Monday, December 31, 2007

Health Care Bubble?

Paranoid Renter over at Sacramento Land(ing) believes that the next bubble will be in healthcare:
"
The bubble I see is one where there are too many jobs created in healthcare and auxiliary industries. So the way I see this playing out:
- Lots of nurse positions; nurse salaries go up marginally. Nursing schools make out like bandits.
- Doctors salaries skyrocket and they start switching jobs like crazy to take advantage of pay hikes.
- Artificial shortages of drugs drive up prices of drugs and help the pharmaceutical industry report record profit.
- Lots of administrative positions created ("director of customer care for the hospital", etc.) and tons of bureaucracy in billing and hospital management. [For the record, my insurance/billing is not yet complete for a blood test I had last March!]. Errors in billing (usually amounting to overbilling) will proliferate.
- Insurance will cover less and charge more resulting in record profits for insurers."


My response, which was too long and not at all housing bubble related:

Nurse positions are chronically underfilled and have been for years. This article in USA Today sums it up fairly well. A bout 4 years ago, I sent away for a bunch of free promotional stuff , including a neat video, to encourage young people to go into nursing. I set up my table and video and posters and brochures at a local high school job fair, and there was enormous interest. During the fair, which also had representatives from Cal State (it has a nursing program) and American River College (ditto) , I was approached by one of the career counselors from one of the colleges, who told me that they had a waiting list several years long to get into their nursing program. The problem isn't convincing people to consider a career in nursing, it's convincing nurses to get the pre-requisite Masters or Doctors degree and teach nursing. Nurses make more by practicing their profession than by teaching it.
Laws mandate clinical nursing instructors supervise a very limited number of student nurses on the floor, as well, and that also tends to limit the number of students that can be admitted to a school.
We are currently importing a very substantial number of foreign nurses to fill positions that Americans want to fill and are unable to find training for.
It is hard to imagine a situation in which there will be an over-supply of nurses. The government already offers incentives to Colleges of Nursing, and while I would not turn down a pay raise, neither do I feel that I am not compensated enough . The laws of supply and demand work pretty darn well in nursing: we're in demand, and we get damn good salaries and benefits. We get paid more in California, because it is an expensive state in which to live and because it has a severe nursing shortage. California law mandates ratios of from 2:1 in Intensive Care units to 5:1 on Medical/Surgical floors. Considering the multitude of drugs and IV fluids/medications, and treatments, and assessments that must be performed a ratio of 5 :1 is not at all generous. Any parent who has ever cared for more than 1 sick child will immediately grasp this. People are not hospitalized for minor ailments any longer. Most routine surgeries go home within a day. My knees, hips and feet constantly ached when I worked on the floor, and it was a true aerobics and weight-lifting work-out. Statistically, the best care is of course one on one, but that is not economically feasable for any but the very sickest patients. Studies show that increasing the ratio beyond 5 patients leads to an increased mortality rate.

Doctors do not usually get salaries; they are usually in private practice and they receive compensation from a variety of sources. The exception is Kaiser docs, who do work for Kaiser and receive a salary. They also don't have to worry about paying their staff, including billers and coders and "authorization" clerks and not just the hands-on workers that take your vital signs when you see your MD. They don't have to worry about obtaining coverage for vacations, seminars or emergencies. They don't have to worry about malpractice insurance.

Medicare Part D has already driven up the cost of pharmaceuticals because the government is not allowed to bargain with drug companies on the price of the meds, and the drug companies are allowed to stop covering a medication in the middle of your coverage period if they want to, but the consumer is not allowed to choose a new plan until the next coverage year begins (and there are over 67 drug plans in California, btw). The Veteran's Administration, who up until the current political administration had provided excellent care to veterans since they cleaned up their act after the Vietnam War, actually gets very good prices on medications by driving a hard bargain. So do several HMO's who provide prescription medicine coverage.

There are already multitudinous layers of bureaucracy in healthcare. Your doctor, your clinic, your hospital (again, unless you are a Kaiser member) must staff entire departments who do nothing but submit and re-submit bills to insurers, trying to meet all their demands for verification and proof, and trying to get procedures authorized. Each insurer, and there are dozens of them, has different rules and paperwork. Medicare is probably the single biggest payer that most healthcare providers deal with, but it is not in the business of denying care to ensure fat CEO compensation and shareholder dividends, so it is tedious but quite possible to actually get paid under Medicare. There will always be administrative costs associated with healthcare; we are talking about people's lives and well-being. We are talking about your child, your mother, your lover. The state has regulations and inspectors, the feds have regulations and inspectors, and most hospital systems have the good ol' "Quality Assurance" department who keeps coming up with new goals to meet. And mistakes STILL happen, at an alarming rate.
Single-payer healthcare is more likely to reduce the need for clerical and administrative staff than to increase it. Knowing one set of regulations and codes is much more efficient than employing the staff necessary to specialize in each and every insurer's regulations.

Finally, insurance has been covering less and charging more for years now. Private insurance costs have risen at over twice the inflation rate in the past 2 years. Things have gotten so bad that even corporate capitalists are now screaming for a single-payer healthcare system -- at least the ones that don't work in the health insurance industry are. At this point, the greed of the few has pushed the tolerance of the many over the edge. Insurers refusing to pay for life-saving operations or procedures which are not experimental, but are very expensive, is now a fact of healthcare in the US.

Is this a "bubble"? I don't think so. Technically, a "bubble" arises in the financial sense when a commodity is irrationally valued without any basis in fact. The facts are that we DO have a growing population, of which an increasingly large number are living long enough to develop chronic illness. Additionally, we have made technological advances and are able to perform procedures that will add years to people's lives. None of this fits the definition of a speculative bubble.

Saturday, December 1, 2007

I Give Up


When we moved to this rental in El Dorado Hills we believed that we would only be staying for 6 months -- maybe less.

That was nearly 2 years ago.

In the past week, a Streng atrium model home came up for rent on Craig's List. My daughter and I went out and looked around the yard, pool, etc. and peered in windows and I decided to pursue it. Sig went down and looked at it separately from me, but we both did the tour.
Frankly, it's not worth the rent they're asking. The property management guy did emphasize that the owners would be doing some fix-up and painting, to be fair. But the bottom line is that this Streng was somewhat poorly maintained, and the owners did some things that it would be hard for me to live with in this particular style of house: they took out one of the planters and put in planking which lays beneath the level of the room just enough to trip you, they put up a chair rail in the area off the kitchen (doesn't fit modern style at all, and since you have to look at it from all over the main open room, it's a constant thorn in your side). These are major design flaws that I would not feel free to correct in a rental house. In addition, they removed the Oriental-style lanterns and hung some kind of smoked-glass ugly lights, and of course put ceiling fans in. Ceiling fans seems to be the hot item that original owners switched the great modern globe lights or lanterns out for.

If it had been up to me, a notoriously impulsive person, I would have put a deposit on the place and moved, because I love Strengs. But Sig was not that impressed, and we sat down and made a pro/con list:
Pro: Cmyst likes Streng atriums and this is a Streng atrium.
Con: Sig is worried that the doggies will pee on the plants (not the end of the world, certainly...) and that grandkids will delight in removing the rocks, throwing the rocks, and perhaps eating the rocks (which could be bad if the doggies DO pee on the plants...)
This prompted a discussion on how much I really love this particular model and how it is likely to be what I end up purchasing, one day, if I'm not too old, and if mortgages are ever able to be obtained again without 20% down, and if house prices once again revert to their historical norms.
Pro: The yard is much smaller than the one we have, no lawn, no maintenance other than turning on the irrigation system in the summer to maintain the ground cover. Sig was very excited about this. Our present gardens are way too much for us, consisting of several pathways and decks and gazebo. Even hosting parties of up to 20 people, we use about 1/4 of the available areas comfortably. In addition, we have a huge front garden area that gets used even less. But we must still maintain these areas, as our landlords are notoriously lax about providing gardening services as were promised, but neither have they made any noise about raising our rent so we just do a lot of maintenance and keep our yaps shut.
Con: There is no real area that is safe to host large outdoor parties (which we do about 3 times a year) or to set up the grill in a way that the cook can maintain conversation with any diners. The yard is perfectly fine for a couple who never entertain more than 2 other friends. For a couple with a large extended family, it does not work.
Pro: It is closer in to Sacramento, and the neighborhood is safe. It would be much easier for me, as most of my work visits are in the area.
Con: Sig believes it will be noisier and that there will be more traffic congestion problems. I disagree with him, and really --- I know these neighborhoods lots better than he does.
Pro: No water bills! We are currently spending about $125/mo on water bills, an unexpected expense when we moved from an un-metered Sacramento Co. to metered EDH Co.
Con: Other utility costs MIGHT rise. The incredibly large skylight, which I love, might also be a huge energy cost from lost heat in winter and incoming sun/heat in summer.
Pro: There's a swimming pool and a hot tub, functional, and pool/spa servicing provided. There really isn't any con to this one, and Sig really wanted that pool. He talked a lot about it. Me, I want the hot tub.

So far, we pretty much have balanced pros and cons. But there are a final 3 cons:
Con: We would have to spend $3,000 minimally to move into the house. We will probably get a return of our current deposit of $1800, but that would be long after the Christmas season and it's likely we wouldn't get the full amount, no matter how clean things are. That's just the reality.
So, our entire savings would be depleted and we'd have to borrow for kid presents (only kids get presents in our family, which has made the holiday a lot more enjoyable for the adults) and for a post-New Year's weekend trip that we've already planned and made reservations for.
Con: The rent for this smaller house with a smaller yard in an OK suburb is the same as for our current house in a much safer, quieter and more upscale in reputation suburb.
BIG CON: We'd have to move. Sig feels that since I work outside the home and he doesn't, he'd have to do most of the moving, like he did when we moved here. We'd have to hire movers for the appliances and beds, as Sig had a neck/back surgery history that is supposed to prevent him from really heavy lifting. That would probably cost an additional several hundred bucks. Moving is an incredible hassle and is one of the main reasons that I want my own home: when I do purchase, I never intend to move again. That's it. No more moving.

There really was no logical decision other than to stay put. IF the Streng had been more nicely maintained by owners who understood they had a modern home, not a country home; IF the rental rate had been $300/mo. less; IF the yard had been a little bigger.

So, I'm really bummed now. I had plans to start a new Blog on my rental Streng. I was hoping to finally be done with waiting, even though I still can't afford to buy any decent Strengs that are on the market currently. I took a farewell tour of all the neighborhoods (minus the Elk Grove one, it's just too far to go on a Friday just before rush hour) where I have tracked Strengs: off Hemlock in Citrus Heights, the Northgate area where the rental house was, the Wildflower Circle area of Carmichael. And I gave up. There is no sense putting any more energy into this pursuit because it is fruitless. Prices will EVENTUALLY come down, but until they do I think it's best for me to just put Strengs out of my mind and do what I said I was going to do way back in my first post: settle in here, put up some pictures, de-clutter the boxes from the Den and perhaps fix that upstairs guest bedroom into a little office so I can remove all my work-related stuff from the dining area. Maybe I'll buy a good refurbished hot tub; there's a spa area with 110 and 220 already hooked up just outside. Maybe Sig will get a telescope for the upstairs deck. We talked about all of this when we first moved here, and I think that I've finally accepted that it is time to actually LIVE and that it is entirely possible to do that in this rental house.

Thursday, November 22, 2007

The Incipient Moment


For many years, we have been told that the Chinese symbol for "Crisis" consisted of "danger" and "opportunity". In fact, the lower symbol is not "opportunity". It is roughly translated as "crucial point". Our misinterpretation of this Chinese symbol is in itself symbolic of the current
mental state of the housing market.
Many of us have adapted psychologically to housing prices that have been outrageously out of whack with fundamentals. We are at that point now where prices in the Sacramento and Central Valley area have fallen off substantially from their ridiculous highs of 2005. In comparison, some houses are beginning to look like bargains.
But is this an "opportunity"?
Or is it really that crucial point where the market and our economy pause before the crisis in all its full-blown destruction actually begins?

This past week has been a challenging time in my 2 year journey into the Sacramento area housing market. As I have mentioned before, I have a fondness for Streng homes.
These mid-century modern tract homes can be found in clumps and individually from the most exclusive neighborhoods like Shelfield Oaks in the Arden area to rusty working class neighborhoods in Elk Grove and Foothill Farms. No one is building tract homes like these any longer, though in my opinion some of these struggling builders could do far worse than to emulate the Streng's sense of style and add in some eco-friendly materials and energy-efficient components like they are doing with the same old tired stucco designs that have been promoted as the apex of tract home luxury and class. From the first time I ever stepped inside a Streng atrium model, I was in love; but at the time I had a house and I didn't pursue the matter. Now, that mysterious house with concrete paths and indoor gardens is no longer a mystery. I know what it is, and I know where to find it. But it's not any individual house that I'm in love with. It's the design of these homes that I have fallen for. I am currently tracking any reasonably-priced Streng in the Sacramento area. (Those under 400K, which means the Arden area is out of my league). I prefer the atrium models, but the other models have design elements such as clerestory windows and open-beam ceilings, that make them nearly as attractive to me.

My first, and relatively minor, challenge came when a Streng with very good bones came on the market in Elk Grove at a price that was 50K less than the other 3 Strengs in that area were asking, and with much less and relatively easily remedied futzing around with the basic design elements. (These houses can be prey to over-zealous flippers who want to upgrade them right into granite counter top mediocrity). In comparison, this house seemed to be a real bargain. And to give this owner their due, they priced this house with the right attitude. I even went to the trouble of looking into pre-qualification and what my payments would be, and that is where I pulled back. Because even though the house was priced at about 3 x my income, and was the best priced house in the neighborhood, it was still priced too high. It had a paper gain of well over 150K in 10 years, roughly doubling its asking price. Moreover, the crime rate of the area was well over the national average and household income, while still over the regional average, was a little low for the asking price. Because I recognized that the seller had at least made an effort to price well and was offering the most home for the money in that area, I was actually pleased when it went pending. A month or so later, though, it was back on MLS and had taken a further 10K price reduction. This caused me to reflect a lot on the advisability of buying in to what is still a sinking market.

Then, this week I was driving through Foothill Farms and decided to tour a neighborhood that I knew was loaded with Strengs, just to look at them. I like looking at what people have done with their Streng, and will never pass up the chance to detour into neighborhoods where there are a lot of them. Sometimes I eat lunch and do paperwork in my car in these neighborhoods, just basking in the hip wonder of it all. And to my astonishment, there were 2 houses for sale that I had missed in my weekly MLS trolling. When I got home to my computer and looked them up, it turns out they were priced below my parameters, which I set months ago in order to eliminate houses that were too far gone to rehab. These houses were not too far gone, and the neighborhood was solid and relatively quiet, filled with other Strengs that showed a lot of pride of ownership and a commendable level of respect for modern design. One of these two Strengs is a foreclosure, and it's being offered at just over 200K. It needs some work, and I've no idea what the inside is like, but on either side are very nicely maintained neighbors. Now, 200K is pretty damned reasonable in general. And I am inclined to want to look at this house more carefully, which would mean involving one of the Sacramento Bubble bloggers who is an agent -- and I don't want to do that unless I'm really serious. But it's hard to know if I'm really serious without seeing the house on more intimate terms. And even though this house is priced pretty well now, will it hold that value? If prices revert to their 2001 averages, it would not. In fact, if prices revert to 2001, this house in Foothill Farms is still priced about 70K too high. It's still 4.5 x the median household income for the neighborhood, which is still a little high -- though admittedly not as crazy high as the 10 x income in some places. There are other things to consider, too: the neighborhood isn't bad, but it isn't stellar. The house is not the atrium model that I love. There is multi-family housing in the area. Even from casual observation of the outside of the house only, it needs some serious sprucing up. Will other, more "move in ready" Strengs start hitting the market at the same pricing level in the next year? Or will it really take as many years as some people are predicting for the market pricing to fully correct to a sane level? I am not getting any younger, and while I don't want to throw money away, neither do I want to rent until I'm too old to be physically able to landscape and paint and renovate. I would like to spend a few productive years "coming home" to a place that I can make mine, instead of spending those years in a rental that I don't feel the freedom or inclination to modify to meet my needs.

Is this the opportunity within the crisis? Or is it the crucial point where the crisis really begins?
When in doubt, it is prudent to stop and think. Perhaps the turning of the year will bring further illumination.

Friday, October 19, 2007

Happy New Year!


(Haunted house courtesy of Business Week -- check out their take on it.)

A couple weeks ago the Bee had a really funny comment to an online article about the dismal state of housing in Sacramento, from a woman who insisted that she had to abandon her house, because it was haunted and was freaking out her child and nanny.

I don't know about this woman's house, which from the sound of it was in a new subdivision and was new construction, and therefore unlikely to have the built-up psychic trauma that is (as everyone knows) a key factor in a haunting. But I'm pretty sure that I lived in a haunted house for about a year. In fact, when referencing that time period, the kids (grown now) and I can always pinpoint the time frame by using that year as a reference, cited as "when we lived in that haunted house".

So, in honor of the popular conception of Halloween, here is my haunted house story:

My ex-hub and I, and our four kids, were happily barely surviving in Sebastopol when we were called back to Illinois due to a family emergency. At the time, real estate back there was in the same dire straits as it is here now, and instead of renting an apartment we "bought" a house contract for deed, since we could not get conventional financing. It was an old Victorian house that would have been way too expensive for us, except for the fact that it was in a working class neighborhood that was slowly deteriorating. It had the usual gingerbread trim, but my friend Sharon was upset about the "evil face" that was carved into the trim over the bay windows. It really wasn't an evil face; it was just a bearded male face, very stylized and surrounded by stylized leaves. Inside, there was a first floor parlor that you entered from the front door, and stairs leading up to the right. There was a room off the parlor that we used as the master bedroom, a storage room under the stairway, and a kitchen, bathroom, dining room and living room to the left. Upstairs, there was a huge open area with a large walk-in closet and a bathroom to the right, and two bedrooms to the left. The bedroom nearest the stairs had a closet with a door in the back that opened up to a stairway that led up into the attic.

Almost immediately upon moving into the house, my oldest daughter refused to sleep in the bedroom assigned to her, claiming that in the middle of the night the door in the closet sounded as if it was opening. The youngest child was sleeping in the large open area, and she complained about noise from the bathroom. We dismissed these complaints, and told the kids that the house was very old and that old houses made funny sounds and old pipes often rattled. Eventually, both the girls moved into my oldest son's room (it was the actual master bedroom, we just didn't want any of the kids sleeping downstairs, for security and safety reasons). It looked a little bit like a dorm room, but easily held all three beds and everyone's toys.
Over the course of the next few weeks, I noticed that none of the kids was using the bathroom upstairs. They even moved their toothbrushes down to the first floor bath. The first floor bath was quite a bit smaller than the second floor bath. It aggravated me, but I didn't question it. I think I had some notion that it had something to do with us using the first floor bathroom to toilet train the baby, and the other kids thinking that made it the "kid bath". Or them wanting to take their baths downstairs in the evening close to the rest of the family, because the house was much bigger than we were used to and even my ex and I agreed that there were times it felt kind of spooky. You never really felt alone in the house, even when you knew there was no one but you there. After the kids abandoned the upstairs bathroom, I was doing my very infrequent house cleaning one afternoon and decided to make sure it was clean. It was a fairly large room, and the door shut while I was cleaning the tub (which was actually dusty by that point). I didn't think too much about it, although I did have a very uneasy feeling while in there. It also had an odd odor, which I tried to attribute in my mind to just not being used. When I finished cleaning and tried to open the door, it wouldn't budge. Now, these were old doors and you needed a skeleton key to lock/unlock them. After what seemed like several minutes, but was probably just a few seconds, of me tugging frantically at the door it finally popped open and I got the heck outta there. When I closed the door to test it, it opened quite easily.

Another time, I came home from class (I was in college at the time, and chronically exhausted) and put my books and study materials on the dining room table, as was my usual habit. I changed clothes, and started dinner. No one was home except me at the time. When I went into the dining room to begin studying, my books were gone. I was really irritated, because I knew I had put them there. I demanded, "Give me back my books!". No one answered. I then began looking all over the first floor for them, to no avail, and finally became distracted by the kids coming home and finishing dinner prep. When I opened the large built-in breadbox to get the rolls for dinner, there were my books. There is no way that I put the books in that breadbox.

At that point, I was beginning to think that something was not right with the house. Things would go missing constantly, which often happens when you have kids and cats, but it was very odd things. And they would show up in very odd places. I attributed the sense of always being watched and never being alone to the cats, as I also attributed odd noises and clatters to the cats. The books-in-breadbox incident was really disturbing to me, though, especially after being locked in the bathroom. Plus, the kids were acting weirder than usual. They had enjoyed skating in the basement, which was half finished, for several weeks after we moved in. Then, they stopped that and seemed to just want to hang around with us in the living room all the time. Sometimes, when I woke up in the morning, I'd find all of them asleep on a pile of blankets on the floor at the end of our bed.

So, I gathered them all together, and told them about the book incident and the bathroom incident, and asked them if they had noticed anything strange about the house. They told me very disturbing anecdotes about a glowing green man in bib overalls who hung out in the basement, and being pinched at night. They claimed that the windows in the bedroom they were all sleeping in often opened, and that they had an absolute dread of the closet that led to the attic and the upstairs bath. It turned out that was why they periodically ended up in our room on the floor. Everyone, including my ex and I, had experienced "corner of the eye" movements that seemed like someone walking up the stairs or across a room, but when you actually turned to look there was no one there.

We all decided that the house was haunted, and then we debated how to deal with it. First, we decided that we'd just verbally acknowledge the ghost whenever something happened. We decided that no one would ever go, or be asked to go, into the basement or the upstairs first bedroom or bathroom alone. If anyone felt genuinely threatened, they were to tell me what happened. If something odd happened and it wasn't really threatening, we asked the ghost to knock it off. These measures did help a little, as did the feeling that we were all in it together and no one had to feel silly about their fears. But looking back on those days, that was an absolutely eerie house. The most beautiful house I've ever lived in, and yet there was that constant sense of foreboding that kept any of us from ever really relaxing there.

Eventually, we inherited another house from my mom and decided to let the contract house go back to the owner -- it didn't go against our credit, since he still held the deed. We hired some movers to help us move the beds and wardrobes out, and as they were going down the stairs they kept complaining about the poor ductwork and how there was a freezing cold spot on the landing. This was in July, with the front door open and the weather was humid and warm.
There was no duct opening anywhere near the landing, of course. We had a window air unit in the downstairs bedroom, but there was no central air in that house -- only a furnace in the basement. I remember exchanging knowing glances with my oldest daughter when the movers made that comment.

The Sig has a much more threatening and frightening story of living in a haunted house, but it's his story so I can't tell it. In the spirit of the season, feel free to tell us yours!

(BTW, what we call Halloween was the Celtic New Year, which they called Samhuinn. And trick-or-treaters came about due to the seasonal reflection on the deaths of members of the community and the custom of leaving food out for them, which morphed into young people dressing as shades and going from house to house begging for food. The original Jack O'lanterns were turnips, which had a skull-like quality. Any produce left in the fields after Samhuinn was considered inedible and as belonging to the local nature spirits. )

Tuesday, October 9, 2007

Forward into the Past

Greetings from Sciath ingen Aort, a Gael from Dal Riata circa 600-ish A.D. She is good-natured, if somewhat stubborn, and prefers the wilds to civilization. She wears simple tunics and leggings most of the time, but has a bog dress and some simple pins and torques for ceremonial occasions. Because there were historical Celtic female warrior chieftains, and also female remains in barrows that gave every indication of being those of important warriors, Sciath's role as an archer and light fighter/hunter/ranger is somewhat reasonable. The last thing that Sciath would be doing is attending Court, addressing people wearing ornamental head-gear with honorifics, and kneeling to them. She would be more inclined to be aiming at them.

And such is just one of the anomalies of Life in the Current Middle Ages, as the Society for Creative Anachronism likes to phrase it. It rests heavy on Sciath, and I'm none too pleased with it, either.

I joined the SCA under duress. I was a member of a much smaller group of friends who had been debating Celtic myth, history and languages for years. At some point in time, a couple of our founders ran across some SCA folk at some lecture or other, and they became friendly, and soon we were being dragged into all manor of aggravations such as Court and lessons in how to recognize and properly address SCA nobility. I've told them from the very beginning that not only is this historically inaccurate when it comes to our particular era and culture, but I find it personally distasteful. I usually avoid the whole mess by avoiding Court and walking away when I see people with funny pointy metal hats coming my way.

Be that as it may, I was a card-carrying Scadian for about 4 years and then I just got burnt out on it all and let it lapse. The main "War" that we attend is the Great Western War and it is held in the Kingdom of Caid (Southern California), where our friends live. In Caid, we have a household that now numbers over 35, and we are thus guaranteed an encampment and food and drink, and companionship. Unfortunately, we live in the Kingdom of the West (central and northern Cali, Alaska, Nevada and the Pacific Rim countries). The West is the original SCA kingdom, the elite of the elite. And it is incredibly difficult to find a niche here. There are more pointy hats and elite warrior/knights and artist/scholars ("Laurels") and organizer/scholars ("Pelicans") than it is possible to avoid. While some of them try to be helpful, there is more often than not a certain unconscious arrogance and clique-ishness. Many of them have known one another for decades, and there are now people who are third generation Scadians in the West. Since we only go to Caid once a year, in order to progress within the SCA we tried to find friendship in a local group, and it didn't work well. The Sig tried harder than I did, because that's just the kind of nerd he is. He researched period cookery and won the Kingdom level cooking award as the damn very first thing he did, which of course meant that we had to go to Court at our first event in the West, and we didn't have our household/friends around to show us the ropes. No one knew who we were, and you would have thought from the looks that he got that he had arrived at Court via teleportation from the Stargate or something. But soon enough, he made friends with the West archers. The Kingdom archer at the time was one of about 5 people in the West who went out of their way to try to assist us and teach us a bit, but he was difficult to access most of the time. Eventually, the Sig was just planning archery events and winging it. And then, I injured my knee two years ago this month, and since we hadn't really made any West Kingdom connections or friendships beyond the Ranger folk (and they tend to be a very solitary lot by nature) we kind of gave up as I was no longer able to trek around in the godforsaken areas that were set aside for field archery.
Last October, the Great Western War was cancelled due to our long-time site having a literal meltdown from the heat wave which fried much of the wiring for the lighting and control buildings. We didn't see our household in Caid again until this year, at the new GWW site in Bakersfield. And as happens EVERY DAMN TIME we all get together, the Sig and I began to get energized again about archery, and brewing, and cooking. We successfully avoided Court.
We came back and looked up the local group, and were very excited when it appeared that the local group was just forming up. Maybe we wouldn't be noobs again -- or at least, we could be noobs with other noobs. Sig has already volunteered to travel to Tres Pinos next weekend to judge a seige cookery contest at the Crown tournament (please, don't ask me to explain tournaments and Crown and heirs and succession. It's insane).

I am cautiously hopeful, but I have since learned from email correspondence with the Shire Marshall that the group we had thought was just forming was in fact an established group that had been inactive for awhile. If they are very needful of members, we will probably have found our SCA niche. This is about the fifth time we've done this, though, and the other four times never got us to the goal of fitting in and feeling comfortable. In fact, we'd been talking about selling the pavillion tent (don't ask...) and the period encampment gear. So, in about a month we'll have a better idea of where we stand here in the Shire of Mountain Gate (El Dorado county).

What does this have to do with housing? Not a thing. Which is good, even if this Shire turns out as disappointing as the old Province of Golden Rivers (Sacramento/Arden/Carmichael). Because obsession with the housing bubble and the MLS is even more boring, frustrating and aggravating than Court. Sometimes, you have to walk away from it and take a breather.

Saturday, September 29, 2007

It Really Is The Bottom Line


There's a certain comfort to the rituals that we all engage in.
One of my own is the Sunday browse through the MLS with a big latte', hopefully conducted before anyone else is awake so that I have blissful peace and total self-indulgence. I started this ritual right around October of '01. At the time, I didn't believe that I had decent enough credit or a large enough income to qualify for a mortgage, but I enjoyed looking and thinking about the various areas in the greater Sacramento metro, and seeing what people had done with their properties and what the trends were in renovation, etc. As Fate would dictate, even though I adored the job I was holding at the time, outside forces compelled me to seek another position and suddenly I was earning enough to actually afford to buy a house. My RE agent and his mortgage broker both assured me I qualified for quite a bit more house than I really wanted to take on, and eventually I ended up with an entirely reasonable mortgage on a nice condo about 10 minutes from my job.
Over the years, I continued to browse the MLS and noted that prices seemed to be going up a lot. A co-worker advised me about 2 years into my mortgage to refinance, because interest rates had dropped and equity had increased, and I could get a lower house payment. Amazingly, this was true. I also took most of the equity out at that time, in order to pay off about 50K in combined student loan and credit card debt, which gave me a little bit bigger house payment but I got rid of hundreds of dollars of monthly payments and saved thousands in interest that I would have paid out over the years. A year later, I decided I needed to make a change in jobs again, and accepted a position that paid less but was much less stressful. I also took a month off, and my friend and I went to an SCA "war" in Arizona with friends, and then met some other friends in LA and stayed in Hollywood for a couple days while visiting the Getty museum. On the way home, the Sig and I stopped in Santa Barbara for a day on our "Sideways" tour of wineries. In order to take that month off and that little vacation, I again refinanced and took out about 10K, probably the most foolish thing I've ever done, and also probably worth it for my sanity's sake. On the up side, about 4 months into my new job, I was offered the exact same position with a different employer who was willing to pay me the prevailing wage for my years of experience and I again ended up earning a very good income and benefits, and vacation time.
A year into my now very satisfying (financially and professionally) job, and still reading the MLS, I began to think that I needed to move. The Sig and I had to walk the doggies four or five times a day, from our top-floor condo. Our guest bedroom had gotten cluttered with exercise stuff, SCA stuff, archery stuff and books, and we had to store most of our camping stuff in a storage facility a few blocks away for about $100/month. We had ambivilent feelings about the condo community, which consisted of some really great people and some really crazy ones. And I was also paying attention to a guy named Bonddad from DailyKos who was saying that there was a housing bubble. I didn't understand "bubbles" at the time, but I knew people that had lost homes in the 80's and 90's due to ARMs and felt an aversion to them. I also knew that people were spending a lot of money on cars, trucks and furniture and that most of the houses on MLS seemed to have been upgraded with new kitchens and baths and pergo floors lately. I decided it was a really good idea to sell, and once again my same RE agent and his same mortgage broker associate told me that I'd qualify for about twice as much as I could afford. Only this time, I didn't want a condo, and that left us looking at houses that were horribly disappointing. Out of about 10, only 1 of them made us feel like buying, and someone beat us to it, THANK GOD. Once the condo sold, and we had 30 days to find a place, we decided to try renting a house instead and we were very pleasantly surprised at the variety and cost. It was a no-brainer at that point.

Nowadays, after having rented for about 18 months so far, it's still a no-brainer. Only now, instead of mortgage brokers telling me that I can afford a 500K house with no money down with a 610 FICO, they're telling me that they'll lend about 250K and I have to have at least 5% down to get a 6.25 % interest rate first mortgage with a 10% second mortgage for the remaining 15% down. 10% is a little high. IOW, I need 20% down now to qualify for a reasonable interest rate for about 2.5 x my income, and the only reason I can even get a 10% rate on a second mortgage is because my FICO is now around 800. And no guarantee that those interest rates and the down payment requirement will stay where they are until the houses that I am interested in drop into the 250K range, which will probably take at least another year or two. (And the mortgage broker I spoke with kept emphasizing "and of course we will need proof of your income".)

So, think about this, home sellers. Really think about who is out there to buy your house, and what they can qualify for, and whether they can REALLY qualify at all.
It's a damn shame that so many people made so much money on this Ponzi scheme for so long, and that you didn't. But the fact is, you waited too long. If you really do need to sell these days, you have to be willing to accept an awful lot less than some people got in 2005 or even 2006.

As for me, I could have done better. I could have another 10K in the bank right now, if I'd not have taken that month off between jobs and that very frugal camping trip to the SCA Estrella War and to LA (Travel Lodge, not Hilton) for Sig to see Grauman's Chinese Theatre and the Walk of Fame and "Hollywood" sign. But I can't really complain, because I bought that condo with no money down, a marginal FICO, and 50K debt. And I am now debt-free, with a few thousand in a money market account, and a FICO of 800. And being debt-free, after 20 years of struggling to pay off debt, is such a wonderful thing that there is no way that I am ever going to pay more for being able to say that I "own" a house than I would pay to rent that same house, minus tax and mortgage interest.

I still maintain my ritual of MLS browsing. And I've developed a strong interest in modern architecture and design. I still have my very short list of Streng homes on the MLS in neighborhoods where I would probably be one of the higher income residents -- not ones in Davis or Arden Park, where I'd be the poor kid on the block. Sometimes, one of these homes that I track goes off MLS, and I usually go to check on it when I find myself in the area, to see if it looks empty or if it looks sold. And if it looks sold, I never feel sorry that I didn't put an offer in, even though I do feel sad when I take it off my list. I tend to think that in another year or less, I might just be seeing it on the MLS again. Besides, even though they really aren't building more Strengs, people still do sell them, and when one door closes another door opens. My list has been pretty stable at about 5 houses for the last six months, from a high of about 12 houses a year ago. And the bottom line is that no matter how much I like a house, if I can't afford to buy it and still eat and enjoy a few weekends in Tahoe or Monterrey or a yearly vacation to see family back east, then it's not worth it.

Sunday, September 9, 2007

Gardener Included


When we made the decision to rent our current place, it was after we'd looked at probably 5 or 6 other houses. Our criteria were relatively simple: safe neighborhood, fenced in yard, no really big dogs in the neighboring yards, not near a school or church (traffic).
Every place we looked at had fencing falling down, including this one. Every house we looked at had a large dog in the next yard, some of which were busily engaged in trying to dismantle the fencing (which they had nearly done in a couple of the places), including this one.
But by the time I drove all the way up to El Dorado Hills to look at this place, we had a good grasp on the typical rental yard size, and it seemed to go down as the size of the house went up. The biggest house we looked at, in Roseville, had the smallest and most useless yard. One of the reasons I sold my condo was because we wanted a house with a yard, for our dogs (very tiny dogs, 13 pounds and 8 pounds) .
And this house had YARD. Man, did it ever. The front yard was about twice as big as the entire yard of the McMansion in Roseville, and it had a walkway meandering through it and a little alcoved patio just Bistro table sized and perfect for sitting at and watching the neighborhood. The backyard was like a park, complete with trails and a little bridge, and a small barn-like outbuilding that we later discovered had power and lights.
So, it was easy to ignore the big dogs in the yard behind the house, because there was a little ditch and a gravel drive between the fence and the main yard, and the rear fence was very sturdy and reinforced with heavy metal posts as well. The side fencing needed some repairs, which we figured we could easily do. Our main concern was the extensive gardens and landscaping, because I have a bad back and bad knees (I used to ski and mountain bike) and Sig has two fused vertabrae in his neck and isn't supposed to be doing much lifting and hacking. But, according to the property management company, "Gardener included" in the rent.
So, we jumped on the rental and felt pretty good about it. And we didn't expect any gardeners to show up until later in the spring, when it stopped raining. But spring turned into summer and we still didn't see any gardeners, and the pathways were beginning to get over-run with vines and bushes. One of the trees appeared dead, and there were several large, heavy branches hanging over the rear patios (there are four patio areas at this house and one deck off the upstairs master bedroom). The rose bushes were going nuts. There isn't any lawn at this house, a great blessing that I have come to really appreciate, but things were growing in the multiple flower beds that I wasn't sure were supposed to be growing there. So, we called the property management folks and asked when, exactly, the gardeners were scheduled to begin.
And a day or so later, the owners of the house showed up. THEY were the gardeners. And they're very nice people, but they're not spring chickens, either. Their first "gardening" went well enough, and we found out which plants were good and which were unwelcome, and how to turn on the irrigation system, and that the tree I thought was dead was always the last tree to leaf in the spring. Sig felt very uneasy with the owners working outside while we sat inside playing computer games, so we had to go out and "help". A few months later, they came back and we all raked and blowed the leaves into about 25 large yard leaf bags, and they cleaned the gutters. This spring they came back, and did some weeding, and they were going to fix the trellis that had fallen over the shed door due to the weight of the roses on it. They said they'd be back in a couple of days, but they never did come back.
By now, we had purchased a wide assortment of clippers and trimmers and trowels and shovels and rakes and brooms and a wheelbarrow and a leaf blower. And we just hacked the roses down so that we could get into the shed, and let them kind of fall to the side. It isn't quite as lovely as the heavy spray of flowers over the shed door, but it's a lot less deadly. Sig had mentioned mulching the large side yard that's outside the side fence. There are several neighbors facing that yard, and their yards are very tidy. The side yard looked kind of desolate and forsaken. The landlord told Sig that the ivy that was growing in the front/side yard would eventually work its way around and that mulch wasn't needed.
So, Sig went to Home Depot and bought mulch. He bought over 30 large bags of redwood mulch. He didn't know that it would be cheaper to just order a truckload of the stuff to be dumped. He's from New York City, for pity's sake. The side yard looked great when he had finished, and the neighbors made a point of telling him so. "We didn't want to wait for the ivy to cover it", he told the neighbor. "I've lived here for over 15 years and the ivy has NEVER covered it", the neighbor replied.
Then, early this summer we went out into the front yard and pulled out a lot of creeping, tangled prickly things and dried weeds, and discovered the front yard irrigation tubing and fixed some of it. And that was pretty debilitating, to tell you the truth. We were pretty gnarly that day.
And today, I went out to do a little "spot" weeding and discovered that a large evergreen bush on the side yard was growing down so far into the roadside ditch that it was impeding the flow of the run-off. The main street into our neighborhood is along that side yard, and all the run-off goes down that ditch. I had to pull out mats of weeds that were growing in it, and then Sig came out with the power trimmer and we hacked and pulled and cursed and sweated and finally got the damn drainage ditch clear.
And yesterday, Sig fixed the front door. The landlord had attempted to fix it a few months ago, but his repair job only lasted a week or so. The front door is very nice, a big double door with a thumblatch handle that you depress and pull to open the door. Only, the latch was broken. So, even if the door was unlocked, you couldn't open it from the outside. It bugged Sig to no end that he had to keep letting people in the door. We decided to just fix it because the last time the landlord had not really fixed it, and he'd been here for hours. Sig bought an entire new kit for the door, with deadlock and handle and knob. All we needed was the handle, but they don't sell just handles. You have to get the whole enchilada, and it isn't cheap.
We also have ductwork that periodically becomes detached from where it is supposed to be, and the two front (west side, with really big windows) bedrooms get no cooling at all. We didn't realize this until a relative came to stay with us just as the summer was really heating up. And we also have periodic problems with mineral deposits in shower heads and the kitchen spray faucet. I really suspect that the hot water heater is getting ready to go belly up. And the garage has a horrible odor. When we first moved in, we thought it was probably from a dog that was probably kept in the garage. It's not. We don't know what it is. There's a crawlspace next to the garage -- which is where the handyman who came out to "fix" the ductwork went. ("I have to come out here a couple times every year. They really need to just put in new ducts," he told Sig.) If you leave the door from the garage to the den open, it will stink up the den. There's a pantry off the den that smells very faintly of the same odor.
If this was my house, I'd either fix these things -- and in the case of the ductwork, for sure I'd fix it -- or I'd deserve to live with them. But it's not my house. Sig feels that we should just go ahead and hire a landscaper. But we can't afford to do that, which brings up rant #2 for the month of September: when we first moved in here, we were saving about $500 a month. Now, we are unable to save anything. Zilch. We are racking our brains trying to figure this out, and the only thing we can figure is that gas, food and utilities must have gone up. We don't eat any different than we always have, and nothing else has changed. A year ago, I wouldn't have batted an eye about hiring a landscaper. But after wrestling with the household budget for the last 3 months (when I first started noticing that money was leaving faster than it was arriving) it's obvious that we don't have any money to waste on someone else's house, and that perhaps one of the reasons we aren't able to save money any longer is because we are spending it on fixing the house, fixing the yard, and tools for fixing the house and the yard. For a house that isn't ours.
So, I'm kinda peeved at this notion that renters are evil people who will tear up your house and who will make neighborhoods deteriorate. I'm sure that some renters are like that, but in my experience, and this is not the only landlord/tenant situation I've been in, the problem lies more with the OWNER. They usually don't want to pay anything out to maintain their rental property. They no longer take pride in it. They resent you if you call them to report a problem. They want the monthly rental check, and otherwise they want to forget that the house or apartment exists.
I love the yard here, and we aren't strictly speaking playing "by the rules" either. I have a young family member staying with us (we have 3 bedrooms) so that she can afford to attend college, and we didn't bother to notify the property management company or get permission from the owners. We figure the owners aren't going to care, as long as we're quiet and clean. And the property management company would only want another $50 to run her credit, which is silly, since her income has nothing to do with us renting this house. I hate moving, and it's expensive to move. You never get your full deposit back, no matter how clean you leave a place, and before you even get your partial deposit back you need to pay your new landlord a deposit and first month's rent. It's very expensive to move when you're renting. It was my goal to ride out the housing storm in this house, for the duration.

Sunday, August 5, 2007

The Tipping Point

I'm sure that in retrospect, the actual point at which the credit bubble avalanche began will be some other week, but as far as I'm concerned it started the first week of August, 2007.

Because that was the week that it began hurting my family economically. Not that they don't deserve it; but they're MY FAMILY and I love them. And they are really representative of families in the millions all over this country. People -- regular people, who don't obsess about any kind of "bubble" and who don't even know what "bubbles" are -- are beginning to smell change in the air. They don't know that Bear Stearns is going through a shake-out in management due to the massive failure of three of their hedge funds based on CDOs in the mortgage industry, they don't know that over a hundred mortgage banks have failed, they don't know sub-prime from prime rib.

All they know is that it turns out Real Estate doesn't always go up, that they actually CAN'T refinance into a lower house payment, and that even selling their house isn't an option because no one is left to buy it for what they owe on it. And they don't know what to do.
The cost of food has gone up.
The cost of gas has gone up.
The cost of heating/cooling homes has gone up.

Workers in all sorts of businesses are beginning to feel the effects of the spigot of easy credit suddenly being shut down. Hours are being cut, and paychecks are shrinking even if people keep their jobs. Health care share of costs have been getting larger and larger over the last few years, and that has been a concern all along for most people, but suddenly it is a HUGE concern because they can no longer borrow in order to pay for unexpected doctor visits and they no longer have the extra money for that $70 copay after they buy groceries and pay utility bills.

Wall Street is finally beginning to feel the effects, too, but I don't give a flying flip about Wall Street, ya know?? That great need that market players have to make massive profits fed into this mess. It drove the credit bubble, and that drove the housing bubble. If Wall Street had taken their lumps back when the Dotcom bubble burst, we wouldn't have this ever-so-larger bubble to deal with now. Back then, it really was contained, to bubble investors and to the technology segment. It hurt, then, too. I had a son-in-law, as well as an old friend, who both lost jobs and to this day do not work in their fields of computer engineering and technology, and who are both making much less than they did. But this credit and housing bubble is much more far-reaching. People were feeding our consumer-driven national economy with equity from their homes, not from any increase in their wages. People bought and flipped homes, never intending to live in them. Mortgage brokers and Realtors made two or three times what had been normal yearly compensation, as the "value" of houses skyrocketed and took their commission percentages up with it. OF COURSE these "professionals" are not going to tell the media, or the consumer, that Real Estate under normal circumstances does not continue to appreciate at double digits every year. They may not even want to admit this to themselves.

Cities and towns all over the country believed that they were having massive growth. They built schools and planned on the windfall taxes being permanent. Builders negotiated new subdivisions, and new infrastructure.
And no one seemed to notice that most of those homes never had anyone move in; or that the same person was claiming to be living in multiple homes in the same subdivision. And now, the builders have to finish projects, and have to keep building even though it's evident that no one is buying. And there aren't enough students, so the new schools never open. And tax revenue is going down.

The avalanche is picking up speed. When it's all over, yeah, I will probably be able to afford to buy a house. I wonder if I'll even want to, at that point.

Monday, July 30, 2007

My Humble Story


There's a lot of angst currently floating around now that the housing bubble has begun to deflate. I have come to understand that this was not just a housing bubble, but a credit bubble. And that the roots of the problem were in the dotcom bubble just prior. And now that it appears that we have come to the end of the easy money economy, many people are worrying that life will become brutish and violent and very, very hard.

First, I'd like to point out that for the majority of the Earth's population, living standards are closer to Stone Age than Industrial Age. More people need plumbing and reliable energy than an upgrade to a plasma TV. Not being able to take a vacation, buy a new car, go out to eat, etc. does not constitute suffering. I know. I've been there before. Here is my story:

My parents were good people, born and raised during the Depression years. They were remarkable people. They both had learned Latin in high school. My mother had a BA. My dad had gone from high school to a good union job. But because of that Depression upbringing, they were frugal beyond frugal. They had met in their 30's, and were about 10 years older than most of my friend's parents, and this evidently made a huge difference in their attitudes toward debt and savings. My brother and I got new clothes every Fall when school was starting, and if we needed shoes or outgrew something we could get another, but otherwise not. My maternal grandmother was a great country cook, raised her own chickens and eggs, made her own noodles and breads and preserves, canned vegetables, etc. My mom carried on that tradition in the suburbs. We had a 1/4 acre lot, and the entire back portion was a huge garden. We had a huge freezer in the utility room, and we froze corn, beans, peas, broccoli and carrots. We pickled beets and cucumbers, and canned tomatoes (which are higher in acid and relatively safe to can).
My dad would buy a side of beef and have it cut up every six months or so, and my grandmother supplied chickens and her famous noodles. Once in a blue moon, we would go out to eat, and it was a major event. As I got older, I went with friends more often to burger joints. I remember when the Big Mac was introduced, and I remember when the first Long John Silver's came to Decatur, Illinois.
To make a very long and painful story short, I grew from a happy childhood into an angry adolescence, largely because of the Vietnam War. Every day the war was on the evening news, and the older brothers of nearly all my friends had been drafted. Some were killed. As we got nearer to adulthood, most of us began to feel that we could not escape the reality of the Draft. We were working and middle-class kids, and the boys we grew up with didn't really consider college as an option for the most part. We had grown up being supported by blue-collar fathers, in a blue-collar Midwest industrial city. When you thought "economic security", you thought UAW or AFL-CIO, and lucking into a job with Caterpillar Tractor or Firestone Tire or Staley's.
Our hormones were strong, and we were fearful of the future. When my first boyfriend enlisted in the Army in order to have better options than waiting until his draft number came up, I freaked out. The next boyfriend, I made sure I could keep a piece of. I got pregnant at age 16.
We had just been through the protests and civil disobedience of the sixties, and we were moving towards the Nixon resignation and the political upheaval of the post-War era. The economy sucked, but you didn't really think about it because somehow it was all just part of one big picture of social, political and economic distress.
My new husband and I were way too young to be parents at ages 16 and 18 . We struggled with the times and with one another. I was on the Pill when I became pregnant with baby #2, and we were living in a two room apartment. He decided to join the Army, and our life became manageable finally. We were not good together. He was volatile, and I was not one to be intimidated. By now we were living in Texas, and I got a job working as a utilities service worker for the City of Killeen. It was a good blue-collar job, and I earned a good wage and had good benefits but I didn't think about it. We always used the Army benefits instead. We now lived in a four room duplex with two kids.
When his 3 year enlistment was up, we moved to Austin so that he could attend UT. He had a part-time job at Motorola, and I worked part-time as a waitress. I was using a diaphragm and became pregnant with baby #3. This totally blew our shakey finances. Baby #1 had been paid for by my father's excellent health program under which I was still covered, Baby #2 had been paid for by the US Army. This one, we had no insurance. I was seriously considering home birth due to the financial burden. I was able to qualify for prenatal care through some program or other, but it didn't cover the hospital. I ended up needing a c-section, and I insisted on leaving the hospital about 3 days later, with strict orders not to lift anything heavier than the baby. I came home to a totally wrecked apartment. My husband had dropped me off at the hospital, and the older kids off at my best friend's apartment downstairs, and disappeared. He didn't know when his 3rd baby was born. He ended up having a motorcycle accident a few days later, and the police brought him home from the ER because his license had our address. He had a concussion, and I was supposed to watch him closely for 24 hours. We were now living in an upscale 2 bed/2 bath apartment in Austin, with a terrace! Woot!
We moved to a 3 bed, 2 bath rental house in the suburbs at this point. His motorcyle was repaired, and I drove the Subaru sedan. The house didn't have a refrigerator, and we couldn't afford to buy one, so we kept food in an ice chest and bought ice every day. He was still going to school, and I was working full time nights at a 24 hour restaurant called JoJo's . I came home, barricaded the crawling baby into the living room, and slept on the couch while she played. He worked and went to school during the day, and came home (hopefully...sometimes he didn't) in time for me to drive to work. This was the late 70's. We had gas lines. Inflation was crazy.
At some point in time I began seriously plotting how to kill my husband, who by now was not even spending holidays with us, because when he did show up he was abusive and frightening. It occurred to me that perhaps it was time to take the kids and move out. Using our tax refund, and carefully putting 50% of it into the account that he could access, I opened my own account and then saved up enough over the course of a couple months that I could rent my own 1 bedroom apartment. I took the kids, 3 plates, 3 cups, 2 saucepans, 1 dutch oven, and a flatware set for each of us, our clothes, one set of linens, and left. I did not leave a forwarding address, and I could not afford a phone. He eventually showed up at my job, of course, and his main concern was that I had taken 50% of "his" tax return money. He occasionally came to see the kids, or take them for a weekend. My friends were concerned that he would take off with them, but it never worried me. He did not really want to be a father, and as long as I didn't ask for support money he wouldn't bother me, and I knew it. I couldn't afford babysitting, and I was still working nights at JoJo's. The apartment manager lived next door, and she agreed to keep the baby at night for $20/week. The older kids had strict orders to stay inside, and to go to her apartment if there were any problems. I put them to bed at 9 pm and went to work at 10pm. I got home at 7 am, picked up the baby, woke up the older kids and sent them to school. I then barricaded the baby into the living room with me, set up her toys, and slept on the couch. Finally, she crawled over to the kitchenette area, and managed to pull up on a chair and then reach onto the table and break a cup. She cut her finger, the older kids came home to a bloody baby and immediately got the manager, who woke me up. That was it for me trying to support myself and the kids on my own. We took the baby to the ER, where she got 3 stitches in her little finger, and within two days I was on my way back to Illinois and my mother. I moved in with my mother (my father had died just after baby#2 was born) who was doing volunteer work for a social services agency. With their help, I got on AFDC and food stamps. I began taking classes at the community college. I eventually moved into a small 2 bedroom trailer with the kids, who all shared a bedroom. We had no TV. We still had the Subaru, which we had bought used years before. And about six months later, the second man I married moved into the trailer across the street. He was a pipefitter, and compared to me, he was wealthy. He was 27 years old, and I was 23. He wanted to be a family man, and I had the family. And best of all, he was from California. He was only working at the nuclear power plant in Clinton temporarily; it was what he did, traveling from industrial construction site to site across the country. He made enough in one paycheck (working 60 hours a week) to buy a good used Camaro from one of the poor shmucks who'd been laid off from Firestone (it was now 1981), and after dating me for about 2 months, he wanted to move me and the kids into a very nice 3 bedroom townhouse with a loft playroom. He bought me a fur coat. He bought the kids toys and clothes. My estranged husband showed up as soon as he was served with divorce papers, and he was soon on the road back to Texas driving the Subaru. The kids spent a weekend with him before he left, and that was the last they heard from him for about 5 years.
The second husband was a hard worker and a decent father. He had very different views than I did on several subjects, but I always rationalized that his views on other people weren't important. His views on family were important. During this time, we "bought" two houses contract-for-deed because the interest rates were so high that we couldn't qualify for a home any other way. We moved back to Texas when he took a job in Houston for a couple years, and let the house go back to the owner on the first place. I had just had baby #4, for which we thankfully had insurance. He started a business in Houston when his industrial construction job ended, and we were doing well, and then I discovered that he was not paying any taxes and that he in fact had not paid income taxes for years. This absolutely floored me. I realized that we could not have any kind of secure life with this hanging over us, and I insisted we talk to an attorney, who helped us to arrange to pay off a massive 50K tax debt to the IRS. My second husband was terribly upset that I had insisted on this, and never forgave me for it. We ended up moving to a property that his mother and step-dad owned in Sebastopol. When we arrived in California the first time, we had less than $5 left. His dad was an engineer at Bechtel in San Francisco, and was able to get him a job working construction for them. He made $30/hour and most of it went to the IRS. We lived in a converted warehouse (I'd love it, now! But I'd have to do some serious remodeling). We had electricity and cold running water. We heated the water on the stove, and poured it into a big round galvinized bin for baths. We pulled it out to the loading dock and dumped it afterwards. There was an outhouse behind the warehouse. At night, we had a cat named "Killer" that hunted the mice in the warehouse. We hung sheets to make "rooms". But we lived in the middle of an orchard that was no longer being used commercially, and there was a fruit stand that my mother-in-law rented out at the bottom of the hill. We could eat all the peaches and Gravenstein apples that we were able to, and we made a lot of pies and jams. The kids would go down to the fruit stand and buy grapes and berries as a treat. And our weekly trip hauling our household garbage to the dump would have been considered a scenic drive in Illinois, through Redwood forest and up mountain roads. We lived directly behind the first commune that had any notoriety in the sixties; I think it was called Morningstar Ranch. It was not a commune when we were there, though. During this time, my mother became ill and six months later the kids and I were on a Grayhound bus back to Illinois. My husband packed up our meager belongings and followed, and we "bought" another house contract for deed and moved my mother into the bottom bedroom. It was a huge Victorian, with entry foyer that could have been a living room, dining room, bath, kitchen and bedroom on first floor and two large bedrooms upstairs with another hall that we used as a third bedroom, and another bath.
It was in a working class neighborhood, and I think we agreed to pay 18K for it. This was 1984 or so. My husband got a job with one of his old construction buddies, and we bought a used boat.
My mom died a few months later, and we moved into her house, let the CFD house go back to the owner and inherited her remaining mortgage. Our house payment was $140/month. We stayed in Illinois for the next 12 years, and amazingly enough it never even occurred to us to pay off the loan, which would have been relatively easy. I borrowed money to finish college. I worked for a year after college, and when we wanted to buy a bigger, newer home we were told that because my husband was a construction worker they could not count his income and that my income alone was not enough for the homes we were looking at. We were devastated. My oldest son was in high school by then, and my oldest daughter (after a period of angst that made my own adolescence seem normal) married HER boyfriend right out of high school, he joined the Navy, and they were in Florida. One was in middle school, and the youngest was in grade school. Decatur was by this time a post-industrial nightmare, ravaged by the high inflation and unemployment of the 70's and 80's. The union jobs had dried up. The drop out rate was around 50%, as I recall. It was just flat depressing, and it felt like a trap that we would never get out of.
We started looking at jobs back in California. We had vowed never to return until we could afford the lifestyle, and with my new career we could afford the lifestyle. I took a job out here making exactly 3 times what I made in Decatur, and we already knew what our housing, food and energy bills would be thanks to careful research for six months. The only surprise was the much higher cost to license our vehicles, but that was a minor concern. My husband was 39 and I was 35, and within six months of moving to Sacramento we had purchased our first conventional mortgage. We sold the house in Illinois that we had inherited for the remainder of the loan, which was 12k. Our first purchased house was 120k, a fortune to us. My ex still lives there. I supported the entire family for a couple years, and my husband grew a small business which now supports him and provides work for some of the kids and several employees. Eventually, as the kids got older, our very different views on some pretty important issues led to our divorce. He views it as "not making enough money", I view it as him not being able to stop spending money, but we're pretty amicable. We had a good 20 year run, and we both came out of it better than we entered it, and everyone survived, and that is the point to this whole thing: in the long run, you do what you can and what you must to take care of your own.
There are times when I miss Houston, or Illinois, or Sebastopol. There were wondrous things in each of those places, and I don't think the kids suffered for us having struggled, and I wouldn't change any of it.
I don't see how any future times could be worse than the times I've lived through, or the stories my parents told of their childhood in the Depression. All that trite stuff about tough times not lasting, but tough people always lasting, is true. Not everyone survives, but a lot of it is attitude.
Our needs are actually few. It is our wants that cause us to get into trouble, and it is very hard to extricate yourself from trouble once you start down that path. Success is a very relative thing, and it is very subjective. Being poor is not a failure, and without having been very poor I would not have learned some lessons that I needed to learn about culture, power, stereotypes and integrity.
Who knows what tomorrow may bring? Enjoy today.

Saturday, July 14, 2007

The Summer of Our Discontent

(That little white speck in the lighter area is the Earth, in a picture taken from deep space. We are a dust mote.)


There have been posts lately on Average Buyer and on The Housing Bubble Blog that point to a growing sense of foreboding of the permanent loss of physical/geographical community and of economic/social stability. Survivalists have gotten a bad rep since so many of them tend towards social and cultural phobias, but the reality is that there are a lot of leftist survivalists out there, too. Since I consider myself one of them, albeit one who has "fallen off the wagon" so to speak, I tend to think that my opinions on such matters as those referenced in the links above are too subjective to be of much worth.

This blog is very much like the journals I used to keep in my young adulthood, and as such it is a way of time travel. The me that is in the present-soon-to-be-past feels that our society and perhaps the world is on the verge of a crisis. The me that is in the future-soon-to-be-present will have to determine if such is the case. I have felt this way before, and nothing much happened. On the other hand, I was young in the 70's/80's and I couldn't sort out the poverty of youth from what I now know to be stagflation. I grew up listening to my parents' stories of childhood in the Great Depression. You know, one pair of shoes per year, going barefoot in summer, trading chickens and garden produce for staples at the store and in the case of my grandfather getting paid for his work (as the school Principal and post-master) in goods and services from the citizenry.

As I write this, Micheal is reading to me off Google News that Putin is pulling out of the European NATO treaty in response to the U.S. deploying missile shields in Eastern Europe. The Iraq War continues. Our military resources are by all accounts woefully stretched. The Republican Party appears to be self-destructing, and the Democratic Party appears to be incapable of understanding that it is up to them to lead us out of this mess. We can statistically prove that the wealthy are much wealthier. It's harder to prove that the rest of us are poorer, because of the skillful and manipulative juggling of economic data. Economically, most of my curiosity and energy has gone into studying the housing/credit bubble. That bubble has now burst, but it is only slowly sinking in to the "consumer" whose purchasing ability is the only thing keeping our national economy afloat. Which is what caused the bubble in the first place. Yet, perversely, the stock market keeps going up with only a very rare and limited down day.

I have little to no faith in the media these days, or in our national leaders (and this is regardless of party affiliation). I truly suspect that things are much, much worse than anyone in power will ever be able to admit until they totally fall apart. That being said, what can I or anyone else do about it? If there is a total collapse, we'd do the most logical thing: gather together with our family and tough it out. We're better prepared than most to survive in primitive conditions due to many things: the poverty of our youth, military training, years of camping and woodcraft.

In my more optimistic moments, I tend to see not a catastrophic change but a more gradual one. A return of economies based more locally, including local manufacture of durable goods and clothing and agriculture. Homes which are much smaller. Solar and hydro power. Vehicles which travel shorter distances and go slower. For those who yearn for the social and community supports of prior generations, here will be your chance to rebuild them. A part of me wants very much to believe that urban areas will survive and that we could all live together in greener urban neighborhoods where centralization of goods and services would be the advantage. But I suspect that for many, they will feel more secure and happy in very small towns. I suspect that climate change will dictate that areas of the country where we now have suburbs will become ghost towns; hopefully some enterprising business will develop which salvages the materials from these places. Water will become extremely important, and we will simply not be able to irrigate vast areas as we do now in order to make them liveable.
Our ancestors would be totally stupefied at the world we live in. It is the height of folly to believe that we are special, and that we are any less a part of the natural world than they were. We have all agreed to an artificial construct that we have labeled "Reality" and which includes most of what passes for civilized living. The world cares little for our Reality, has been here for long ages prior to our gaining consciousness and will carry on very well if we disappear.

Sunday, May 27, 2007

I can't see the sense in this



I have a thing for Streng homes. I like their modern lines, their open floorplans, the way the front of the home is usually windowless and the back of the home is usually wall to ceiling windows. I like the atrium models. Having a little garden as the centerpiece of a home is charming.

Streng homes were built roughly between 1960 and 1980 in Sacramento. They are reminiscent of Eichler homes from the Bay Area. There's something very holistic about them, when they're properly maintained or renovated. What appeals to me about modern design in all things is the simplicity and cleanliness of it, the way it treats space as being integral to the overall effect, vs. something to fill up with all kinds of frou-frou and junk. It's very invigorating to choose a design style that encourages one to have few pieces of furniture, and emphasize space and geometric form . What is great about Streng homes is that they also encourage the homeowner to interact with the natural environment with use of the atriums and the expansive windows out onto the private areas of the yard.

So, I track Streng homes like a woman obsessed. I rejoice when they appear on the MLS. I grieve when they go inactive. Someday, I will buy one -- but not this day, not this year. Not until prices go back down. (And I believe that prices will go down, but it will take another year for it to really start and it will be another 4 or 5 years until they bottom out.) And since I track all Streng homes that land on MLS via the magic of The Internets, it is pretty hard to pull one over on me and beyond that -- why would anyone want to?

What I'm talking about here is sellers who list their home for a period of time, then pull it off the market, then re-list it. Two of the homes I track have done that. Both had been on the market for over six months. One had dropped their asking price several times, and then came back on the market at the last price it had been. As if somehow, magically, it would be more alluring if we didn't realize how long it had really been for sale. As if qualified buyers would drop from the heavens if only they didn't know that the sellers were having trouble selling the place. The other is even worse -- they kept it on the market for months and didn't drop the price a dime. Then they pull it off, and relist it for about $30,000 less than it had been about a month later. Within days, they had dropped it an additional $10, 000. Why not just leave it on the market, and lower the price? That way, at least we know you're trying. And this re-listing thing isn't really fooling anyone who has the sense to use all the free information that is available to them online --- which is an awful lot of people. I'll tell you the statistic that I find most helpful, and the one that I look up first: the last sale of the house, and the sale price. Here is why:
The "bubble" began forming in the late 90's, but it was slow. Things didn't really take off until 2000 or 2001. (See actual graph of a very nice Streng home's "value" above) That price gives me, as a potential buyer, an idea of where that home's "value" was before the real estate market was driven up by speculators and investors. If the last sale took place anywhere in that big, bubbly curve, I know that the seller is not going to be able to lower their price without losing an awful lot of money. And sadly, most of the people who are selling are doing so because they have to sell. All the come-ons like "make offer -- motivated seller!" and "must sell!" and "owner wants it sold NOW!" don't mean squat if the seller can't lower the price to where the house will sell.
So, where does that leave all of us, no matter what side of the transaction we're on? As far as I can tell, it leaves all of us feeling bitter and resentful. As a potential buyer, I would very much like to buy one of the homes I'm tracking. I make a much better than median income, and I have a great FICO. But I don't have money to burn, and I'm not going to go deeply into debt so that you can retire debt-free. When the cost of buying a home returns to fundamentals, such as 10 x yearly comparable rents, or 3 x yearly income, then I will buy. And my own take on it is that there are very few sellers out there who are able to drop their asking price by much, or they would be doing it by now. I think most of them have no equity in their homes any longer. If they sell short, even if their lender approves, they will have to file the difference as income and pay taxes on it. (How's that "tax break" thing working out for you all now?) If they don't, they're going to be foreclosed on. It is a lose - lose situation for all of us.
And it doesn't make any sense to keep rubber-banding your home off/on to MLS to try to disguise the facts.


Thursday, May 24, 2007

Stand in the Place Where You Are

And right now, that is El Dorado Hills, California, where I have burrowed into a hillside in a rental home with an enchanted garden. This blog is an exercise in being in the here and now, because life is short and it is ongoing while I wait for the real estate bubble in Sacramento to deflate. Sometimes, even when you are obsessed with the bubble, you just need a place to kick back and reflect on life. This is the Bubbleholics Anonymous of the Greater Sacramento Area.