vp's are about buisness, not nursing.
it's about staffing, and salaries and costs.
vp's don't engage in hey, how ya doing, let's check that temperature.
In addition to relocation mobility, the cost of transportation effectively reduces each person's employment cachement area. Doubly so for two earner families.
IMO, there are not many discerning folks who saw the RE, or credit bubble, silliness. Lots of smart folks, many titled VP or CEO or CFO, participated and will lose their shirts. Many multimillionaires, too.
Heck, even some billionaires, like Macklowe, will be losing much, if not all.
Unrelated -- sentiment is turning bearish, it appears: today the PPT/schmucks/shysters/shylocks had to burn a lot of good powder (i.e., make sizeable S&P 500 futures purchases) to keep the market up, in the face of what appears to be unexceptional volume.
There is also the opposite. I have no long term job security. Thus even though prices where I live are getting reasonable quickly, I plan to keep renting, barring some incrible forclosure offer.
OT, but did anybody else find it odd that the FDIC had a full page ad in the WSJ with the headline "Insuring deposits up to (big picture of $100,000 bill)...? At the bottom there is a website and phone number to call for more information. Have they been running these ads for years and I just never noticed them before?
"The Federal Reserve seems to think it can engage in rule making in secret only with the industry," said Matthew Lee, executive director of the New York-based non-profit group Inner City Press/Community on the Move.
The Fed seems to think they get to operate like a 4th branch of the government, except without the accountability and oversight of the other three branches.
Maybe this explains why our economy is so diseased today.
Anecdotally (did I spell that right?) I knew a family who moved for job change late last year. Couldn't sell house for enough to pay off loan, finally had to let it go to bank.
In that situation I could understand a walkaway. Little/no equity, can't sell, and have moved on.
The people talking about relocation services from the previous post on this are missing a critical insight: once the unemployment rate gets to where it's going, companies will tell employees that they can relocate at their own expense, and if they don't like it, there are a thousand resumes sitting on the manager's desk of people who are willing to relocate for a job.
Anecdotally (did I spell that right?) I knew a family who moved for job change late last year. Couldn't sell house for enough to pay off loan, finally had to let it go to bank.
I think this article has it all wrong. IMO job transfer is the ideal incentive to "buy and bail".
I think the labor force will become more mobile as people look for justification to bail out on their existing mortgage and turn to relocation as a convenient excuse that sets them right with their maker.
I thank my lucky stars everyday that the banks didn't accept our lowball offers last year. This has allowed us to move onto some great opportunities - Bye Bye CA!
ps. one offer they didn't take was 185k with zero contingencies other then financing for a house now listed and sitting for 135k. Too freaking funny. It sold for 365k at the peak.
Come on... There is no hard data behind labour mobility problems being caused by the housing downturn. This is the same type of reporting, based on anecdotes, that Tanta has ripped into on the whole "ruthless default" subject.
Sure, we can find some individuals, and companies, that have experience relocation difficulties but that doesn't mean it is really statistically significant. Just as all the lender proclamations about cruel ruthless defaulters doesn't prove it is really happening, hearing some hard-case stories from people (or the companies that want to employ them) who can't move to a new job doesn't prove that mobility is now a REAL issue.
"One of the strengths of the U.S. labor market has been the flexibility associated with geographical mobility - households can move easily from one region to another for better employment. The housing bust will limit this flexibility."
Is this a plus for the labor market or for US business interests? I don't think it's an unmitigated advantage that households can move "easily." That kind of move has now become expected for many people - and it often causes hardship to them, their families, and the other groups and organizations that depend on a somewhat stable membership.
I don't think it will be horrible if it becomes more difficult to move people around like chess pieces. Sure, it's good that people can sometimes take advantage of an opportunity. But, humanly speaking, it's not an easy decision, nor should it be.
Note also that the ongoing and inevitable increase in fuel prices is tending to have the same effect. There are now powerful forces working against labor mobility. Maybe it will make businesses think twice before relocating ....
"I think the labor force will become more mobile as people look for justification to bail out on their existing mortgage and turn to relocation as a convenient excuse that sets them right with their maker."
Agreed mostly; but if you've lost your job locally, or can't get ahead locally, it's not just an excuse.
In markets where declining prices affect equity, economic ties keeping jobseekers in their current towns (and homes) will grow weaker and weaker.
I know a few people who relocated anyway, but couldn't sell their houses. They are straddled on two mortgages or "a mortgage and a rent."
Even the area market has passed the peak about two years ago, they always start listing at the peak price. As if, they are psychologically stuck there.
Then, the price falls, but it stops at the mortgage loan balance for a long long time.
Anecdotally speaking as a jobseeker in SoCal (LA/OC/Riverside), I'm not seeing this being a boon to local candidates at all.In fact, I can tell you that the job market for Accounting and Finance (not mortgage or banking related either..think MFG), is HORRILBLY BAD right now. I don't know what is going on, but the bottom has fallen out of the job market in SoCal. I'm seeing severe wage deflation and few decent opportunities with many qualified candidates competing.
The likely story is not that people can't sell their houses to relocate jobs. The real story is that no one at an executive level wants to move to Michigan, Illinois (except Chicago), and Ohio. These are dying rust belt era states that don't have the cultural attractions that upwardly mobile execs want.
"I don't know what is going on, but the bottom has fallen out of the job market in SoCal. I'm seeing severe wage deflation and few decent opportunities with many qualified candidates competing."
Just coincidentally, I'm looking at fresh YOY figures for SoCal donations to the medium-gauge public university I work for. Total donors are about the same but giving is down ~15 percent despite a major field effort in that area. The wealth effect has worn off, I think.
Those people who have extremely low intrest mortgages will also think twice before moving. Low interest rate loans have a large impact on the quality of your life and your ability to save. Having had a 12.5% mortgage in the early eighties and the current condition of the economy and the direction of the movement in long term rates. It would be extremely hard to give up our 4.36 fifteen with 10 years left. The improved cashflow has allowed us to max out our 401K as well as pay for our oldests instate tuition and board.
Hmmm, one of my neighbors has been offered VP with his current company. He has been with his company for more than 20 years, worked very hard, finally got the promotion he wanted.
Except now he has to move hundreds of miles to company HQ for the new job. His family is TOTALLY against the move and, in a way, so is he. His house is almost paid for but it'd be a loss in equity to sell now.
I don't think it's an unmitigated advantage that households can move "easily." That kind of move has now become expected for many people - and it often causes hardship
Oh, yeah? Try sitting there getting crushed by your employer year after year with no raise and constant layoffs. I sold my house in 2004. I can't see that I'll buy another one again. No reason. Mayb if prices fall to rent levels but even then, I'm a target for property taxes and further depreciation.
It reminds me of a moving company commercial of a few years back where the house of a up and coming executive gets bigger and bigger with each move along with the size and number of moving vans.
So I'd speculate that up and coming, aggressive types, would have bought as much house as the prior moving allowance plus income would allow in the most prestigious neighbor in order to impress to get that next job. So the combination of frequent purchases along with the need to impress would result in a lot of upside down executives.
Its a beautiful place. I'm going to look at it myself. But my house is almost paid for and I'm not sure I want a lot of debt at my age (over 65), this is the only thing stopping my wife from packing for our move today, even she is worried about debt and housing today.
One of his perks - the company will rent him a condo in the new city for a year or so while he decides what to do with his old house. RHIP.
The Fed seems to think they get to operate like a 4th branch of the government, except without the accountability and oversight of the other three branches.
correction: Cheney is the 4th, so the Fed would be the 5th branch..
It's hard to believe people would have trouble selling and then buy again. The sweetest deal couldn't make me a homeowner again. All the little costs, the endless Home Depot purchases -- it's liked being pecked to death by buzzards. Not to mention the time one spends fixing the house up (when you could be reading CR What in the dat gum world is wrong with renting?
CR
theautomaticearth is reporting that IB's have so far lost half of their profits from 04 through first half 07. First, why not extend this to first half 08... second, considering that they distribute so much in salaries, bonuses and stock options, how much actually went to the suffering shareholders? And, why would anybody invest in these companies considering that their best profit centers are gone, maybe forever and certainly for years?
IBs made very respectable profits for decades during which they left mortgages to local S&Ls. Once they dump the crap from their books the ones that survive (GC and JPM certainly) will have a wide open playing field. I don't own either one, but I can see a case. Usually when there is a market shakeup in any industry, the best-run companies come out of it in good shape, because the weak ones go under.
Sue: "Maybe it will make businesses think twice before relocating ... "
If it were a market where there is near full employment. But it's not, and the unemployment rate is growing very fast. Companies won't think twice about asking for a relocation, and if the answer is no they'll simply find someone who will move, or who is already local. This is not anecdotal, this is exactly what I saw in my company during the dot.com crash: field offices got shut down, and employees were told they could move back to HQ in Philadelphia, or the company would find someone else to fill their job.
One other point: the other thing I remember during the dot.com crash was a massive tightening of travel budgets. In particular, travel budgets for "airplane commuters"--managers and executives who lived out of state and flew into the office every week--got tightened up in a big way. I expect the same to happen this time around, especially with airfares spiraling upward. Executives who can cover the cost out of pocket will be able to keep making the commute from Montana to New York, those who can't will face involuntary relocation.
Except now he has to move hundreds of miles to company HQ for the new job. His family is TOTALLY against the move and, in a way, so is he. His house is almost paid for but it'd be a loss in equity to sell now.
He'll move. At his age he really has no choice.
Hazard
That makes no sense. If he's almost paid off he has a wickedly low cost basis. He can rent. There's also a little denial going on. He thinks he'll be leaving equity on the table if he sells now instead of waiting for things to get better. Newsflash, it isn't going to get better.
Suppose 1.5 earners per family and that all 200,000 of those households have all their earners instantly and permanently lose their jobs as a result of failure to relocate, rather than just fail to get promoted.
That gives us 300,000 extra unemployed.
US labor force is 154,354,000. So this extreme projection gives us an unemployment rate that is 2 10ths of 1% higher (e.g. 5.5% instead of 5.3%).
This would suck for these imaginary 300,000, but not a make-or-break in the grand scheme of things.
One of his perks - the company will rent him a condo in the new city for a year or so while he decides what to do with his old house. RHIP.
Hazard | 06.16.08 - 6:38 pm | #
I've met lotsa VP level exec's who don't move unless they want to live there. Especially if they know its going to be their last placement.
Heck I know Sr. Execs now who commute to rural PA... one from Chicago, one from Florida, one from CT. They have small apartments in PA and commute back and forth on the weekends. Their hours are so long during the week it hardly matters where they live (from their family's perspective anyway).
Expensive? Sure but they get paid VERY WELL and can afford it & their families don't want to move AGAIN. Besides these guys are traveling all over the world on business - something like 60% of the time - so does it really matter where the last flight of the week ends up?
I don't sweat the hassle & expense for the big dogs, they'll do okay regardless... its the average guy who can't afford to jet set commute that gets beat up when you absolutely have to up-root but can't. No company will pay for him/her to commute or fork out for him/her to have an apartment/condo at company expense.
And if we start seeing real job loss - then they'll be moving. You can count on that.
Back in the day, I remember companies buying the new guys or transferee's house and making up the difference in the housing expenses in the new location or paying the difference in mortgage costs.
D White writes:
There are no qualified people in Houston, one of the larger cities in the country?
D White | 06.16.08 - 7:11 pm | #
Houston is one of the craziest boom-bust cities in America due to the process industries. I personally thinks its even nuttier than Silicon Valley.
I was recruited by a Houston design/build chem engineering outfit out of college at the peak of the oil patch boom... companies like the one I was interviewing with were sucking up all the talent they could find & paying big premiums for skills. That left everyone else in Houston wanting... and it was hard to get enough folks to relocate from the rust belt down there (same reasons as now).
I turned them down & went to podunk to do ag processing instead. Many of my classmates didn't - went to Houston & made the big money... for about 2 to 3 more years until the bust. Peak bust there were tens of thousands of high paid talent unemployed with expensive property that was now underwater & they couldn't sell.
So where are we today? Oil patch is hot again & businesses are trying to draw in talent from almost anywhere... who find it difficult to move there due to housing market where they are coming from.
In a few years oil patch will probably crash & the folks that did get sucked into Houston will again find it hard to leave due to housing albatross around their neck.
We go around and around the sun and nothing much changes.
Thats true dryfly, this guy is gone half the time now anyway. He says his travel is only going to increase.
In the meantime, it IS a nice house, a good time to get a good buy (thinking a real bargain here ... maybe), anyway it doesn't hurt to talk. Silly to make a move 2 streets over but ?????????
Back in the day, I remember companies buying the new guys or transferee's house and making up the difference in the housing expenses in the new location or paying the difference in mortgage costs.
Vader | 06.16.08 - 7:16 pm | #
I suppose that's still done but its above the pay grade of the folks I fish with.
Yeah, I think I could sell. Not sure I want a monster mortgage though (well, monster to me), its a lot more place than ours (we bought the cheapy in our neighborhood 14 years ago). Gotta see what the deal is first. For once though I don't think my wife will go along with this.
As Dryfly suggests, Hackett is incorrect. Of course people will move if employers offer a high enough compensation package including relocation expenses. Since her employers apparently won't pay for relocation or pay high enough wages, positions go unfilled.
Too often when employers complain that they can't find qualified candidates, what they mean is that qualified candidates won't work for an uncompetitive wage and benefit packages.
OT: Answering from another thread USD for 600K for a house in the middle of nowhere.
Why so much? What drives it?
dryfly | 06.16.08 - 4:56 pm | #
a) 1999 Hong Kong going to China.
Some were looking for alternative options to Singapore to do be in South East asia to do business.
B) One of the few countries where a furriner can own outright (Theres a 100% tax now on furriner purchases, always ways around thats). For contrast Thailand its a 99 year lease.
When the tourists (Europe/UK mainly) saw the HK expats buying places on the cheap and minting money (BB, Hotels etc ), they got on the act as well.
Now that its bursting, its probably going be to be a problem for those wanting to get out. Nothings bought on mortgage, its cash down for these prices. (banks do 10-50K mortgages for the average local, 75% LTV at 21% !!!! ).
Perhaps the slow housing market is preventing some people from moving... but the same market may revitalize Southern California. Those of us who watched real estate in California climb to levels that bore no relation to incomes whatsoever stopped considering moving to California after about 2000- and, even for professional positions, California employers often refused to interview out-of-state candidates, knowing those candidates would ultimately not move to the state.
The pain of the bust is horrible, but talented new people may now actually consider coming to California once again.
Many homeowners have suffered loss of equity through no fault of their own. Having a fixed rate low mortgage and paying on time do you no good if tons of people in your area are bailing on liar loans and dragging your home price down with them. The tide is going out with everybody in it.
Out-of-staters might be considering California, but the massive budget crisis will likely give them pause. It's perfectly clear that state services will face a massive cutback, and who knows how much that will affect the standard of living, and the economy. That, and the huge drag on neighborhood standard of living from the foreclosures. Nothing quite like living next door to a boarded up house.
"The pain of the bust is horrible, but talented new people may now actually consider coming to California once again."
-West Coast Okie
I found a job opening in San Jose yesterday that matched VERY closely to what I did prior to my former employer's plant closure. I don't think rents have went down any in San Jose, unfortunately. Does anybody have any crystal ball on the ultimate effects of rental pricing in "sticky" markets, say a year from now?
Isn't labor mobility one of the advantages that the U.S. has over the EU, at least according to Americans? Even if at least in Germany, skilled labor is considered much more valuable than mobile labor - and look what that has resulted in for Germany.
And does this mean that now the U.S. will start to develop other bad EU practices, like 6 week vacations, universal health care, and a higher savings rate?
There is a seeming paradox in the impact of housing and labor mobility. About 15 years ago, the OECD did a study on the impact of home ownership on labor markets and found that (all else equal, of course) high levels of home ownership reduced labor mobility and so reduced labor market flexibility and employment. The US was something of an exception. Though, to the best of my recollection, the OECD didn't go into the causes of better labor market performance in the US than would be expected, given the level of home ownership, the ease with which we trade houses seems an obvious factor. Now that we trade houses with less ease, there is every reason to expect the US will become more normal, in the sense that home ownership will gum up the labor market.
The seeming paradox is that, in the EU and elsewhere, home ownership levels are generally lower than in the US, but labor mobility is lower, too. That is where the "all else equal" part comes in. There are a number of cultural and legal factors which reduce labor mobility more in Europe than in the US. Some years back, the Dutch bragged that children lived on average within 10 km of their parents. What happens in Maastricht stays in Maastricht. So no real paradox.
There is a flipside to this issue as well. A few years (decades?) back a world organization did a study and they found a very interesting corelation between home ownership and unemployment; areas of high ownership consistently showed higher unemployment. The conclusion was that with a home ownership (deeper roots to the geographic area) people were less willing to move in search of a job. On the other hand a renter would move where the jobs were. This is especially true in 'verticals' like auto, one needs to look at no further than Michigan and Ohio and notice a higher unemployment as people (home owners) in these 'verticals' refuse to move and rather be unemployed while the renters have moved elsewhere.
Businesses are willing to offshore work to folks halfway around the world, but still require American workers to re-locate and then come in to the office every day to sit at desks and work. Bizarre.
k harris: "the ease with which we trade houses seems an obvious factor"
The US has the GSEs. Elsewhere repaying your loan early tends to come with stiff prepayment penalties, over its whole lifetime. I read a claim to the effect that the GSEs were purposely created to provide liquidity in the housing market by enabling transactions.
And, of course, almost any financial scheme will work beautifully when you print the world's reserve currency, and a period of secular growth allows you to "print" with impunity.
The US has the GSEs. Elsewhere repaying your loan early tends to come with stiff prepayment penalties, over its whole lifetime. I read a claim to the effect that the GSEs were purposely created to provide liquidity in the housing market by enabling transactions.
God Bless the GSEs! Ditto for the Fed, the repeal of Glass-Steagal, and the tons of pro-Realturd subsidies, like the MID, "any two will do" rule, 1031 exchange, etc. Without all these wonderful things, the price of an average house might be closer to 2-3X HH income, instead of the 11-12X it has reached in CA.
HARM: Of course, everything gets priced in. But most of US mortgages can be paid off just by repaying the current balance. This means provided somewhat "stable" house prices, you actually have a good chance of being able to pay off your mortgage from the proceeds of selling. Not so with penalty clauses because you are "cheating" the bank of 20 years interest.
If they are upside down because of a stupid RE decision, they're not qualified to be a VP of anything....
jus sayi
vice president of quality and key nursing director positions
Doesn't sound like either of these group need RE acumen to me.
vp's are about buisness, not nursing.
it's about staffing, and salaries and costs.
vp's don't engage in hey, how ya doing, let's check that temperature.
Interesting. Could give the young 'uns a leg up over their more settled elders.
In addition to relocation mobility, the cost of transportation effectively reduces each person's employment cachement area. Doubly so for two earner families.
IMO, there are not many discerning folks who saw the RE, or credit bubble, silliness. Lots of smart folks, many titled VP or CEO or CFO, participated and will lose their shirts. Many multimillionaires, too.
Heck, even some billionaires, like Macklowe, will be losing much, if not all.
Unrelated -- sentiment is turning bearish, it appears: today the PPT/schmucks/shysters/shylocks had to burn a lot of good powder (i.e., make sizeable S&P 500 futures purchases) to keep the market up, in the face of what appears to be unexceptional volume.
Important news not to be missed :-
N.Y. Fed's private OTC actions under fire
N.Y. Fed's private OTC actions under fire
| Reuters
Happy days are here again, back to business as usual, look for rate hikes and bailouts!
I just wonder though, when the FED provides aid and bailouts, whose money are they using?
This ain't gonna help:
NATIONAL OVERNIGHT AVERAGES TODAY / LAST WEEK
30 yr fixed mtg 6.30% 6.06%
15 yr fixed mtg 5.89% 5.61%
5/1 ARM 5.76% 5.30%
30 yr fixed jumbo mtg 7.51% 7.23%
5/1 jumbo ARM 6.39% 6.14%
There is also the opposite. I have no long term job security. Thus even though prices where I live are getting reasonable quickly, I plan to keep renting, barring some incrible forclosure offer.
OT, but did anybody else find it odd that the FDIC had a full page ad in the WSJ with the headline "Insuring deposits up to (big picture of $100,000 bill)...? At the bottom there is a website and phone number to call for more information. Have they been running these ads for years and I just never noticed them before?
$100,000 is the key--warning to those who will listen.
Spread the risk around.
"The Federal Reserve seems to think it can engage in rule making in secret only with the industry," said Matthew Lee, executive director of the New York-based non-profit group Inner City Press/Community on the Move.
The Fed seems to think they get to operate like a 4th branch of the government, except without the accountability and oversight of the other three branches.
Maybe this explains why our economy is so diseased today.
BB writes: "I just wonder though, when the FED provides aid and bailouts, whose money are they using?"
oh, I'm sure it's their own.
Anecdotally (did I spell that right?) I knew a family who moved for job change late last year. Couldn't sell house for enough to pay off loan, finally had to let it go to bank.
In that situation I could understand a walkaway. Little/no equity, can't sell, and have moved on.
The people talking about relocation services from the previous post on this are missing a critical insight: once the unemployment rate gets to where it's going, companies will tell employees that they can relocate at their own expense, and if they don't like it, there are a thousand resumes sitting on the manager's desk of people who are willing to relocate for a job.
Anecdotally (did I spell that right?) I knew a family who moved for job change late last year. Couldn't sell house for enough to pay off loan, finally had to let it go to bank.
I think this article has it all wrong. IMO job transfer is the ideal incentive to "buy and bail".
I think the labor force will become more mobile as people look for justification to bail out on their existing mortgage and turn to relocation as a convenient excuse that sets them right with their maker.
I thank my lucky stars everyday that the banks didn't accept our lowball offers last year. This has allowed us to move onto some great opportunities - Bye Bye CA!
ps. one offer they didn't take was 185k with zero contingencies other then financing for a house now listed and sitting for 135k. Too freaking funny. It sold for 365k at the peak.
Come on... There is no hard data behind labour mobility problems being caused by the housing downturn. This is the same type of reporting, based on anecdotes, that Tanta has ripped into on the whole "ruthless default" subject.
Sure, we can find some individuals, and companies, that have experience relocation difficulties but that doesn't mean it is really statistically significant. Just as all the lender proclamations about cruel ruthless defaulters doesn't prove it is really happening, hearing some hard-case stories from people (or the companies that want to employ them) who can't move to a new job doesn't prove that mobility is now a REAL issue.
"One of the strengths of the U.S. labor market has been the flexibility associated with geographical mobility - households can move easily from one region to another for better employment. The housing bust will limit this flexibility."
Is this a plus for the labor market or for US business interests? I don't think it's an unmitigated advantage that households can move "easily." That kind of move has now become expected for many people - and it often causes hardship to them, their families, and the other groups and organizations that depend on a somewhat stable membership.
I don't think it will be horrible if it becomes more difficult to move people around like chess pieces. Sure, it's good that people can sometimes take advantage of an opportunity. But, humanly speaking, it's not an easy decision, nor should it be.
Note also that the ongoing and inevitable increase in fuel prices is tending to have the same effect. There are now powerful forces working against labor mobility. Maybe it will make businesses think twice before relocating ....
"I think the labor force will become more mobile as people look for justification to bail out on their existing mortgage and turn to relocation as a convenient excuse that sets them right with their maker."
Agreed mostly; but if you've lost your job locally, or can't get ahead locally, it's not just an excuse.
In markets where declining prices affect equity, economic ties keeping jobseekers in their current towns (and homes) will grow weaker and weaker.
I know a few people who relocated anyway, but couldn't sell their houses. They are straddled on two mortgages or "a mortgage and a rent."
Even the area market has passed the peak about two years ago, they always start listing at the peak price. As if, they are psychologically stuck there.
Then, the price falls, but it stops at the mortgage loan balance for a long long time.
Anecdotally speaking as a jobseeker in SoCal (LA/OC/Riverside), I'm not seeing this being a boon to local candidates at all.In fact, I can tell you that the job market for Accounting and Finance (not mortgage or banking related either..think MFG), is HORRILBLY BAD right now. I don't know what is going on, but the bottom has fallen out of the job market in SoCal. I'm seeing severe wage deflation and few decent opportunities with many qualified candidates competing.
The likely story is not that people can't sell their houses to relocate jobs. The real story is that no one at an executive level wants to move to Michigan, Illinois (except Chicago), and Ohio. These are dying rust belt era states that don't have the cultural attractions that upwardly mobile execs want.
as a bitter renter.... GOOD
If they are upside down because of a stupid RE decision, they're not qualified to be a VP of anything.
In some places, nothing is moving at any price. So there's no need to assume a job seeker made a stupid RE decision.
Many people around me in bayarea are still buying their homes at prices around one million. Where is the problem you guys are talking about?
"I don't know what is going on, but the bottom has fallen out of the job market in SoCal. I'm seeing severe wage deflation and few decent opportunities with many qualified candidates competing."
Just coincidentally, I'm looking at fresh YOY figures for SoCal donations to the medium-gauge public university I work for. Total donors are about the same but giving is down ~15 percent despite a major field effort in that area. The wealth effect has worn off, I think.
Those people who have extremely low intrest mortgages will also think twice before moving. Low interest rate loans have a large impact on the quality of your life and your ability to save. Having had a 12.5% mortgage in the early eighties and the current condition of the economy and the direction of the movement in long term rates. It would be extremely hard to give up our 4.36 fifteen with 10 years left. The improved cashflow has allowed us to max out our 401K as well as pay for our oldests instate tuition and board.
Hmmm, one of my neighbors has been offered VP with his current company. He has been with his company for more than 20 years, worked very hard, finally got the promotion he wanted.
Except now he has to move hundreds of miles to company HQ for the new job. His family is TOTALLY against the move and, in a way, so is he. His house is almost paid for but it'd be a loss in equity to sell now.
He'll move. At his age he really has no choice.
I don't think it's an unmitigated advantage that households can move "easily." That kind of move has now become expected for many people - and it often causes hardship
Oh, yeah? Try sitting there getting crushed by your employer year after year with no raise and constant layoffs. I sold my house in 2004. I can't see that I'll buy another one again. No reason. Mayb if prices fall to rent levels but even then, I'm a target for property taxes and further depreciation.
Informed speculation?
It reminds me of a moving company commercial of a few years back where the house of a up and coming executive gets bigger and bigger with each move along with the size and number of moving vans.
So I'd speculate that up and coming, aggressive types, would have bought as much house as the prior moving allowance plus income would allow in the most prestigious neighbor in order to impress to get that next job. So the combination of frequent purchases along with the need to impress would result in a lot of upside down executives.
In a declining or even static market without significant moving allowances, home ownership is a ball and chain on movement.
Yet at the same time, renting would be déclasse. Going to be interesting for business.
Hey wait they can always hire H2Bs -temporary foreign workers.
Hazard: If your friend's house is almost paid off, tell him to rent it out.
Why sell in that case?
Its a beautiful place. I'm going to look at it myself. But my house is almost paid for and I'm not sure I want a lot of debt at my age (over 65), this is the only thing stopping my wife from packing for our move today, even she is worried about debt and housing today.
One of his perks - the company will rent him a condo in the new city for a year or so while he decides what to do with his old house. RHIP.
ac writes:
The Fed seems to think they get to operate like a 4th branch of the government, except without the accountability and oversight of the other three branches.
correction: Cheney is the 4th, so the Fed would be the 5th branch..
It's hard to believe people would have trouble selling and then buy again. The sweetest deal couldn't make me a homeowner again. All the little costs, the endless Home Depot purchases -- it's liked being pecked to death by buzzards. Not to mention the time one spends fixing the house up (when you could be reading CR
What in the dat gum world is wrong with renting?
My company relocated in April from Alexandria VA to Chicago IL. Of the 100 or so employees, exactly 5 moved to Chicago.
And those 5? 4 didn't own property. I'm the only one who owned anything.
And I bought in 2002 and am losing a couple hundred a month renting my place out.
It was completely unfeasable for anyone with more of a house than me to even consider it. The monthly loss on the real estate was too high.
And in Chicago? I'm renting. I know better than to even think of getting two mortgages on one income.
CR
theautomaticearth is reporting that IB's have so far lost half of their profits from 04 through first half 07. First, why not extend this to first half 08... second, considering that they distribute so much in salaries, bonuses and stock options, how much actually went to the suffering shareholders? And, why would anybody invest in these companies considering that their best profit centers are gone, maybe forever and certainly for years?
IBs made very respectable profits for decades during which they left mortgages to local S&Ls. Once they dump the crap from their books the ones that survive (GC and JPM certainly) will have a wide open playing field. I don't own either one, but I can see a case. Usually when there is a market shakeup in any industry, the best-run companies come out of it in good shape, because the weak ones go under.
oops, I meant GS, not GC
Sue: "Maybe it will make businesses think twice before relocating ... "
If it were a market where there is near full employment. But it's not, and the unemployment rate is growing very fast. Companies won't think twice about asking for a relocation, and if the answer is no they'll simply find someone who will move, or who is already local. This is not anecdotal, this is exactly what I saw in my company during the dot.com crash: field offices got shut down, and employees were told they could move back to HQ in Philadelphia, or the company would find someone else to fill their job.
One other point: the other thing I remember during the dot.com crash was a massive tightening of travel budgets. In particular, travel budgets for "airplane commuters"--managers and executives who lived out of state and flew into the office every week--got tightened up in a big way. I expect the same to happen this time around, especially with airfares spiraling upward. Executives who can cover the cost out of pocket will be able to keep making the commute from Montana to New York, those who can't will face involuntary relocation.
Except now he has to move hundreds of miles to company HQ for the new job. His family is TOTALLY against the move and, in a way, so is he. His house is almost paid for but it'd be a loss in equity to sell now.
He'll move. At his age he really has no choice.
Hazard
That makes no sense. If he's almost paid off he has a wickedly low cost basis. He can rent. There's also a little denial going on. He thinks he'll be leaving equity on the table if he sells now instead of waiting for things to get better. Newsflash, it isn't going to get better.
OT and funny:
BBC NEWS | Business | Bernanke warns of healthcare bill
is there no end to the good news bull run!!
Suppose 1.5 earners per family and that all 200,000 of those households have all their earners instantly and permanently lose their jobs as a result of failure to relocate, rather than just fail to get promoted.
That gives us 300,000 extra unemployed.
US labor force is 154,354,000. So this extreme projection gives us an unemployment rate that is 2 10ths of 1% higher (e.g. 5.5% instead of 5.3%).
This would suck for these imaginary 300,000, but not a make-or-break in the grand scheme of things.
One of his perks - the company will rent him a condo in the new city for a year or so while he decides what to do with his old house. RHIP.
Hazard | 06.16.08 - 6:38 pm | #
I've met lotsa VP level exec's who don't move unless they want to live there. Especially if they know its going to be their last placement.
Heck I know Sr. Execs now who commute to rural PA... one from Chicago, one from Florida, one from CT. They have small apartments in PA and commute back and forth on the weekends. Their hours are so long during the week it hardly matters where they live (from their family's perspective anyway).
Expensive? Sure but they get paid VERY WELL and can afford it & their families don't want to move AGAIN. Besides these guys are traveling all over the world on business - something like 60% of the time - so does it really matter where the last flight of the week ends up?
I don't sweat the hassle & expense for the big dogs, they'll do okay regardless... its the average guy who can't afford to jet set commute that gets beat up when you absolutely have to up-root but can't. No company will pay for him/her to commute or fork out for him/her to have an apartment/condo at company expense.
And if we start seeing real job loss - then they'll be moving. You can count on that.
There are no qualified people in Houston, one of the larger cities in the country?
dryfly
Or pay relocation expenses or buy his house.
Back in the day, I remember companies buying the new guys or transferee's house and making up the difference in the housing expenses in the new location or paying the difference in mortgage costs.
D White writes:
There are no qualified people in Houston, one of the larger cities in the country?
D White | 06.16.08 - 7:11 pm | #
Houston is one of the craziest boom-bust cities in America due to the process industries. I personally thinks its even nuttier than Silicon Valley.
I was recruited by a Houston design/build chem engineering outfit out of college at the peak of the oil patch boom... companies like the one I was interviewing with were sucking up all the talent they could find & paying big premiums for skills. That left everyone else in Houston wanting... and it was hard to get enough folks to relocate from the rust belt down there (same reasons as now).
I turned them down & went to podunk to do ag processing instead. Many of my classmates didn't - went to Houston & made the big money... for about 2 to 3 more years until the bust. Peak bust there were tens of thousands of high paid talent unemployed with expensive property that was now underwater & they couldn't sell.
So where are we today? Oil patch is hot again & businesses are trying to draw in talent from almost anywhere... who find it difficult to move there due to housing market where they are coming from.
In a few years oil patch will probably crash & the folks that did get sucked into Houston will again find it hard to leave due to housing albatross around their neck.
We go around and around the sun and nothing much changes.
Thats true dryfly, this guy is gone half the time now anyway. He says his travel is only going to increase.
In the meantime, it IS a nice house, a good time to get a good buy (thinking a real bargain here ... maybe), anyway it doesn't hurt to talk. Silly to make a move 2 streets over but ?????????
Back in the day, I remember companies buying the new guys or transferee's house and making up the difference in the housing expenses in the new location or paying the difference in mortgage costs.
Vader | 06.16.08 - 7:16 pm | #
I suppose that's still done but its above the pay grade of the folks I fish with.
Silly to make a move 2 streets over but ?????????
Pick up truck moves are always preferable to van moves... assuming its only two blocks and not two time zones.
Could you sell your place?
Yeah, I think I could sell. Not sure I want a monster mortgage though (well, monster to me), its a lot more place than ours (we bought the cheapy in our neighborhood 14 years ago). Gotta see what the deal is first. For once though I don't think my wife will go along with this.
As Dryfly suggests, Hackett is incorrect. Of course people will move if employers offer a high enough compensation package including relocation expenses. Since her employers apparently won't pay for relocation or pay high enough wages, positions go unfilled.
Too often when employers complain that they can't find qualified candidates, what they mean is that qualified candidates won't work for an uncompetitive wage and benefit packages.
OT: Answering from another thread
USD for 600K for a house in the middle of nowhere.
Why so much? What drives it?
dryfly | 06.16.08 - 4:56 pm | #
a) 1999 Hong Kong going to China.
Some were looking for alternative options to Singapore to do be in South East asia to do business.
B) One of the few countries where a furriner can own outright (Theres a 100% tax now on furriner purchases, always ways around thats). For contrast Thailand its a 99 year lease.
When the tourists (Europe/UK mainly) saw the HK expats buying places on the cheap and minting money (BB, Hotels etc ), they got on the act as well.
Now that its bursting, its probably going be to be a problem for those wanting to get out. Nothings bought on mortgage, its cash down for these prices. (banks do 10-50K mortgages for the average local, 75% LTV at 21% !!!! ).
Perhaps the slow housing market is preventing some people from moving... but the same market may revitalize Southern California. Those of us who watched real estate in California climb to levels that bore no relation to incomes whatsoever stopped considering moving to California after about 2000- and, even for professional positions, California employers often refused to interview out-of-state candidates, knowing those candidates would ultimately not move to the state.
The pain of the bust is horrible, but talented new people may now actually consider coming to California once again.
Many homeowners have suffered loss of equity through no fault of their own. Having a fixed rate low mortgage and paying on time do you no good if tons of people in your area are bailing on liar loans and dragging your home price down with them. The tide is going out with everybody in it.
Out-of-staters might be considering California, but the massive budget crisis will likely give them pause. It's perfectly clear that state services will face a massive cutback, and who knows how much that will affect the standard of living, and the economy. That, and the huge drag on neighborhood standard of living from the foreclosures. Nothing quite like living next door to a boarded up house.
"The pain of the bust is horrible, but talented new people may now actually consider coming to California once again."
-West Coast Okie
I found a job opening in San Jose yesterday that matched VERY closely to what I did prior to my former employer's plant closure. I don't think rents have went down any in San Jose, unfortunately. Does anybody have any crystal ball on the ultimate effects of rental pricing in "sticky" markets, say a year from now?
Isn't labor mobility one of the advantages that the U.S. has over the EU, at least according to Americans? Even if at least in Germany, skilled labor is considered much more valuable than mobile labor - and look what that has resulted in for Germany.
And does this mean that now the U.S. will start to develop other bad EU practices, like 6 week vacations, universal health care, and a higher savings rate?
Let's just say I'm not holding my breath.
There is a seeming paradox in the impact of housing and labor mobility. About 15 years ago, the OECD did a study on the impact of home ownership on labor markets and found that (all else equal, of course) high levels of home ownership reduced labor mobility and so reduced labor market flexibility and employment. The US was something of an exception. Though, to the best of my recollection, the OECD didn't go into the causes of better labor market performance in the US than would be expected, given the level of home ownership, the ease with which we trade houses seems an obvious factor. Now that we trade houses with less ease, there is every reason to expect the US will become more normal, in the sense that home ownership will gum up the labor market.
The seeming paradox is that, in the EU and elsewhere, home ownership levels are generally lower than in the US, but labor mobility is lower, too. That is where the "all else equal" part comes in. There are a number of cultural and legal factors which reduce labor mobility more in Europe than in the US. Some years back, the Dutch bragged that children lived on average within 10 km of their parents. What happens in Maastricht stays in Maastricht. So no real paradox.
There is a flipside to this issue as well. A few years (decades?) back a world organization did a study and they found a very interesting corelation between home ownership and unemployment; areas of high ownership consistently showed higher unemployment. The conclusion was that with a home ownership (deeper roots to the geographic area) people were less willing to move in search of a job. On the other hand a renter would move where the jobs were. This is especially true in 'verticals' like auto, one needs to look at no further than Michigan and Ohio and notice a higher unemployment as people (home owners) in these 'verticals' refuse to move and rather be unemployed while the renters have moved elsewhere.
Businesses are willing to offshore work to folks halfway around the world, but still require American workers to re-locate and then come in to the office every day to sit at desks and work. Bizarre.
k harris: "the ease with which we trade houses seems an obvious factor"
The US has the GSEs. Elsewhere repaying your loan early tends to come with stiff prepayment penalties, over its whole lifetime. I read a claim to the effect that the GSEs were purposely created to provide liquidity in the housing market by enabling transactions.
And, of course, almost any financial scheme will work beautifully when you print the world's reserve currency, and a period of secular growth allows you to "print" with impunity.
The US has the GSEs. Elsewhere repaying your loan early tends to come with stiff prepayment penalties, over its whole lifetime. I read a claim to the effect that the GSEs were purposely created to provide liquidity in the housing market by enabling transactions.
God Bless the GSEs! Ditto for the Fed, the repeal of Glass-Steagal, and the tons of pro-Realturd subsidies, like the MID, "any two will do" rule, 1031 exchange, etc. Without all these wonderful things, the price of an average house might be closer to 2-3X HH income, instead of the 11-12X it has reached in CA.
Your government hard at work "helping" us.
HARM: Of course, everything gets priced in. But most of US mortgages can be paid off just by repaying the current balance. This means provided somewhat "stable" house prices, you actually have a good chance of being able to pay off your mortgage from the proceeds of selling. Not so with penalty clauses because you are "cheating" the bank of 20 years interest.