Friday, 26 March 2010

Land yasan

Yasan land or real estate (English: real estate) is a legal term that includes land along with anything that stayed still on the ground, such as buildings. Yasan land is often considered synonymous with real property, in contrast with personal property. However, the use of the technique, some people still choose yasan distinction between the land, pointing to the ground and objects on it, with real property, pointing to the right of ownership over land yasan. Term yasan land and real property used primarily in common law, while civil law jurisdictions refer to the immovable property.

According to the legal terminology in some jurisdictions is an immovable goods which includes land and all of which are above such as buildings, plants and others.

Property in a foreign language is often referred to as real property also sometimes called realty (in Indonesia, the term real estate is more used to indicate a housing area which was developed by real estate development company)

In law, the word real is defined as an object (Latin: res / rei) that distinguish it from "man". So the law distinguishes between real property (land and all of which are above) and individual property (eg clothes, furniture, money).

Saturday, 20 March 2010

Zell Predicts Real Estate Recovery Starts End of 2010

today Sam Zell (another billionaire) said essentially the same thing. Zell speaking with Bloomberg says the recovery will start at year end and gain strength in the middle of next.

The concern I have is not the financial markets now, it is the relationship between the markets and the government. The unknown regulatory hurdles and expenses are what concern me going into the coming year.

Everyone is basing the real estate recovery on the general economic recovery, but we forget that the economy was driven by real estate growth and development between 2004 and 2006. So now we are back 7 years before the general economy was doing positive things.

Since that time we have added many more challenges from the government in the form of regulations and taxation which will hamper future economic recoveries. Add into that all of the soft landing programs that have kept us from hitting the bottom in residential real estate and it is hard to forecast accurately when the recovery will really start.

Zell made his fortune investing in real estate, and sold Chicago-based Equity Office Properties Trust to Blackstone Group LP in New York for $39 billion in 2007. He said in yesterday’s interview that the U.S. housing market will start recovering toward the end of 2010 and strengthen in the middle of 2011.

Now chairman of Equity Residential, the largest publicly traded U.S. apartment owner, Zell said real estate investment trusts will have enough cash to boost dividends in the future. Almost 70 percent of REITS tracked by Morningstar Inc. have cut or eliminated their payouts since the second quarter of 2008 as commercial real estate values plunged.

Monday, 08 February 2010

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Friday, 05 February 2010

Become a Professional Home Builder

I know a lot of builders who do a great job building a home and after the buyer moves in, fall on their face by not following up. I've been guilty of the same thing. They have a home that is 90% perfect and all the buyer can think of is that a door that does not shut properly, and the builder never came back to fix it. They forget that 90% of their home is perfect.

It's very important that you follow up on the punch list and you finish all those items, within reason, that the owner says are problems.

The best way I found to handle this is to have a thorough walk through before the buyer moves in. Repair all those items and when the individual moves in, tell him to live in the home for at least a period of 30 days without calling you or your office. Have the customer write down those items he's not happy with during that 30-day period. Verbal communication is not good enough. He has to put all his little complaints in writing.

Any major item, like their air conditioner not working is an emergency item that you'll handle immediately. Normally, for those items, you've supplied the customer with direct phone numbers to the subcontractor that did the work with the understanding that he will call the subcontractor directly.

It's going to take living in the home just to see what items need repairing or replacing. At the end of this 30-day period, the builder or someone representing the builder needs to sit down with the owner and go over this written punch list. This could take a good amount of time, so you need to allocate enough time to do this.

As you go over the punch list it's very important that you describe to the owner how you're going to fix a problem. For example, if you've got a nail popping out of the drywall you can say, "Well we will hammer the nail back in place. We'll repair the drywall and then we'll repaint that area. And if it doesn't blend properly we'll repaint the entire wall." Look at the owner and ask, "Is that satisfactory?" Because the way you plan to fix a problem and the way he thinks it should be fixed, may not agree. If you don't agree on a solution, talk about it until you do. So, you need to tell them how you're going to fix each and every problem.

After you've gone through the entire list, stipulate in writing that you'll have 60 days to complete the punch list. I want to forewarn you. You can't repair those items fast enough. Don't wait until the tail end of the 60-day period before anybody shows up. Jump on it immediately! Once everything is completed on that punch list, it is understood that any other needed repairs will fall under the homeowner's warranty, which we will discuss a little later. One note, wood molding in a home will do a lot of expanding and /or contracting during the first year. If this molding is painted, it will definitely need re-caulking after the first year. I know a builder that has a sterling reputation because he tells the customer that after a year, he'll bring his painters back into the home to re-caulk these joints. They love him and can't say enough good things about him.

Some people are a little too picky. If the customer is nitpicking you to death, you've got to call his hand. If he has just a few picky items, go ahead and appease him and fix them to the best of your ability. This is great PR. You want satisfied customers. You don't want them telling other people anything negative about you or your company.

There's a major builder in the Atlanta area who has a reputation of returning years later and repairing items. Because of this, you'll see resale homes in their ads highlighting the fact that this particular builder built this home. This builder also commands a higher price for his homes and he gets it.

Article Source: http://EzineArticles.com/?expert=Thomas_R._Harrison

Sunk Costs and Mortgage Default

A paper with Eric Rosenblatt and Vincent Yao. The abstract:

In this paper, we estimate default hazard functions that include standard variables along with borrowers sunk cost: i.e., down payment at loan origination. After testing large numbers of specifications, we find that after controlling for mark-to-market loan-to-value, initial combined loan to value remains an important predictor of default. We also find, contrary to Guiso, Sapienza and Zingales, that there is not a specific point at which one observes a discontinuous default probability, but that it is rather that default is smooth in mark-to-market LTV.

Wednesday, 03 February 2010

Paul Goldberger on Dubai

The architecture critic writes:

The Burj Khalifa, like most super-tall skyscrapers, looks best from afar, and, certainly, it can’t do much to mitigate the real horror of Dubai, which isn’t the fact that most of the towers look gaudy on the sky line but that they are wretched at street level. This is a city that has grown with utter hostility to the idea of the street. The main commercial thoroughfare, Sheikh Zayed Road, lined with skyscrapers, is a twelve-lane highway. It’s impossible to get anywhere here without a car, and there is no place to walk except inside a mall. The city is completing a transit system, and there are some strikingly handsome, glass-enclosed elevated stations, but it is an idealized version of a Western-style metro, dropped onto an urban plan designed solely for the automobile; it’s hard to believe that it will make much difference. The biggest group of pedestrians I saw in five days was on the promenade outside the Dubai Mall, where people gather to look across an artificial lagoon at the Burj Khalifa while watching fountains dance to Middle Eastern music. To them, the Burj is a backdrop for a show.

I couldn't say it better myself.

Saturday, 30 January 2010

Why does NBC do this?

NBC blocks its shows from streaming in India, but Viacom (Comedy Central, CBS) doesn't. So I have been able to watch the Daily Show and Letterman, but I couldn't watch Conan's last show.

Why do they do this? Students here seem pretty hooked on Jon Stewart; it seems to me this might translate to DVD revenue somehow.

Thursday, 28 January 2010

Richard DeKaser says only 87 of 299 US cities now have overvalued housing markets

His list seems quite reasonable to me. And his 2006 list pretty much nailed overvalued markets.

Wednesday, 27 January 2010

Economists need to do a better job of explaining Pigouvian Taxes

I am actually surprised that there is much of an argument about taxing large banks in order to recover TARP funds. We certainly have adequate evidence that "too large to fail" financial institutions impose social costs on the economy. We also have ample evidence that bank managers, knowing that they are managing "too big to fail" institutions, will take on excessive risk, unless they are actively discouraged from doing so.

Textbook economics says that when an action creates social costs, it is optimal to tax it. It is, of course, difficult to know what the precisely correct tax rate should be, but we can probably come up with a reasonable approximation. And getting taxes slightly wrong is probably less distortionary than getting regulation wrong/

I long thought that if Fannie and Freddie had to pay a Pigou tax on their debt, they would avoid getting into trouble. Alas...

Tuesday, 26 January 2010

Inexpensive Capital Stock that might increase productivity in India

Hyderabad does not have many sidewalks--even where it is building wide roads. Lots of streets in Europe don't have sidewalks either, but they are so narrow that cars drive slowly, meaning that cars and pedestrians can co-exist without separation.

But here, walking can be down right scary. I will upload some pictures later. While I understand that resources are scarce here (investments in water, sanitation and education likely dominate everything else), I really do wonder where, from a capital budgeting perspective, sidewalks would rank.

Monday, 25 January 2010

California has less than four months of housing inventories

The California Association of Realtors sales report puts inventories at 3.8 months. Perhaps more interesting is that even inventories in the $1 million + range are half what they were a year ago, and at 7.8 months are just slightly higher than the equilibrium level of 5-6 months.

The market is now tight enough that it could even handle some foreclosures (the shadow inventory) without getting whacked too badly. And because lenders seem more willing to do short sales, there is a chance that the number of foreclosures will be somewhat smaller than previously forecast.

Once again, if not Bernanke, who?

So I see names out there. I think lots of supporters of Paul Volcker would be disappointed with his policies--he was, after all, the guy who allowed interest rates to rise into the stratosphere in order to break the back of inflation. I actually admire his helmsmanship of the Fed a lot, but I am not sure that many of those throwing out his name understand what they might be getting.

Paul Krugman is certainly more than smart enough and has made remarkably accurate forecasts over the past nine years, and I like his politics a lot--I am guessing I agree with him about 95 percent of the time. But his comments have at times been immoderate--and Federal Reserve Chairs need to have even temperaments. I also would guess he would have a tough time getting confirmed, although I am terrible at political forecasts. As PK also notes, Alan Blinder and Janet Yellin, who would also be good choices, might have tough confirmation battles.

John Taylor, William Poole and Charley Plosser are all smart but are ideologues. I have never seen any evidence that they care in the least about the social costs of unemployment. I suppose Martin Feldstein would be OK, but I am not sure why a Democratic President would nominate him.

In short, I keep coming back to the fact the Bernanke is smart (or, as Krugman says, brilliant), honest, is willing to listen and learn, and has an even temperament. Did he not see the magnitude of the crisis coming? Sure. But neither did a lot of us (I thought the subprime meltdown would be a problem on the order of the Savings and Loan crisis--it was Nouriel Roubini who ultimately woke me up). I just don't see anyone better out there.

Sunday, 24 January 2010

Next on the reading pile: Louis Menand's The Marketplace of Ideas

I loved the Metaphysical Club (especially the stuff on Oliver Wendell Holmes); Menand has a sharp eye and a winning style. But he purports (apparently) to solve a mystery which isn't all that much of a mystery: why is the academy so liberal? To me the answer is obvious--if you are willing to become an English professor, you have revealed that you don't care much about money.

One survey I just found put the average English assistant professor's starting salary at $47K; a full professor makes on average 74K. Given how grueling it is to get a Ph.D., and given how few tenure track jobs are out there in English, this means the expected monetary value of going to graduate school relative to effort is small.

So why do people do it? Because they love Dickens or Austin or Shakespeare or Conrad or Toni Morrison or Zadie Smith, and they want to spend their lives reading and thinking about such. Clearly, money wages do not have a particularly large place in their utility functions. If money is not important to you, then maybe you will be less prone to complain about taxes.

Conversely, people who care a lot about money should look elsewhere. Even within fields this is true: academic physicians tend to earn less than private practice docs, but they get to play with state-of-the art treatments and probably provide better medical care. So once again, money is not top priority.

I do not think I am going out on a limb when I posit that the correlation between how much someone cares about money and their propensity to vote Republican is highly correlated. So I suppose if Republicans want more conservative English Professors, they should advocate paying them better!

Friday, 22 January 2010

Brad Delong takes down the execrable Charles Murray

The only reason to mention a reference to Murray is that it gives me an excuse to recommend Goldberger and Manski vivisection of "The Bell Curve."

If not Ben, then who?

I wish that those who are trying to block Bernanke would let us know a better alternative--I can't think of one. Bernanke is smart, honest, and while he made mistakes, he showed a great deal of flexibility (and a willingness to learn) in response to the crisis. The best evidence suggests to me that we were indeed on the brink, and he gets a lot of credit for pulling us back. I guess that I am especially mystified that the Republicans would oppose him, unless they are hoping to put the country on a new downward spiral before the midterms (I like to think they even they are not that cynical).

Full disclosure: I briefly met Bernanke once, and I really liked him as a person. But I don't think that has any influence on my views of him as a central banker.

Does how little we know about other countries matter? Probably.

I am currently in India, and went out for beer last night with a number of people, all of whom seemed very engaged in the outcome of the Massachusetts Senate race; there was in particular a lot of curiosity about what it meant for US policy going forward.

Yet I would guess that very few Americans know the name Jyoti Basu (I know that if it weren't for the fact that I have now visited India 4-5 times, I would not know who he is). Basu died a few weeks ago, and it is fair to say that he was at least as important to India as Ted Kennedy was to the US, and probably more so.

It seems to me that as India and China's influence continue to grow, it will become increasingly important that more of us in the US know more about their politics and their leaders--beyond heads of state. But then again, maybe I am just getting on my high horse, which I am known to do from time to time.

Tuesday, 19 January 2010

George Harrison - Bangladesh

Lunch conversation today turned to the many intractable problems (still) facing Bangladesh, and it reminded me of the great George Harrison song--which doesn't seem to get much play anymore.

My Cousin Jonathan Weinstein quotes George Washington on Speculators

"[They] work more effectually against us, than the enemy's arms. They are a hundred times more dangerous to our liberties, and the great cause we are engaged in. It is much to be lamented that each State, long ere this, has not hunted them down as pests to society, and the greatest enemies we have to the happiness of America."

Of course Jon also points out that Alexander Hamilton was backstage, telling bankers that they really had nothing to worry about.

Thursday, 14 January 2010

The estimable Joseph Stiglitz complains about the social cost of securitization, but doesn't acknowledge possible social benefits

In Mother Jones he writes:

Securitization epitomized the process of how markets can weaken personal relationships and community. With securitization, trust has no role; the lender and the borrower have no personal relationship. Everything is anonymous, and with those whose lives are being destroyed represented as merely data, the only issues in restructuring are what is legal—what is the mortgage servicer allowed to do (see "Mortgage Shark Attack")—and what will maximize the expected return to the owners of the securities. Enmeshed in legal tangles, both lenders and borrowers suffer. Only the lawyers win.


This is an issue. But let's not get too sentimental about the days in which we relied on relationship lending. In those times, if one was white or male, his relationship with lenders was automatically better than anyone else's. When lending decisions were made based on borrower "character," it re-enforced the ability of well-connected people to get access to capital, while others were shut out.

There was something to be said for a model where measurable credit-worthiness--rather than personal relationships--determined loan outcomes. The problem was not the securities, but rather the fact that lenders did away with all underwriting--measurable and unmeasurable.

Wednesday, 13 January 2010

Arturo Toscanini

Haven't listened to anything from AT in while. Shame on me.

Tuesday, 12 January 2010

Having dumped on Mickey Kaus, I have to give him props for:

this (you have to scroll, I can't find a permalink):

Funny, I would think health care reform would be judged effective if, say ... all Americans, however rich or poor, can get the health care they need, including the latest advances in life-saving and life-enhancing treatments. If reform accomplishes that, but the health care sector winds up as 20 percent of GDP, will it really be a failure? Why? As long as it's paid for who is Al Hunt to tell Americans how much of their GDP they should spend keeping themselves alive?


I think that is about right.

Monday, 11 January 2010

The biggest stretch I have yet seen for blaming Fannie for the world's problem

Micky Kaus, who seems to have trouble sleeping at night for fear that some below median income person somewhere might actually benefit from government, attacks Jim Johnson, former CEO of Fannie Mae, for contributing to our current woes.

The problem is that Johnson ran the company from 1991-1998; I am guessing that few mortgages from his tenure are even around anymore, and if any are, their balance is so much lower than the value of the house supporting them (house prices are still nuch higher than in 1998, and the loan would have amortized a lot), that the incentive to default is non-existent.

Of course, in the piece he approvingly quotes Peter Wallison, an AEI "scholar" who never met a bank he didn't like.

Over the years, Fannie has done plenty of things not to like. But jeez!

Thursday, 07 January 2010

The Risk Culture at Freddie Mac pre-2003

I am in the middle of writing a default paper (I know, who isn't); in the course of looking up references, I Googled (Bob) Van Order and (Chet) Foster, who wrote two of the seminal papers on mortgage default modeling. The first entry that shows up is this very good blog post from Arnold Kling from about a year ago. He finishes the post with:

I was "present at the creation" of Freddie Mac's risk management culture--all of those people who had absorbed the Foster-Van Order approach to pricing mortgage default risk. That was the culture that Syron rejected. I was proud to be part of that culture, and I would have felt hurt no matter how Syron's new policy turned out. But the new policy drove Freddie Mac to the brink of bankruptcy, if not beyond. As a result, I believe that the risk-assessment models that we so proudly developed will die along with the company.


I read the post when Arnold first wrote it, but it struck me as especially poignent now. As it happens, when I was at the ASSA meetings, the people I went to dinner with on both nights all either once worked at or currently still do work at Freddie. This was not by design--they were just all people I like hanging out with, because they are all caring and exceedingly competent people. They are the sort of people that led me to want to work at Freddie during my brief absence from academia. That culture that Arnold writes about was pretty special, and it would be nice if somehow we could get it back.

Wednesday, 06 January 2010

The best tip I got at the ASSA meetings

I went to a wonderful memorial session celebrating the work and life of Arthur Goldberger, and a number of speakers referred to Nicholas Kiefer's interview with him in Econometric Theory. A copy is here. Read it.

Monday, 04 January 2010

Don Haurin gave a very nice AREUEA Presidential Address

He tries to explain the increase in the homeownership rate over the 90s and 00s. He finds:

Demographics don't
Income and wealth don't
Interest rates don't
Local house prices don't
National house prices do!

We finds that when the moving average of national house prices rises, the propensity to own goes up. While one would think tat only local house prices are relevant, they do not have explanatory power for tenure choice--only national house prices have such power. Perhaps the frenzy was driven by national media reporting. I look forward to seeing Don's paper.

Saturday, 02 January 2010

More evidence that economists are cheap

The Wall Street Journal reports on the strange band of people converging on Atlanta over the next three days: We have our conventions after the New Year, because that is when hotel rates are cheapest.

Two personal anecdotes on the penurious nature of economists:

(1) Many years ago, I went to the ASSA meeting in New Orleans. My plane arrived late, and I hadn't eaten, so I went into a bar to get a burger. Once I sit down, the bartender says to me, "you're not one of those as****e economists, are you." I said, "no sir, not me." He said, "good, those as****e economists are so cheap that all they'll drink is beer. Now what will you have."

(2) There was an chain Italian restaurant where I would sometimes go to lunch with colleagues. It was one of these places that gives you all the salad and rolls that you can eat if you order an entree--they just put a couple of salad bowls on the table, and refill them when they're empty. When one of our colleagues would learn a group was going, he would come along, eat the salad and rolls, and not order anything.

Friday, 01 January 2010

Florida did overbuild

Doing the same exercise as I did for California: since 1980, population in Flordia has grown by about 8.7 million--average household size is 2.46 people, for increased demand of 3.6 million units. About 4.6 million units were built, or one million more than necessary to meet full-time residential demand. Florida has a large second home market, but really...Florida's population is about half of California's.