October 16, 2012

Burbed’s Election 2012 Voter Guide to California Propositions and more – Part 2

Burbians,

Yesterday I said I would publish a voter’s guide to our state’s amazing propositions. I have a lot of respect for our proposition system. After all, we all know that California (especially Silicon Valley) is only full of smart people who can enable direct democracy to work.

Proposition 30 Temporary Taxes to Fund Education. Guaranteed Local Public Safety Funding

Burbed recommends: No

Why? Because this increase the personal income tax on people who make over $250,000. These are the most important people in the Bay Area – the House Price Creators. Instead, this proposition seeks to redistribute their income to schools and whatnot. As we all know, Home owners are our nation’s future. Not children. Children are a terrible tax drain. They’re so obnoxious with their demands that we even banned them from working because they were so distracting to people who were adding value to our economy, and paying mortgages.

Save Home Price Creators! Vote no!

Proposition 31 State Budget. State and Local Government

Burbed recommends: No

Why? Because this is too complicated and if it doesn’t make sense in 30 seconds, it probably is bad. Also, I can’t see how a Yes for this would directly raise house prices. Pass.

Proposition 32 Political Contributions by Payroll Deduction. Contributions to Candidates

Burbed recommends: Yes

Forget the union aspect of this – let’s focus on the economics. Every $1 that is deducted for political contributions is a $1 that cannot be spent on a mortgage – which is a $1 that won’t go towards helping increase housing prices. If I could, I would ban all political contributions – except from the National Association of Realtors, of course, because their voice needs to be heard.

Help your union friends pay their mortgages! Vote yes on this. And if they lose their jobs/benefits/pay because they can’t collectively bargain anymore, then that’s ok – we don’t want poor people living here in the Real Bay Area anyway. $250k or bust!

Proposition 33 Auto Insurance Companies. Prices Based on Driver’s History of Insurance Coverage

Burbed recommends: No

It’s a good idea, but this doesn’t go far enough. I like the idea of insurance companies being able to charge a 200% surcharge for having a gap in insurance coverage (as it happens in other states) that have passed something like this. Let’s face it, if we don’t make this state more expensive to live in, we’ll attract more undesirables.

But the reality is that it doesn’t address the biggest problem: that renters should be charged more for auto insurance than real citizens – aka homeowners. Everyone knows that renters have no respect for law or lives – they’re a daily threat, clogging up streets that homeowners pay (almost nothing thanks to Prop 13) for.

Send the message that this doesn’t go far enough. Vote no.

Proposition 34 Death Penalty

Burbed recommends: No

California spends $200M a year on special death row housing and other expenses apparently. This money has to go somewhere! If we get rid of the death penalty, what will happen to all the lawyers that deal with death penalty cases? How will they be able to afford their homes.

Sure it’s kinda unfair that some people get executed wrongly. But it’s also unfair to live next to a death penalty expert lawyer, and then see your house price drop because they have to do a short sale.

Sorry death row inmates – you’ve gotta take one for the team on this one. Greater good and all that.

Proposition 35 Human Trafficking. Penalties

Burbed recommends: No

Let’s face it, human trafficking is terrible. Instead of penalizing these pimps, we need to retrain them to become recruiters for Dice so that they can grow their business and buy more billboards on 101. Nothing brings me more joy than seeing those – it’s a great reminder of how awesome the hiring scene is in the Valley, and that in turn drives up housing prices.

Proposition 36 Three Strikes Law. Repeat Felony Offenders. Penalties

Burbed recommends: Yes

Personally I think we need fewer people in jails, so we can make more room for renters who don’t pay on time. But until that becomes a criminal violation (fingers crossed!) let’s get more people on the street so that we can train them to become eventual homeowners. More demand is always a good thing. And, since we don’t really do much in the way of retraining for prisoners here in California, we can assume these folks will end up back in courts and jail – gotta think of those lawyers!

Help the lawyers, help the world. Yes on Prop 36.

Proposition 37 Genetically Engineered Foods. Labeling

Burbed recommends: No

Slippery slope my friends. First, we require companies to label food that may rise up and revolt in our stomach. Next, realtors will be required to verify claims in the descriptions in MLS. This is simply too dangerous. Less disclosure is always a good thing – moral hazard and all that.

Proposition 38 Tax to Fund Education and Early Childhood Programs

Burbed recommends: No

See Prop 30. Repeat after me: “Children are not our future. Baby boomers are our future.”

Proposition 39 Tax Treatment for Multistate Businesses. Clean Energy and Energy Efficiency Funding

Burbed recommends: No

This ends tax breaks for companies. As we all know, when you give tax breaks to companies, they pass these savings on to the employees in terms of higher wages. Just like how if you are constipated, the key is to buy more toilet paper because the supply will stimulate demand.

That said, this proposition does guarantee money for green projects – which could lead to even more hype for CleanTech which would mean more multi-trillion IPOs which would mean Manhattan level housing prices even in Redwood City.

This one’s a tough one. I’m going to have to stick with no for now though.

Proposition 40 Redistricting. State Senate Districts

Burbed recommends: No

Why? Because there apparently is no opposition. That’s got to be a trap. Vote no just to be on the safe side.

And there you have it folks, a guide to voting for the propositions this year!

Make me proud!

How many of these recommendations will you take?

Comments (14) -- Posted by: burbed @ 5:00 am






October 15, 2012

Burbed’s Election 2012 Voter Guide to California Propositions and more – Part 1

Burbians,

I long contemplated whether or not I should write a voter’s guide for this election year. The fact is that I’m pretty jaded about the election process because of the rampant voter fraud.

Yes. Rampant voter fraud.

What?? You don’t know about the rampant voter fraud? Well, in that case, like my friend in this video says: “All you have to do is study it out.

The short version is this: Why do we allow renters to vote?

As we all know, renters are the collection of every worse stereotype you can imagine. Take everything we all hate about the poors, the gays, the blacks, the rich, the asians, the breeders, the hispanics, the liberals, the non-hispanic whites, the conservatives, the rednecks, the lazy youth, the elites, and the greedy boomers – put them in the blender you bought at Costco, and boom: Renters.

It is an absolute travesty that we allow these people who smell, are snobby, are flamboyant, don’t value education, drive too fast, keep popping out babies, drive too slow,  do drugs, are close minded, are too green, are too lazy, strive too hard, ruin our schools, are here illegally, pretend to be victims, oppress others, pay by check, make our schools too competitive, and are (UGH) vegan take part in our political process. First it was renters… what next? Should we let cougars (the mountain lion kind, not the aggressive kind) vote?

Fraud. That’s what it is.

Now, there are some who would argue that making home ownership a prerequisite discriminates against poor people. To that I have two points:

  1. This is exactly what our Founding Fathers wanted. They only wanted propertied people to vote. Trust me, I saw a documentary on the Declaration of Independence (Nicholas Cage did a fantastic job.)
  2. Poor people can own homes. Strawberry pickers buy a $720,000 houses all the time.

BOOM. The argument store is now closed.

But, as a journalist, it is my responsibility to educate you. And educate you I will.

So despite my reservations, I will indeed publish a voter’s guide tomorrow.

However, this guide will be limited only to the state-wide propositions.

I cannot endorse Obama or Romney. Neither of them support my plan to restore our economy by taking the Mortgage Interest Deduction, and turning it into the Mortgage Interest Tax Credit. That’s right… under my plan, you wouldn’t be able to deduct interest – instead you would get that money back directly. This would help our starving banks who, as we all know, are doing God’s work.

Before I publish this guide tomorrow some questions for the Burbians:

  1. What are the (true) stereotypes that you hate the most about renters?
  2. Should homeowners get one vote, while condo owners get .5 votes? Discuss.
  3. What should I recommend for each of the propositions?

-Your humble Burbed

Comments (22) -- Posted by: burbed @ 5:51 am

October 14, 2012

Oh Noes! Politicians hating on mortgage deduction AGAIN!

Tax deduction for mortgage interest could be targeted

By Pete Carey, Posted: 10/12/2012 04:21:11 PM PDT, Updated: 10/12/2012 05:03:23 PM PDT

121013-mortgage-mittSAN FRANCISCO — The mortgage interest tax deduction beloved by many Americans is a logical target for raising revenue to deal with growing deficits, a leading housing economist said Friday.

“For fiscal sustainability, we need to get revenue,” said Richard Green, director of the USC Lusk Center for Real Estate. The alternative to shrinking the tax break is raising taxes, he said at a forum on California’s housing market sponsored by the Lusk Center and the online real estate service Zillow.

“My judgment is it’s better to do something about tax expenditures,” Green said. “One of the largest is the home mortgage interest deduction.”

The issue has been a hot button in the presidential campaign, as Democrats challenge Republicans to disclose what tax “loopholes” they would close to pay for their proposed tax cuts.

We are doomed.  DOOMED!  Once they come for our mortgage deductions, there is no more point to living.

Comments (60) -- Posted by: madhaus @ 5:06 am

July 24, 2012

TechCU conversion – Vote No [Not Snarky]

Let’s take a pause from examining the joys and wonderment of Real Bay Areal Real Estate, and look at a serious issue.

If you are a TechCU customer, you will soon be asked to vote on whether you want to convert the bank to… well… a bank. Or to keep it as is.

I’ve read through the literature, and I can’t seem to find any good reason on why this conversion should happen.

Worse yet, the phone calls, the literature, the raffle for free iPads for voting (seriously??) have all left a bad taste in my mouth.

You’re free to do whatever you want to do, but I’m planning on voting no on the conversion.

Here’s some more reasons why:

http://www.savetcu.org/

Comments (15) -- Posted by: burbed @ 5:26 am

May 28, 2012

Official Burbed Ballot Guide

120527-voters-guide-stickerNext Tuesday will be Primary Election Day in California.  Not only will voters get to select partisan candidates, there will also be some ballot measures to vote on.  Here are our recommendations on how to vote if you value living in the Real Bay Area.

Primary election procedure has changed this year.  Before Proposition 14, which passed in 2010, one winning candidate per party appeared on the November ballot. Now all primary elections are a free-for-all whittled down to the top two finishers, who will duke it out in November for the contested office.  Burbed officially disapproves of this method.  Instead, primary elections should be more like buying a house.  Whoever offers the most money with the fewest contingencies should be chosen as the winner, although a plate of chocolate cookies and a family photo may also do the trick.

Federal, State & Local Candidates

120527-voters-guide-white-housePresident: Does it matter?  Is the White House in the Real Bay Area?  No, it is not.  Is Barack Obama from the Real Bay Area?  No.  Is Mitt Romney?  No, and he owns enough houses that he should be!  Neither Ron Paul nor Gary Johnson qualify either.

Senate: Does it matter?  Is the Senate Building in the Real Bay Area?  No, it is not.  But wait, you may say.  While the Senate Building is in Washington, DC, many of the Senatorial candidates actually do live in the Real Bay Area.  To which we say, and?  You want to vote for someone who lives in the RBA and is willing to move to a job somewhere else?  This disqualifies them by definition!

House of Representatives: See Senate.

State and Local Offices: As none of them requested our endorsement, we offer no recommendations.  Then again, if anyone had requested our endorsement, that would disqualify by definition.  Who would ask for a real estate website’s endorsement?  Well, who other than Gary Miller?

State Propositions

120527-voters-guide-29Proposition 28: Term limit modification. Vote NO.  This does not affect property values, although it may lead to more turnover of Sacramento property.  Since Sacramento isn’t in the RBA, this won’t affect prices here. 

Proposition 29: Tobacco tax.  Vote YES.  Burbed is in favor of taxing things that are not housing in order to avoid unnecessarily raising property taxes instead.  Also we are opposed to any industry spending $40 million on misleading advertising.  Did you really think those actors in lab coats were actual scientists?

Santa Clara County Measures

120527-voters-guide-jailMeasure A: County Jail operations.  Vote NO.  This looks like an opportunity to let any number of agencies get their fingers in the jail pie, and by “opportunity” we actually mean “payola, corruption, and graft, oh my!”  Do we really need a County Jail anymore?  There are so many foreclosed homes in East San Jose we should just use them instead.

Measure B: San Jose pensions. Burbed does not have an official position on this, but has enjoyed the complete disconnect between how the SJ Mercury News has been covering this (Chuck Reed walks on water and raises the dead) versus NBC11 (Chuck Reed is a lying scumbag who eats babies for breakfast).  The truth is probably that there is nothing in the pension fund at all because it was all invested in that downtown condo tower that didn’t work out so well.

Various school bond measures (C, E, G, H): Vote YES, except for Measure E, because who do you think you’re fooling, Milpitas?  Better funded schools ensure your property values remain high (and if you live in Milpitas, this clearly does not apply).  If you’re a rentard, vote YES anyway.  Someday you’ll own.  (Keep believing that.)  You may object that we said above to vote for taxes for other things because we don’t want higher property taxes.  To which we reply, are you some kind of rentard idiot?  These are school BONDS, not school TAXES.  Bonds mean borrow and spend, not tax and spend.  Note: School bonds must receive 55% YES votes to pass.

Plenty more County Ballot Measures inside!  Click on through!

(more…)

Comments (15) -- Posted by: madhaus @ 5:04 am

January 28, 2012

FHFA Director Edward DeMarco: Please Resign Immediately

Today we have a guest post by Burbed reader Greg Fielding. This post is reblogged from his site, Bay Area Real Estate Trends, and appears here in its entirety. 

Now, I think this passionate piece on the Federal Housing Finance Agency is a great springboard for discussion, but it’s completely irrelevant to what’s going on in the Real Bay Area.  Unlike where Greg lives (hint: East is Least), It’s Special Here.  We don’t have to worry about underwater mortgages or massive foreclosure meltdown, but maybe some of you know some underprivileged people who don’t live in the RBA. 

Anyway, please give Greg a big, warm, RBA welcome!  And next time, Greg, don’t hold back.  Let everyone know how you really feel.


Dear Edward DeMarco,

Your position regarding principal reduction for underwater mortgages illustrates just how unfit you are to be running the FHFA. You argue against principal reductions, because it might cost “marginally” more than principal forbearance, yet you completely ignore all of the data suggesting that negative equity leads to strategic defaults and a potential death spiral for housing.

Home prices are still falling. Without principal reduction, more and more homeowners will make the financially-prudent decision to walk away. This epidemic can be slowed or even halted with bold action and leadership from people in positions like yours. More of the same simply isn’t going to cut it.

You are an impediment to the recovery of the housing market and our economy. Please submit your resignation, effective immediately, for the good of the Country.

Thank you,

Everyone in the world who is not currently invested in mortgage-backed securities

The head of the FHFA is either corrupt or a fool. Either way he is not the leader we need right now at that position.

The Wall Street Journal reports: DeMarco: Principal Write-Downs Expensive, Benefits Uncertain

Last week, the acting director of the Federal Housing Finance Agency, which regulates Fannie and Freddie, sent lawmakers a detailed analysis of why cutting loan balances doesn’t make sense from a financial standpoint, given the regulator’s mandate to “preserve and conserve” Fannie and Freddie’s assets.      […]

Edward DeMarco, acting director of the FHFA, argued that doing so would cause taxpayers to spend more money on the mortgage giants’ rescue than other foreclosure-prevention strategies. Fannie and Freddie have been propped up by taxpayer support for more than three years, a rescue that’s cost taxpayers about $151 billion

“Any money spent on this endeavor would ultimately come from taxpayers and given that our analysis does not indicate a preservation of assets for Fannie Mae and Freddie Mac substantial enough to offset costs, an expenditure of this nature at this time would, in my judgment, require congressional action,” DeMarco wrote in the letter.

About 3 million borrowers with loans backed by Fannie and Freddie owed more on their homes than their properties were worth as of last summer. That’s about 10% of the loans they own or guarantee. A write-down of all 3 million of those mortgages would cost taxpayers $100 billion, Mr. DeMarco estimated.

Fannie and Freddie do offer forbearance plans, in which lenders don’t require any payments on a portion of the loan for up to 12 months. What they don’t offer is forgiveness, where that portion of the loan is wiped out.

Mr. Demarco, in his letter to lawmakers, said FHFA’s analysis concluded that “forbearance achieves marginally lower losses for the taxpayer than forgiveness, although both forgiveness and forbearance reduce the borrower’s payment to the same affordable level.”

DeMarco and the academic-econo-forecasters who put this study together have completely ignored the element of social mood. IF people increasingly feel like there is no hope, they will give up and strategically default. Their study assumes no increase in the total number of foreclosures. It’s as if they are expecting the world to stand still while their economic model runs it’s course in a vacuum.

[…] “Unless there is an expectation that principal forgiveness will reduce losses, we cannot justify the expense of investing in major systems upgrades,” he wrote.

[…] Fannie and Freddie would also risk giving up money if they reduced loan balances because they could no longer recover money from mortgage insurers, which cover some losses for borrowers who have a down payment of less than 20%.

What exactly are the expenses he can’t justify?

Let’s take a look at a chart from his letter. (click for a bigger view)

DeMarco argues that the taxpayers, who are paying for these losses, will save the money outlined above by offering principal forbearance instead of principal reductions. In the four scenarios they outline, these losses range from 5.5% to an actual gain of 1.15%.

Not only are these petty savings to begin with, but the data behind them assume that falling equity will NOT lead to more foreclosures. Even if falling equity only leads to a handful more foreclosures, those additional losses would offset any initial savings. Moreover, down in the trenches, a lot of underwater homeowners are holding out hope for a principal reduction. If they don’t get it, they will rationally stop paying. Edward DeMarco is out of touch with what’s happening at the street-level of the industry he oversees.

Consider Laurie Goodman’s analysis of the situation:

She figures that there will be about 10.4 million more foreclosed homes over the next 5-6 years. She assumes:

  • 90% of the existing non-performing loans will eventually end in foreclosure
  • 65% of the re-performing loans will end up in foreclosure (these are loans that have been modified).
  • 40% of loans with 120% or more LTV will default
  • 15% of loans with 100-120% LTV will default
  • 5% of loans with less than 100% LTV will eventually default

These numbers are based on performance of similar loans over the last few years. The frightening part is the side-note from the exhibit:

Assumes no change in overall housing prices, interest rates,
or new home construction

So, if 10 million more homes get lost to foreclosure in the coming years, it is reasonable to assume that the that additional distressed inventory would continue to drive home prices even lower. Which, would force adjustments to the 10 million figure, making it even worse.

And so on.

Laurie discusses this “death spiral:”

However, the (housing) overhang means that home prices, despite being very affordable, are likely to decline further. This may recreate the housing death spiral—as lower housing prices mean more borrowers become underwater. We have determined LTV is the single most important predictor of default. So more underwater borrowers means more defaults; more defaults means more inventory, more overhang, and even further declines in home prices. While home prices can go down another 5% without re-igniting this housing death spiral, a 10% decline would certainly re-ignite the spiral in our opinion.

This “death spiral” is the doomsday scenario that Ben Bernanke and crew are doing everything they can to avoid. But Case-Shiller home prices are already declining at a healthy clip – how far away is that “death spiral” really?

Time and time again, policymakers make decisions based on models that can never account for the mood on the street. Or, they know the mood and risks, but are completely corrupt. I’m not sure which camp DeMarco is in, but he is clearly not the leader we need at the FHFA to help get housing back on track.

Comments (2) -- Posted by: madhaus @ 5:17 am

April 17, 2011

Join the Realtor Party!

We are the REALTOR® Party: An energized movement of real estate professionals fighting to keep the dream of homeownership alive for this country.

Now more than ever, it is critical for REALTORS® across America to come together and speak with one voice about the stability a sound and dynamic real estate market brings to our communities. From city hall to the state house to the U.S. Capitol, our elected officials are making decisions that have a huge impact on the bottom line of REALTORS® and their customers. Through the support of REALTORS® like you, the REALTOR® Party represents your interests.

As a member of the REALTOR® Party, you…

Vote for REALTOR® Party Candidates.

Act on REALTOR® Party Issues.

Invest in RPAC.

So now it’s time to…

Join the REALTOR® Party.

Get other REALTORS® involved

Download the mobile app!

Learn how the REALTOR® Party is forging a new path with a bipartisan, issue-oriented approach to politics.

Learn about the issues the REALTOR® Party will be fighting for this year.

Take Part in the "We Are the REALTOR® Party Photo Challenge!

Learn more about the REALTOR® Party

Share on Facebook: Share

Yesterday I mentioned that the National Association of Realtors feels they are fighting for their very survival.  To do so, they are rallying their members to join their political arm (and doubling their dues in the process).

But you don’t have to be a NAR member to join in the fun.  Head on over to the Realtor Action Center and find out how you can make sure Realtors aren’t threatened by all these woes that they had nothing to do with, such as mortgage fraud, irresponsibly marketing homes to people who couldn’t afford them, or misrepresenting real property as an investment by people who aren’t qualified to be investment advisors.

The above copy from NAR shows what consummate professionals they are.  The very beginning of this new mission begins with a sentence fragment.  You can be assured there isn’t a single member of this fine organization who has any idea why that’s a mistake, either.

This is an Open Thread.  Feel free to weigh in on the the NAR, the Realtor Party, or any housing topic you wish.  Seen any cute Open Houses yesterday?  How about cute Realtors?  No?  Then check out these hot numbers, like Zebra Lady.  Rrowl!  Which one do you want to personally handle your escrow?

Comments (12) -- Posted by: madhaus @ 5:13 am

August 15, 2010

Should Government Encourage Homeownership?

I realize asking this question on a real estate blog is a bit like asking RBA parents whether it’s advisable to raise school taxes.  All I can say is Not my fault, USAToday brought it up.

Feds rethink policies that encourage home ownership

image By Paul Wiseman, USA TODAY

Just how much should Uncle Sam do to help Americans buy their own homes?

For 70 years — and for the last 15 in particular — the answer has been: Whatever it takes.

Now, policymakers are pausing to reconsider. In the next few months, they’ll weigh whether there can be too much of a good thing when it comes to helping families finance the American Dream.

The rethink could mean a shake-up for a mortgage market addicted to government subsidies.

“This process of figuring out the government’s role is going to involve some hard choices,” says Alyssa Katz, author of Our Lot: How Real Estate Came to Own Us. “The moment you start changing the nature of what is guaranteed by the government, what is subsidized, you start to change the alignment of winners and losers. … We took for granted that anyone could get a mortgage.”

This is not only a long piece for USAToday, it actually runs longer than most of my Sunday essays here on Burbed.  There’s a lot in this article, and most of you will probably TL;DR the thing.  So here are the major ideas.  (I realize that my trying to shorten a teal deer essay is going to be about as effective as asking Steven Slater to give a rousing pep talk about the joys of being a flight attendant.)

  • Previous policies led US to massively overinvest in housing
  • Treasury Secretary Geithner said reforms must make mortgage credit widely available, promote affordable housing for buyers and renters alike, protect consumers from predatory lending, promote financial stability.
  • Government sponsored enterprises such as Fannie and Freddie are providing funding for 90% of all mortgages now, unlike in 2005 where plenty of private lending.
  • Fannie and Freddie privatized profits and socialized losses to taxpayers.  Next incarnation won’t do so.
  • If they are taken away, there goes a homebuyers’ subsidy as mortgages will be more expensive.  Upper middle class homeowners vote.
  • 30 year fixed mortgages encouraged by Fannie and Freddie but bad bet for banks.  If rates are low they are poor return, if rates are high, borrowers refinance when rates go down again.  Contrast with the pre-WW2 model: 50% down, 5 year mortgage, balloon payment.
  • Government may switch to subsidizing apartments for renters instead of lower-rate mortgages
  • image Until now $230 billion spent on homeowner subsidies (including $80 billion mortgage interest deduction) versus $60 billion for renter programs.  Renters need the help more, 45% of them spend more than 30% of income on their rent, which is definition of affordable housing.  Furthermore 71% of bottom third income renters spend over half income on rent.
  • Richard Florida notes policies encouraging suburban homebuying no longer benefit economy as it did after WW2.  Money spent on furnishing a home no longer supports American industry as appliances, furniture mostly made elsewhere.
  • More homeowners mean fewer people moving where the jobs are.  Moving rate was 20% in 1985 but down to 11% in 2008.  Florida found high-homeownership cities lag in job creation.  (I hope this sounds familiar, as I’ve already written about his observations on this very topic.)
  • Florida thinks the Ideal homeownership rate to aim for should be 55%.  Current rate is 66.9%, projected to fall to 62% by 2012, a rate last seen in 1960.

I’m sure there’s more to say, so why don’t you say it in the comments.  Is it time for homeowners to pull their own weight and stop sucking the government teat?  Are Angry Renters angry for a damned good reason?  Are there just some people who shouldn’t be homeowners even if they can fog a mirror?

Comments (46) -- Posted by: madhaus @ 5:06 am