Monthly Archives: January 2014

Financial advice for young adults: don’t buy a series of McMansions

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A set of “10 Pillars of Financial Independence” includes advice about avoiding McMansions:

Therefore, their choices are to sacrifice a bit now so that in 30 years they have a home paid for and $204,958.63 in the bank, or a slightly smaller house payment and a home paid for without a good start on their nest egg. Many of the choices you make 10-20 years ahead of retirement can pay off very well when you want to retire.

I’m a firm believer in paying for your home as soon as possible. Unfortunately, beginning with a starter home and moving up to McMansion after McMansion has become commonplace; this habit can make it practically impossible to pay off your home in a timely fashion.

The general advice sounds good: beware of long mortgages for houses you don’t need. Instead, take the money you could save with a smaller mortgage over a shorter period of time and invest it.

However, the idea of people buying McMansion after McMansion after having a starter home sounds exaggerated to me. Perhaps I might be wrong: do McMansion owners tend to live in multiple such homes over their lifetime? Are they more or less likely to move than others? The illustration makes sense – don’t keep purchasing home after home that you can’t afford – and fits the idea that Americans overconsumed in the late 1990s and early 2000s. But, I would be interested in knowing more about serial McMansion purchases…

The American cities with the highest percentage of households without a car

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As part of a look at the connection between education levels and car ownership, Derek Thompson includes this information about which American cities have lower rates of car ownership:

Here are the non-car household rates in 30 large U.S. cities (the national average is in RED):

Source: Michael Sivak, University of Michigan

What do NYC, DC, Boston, and Philadelphia have in common? For one, they’re old, crowded cities with good (okay, decent) public transit. “The five cities with the highest proportions of households without a vehicle were all among the top five cities in a recent ranking of the quality of public transportation,” Michael Sivak, director of Sustainable Worldwide Transportation at Michigan, told WSJ.

That might be the most important, variable, but it wasn’t the first thing this graph reminds me of. When I see New York, D.C., Boston, Philadelphia, San Francisco, the first thing I think is: These are all the classic, even cliche, magnets for elite college graduates. 

So I compared the cities’ non-car ownership rates to their share of bachelor’s-degree holders. And it turns out there is a statistically significant relationship between being college-dense and car-light.

Then follows a correlation chart – but no number or measure of the significance of the relationship! If one is going to claim a statistically significant relationship, more information needs to be provided like the correlation coefficient and the significance level.

That said, larger Sunbelt cities don’t come out well, nor do smaller Northern or Midwestern cities. All together, these cities are more likely to have sprawl and not have the kind of dense downtowns like Manhattan or the Loop that supports a lot of workers traveling to a single area each day. There was less historical incentive in these communities to build mass transit (outside of commuter rail) and such services, particularly subways or light rail, are quite expensive to build today in more sprawling conditions.

The three conditions sociologists say are crucial for friendship

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An article on the difficulty of making good friends after age 30 highlights the conditions sociologists say lead to friendship:

As external conditions change, it becomes tougher to meet the three conditions that sociologists since the 1950s have considered crucial to making close friends: proximity; repeated, unplanned interactions; and a setting that encourages people to let their guard down and confide in each other, said Rebecca G. Adams, a professor of sociology and gerontology at the University of North Carolina at Greensboro. This is why so many people meet their lifelong friends in college, she added.

It is interesting to consider how well this compares with online friendship. Let’s look at Facebook:

1. Proximity. This is virtual proximity where your friends are easy to access and Facebook helpfully tells you what they are up to. It is interesting to note that most friends of Facebook users are people they know from the offline world – there is a lot of overlap between these two realms.

2. Repeated, unplanned interactions. This could happen through wall posts, messages, tagging, and chatting. However, users of Facebook can choose when and how they do this as opposed to consistently running into someone in the offline world. This choice of interaction allows users to participate when and with whom they want in a way that wasn’t possible before.

3. Setting that allows people to let down their guard. Maybe the privacy settings in Facebook allow this but not in the same way as proximity and face-to-face interactions. Facebook is full of impression management where users create the image they want to project to others (this is also true of face-to-face interactions).

All together, Facebook capitalizes on the some of the advantages and difficulties of the early 21st century but it doesn’t replicate the experience of developing friendships in-person.

“Half of American fans say ‘supernatural’ forces are in play during sports events”

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Around half of American sports fans, particularly football fans, think that the supernatural influences are at play on the field/court/ice/pitch/playing surface.

“Just ahead of the 2014 Super Bowl, 50 percent of sports fans see some aspect of the supernatural at play in sports, meaning they either pray to God to help their team, have thought their team was cursed at some point in time, or believe that God plays a role in determining the outcome of sporting events,” reports a new survey conducted by the Public Religion Research Institute, a nonpartisan, non-profit group based in the nation’s capital.

A fervent 26 percent of the respondents say they have prayed that “for God to help their team”, while an equal number have entertained the notion that their team was “cursed.”…

“Football fans are also more likely than other fans to say they pray for their team (33 percent ), perform pre-game or game-time rituals (25 percent), or to believe that their team has been cursed (31 percent).

White evangelical Protestants (38 percent), white mainline Protestant (33 percent) and minority Protestant (29 percent) sports fans are considerably more likely than Catholic (21 percent) or religiously unaffiliated (15 percent) fans to say they have prayed for their team, the survey found.

A few quick thoughts:

1. America is often regarded as an unusually religious industrialized nation so it is not surprising that this would carry over to sports.

2. This gives credence to the argument that sports might sometimes act as functional religion.

3. Rather than attribute outcomes on the field to the actions of individual players or physics, some fans invoke the supernatural. How else to explain unusual plays or certain outcomes? Does invoking religion is related to the record of a particular team (bad teams are cursed, good teams are provided miracles – mediocre/average teams are supernaturally stagnant)?

New documentary shows China’s Internet addiction camps

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A new documentary goes inside Internet addiction facilities inside China:

In a documentary called Web Junkies, filmmakers Shosh Shlam and Hilla Medalia go behind the doors at the Daxong Camp in Beijing – one of China’s first of many rehab correctional facilities.

The film captures the expressionless faces of the teens, males mostly, dressed in camo uniform attending the three-to-four month “treatment”, which involves military physical training, medication, therapy sessions and controlled diet in order to reconnect them with society.

The addicts, who mostly are brought in against their will by their parents, stay in barren and bleak cells at night, completely cut off from electronics. Except when they are wired up to machines so psychologists can observe their brain activity. Then, during the day, they sit like specimens in front of a panel of doctors in white coats as they try to reprogram their subject…

The documentary, which is being shown at the Sundance film festival, serves to highlight the psychological and physiological effects of the internet, but also calls into question whether parents are simply using this “disorder” to blame all manner of social issues and behavioural issues.

See the documentary’s website, including a clip from the film, here.

There are several interesting factors at work here:

1. Defining internet addiction itself.

2. Discussion of how to best treat Internet addiction.

3. How this treatment occurs in a country, China, that some Americans view as authoritarian.

Perhaps it would be worthwhile for some people who know much more about this topic to see this documentary, read about what is going on in China to address Internet addiction, and then compare it to treatment options here in the United States.

Illinois property taxes second-highest in the nation

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A new report shows at the end of 2012 Illinois had the second-highest property taxes, just behind New Jersey:

Property taxes in Illinois average 2.28 percent of a home’s value, according to the Urban Institute. In New Jersey, they’re 2.32 percent, and in lowest-taxing Hawaii, they’re 0.27 percent. (The lowest among mainland states is Alabama, at 0.46 percent.)All the states that ranked ahead of Illinois in the 2007–11 chart saw their tax rates go up in 2012. But the rate in Illinois went up more…

What’s moving us up the list? Home values are down but taxing bodies’ appetites are up, as Costin sees it. Illinois home values fell farther and are improving more slowly than those in many other states. The latest Case-Shiller index data, which came out on New Year’s Eve, showed that while home values in the nation’s ten major cities have recovered, on average, to June 2004 levels, they’re only back to February 2003 levels in Chicago. At the same time, Costin says, “most local taxing bodies do the maximum increase they can do under the law each year.” Lombard and Lake County are notable exceptions, he says; both have reduced their rates.

When they’re asking for more total dollars in taxation on a smaller pot of aggregate home values, the tax rate is what goes up. It doesn’t necessarily mean that the amount of tax you have to pay goes up, as Cook County pointed out earlier this year.

While there are concerns about the federal budget as well as the monetary issues of the state of Illinois, these rising property taxes hint at another concern: the need for tax revenues for lower levels of government. These property taxes primarily go for local schools, cities, and other local services. See where property taxes go in one town in DuPage County. Or how one Chicago suburb is thinking about privatizing more of its roads to pay for their maintenance.

It is interesting to note that property taxes are higher in specific states but not others. For example, much of the Northeast and upper Midwest has higher property taxes but while Kansas and Texas do, Oklahoma does not. And, California does not. In a state where one city went bankrupt are others have looked to outsource municipal services, the property tax revolts of the 1970s (see Prop 13) have successfully kept property tax rates down (though home values are still high). Yet, if the money doesn’t come through property taxes, it likely comes from other sources.

CNN’s Chicagoland reality series featuring Rahm Emanuel premieres at Sundance

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Here is some activity regarding the upcoming Chicagoland series on CNN:

The William Morris Endeavor clients decided to ask that their agency not represent them in the deal so as to avoid a conflict of interest when covering Chicago mayor Rahm Emanuel, brother of WME co-CEO Ari Emanuel. The agency agreed with the decision…

The filmmakers tell The Hollywood Reporter that the project is an evenhanded look at the mayor and the city, which was rocked by a bitter teacher’s strike and has grappled with a high murder rate. “The teacher’s union thought we were with Rahm, and Rahm thought we were the teacher’s union,” Benjamin says.

The pair gained extraordinary access to Rahm Emanuel, which was facilitated by David Axelrod, the Chicago-based former campaign adviser to President Barack Obama. Rahm was Obama’s first chief of staff and helped him get elected in 2008. Ari was instrumental in mobilizing the Hollywood donor community to back Obama.

Levin and Benjamin shot footage over an eight-month period in which the murder rate did go down, but they say they were prepared to cover the city’s story however it unfolded. “We expect criticism,” says Levin. “So long as it’s from all sides, we’ll be happy. If someone says we’re too kind or too critical to one side, that wouldn’t be good.”

In a series like this, I imagine there will be plenty of unhappy viewers. Regardless, it should be interesting to see how Chicago and its mayor are portrayed. City effectively responding to 21st century challenges or superactive mayor needed to help a city escape its own troubles? Additionally, I think it will be difficult to convey the complexity of a global city like Chicago in eight episodes and by focusing on its leader. Leaders are important but they don’t dictate everything happening in a city of nearly 3 million people.

Tight American rental market

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Even though the housing market may be showing some good signs, the rental market is still tight:

Reis’ fourth-quarter data showed that apartment vacancies around the country continue to tighten. They’re at 4.1 percent. For renters, it’s only getting tougher and tougher…

New Haven, Conn., moved into the No. 1 spot with the lowest vacancy rate, 2.2 percent. It was followed by San Diego, San Jose, New York City and Buffalo, all of which had vacancy rates of 2.7 percent or tighter.

Elsewhere around the country, the middle of the pack still had tight markets: Chicago (ranked 30th) and Baltimore (33rd) were among those that had 3.7 percent vacancies; Los Angeles (18th) had 3.1 percent; Dallas and Orlando (58th and 60th, respectively) had 4.9 percent vacancies.

Shouldn’t this lead to the construction of more units?

Though we’re at a 4 percent vacancy rate — incredibly low, by historical standards — construction is just at its historical average.

But we’re just now seeing an increasing ramp-up of construction activity. In the third quarter, we saw about 42,000 units completed, the most that we’ve seen on a quarterly basis since 2003.

Rental demand may be high – and some are predicting long terms upticks in renting due to this economic crisis which will scare people away from owning – but it sounds like the economy is still not strong enough to support a lot of new construction. What will it take to start providing significantly more rental units?

In the movie Her, futuristic Los Angeles looks like Shanghai

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In recently watching the movie Her, I was intrigued to see the futuristic Los Angeles. What exactly does it look like? Shanghai, as the film was filmed in LA and there. Here is what I noticed in the film:

1. There are a number of portrayals of Los Angeles. For example, the Walt Disney Concert Hall is featured in several scenes. One time the main character walks past the Hall and another scene takes places on an outside terrace with a lotus flower fountain on an upper level of the hall. Here is what the fountain looks like:

WaltDisneyConcertHallFountain

See an exterior shot of the building in an earlier post. This building fits well with a futuristic image with its metal panel exterior and unusual lines.

2. There are a number of shots of a city skyline, particularly from the main character’s apartment. However, this view usually has a lot more tall buildings than Los Angeles actually has. While Los Angeles has a downtown as well as an outcropping of taller buildings by Beverly Hills, there were clearly too many to be LA. At the same time, there were also shots featuring the One Wilshire building. So the film plays loose with the skyline shots but they are often Shanghai.

3. There are a number of scenes in public spaces, particularly nice plazas and walkways that connect large buildings. I haven’t explored all of LA but I know these are limited in the downtown so there seemed to be too many.

4. There is a scene early in the movie featuring a subway/train map in the background and while the base map is of Los Angeles, it clearly has too many mass transit routes to match today’s LA.

5. Others images of mass transit don’t look like LA including a bullet train and elevated mass transit lines.

6. Some of the shots from apartments or the tops of buildings show more boulevards than streets or highways.

7. Some of the outdoor scenes have street signs that look more Asian in design as well as more Asian pedestrians (though LA has a large Asian population).

Los Angeles was once viewed as the future of American cities: sprawling, encompassing a broad range of terrains from beaches to hills, and glamorous locations. However, American filmmakers may now be looking to rapidly growing Chinese cities for what the future holds.

Good question: “What Will Happen to Public Transit in a World Full of Autonomous Cars?”

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The fate of mass transit is unclear in a world of all autonomous cars:

The question of what they’ll mean for transit was actually on the program this year at the Transportation Research Board annual meeting in Washington, where several thousand transportation officials and researchers met to talk about state-of-the-art asphalts, biker behavior, and the infrastructure of the future. In one packed session, I heard Jerome Lutin, a retired longtime New Jersey Transit planner, say something that sounded almost like blasphemy.

“We’re just wringing our hands, and we’re going to object to this,” he warned the room. “But the transit industry needs to promote shared-use autonomous cars as a replacement for transit on many bus routes and for service to persons with disabilities.”…

The implication in this raises (at least) two more questions: Exactly where (and when) will it make sense for people to use buses or rail instead of autonomous cars? And if autonomous cars come to supplement these services, should transit agencies get into the business of operating them? In my initial daydream – where shared self-driving cars are whisking us all about – it’s unclear exactly who owns and manages them.

Lutin sounds skeptical that transit agencies will be able to move into this space. “They don’t adapt well to change,” he says. They’re also governed by rigid mandates that limit what they can do. A mass transit agency can’t overnight start operating something that looks like a taxi service. Public agencies also must contend with labor unions, and labor unions likely won’t like the idea of replacing bus routes with autonomous cars.

This does seem to trade a public good – mass transit paid for by taxpayers and users – for private goods, autonomous cars owned by individual users. While we haven’t seen prices for driverless cars yet, I can’t imagine they are going to be too cheap at the beginning. Even a less appointed driverless car, say a Chevrolet Aveo, is going to need more complicated gadgetry to be autonomy. But, as this planner notes, Americans do tend to like more private transit options if they can afford it.