31 thoughts on “The Next Housing Bubble”

  1. I find it ironic that the school system that taught our kids to hate capitalism and the free market is responsible for impoverishing those same kids.

    Administrative positions over the last 25 years have doubled.
    http://www.the-american-interest.com/blog/2014/02/15/university-administrative-glut-worse-than-we-thought/

    This smacks of Orwellian hypocrisy. If you work for the university, no matter how irrelevant and overpaid your position is, you are doing it for the benefit of society.

    1. A lot of universities need to cut overheads.

      Smaller offices for faculty,
      fewer secretaries,

      I’d also make Academic salaries comfortable based upon tenure to age 69,
      but, academic salaries shouldn’t compete with industry.

      If you want the big dollars, that’s cool. Be Dr Bose or Gordon Moore, but
      teach as an adjunct.

      1. “Smaller offices for faculty”

        Colleges are stuck with the facilities they have. Many teacher offices are very small and cramped already especially when shared. Their size isn’t driving the cost of overhead. What would drive up costs? Building new facilities or remodeling current ones just to make smaller offices.

        1. take a lot of faculty spaces, throw a cube in there, bang room for 2.

          The cost of moving non structural walls isn’t too bad.

          The real savings of course comes from dropping admin staff.

          Have very few secretaries, have very few assistants, make the paperwork
          easy so you don’t have to struggle to get things done.

          1. “take a lot of faculty spaces, throw a cube in there, bang room for 2.”

            I can’t speak for all colleges but many of them already cram teachers in small offices. Overhead comes from the facilities existing in the first place not necessarily how the space is arranged inside.

            “Have very few secretaries”

            How many faculty have their own secretaries? A department does need a point person though for a variety of reason.

            ” have very few assistants”

            These are probably unpaid or work study positions filled by students.

            I agree cutting administrative positions could save some money.

          2. The secretaries aren’t where the big money is going in administration costs. It’s the ever-expanding bloat of what I sarcastically refer to as the Third Deputy Assistant Vice Dean for Diveristy and Sustainability positions (with their 6 figure incomes) that drive up the costs of a college education. In many university systems, administration personnel already outnumber classroom professors while adding little or nothing of value. At the same time, a growing percentage of actual classroom instruction (you know, actually performing the institution’s mission) is provided by poorly paid adjunct faculty. Just because a public or private university labels itself as “non-profit”, that doesn’t mean it’s somehow nobel or even well managed. It just means they spend everything penny they get and can raise tuition and fees to keep on spending more.

  2. The increased expense of health care, post the Affordable Care Act, will also divert spending from housing.

  3. It used to be Higher Ed in this country was everywhere from Free to Very cheap.

    Used to be the average State University was less then the average Pell Grant, so
    if you were poor, you had a Pell Grant and it paid for tuition.

    If you were middle class your parents paid or you worked a summer job.

    Used to be UCal was $200/year for a standard student.

      1. I don’t know how you put your two comments together. You said that you need to cut costs, but then you said the problem in California was Reagan. Please clarify.

        In my school (in Minnesota), tuition went from approx $50.00/credit in 1993 to approx $260.00/credit today. You can not blame that on budget cuts.

        1. To leftist dunces like DoucheNozzle, everything is Reagan’s fault, decades later, just like everything will be George W. Bush’s fault well into the 22nd century. It doesn’t have to make sense.

        2. for much of the history of this country the state educational system was
          part of the “Infra-structure” of the state. The Land Grant act
          https://en.wikipedia.org/wiki/Morrill_Land-Grant_Acts
          created a basis to establish the great western and midwestern public universities.
          Unfortunately Reagan and the later Prop 13 activists starved the state of funds
          to support these institutions.

          I don’t doubt many of these schools could use some serious rework, in terms of
          increasing efficient use of facilities and people, but, it’s in the best interest of
          society to have an educated population.

          Rand seems to have a fascination with witless hillbillies, but, the Founding Fathers
          would have had nothing to do with these people. I seem to recall George Washington
          sent the army after them to collect taxes.

          2. I was born a couple miles from Cumberland Gap. When I was young I required a translator to talk to non-hillbilly relatives because they couldn’t understand my vowel sounds.

    2. “Used to be the average State University was less then the average Pell Grant”

      The minimum price of a commodity will always rise to the base subsidy. This is why health insurance costs went up, and will continue to do so, with Obamacare.

  4. Majors like medicine or robotics will require some very extensive spending on cutting-edge equipment (such as MRI machines or robots), while majors like English or history shouldn’t need anything that wasn’t in use in 1905 (a room with heat, lights, chairs, and a blackboard). Yet it wouldn’t be fair to give millions of dollars to the robotics program and not give millions of dollars to the English department, and on top of that the tuition is the same for both types of programs.

    You’d think that in a free market someone could set-up shop and turn out an English major very cheaply, hardly different than teaching English as a second language to a room full of immigrants, whereas a robotics program would have to charge to cover their much greater costs.

    1. From what I saw at my last visit to my Alma (not really) Mater, much of the costs went into building renovation.

      Here in Seattle, the University of Washington is building like crazy. Frankly, I hope they get burned with worthless real estate. Maybe they’ll cut the aggrieved victims courses.

    2. Many schools have different tuitions, a higher tuition for science/engineering and a lower
      tuition for Arts/Humanities. One trick at such schools is sign up for Math as a freshman,
      and take a few CS/Physics/Logic classes as double slotted Math classes. Wait until
      your senior year and then change major.

      English doesn’t need a lot of stuff, but a good library sure helps, having a lot of those books
      from 1905 does require some shelf space. There is also a lot of good literature since 1905 too.
      Mailer, Fitzgerald, Faulkner, Heller, Forster, Penn Warren, Salinger.

      Tell me you aren’t one of those Salinger haters.

      1. English doesn’t need a lot of stuff, but a good library sure helps, having a lot of those books
        from 1905 does require some shelf space.

        Hello, it’s 2014. It actually requires zero shelf space. The irony is that never before have so many old books (I’m thinking of many from the 19th century, in particular) been available to so many, making this particular assertion of yours one of the worst in recent history, and that’s saying a lot.

        Cheers! 🙂

        1. while many texts are available on Project Gutenberg and other sources,
          there is nothing so nice as being able to read through the print.

          Also, sometimes you find marginalia from other readers and the
          spines show you where other people stopped.

          1. My suspicion that you are a right winger posing as a left winger in a Stephen Colbert-esque parody performance art continues to grow.

      2. Salinger was a poser. Catcher in the Rye is a worthless novel, appealing only to those who think they have an axe to grind. It attracts upper middle class high school and college students who rebel merely for the sake of rebellion.

  5. Here’s to hoping that things like Khan academy grow to the point that you can pass things like the EIT, LSAT, and MCAT without college before the powers that be react in their typical fashion.

  6. Can someone tell me:
    What is the American student loan system?
    What’s wrong with it?
    And, what system should there be?

    Personally I don’t think there should be any government student loan systems, the little buggers should raise the money themselves or take out commercial loans like anyone else who invests (eg. in a business) for a higher future income.

    2. The details may vary on the program, but the government will pay the interest on the student loan to the banks as long as the student is enrolled in a college. Once the student graduates, they have to pay approximately 8 percent on the loan.

      This is different from grants, such as the Pell Grant, which do not have to be paid back.

      Since these programs started, every time the grant or loan amounts were increased, tuition increases immediately followed. Any real journalist would have been writing about this scam decades ago, but they are in league with Big Education.

  7. Something caught my eye about this article, and it wasn’t regarding the costs of tuition or levels of student loan debt.

    “Take someone seeking a $626,000 loan with a 4.5 percent interest rate to buy an $800,000 house.”

    What? Who in the world thinks they’re entitled to an $800,000 house right out of college? Or even ten years after they get out of college? I live in an expensive city–with a housing cost index of 160, only 6 meager points beneath New York City–and around here a good two-story house with a two-car garage and a yard, in an upper-middle-class suburban neighborhood, costs only $400k to $600k. For my first house I’m looking at something around $200k at most, something which is within my reach even without a tremendous income.

    Which brings me to the second thing that caught my eye: “If that person earned $125,000 a year…”

    $125,000 a year, out of college? Hell, in your twenties at all? Even in your thirties? $125,000 a year makes you a literal one-percenter: the Census Bureau doesn’t even have a category for that much personal income, capping out at “$100,000 or more”, and the majority of those people are older than 45. And if you managed to somehow be in that minority that made $125,000 a year, you could pay off your entire student loan–ALL OF IT–in one or two years, “merely” by living at a modest standard of living for a while. And by “modest” I don’t mean eating ramen on a daily basis. I make $50k a year pre-tax and I live very well, wanting for nothing, accruing no debt and even saving for my down payment–if I suddenly had $75k on top of that, I could buy my house with CASH in a few short years, and forget a 30-year mortgage.

    How it’s possible that someone making six figures cannot conceive of how to make ends meet completely escapes me. Why it’s acceptable for someone to expect a mansion as their first house out of the gate completely escapes me. It may be true that these sad graduates have been victimized by easy money and predatory lending on the part of colleges and the government, but their expectations are so far out of line with reality that I can muster very little sympathy for them.

      1. The point is then, um, maybe, don’t live in downtown New York?

        Go 20 minutes outside the city. No you may not have immediate access to the New York City night life, but access to a downtown night life isn’t exactly a natural right.

    2. You ignore the effect of progressive taxation. Every year at this time I do the math and conclude that I would have 2/3 the take-home pay if my gross income were halved.

      I live in Los Angeles and am not surprised by those numbers. I have friends who live in Silicon Valley and they would think them low. Geography matters.

      Do you have kids? I have 2, fortunately now almost out of college. Makes a huge difference. Every year for 14 years I had to earn $45k before tax to have the after-tax money to pay for the schools that my kids deserved (not hoity-toity – just Prot and Cath parochial schools with good curricula and values) (hoity-toity private high schools in LA charge $35k/year per kid, no volume discount).

      Does your spouse work outside the home? We chose to have my spouse be a full-time mom, and it was worth it, but it makes it a bit more nerve-wracking to be the sole support.

      Are you saving for retirement? I lose about 10% to that annually.

      Sorry, venting.

      1. You ignore the effect of progressive taxation. Every year at this time I do the math and conclude that I would have 2/3 the take-home pay if my gross income were halved.
        I’m confused… In what country and/or state do you live where doubling your income only results in a 50% increase in take-home pay (which is the inverse relationship of what you gave, a 33% reduction in take-home from a 50% reduction in gross)? That’s a marginal tax rate for the next X dollars of almost 64%, whereas the highest marginal rate for income on U.S. taxes is “only” 39.6%.

        There is only one case in which I could think such math would work out: you are in such a low tax bracket and/or have so many exemptions that halving your income would drop you to a 0% tax bracket. I haven’t done any of the detailed calculations to know if it even would work out mathematically, but you also responded to the “six-figure income earner”, so I doubt this is the situation.

        Either way, you make what you make, and if your whine about paying for private school is any indication, a 33% reduction in your income would probably keep you from putting food on the table. If that’s the case, then why complain about how much your marginal tax rate is, when you are currently making enough to save for the future? If you made less, you’d make less, no matter how much or less you’d be getting taxed on that income…

        Are you saving for retirement? I lose about 10% to that annually.
        If you consider saving for future retirement a “loss”, then you’re doing it wrong. Since your reply was put under the “how can anyone who makes six figures not figure out how to make ends meet?” I presume you fall into that category of a six-figure income earner.

        You seem to have at least a half-dozen chips on your shoulder related to income and perceived quality-of-life, and the fact that you think of savings as a “burden” (yet still do it anyway) is troubling. Fortunately, you haven’t whined about thinking that you shouldn’t have had to pay for your kids to go to private school (again, a choice you made), so I can’t come right out and call you “entitled”, but the attitude of “woe is me, I have to pay for things to make my life better” is on the precipice of the slippery slope to an entitled mentality…

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