Saturday, July 21, 2012

Numbers Don't Lie

When I first joined Apple in mid-2005, the stock was about US$45 a share. When I left in early 2008, it had gone up to US$180 or so. The stock floundered while I was away, and when I came back in late 2009, it was at US$190 or so. Since then, it's gone to over US$600. Look it up yourself, it's just cold, hard numbers.

I should run for president.

Saturday, July 14, 2012

Lessons from Trying to Buy a House

The Internet has become an incredibly powerful tool in ways that even a practitioner doesn't necessarily realize. When we decided that it was time to start looking for a house to buy about six months ago, the wealth of information freely available on the Internet was astounding. Armed with apps and websites, I was finding many of the properties that my real estate agent was finding. She usually had some more information (such as whether it's a short sale), but I wasn't far behind at all. It was also a great resource for many industry jargon, as well as traps and pitfalls that lie in wait.

The first thing we learned was that mortgage calculators are entirely ass-backwards. The crucial number to start and end with is how much you have to pay every month for housing. From that number, based on how much downpayment you can muster, interest rates you qualify for, and required expenses such as property taxes and insurance, comes the number telling you how much house you can afford. The online calculators start with "Home Value" as a variable you can enter, which is utterly wrong. Home value is the result of the math, not the starting point.

Another thing we realized was that Americans really are bad at math. Apparently many people (including our agent) don't actually understand that paying your mortgage bi-weekly versus monthly is the same thing. In one case, you pay more quickly and therefore pay less in interest. In the other, you get to hang on to the money you borrowed for longer, at the expense of paying more interest. It's just like the difference between a 15-year mortgage and a 30-year one, but it seems to confuse people. This isn't even really math - it's barely arithmetic!

We also learned that by about 1,500-sqft, the American home-buyer apparently wants a formal living room and a formal dining room, instead of just bigger rooms or other general-purpose rooms like dens. Since Americans don't really invite mere acquaintances home for social functions, the close friends they do invite inevitably go straight into the family room and kitchen, so a good third of these first floors just sit there and never get used. Now, if this was Texas I could understand that land is cheap, but in the Bay Area I'd have expected more pragmatism. How about a music room? Asian kids all learn the violin or piano, right? (It's okay, I can say that.) How about a hobby room, where you might at least lay out a table for a jigsaw puzzle? How about a library?

Lots of houses are built in bulk as part of phased developments, where buyers get to pick one of four or five models, and the developer ensures that your house is not identical to the next ones. It boggles our mind that a development might have dozens of these homes, and yet the interior layouts remain spectacularly bad. 2,000-sqft houses would still have cabinets that aren't square, and there'd be all sorts of odd spaces that aren't good for anything. You'd think if you were designing just four houses to build 100 times, you'd make sure each one is pretty good. After all, this is the industry that came up with "measure twice, cut once", isn't it?

Typically, the master's bedrooms take up half a floor, while the kids' bedrooms are too small to fit even a proper study desk. (As long as we're pretending, shouldn't you pretend that your kids study?) The master's bath is grandiose, but there is perhaps just enough closet space for one person. Nobody seems to have any storage space - turns out Americans park their cars in the driveway and store stuff in the garage - but, boy, do they want that master spa and that formal living room.

And what the hell is up with the white tile countertops? A basic requirement for a countertop is that it's a flat work surface!