Punishment?

It is easy to get trapped by our own notion of fairness. Someone does something we don't like, and apparently profits by it, and we want to punish them.

We want to punish bad behavior partly because it stops that person from continuing in that behavior, and partly because it deters others from engaging in similar behavior.

The problem is, this is not always the best thing for US. The whole point of punishment is to make life unpleasant for the punished, not to make life better for the punishers.

The trap is believing uncritically that punishing the criminal is the best thing we can do for ourselves. That is like automatically going on the same vacation every year, without considering other options.

We have the ability to sit down in each situation and consider our best course of action. It will probably be different for every single criminal, and every single crime. Our legal system does not appear to do this. Instead, we fall back on the notion of fairness, like every person doing a certain thing should be treated the same way by the law. Unfortunately, this is not always the best thing for us. So we inadvertantly continue the damage which the criminal started.

There are hundreds of ways to deter people from committing crimes. Severe punishment is not necessarily the best way. There are hundreds of ways to stop a person from committing further crimes, once we have caught them committing one. The way our society does it now doesn't work very well, and it's expensive, and not very fun. We are a very creative people, we can come up with much better solutions.

What if it were your job to ensure that no crimes happened today in your city? If you were mayor and had a budget of $1 million, what kinds of things could you try? What if it were your job to make sure a convicted murderer didn't kill again? How many ways could you think of to accomplish this? Be creative.

Affordability?

"Affordability" is a very slippery concept.

Some government agencies define "affordable" as "housing that can be purchased by people who earn the median income for the region."

There are a few problems with this definition, which render it all but useless. First, the word "housing" is not defined fully. For instance, mobile homes qualify as housing, as do condominiums, artist's lofts, hilltop mansions, duplexes...even four houses on one lot. These items are not comparable. The actual square footage of the living space and the yard area should be specified, including what constitutes a kitchen, bathroom, closet, door, window, garage, peace and quiet, safety, and all the other things that go into making a place habitable.

Second, "can be purchased" is problematic. When I bought my first home many people were saying it couldn't be done. Every one of the 26 people I helped buy properties in Oakland had been confident that this was impossible. The government will point to a so called industry standard acceptable debt to income ratio, and half the lenders out there have made up their own standard. There are a million ways to buy a house.

Next we have "the median income". In neighborhoods with significant underground and cash economies the median income is way underreported. But even if it were correct, last year's "income" only tells a small part of the story. This year's income is more important, and credit is even more important than that, because anyone with good credit can get a loan where they don't have to document their income at all. And of course, assets matter too, because someone with $100,000 equity in their house will have no trouble buying a $200,000 house, putting 50% down.

But what about the monthly payment? Well, the government makes the assumption that the purchaser is going to pay the whole thing. When in fact, millions of homeowners rent out part of their property to others who help with the payment. A $1 million fourplex is affordable to anyone, if the rent from three of the units pays the entire mortgage.

And finally, "the region". Why do we use a different measure for people in Santa Monica vs those in San Bernardino? Does everyone have a right to live where they are born, regardless of what they do? If so, then why is that right only protected in a few places?

Here is another way to look at this whole issue. There are places where lots of people want to be, and places where only a few people want to be. The former will be expensive, and the latter will be cheap. So everyone gets to choose how important it is for them to live in their favorite place. There are activities which produce lots of wealth, and activities which don't produce any wealth. Everyone gets to choose which activities they pursue.

There is a problem here, though. Most people do not know that they have this choice. They are not aware of the incredible opportunities for rapid wealth creation that are all around them. But it is fun to educate people about this. Whereas it isn't as fun (at least from my point of view) to try to derail the real estate market, in order to protect people from having to pay a market price for the privilege of living where lots of other people want to live.

Real Estate Trend

This is the first real estate article in a looong time which I actually agree with. :)

People are starting to wake up...

http://money.cnn.com/2005/04/15/real_estate/behind_hot_zips/index.htm


What makes a hot zip code hot?
The hot zip codes aren't all glitz and glam. They're affordable, close to the city or on the coast.April 18, 2005: 11:41 AM EDT By Sarah Max, CNN/Money senior writer

Salem, Ore. (CNN/Money) – Scrutinize our latest list of zip codes with the strongest price appreciation and you might wonder how some of these places could ever be considered "hot."
The neighborhoods are still a little rough around the edges. The houses need updating. Yoga centers and martini bars are few and far between. Paris Hilton, the aficionado of all things "hot," has never heard of these places.
(Click here to see the original story on hot zip codes.)
So we asked local real estate agents to tell us what they saw happening in New Jersey's 08008, Seattle's 98126, Chicago's 60632 and other zips that made our list.
Three distinct trends have influenced home prices in these zip codes, said David Stiff, senior economist for Fiserv CSW, which provided the data.

1. Affordability is everything.
Looking closely at the zip codes with the most appreciation over the past five years, you won't see places like Beverly Hills, Beacon Hill or East Hampton because home prices in these areas – though increasing – are just too dear.
In the priciest metros, buyers must search far and wide for affordable housing.
"In Boston, all of these zip codes are far from downtown," said Stiff, referring to New Bedford, Lawrence and Worcester. "They are former mill towns that are having a resurgence in price because they're so affordable."
In Los Angeles, the hot 'hoods are in the eastern suburbs where median home prices are still under $500,000. Prices in Rialto, Calif., have appreciated 191 percent, but the median home price, $270,000, is still extremely low for the area.
The same is true in the San Francisco Bay Area, which has some of the highest home prices in the country.
"People are trading distance for dollars," said Ray Brown, a real estate agent with Pacific Union, explaining that some of the zip codes with the greatest appreciation are near Sacramento, which is about 80 miles away. Some people commute the distance.

2. Urban trumps suburban.
While buyers in the priciest metros have no choice but to head to the suburbs, in cities where housing is relatively affordable buyers are shopping for property within city limits.
In Chicago, married couples are no longer fleeing the city for the suburbs and empty nesters are leaving the suburbs and moving back into the city, said Nancy Suvarnamani, president elect of the Chicago Association of Realtors.
"People want to live in Chicago and are willing to explore and purchase in areas that were once, not long ago, considered undesirable," she said. Because a lot of the established areas are too expensive, buyers are going to Logan Square (zip code 60639) and Uptown (60640).
"Irving Park and [the areas near it] are highly desirable areas because they contain large older, single homes, with a lot of character," she said. "People can purchase single-family homes in this area for under $500,000, and this is no longer possible in many Chicago neighborhoods."
Archer Heights (60632) and adjacent Brighton Park (60638), meanwhile, have experienced tremendous appreciation because of the expansion of Midway Airport, she noted. People want to live close to where they work, which has a ripple effect on the entire neighborhood.
The same trend is playing out in Seattle.
There, the neighborhoods with the strongest appreciation range from still-affordable West Seattle (98106), where the median home price is $233,000 to the more established Queen Anne-Magnolia (98109) where the median priced home is $556,000.
"But what's similar is they are all within a stone's throw away from downtown," said Edward Krigsman, a real estate agent with John L. Scott. Although Microsoft and other large employers are east of the city, he said, buyers are looking for reasonably priced areas within the city.
"The closer the better, the cheaper the better," Krigsman said.

3. Go coastal.
In the New York and Philadelphia metros the zip codes with the most price gains are primarily New Jersey shore towns.
"There is huge demand for waterfront homes," said Stiff. "Right now, if you look at the Florida coast, the Jersey shore you see second-home buying driving appreciation."
According to Bonnie Fitzgerald, president of elect of the New Jersey Association of Realtors, buyers have been buying what were once year-round houses, fixing them up and turning them into vacation homes.
Although prices in these New Jersey shore towns have increased tremendously, she said, they're still a relative bargain compared with beach towns on Long Island.
"Some of these places have some stigma of 'Well that's not the best area to live,'" she noted. But if they're on or near the beach, stigma doesn't matter. "People renovate the houses and the whole demographics of the town changes."
Click here for the top zips in 10 metro areas.
Ultimate home guide 2005

The Future of Real Estate

By 2010, real estate is going to migrate entirely to the internet. A site like ebay for real estate is going to show buyers everything they need to know and walk them through the transactions, virtually eliminating the need for real estate agents as we know them.

The following steps will enable this to happen.

1) We will have a standard protocol for describing properties. Everything about a home, commercial space, or vacant lot that is relevant to its value will be catalogued and displayed in tables, maps, drawings, and photos, allowing for accurate comparisons across properties.

2) Inspections that are now optional (e.g. professional home inspection, soil report, pest control, roof inspection, zoning & permits, police activity, air quality, comparable sales, tenant info, etc.) will become a mandatory part of the process. The seller will simply pay one time for the service that compiles and posts all these reports. Currently this costs between $1000 and $5000 per transaction, however, better tracking and economies of scale will bring that price down to less than $500 per transaction.

3) The process of obtaining real estate financing will be further automated. This has already been done with Home Equity Lines of Credit, where you can walk into a bank and get a loan on your primary residence as quickly, cheaply, and easily as getting a credit card. The credit reporting, FICO score, and loan application process will be improved to give a more accurate picture of borrower risk. Sites like eloan will preapprove and process the entire loan before the buyer even selects the property. The typical escrow period will be 3-5 business days.

4) Rent back provisions will be standardised. Because escrow will be so fast, whereas arranging a move sometimes takes longer, a standard contract for renting back the property from the new owner will be added to every transaction.

5) Contract repair work will be standardised. There will still be contractors and unlicensed individuals willing to work for less, but a standard menu of construction options and prices, similar to the ones used by auto mechanics, will smooth negotiations involving repairs.

6) A standard service (bonded & insured) for showing homes to prospective buyers and inspectors will be established. This is already being done by discount brokerages.

These six changes will virtually eliminate the need for commissioned real estate agents.

The happy side effect will be a dramatic increase in the liquidity of real estate, which will lead to the rapid revitalisation of all distressed neighborhoods. I will explain how this works in a future post.

Who Would Jesus Bomb?

Jesus said, "Do unto others as you would have them do unto you."

So my question is, when would you want someone to declare war on you and drop bombs on your relatives?

Jesus said, "Love your enemies; do good to those who persecute you."
Jesus said, "If someone strikes you on the right cheek, offer him the left as well."

In reference to these and similar quotes, my father used to say, "Those are difficult teachings."

But Jesus said, "My yoke is easy, and my burden light."

Either Jesus was God or he wasn't. Either the Gospels quote him accurately or they don't. If you believe he was God, and the Gospels are true, then do what he says, or at least try. Don't use the old testament to contradict Jesus and then say that you are a Christian. And don't stand in righteous judgement over people that Jesus died to save.

Jesus said, "Judge not, lest ye be judged."

So-called Christian theologians have come up with elaborate justifications for war, based on the idea that sometimes, killing a few wicked people can save many innocents. But then, why didn't Jesus do that? Are we supposed to act differently than he did?

Jesus said, "Love one another as I have loved you."
Jesus said, "Love your neighbor as yourself."

When faced with these kinds of arguments, my brother used to say, "That's the great thing about the Bible, you can use it to prove anything you want." That's a pretty Zen way to look at it. :)