I saw a thread at google where people had to explain to the community moderators (a heavy handed group of censors for memegen and other internal comms) that there is, in fact, discrmination in the world beyond that of black people in america. They were very surprised.
Kinda. If I buy a 1M home at 2.5% interest, I have a $4,000 monthly payment. If rates go to 6%:
- Housing prices plummet to $600,000, assuming people are willing to spend the same per month.
- My monthly payments are identical to had I bought at $600k at 6%. If I stay there, I'm not much worse off. It's harder to pay off the home quickly.
- If I move out, and I rent out my home, it covers monthly payments approximately exactly.
The only time the owner is in danger is if:
1) They need to move.
2) They can't rent out the original property.
Rent works out since while the home is a liability, with 6% interest rates, the 2.5% loan is an asset.
As a footnote, what I expect is actually happening here is people are anticipating high inflation. If that happens, this isn't a bubble. Real housing prices might be fixed, at least looking out a few years.
> If I move out, and I rent out my home, it covers monthly payments approximately exactly.
That's not actually sustainable. You have repairs you're going to need to do, sometimes unexpectedly large ones. You have tenants that move out, and then marketing expenses and/or vacancies. If you're unlucky you have bad tenants that do damage or don't pay or need to be evicted after not paying.
It can work temporarily (unless you are unlucky), waiting for a better time to sell. But most people who need to move don't really want to be in the landlord business, and it is a business with financial risk and headaches.
I would also add that there's nothing worse than being a landlord of a single unit/property. Pretty much all of the functions that you'll need to fulfill as a landlord take the same amount of time for 2-3+ units as they do for 1, except your potential returns are lower. Setting up a system to collect rent, managing repair requests and vendors, a tenant marketing/screening plan, extended vacancies, etc. are all much more painful to do for a single unit than for a collection of units. I see a lot of people throw the "just rent it out" line without considering any of this.
<- My monthly payments are identical to had I bought at $600k at 6%. If I stay there, I'm not much worse off. It's harder to pay off the home quickly.
You are a lot worse-off. If you buy at 6%, and then rates go down to 2%, you can refinance and your home is valued at a higher rate. IF you buy at 0%, you bought the house at the peak, and cannot refinance the debt.
You would have the same payment as someone at a higher rate because at higher rates, someone would would have purchased the same home at a lower price.
"If I move out, and I rent out my home, it covers monthly payments approximately exactly."
You cannot borrow for rent, so rents follow income growth more closely. So in some expensive real estate markets, if no income growth, rent might not cover your mortgage repayments.
This is very true. I have pretty expensive home that I rent out which is in a pretty affluent area. The rent is insanely low relative to the supposed value of the house (3% cap rate).
You make s great point as to the reason for this. Rental rates are completely detached from current interest rates.
Although true, for sure, when considering cash flow -- it's a fairly big upside that at the end despite having tenants pay most of the principal you end up owning it. Extra risk, etc, but housing prices falling is exactly the risk you're going into with wide eyes open so it's just a gamble.
But at the end, there's a decent shot you have full ownership of a house worth even more than you paid, and even if it loses most of its value you still own a place you can live in perpetuity paying only maintenance and property taxes. The renters don't get that, so it does kind of seem fair if they do not, in fact, cover your mortgage for you.
Let's say mortgage repayment is $3000, and rent only covers $2500. Let's add another $500 in overhead. I'm paying $12k per year. $36k would break me financially, but $12k is a good investment, since at the same time, two things are happening:
1) I am one year closer to owning the home. Yay!
2) Inflation. Rents next year might be lower, but rents in 10 years will be higher.
Fixed rate mortgages are subsidized by the US government, that's why. The mechanism of the subsidy is extremely complicated, but it is not a small effect.
Before the creation of the enormous state-owned insurance corporations and government programs to drive down those fixed rate mortgage costs, American mortgages were usually short-term, with giant balloon payments. Those short-term, balloon-payment mortgages went bust in huge numbers during the Great Depression, creating pressure on the government to "do something."
Say what you will about American housing policy, but those 15- and 30-year mortgage arrangements are very stable.
The Macs drove subsidising the moral hazard of fixed rate loans into the public conscious, a subsidy for home owners, political suicide to take away. Better (politically) to rob from a generation or two to pay for reckless low interest rates.
The weird thing is that 5 year adjustable rates are higher then 30yr. fixed. That only makes sense if interest rates will go down over the next 5 years, which seems unlikely to me.
If you look at it from the bank's perspective it makes more sense. I got a 5 year and paid it off early. The bank got about 8% of my home value. My friend has a 30 year and the bank will get ~110% of his home value.
Damn, I would assume houses must be much cheaper in Australia than in the US? Or only the very very rich can afford to buy their own home? (Or is it amortized over more than 5 years, you just have a balloon you need to refinance?)
In the US, where 30-year mortgages are standard, the LARGE majority of homeowners would not be able to afford payments on their home amortized over only 5 years.
I dont have information that can compare Apples to Apples as such, as in US vs AU values.
But I can say that prices are rising rapidly here in Australia.
The already expensive Sydney market rose on average ~$1200 a day over the last quarter!
Melbourne isn't far behind!
We too have low interest rates!
Whats not clear is how people are paying for the houses. Where is the money for deposits coming from, and how are they servicing such huge loans?
Dual incomes and parents assisting would account for a lot of it. But what happens if/when the parents need the money back and the DINKies decide to have children and either lose the dual income or get slugged with child care fees!
I don't know about Australia, but it sounds like the comment you responded is saying that mortgages there are something like a US 5/1 ARM, not that they are paid off in five years.
That is, the interest rate is guaranteed for five years and then it periodically adjusts.
30 year mortgages are standard I Australia too. After your initial fixed interest period expires you will then pay the current floating rates or chose to refix for another period (of up to 5 years) at the current interest rates.
I looked for some official statistics, and while I'm not sure if I'm in the right place, it paints a rather different picture from yours. The figure for housing costs implies a typical home value of more like 300K USD or 400K AUD.
Also, if this is accurate, Australia is more of a nation of homeowners than of renters.
It also says housing costs for renters have increased 51% in 20 years (to 2018) which is an average of 2% annually.
"housing costs are defined as the sum of rent payments; rate payments (water and general); and mortgage or unsecured loan payments (if the initial purpose of the loan was primarily to buy, add, or alter the dwelling)"
Australia's housing market, like I'm guessing many others, is quite heterogeneous.
Sydney and to a lesser extent Melbourne are both completely unaffordable (A$1m+) to new home owners on an average income unless you're prepared to live in a unit or commute 2 hours a day to the CBD. Brisbane, Adelaide and Perth on the other hand are significantly cheaper and one could still afford a nice family home.
Also worth noting is that the huge boom in prices only really started in the early 2000s. People who bought prior to that period make up a disproportionate number of owner occupiers.
This appears to be a data provider oriented towards entities with large real estate portfolios, and they specifically say on their website that their "hedonic" index is not meant for affordability calculations, for what that's worth.
It's difficult for me to tell which index is in the article, but the note about the missing data under the chart implies to me that the article is (inappropriately) using the hedonic index. I wonder how much difference it makes.
'this month's figures from CoreLogic did not include Perth or regional Western Australia "pending the resolution of a divergence from other housing market measures in WA" '
"Rather than relying solely on transacted sale prices to provide a measure of housing market conditions, the CoreLogic Daily Home Value Index is based on a ‘hedonic’ methodology which includes the attributes of properties that are transacting as part of the analysis."
"The fact that median or other percentile based series cannot be used to track changes in value of a market portfolio does not make them wrong: it is simply that they have different applications than hedonic indices. For example, median price series are useful in answering economic policy questions relating to housing affordability."
Interesting points RE the hedonic index, I'm not sure what the intended use case is but we can approach it from another angle if you would like.
A more up to date government source has the following;
> Weighted average (mean) of the eight capital cities Residential Property Price Index... rose 16.8% over the last twelve months.
We could go on forever trying to work out the exact numbers. The main thing I want to do is show non-australians how quickly our prices have risen and are rising!
>- My monthly payments are identical to had I bought at $600k at 6%. If I stay there, I'm not much worse off. It's harder to pay off the home quickly.
>- If I move out, and I rent out my home, it covers monthly payments approximately exactly.
In any situation where interest rates go to 6%, there will probably also be some upheaval that affects your earnings and ability to rent it out at the present rental rate. The risks are correlated.
> - My monthly payments are identical to had I bought at $600k at 6%
I'm not sure how it works in the US, but where I live, you have a fixed interest rate for a couple of years max, after that you pay the market rate.
So in your case, if you had a fixed interest rate for 3-5 years, after those years pass, you'd have also a massive increase in mortgage payment, plus your house severely depreciating.
The U.S. is unusual in that rates being fixed for the full 30 year term of the mortgage is normal. They do tend to wind up with somewhat higher interest rates as a result, however.
That seems to be the case where I live as well, though I believe there is a way to lock in an interest rate for longer. (Not a homeowner)
If interest rates rise to 6% and you've got 2.5%, the advantage would last that long. However, I know interest is front-loaded to the first few amortization periods, so maybe it would be more significant.
> what I expect is actually happening here is people are anticipating high inflation
That's why price to income is an interesting metric. High inflation without income rise just means people feel worse off and a correction will occur. Housing, along with many other things, are competing for people's wallet. Interestingly, covid is causing a labor shortage and income to rise at the low ends. I suspect stagnating in the "middle income" ranges.
At 5% or more interest more than half your money goes to the bank rather than the house. At 0% all your money goes to the house. You can call this inflation if you want but then you are ignoring that you are paying a million dollars for a less than million dollar house because of interest.
The fact that spending and price are decoupled make the inflation idea stupid.
I’ve not seen that definition of inflation. I think you’re thinking of some type of equilibrium/market efficiency theory, where to support higher prices there has to be income growth, which is false especially in the short term where prices can rapidly rise faster than income could realistically keep pace and consumer is just worse off.
It's the standard definition, where inflation is a change in the price level, and the nominal GDP is defined as the real GDP times the price level Y×P. Since GDP is a just a sum of income components, of which one is wages, an increase in the price level implies a proportional increase in wages.
This is the case in the US because rates are the same for the length of the loan. This is decidedly NOT the case in the UK, where the entire market is composed of teaser-rate loans (2, 5, 10 year), which revert eventually and then need refinanced at the prevailing rate.
That's going to be a nasty wake-up call for a lot of people.
To be fair, France has consistently betrayed its allies, throughout history. The start of WWII is worth looking at, where both France and Britain broke mutual defense treaty after mutual defense treaty appeasing Germany.
Culture runs deep. France adores Vercingetorix, who surrendered to Julius Caesar after "releasing" all the women and children to die of starvation between the Roman and French lines at the Battle Of Alesia.
Since WWII, France has been a fickle ally to the US at best.
The problem here is metacognitive skills: knowing what you don't know.
The parents are right: "Parents went ugly, they said I was a careless, stupid, ignorant boy. I know they are not right." Acknowledging that is the first step. The second step is understanding that's true of most 22-year-olds. Age 0-12, you worship your parents. Age 13-19, ego really grows. You rebel, and do the opposite of what your parents want since you believe you know better. Early twenties is when you start to understand that you are, indeed, a careless, stupid, ignorant boy, and start to take advice from others. That's growing up in a nutshell.
Most of the more successful people I know get really good at taking advice from others, putting ego aside, filtering advice (not all of it is good!), and keeping an open mind. The executive version of that is delegating, and knowing whom to delegate to.
Constantly shifting focus is 100% standard for that age, and it's a fine way to grow. People at that age also really do mimic (usually stupid) role models. The "I want to be the cool computer wiz without a degree" is completely standard (only insert "rock musician" "soldier" "goth" etc). It's how your brain is wired.
I know this sounds like dime store psychoanalysis, but it's helpful to know you're not alone, and it's just how people are wired.
A few thoughts:
1) A CS degree should not be easy. If you're where you think you are, you can test out of the freshman CS courses. If you're a hotshot, you can start with a graduate-level class on sublinear-time algorithms or something. More likely, you can start with junior and senior classes. Those foundations are important, though.
2) Getting good at math is important. Social sciences degree was a mistake.
3) At 22, optimize for growth, not for profits. Profits can come later. There is an order of magnitude difference between a principal at Google and an entry-level coder. You don't get there incrementally.
4) There's plenty of part-time work, contract work, etc. available if you hunt around. A good path might be work half-time and school half-time. Both grow you in different ways.
5) It sounds like you have a good foundation to get wherever you're going. It doesn't feel like it, but you're on the right track.
I think one more issue is support. If I want a chip from TI, Analog Devices, etc., I fill out a web form and get a sample. If I want to talk to an engineer, I place a phone call. If I want to order a dozen of a part, I go to Digikey. If I want a datasheet, it's online.
Intel won't give you the time of day unless you're HP or Dell. That's optimal for capitalizing on old markets, but it means it's never in new markets. It always starts at a disadvantage. It's not that Intel never has chips startups want to use; it's that it's impossible to engineer with most of them.
By the time a product has enough marketshare for Intel to care, they need to displace an existing supplier.
This means they could never really diversify outside of PCs.
This is a point where I would have to disagree. While their early access programs are generally restricted to larger customers, you can apply to join other schemes (called Docs and Docs+ as far as I remember) where they will assign you an account manager and a dedicated platform application engineer to help you with your design-in process.
I worked at a small start-up producing COM-HPC boards for companies who wanted to keep their servers in-house, as opposed to using cloud infrastructure. We weren't purchasing any more than maybe 500 CPUs of their upcoming platform. Despite that, they supplied 1:1 tech support, reference schematics/layouts, a reference validation platform with which to test our design on, and 1000's of documents including product design guides and white papers. This all came about by just contacting Intel's developer account support and filling in a few forms.
We also produced the same product with AMD hardware and the difference was night an day. Say what you will about their production difficulties and roadmaps, their engineering support is years ahead of AMD.
I've had few enough interactions with AMD that I can't pass judgement, but from the few I've had were consistent with your assessment. AMD was a complete black hole. My interactions with Intel were lightyears ahead of AMD.
But Intel, in turn, was lightyears behind Analog, Linear, Maxim, TI, and most other vendors I've dealt with (this was before Analog gobbled Linear and Maxim up).
XMG (a gaming laptop brand) even publicly announced that AMD would not meet their request for validation samples of Ryzen 5800 and 5900 CPUs. CPUs that have been launched and are shipping to other customers already.
If AMD at at 100% production capacity, why would they want to increase demand? Surely supplying validation samples could only hurt AMD in that situation (technical costs, disappointing the customer when the customer want to shift to production).
1. It's not mostly about the demand, but about maintaining good working relations with systems manufacturers.
2. Increased demand is not a daily thing. Positive reviews and manufacturer interests would likely hold for a while, effecting the next production planning cycle or what-not.
3. Counteract effects quelling demand.
4. They could theoretically avoid letting prices drop if demand is strong.
It really depends on who the targeted customers are. I remember inquiring on some TI lines and being told by the rep that unless you’re a customer anticipating 1M+ units, that chip really isn’t available.
Intel and AMD are both like that, and it makes me wonder how much space they have opened up for ARM. I would love a small x86 SoC if it came with the same level of support that an NXP or TI ARM chip has, but they don't.
> Intel and AMD are both like that, and it makes me wonder how much space they have opened up for ARM.
Arguably, this is what led to the creation of ARM. Acorn wanted to make a computer with a 286, but Intel ignored them, so they decided to build their own RISC based CPU, the "Acorn RISC Machine".
I wonder how a small outfit like UDOO manages to design around an AMD embedded part then. The boards are out there and they work, but I have no idea how the negotiations happened.
My impression is that if you are an open source project (especially one with a few already existing designs), you can actually get some design support from large companies. This is especially true if you either meet the right person in marketing at those companies or know someone on the inside. The Raspberry Pi uses chips from a very user-hostile company (Broadcom) because they started as a side project by a few engineers at Broadcom.
> If I want to talk to an engineer, I place a phone call. If I want to order a dozen of a part, I go to Digikey. If I want a datasheet, it's online.
I notice you didn't list Broadcom... And bullshit can you call an engineer. Submit a support case through some online portal maybe. Zero chance they are giving you a direct line to their engineers.
Yah they are all like that, in the arm space outside of really low end devices and the rk3399 they won't even give you minimal register docs for standard devices. I had problems at the previous place trying to build a PCIe device where the minimum to to even get the most minimal of documentation was 100k units. Sure you could buy the parts from digikey but they were useless because the public docs were little more than footprints and high level whitepaper like feature matrices.
And everything you detailed there is solely a management issue.
They could devote a market segment to support that as a long term emerging market support aspect of their business, but it's clear that short term hit-strike-price-for-execs has been the dominant management mode for quite some time.
Over time, MIT's acceptance of diversity, intellectual and otherwise, has waned. Right now, it's the top university brand in the world. That's a tightrope political game to play, and MIT optimizes to it very well. It's been a slow process for many decades, but it's really accelerated recently.
I'm not sure what the better schools are now. I've heard good things about Georgia Tech.
We do need nerd camps and nerd schools still. The old MIT was awesome.
Software, plumbing, and car mechanics don't need a degree. They are technician work.
However, if you can have a much more fun life if you have a deep understanding of things like signal processing, image processing, differential equations, control systems, dynamics, etc.
Those let you do things like building medical imaging systems, autonomous robots, or deep learning systems. They're much more intellectually fulfilling than just coding, which loses its charm after a bit. You're also not competing against low-cost coders, which isn't a problem in the current market, but economies are cyclical. When the next recession comes, having more specialized skills is more helpful.
These do require mentorship, guidance, and some form of study.
As much as coming into university straight out of high school is often a bad idea, so is skipping it altogether.
The key problem is these aren't skills you can pick up incrementally. They take years of focused study. For example, you can't learn control systems without diff. eq. which in turn requires calculus. There's little immediate reward to learning calculus and diff eq, and little way to know what's important without expert guidance.
You assume I have interest in those deeper aspects, which I don't. I enjoy my work, but it's just a job to me. I stay up-to-date and develop my skills, but I have a life outside of work, and generally stay away from writing code in my other endeavors.
And speaking subjectively, I have always preferred HSV because I came to color from the background of mixing pigments (painting). Adding white to a pigment to desaturate it (make it more pastel) is intuitive with paints ... as is adding black to darken a pigment.
HSV (and Okhsv) more closely match my painterly intuition.
- Google has policies which are culturally unresponsive and discriminatory to Eastern Europeans.
- Neither side was aware of the scope of the problem.
I've seen this a lot, where there are cultural difference that neither the immigrant nor the native are aware of, but that lead to improper treatment.