The house has 4 beds upstairs, and one downstairs with 3 full baths upstairs, half bath in the main level, and one downstairs. Almost 7000 sq ft with hardwood floors in the two upper levels, tile in the kitchen and beatiful verde granite kitchen countertops.

The house is very nicely built, with decorative railings in the balconies some of which are black metal as in the room porches.

The house was for sale last year. They might have plans for selling it in the future. If you like the pictures contact him directly at morad at abusabe dot com .

I was reading the EXiT realty newspaper, called “The Exit Recruiter”. They usually have a theme of reminding people about some fundamental aspects of the market that will never change. One important aspect is that people desire to own real estate. Home ownership is called the American dream, as everyone dreams of owning a piece of land, which he mows and have a nice grill in the backyard and spend time playing basketball with his kids. It is a dream that everyone wants, and because of this another power is generated i.e. demand.

It is not a secret that the current real estate market is a challenge to everyone and on many levels for all of those participating in it. This includes all buyers, sellers, lawyers, mortgage brokers, banks, title companies, appraisers, inspectors and real estate agents.

The speed by which the market changes can be exciting to some who can find an opportunity be that buyers or brokers and can also baffle the onlookers in the peanut gallery. The peaks and valleys the market swings on are often record-breaking. However, sometimes it goes flat and dormant with no pulse whatsoever.

With very close and deep looks, every market seems to have opportunity. It is obvious that the real estate values are going down, and for a fact no one can sell real estate short - it doesn’t work that way . But there is an opportunity, and someone will grab it. People enjoy making a profit. With this in mind, it becomes obvious that real estate values always return no matter what the circumstance.

Yesterday, news got released that the real estate market even went lower. We’re still slowing down as long as this chart is less than 1. However, it looks like there’s a trough (bottom) being created, and no one knows whether it is a global or local bottom. In other words, no one knows whether the market will start reversing or go down again.

Whether this or that, I guess everyone agrees that the market is not only down now, but full of blood. That’s why there’s many investors roaming around buying foreclosures, short sales or other distressed properties.

However, there’s been a couple of WSJ articles forecasting that the worst is over, and the real estate market will bounce back. That’s why I believe that by Jan’09 things should look better - at minimum.

However, there’s a couple of things that tells me we might still go in the flat bottom till the end of 2009. First Fannie Mae just expected prices to further drop. The chart in the second WSJ shows the market bouncing up after a recession, and we’re not in a technical recession yet.

I will update the chart that I used to analyze my local market, and will share it on the weblog. I agree that we are in the market bottom, but I think this bottom will be little bit more flat than just April of 2008.

Although this week news came out that existing home sales is one the rise, it seems that there are different type of buyers this time. Buyers are either trying to take significant advantage of the market, or strong investors are buying investments when there’s lots of blood. And I still believe that the market will bounce back, yet it looks this time that there’s a different type of bouncing back. There will be a lot of sales at low price first, then the price will start following as demand increases.

So we should be happy that the market is bouncing back, yet be careful because at the end of that short peak there might be another trough - unless serious measures are taken by the government to seek permanent economic fix through bringing manufacturing jobs back in the US.

But, the question poses itself: is lowering the rate to such point a solution for the real estate problem? will it ease the foreclosure pressure from many of the homeowners? As expected, the answer is no. Lowering the rate is a move to make the banks lend more money, with lesser restrictions.

Let’s remember that the problem is not the real estate market. The real estate market is however, the outcome of the problem: our economy is structured to grow only with an increasing amount of credit. There’s lots of reasons for this, including that the US gross domestic product is mostly due to services, and not due to manufacturing (which was shipped outside). Because of that, fictitious money has to be created by the federal reserve to keep people happy. One way of creating the fictitious money is by easing lending, so people borrow more. And when people borrow, their banks have to borrow from the federal reserve to give them the money. And since the federal reserve can create money out of thin air, they just do and the people will be happy for another while.

By moving the interest rate to higher or lower levels the federal reserve can control how much fictitious money gets created in the system. This money is fictitious because it was not created through manufacturing, but rather through punching numbers in computers and thus it does not equate to any merchandise in the economy.

Due to interest, the money pool with the people gets constricted by time and moves little by little to the owners of the federal reserve (the federal reserve is privately owned by banks). Once that money pool get very small, more money has to be created to keep the people happy, which means more people have to borrow.

The problem comes when no one can borrow any more because it is very hard to do so, and what’s worse is when the federal reserve rate is already low - and how low can that rate go? now we’re at 2.25%? well… that’s the real bubble, and that’s the real problem.

There’s actually two solutions for that problem, the first is the correct but hard one and the second is the easy one. The hard but correct solution is to move manufacturing back in the US thus most of the GDP should be out of manufacturing and not financial services and creating fictitious money will have a lesser effect on inflation, since we have growth in products as well. The easy solution is to introduce fresh people in the system that can borrow - and thus new money can be created aka immigration reform. Although immigration reform is something good if ethically handled, yet the economic pressures will ultimately lead to using immigration as a way out of the economic crisis. However, immigration reform is like putting a band aid on a wound as you still have to treat the wound, and the same problem will hit us again in a few years.

In my opinion, the home mortgage crisis is the outcome of a bigger problem. Actually, in part, people are not finding money to pay mortgages is an outcome of the fact that the money in the system is not enough - for the people to make money to pay their dues. And people are not finding money because the growth of the US economy is based on an ever increasing credit - an ever increasing borrowing, which if slowed the money in the system will decrease.

It all spins from the fact that the federal reserve lends the banks non-existent money. Basically, you go to your bank to get a loan to buy a home. Since your bank does not have the money, they in turn go borrow it from the federal reserve and put down 10%. The federal reserve being a bank for banks, creates the money out of thin air and gives it to them. Well, your bank does not actually get money - it’s just that the amount gets punched in their federal reserve account and in turn gets punched into your bank account through a technology called “the computer keyboard”.

At the end of the day you’ll be happy to have the money, pay interest on it to your bank and in turn your bank pays interest to the federal reserve. Now, one can argue that actually the money that has been created out of thin air can be destroyed by repaying the loan to your bank, and your bank repaying its loan to the federal reserve. This is true - but what about the interest that you paid, and that your bank paid to the federal reserve? See - that’s the big problem, it’s the flow of wealth going from people to the banks. This in turn leaves lesser wealth with the people. Now, for the people to be able to go and buy, they need money and the only way to create money with the people is with going and borrowing — Now I think I clarified my point.

The problem is not the housing market, it is a usury system devised to move wealth to the banks and bank owners from the people, while maintaining both the people and government under continuous pressure to borrow. Borrowing creates money, which makes people happy and covers the government expenses.

Since at the moment people cannot borrow any more and are maxed out, and the government already borrowing as fast as they can because of wars and that’s not enough to create money in the system one outcome is the housing slump.

Of course things will tend to fix itself. The fix happens when those fictitious money get destroyed and some people become free again to borrow. One way for that fictitious money to be destroyed is by people defaulting on their loans, and banks taking homes in lieu of the money, selling the homes and repaying the loans. But, it takes time for the foreclosures and bankruptcies to be removed from the credit reports so that those people can borrow again - around 7 years.

Since the real estate market was getting very hot around 2002, the people who foreclosed at that point of time will start borrowing again sometime in 2009. When people start borrowing again, the real estate market and the economy will start booming as well.

I think now we will be very very focused on the Fed’s statement in front of congress on Wednesday and Thursday, plus the election process and how the three possible presidents plan to solve this mess.

So here it is. Some interesting observation: it seems that we will be seeing a similar local minimum like the one happened in Jan 06. That doesn’t mean that the real estate market is up again, as the relative absorption is still below 1. This means that by the end of this year, we might observe another peak over 1.

Just to recap: The relative market absorption compares the absorption rate with that of a year earlier. The absorption rate is simply the ratio between the number of units offered on the market, to those which closed in a settlement. If the relative absorption is more than one, it means that we’re selling more of the inventory than we did a year earlier. If it is below one, then it means we’re selling less.

The market has been under the 1 threshold since June 2005, with only a small and very short peak on Jan 2007.

Some interesting things are going to happen this week:

a. I’m looking to see the reaction of the Fed’s chairman in his testimony in front of Congress this week - should be on Wed & Thursday. The expectations are favoring rate cuts, which should be good for the real estate market.

b. I will watch Hillary’s & Obama’s debate on Tuesday. Nader joined the race again. While some might see that having a little effect on the real estate market, I guess that it might actually have. Nader will not be the president, but joining the race will again arouse the fears of him spoiling the democratic candidacy. Thus both parties should try to have more practical plans. The one that I see really impractical is Hillary’s rate freeze. When you think about that from the point of view of lenders, as a lender you are now forced to swallow a larger unanticipated loss due to this regulation. Again as a lender, you will need to make more money from new loans to balance the loss. Obviously, mortgage rates will go through the roof, bringing the real estate market to a sudden freeze & pushing home values down. That’s why I think following the presidential race is extremely important.

I’ll try to update my analysis charts to see what happened in the past two months and get a more visual indication of how fast we’re falling, so expect another post soon.

Usually in condominiums there is a master insurance policy that provides similar coverage. The coverage of the master insurance policy is usually limited to the structure itself, and you should read carefully what it covers so when you shop for your home insurance policy you try to buy one that least intersects with the master insurance coverage.

Home owners insurance also has limits on the liability coverage it provides. Usually insurance companies will provide more than one level and you’ll be free to select the one that best suits you.

Home owners insurance does not come by default, and usually is not required by lenders. Other types of insurance like flood insurance might be required in some areas.

Things like a wedding  ring got flushed, theft, vandalism, a piece of ice slid from your roof and broke your neighbors windshield are all examples of losses that might be covered under a home owners insurance policy.

The most important factor behind eliminating your loans is your will to go out of debt. Some people perceive mortgages as blessings, and fall more in debt to be get the tax deduction. Some feel they are happy and don’t want to think about and move on with their life. Even if you’re happy having loans, you’ve got to know that you’ll be happier debt free. Further more, paying off your mortgage is a big deal, and my school of thought is to avoid loans even if there’s tax deductions behind it.

The different types of loans most us have are: Student loans, credit cards, mortgages, home equity line of credits or home equity loans. The first step is to sort the loans by interest rate. Sort them from the highest rate down to the lowest rate. In order to kill your loans you’ve got to solve this riddle:

Move higher rate loans into lower rate loans, while still being able to maintain the monthly payment AND using every penny you have in cash towards the higher rate loans.

So there are two steps here. If you can move the higher interest rate loans into lower interest rate loans, that would be great. For example part of your home equity line of credit (which might be at 6%) can be moved into a credit card, with 0% for a year and $XX balance transfer fee. You’ve got to do the math here. A. is 6% in a year more, or the balance transfer fee? B. Will you be able to make the minimum payment to the credit card?

Paying twice a month: That’s another way to kill loans. To do that you have first to make a full payment. During half the cycle, you should issue another payment towards the loan. Now some caveats are there. If your note states that any payments you make will first go towards the interest and then towards the principal, it might happen that you’ll be paying only interest. For this to work, you have to be contributing towards the principal twice a month - so you have to outsmart the bank here. The payment has to be made on a date such that when it clears in your account it will contribute towards decreasing the principal.

So you’ve got to plan it correct, and plan it very carefully and be disciplined in applying your plan. It’s not easy, but a lot of people fall in debt and the only way out is to plan well and make the bank work for you - not the reverse.

In case you were the buyer: before going to settlement you need to structure your tour in the home to cover all items under the contract and any items needed to be fixed. In practice, you or your Realtor should have the contract, any addenda signed after including the home inspections, the results of the home inspection and any addenda agreed on whether it was items to fix or money in lieu of fixing. The goal is to make sure that there is no substantial difference between the time you did the inspection and that moment before you are handed the home. If you never had an inspection, then the home should not be substantially different from the time of the contract acceptance.

Of course all of us understand that as people are moving out of a home, there will be minor scratches in the walls. What you shouldn’t expect to see is a new leakage, plumbing that doesn’t work, heating problems, a stove or oven that doesn’t heat, broken windows or washer or dryer that do not work. Basically, all the plumbing, heating, mechanic devices in the home should be operational. Most contracts will have a paragraph stating that at the time of the walk through the seller should have the utilities connected and operating.

So what if you find something that you can’t test… for example the dish washer because the water is not available? The simplest way is to hold an escrow with the settlement company for the value of a dishwasher - say $500. You can test the dishwasher later on, if it works then you just inform the settlement company to release the escrow.

In case you were the seller: You will need to do exactly the same in terms of having the contract and all the addenda. You should also keep with you a list of handymen to call in case something came up that were broken. Those should include a plumber and an HVAC. There’s a set of things that you should not do, and those include: don’t turn off the heat to save. At the day of the final walk through the buyer needs to see that the heating and cooling equipment are working. The same goes to the electric and water. Inform the utilities companies with the last day you’ll own the property but don’t disconnect the utilities.

We will tackle them one at a time. The first case is Slow due to HTML bloat. Users like pages full of information. HTML bloat happens when we keep modifying the pages and forget that every single addition adds to the time of transfer as well. The first optimization is usually to separate code (HTML) from styles (CSS) and from javascript code. So you should have the HTML data separate by itself. This will help if your jaavscript and css are static files, so the browser will only transfer them if they were modified either by issuing the HTML HEAD or a conditional GET to your web server. The second optimization is turning on php’s buffer compression. In browsers supporting HTTP 1.1 the server can respond with a compressed version of the file. This will reduce the time of transfer since most transfered files are actually text.

The second type of sluggishness is due to long server processing time. When we talk about server processing time we have to focus on modifications that will lead to significant improvements. Almost all the time is usually used in database queries. The time consumed by the PHP scripts is usually around 5% of the whole time needed to display a page. You can easily figure this out by using a timing function such as the very popular getmicrotime:

function getmicrotime($t) {
list($usec, $sec) = explode(" ",$t);
return ((float)$usec + (float)$sec);
}

I added this function in my beta version of the website, and ran it at the header and footer as well as inside a query & fetch_array wrappers that are used to access sql results. The result was focusing on optimizing database queries will significantly improve the page load time and will be more fruitful than spending time optimizing the PHP code.

The easiest way to optimize the SQL queries is by letting the website work in the normal mode, and every time your query wrapper is called append a text file with the sql query. By looking at the sql log I noticed a great deal that can be improved including queries that get repeated, un-necessary queries where the calling function can pass the result to the called function without re-querying the database. The most effective optimization is usually minimizing the inserts, updates and deletes. Those are usually the most time consuming. In certain cases one can either run the update or delete in background using delayed inserts in mysql or pg_send_query in and execute it as the last SQL statement in the script.

Your second step is optimizing the PHP code itself. This will only be effective if the time consumed by the PHP code is at least 20% of the whole time, otherwise in my experiments I really didn’t feel any difference. You can optimize the PHP code by splitting large include files into smaller ones and using them only when needed. Use faster functions like str_replace instead of ereg_replace. Use single colon strings with apostrophe’s instead of double quotes when no variable are inside of the string.

The third type of sluggishness is due to long browser rendering time. This happens when the page contains a lot of elements whose size (widths and heights) depend on images to be loaded or further elements in the HTML code. So the browser keeps moving elements around every time it loads a new image or a new HTML element. I regard this as a usability issue other than being a major user nuisance. In some the website visitor will see an image and will move the mouse to click on it only to find it moving away because another element got loaded. To improve on this one should include the widths and heights of most elements even if it was in percentages and not in absolute pixels. This will give the browser the chance to size the element and avoid moving elements around as it is loading and rendering the HTML.

Usually, and in my experience homes that go in foreclosure auctions will sell around 75%-85% of their value. Although this is not a rule, and in hot markets foreclosures can sell even higher, yet in a slumping market this is my average expectation. If the home is 100% financed usually the loan is broken into two loans, one at 80% of the value, and the second is at 20% of the value. Those two loans sometimes are with different banks. The way those loans gets recorded is by giving a higher lien priority to the 80% loan, and a lower lien priority to the 20% loan. This means that in a foreclosure, the judge will repay first the 80% loan, and use any remaining funds to pay the 20% loan. And so, the 20% loan will get a lower priority.

Lenders understand that in case of foreclosure the smaller loan will usually swallow a big part if not all the loss, and so the 20% loan will have higher interest rate compared to the 80% one due to higher risks. — So how can this information help you?

Short Sales:

If foreclosure signs are showing on your finances, things are getting tougher then contact your 20% loan bank. Those are the ones that will take the biggest loss if you go into foreclosure. Ask them either to restructure your 20% loan in a more helpful manner, or to help you sell your home in a “short sale”. A short sale is a process by which the bank agrees to sell the house at a lesser price than it’s anticipated market value without asking for the difference between what you owe and what the home sold for. Banks will do that to avoid a bigger loss if the house goes into foreclosure. If they agree to help, then that’s one way out. You might also talk to the 80% bank, but remember they are least likely to get a loss.

Deed in lieu of Foreclosure:

That’s another way out. If you have your home in one 100% loan or your banks don’t want to help in a short sale try asking for a deed in lieu of foreclosure. This is a instrument by which the bank takes ownership of the home and in return will not start foreclosure proceedings against you. Every bank has their own forms and not every bank will agree to this. But again, its another route to investigate.

Always remember that although those two ways are alternatives to foreclosure that you should discuss with your bank, yet they will not save your credit. However, in my opinion they will lead to lesser damage, and may be better options. Also remember that in tough financial times the best way is to communicate with the lender. Don’t delay it, and good things will not come if you wait.

Definitely, the amount of people looking on the website is between 3 to 4 times more per week when compared to the previous quarter. So I expect existing home sales to rise this quarter and the following quarters compared to the past six months.

Another great help is the release of the blocked stimulus package.  The National Association of Realtors has been trying to tell senators to add to the bill terms, which will result in increasing the limit on jumbo loans. Currently, the jumbo loan is over $417K, and once you get a loan over $417K you will definitely pay higher interest rate. If that limit was pushed higher, then people would be able to get more cheaper loans.

So all-in-all, I think we’re moving to better conditions than the earlier 6 months.

The most direct way to write SEO friendly  URLs is to use mod rewrite, where every URL is placed with the long descriptive format, and gets rewritten by apache to its corresponding non-friendly form. In a growing website, such a way will eventually overload apache as every rewriterule line gets treated as a regular expression, and executing regular expressions is not fast.

Better than that is to use only one rewriterule line in the .htaccess file of the form:

RewriteRule ^myscript* myscript.php

and inside myscript.php parsing $_SERVER['REQUEST_URI'] will show the original request URI containing all the parameters. So for example:

http://www.mysite.com/myscript-some-many-parameters.html

will finally call your script, and the $_SERVER['REQUEST_URI'] will contain ‘/myscript-some-many-parameters.html’, which then either you explode with ‘-’ or parse to retrieve your parameters back.

So it took me a while to set up the RAID 0 array on the box using UBUNTU and the reason is that we have to use the server installation CD. The GUI desktop CD does not have the RAID option - or at least I wasn’t able to figure out where to find it. On the server CD, the easiest way is first to create two identical partitions on the two hard drives, and select the partition types as RAID. An option will then appear that says something like “Create a software RAID device”. You can use that to include both partitions in the RAID device. Remember that you must have a small /boot ext3 may be 100MB, and swap partitions.

There was an obvious increase in performance over a single drive, although I did not measure before and after but from what I see the intensive hard disk operations that used to saturate the drives when monitored by atop no longer does that. My interpretation is because the peak bandwidth of the SATA controller is larger than any hard disk by itself plus we have buffers in every hard disk, so effectively we’re using twice as much buffers.

Moving the database and websites took almost all the night, I started pg_dump on one machine over ssh, piping on the other side in a psql process. I stayed two hours after I started it, then I gave up and went to sleep. In the same time I had processes running to sync the files and my subversion repository.

Today I heard a commercial about lennar announcing a 4.9% fixed loan, with lots of disclaimers following the announcement. Check it out. I’m not related to lennar by any way nor I will benefit from anyone taking a loan from them.

I knew mortgages with even lower rates than that … all the way down to 2.5% fixed. I haven’t researched lennar’s loan, but from my previous research those very low rates are negative amortization loans. It’s those loans where the real rate is something like 6%, you pay only a smaller amount and rest gets added over your principal. So in reality, your principal grows and is not paid off.

If that 4.9% is not a negative ammo then it would really be a good deal! you know, the inflation in the united states is between 3%-5% i.e. money loses value at 3%-5% a year approx. If someone is giving a loan at 4.9% then they’re really pushing their risk level high - unless there’s a catch in there. If you add the effect of inflation plus the cost of the loan (salaries and wages to people working on it, commissions, originations …etc) a 4.9% fixed amortized loan is definitely either barely breaking even or a losing deal for the lender - I really don’t know how they’re making it happen.

What made me search for a tool that shows disk usage is that I felt there is a disk bottle neck on the box. Of course my guess was the database since I’m now storing all the media inside the database. By using atop and watching the heavy update/insert/delete times I was able to correlate that the database is actually responsible for the disk overload. The problem was never felt from the website users, since the difference in response was very small for the human visitor to feel since those update processes run with idle priority. However, during massive updates I will see the disk saturated almost all the time.

The solution was playing the parameters in the /etc/postgres/postgres.conf file especially the buffers, as well as the kernel shared memory limit shmmax and shmall in /etc/sysctl.conf and also using the sysctl tool. The other side is of course optimizing the process doing the update by making more use of the timestamps provided by the RETS query especially the media. The larger effect was due to the update process optimization.

Some nice features in atop include showing the RGROW field, which shows how many pages the process added in the resident memory. A positive number will show that the process is doing page faults and adding pages in RAM. A -ve number shows that a process is losing pages from RAM due to insufficient RAM. To make sure postgres can find enough memory, the RGROW field should never be showing -ve numbers. Also, there is a global field call PAG which shows how many page faults are happening in the system. If that field goes red and no -ve numbers in postgres RGROW it means that postgres is taking the RAM out of other processes, and those processes are stressing the system. If those processes run frequently then this for sure will cause every thing to slowdown including the postgres server. So make sure that if you optimize postgres you keep enough memory for other processes to run as well.

Don’t sell or buy real estate just because you’re afraid of the market. That’s my opinion for the everyday person - not the investor.

I got a call from a friend on Friday morning. He has a home improvement company and basically he was sitting with a friend/client of him, and they wanted my opinion whether she should just put her townhouse on the market without any improvements. According to what they said, it needed at minimum painting, rugs. Her philosophy was just get rid of the house without paying any extras. And my answer for that question was my stats show things selling below 10% of the inventory in my area, around 5.5%. That means if the market is faster in Jan than Dec, your chance to get picked will be around 10% i.e. the buyer will choose one, leave nine listings. Would someone then pick a listing with no improvements or updates ? In most cases, upgrades will only help you sell the listing and you will not recoup any of its expense in today’s market.

And the second question that hit me is really whether she should sell now or no? And my response was the same as above, if you don’t need to sell - then don’t (again not for the investor).

So what about investors versus the everyday person? Most people should in the housing market for the purpose of living in the home i.e. long term players. The housing market changes, because it is a market and those changes and variations are much slower than the stock market. However, there are another category of people who make living by buying houses/homes and reselling them, and those are the investors. Buying and selling in a short term involves risks. For example, you buy a distressed property and did your do diligence in terms of inspection. However, not every single flaw will be discovered by inspectors as some are hidden and may be not even the previous owner knew about it. Sometimes an investor will decide to sell to cut his losses short and exchange the property for a better investment, after all he will neither live in the first nor the second. That’s why I wrote between parenthesis that selling the property in a low market is not a good idea for the everyday person but might be a good idea for investors.

Just to recap, this chart compares the current market absorption to a year earlier. The chart actually plots the ratio. The market absorption is simply how much units are sold divided by the number of active listings. If everything sells, the absorption is 1, if part of the listings sell it is less than one. The absorption can be more than one if we sell more listings than what is active on the market - since some listings are entered in the MLS for stats only, which are sold outside the MLS.

So by comparing the absorption at any time versus a year earlier I can tell how aggressive the listings are selling. The comparisons are made by using data published on GCAAR’s website for Montgomery County Single Family homes.

Some quick observations:

1. During the bullish region (the start of the chart), the cycle was short. You can identify the cycle using either two peaks or two troughs.
2. Also, during the bullish market the curve was mostly over 1 indicating that at those points of time we were selling more homes of what is listed compared to a year earlier.
3. As the bearish market hit, the curve slid more below one.
4. Worse, the cycle is getting wider keeping the curve under 1 for longer periods of time.
5. At the start of 2007 the curve touched one, and I was hoping in an earlier post that this is a sign of going out of slow real estate market.

What really happened now is the curve went down a. deeper than the trough of Feb 2006, and faster with a steeper down slope. Furthermore, it does not look to me like a trough is leveling at the current point in time. What I also notice is that at the start of every year there is either a peak or a trough. Jan04-Jul04: trough, Jan05-May05: Peak, Oct05-May05:trough, Jan07-Jul07: Peak. Using the same sequence I expect the trough to happen between Jan08 and July08. If the tax rebates, federal reserve rate cuts and other expected rate cuts on Jan 25 2008 will affect the market, hopefully this will be the last trough we see before we go out. But that also means if anything will change, the real estate market won’t really switch except in the second half of 2008.

However, slow market are not really bad. Some people like investors might find good opportunities in this market and may want to move faster before it is all gone and wheels turn back.

Probability to click an image ad

Probability to click a text ad

Number of text units inside the ad

Cost per click for image ad unit number i

Average cost per click for text ads

Cost per click for image ads

The money made through image ads

The money made through text ads

The number of impressions of image ads

The number of impressions of text ads

The dollars profit of image ads

The dollars profit of text ads

The number click throughs of image ads

The number click throughs of text ads

So,

If an image ad wins the auction, this implies . However, for the image ad to be more profitable the average money that it will generate must be more than the average money that the text ad will generate, i.e. which is .

However, I do believe (although I don’t have enough statistics yeet) that and might be slightly higher, but not much bigger. That leaves us with , which means that the condition for the image ads to actually generate larger profit is

i.e. the payout of the image ad has to be more than the sum of all the payouts of the text ad units. This is based on the assumption that the probabilities of text and image clicks are approximately the same. Since the ratio is not actually known, the worst case scenario is that since in average image ads are more appealing to people and usually will get seen more. In that case, the condition earlier can be used as a sufficient condition for an image ad winning a campaign over a set of text ads and be of higher profit.

But from our point of view, and given that we know that advertisers do not apply this criteria how can we determine whether or not to let image ads run in the auction? To answer that question we note that as the image ad won the auction. This is because . For the inequality to always be true, we need to make sure that as well. If the latter is true, then the inequality holds at all times, and an auction winning image ad will be more profitable than the N text units.

This boils down to knowing the ratio which is required to be . We can actually know this ratio by running an only text ad, and an only image ad that alternate in the same ad spot and of course having two different channels or ad zones. Using the stats of your ad server (adsense/adbrite or any other), then you can determine and can approximate by , and is already known from the ad block that you chose, which is the number of text units in that block. Therefore . Similarly you can find . If then you know for sure now that it is more profitable for you to allow image ads to bid against text ads in the same auction for that ad unit spot.

Disclaimer: The information above is stated as is with no guarantees of any type. Use it on your own risk.

Why does the federal reserve need to cut the rate? Our economy is based on ever increasing credit. If people don’t borrow, there will be no money i.e. DEBT=MONEY CREATED IN THE SYSTEM. The reverse is true, repayment of a debt destroys the money created, which is the same thing that happens when a mortgage goes to foreclosure - the money gets destroyed.

There’s been a lot of money destroyed lately due to the sub-prime mortgage crisis going on. By lowering the interest rate, the federal reserve lowers the interest banks pay when they take loans, to give us loans. Consequently, banks should be lowering credit rates soon. This should encourage people to borrow and create new money in the system.

This problem that we’re in is because both the federal reserve and the government react to the market, and did not act earlier to the future indications. Many people knows that if the government did not take the money in the form of taxes, they will print it and more money in the system causes inflation, which leads to rise in prices - so we end up paying it anyways. That said, announcing the tax rebates earlier would neither affect the government nor change the wealth of Americans but it would have supported the market little more and the only reason this didn’t happen is because the government acted slow.

I would have never anticipated the rate cut earlier. I always expect from the federal reserve to react rather than act - in contrary to my expectations from the government who should act before problems happen. The interest collected from the banks will go to the owners of the federal reserve. So, keeping the interest rate higher as long as possible is of interest to the federal reserve, which represent its owners. Although the federal reserve hinted at the rate cut a week earlier, yet they didn’t move except when a problem happened. I really believe that one big question to the next president is how he/she plans to regulate the federal reserve, or at least steer them to be in the benefit of people more than in the benefit of banks.

Those number are very important in case you’re selling your home. You need to know your possibilities of selling your listing i order to determine the correct price. It is a very hot investor/buyers market, but not any buyer can now buy! If you are a seller, think twice before you counter offer.

The package sources I’m using are:

deb http://www.datakeylive.com/ubuntu gutsy main
deb-src http://www.datakeylive.com/ubuntu gutsy main