Apps Contact Seminars

June 30th, 2009

## An 18.1 pc decline in home prices is an improvement?

A recent Forbes article screams: “..closely watched housing market measure showed hints of improvement. Home prices fell 18.1% in April, from the year-earlier period..”

The reason it says this is an improvement is because the home prices fell 18.7% in March! So, this fall is 0.6% lesser than the fall in March. Assuming constant acceleration, the home prices could stop falling in 30 months. That would be October 2011. Also, by that time the home prices would be 37% lower than the prices in March 2008 (that is, a home valued at 500,000\$ in March 2008 would be valued at approximately \$320,000 in October 2011) and about 15-16% lower than the prices in March 2009.

Now of course, the preceding simplistic analysis is just a bunch of BS coming from a computer scientist with no economic experience and you are free to discard it with a whiff of dismissal. And if you know any better, you really should. But in case you don’t, let us analyze it a bit further.

Prospective home buyers continue to hesitate to buy in a market with falling home prices. The reason is obviously that they don’t want to lose value. However, as the home prices continue to fall further and further, at some point of time, they simply go below the cost to live in the house (aka rent). A certain percent of home buyers at that time buy the property even if they think the property prices are falling, as they can simply compare the hard cost of rent with the hard cost of owning. In most circumstances this “certain percent” is enough to ensure that the cost of owning a home does not go below the cost of renting. There is no indication yet that today’s circumstances are any different.

So, where does that leave us? If we can check the prices of the home against the cost of renting, then we can cross check our rough calculation above.

In the DC metro area, the price of renting a 2 bedroom apartment runs between \$1000 and \$1600. The cost of owning a 3 bedroom townhouse has fallen from between \$200,000 to \$400,000 to between \$ 140,000 to \$280,000 depending upon the location etc. The monthly cost for the loan would be between \$1100 and \$2200. Assuming a further 15% loss in value from our previous calculations compared to March 2009, the projected cost of owning would run between \$119,000 to \$238,000 and the monthly cost to be between \$935 and \$1870, which seems to be nicely centered around the rent. Crosscheck seems to succeed, and also it appears that bottoming out could really happen well before October 2011, but does not seem to be before October 2010.

Since I like speculating better than equivocating, I will draw a stake in the ground and say that home prices should bottom around October 2010. There, you have it, my expert opinion after about 40 minutes of Excel line charts and blogger scribbling.

There is an insane number of assumptions in the calculations above, so don’t even bother to tell me about all of them. But overall, I have tried to do some concrete analysis, rather than leaving you with a very dry “it depends” answer.

Tags:

June 12th, 2009

## Letterman and a 14 year old girl

When you witness a spat between a former vice president candidate and a very well respected (and funny!) talk show host, and it gets so personal, you may really wonder – who has more to lose.

Sarah Palin has the potential of going down as one of the funniest (not in a positive way) Vice Presidents we didn’t have. Yet, in this case, it appears to me that if a public poll was taken, a majority of people would say that Letterman crossed the line by including her children in a spat. Multiple rounds of punches and counter punches later, and it appears that a comedian who can get offended by someone taking offense at the jokes does have a fair bit to lose. (Or perhaps, it is just some late onset OCD for Dave.)

One of the things that comedians do is to try a lot of things. Some are funny, and they stick, and you say those things a lot. Others are not so funny, and you discard them. Still others are offensive, and you try to bury them asap! This one in particular is in the 3rd group.

So, just say sorry and move on to the next joke Dave.

June 7th, 2009

## Alter – Other – Antar

I was amazed to find out that the etymology of the synonyms Alter and Other is so closely related. Latin word “Alter”, which means other, apparently led to old French word “autre” and old German “andar”. The Spanish word “Otro” obviously comes from the same roots. The Sanskrit word “Antar” (as in Antaryami) and the Latin word “Alter” seem to be the ultimate root for all these words.

Tags:

June 3rd, 2009

## The idiotic CNN and AFP just don’t get it

See the screaming headline on AFP “‘Untouchable’ elected India’s first woman speaker” or the slightly more moderate “India’s parliament elects first woman speaker“. Then read on the CNN’s version, as they say: “Hindus believe there are five main groups of people. The last group is the Dalits. They’re considered impure and are often forced to work in menial jobs. They drink from separate wells and use different entry ways to come and go from buildings.” Notice, the high handedness, the absoluteness, and the lack of any qualifiers on when any of those things happen.

This is journalist at its worst – not reporting what happens, but reporting what the journalist believes in. Let us dissect CNN’s thoughtful commentary line by line:

• Hindus believe there are five main groups of people. The last group is the Dalits.”. Which Hindus? Did CNN check with all living Hindus, or did they at least use a recent Gallup poll? Where is the citation? I know about a million Hindus, and while a vast majority of them seem to believe that Sachin Tendulkar is a living God, their thoughts on the subject of caste system are extremely hazy.
• Then, it gets better: “They’re considered impure and are often forced to work in menial jobs. Considered “impure”, by who? By you, me, or the CNN? Again, the implication is that they are considered “impure” by ALL HINDUS, or at least by a vast majority of them, or at the very very least, by a significant percentage of Hindus. In that case, where is citation (or at least the mention) of the poll or the study?
• Definitely, this journalist has saved the best for the last, because in the end it goes beyond what Hindus believe, into what Hindus do, every day of their lives!They (Dalits) drink from separate wells and use different entry ways to come and go from buildings.” If you have ever visited India, or interacted with Hindus at other places, have you noticed this? In the middle class Indian cities, do you find separate wells for Dalits, if you find wells at all? In rural India, do you see this happening? Do you see Indian buildings with multiple entraces? The point isn’t that it is happening *somewhere*. The point is the unqualified mega statements made by a journalist who forgot to study journalism and focused on social action instead.

The point isn’t that casteism isn’t a problem that needs to be continuously addressed. Similar to racism in America, it is a problem that exists in pockets, but is nuanced. Making generic society wide statements hardly adds any value.

Tags:

Switch to our mobile site