December 18, 2011

Placing Blame for the Housing Bubble Where it Belongs

imageIf you want to test someone’s political orientation, ask what caused the housing bubble and subsequent crash (yes, we know, there is no housing crash in the Real Bay Area).

Conservatives blame the federal government (although I repeat myself).  In this case it’s a confluence of the GSEs, Freddie Mac and Fannie Mae, and both Congress and the Executive for pushing homeownership on people who weren’t ready for the responsibility and couldn’t afford it anyway.  In particular, the guilty parties are Barney Frank and poor people.

imageLiberals blame Wall Street for blowing up the economy by securitizing mortgages and creating more and more leveraged and abstract financial instruments using them.  The products required a steady stream of mortgages, so brokers had every incentive to approve everything.  There was no risk to them because they weren’t keeping the loans.  Also, since Goldman Sachs ultimately shorted the entire market, they’re doubly responsible for talking it up to customers while doing their best to crater it.

A new Federal report points the finger elsewhere.  They blame a different kind of speculator.

Federal report: Home flipping drove housing bubble

Associated Press
Posted: 12/13/2011 06:33:47 AM PST, Updated: 12/13/2011 10:31:40 AM PST

LAS VEGAS — A new federal report shows that speculative real estate investors played a larger role than originally thought in driving the housing bubble that led to record foreclosures and sent economies plummeting in Nevada, California, Arizona, Florida and other states.

Researchers with the Federal Reserve Bank of New York found that investors who used low down payment, subprime credit to purchase multiple residential properties helped inflate home prices and are largely to blame for the recession. The researchers said their findings focused on an "undocumented" dimension of the housing market crisis that had been previously overlooked as officials focused on how to contain the financial crisis, not what caused it.

More than a third of all U.S. home mortgages granted in 2006 went to people who already owned at least one house, according to the report. In Arizona, California, Florida and Nevada, where average home prices more than doubled from 2000 to 2006, investors made up nearly half of all mortgage-backed purchases during the housing bubble. Buyers owning three or more properties represented the fastest-growing segment of homeowners during that time.

"This may have allowed the bubble to inflate further, which caused millions of owner-occupants to pay more if they wanted to buy a home for their family," the researchers noted.

imageThis report won’t satisfy either of the above groups, because it fails to place the blame where it belongs: on either Big Government, Big Business, or Big Poverty.  How could a bunch of onesie twosie speculators drive up home prices as much as they did?  That’s like blaming high coffee prices on just Seattle residents.

Please identify and complain about your favorite party to blame for the rest of the country’s housing market imploding while our home prices remain insanely delightfully high robust.

This is an Open Thread. 

Comments (31) -- Posted by: madhaus @ 5:07 am

December 11, 2011

NASA encouraging Commuter Airplanes: This means War!

imageDid you know that your tax dollars are subsidizing the possible destruction of the Real Bay Area as we know it?

NASA is offering a series of prizes to encourage Green Flight.  These “green” flying machines are called SAVs, or Suburban Air Vehicles, which would have either VTOL (vertical takeoff and landing) or ESTOL (extremely short yadda yadda) abilities.  “Pocket airports,” which need be no larger than 2 acres, could be placed anywhere as the planes would have electric motors. 

Electric motors would be much quieter than gas motors, so there wouldn’t be the noise factor that you get from a conventional airport.  Think flying EVs.  Being close to a pocket airport could be not a location fail but a location win.  Heavily trafficked areas could have SAV taxis rather than leaving the plane parked all day. 

imageWhile this X-Prize approach to solving traffic problems might sound all ecological and high minded (ha ha), this is a threat to our entire way of life!  Realize what this would mean to home prices in the RBA

NASA is encouraging aircraft designs that could have a range of up to one thousand miles per battery charge.  That means the RBA could expand as far away as Montana!  After all, why is the RBA so Special?  It’s close to the great jobs.  And what keeps commutes from further afield long and painful?  Gridlocked traffic!  That’s why people pay the prices they do for Burbed-worthy habitation!

imageNot only that, Google has just stabbed us all in the back by being a major backer of the prize money!  The first stage of awards, totaling $1.65 million, were made possible by Google’s involvement.

According to a study done using patterns in Sonoma County, removing just 3500 vehicles a day from the Golden Gate Bridge and San Rafael Bridges would alleviate gridlock (see page 27, Sonoma-Marin County Commute Model, also the traffic study itself).  That means commutes would be less painful for the automobile drivers as well as those on these SAVs (which everyone knows stands for Suburban Assault Vehicle).

imageNot only that, imagine these damned miniplanes hogging the ChargeStation and leaving your Leaf or Volt stranded!  I tell you, Real Bay Areans, contact your Congresscritter and demand that NASA stop investing in technology that will allow just anyone to get to work at Google yet also own a house on ten acres for half the price you paid for a mansion in Cupertino

Remember, high property values means nobody else gets in after you!  This is an Open Thread.

Comments (6) -- Posted by: madhaus @ 5:04 am

December 10, 2011

Cannonball! Not in the pool, through your house!

Here’s another problem to worry about while you’re househunting.  You already knew about busy streets, railroad tracks, airports, and high-voltage power lines.  Did you also check to make sure that Discovery Channel’s Mythbusters production crew isn’t firing cannonballs on a nearby artillery range? 

Thanks very much to Burbed reader Real Alex for alerting us to this unique location fail.

Mythbusters Accidentally Shoot House

The cannonball that caused the damage came from the popular show "Mythbusters."

By Mathew Luschek, |  Wednesday, Dec 7, 2011  |  Updated 9:11 AM PST

A projectile from an Alameda County firing range in Dublin  accidentally missed its intended target, said JD Nelson, the public information officer for the Alameda County Sheriff’s Office. Instead, the object blasted through the wall of a home near Tassajara Road and Somerset Lane.

The projectile reportedly entered the home through one wall and exited through another. It also damaged a vehicle in the neighborhood.

According to the Alameda Sheriff, the cannonball "took a few unfortunate bounces" during a "Mythbusters" experiment gone awry.


The softball-sized cannonball was fired off at the Alameda County Sheriff’s office bomb disposal range in Dublin, on a US Army Combat range next to Santa Rita Jail.  The ball should have hit a row of barrels full of water, which would have reduced its momentum. 

Instead, the cannon misfired, the 30 pound shot missed the barrels and bounced off the hillside surrounding the firing range.  This launched it toward homes in the Tassajara Creek neighborhood 700 yards away.


The blasted ball traveled right through this Cassata Place house (shown by the blue pin on the map above), smashing through the front door, internal walls, and out the back.  Note that despite the front door entry, the peripatetic plus-sized pellet propelled itself UP THE STAIRS and departed from the second floor. 




Residents of the house slept through the whole thing, woken by the settling plaster dust.

From there the pitiless projectile propagated across six-lane Tassajara Road, repeatedly bounced off Ming Jiang’s tiled roof on Bellevue Circle (shown by the red pin in the map above), then went through the window of Jasbir Gill’s minivan on Springvale Drive (green pin), smashed the dashboard and came to rest inside.  Gill had been in the Toyota Sienna with his 13 year old son just ten minutes before the incident.  The County Sheriff’s office took both minivan and cannonball as evidence.


Homes in this neighborhood are valued from $550K to $680K and are about ten years old.  ZEstimates suggest that they are currently worth what they were selling for when they were built in 2000 and 2001, with peak ZEstimates at an even million back in December, 2005.  This Streetview picture of Gill’s Springvale Drive home also caught the doomed Toyota Sienna, long before its cannonball contact.


imageAs of this writing, nobody from Mythbusters would return calls to media.   Host Adam Savage hung up on a San Francisco Chronicle reporter.

Meanwhile, a tweet sent on Tuesday by Mythbusters co-host Grant Imahara (photo at right), mentioning the planned cannon experiments, was scrubbed along with the photo it had linked to.

Mythbusters has been using the firing range/bomb disposal area for the past eight years without incident.  While the show is San Francisco-based, their artillery experiments are not.  Just one more reason to stick to the Real Bay Area when looking for a house!


imageUpdate: Looks like the Mythbusters stars, hosts Adam Savage and Jamie Hyneman, visited the neighborhood in person and promised to make repairs to all affected properties.  They also promised not to fire any more cannonballs at the firing range, saying they would use a range in the Gold Country for their “can a cannonball breach a castle wall” experiments.  The Dublin range is shut while the County Sheriff’s office reviews the incident.

Given that these are Bay Area castles, the answer to whether a cannonball can breach a castle wall is obviously yes.  Myth confirmed!

Comments (7) -- Posted by: madhaus @ 5:05 am

November 12, 2011

Special Weekend Open Thread Extra: Nearly NARmal

imageHere’s a great place for an Open Thread: right on top of a Can You Top This letter from the President of NAR (the National Association of Realtards). 

This is Ron Phipps’ letter to The Wall Street Journal in its entirety, because you won’t want to miss one single stupefying word of it.

Thanks very much to Burbed reader PKamp3 for mentioning this exchange in comments.

The Wall Street Journal would have people believe that hard-working, middle-class families are not affected by lower conforming loan limits, when nothing could be further from the truth ("More McMansion Subsidies," Review & Outlook, Nov. 1). The representatives in Congress who support higher loan limits understand that this is not a partisan issue, as you are trying to make it out to be.

The majority of markets impacted by the loan-limit decline are not high-cost areas. For example, more than 100 counties throughout the Midwest and more than 200 counties in the South have seen loan limits decline by more than $64,000.

And despite how your editorial tries to position the issue, the loan limits are not the same as reforming Fannie Mae and Freddie Mac. Allowing the mortgage loan limits to expire in October was an arbitrary decision. Creating more market disruptions before reforming mortgage markets will only hurt our recovery.

The Senate measure to reinstate the limits is temporary—restoring the higher limits while the housing and mortgage markets stabilize. Recently, economist Mark Zandi said policy makers could shore up the housing market by "extending the current higher conforming loan limits that are set to decline in a few weeks." Borrowers, not taxpayers, will bear the entire cost of the higher loan-limits provision.

As people across the country are trying to gain a foothold in these trying times, we need to give them the resources to do so. The National Association of Realtors applauds the members of Congress who are standing up for America’s families rather than turning their backs on them.

Ron Phipps

National Assn. of Realtors

Of course this is 100% Grade AAA horseapples and every one of us should feel stupider for having wasted three minutes in reading it.  In fact, this is such toxic waste even the WSJ editorial page couldn’t leave it without a response as an unsigned opinion piece.  (It’s behind the paywall, but the best way to find it for free, should this link not work, is to search for its title with teh Google.)

The Realtor Subsidy

Crony capitalism on parade.

To understand why 90% of U.S. mortgages are still underwritten by taxpayers, look no further than the nearby letter from Ron Phipps of the Realtors lobby. He makes clear that the Realtors, like the rest of the housing-subsidy crowd, are working hard to get Congress to reinstate a $729,750 loan-limit for Fannie Mae and Freddie Mac guarantees.

Notice how Mr. Phipps doesn’t mention that dollar figure, perhaps because it makes a howler of his claim that the loan-limit reduction in October to $625,500 is somehow a blow to the "middle class." As House Financial Services Chairman Spencer Bachus and several colleagues note in a November 7 letter to GOP appropriations conferees, "the lower loan limits only affect a very small slice of wealthier homeowners in high cost areas." Only 1.3% of all loans done by Fannie, Freddie and the Federal Housing Administration would be affected by the change.

imageAnd it goes on from there.  I’m sure you could write your own takedown of Phipps’ inane, self-serving, logic-free effluvia, and in fact I bet you could have a lot of fun with it.  I am chucking a bit noting the Wall Street Journal use the terms “crony capitalism” and “lobby” as if they’re bad things.  Should we look forward to them setting up a tent (mink-lined, probably) in Zucotti Park?

Here’s a few more things the WSJ neglected to mention but I’ll bring up.

  • The “non-high-cost areas” affected purportedly include more than 100 flyover counties in the Midwest and 200 in the South.  Phipps neglected to tell you how many total counties are worth flying over, but I suspect it’s more than 300.
  • A free clue: Georgia has 159 counties.
  • Borrowers will bear the entire cost?  Oh, now borrowers fund their own tax deductions?  Then why is the deficit so high?  Do corporations fund their own R&D credits too?
  • And remember, this is your Weekend Open Thread!
Comments (9) -- Posted by: madhaus @ 5:21 pm

October 29, 2011

Chinese Property Bubble? Here’s how they’re making more land!

It’s Halloween Weekend, so we’ve got a couple of creepy pieces for you both days.  Today, another dispatch from Beijing, courtesy of The New York Times.

Harassment and Evictions Bedevil Even China’s Well-Off

Published: October 27, 2011

Photo, right: Yan Lianke outside his house, to be demolished.  (Shiho Fukada for NYT)

BEIJING — It is a familiar tale of modern China with a sadly predictable denouement. A group of people wake up to find demolition notices affixed to their homes. After they reject the government’s compensation as too meager, a dark campaign of harassment ensues. The bulldozers arrive in the dead of night. Score another win for the boundless authority of the state.

But the struggle unfolding at Huaxiang World Famous Garden, a gated, suburban-style community on the exurban fringe of the capital, is not like a majority of redevelopment battles that each year lead to the forced eviction and dispossession of countless families.

image(Photo, left: A banner vows to sacrifice “our blood and lives” to save homes.  Shiho Fukada for NYT.)

The residents involved are by and large middle class and privileged — doctors, financiers, retired government bureaucrats — who thought they were immune to such capriciousness. Among their ranks is one of China’s most successful fiction writers, Yan Lianke, whose satirical novels about famine, AIDS and the cruelties of the Cultural Revolution plumb the suffering of ordinary Chinese.

Just as notable is that their subdivision is new, the oldest house no more than five years old. At least three of the homes were completed this year. The local district government, however, says the residences and their pampered gardens must give way to a road-widening project that was announced in July. Everyone was given just three weeks to leave.

This is what happens when the rule of law is a complete fiction.  Moneyed interests, working hand in glove with a powerful government, and even supposedly rich people end up losing their homes… to even richer people who want that well-situated land.

imageAren’t you glad we live in the United States?Instead of obnoxious sound trucks, nasty text messages, mysterious thugs and early morning bulldozers, we just have the banks forge some title documents and claim they own your house because some ginormous spreadsheet somewhere says they do.  And didn’t we have Alan Greenspan propose burning houses down as the low-cost strategy?

This is why the word “Occupy” combined with any geographic place name is now banned as a search term in China.

And if you think this is scary, just wait until you read tomorrow’s article. Meanwhile, this is an Open Thread.  What Open Houses are you visiting and what Tricks will you play there?

Comments (17) -- Posted by: madhaus @ 5:07 am

October 23, 2011

Prop 13: Insidious Budget Cancer or Fiscal Terrorist Threat?

Well, that certainly got your attention.  I’d like to direct you to an excellent, dare I say seminal piece of reporting on the elephant in the California real estate room: Proposition 13.  I’ll quote a few grafs here, but I really would like you to read the entire piece.

California Diminished by 1978 Tax Revolt Shows U.S. in Decline

By Christopher Palmeri, Bloomberg/Businessweek
October 17, 2011, 12:23 AM EDT

Oct. 17 (Bloomberg) — California voters approved Proposition 13 to rein in property taxes that had doubled in 10 years. More than three decades later, that rebellion has mortgaged the state’s future, saddling it with the nation’s highest debt and lowest credit rating.

The measure led to reductions that dropped per-student school spending from seventh to 29th nationally, prompted cities to pursue sprawling retail development to compensate for lost revenue, and pushed the state into budget gridlock, including a $705 million revenue shortfall announced Oct. 10, by requiring two-thirds approval for any tax increase.

“Proposition 13 set up an unfair and dysfunctional two- tiered system of property taxes,” said Kevin Starr, a history professor at the University of Southern California and the author of a series of books on the state. “It choked off a source of revenue, and the lack of that revenue has brought California to the edge.”

The measure, approved in 1978, was the inspiration for an antitax movement that has taken hold of the public discourse in Washington and in state legislatures throughout the country. It caps real estate levies at 1 percent of a property’s most-recent sale price. Before it passed, local governments could raise revenue as they saw fit.

imageHere’s a few more colorful quotes from this story:

  • “You couldn’t invent a crazier system,” [Santa Clara County Assessor Larry] Stone said in a telephone interview.
  • “It’s had a profound impact on multiple levels,” said Jean Ross, executive director of the California Budget Project, a nonpartisan research group in Sacramento. “The one that’s underestimated is the shift in decision-making from the local level to the state. All of our public systems have been affected by our seemingly perpetual budget crises.”
  • “Prop. 13 has had the unintended effect of favoring commercial property owners at the expense of homeowners,” [Los Angeles Mayor Antonio] Villaraigosa said Aug. 16 at the Sacramento Press Club. “Let’s apply Prop. 13’s protections to homeowners and homeowners alone.”
  • “This is a nightmare,” said Mohammad Islam, San Bernardino’s assistant superintendent who has worked in school finance for 22 years. “It’s impossible what the state is doing to us.”

Yet despite all California’s budget woes (as described by Michael Lewis in Vanity Fair), there is no organized movement toward either doing away with, or even modifying Proposition 13 to a homeowners-only tax adjustment.  While presented as a way to keep senior citizens from losing their homes to skyrocketing property taxes, Prop 13 has become a windfall for commercial and corporate property owners instead.

imageMeanwhile, California’s public school system has declined from seventh in per-pupil spending to 29th according to this article. If you go by this NEA report, it’s 36th. According to this article from KQED, it’s 42nd.  Or 43rd.  Or 46th.  More importantly, education quality has dropped as well.  California ranks 46th of 51 (50 states plus District of Columbia) on test scores in 2003.  This more recent ranking had California come in 30th (but this appears to be a different series of grades).

That NEA report said we’re #3 in prison spending per capita, though!  Woot!

Now, if you don’t think an educated citizenry is an important goal, then you can tell me to shut up already about school funding.  But I suspect most knowledge workers (such as Silicon Valley engineers or San Francisco creative class members) would want our schools to return to their previous high quality, and that means starving them is not in our interest.


Let’s hear from someone else who doesn’t agree with that.  Furthermore, this is someone who writes a San Francisco real estate blog.  Here is his complete takedown of that 2600 word Bloomberg piece.  Ready?

Prop 13 Isn’t Squeezing Anything

Bill Quick, San Francisco Real Estate Blog

The political big spenders absolutely hate Prop 13, because it cut off their unlimited access to the piggy bank of private property taxation.

The truth is, our spending on essentials like education, public safety, and other bottom-line items is not being constricted by Prop 13. It is being choked off by the propensity of governments at both the local and state levels to spend money on tens of thousands of pet projects and pet constituencies, rather than paying for services that voters feel are the most basic. We’re not broke because our state “salary” (taxes) is too low, it’s because we spend way too much on non-essential fripperies.

Wow, I’m speechless from that relentless chain of brilliant logic!  And to be fair, when I called Quick on his heavy use of facts and supporting evidence, he did respond with this:

imageEnjoyed your sarcasm! I’ll be looking forward to your piece supporting runaway property taxes and booting retired boomers into the street, too. Of course, California’s housing economy is in such great shape that property tax hikes should be just the ticket for rocketing us to even greater heights!

Right.  Because interest rates and inflation are exactly the same as they were in 1978, and property tax assessments are rising faster than college costs.  Then there’s this:

Here’s a bunch of stats on California’s tax and business climate. Short takeaway: We’re in awful shape, with one of the highest overall tax burdens in America.

imageThe bunch of stats are from the Tax Foundation, so I looked into just who they are and what their real motives are.  They’re funded by high-minded humanitarians such as the Koch Foundation (as in Koch Brothers) and ExxonMobil. They obviously have your interests in mind rather than those grabby one percenters!  Would you expect anything less from a group founded by the CEOs of General Motors and Standard Oil other than whether grannies are getting taxed out of their Cayman Island Corporations and have to bunk in their Swiss bank deposits?

Paul Krugman (a know-nothing economist who won a stupid Nobel) accused this group of committing “deliberate fraud” in their evaluation of Obama’s jobs proposal.  This isn’t the first time he’s questioned their methodology, either. But let’s drink to “the tax is too damned high” Kool-aid that the Tax Foundation is pouring.

It’s a lot cheaper than actually fixing things.

Comments (64) -- Posted by: madhaus @ 5:05 am

October 16, 2011

We Are the 99th Percentile

imageimageOccupy Wall Street is finishing up its fourth week in Zucotti Park (if they weren’t evicted yesterday), near Wall Street in Manhattan.  The massive protest against Wall Street excess has spun off Occupy movements across the United States, including our very own Occupy San Jose movement on the steps of City Hall. 

And that  in turn spread to, I kid you not, Occupy Palo Alto.  The very definition of the one percent has supporters of the other 99, or at least the 99 found the right location, location, location for the one.

Occupy Wall Street comes to Palo Alto

imageBy Jason Green, Daily News Staff Writer
Posted: 10/13/2011 06:09:44 AM PDT, Updated: 10/13/2011 06:09:51 AM PDT

Photos by Kirstina Sangsahachart/ Daily News

Some 150 people gathered Wednesday evening in front of a Palo Alto bank to lend their support to the growing Occupy Wall Street movement that has zeroed in on corporate greed and rampant unemployment.

Organized by the Peninsula Peace and Justice Center, the rally in front of the Bank of America on El Camino Real was one of several that took place across the Bay Area on Wednesday.

image"This is an upwelling of frustration, a deep-seated desire for substantive change and a keen awareness of just how unfair and unequal our country has become," said the center’s director, Paul George, as protesters sang and waved signs at passing cars. "I expect to see these kinds of demonstrations happening weekly, daily."

As with the demonstrations in San Francisco and San Jose, the Palo Alto rally was held in front of a bank that received a federal bailout but foreclosed on jobless homeowners. "They got $45 billion in bailout money," George said, motioning to the Bank of America behind him, "and they continue to evict people from their homes."

imageOne reason the movement has caught on has been the 99 percent message.  Signs from the Occupy groups tell their stories, and the Tumblr blog We Are the 99 Percent allows anyone to send in a photo with their tale of financial fallout.  (Click the image at left for a larger view.) And there are so many of these stories.  The enormity of misery and how so many people ended up near-destitute in these tales is what sustains both the demonstrations and those who add in their stories to the blog.

Even in the Real Bay Area, where It’s Special Here, people are living paycheck to paycheck.  We’ve discussed some of these ideas on Burbed before, such as the banks’ imagefailure to foreclose on expensive homes, the huge amount of shadow inventory keeping home prices high, and the requirement for two incomes in order to buy even adequate housing.  Now rents are shooting up in both San Francisco and Silicon Valley.

For the most part, people who follow a real estate blog do so because they plan to buy or sell property at some point.  They are most likely in a better financial position than the typical resident.  So given that most of us are doing better than average (We Are the Top 50%), and that with incomes and home prices near the top of the entire country (We are the 1%), how are you feeling about your own financial prospects? 

imageWhat do you think about them now that a number of economists are admitting that yes indeed, we are in a full-blown Depression?  The drop in homeownership rates suggests a Depression as well.  Do you feel you’re the “rich” “they” want to tax, or do you consider yourself “middle class”?  Does “middle class” even make sense in an economy as atypical as ours, where a sixty year old tract house on 6000 square feet can sell for over $800,000?  Or a two-income family taking home more than $200K a year has little disposable income after paying for living expenses?  Or as someone recently asked on, if you lost your job today, in how many months would you be homeless?

Comments (80) -- Posted by: madhaus @ 5:18 am

October 15, 2011

RBX: Housing Futures Contracts may be in your future!

RadarLogic to launch housing futures

imageby LIZ ENOCHS
Thursday, October 13th, 2011, 5:21 pm

In about two weeks, hedge funds, mortgage lenders, and other investors will be able to bet on the future of the U.S. housing market without buying a home.

RadarLogic, a housing data provider, is introducing a tradeable futures contract based on its national composite index that compiles data on home prices in 25 U.S. metropolitan areas. The contracts are slated to be available through the CBOE Futures Exchange after receiving regulatory approval, which is anticipated within the next two weeks.

The product could help bring stability to the housing market and ultimately lower costs for borrowers, said Quinn Eddin, director of research for RadarLogic.

Who cares about how housing is doing nationally?  It’s doing terrible, that’s why I stuck in that photo of hard-earned equity getting burned up every month.  (Also I couldn’t find a photo of flat-screen TVs getting thrown out the window.)  But what you should care really about is When Can I Buy Myself a Futures Contract on the Real Bay Area?

RadarLogic is looking into regional and metropolitan-level futures contracts, but there’s nothing about an RBA-specific deal (which should obviously be called the RBAXX, because it’s eXtra Special Here).  Also, the RBX is only going to be settled twice a year. 

The RBAXX will need to be settled daily, because it will only go up. 

This is an Open Thread.  How much would you overbid to get in on the ground floor of the RBAXX?

Comments (18) -- Posted by: madhaus @ 5:10 am

October 9, 2011

Smaller Companies Squeezed Out of Peninsula

Maybe Facebook isn’t going to save us all.  Maybe it’s going to push rents up so high that only it and Google can afford office space in the Peninsula.


Membrane Technologies, other tech firms, shift operations from Peninsula to East Bay

By George Avalos, Oakland Tribune
Posted: 10/06/2011 03:14:56 PM PDT, Updated: 10/06/2011 03:59:22 PM PDT

Membrane Technology & Research is moving its headquarters and other operations to Newark in the latest deal by a company migrating across the bay in search of less expensive offices.

Based in Menlo Park, Membrane Technology has signed a deal to lease 62,000 square feet at Stevenson Point Tech Park I, taking up an entire building at 39630 Eureka Drive.

Membrane will shift about 70 jobs to the new head offices, said Hans Wijmans, Membrane’s CEO.

“We of course hope that the future will bring growth and will require new hires,” Wijmans said.

The company makes membranes that can filter out unwanted substances from industrial operations. The tube-shaped devices can remove carbon dioxide and nitrogen emitted by refineries, coal plants and natural gas facilities.

Take that, Menlo Park!  Newark is poaching your high-tech jobs!  Not only that, this place has explosive growth!

Membrane Technology suffered an explosion at one of its Menlo Park buildings in early September. One man, a company employee, was killed in the blast. Cal-OSHA is investigating the incident.

That sounds exactly like the sort of industry that belongs in Newark!  Way to go!

This is an Open Thread.  Where is your job most likely to relocate to?  What city would you least want it to move to?

Comments (10) -- Posted by: madhaus @ 5:36 am

September 18, 2011

What’s the Difference between the Bay Area and Procter & Gamble?

Simple.  The income divide between haves and have-nots have been obvious for years in the Bay Area.  Haves live in Atherton, Have-nots live in West Atherton.  But Procter & Gamble, makers of some of America’s most known household products, are just beginning to notice.

As Middle Class Shrinks, P&G Aims High and Low

By ELLEN BYRON, The Wall Street Journal, September 12, 2011

For generations, Procter & Gamble Co.’s growth strategy was focused on developing household staples for the vast American middle class.

A shrinking middle class has forced Procter and Gamble to adjust the way it markets its household products — to higher and lower income levels than the traditional middle-class levels, WSJ’s Ellen Byron reports on the AM Hub. AP Photo/Steve Helber

Now, P&G executives say many of its former middle-market shoppers are trading down to lower-priced goods—widening the pools of have and have-not consumers at the expense of the middle.

That’s forced P&G, which estimates it has at least one product in 98% of American households, to fundamentally change the way it develops and sells its goods. For the first time in 38 years, for example, the company launched a new dish soap in the U.S. at a bargain price.

P&G’s roll out of Gain dish soap says a lot about the health of the American middle class: The world’s largest maker of consumer products is now betting that the squeeze on middle America will be long lasting.

"It’s required us to think differently about our product portfolio and how to please the high-end and lower-end markets," says Melanie Healey, group president of P&G’s North America business. "That’s frankly where a lot of the growth is happening."

In the wake of the worst recession in 50 years, there’s little doubt that the American middle class—the 40% of households with annual incomes between $50,000 and $140,000 a year—is in distress. Even before the recession, incomes of American middle-class families weren’t keeping up with inflation, especially with the rising costs of what are considered the essential ingredients of middle-class life—college education, health care and housing. In 2009, the income of the median family, the one smack in the middle of the middle, was lower, adjusted for inflation, than in 1998, the Census Bureau says.

imageProctor & Gamble sells to 98 percent of the households in the United States.  If you use Tide Detergent, or their budget brand Gain, you’re a P&G customer.  P&G owns Gillette razors.  They have both Pampers and Luvs disposable diapers.  The first is the premium brand, the other, the bargain.  Now they’re going all in on Consumer Hourglass Theory because the numbers show the middle class just doesn’t have much around the middle anymore.

Consumer Hourglass Theory, a term invented by Citibank, says since the middle is getting pinched, market to the high-income spenders and the budget-brand penny pinchers.  This imageapproach says luxury brands will be profitable, as will low-end brands, but stores that aim to the middle will find more difficulty. 

Look what’s happening right here in our real estate market.  Old Palo Alto?  Pending, pending, pending, gone!  East San Jose?  Bargains are snapped up too.  But that in-between $600-900K tier?  Not so good.  Federal loan guarantees being reduced doesn’t help, either.

This is an Open Thread.  Which tier of houses are you looking at this weekend?

Comments (33) -- Posted by: madhaus @ 5:08 am