So has there been a behind-the-scenes rollover-changing war today, or is the same blogger changing the rollover over and over again until it gets noticed?
Oh, and fuck the homeowners. Always yelling at me and throwing paint on my cats.
Fuck, my last rollover was good! We're having something of a battle.
GREAT GOOGLY MOOGLY.
Better sell my mansion pronto.
Damn, and here I was so sure that my house really, truly is worth at least twice what we spent on it seven years ago. Oh, cruel fate.
Jelly beans are an inflation hedge, like gold. You want to pair asset classes that don't correlate so highly, like jelly beans and timber.
I'm praying for the pop so that I can hopefully own something someday. Schadenfreudelicious!
ac, have you seen my ward? He isn't answering his IM, the rascal.
9: Only problem is that it will mostly be the wrong people getting clobbered. There's a special place in hell for the realtors and mortgage brokers pushing people into funky mortgage products where they can barely afford the teaser payments, but they'll be right back at "now is the perfect time to buy!" before the dust even clears.
And they're telling the other people it's the perfect time to sell.
11: Would that include Greenspan hyping ARMs? What do you think was up with that? Senility, or (my theory) propping up the economy so W would get another term and another whack at eliminating Social Security?
What is this rollover of which ogged and s.j. speak? The text that pops up when you roll over the blog roll?
Becks, I have a nice little place in Pekin, ND for you. 3 bedrooms and a quarter acre of land for $20,000.
If your map isn't good enough to find Pekin, I'll send you a better map.
Millsy, it's the hover text over the big picture at the top of the page.
7: Actually, when I think of "great googly moogly" I think of Xander Harris.
13: I'm inclined to go with option B.
This is sort of scary, since we plan to have outgrown our current home in a few years.
11: I don't know what was up with Greenspan on that. The charitable explanation would be that he was making a point that was reasonable in the abstract without paying enough attention to the context in which he was making it. As a theoretical matter, it arguably is kind of silly to pay a premium to lock a rate in for 30 years when few mortgages last anywhere near that long, and there's maybe a bit of a "trust us" element in telling people that they shouldn't expect the second coming of the Volcker era anytime soon. OTOH, the timing was crazy, and Greenspan's not stupid, so it's easy to suspect something more nefarious.
I'm a terrible person for being happy about this, but we have a fixed rate mortgage, and I want to buy the apartment next-door so that Newt can have his own bedroom. A crash would work great for us -- our theoretical net worth would drop, but given that we don't want to move, who cares.
I sent that chart to my wife this morning. I am screwed, but I know people who are more screwed. At least I am not in some crazy ARM or interest free loan.
21 - Aww...that's the thread where Ogged and I were going to buy a house together and turn it into the Unfogged Group House.
I am utterly unable to reconstruct what comment 46 in that thread means. Maybe it was something about the ATM meaning of "split infinitive" (boys have dangling participles instead), but still, opaque to me.
Rampaging superpredator underclass raccoon gangs in Sleater-Kinney Country
Weiner, I thought apo was just imagning what life would be like in the Unfogged House.
That's comment 44 (which pwned). 46 is me obviously attempting to make a joke, but what is it? It's like when you get to the end of the Chris Muir strip and there are various cues that tell you that the last line is a punchline, but damn if I know why.
If you aren't interested in selling your house, does a crash in prices really make a difference? My parents are building a McMansion, and they are also planning on dying in it. (They are making it totally handicapped accessible, for when they are frail and wheelchair bound.) A crash in prices should only reduce their tax burden, no?
Oh, you're right. Yup, I can't make sense of it either.
16: That's kind of what I thought. But, strangely, I get no rollover from the picture. I blame IE.
27: It's a problem if you can't afford your payments. People out there with interest-only mortgages, who were counting on their equity doubling so that they could borrow more against their house to make payments, are in real trouble when the value of their home drops.
Pretty much, anyone who's in a house to live there, and can afford their payments, is fine whatever happens. Anyone who was counting on their house as a moneymaking investment is screwed.
If the crash makes the economy tank, it'll be a problem for lots and lots of people.
29: Oh wait, it works, I just wasn't patient enough.
You guys need to start signing your rollovers though. Is the "dildos and bear fucking" one yours, ogged? I need to know who to inform that that's really weak.
Is there anything more European than concern for others?
Not mine. The previous one, "An eclectic web magazine for lonely people who used to be funny" was mine.
so that they could borrow more against their house to make payments
Equity hot-potato! This doesn't really happen, does it?
34: Yours is pretty good ogged.
Who's the weak link?
Who's the weak link?
A good question. Will s/he fess up?
35: I'm pretty sure that happens, yes.
Last night I dreamt that I bought a new place and forgot to sell the old one.
Works for us. We're selling now (house has gone up about 25% in the three years we've owned it) and renting in Ventura, apparently, for a year while we wait for me to find a job (how long will my commute be? Who knows?) and for the market in LA to soften up.
Mr. B. called this evening and said he basically found the Brady house for us to rent. Plus it has a Koi pond with a waterfall. And a gardener and the cost of water is included in the $2600/month rent.
You're allowed to laugh, but admit it: you're kind of envious of the Brady house.
Ogged, Becks, I think you've found your commune.
FINE. I'm the weak link. I thought Ogged's was depressing and wanted to prompt him to change it. I didn't figure mine would last.
That's great, B. A koi pond and a waterfall? You have to post photos of the koi pond. I totally want a koi pond now. I wonder how that would work in Boston.
(They are making it totally handicapped accessible, for when they are frail and wheelchair bound.)
This is really smart and I wish more people would build houses with this in mind. I lived in a handicapped accessible apartment and it was awesome -- the move was easy because of the wide doorways, plenty of space in the kitchen and bathrooms, easy to open the doors with your hands full, etc.
Man I don't know what you guys are talking about -- looks from that linked graph like now is the best time to own a house in the last hundred years! Prices are going up fast, I mean look at that thing, it's going up, up, up!
I'm in a one-year lease, with heat included in the rent, and after that I'm going to live in the janitor's closet at the seminary. The chemical fumes will be rough, but it's totally worth it for the nice big sink.
48: Actually, I shouldn't say *totally* handicapped accessible. I don't know all the details. I know they are planning for the fact that they will be old and frail, and put an elevator in the house.
I hate how the graph starts at 60. Sometimes I think nobody's fucking read The Visual Display of Quantitative Information.
Still scary, though.
52: What's wrong, in this case, with the graph starting at 60? Seems like you'd have a bunch of unneccessary white space at the bottom otherwise, and the graphic would need to be larger, for no particular good reason.
Yeah, I don't see the issue. Seems reasonable to me.
The graph as is is misleading. Most people won't notice the difference. Newspapers almost always do that (at least swedish ones, but I think USian ones too.)
I'm not really seeing how it's misleading. It seems like the story is how completely off the charts current housing prices are, and the graphic illustrates that effectively.
If the effect only went up to 150, it would be a great crime. As it is, it's just bad taste. It's well known that eliminating the zero of a graph is a great way to disguise the natural scale of the noise of a system, and is often used to dupe people.
And it's a little ironic that the page linked in 52 exhibits such horrible design.
Most people won't notice the difference.
Exactly. Most people will think that this-thing-which-is-not-price is 14x as high now as in 1970, when in fact it's 'only' 3x.
Since the effect is probably real and probably worthy of feeling disturbed about, it's not *that* bad, but clearly is an effort to make a bad thing look much, much worse.
It's well known that eliminating the zero of a graph is a great way to disguise the natural scale of the noise of a system, and is often used to dupe people.
Sure, but I don't think that's the case here.
What about if the 1890 benchmark had been set at 40 instead of 100? Would you still think it was a problem?
58: really? I think LibraryThing is really well done. But then again, I'm a LT zealot.
60: if the zero of the graph was set at 0.6*40=24, as presumably it would (based on the aesthetic decision of whoever made the graph), yes, I'd still think it a problem.
Most people will think that this-thing-which-is-not-price is 14x as high now as in 1970, when in fact it's 'only' 3x.
Okay, I'm feeling stupid, but the 1970 score looks like it's about 108, and the 2006 score is 200. Where do 14x and 3x come into this?
And as for LT, I just meant its visual design was unappealing. I see now that the tags links are different sizes for a reason.
I'm the stupid one; I of course meant 1942, the graph's minimum.
Minimum, except for the 1920-21 one. Fucking tequila.
#52: the designer almost certainly has read "the Visual Display of Quantitative Information". Tufte has some harsh words for the Darrell Huff school of always starting at zero and makes the sensible point that the purpose of a graph is to show the data, not a load of white space.
66: it would depend entirely on the audience. In newspapers, I really think you need to show the white space.
I'm with dsquared on this. Zero is not a meaningful number in this case. The series being graphed is an index, normalized to 100 in 1890. The analogue, I would argue, for a 100-based index to the ordinary zero line is the 100 line.
Another way of putting it is that this graph could have been done as "percentage change in housing prices since 1890" simply by subtracting 100 from every point on the y axis, without any change in the overall layout. Then zero would be shown, and the graph would be no more or less misleading than it is now.
I am utterly unable to reconstruct what comment 46 in that thread means. Maybe it was something about the ATM meaning of "split infinitive" (boys have dangling participles instead), but still, opaque to me.
I'm ashamed that I mishyphenated At Swim-Two-Birds.
Say "@Sw2B" and you'll never have that problem.
62: I don't understand the reasoning here, why 0.6*40=24?
70: Wouldn't it be less misleading, because it would no longer give the impression that the price today is 14 times what it was in 1920?
73: Well, by the logic that reads this graph as giving the impression that the price today is 14 times what it was in 1920, the graph I propose would give the impression that the price today is infinitely higher than the price (0) in 1920.
I agree with you that some newspaper readers will interpret it in the way you suggest. But I don't think there's any way to make an index graph that is immune to this sort of interpretation. Still, I suppose you are right that the alternative I suggested would be an improvement.
So, um, is it a good time to buy a house? We've been looking for the past several months, and found one this weekend we're close to making an offer on (you can see it here.) Presuming everything about it checks out, it's priced very competitively even for the softening market. It's got a small sunroom, a back deck and patio area, garage, manageable back yard that still has room for some gardening, lots of room, good built-ins and storage space. It's in need of some work--mostly cosmetic, to remove the old people smell, but some bigger projects (redoing some of the shingling, replace a drop ceiling in one room, and so on.) The neighborhood is decent but unexciting: this is Pawtucket, so automatically a step down from Providence, and it's not even the higher status part of Pawtucket (for mrh, we're talking Fairlawn, as opposed to Oak Hill.)
Presuming no one lost their job, in which case we're fucked no matter what, we'd not have trouble making the payments. But should I feel bad or wary of buying what is, right now, a good, relatively cheap house, when it might go for less in 3 months--or something better that we can't afford now might be possible in six months? Our buyers broker was already telling us we should make a list of properties we liked that were out of our range and then make lowball offers, 10 to 40 percent below asking price. On the other hand, we're kind of sick of looking, and definitely sick of living in our current crapshack with slimeball landlord. It's just all this "hard landing" talk gets a little scary. What to do?
The analogue, I would argue, for a 100-based index to the ordinary zero line is the 100 line.
Yes, but the text of the graph describes it as being a graph of actual home prices (in current dollars), saying that a 199 on the index means $199,000 and so on. The effect of this is a slightly milder version of the problem discussed in Question 1 here.
If you love this house, buy it. If you just like it, do what your buyer's broker suggests, for houses have been on the market for a while. It's pretty clear that you'll be able at least to find comparable values six months from now. Set a deadline on the lowball offering process, and if nothing happens within that deadline, go back to the range you're looking in now.
JL--it differs on a market-by-market basis. For Minneapolis-St. Paul, I would say wait a year, but your area may be different. (Note that while I bitched above about being in an ARM, we took it because we were 90% certain that we wouldn't be living in the house by the time the interest rates were going up.)
79 -- are you still expecting to be moving shortly? If not, how difficult is it to convert to a fixed rate? I am moderately happy about having a fixed rate mortgage, but know I am still fucked in the long run.
"when it might go for less in 3 months--or something better that we can't afford now might be possible in six months"
When everyone starts thinking like that, things are going to be really ugly.
We have an ARM, but it doesn't reset for another 5 years, at which point we could scrape together enough to pay off most of it. In the meantime, CD rates are higher than our mortgage interest rate (although I don't know how the math works out on that with amortization and tax deductions.)
80--we have another 3 years to go before it starts to fluctuate, and another two before the rate could get up to what's available now. We'll be out of this house by then--we're planning on having another child in the next couple years, and it'll start to feel pretty cramped at that point. Both of us will be out of our master's programs, she'll be back at work full time, it's reasonable to assume I'll have at least one promotion in that time--we should be OK looking for another house in 3-5 years.
When everyone starts thinking like that, things are going to be really ugly.
Yeah. Which is why my happiness that prices are starting to drop is tempered by anxiety over what the future might hold. As happy as I'd be to have a house, I'd really rather not experience the sort of economic doomsday scenarios involved in what some people describe as a real hard landing. I think I'd find it small comfort to learn I was right about a bubble in the market when collecting unemployment.
Thanks for the advice. We could wait, I suppose, and maybe we'd get a better deal; but I think we're going to go for it.
Really nice house JL. Hope all goes smoothly if you go for it. I'm not even going to think about how much somewhere comparable would cost in pounds over here.
Matt F writes (in 77) Yes, but the text of the graph describes it as being a graph of actual home prices (in current dollars), saying that a 199 on the index means $199,000 and so on.
I don't think that's right. The first sentence is "The 1890 benchmark is 100 on the chart." They then offer an illustration about how to interpret index numbers: "If a standard house sold in 1890 for $100,000 . . . an equivalent standard house would have sold for . . . $199,000 in 2006 (199 on the index scale, or 99 percent higher than 1890)." This is a fairly good description. But it isn't saying that this reports only houses that sold for $100,000 in 1890. If it was saying that, it would be wrong: I know for a fact that the Schiller index (actually, the Case-Schiller index) uses houses of various values.
Again, I maintain that the only "baseline" for an index is the baseline index value, in this case 100. A 0 on this graph would indicate that houses had all fallen to values of $0. That is, it is outside the plausible range of the variable.
Someone posted a link to Tufte's site early on, where one of his correspondents recommends a log scale for things like this. That might be sensible. It would make clear, for example, the relative magnitudes of the runup in the 40s and that in the last 10 years (the current one is much bigger, but not as much bigger as this makes it look). But if you aren't willing to go to a log scale for a newspaper, or to graph the annual changes in place of the levels, I don't think you can do much better than this graph.
JL, I just looked at the picture--that house is really cute. Also, original moldings! But does it have a koi pond?
No koi pond, I'm afraid. It is a cute house, and we like it a lot--the moldings are great, as are the loads of built-in cabinets and drawers. Unfortunately, when we met with our broker this evening to go over the disclosures and craft an offer, we saw that they listed the roof as 30 years old, and not the 15 we had been told. So we need clarity on that point before taking any further steps.