Tuesday, August 26, 2014

Earthquakes and Muggings - 2014 and 1989

As a resident of Northern California for more than forty years I have had my fair share of earthquakes. In the seventies there were the usual 3.0s that left you wondering, “Did that just happen?” Then in the early eighties there where a couple of 5.0s that made my wife’s high-rise building sway, and the old office building I was in, rain dust on the drafting tables. Last Saturday at 3:21 I was awoken by the gentle but persistent shaking of our bed – for more than 10 seconds. I knew then that something big had happened, but where I wasn’t sure. I went back to sleep thinking of the tragic affects of the famous World Series earthquake of October 17, 1989.

It’s called the Loma Prieta earthquake (west of San Jose) because of where it all started that Tuesday evening at 5:04—but to all of us at the Bay Bridge World Series it will always be call the World Series Quake. It was game 3 of the series, the first game at home. My Giants were down two games to the Oakland Athletics (5-0, 5-1). We needed this home game to even stay with the powerful Athletics who had won 99 games that season. We needed more than hope; we needed a miracle.

The Giants had just finished a bruising series with the Cubs (4-1) to win the National League Championship. The fans were in heaven—finally a World Series in San Francisco. The venue was Candlestick Park, one of the most reviled ballparks in the National League. Cold, foggy, windy, poorly located, food stunk, and attendance for some years often was at the bottom of the league. They even gave out pins if you were brave enough to stay for an extra inning game, the Croix De Candlestick.

We had, over the series with the Padres and the Cubs, met many of the fans near our seats in the deck directly above third base. Good people, smart people, baseball people. Even the weather during the previous weeks (as is often the case in San Francisco in October) was just plain great.

As the fans piled in early for the game that Tuesday evening there was a palpable feel that this would turn around tonight. We would take the three home games then show Oakland our metal when we took the series on their ball field. The ballpark was festooned with all the usual red, white, and blue bunting. Since the league takes over for all the festivities there was a certain sense in the air that we weren’t in Candlestick, just a feeling, but it was like the atmosphere was different, the field looked different. Maybe it was all the cameras, the helicopters overhead, the suits on the field – something was different.

In minutes the “Battle of the Bay” would start, for baseball fans having their team in the World Series is every birthday, Christmas, and 4th of July they’ve had all rolled into one. Bags of souvenirs and trinkets were stuffed under the seat, the first beer was half gone, and the stands were filled well beyond capacity—it was a wonder. The game was to start at 5:35 – 8:35 in New York (which was asleep, this was not a TV demographers dream match, to say the least)

Then the shaking began. First more like a push, then a roll, then another push. The silence from 65,000 fans was loud. I still remember the eeriness of it. What the hell is going on? As the shaking eased everyone knew what had just happened—except the Easterners who hadn’t a clue. The whispers rose to a full-throated conversation, the crowd was into it now. “Yeah, this is San Francisco baseball. Get the game started. Play ball!” Then the power went out, no announcements could be made, then the big lights went out, no communication with the fans in the stadium. Only those with transistors radios had an idea of what was going on, and even that was sketchy since the broadcasting from the park was compromised by the loss of power.

From the row behind us someone issued a, “No shit.” The fellow had been our eyes for the last two weeks, he had faithfully brought his small battery operated TV so we could watch replays. “The Bay Bridge bridge collapsed, the city is burning,” was his next update. Helicopters flying over the park had fanned outward to survey what had happened after the quake hit. The first shots of the collapsed portion of the Bay Bridge and the fire in the Marina district were being broadcast around the world. The word spread through the crowd – people began to move quietly and orderly to the exits. It was time to go home – the game would wait. It would not resume for ten days.

Random thoughts:
  • The young lady sitting next to me (name lost to time) informed me that when the quake hit I grabbed her thigh and left a serious bruise—I absolutely don’t remember—and I always remember grabbing women’s thighs.
  • If the earthquake had lasted as long as the 1906 earthquake (15 seconds+/- to 42 seconds) I would not be writing this missive.
  • The various TV crews working the game responded differently – Johnny Bench ran out of the booth so fast that it prompted his partner Jack Buck to say, “If he moved that fast, he’d never hit into a double play. I never saw anyone move that fast in my life.”
  • Rules for backup power and safety were rewritten for all California stadiums.
  • The Embarcadero Freeway, that cut the City of San Francisco off from the bay, was compromised and would be torn down. This was nature’s way of doing what the city government hadn’t been able to do for thirty years. The result is a spectacular new waterfront and promenade.
  • Sadly and tragically more than 60 people lost their lives – most in the collapse of the double deck freeway in Oakland. A friend’s wife had just left that section two minutes before the quake. The loss of life was less because everyone had gone home early to watch the game.
  • A new ballpark for the Giants would open in 2000, not because Candlestick failed, but because new ownership revitalized an historic franchise. The average attendance went from about 12,000 per game at Candlestick, to more than 40,000. The quake played a part in this change.

Eventually the Giants were swept by the A’s, forcing many in the Bay Area, including family members, to come to grips with their loyalties and ball cap collections.

We survived; only one small teddy bear fell off a shelf in our San Francisco home’s living room. The next few days were eerie and strange. San Francisco was essentially closed, and would slowly awaken and get back together. The cost was in the tens of billions and it would take 24 years to replace the old unsafe Bay Bridge cantilever section.

Our hearts and thoughts go out to those in Vallejo and Napa who were victims of nature’s geological adjustment. We all know it could and will happen—but it’s more like a mugging than anything else.

Stay Tuned . . . . . . . .

Thursday, August 7, 2014

Saturday, August 2, 2014

It is Becoming Electric!

BMW's i8 Concept car - hybrid (for now)
Long time readers know well my issues with electric cars, not the concept or the idea but the government’s (state and federal) tax credits and other juicy bits that help to make the car more affordable. In other words take from you to give to me. And of course the headlong rush to promote the electric car as the savior of the world has or will lead to other unintended consequences.

Most state and federal highways in the United States are paid for out of the various taxes placed on the sale of gasoline. It doesn’t take a high school math student to understand that as we sell less gas there will be less money for the roads and highway infrastructure such as bridges and tunnels. Electric cars put as much wear and tear on these facilities as gas powered vehicles—no matter what the HOV sticker on the rear bumper of the electric car says. Look for a revolution in how we fund our highways. The tax fund will decline—decisions on how to go forward will have to be made now not later. This will be a significant change to how we fund this all-important part of the American fabric. Will there be point of sale assessments? Will there be usage fees charged through internet connections with the car talking to state and federal computer (now that will be interesting)? Will there be usage assessments made at the electric meter at you house? It will get complicated before its simplified.

With the decline in gasoline demand the urban architecture of America will change. Across the American landscape, at prime highway corners, are gas stations, tens of thousands of them. Think what will happen as they disappear, what will replace them? What new architectural gem will fill this half-acre of extremely prime real estate? The corners are too small for most land uses, access is difficult (we make allowances for service stations), and clean-up is necessary. I think that housing has a chance here.

There may be the inevitable shift to replaceable batteries. These would require a location like the gas station but would allow for the quick replacement of a standardized battery pack—thus freeing the electric car from its extension cord. It is this flexibility that will allow the electric vehicle to achieve parity with gas.

There are now eleven all-electric cars available on the American market—and maybe another dozen more coming soon from GM, BMW, and the other international brands. A significant change in the overall transportation industry is coming. And it’s coming very quickly. These cars are simpler and safer. Less moving parts, no container of high explosive fuel under the rear seat, no pollution, and no having to take the car in for 3,000 mile oil changes. You know there’s a change when Ferrari is making an electric car (hybrid of course).

And when this change reaches the tipping point when there are more electric vehicles than gas vehicles on the road—what will the environmental crowd bitch about then?

Stay Tuned . . . . . . . . . .

Thursday, July 24, 2014

Is Housing Too Expensive?

Roller-Coaster Housing Prices
I read a post the other day that said the reason for the flat rate of housing sales is that they are too expensive. According to the article by Frank Anton, only 1 in 6 homes sold is a new home. Currently the percentage is even lower. One of the reasons is the national average has new homes costing 45% more than an existing home. I’m shocked that it took this long to figure out what has been the norm for more than fifty years—new homes almost always cost more than existing homes.

It is this relationship between the new home and the existing home that has provided the base line for affordable housing—the existing older home is the affordable home market. The twisted belief that we can build new affordable housing is the mantra pushed by agencies, charities, and cities. And the only way it happens is by subsidies, fees tacked on new housing, and grants. In other words new affordable housing exists because someone other than the homebuyer is contributing to the bottom line cost of the house. Which brings me back to home prices.

Outside of those few who believe that all homebuilders are carpetbaggers, speculators, and opportunists, almost every builder I know won’t build unless he has a confirmed market. There is little if any speculative building today, this is a lesson they learned in 2008 when it all when to hell in a lender’s basket. To believe that builders just throw out product like they were chumming for tuna is just plain silly—the forces of the marketplace would kill them.

At any time in any market housing will be too expensive—until it's not. What controls housing costs are five things: land cost, entitlements, materials, labor, and profit. Working backwards the builder makes choices through these five factors to set his price. He narrows his profit, he finds cheaper or non-union labor, he buys materials in bulk, he begs for fee reductions (building the park may be cheaper than paying the park fees), and lastly maybe he can renegotiate the land cost. It is a complex dance played to the tune of the band—the marketplace—that has its own balancing act of interest rates, debt, and income.

The difficulty today, especially in dense urban markets, is the newest player in the game—the non-profit affordable home builder (the non-profit thing is a ruse, they make a lot of money, it’s just called something different). They compete directly and unfairly with the for-profit builder at the first-time-buyer market. Why would a builder go through all the sturm and drang of the entitlement process to compete at the lowest cost/profit level when, with government assistance, he can and will be undercut? They won’t, they will just build to a different price point.

So, the real reason for the rising cost of housing is that we are not building enough housing—period. The only way that housing costs can go down is to noticeably modify one of the five factors. I don’t see this happening in the near future. Land costs are dramatically rising in urban areas, my experience recently is that cities are not interested in reducing their fees (some are raising or expanding their fees), materials costs are holding steady but this is a result of more supply than demand, labor is flat (but the push on the minimum wage may have an effect), and profit is what it is, except when there is competition which can noticeably affect the price.

It’s my opinion the biggest problem right now is the first time homebuyer market. They are unsure about the future and will bide their time. If they can settle into a good apartment, get their student debt managed, and maybe even find a willing partner to share the burden, the market will change. But right now I think they are marking their time—which is not good for the merchant homebuilder.

Stay Tuned . . . . . . . .

Saturday, July 12, 2014

Traffic To Die For

When I listen to the latest on traffic in the Bay Area and San Francisco (Galaxy Base for Cogito Urbanus) you would think we were in a free fire zone of automotive chaos and collisions. Here are a few videos that make you wish for those future days of robot cars.

The above is in Addis Ababa, Ethiopia (I bet some of you thought is was Columbus Circle in New York City). Makes you kind of dream about stoplights and left turn arrows. What is most fascinating are the pedestrians dancing in and amongst the cars. I hate to think of the number of accidents, though libertarians might think this all normal which proves that we don’t need the heavy hand of government over-management.

Note the seven lanes demarcated in the upper left lanes (Traffic Engineers of Africa) with appropriate turn and directional arrows. Watch how they are stringently followed. And I also note the lack of bicycles, I guess they are not as useful in a third world country as I was led to believe.

Now Ho Chi Minh City, Vietnam is an entirely different matter. One difference is the dominant use of motorcycles and mini-bikes. The intersection also has a traffic signal, one I believe, that hangs over the center. As with Ethiopia, pedestrians must fend for themselves.

Mumbai, India looks like any intersection in New York (mostly taxis and pedestrians) or Columbus Street in San Francisco.

Driving in China – Linyi City style. Lanes? I don't need no stinking lanes.

Pedestrian crossing Japanese style. This near the Shibuya train station in Tokyo.

And you thought Los Angeles traffic was bad.

What more can you say when you mix vodka and traffic. This is near St. Petersburg, Russia.

And you can always bet on the Japanese to solve the problem – Nagoya, Japan

Stay Tuned . . . . . . . . .