Friday, August 19, 2011

Wealthy areas are Still Bubble Prices

Looking at home price graphs on zillow it really is impressive how they fall into one of the categories. First, there are areas whose home prices have fallen to pre-bubble levels, then there are those which are still fighting the fall.

First, a few which have lost all bubble gains:

Merced Zillow Home Value Index
San Bernardino Zillow Home Value Index
Riverside Zillow Home Value Index
Las Vegas Metro Zillow Home Value Index
Orlando Zillow Home Value Index
Phoenix Zillow Home Value Index
Miami-Fort Lauderdale Metro Zillow Home Value Index
Atlanta Zillow Home Value Index
Minneapolis Zillow Home Value Index
Chicago Zillow Home Value Index

These cities all had a huge bubble, then prices returned to what they were before the bubble and stayed there.

Then there is a second group of cities which has held on to gains, at least so far. They seem to be following the same trajectory as the rest of the country. They just aren't dropping as fast.
Boston Zillow Home Value Index

Washington Zillow Home Value Index

New York Zillow Home Value Index

Honolulu Zillow Home Value Index

Seattle Zillow Home Value Index
Brea Zillow Home Value Index
Chino Hills Zillow Home Value Index
Fullerton Zillow Home Value Index
West Covina Zillow Home Value Index
Rowland Heights Zillow Home Value Index
Orange Zillow Home Value Index

I am willing to bet that the crash in home prices in the entire rest of the country will suck people out of many of these areas until the prices reach what they were a decade ago. Incomes haven't gone up enough to explain these prices, or at least they have not in Southern California. It mostly seems like wealthier people just refusing to sell.

What does stand out is that these are all places known for being actually interesting places to live. Bubble prices in places like Merced went away pretty quickly. At the end of the day, few people wanted to spend a fortune to own a home there. In New York City, even the thought of crashing home prices was not enough to keep people away. I am not convinced any are actually much more interesting places than a decade ago though. So I expect most to see a slow draining down of prices until inflation adjusted they get near previous values.

Hitting Richer areas

Early on when the bubble was crashing, Orange county and LA county held up well while San Bernardino and Riverside counties crashed. Richer people were able to hold out longer and avoid selling. This created a problem though. There is currently an absurd price differential between these poorer areas and the better off areas. This differential is much greater than what was present before the bubble since bubble prices reign in the richer areas while all the drop from the bubble is over in poorer areas.

Now this price differential is finally starting to rectify itself.

The Riverside Metro area is down 3.9% in the past year.Typical cities are:
Chino 6.5% down year over year
Chino Hills 7.5% down
Corona 4.9% down
Fontana 0.7% down
Riverside, 0.8% up
San Bernardino 2.6% up

The Los Angeles metro area is down a whopping 7.2%. Typical cities are:

Brea, 7.5% down year over year
Compton 2.6% up
Diamond Bar 6.3% down
Fullerton 7.9% down
Irvine 16.8% down
Rowland Heights 9% down
Laguna Beach 21.5% down
Long Beach 7.4% down
Los Angeles 7.4% down
Malibu 7.9% down
Orange 10.2% down
Pasadena 5.7% down
Pico Rivera 0.5% up
Mission Viejo 7.9%
Walnut 6.7% down
West Hollywood 9.5% down
Yorba Linda 6.8% down

That means a 300k home in Orange lost about 30k in value in just the past year even without counting the additional 2% homes dropped because of inflation. This was even before the last few weeks of chaos in financial markets too. Richer people own more stock, so now that it is so volatile I expect even fewer people will feel like buying.

The areas that are no longer falling are cities like Compton, Pico Rivera, and San Bernardino. Places where people simply could not afford to prop up prices at all and pre-bubble prices reign. The places which are falling like crazy are ones like Orange,

Sunday, August 14, 2011

Tax Reform

Two of the most insane aspects of our tax code are that capital gains are taxed at a lower rate than income and mortgages lower tax rates.

Our tax code should be encouraging people to make their money from working, not gambling. It also should discourage debt. The mortgage deduction encourages people to take our very large mortgages. This helps the banking industry but is a tax loophole that almost entirely goes to wealthy Americans who really don't need the help.

At least I am seeing some talk about removing the mortgage write-off and Warren Buffet is talking loudly about the tax rates for the rich being lower than the middle class. Unfortunately I don't believe than many in Congress are willing to do something so reasonable to help lower our debt.

Strong Magnets are dangerous.

I just blew $30 on magnets. I want to make my three phase generator work and upgrade my old generator. So I bought several disk magnets and two bar magnets and ten cubical magnets. The bar magnets are plastic coated so I don't have the typical problem of chipping when something gets pulled too fast towards the magnet. The cubical magnets are going to be used to build at Halbach Array which I am hoping to use in a future project to build a model maglev train.

Anyways, I just looked at Amazon reviews for a $30 magnet. Wow. I think the 12-25lb pull force on the magnets I bought is as much as I am going to play with.

"The first time they flew together my finger was in the middle. Before I got my finger out it had pinched and pulled about a quarter inch of skin with a little meat off. "

"One last thing. You will pinch your fingers between them no matter how careful you are. You will see what I mean if you get a couple! "

"I also bought a few of these, and also lost part of my finger. I bled more than I have since I was about ten and fell off my bicycle, way back then.

That's not really significant, though. What's significant is that I read all of the other horror stories about people losing small pieces of their fingers to these magnets, before I even ordered mine. So I planned a lot and I really tried to be careful. I wasn't careful enough, though. I used some plastic pieces pieces to separate my magnets, out of their original packaging, but I didn't use long enough plastic pieces, and so, snap."

And that is only a $30 magnet. Some magnets are for sale for more than a thousand dollars! That thing could probably crush your skull!

Wednesday, August 10, 2011

Has everything been thought of?

It is absolutely remarkable how as soon as I have a good, I go into google and someone beat me to it.
One of my favorite technological ideas are vacuum maglev trains. No friction at all makes for very fast very efficient travel. I realized that they can get a very high percentage of the way to escape velocity. So, it would be possible to launch a rocket up to very high speeds in a vactrain track, point the last part of the track straight up, than open a door right before the train hits it. You then fire the rocket, which now needs less than half the fuel it would otherwise require.

Of course, NASA was looking into maglev launchers quite a time ago. The wikipedia even has a huge page on the subject.

Reading some more papers on this subject, I am pretty close to writing my congressman trying to talk him into supporting this idea. For a few tens of billion dollars we really could build something which reduces the cost of things getting into orbit to a tiny fraction of the present cost.

Monday, August 8, 2011

How Science Works

Every so often I think about trying to do real science a Then I am reminded what actually doing real science is like.

If I ever try to do science again, I am most likely to do so in a hardcore hobbyist mode. It is just too much trouble having your life depend on producing results. There are a handful of people who have managed to make science a side job and because they work in fields with little real funding, a few thousand dollars in equipment and a whole lot of obsessiveness make them actually useful. This was common two hundred years ago, as science has become more specialized it is harder and harder to pull off. Still, if I ever had a phase of my life with nothing particularly important going on I might consider taking a shot at it.

Stocks on Sale

This was my first real stock crash. I starting investing soon after the 2008 crash and therefore made out like a bandit for most of the past two years. Recently that stopped though. I lost around $2500 in just the past week.

In twenty years, I am not sure how I will handle stock crashes. It won't be hard to lose a years salary in a few hours if I keep investing at the rate I have been. For this one though, I am just debating if I should stop putting money in bonds for a few weeks so I can focus on stocks. I see little good reason for this crash and I expect the economy to keep on growing with at least the rate it grew in the past six months.

Still, that is assuming that stock value is linked to the economy. The baby boomers retiring just might kill off the next ten or twenty years of stock returns even if the economy does just fine. Who has the money to buy as fast as that generation will sell to fund their retirements? Now that stocks don't seem to be providing much in the way of dividends and haven't provided any return on investment for over a decade they may in fact be useless pieces of paper. Since shareholders have so much power over companies and companies are making so much money things are almost certain to get better in the thirty to seventy year time scale which I care about though.

Friday, August 5, 2011


Not all that long ago, someone at PG&E lost his job for something posted online. Therefore I better cover myself by copying and pasting the following:

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