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A ball of glass will bounce higher then a ball of rubber.

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World's Largest Paper Cup

Apparently the World's Largest Paper Cup is located in my hometown. I don't even know exactly where it is, or why it is, or whether or not it's actually made of paper ... I've lived here for almost 2 decades total, and somehow have missed out on this 3 story monstrosity.

posted by Doug 9:53 PM

The Big Big Numbers Effect

Recently, the office began doing $1,000,000+ appraisals. And one thing I've noticed is how adamant people are that they know the value of their homes at this level. When you appraise a condo in the $250,000 and they think it's $260,000 and you look at them and say "Sorry, but it's not" they usually sigh a little bit, maybe whine, but in the end they accept that your valuation will have to do.

Recently someone asked me about a home in Bonita that they bought for 1.2 million and then poured $400,000 worth of upgrades into. I told them it was worth 1.2 million still. "But we bought it for that." "Yes." "And then we put in almost a half-million more." "Yes." "So it should be worth at least 1.6 million" "No."

And the trouble was, when they bought it, in their enthusiasm they paid almost $400,000 more than it was actually worth. And because they came in with a large chunk of cash, the appraisal their lender got was more or less a formality because there wasn't a whole lot of risk on the part of the lender.

Anyway, they were livid.

Not at themselves, of course. But at me.

And I've noticed that this is the case with million + homes. Even the homes in the 3/4 million range. In Loma Linda, a bunch of homes are selling in the $675,000 range. One home sold for $780,000. What happened? Well, the buyer might've been from out of town, flush with cash, and wanted that home. Period. What's $100,000 when you're a millionaire, right? Well now everybody in that area thinks their home is worth $780,000.

And here's the kicker. Now that everyone thinks their home is worth that much ... it just might be. In one fell swoop everybody's home may have just went up 15% in value. Let's say you want to move into that area now and start looking around. Everybody's selling their home for $780,000. That must be what they're worth right? Even if one month ago, everyone was selling for $670,000, you don't know that. Plop, you put down a bid.

Now there are two houses sold for $780,000 and it's not just an anomaly, it's a trend.

Let's say you want to buy a Whopper Jr. for $0.99 You go in, and the guy in front of you pays $3 for his Whopper Jr, even though the guy in front of him just paid $0.99. The cashier looks at you and says "I'm sorry, but people are paying $3 for a Whopper Jr now" would you shell out?

But when it comes to houses, everybody thinks they've got the nicest house in the neighborhood. So they take a quick glance at public records and see the highest price sold and then figure their home is worth $50,000, $100,000, $3 million more. Because "Mine is nicer."

And because an appraiser doesn't actually represent the buyer, but the lender who's giving the buyer the loan, if the buyer comes in with enough cash to allay to risk of the loan, BAM. Done deal, and the buyer never knows any better.

Afterall, what're you saving your money for if not for a dream-home, right?

And here's my theory (A point, finally):

When numbers get astronomically huge, I think people cease being able to wrap their heads around it. You know $10 buys you a DVD, or a movie-night, but what does $10,000,000 get you? "A house" What kind of house? "I don't know. A nice one."

When people have that much money, they cease to care about bargaining. "I want it. How much money do you want for it? Here's a check, fill it out yourself."

Happens all the time. Is this why our deficit is so huge? I mean ... what's $4,000,000,000,000 as opposed to $3,750,000,000,000? Just a sort of bigger number, but there's no way for us to quantify that in real goods. So we just raise the debt ceiling. It's just a number now. And this is why property values skyrocket. What's $10,000 in terms of $800,000? You'd bargain someone down $100 for a used gaming system, but in a house, you don't blink an eye when they ask for an extra $2,000 for whatever.

And I've noticed this with loan underwriters too. They'll question you about $5,000 on a $100,000 loan, but not about $15,000 on a $900,000 loan. It just seems to cease to matter.

Maybe once people are unable to quantify these things in terms of goods, a number's just a number. Most people with that kind of money get it halfway out of luck anyway. Born to the right person, had the right idea at the right time in the right market. And they forget that when they were a teenager, $5.00 was an hour's worth of work after taxes.

Mind-boggling.

posted by Doug 12:42 PM

Dinner Theater

For Mother's Day, Reina and I went out to the Murder Mystery Cafe in HillCrest with her parents, her brother Reggie and her brother's girlfriend Jenn. I got to say, I haven't had that much fun in awhile. They had a hat-contest and Reina and I made the hat that Reina's Mom (far right) is wearing in the picture (she took it off for the show as to not block the view of other guests. She also didn't win. Oh, and this was taken before the show, when the actors are trying to get everybody seated/settled.).

Anyway, if you haven't ever done dinner theater before, you want to check this place out. It's goofy and hokey, but light and fun and just a generally good time. The premise was this: A horse track owner sells his track to a corrupt Senator in order to bet money on a horse which he has hired a magical Gypsy woman to guarantee (magically) to win, while the Senator places his own bet on his own horse, ridden by Frenchman who is also the world's greatest jockey. Meanwhile, the Senator has no intention of selling the track back to the track-owner, a plot uncovered by a gossip-journalist and her talking dog/hand-puppet. The journalist goes cahoots with the Senator's girlfriend, a former movie-starlet, in order to get the story, while the girlfriend attempts to get the Senator to marry her. The Gypsy places a curse on the French jockey to grow two feet to 6'4", somehow a pair of singing-dancing twins get involved in the act, and somebody somehow gets murdered and everyone must figure out how/when/why.

It's $60 a ticket, dinner and some drinks included. The beer was cold, the jokes were funny, and I definitely recommend it.

http://www.mysterycafe.net/

posted by Doug 7:04 PM

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