Evidence of flipping in hot markets suggesting bubble
Pollyanna “what a perfectly lovely, lovely house! How awfully glad you must be you’re so rich!”
No capital gains taxes
Thick mortgage backed securities market
Fewer new buyers chasing money
Falling real estate commissions
Rising incomes
Changing commuting patterns
“breathtaking profit”
Active Federal Reserve Board
Industry sensitive to interest rates
Rising population
Middle income wages rising in money terms
Median age rising
Family size falling
Rise in ownership of 2nd homes
Rise in telecommuting
Home entertainment such as video games eclipsing movies
Capitalization and standardization of home building industry (e.g. Toll Brothers)
A moderation in an accellerator suggests just a slow-down in the rate of growth of housing prices to me, but don’t listen to me–I just cashed out a 40% capital gain in my last house tax free and locked in a super low rate from a private equity mortgage lender and didn’t use a real estate agent to buy and used a cut commission agent to sell. Clearly I’m a Pollyanna.
The original poverty line was based on having enough money to select a nutritious diet in 1963. It was $3,100/year for a family of four with two adults and two children. In 2005, it was $19,800. In constant 2005 dollars using the consumer price index, the 1963 poverty line would be $18,900. Using the GDP deflator (which is based on changing rather than fixed buying patterns), we get $15,400. That is, a family at the poverty line today will buy different items today implying a $4,400 improvement in the standard of living from 1963 to 2005.
Both the GDP deflator and life expectancy measures indicate those below the poverty line are getting better off in an absolute sense. A couple more are in this week’s Economist. The definition of poverty evolves over time and is more of a curve than a line so that there will alway be people in poverty.
WSJ (subscription required) says Electronic Arts is joining Microsoft in an ad serving service for video games:
Advertising in games remains a relatively small business, but many game publishers believe there’s a large untapped revenue opportunity in displaying ads to their audiences. Many games are played by 18- to 34-year-old men, a prized demographic for marketers that is spending more time playing games at the expense of traditional ad-supported media like television….In the past, companies like EA have integrated mostly “static” advertisements into their videogames that don’t change throughout the life of the game … EA is currently estimated to earn revenue in the single-digit millions from such ads….Such ads must be integrated into a game six to eight months before the title is released…[vs.] “dynamically” insert advertisements into games on a regular basis…
With hundreds of hours playing a title, ad revenues could hit tens of dollars per player which could be billions of dollars vs. millions. In a competitive industry, this should drive the sticker price of the games down.
There is a chicken and egg problem though. Ad rates for games are too low right now for game producers to make the ads too intrusive. That makes the ads less valuable per viewing.
Look for more freeware titles and 100%-mail-in-rebate deals around late 2008 for Christmas 2007 titles that have ads.
Mostly it illustrates the great lengths to which scientists must go these days to shape stem cell research to fit the dictates of religious conservatives who have imposed their own view of morality on the scientific enterprise.
This following a piece on cluster bombs where they “dictate” the terms of weapons sales from the Pentagon to protect Lebanese. They have also “imposed their own view of morality on the” war “enterprise.”
At least both views of morality coincide on the ethics of cluster bomb use in stem cell research.
Economist reports that my idea about doing non-destructive stem cell research has been successfully tested.
Once a fertilised egg has divided into eight cells, one of those cells can be removed in a biopsy without reducing the chance of a successful pregnancy….such biopsied cells might, instead, be encouraged to reproduce
In today’s Wall Street Journal, “The Fertility Gap” between Democrats and Republicans is analyzed:
According to the 2004 General Social Survey, if you picked 100 unrelated, politically liberal adults at random, you would find that they had, between them, 147 children. If you picked 100 conservatives, you would find 208 kids. That’s a “fertility gap” of 41%. Given the fact that about 80% of people with an identifiable party preference grow up to vote the same way as their parents, this gap translates into lots more little Republicans than little Democrats to vote in future elections.
Property prices are rising fast in Eastern Europe according to Financial Times:
…property prices in Riga, the Latvian capital, surged by 45.3% in the year to June, following on from a rise of 73.5% in the preceding year, with growth also buoyant in Bulgaria and Estonia. Mr. Bailey [head of residential research at Knight Frank] attributed this to a “levelling up” of prices across Europe, particularly in the former eastern bloc nations that have joined the European Union. “Wage inflation, growing prosperity and access to less constrained mortgage finance have all contributed to rapidly rising prices,” he said.
The same transformation could occur wherever property rights are dim and mortgage rates are high. I am thinking of Jamaica, Lebanon, Mexico, Iraq and many, many other places around the globe. Dollarize (or Euro-ize) the economy, offer subsidized mortgages, low property and capital gains taxes for houses, no rent control and put home improvement shows on TV and we will have a global home boom. These are sitting assets that can be taxed and repossessed. They create a home ownership culture, security of a locked door and a place to hang mosquito netting. $30,000 of cinder block housing for every 4th person on the globe would be $45T. This is the head end of the promise of capitalism with liquid lending.