My anecdotal two-cents on medium density housing

My friend Chris lives in Philadelphia in one of the medium-density neighborhoods Atrios refers to. He is happily carless, walks to work and takes the train when visiting friends in other cities. When I went to visit him, we ate at a Cuban restaurant just across the street and then went sightseeing on foot the next day. He likes Philly because it's small enough to be manageable and not too alienating but large enough to have interesting restaurants and businesses. And rent is not nearly as hellish as some of the bigger cities.

Any other smaller cities in the US where this kind of lifestyle is possible?

"There was no housing bubble"

...So claims Alex Tabarrok.

His claim seems to based on two points:

(1) House prices have not dropped down to anywhere near the historical average.

(2) Alex does not think the house price will drop down to anywhere near the historical average.

I agree with the first, and the second is kinda hard to refute since it's just what he thinks. I think he's a mighty brave man for making such a bold prediction in the age of the internets and searchable archives.

Is there an easy way for me to remind myself to review his predictions in 2010?

The Tattooed Mortgage Broker

I wonder if this Marketplace radio story is more of a sign that tattoos are gaining respectability or that the profession of Mortgage lending is losing it. Snippet of the transcript below.

Kai Ryssdal: Every summer about this time the same thought strikes me. After a couple of months of short sleeves and tank tops you get a good idea of just how many people these days have tattoos. Clearly, body art's becoming more acceptable. Everywhere from college campuses to the boardroom, as Pat Loeb found out. .

James O'Connor: I got a skull and cross bones on my right side. I have praying hands on my left side, and then a cross in the middle.

James O'Connor is giving me a tour of the tattoos that adorn, it looks like, every part of his body — neck, legs, knuckles and full sleeves on his arms.

O'Connor: He calls this stretch skin, cheese skin, where it's supposed to look like you're almost looking inside, you know?

But the most astonishing moment comes when he tells me what he does for a living.

O'Connor: I'm a mortgage broker.

If ever there was evidence of the changing attitude toward tattoos in the workplace, it is 30-year-old James O'Connor. There was a time when his tattoos would have narrowed his job prospects. But he says his success as a mortgage broker is a sign that tattoos do not carry the stigma they once did.

O'Connor: They might look at me weird for a minute. But as soon as, you know, I explain to them what I know and what I've done, they see dollar signs.

A look back: Credit Crunch Cassandra edition

My very first post on blogspot. Seems apropos given the recent news. Awww, memories.

Thursday, April 07, 2005

Bubble, bubble...[housing trouble]

I've been hanging out a lot at the Angry Bear and other econ blogs lately, and I'm starting to get the feeling, my friends, that we're in for a world of hurt. There's been talk for months and months that the housing market is unsustainable. But now the gloomy sentiment is becoming mainstream. I heard not one, but two stories on NPR yesterday about impeding trouble in the housing sector. Prices in 'hot' markets on the coasts have gone completely insane. The housing boom was initially fueled by rock-bottom interest rates, but now speculation is rearing its ugly head, with 85% of condo sales in Miami going to investors. Meanwhile, even ordinary people are throwing caution to the wind and buying the most house they could, even if it means stretching themselves to the limit financially. They've seen their friends and family refinance their way to the good life, and now they want to get in on the action themselves, just as those who are in the know are starting to worriedly mouth the dreaded word -- 'bubble'.

With so many potential customers clamoring for home loans, the financial industry have come up with many new 'creative' products so that marginal clients who would have been turned away in staider times can grab their piece of the American dream. 35-year morgages. Interest-only payments for three or even five years. Despite historically low interest rates, people are eschewing fixed-rate morgages for adjustable-rate morgages because, in the short term, the payments are lower. You don't have to be Alan Greenspan to foresee that many of those American dreams are going to end in the nightmare of foreclosure and bankruptcy. The banks don't care because as soon as they make the loan they turn around and flip them to Fannie Mae and Freddie Mac -- government sponsored enterprises that buys the loans, no questions asked. Government sponsored -- meaning that if their overstuffed portfolios of questionable quality causes those quasi-corporate behemouths to go down, they're probably going to get bailed out with tax-payer's dollars.

What I did not foresee: that the fallout from the US sub-prime crisis is going to have such a direct domino effect worldwide. Investor's teeth are on edge in this part of the world after the events of the past few weeks, when the markets have first flushed from foreign investment and then quickly blanched as the subprime crisis rocked the US markets. It might actually be a good time to buy local stocks now.