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Friday, December 30, 2011

Housing Prices Still Not Making Sense

My husband and I are looking to buy a decent house in a decent neighborhood for a reasonable price, but we're having trouble finding such a thing.  There are decent houses in decent neighborhoods, but their prices are not reasonable.  For all that housing prices have fallen over the past few years, I believe that they still have further to go.

How can I say this when houses have already lost anywhere from 20 to 60% of their values?  Because they were inflated to more than that during the bubble, and incomes haven't risen significantly over the last decade.

Here's the thing.  According to the Wall Street Journal, a household shouldn't plan to spend more than 28% of its gross monthly income on mortgage/property taxes/maintenance/PMI.  (This is a fairly common rule of thumb.)  In 2000, the median household income in Nashua, NH (where we're looking) was $51,969.  Let's assume that household also had a monthly debt load of $500 (between car payments, student loans, and credit card minimum payments), and savings sufficient to put down 20% of the purchase price.  Using the Wall Street Journal's mortgage calculator, that household income would qualify to purchase a home that cost up to $141,365*.  In 2000, the median house in Nashua only cost $132,200, so the average household could purchase the average house, and then some.  In 2009 (the most recent year covered by city-data), the median household income in Nashua had risen to $58,789.  Using those same assumptions, that household could purchase a home that cost up to $181,942*.  That's a problem, since the average house in Nashua in 2009 cost $248,500.  In order for the average household to purchase the average house at that price, the median household income would need to be closer to $69,000.  Even assuming our household is completely debt free, the maximum house they could afford would be $205,997, still well below the median.  Neither housing prices nor incomes have changed much since 2009.

As much as sellers and realtors don't want to admit it, a house (or anything else, for that matter) is only worth what a purchaser will pay for it.  As long as the average house is out of reach for the average purchaser, it's overpriced.  Unless incomes go up significantly in the very near future, housing prices still have a ways to fall.  In Nashua, it's looking like another 27%.

Maybe my husband and I are better off continuing to rent for now.

* I assumed a 30 year fixed mortgage at 8% in 2000 and 5.5% in 2009, both of which are historically accurate.  The tax rate was roughly 2.1% in both years.

Monday, December 19, 2011

Merry Christmas!

Shortly after Thanksgiving, everyone in my house came down sick and stayed that way for several weeks.  Needless to say, that delayed our Christmas preparations.

Christmas shopping wasn't a problem; we don't go overboard with presents for our kids so we already had most of them purchased, with a few clicks online finishing up the job.  But we haven't been able to decorate until now.

Add to that the fact that we've moved so often over the past few years, and we haven't really decorated for Christmas since 2008.  We had a Christmas tree for our son's first Christmas (which, since he was only eight months old, he obviously doesn't remember), but our daughter's never seen one in her own house.  This year we decided to put one up, but we discovered over the weekend that our Christmas tree stand got left behind in one of the four moves we've had since we last used it.

Have you ever tried to find a Christmas tree stand the week before Christmas?  My husband went to several stores to discover that they were sold out, and called even more only to be told the same thing.  When I went out looking, I found more of the same, plus in some cases I had to walk around store employees removing Christmas decorations from the shelves to make room for their next wave of inventory (thankfully they're not yet putting out pink and red heart-shaped objects for Valentine's Day--that'll probably come in about two weeks).

Removing Christmas inventory the week before Christmas?  You know the classic song, "The Twelve Days of Christmas?"  Those twelve days start on December 25 and continue through January 5, the night before Epiphany.  That's the traditional celebration of Christmas, with Advent being the four weeks leading up to Christmas.  I realize that the stores have been selling Christmas since before Halloween, but some of us actually try to celebrate Advent, and keep Christmas for Christmas.  Even if we hadn't been sick, our decorating would have happened only a few days sooner than it did.  So while the stores may be tired of it, some of us are just getting started.

Fortunately the evening was saved by Home Depot.  They had a few tree stands left, so I was able to save my husband from having to try to 'build' something to hold up the tree that was dejectedly sitting on our porch.  Furthermore, the cashier at Home Depot actually wished me a "Merry Christmas."  Not "Happy Holidays," but a real "Merry Christmas."  It was so refreshing to hear!  And then I also got a "Merry Christmas" from the clerk at the store in the mall that sold me a lighted star tree topper (another item that's hard to come by a week before Christmas).

It's common and even expected for Christians and quasi-Christians to lament about the consumerism of Christmas, how early the stores start selling it, and the decline of the religious meaning of the holiday.  We hear so much about how people who aren't religious Christians get offended when wished a "Merry Christmas," insisting instead on "Happy Holidays," which supposedly honors Christmas, Chanukah, Kwanzaa, Conspicuous Consumption Day, and whatever else people choose to celebrate around the end of December.  Now I agree that it's a bit foolish and insensitive for a sales clerk to wish a Merry Christmas to a customer purchasing a menorah, but in the absence of something so obvious, what's wrong with wishing a Merry Christmas to someone who is purchasing Christmas paraphernalia?

Chanukah has always been its own holiday, and should certainly be respected.  Kwanzaa was originally created "as an alternative to Christmas," and Conspicuous Consumption Day is clearly a secular hijacking of the religious holiday.  As such, I think it's perfectly appropriate to wish a "Merry Christmas" to anyone engaging in celebrating Christmas in any way, even if they've appropriated various aspects of the Christmas celebration for a holiday of their own creation.  Does this mean that every purchase between Thanksgiving and Christmas should automatically be met with a "Merry Christmas?"  Not necessarily.  But anyone buying Christmas decorations (trees, ornaments, yard lights, etc.), Christmas cards (any card that doesn't specifically call out Chanukah or Kwanzaa), a ton of toys, or anything featuring snowmen, Santa Claus, Thomas Kinkade artwork, or old-fashioned people skating or riding in horse-drawn sleighs is fair game.

So to the clerks who wished me a "Merry Christmas" last night--thank you!  Please keep up the good work!  You might slightly offend someone who wants to celebrate Christmas without acknowledging its origins as a religious holiday, but you also might bring some joy and hope to a Christian who is trying to remember that Christmas is the celebration of God's breaking into human history by sending his Son to achieve salvation for us all.  It's amazing how just calling the holiday by its right name can go such a long way towards helping with that.

Thursday, December 8, 2011

Education, Standardized Tests, and Idiocy

In principle, I'm no fan of standardized tests as the be-all and end-all of measuring academic achievement and predicting future success.  I think they have their place, but at best they can only be one tool among many to gauge whether a student is progressing acceptably in school.  I believe that the current trend of schools 'teaching to the test' in order to 'prove' that they're good schools and thus receive necessary funding is a horrible disservice to students, teachers, and the future of this nation.

But I have to admit that that opinion is largely uninformed.

You see, I went through a Massachusetts public school system before the MCAS was introduced.  I vaguely recall taking something called the California Achievement Test (yes, in Massachusetts) every few years, but those scores were for informational purposes only.  Along with most of my peers I took the SAT as part of my college entrance efforts, and I'm embarrassed to admit that my combined score didn't even break 1000.  But that didn't matter because I was unmotivated, and ended up on the eight-year, work-my-way-through-night-school plan (see previous post), choosing schools more on affordability, geography, and convenience of schedule than prestige or quality.

So standardized tests have not been a significant part of my educational career.

But I read something yesterday that simply appalled me.

Earlier this week the Washington Post had a piece about a school board member in a major district who took the standardized tests for 10th grade math and reading.  It was later revealed that the district was in Florida, and the test in question was the Florida Comprehensive Assessment Test (FCAT).  This board member self-describes as having a bachelor of science degree, two masters degrees, and 15 credits toward a doctorate.  He helps "oversee an organization with 22,000 employees and a $3 billion operations and capital budget, and am able to make sense of complex data related to those responsibilities."  He admits that of the 60 questions in the math section, he didn't know the answer to a single one of them, and was only able to guess correctly on 10 of them.  On the reading section, he scored a mere 62%.  He dismissed the argument that the information would have been fresher in his mind had he currently been in high school, pointing out instead that "A test that can determine a student’s future life chances should surely relate in some practical way to the requirements of life.  I can’t see how that could possibly be true of the test I took."

This seems to be a pretty compelling statement against the usefulness of the FCAT.  But as much as I'm predisposed against standardized testing, I had trouble believing that the test could be that disconnected from reality.  So I took it myself.

I can't say with certainty that I took exactly the same test this highly educated and highly successful school board member did.  But I went to the Florida Department of Education website where I was able to download the test booklets for the 10th grade math and reading tests from 2006.  The math section had 58 questions, and the reading had 45.  I answered (or tried to answer) all 58 of the math, but I disregarded the essay questions on the reading section because I had no way to objectively score them.  The test booklet failed to provide a couple of necessary readings (due to copyright permissions not being available for an electronic format), so I also disregarded the questions based on those.  (I later discovered that the necessary readings were reproduced in the answer booklet--I left them out anyway because I didn't want to risk seeing the correct answers in the course of my reading.)  So in the end I answered the 35 remaining multiple choice questions I could reasonably be expected to answer.

I have no idea how this school board member manages to enjoy the level of success he claims, because I think he must be an idiot.

I hated math in school.  I barely passed Algebra I and II, and only passed Geometry after I had to revisit it in summer school.  I took two accounting classes and one statistics class in college, back about 15 years ago.  Yes, I did deal with numbers in my first career in finance, but that was mostly arithmetic, and I left that field over 12 years ago.  Of the 58 questions in the test, I answered 43 of them correctly.  Very few were wild-ass guesses.  Most of them, if I didn't know the answer immediately, I was able to figure it out with the information provided.

Of the 35 reading questions, I answered 35 of them correctly.

With the exception of some of the geometry, most of the math problems could be solved through simple arithmetic and/or common sense.  Basic observation and problem-solving skills.  Someone like me, who doesn't remember a single formula from high school math and doesn't do unusual amounts of math in work life (I'm a stay-at-home mom of toddlers--we're still working on counting to 20!), was able to score 74%.  The school board member with his $3 billion budget scored 17%.  The skill I employed most frequently in solving these problems was determining what of the information provided was important to figuring out the solution, and what could be disregarded.  I don't care what line of work you're in, that is a necessary skill for functioning as an adult in today's world.

As far as the multiple-choice questions on the reading test are concerned, all you have to do is read the short piece and answer the questions.  There is no assumption that you are intimately familiar with obscure pieces of literature, or even that you know the technical jargon necessary to grammatically deconstruct a sentence.  All you have to do is demonstrate that you understand what you just read, both the content and the intent.  Why does intent matter?  It matters if you want to be able to tell the difference between an opinion piece and an instruction manual.  It matters if you expect to be able to understand the difference between the story of one person's success in entrepreneurship and a boiler-plate business plan.

Granted, I didn't answer the essay questions.  Let's assume I did, and let's assume I missed all four.  That would have dropped my 100% down to 89%.  The school board member, with all his advanced degrees, scored 62%.  He reasons that the test is unfair because “On the FCAT, [the students] are reading material they didn’t choose.  They are given four possible answers and three out of the four are pretty good.  One is the best answer but kids don’t get points for only a pretty good answer.  They get zero points, the same for the absolute wrong answer.  And then they are given an arbitrary time limit.  Those are a number of reasons that I think the test has to be suspect.”

First of all, I challenge his claim that three of the four answers are "pretty good," but let's put that aside for now.  In real life, can we expect that we'll only ever have to read and understand things that we choose to read?  (No, I don't feel like reading the Instruction Booklet for my 1040, so I just won't bother filing my taxes this year.)  In real life, can we expect that 'partial credit' will be given for an answer that's 'pretty good' but not necessarily the 'best'?  (Well, you've read the detailed job description and I've really enjoyed interviewing you.  You missed the mark a little bit on what skills we're looking for, but you were pretty close, so we'll give you this other job, instead.)  In real life, can we expect that we'll be given unlimited time to comprehend a set of instructions or absorb some basic information necessary for what we're doing?  (You need three months to understand the policies laid out in our employee handbook before you start work?  No problem; we'll keep you on full salary while you figure it out!)

I still don't think standardized tests should be given the level of importance they currently enjoy, but if the FCAT is indicative of what's being expected of 10th graders across the country, I think it's doing a pretty good job of measuring how well kids are learning how to learn.  Based on the two tests I took, students aren't being expected to memorize a bunch of trivia that they'll never use in adulthood; they're being expected to filter information, determine its value, and be able to understand written communication.  In adulthood you don't have to know everything, but you do need to know how to find whatever information you need.  And you can't do that if you can't determine what is relevant and what isn't, discern the difference between opinion, bias, and fact, or understand what a paragraph is even saying.

I'm not worried about students taking the FCAT.  I'm worried that we live in a world in which an adult who is unable to pass the FCAT is on the school board, and is able to function as a leader at a company with 22,000 employees and a capital and operating budget of $3 billion.  Are the expectations of functioning--even successful--adulthood really so low?

No wonder this country's in trouble.