September 27, 2004

WSJ: Coastal Homeowners Are Now Cashing Out has an article about coastal homeowners cashing out and using their profits to buy less expensive houses outright in less expensive markets.
Is it time to take profits on the real-estate boom? The huge rise in prices in thriving cities on or near the coasts has created an arbitrage opportunity for people who have the flexibility to move: Sell Manhattan, buy Montana. Over the past five years, raging real-estate markets in some coastal areas have more than doubled housing prices, while farther inland prices have risen more moderately. That has stretched the price gap between the middle of the country and the coasts far beyond the norm. The typical home price for the 10 American metropolitan areas with the highest housing prices has jumped to 230% of the national median from 155% five years ago, according to an analysis by for The Wall Street Journal.
The main justification for the current house prices that is given is the shortage of supply in hot housing markets. While I think that argument doesn't have much merrit on its face, it's worth pointing out that this is one way a supply shortage could reverse itself.
Posted by dapkus at 10:07 PM

September 10, 2004

Google's "Do no evil"

People make fun of Google's "do no evil" motto. But, in their case, its not just ethics but good business. Google lives and dies by the good will of its users and customers -- none of whom have, in a practical sense, very strong lock in to Google's technology. At the same time, much of the low hanging fruit for a search company like Google, involves doing kinda creepy things (like pay-for-placement, selling data mined from users, etc) . In order to last and avoid the fate of their predecessors, they have to walk a fine line -- "Do no evil" seems like an excellent guide.
Posted by dapkus at 02:05 PM | TrackBack

September 01, 2004

ok, now you know there's trouble

Thanks to a Web Alert over at Google, I've been reading just about every article printed on housing prices in the Bay Area. After you've read a dozen or so, you begin to see a pattern -- an economist will say the values in the market have departed from fundmentals; a realtor or someone from a realtor association will sat "no they haven't - there are more buyers than houses for sale". In other words, scarcity is all that matters. Well, now even the realtors ar forced to concede there is more than one force at work in setting house prices; and that a new one is about to start exerting itself:
"In San Francisco, the median home price is $648,000. That tells the story right there," said David Lereah, chief economist at the National Association of Realtors. "You need a very high median income to qualify for that mortgage. At some point, the cup has runneth over, and something has to give, and that may be prices."
The tide seems to be turning in the coverage of housing -- from "oh my gosh, those crazy house prices just keep on climbing" to "ok, we all know this isn't real".
Posted by dapkus at 01:56 PM | TrackBack