember going to Hong Kong in 1994 when they were saying Americans were coming late to the party, yes there was a downturn after that but the boom a few years later made it looks like a great time to invest.

If you have a long enough time horizon, even a pull back doesn’t need to hurt.

[Escoguy]

Few thoughts:

The level of pensions assumed they would stay in California, pay taxes in California and spend the money in California.

It may be necessary to impose certain requirements retroactively that pensioners verify that all of these things are done, otherwise reductions may be in order.

To the point, if they money stays in the system creating employment and is taxed, the impact doesn’t have to be as dramatic.

Where things go wrong and very badly, is when the money goes elsewhere, and taxes are not paid. But am I naive to assume that retired state workers all pay their taxes correctly to the penny.

[Escoguy]

Maoing

where are you listing the home? i.e. which website.

Is this your house?
http://www.zillow.com/homes/for_rent/San-Diego-CA-92127/house,mobile_type/54908397_zpid/96668_rid/4-_beds/0-1138803_price/0-4000_mp/2900-_size/33.114118,-117.016582,32.930462,-117.236309_rect/11_zm/

This is the only house of 3,000 sf below 4K. Seems nice enough.

If it’s at the right price, you will get a lot of interest. My rentals are in the $2900 to $3400 range. Most recently rented on in four hours with a good increase.

Two came on the market in the summer and I had over a dozen families come by within days.

Given, the is a difference between paying $3250 or $4000.
I would on balance prefer to have it $100/$200 below market and rented than to wait several months. Been doing this almost 20 years and I’ve never had a vacant month. Landlords don’t lead the market, we follow it.

Many tenants will have some credit issues, you need to decide how picky you want to be but there is a difference between the occasional disputed bill or an eviction.

Bigger picture, you need to ask yourself, do you want to be a landlord.
If the house has high property taxes and was not purchased at a discount via foreclosure or short sale, it may not be ideal as a rental.

A landlord needs an edge in the San Diego market. Passive income is best earned with properties bought at a discount.

[Escoguy]

Tariffs could be calculated based on differential fringe benefits.
I.e. if a plant in china has 5% direct labor costs but 2% fringe as there is less insurance, social security/medicaid, days off etc, but a US factory has the same direct labor cost and another 5% for fringe as a percentage of the final product price, a tariff could be imposed that offsets that difference.

It would remove the incentive for Chinese employers to screw their employees by making the total compensation comparable even if the absolute level is lower.

I.e. you impose your social policies on your trading partners. not sure if WTO rules allow that.

But if so, it would put pressure on Chinese employers to raise benefits.

[Escoguy]

The home is really too nice for the area.

The geography is fine, but there are many homes not updated or renovated in the surrounding streets which make one like this stand out.

So you end up having the nicest house where 90% of the homes are still 70s style.

Now if everyone on the surrounding 3-4 cul-de-sacs also did exterior stucco remodel to give the neighborhood a more standard look, it may actually be worth 850K, but for now I’d guess 780K just because it is close to Sorrento Valley.

I’m just not seeing that that neighborhood will appeal to the executive types who can afford 850K. Perhaps two mid level managers with combined income of 200K but even then it’s a big compromise and getting to Mira Mesa schools is a mess with the road layout even if it’s a few miles away.

Try driving on Flanders on a weekday morning. Not fun.

[Author]

Posts