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Housing Bubble or Not

01/23/05 | by JAdP | Categories: Personal Life

Consultants must point out every conceivable risk, and we generally have the time and knowledge to do the risk assessment through tools ranging from simple 2x2 matrices to cause-consequence analyses to iterative Bayesean monte carlo simulations. Does such an onus fall on journalists?

Dan Gillmor writes about a piece in the Orange County Register that he picked up on his rerouted trip back to SF from Boston that seems to promote dangerous speculation in real estate. As Dan says, many experts fear that a housing bubble, similar to the tulip bubble and the dot-com bubble may be happening.

When I first moved to the Northern California Coast from "back East", I had a hard time overcoming "sticker shock" on housing prices. Back in 1984, a 3BR, 2BA house with an Ocean View were listing for over $180,000 and being bid upwards of $200,000. Much more than my houses in Delaware (45K$) or the one in Illinois (90K$) where worth.

The house I bought in 1999 has a tiny bit of an ocean view - actually, a pretty good white water view of Fitzgerald Marine Reserve from the edge of the driveway leaning out into the street. &#59;) I bought that house for just over 400K$ and it now appraises at 800K$. But I am only three blocks from the nearest DSLAM - killer bandwidth. :>> That must be the reason.

I'm still in shock. And I really wish I had bought in 1984 instead of saying "These housing prices can't go any higher". /sigh

But can they? I don't know. Bubbles are rarely identified until after they burst. And real estate here just goes up and up, with very few, and only minor, downturns.

Edit: One comment to Dan's post points to an economic analysis showing that the housing price increases are due to the wealth created by the stock market bubble. I don't believe this. The housing boom is a result of low inflation during the Clinton administration coupled with exceptionally low interest rates. Add in that interest on a mortgage can be one of the largest, if not only, tax deduction left to most people, and buying a house becomes cheaper and wiser than renting.

Edit: And to Dan's point, which I believe concerns responsibility in journalism... Does that responsibility extend to pointing out every uncertainty, every possible outcome, every risk? As consultants, we must do so. Must journalists?

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1 comment


hi..this is long overdue, but i’m leaving a link to your page on my site :)


01/24/05 @ 10:14
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I'm Joseph A. di Paolantonio and this blog has two main foci: my interest in food, and my interest in the future. This provides a look into my personal life, and is separate from my consulting work…though there will be overlap. I am an independent researcher, working as a strategic consultant and I'm an executive with over 20 years of commercial experience with a technical interest in the intersection of Internet of Things, with advanced data management and analysis methods. I view data science as a team activity, and I feel that the IoT must be viewed as a system. I am leveraging my past activities to understand the adoption and impact of the IoT; first, as a system engineer in aerospace, where I developed Bayesian risk assessment methods for systems within the Space Transportation System (including the Space Shuttle), Extreme Ultraviolet Explorer, Gravity Probe B, and many more, and second, as a enterprise data warehousing, business intelligence and analytics professional. Between my aerospace and IT careers, I indulged my hobby of cooking by starting a food company, Montara Magic, centered around my chocolate sauces. My education combined chemistry, mathematics and philosophy. I performed research into molten salt fuel cells in graduate school, and in photovoltaic materials for a short time in industry. The lure of bringing the human race into space was strong, and when I was offered the chance to combine my chemistry and mathematics skills to develop new risk assessment and system engineering methods for space launch and propulsion systems – I couldn't resist. I perform independent research and strategic consulting to bring value from the Internet of Things, Sensor Analytics Ecosystems and data science teams.I am a caregiver, a lover of science fiction and speculative fantasy, and my passion to learn has led me to a pilot's license, an assistant instructor in SCUBA, nordic and alpine skiing, sea kayaking, and reading everything I can, in as many topics as I can.

View Joseph di Paolantonio's profile on LinkedIn

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