Wednesday, December 22, 2010
I'm Dreaming of a DRY Christmas!
Day 7 of the deluge... and according to KTLA, my morning news source, today is supposed to bring the largest amount of precipitation yet! While I'm certainly glad to be getting all the rain, this is Southern California, after all, and we're not used to this sogginess! Supposedly, the rain is going to let up this afternoon and we'll have relatively clear skies through Christmas Day, but then another storm is coming through. And though I am kinda bummed that opening day at Santa Anita might get rained on, I do know how to take a cue from nature....To Tahoe for New Years!
Sunday, December 19, 2010
The Christmas Tree - 2010
Alright, let's get festive! Though Christmas is still a few days away, I thought I'd deck the blog with a shot of our Christmas Tree. This is how we do over in Glendale!
La Nina, really???
If you pay attention to weather news, you know that meteorologists are considering this a La Nina year. Let's see....LA's gotten about 5" of rain in the past 3 days, and looking to get about 5" more in the next 3 days. Unless there isn't a single day of rain from Christmas until June, I'm going to have to laugh at the La Nina 'theory.'
I'm hoping I can find some time to take a few photos when it clears....all this rain is going to make it gorgeous out in a few days!
I'm hoping I can find some time to take a few photos when it clears....all this rain is going to make it gorgeous out in a few days!
Friday, December 17, 2010
Is it really a good time to buy a home?
First off, let's throw out my dissension to the idea that the home you own is an investment. BUT -yes, it's an asset, and yes, it fluctuates in value, so we'll roll with the flow...
Okay, so you are your average American homeowner- check that- Southern California homeowner. You have your primary residence, your castle, your plot on the block, most likely. But do you have acreage? Do you have tenants? Exactly what dividend is this investment paying you? We've learned equity appreciation is no guarantee, and that leveraging that equity while rolling the dice that it will only grow can cause serious pain in a correction.
But prices have fallen, and interest rates have been at an all-time low...shouldn't I get in NOW!?!
Genius marketing. You go, MBA and NAR! As soon as the media waves permeate enough, news about exactly what the definition of a 'Bond Bubble' is, and how it is created will surface, and that marketing campaign is going to come to a screeching halt.
See, the bond market is not too unlike the housing market. There is an asset that is backed by something of tangible value that can be sold to anyone, and there will inherently be an inverse correlation between price, and interest rate with respect to time horizon. And let me tell you, with the tear that the stock market is on, would you take a 4.5% return for 30 years, if you were a deep-pocket investor? Especially, if you were aware of the inverse relationship?
So what happens? Interest rates go up a bit, and the guy selling his house for $750K has a heart-to-heart with his prospective buyer, who tells him that he can't afford the house at the higher payment. They back into a price based on the payment the buyer was ready to make for the old price, but based on a lower interest rate. This means the house sells for $710K, and that's only if rates go from 4.5% to 5.0%.
Who can extract from that? To me, that says that if I'm the guy's neighbor with a similar $750K home, I can expect the value of my house to drop by about $40K per .5% increase in interest rates; assuming there are no foreclosures in the neighborhood creating an arbitrage 'race to the bottom,' and causing further price depression.
Then, the question is, what is your expectation for interest rates? Well, they were just at all-time lows, so I'm thinking that it's not really going out on a limb to assume that they're only going to go up over course of the next 5-10 years. So if I believe that the value of a home is going to go down in the short to mid term, what's the rush to buy?
Wouldn't the best time to buy be when rates were as high as possible, therefore depressing asset (read- housing) prices as low as they could? Because, if the name of the game is 'buy low, sell high,' and I can always refinance my mortgage when rates go down again at some later time in the future, then wouldn't the best time to buy be when the relative affordability was the best?
I'm an early 80's baby, meaning my parents bought their first home when the 30 year Long Bond rate was 14%. Today, the Long Bond yield is 4.41%. My parents bought that house for $90K, and though that house was rather small, it certainly was bigger and had more amenities than the apartment I'm in that I'm sure my landlords paid at least $200K for as a foreclosure. You may say that those purchases were 28 years apart, having an effect on the relative values. Thank you for the bait.
Real estate, as an investment, has less inherent risk than government bonds- not less risk of default, but less risk of a loss of principal. The intrinsic value of land is a beautiful thing. Replacement cost can be insured against, and therefore a return is almost guaranteed...ESPECIALLY if you are the owner and occupier of the investment. So what would a fair return on that investment be? The 30 year Long bond hasn't been much over 5% since it was re-issued in 2006, and though we know that will change, there is more default risk and tangible risk of repayment in the US Treasury than ever before (another topic for another day). So, let's say 2.5% is a fair return for the safest investment around. That would mean that the $90K investment my parents financed 28 years ago would be worth $179,684 today- still less than what my landlords paid for the apartment I'm in. However, I have it on Zillow authority that the house is valued at $384K, today.
Following that thought further, that would mean that a $179K value at a 14% long bond yield vs. what we'll call a $384K value at 4.5% yield today, that would mean that the price of that house should go down by about $21K for every 1% increase to the bond yield.
Bottom line is that when rates go up, values are going down, so how exactly is right now the best time to buy a home? My argument is that the best time to buy the home you are going to live in is when you can afford the payment on the house you want, and make it happen. No need to listen to the hype, because it's all marketing for an industry in desperate need of business. Whether the price is high or low should be irrelevant, but perhaps the best time to buy is when interest rates are high, and refinance later on down the line in order to truly get the biggest bang for your housing buck.
Okay, so you are your average American homeowner- check that- Southern California homeowner. You have your primary residence, your castle, your plot on the block, most likely. But do you have acreage? Do you have tenants? Exactly what dividend is this investment paying you? We've learned equity appreciation is no guarantee, and that leveraging that equity while rolling the dice that it will only grow can cause serious pain in a correction.
But prices have fallen, and interest rates have been at an all-time low...shouldn't I get in NOW!?!
Genius marketing. You go, MBA and NAR! As soon as the media waves permeate enough, news about exactly what the definition of a 'Bond Bubble' is, and how it is created will surface, and that marketing campaign is going to come to a screeching halt.
See, the bond market is not too unlike the housing market. There is an asset that is backed by something of tangible value that can be sold to anyone, and there will inherently be an inverse correlation between price, and interest rate with respect to time horizon. And let me tell you, with the tear that the stock market is on, would you take a 4.5% return for 30 years, if you were a deep-pocket investor? Especially, if you were aware of the inverse relationship?
So what happens? Interest rates go up a bit, and the guy selling his house for $750K has a heart-to-heart with his prospective buyer, who tells him that he can't afford the house at the higher payment. They back into a price based on the payment the buyer was ready to make for the old price, but based on a lower interest rate. This means the house sells for $710K, and that's only if rates go from 4.5% to 5.0%.
Who can extract from that? To me, that says that if I'm the guy's neighbor with a similar $750K home, I can expect the value of my house to drop by about $40K per .5% increase in interest rates; assuming there are no foreclosures in the neighborhood creating an arbitrage 'race to the bottom,' and causing further price depression.
Then, the question is, what is your expectation for interest rates? Well, they were just at all-time lows, so I'm thinking that it's not really going out on a limb to assume that they're only going to go up over course of the next 5-10 years. So if I believe that the value of a home is going to go down in the short to mid term, what's the rush to buy?
Wouldn't the best time to buy be when rates were as high as possible, therefore depressing asset (read- housing) prices as low as they could? Because, if the name of the game is 'buy low, sell high,' and I can always refinance my mortgage when rates go down again at some later time in the future, then wouldn't the best time to buy be when the relative affordability was the best?
I'm an early 80's baby, meaning my parents bought their first home when the 30 year Long Bond rate was 14%. Today, the Long Bond yield is 4.41%. My parents bought that house for $90K, and though that house was rather small, it certainly was bigger and had more amenities than the apartment I'm in that I'm sure my landlords paid at least $200K for as a foreclosure. You may say that those purchases were 28 years apart, having an effect on the relative values. Thank you for the bait.
Real estate, as an investment, has less inherent risk than government bonds- not less risk of default, but less risk of a loss of principal. The intrinsic value of land is a beautiful thing. Replacement cost can be insured against, and therefore a return is almost guaranteed...ESPECIALLY if you are the owner and occupier of the investment. So what would a fair return on that investment be? The 30 year Long bond hasn't been much over 5% since it was re-issued in 2006, and though we know that will change, there is more default risk and tangible risk of repayment in the US Treasury than ever before (another topic for another day). So, let's say 2.5% is a fair return for the safest investment around. That would mean that the $90K investment my parents financed 28 years ago would be worth $179,684 today- still less than what my landlords paid for the apartment I'm in. However, I have it on Zillow authority that the house is valued at $384K, today.
Following that thought further, that would mean that a $179K value at a 14% long bond yield vs. what we'll call a $384K value at 4.5% yield today, that would mean that the price of that house should go down by about $21K for every 1% increase to the bond yield.
Bottom line is that when rates go up, values are going down, so how exactly is right now the best time to buy a home? My argument is that the best time to buy the home you are going to live in is when you can afford the payment on the house you want, and make it happen. No need to listen to the hype, because it's all marketing for an industry in desperate need of business. Whether the price is high or low should be irrelevant, but perhaps the best time to buy is when interest rates are high, and refinance later on down the line in order to truly get the biggest bang for your housing buck.
Tuesday, November 30, 2010
11 months of 2010 gone...What Happened!?!
Tomorrow is the first day of December, and that means 2010 is pretty much done. Already. And what has even happened this year, anyway? Well, the Lakers won a championship, the Dodgers' owners got a divorce, and USC got levied with heavy sanctions over what Reggie Bush did five years ago. So much has happened in the quick 11 months that have comprised 2010 so far, and yet it seems like only last week we were witnessing the new 'Stadium to the Sea' marathon route in action.
I, for one, got engaged, got a new job, and moved in 2010...what events did you find memorable in LA for 2010?
I, for one, got engaged, got a new job, and moved in 2010...what events did you find memorable in LA for 2010?
Friday, November 26, 2010
Droid Bloggin'!
Test, test, 1-2,1-2... Oh the possibilities now that I've got the android Blogger-droid app! Now I can annoy and vent with shorter and more frequent ramblings...prepare!
Published with Blogger-droid v1.6.5
Wednesday, November 17, 2010
Blogging on an iPad
My fiancé got an iPad for work, and of course I had to take it for a spin. While it's essentially an oversized iPod touch, it's pretty damn sweet! I'm definitely a fan of the tablet format; seems like the next most logical progression for a mass platform for personal electronics. It's difficult to criticize Apple while using their product, but the major flaw with the iPad (other than the fact that it can't multitask) is the age-old issue of the closed platform. As sweet as this iPad as, I'm looking forward to playing with the HP and Blackberry tablets that are due out soon, and will probably get one of those.
But I'm going to have to familiarize myself with all of the new technology quick...I've got a Droid X coming on Friday! That's right; you'll be hearing from me a lot more out there on the interwebs, so get used to my ramblings!
But I'm going to have to familiarize myself with all of the new technology quick...I've got a Droid X coming on Friday! That's right; you'll be hearing from me a lot more out there on the interwebs, so get used to my ramblings!
Friday, September 17, 2010
Westside, I'll Be Back
Dear West LA,
It's been great. Your weather is fantastically pleasant, and we've enjoyed each others' company as far back as I can remember. Your eclectic neighborhoods with innumerable activities and hot-spots have made every week different from the last. Over the course of the last six years we've developed a deep and lasting partnership that I promise will never fade. And just because I won't see you every day now, doesn't mean you aren't still number one in my heart.
But the time has come. Through no fault of your own traffic has become excessively cumbersome, and as long as I have a daily commute that takes me outside of your haven, our relationship won't be quite the same. Glendale has called my name, and being walking distance from my office has great appeal, especially for a temporary stop.
We will see each other often, and I promise to return home soon. My employer sees great potential in you just as I do, and I will take it upon myself to ensure that we are reunited with renewed excitement to our relationship. But for now I must say goodbye and we must admire each other from a few miles away. Thank you for all of the good times, and I look forward to many more ahead. We'll see each other soon!
-Chris
It's been great. Your weather is fantastically pleasant, and we've enjoyed each others' company as far back as I can remember. Your eclectic neighborhoods with innumerable activities and hot-spots have made every week different from the last. Over the course of the last six years we've developed a deep and lasting partnership that I promise will never fade. And just because I won't see you every day now, doesn't mean you aren't still number one in my heart.
But the time has come. Through no fault of your own traffic has become excessively cumbersome, and as long as I have a daily commute that takes me outside of your haven, our relationship won't be quite the same. Glendale has called my name, and being walking distance from my office has great appeal, especially for a temporary stop.
We will see each other often, and I promise to return home soon. My employer sees great potential in you just as I do, and I will take it upon myself to ensure that we are reunited with renewed excitement to our relationship. But for now I must say goodbye and we must admire each other from a few miles away. Thank you for all of the good times, and I look forward to many more ahead. We'll see each other soon!
-Chris
Tuesday, April 06, 2010
Paging the Lake Show...Where Are You!?!
"It's a problem of motivation, Bob. Initech ships a few more units- I don't see a dime..." - Peter Gibbons (played by Ron Livingston), Office Space
That's exactly the attitude eminating from inside the Staples Center's home locker rooms. For the Clips, it's that the end of the season is upon them and they can't wait to head out on their fishing trip with EJ, Kenny, and Charles. As for the Lakers, needing just 1 win out of their last 5 to lock up the #1 Western Conference seed, what's the motivation to step your game up when you can put that off until the Playoffs?
The Lakers still have a Hallway Series game to play on their schedule, which they might wake up for if they lose the next 4 games. But with 2 of the other upocoming 4 against Minnesota and Sacramento, it's a safe bet to say that the players are most likely rationalizing their lack of on-court focus with this forward-looking mentality. Granted, Phil would probably like them to use it as an opportunity to grease the wheels, but if it's a few slack games that they need to get out of their system, better now than in 3 weeks!
That's exactly the attitude eminating from inside the Staples Center's home locker rooms. For the Clips, it's that the end of the season is upon them and they can't wait to head out on their fishing trip with EJ, Kenny, and Charles. As for the Lakers, needing just 1 win out of their last 5 to lock up the #1 Western Conference seed, what's the motivation to step your game up when you can put that off until the Playoffs?
The Lakers still have a Hallway Series game to play on their schedule, which they might wake up for if they lose the next 4 games. But with 2 of the other upocoming 4 against Minnesota and Sacramento, it's a safe bet to say that the players are most likely rationalizing their lack of on-court focus with this forward-looking mentality. Granted, Phil would probably like them to use it as an opportunity to grease the wheels, but if it's a few slack games that they need to get out of their system, better now than in 3 weeks!
Raymond vs. Raymond - A Blip of Decent Musical Production from the Industry
I was reviewing my blogroll, and noticed that similar laments of the music industry were touched on last year. 2010 hasn't been any better of a year for music than 2009, at least not yet. However, Usher's latest release, Raymond vs. Raymond leaves me a little optimistic. To be fair, I was also a fan of Here I Stand, which left a lot of the fan base with a confused look on their faces. However, it seems like the collaborators of old have been brought to task in Usher's latest, and with new talent woven in, it's definitely a 2010 LP to go out and get. Kudos on the relase, Ush, R&B needed this! Now, Dre, hip-hop's hurtin', please whip out the pad and drop us the antibiotic we all need....DETOX!
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