I sure hope that Yale Economist Robert J. Shiller’s predictions in this NY Times article about our current housing situation in the United States doesn’t come true. We are in the process of refinancing our home since I want to get out of our adjustable rate mortgage while interest rates are still relatively low. We could sell our one-year old home for almost double what we bought it for. It does make you wonder though. The professor’s predictions are based upon a method - the Schiller Index - that incorporates “the actual financial return that houses produce for their owners”, rather than on the relative value based on what other houses around you are selling for.

I recently read Capital Ideas: The Improbable Origins of Modern Wall Street (highly recommended, by the way) and the author makes mention of how, historically, the relative value of company stock was such a hard concept to grasp. Two factors give me solace that the Shiller Index has more to do with “what my house is really worth” in some objective sense and not what its going to be worth in the current housing market. Those two factors are (1) the amount of people flocking to the Phoenix area and (2) the amount of empty space we still have here. The fact that they can’t build into that space fast enough for the demand also helps to drive up the value. The first factor may become a non-factor if interest rates or inflation rise but I don’t think its going to happen for some time.

But then, if the market ever does collapse by 40% (as Shilling predicts), I can move back to California and afford a house.

Its been four weeks since I’ve been home and in the office working. Seems like forever.

We got to spend some time in Ohio visiting family and friends from mid-July to about mid-August. The kids had a great time playing with their cousins. I’ve posted several pictures including my favorite one.

No sooner than we returned, I took off for San Francisco, where we (the other we, the work folks) are working with Macromedia — more on that later.