Random beach thoughts

I don’t know how people binge watch Netflix series, I have a hard enough time sitting still for even one episode of Ted Lasso. I am trying to write this article at City Beach on a wonderful warm afternoon, and there’s too much going on, or nothing going on, to string together enough thoughts to form a cohesive article. But some issues have penetrated my ADHD fog over the past few days, so here’s some observations on the current state of affairs.

Who is bringing us the future?

Elon Musk? Jerome Powell? Masayoshi Son?

Musk gets enough press, so I’ll pass on that easy target. Jerome Powell, chairman of the Federal Reserve, is still determined to drive the U.S. economy into recession with a misguided interest rate program — that’s too depressing for this sunny afternoon. Masayoshi Son is perhaps not a household name — he is the chairman of Softbank, a company that focuses on investing in sectors of the new technology economy. Recently, Son has decided to focus on becoming a technology architect. He’s using ChatGPT every day for brainstorming, and has apparently come up with more than 600 ideas. He stays up all night “talking” with an AI chatbot, pitching it ideas that they then refine together. He said “I felt great because my idea was praised as feasible and wonderful.” The image in my mind of this fool talking to his machine master, which then pats him on the head with faint praise is hilarious and troubling at the same time. He also has a human team working three shifts standing by 24 hours ready to respond to his ideas within five minutes. In one of my more demented phases, I used to keep a pad of paper and pen on my bedside table, in case I had a great idea whilst sleeping. I actually did write down a bunch of these ah-ha notions, and of course in the harsh light of day, they mostly turned out to be less than overwhelming. Only difference is I don’t have billions of dollars to lose (last fiscal year Softbank reported a loss of $7 billion), and I have long outgrown that particular delusional phase.

The housing market

U.S. existing home prices posted the largest year-over-year decline in more than 11 years last month. The national median existing home price fell 3.2% to $396,100. Overall, the number of sales of existing homes was 20% lower than a year earlier. Most of the decline is due to high interest rates fueling increased mortgage payments. This has a double whammy effect on the housing market, putting many buyers on the sidelines while they try to absorb the affordability challenge, and putting many sellers on hold as they cannot afford to give up their existing 2% mortgage. The sale of existing homes in North Idaho represents 72% of the market (significantly higher than the national average of 60%.) New home builder-developers have a competitive edge because they can offer price reductions and mortgage rate buy-downs, and they do not need to have a replacement home to move into lined up.

Currently, in Bonner County there are about 300 active listings for single family homes. The median list price is $685,000. With a 20% downpayment of $137,000 (challenging enough these days to save that amount) that’s a mortgage amount of $548,000. At the current interest rate of 7%, the monthly payment is $3,624. Factor in a credit card/vehicle cost of $350 per month and that’s total debt of $4,325. The maximum debt to income ratio is 50% which means an annual income of $104,000 is required to afford the median priced home in Bonner County. The median list price for Kootenai County is slightly higher at $715,000, with about 785 properties currently listed. And in Boundary County (Bonners Ferry), there are a mere 69 homes on the market with a median list price of $645,000. There are no economic forces that are easing these prices — higher interest rates/mortgage premiums, the slow-down in the economy, fewer buyers flocking to North Idaho, none of these factors are significantly affecting the price-point of the market. Unlike 2008, there has not been and there will not be, a price collapse.

Totally fake sh-- but also real

I pay absolutely no attention to TikTok, Instagram, Facebook, Twitter, etc. But disposable culture and signs of the Apocalypse (the big one, hence the capital A) still creep into the few mainstream channels I follow. This week the FDA and USDA approved chicken grown in barrels. The barrels are bio-reactors that are basically a big stainless steel stew pot loaded up with chemical nutrients and oxygen, which then produce “chicken.” Sounds like something the demented Mr. Son and his AI bosses dreamed up.

It eats its own

In a classic case of turnabout is fair play, Artificial Intelligence is not only disrupting the employment base for call centers, warehouse delivery systems and a host of other industries, it is a major threat to the sector that created it — computer programming jobs. AI coding has become proficient to the extent there are now mass layoffs at entry level software coding positions. In the race to make AI more sophisticated and more translatable to productivity enhancement, many of the more mundane programming tasks now performed by human engineers are easily absorbed into the technology. Any online marketplace that matches two parties — a buyer and a seller — can increase productivity without adding human employees. AI scales easily and learns more quickly than humans. And it does not require the downtime of lunch breaks or fatigue. It doesn’t procrastinate or engage in office politics. There’s a lot of hand-wringing going on by the creators of this force and the politicians who know so little about its effects trying to control it, but meanwhile AI marches along touching our lives everyday. Book a hotel room, a flight, a rental car; ask any question of a customer service “rep” in any industry — it’s all a chatbot these days. Just try to get a real live human on any transaction.

In one of the more chilling items that surfaced recently on my news feed (brought to me every morning by my AI guides!) the manifesto published 40 years ago by the Unabomber Theodore Kaczynski has been getting attention because of his predictions about technology overtaking and subsuming human society. I don’t know why the AI-powered algorithms send me this junk — maybe they/it realizes I need to be converted. Until that happens though, I’ll be at City Beach taking in the sound of the gentle waves lapping at the shoreline, the sea birds screeching and feeling the healing warmth of the summer sun. Nothing virtual about any of that, just totally and simply real. Enjoy the summer…

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Raphael Barta is an Associate Broker with a practice in residential, vacant land and commercial/investment properties (raphaelb@sandpoint.com).