Housing Bust and Geographical Mobility
Submitted by
CalculatedRisk on Wed, 04/22/2009 - 1:55pm (109 comments)
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Paging Dr. Nemo....
Nemo is busy at work today.
This explains why I was blitzed with phone calls and e-mails from moving companies after I put in a teeny, tiny quote request via the Internet. Some companies made 3 or 4 follow up calls.
GM to shut down most factories for 9 weeks
But will they reopen? I wasn't planning on going anywhere, myself.
another explaination- there is no where to go. After all, where are they hiring these days?
If this were solely related to negative equity, one probably would not see the stark drop off in 2004-05, since price declines didn't start in earnest until 2006. Moreover, it is hard to explain how negative equity could have contributed to the first sharp slide that occurred around 2000 -- unless you chalk everything up to people being tapped out on the home ATM, I suppose.
Vast price differentials on the coasts also likely played some role in mobility. Since not all cities boomed, and the coasts were booming while middle America real estate remains flat, that suggests homes became disproportionately further out of reach for people who wanted to move from smaller towns to coastal metropolises. And while I'm shooting from the hip here, I'll hazard a guess that that is where the job growth was.
In other words, my theory is that it isn't just that people were getting locked in, but also getting frozen out of areas where the jobs were. So they just stay put.
Hopefully this means PODS will go bankrupt and their CEO will have to follow the Horses at the local parade.
(Still a little angry over their quality of service)
Then I guess the rest of you expect UE to reach +25% this year?
I'm perplexed how so many of you know just how rotten to the core our financial system is, and yet you express complete confidence in latent prints of theirs, mere promissory notes.
Why's that?
Ahh, I was interesting in PODS for my mom. Bad service?
Arbit, we are betwixt and between. Old system rotten, no new system.
Thread music:
Situation
Renting offers the best mobility ... go where the jobs are, if there are any.
C&C,
What's your definition of UE? I think U3 will be at 15% by this time next year and U6 at well over 20%. Unless, the goalposts are moved again.
Changing Residences = Geographical Relocation ..?
So if I move across town ?
Is there the term "velocity of housing"? Similar to money, when housing changes hands their is an extra amount of housing need just to facilitate the move. Empty house from buyer or sell, plus new home for buyer / seller. As moving slows down, this demand decreases freeing up even more inventory. This is not an insignificant amount of inventory that gets taken up!
@lawyerliz,
I suspect GM will reopen some or most of the plants, but maybe later than expected, and maybe under different operating conditions, say with about 60% of current employees.
I have a hard time believing the government would let GM BK without bridge loans and detailed plans and for emergence in place, but we shall see.
Arbitrage Macht Frei wrote on Wed, 4/22/2009 - 3:08 pm reply I'm perplexed how so many of you know just how rotten to the core our financial system is, and yet you express complete confidence in latent prints of theirs, mere promissory notes.
Why's that?
Relativity, deflation, 10,000 nukes
A test for me! No value here. I'm digging the new look of this software tho... HT or FP Ken!
Also, to be boringly obvious, Sellers fix up their homes a bit to sell, and Buyers nearly always buy stuff when they move in. I imagine added up, these are fairly huge sums.
No need to move; just buy an iPhone.
@arbitrage,
Not all of us have confidence in FRNs (e.g., my name)
Most cars are built to last 5 years or more, and people are gonna be driving less, more and more.
We can deal w/o new cars for many years, making do.
Sorry for the big post (subscription only):
U.S.: A Death at Freddie Mac
Stratfor Today » April 22, 2009 | 2102 GMT
Summary
The acting chief financial officer of the U.S. government-backed Federal Home Loan Mortgage Corporation (also known as “Freddie Mac”), David Kellermann, was found dead in his home April 22. Kellermann’s death — which police are calling an apparent suicide — raises many questions about what Kellermann knew and how his death will affect the future of Freddie Mac.
Analysis
David Kellermann, the acting chief financial officer of the U.S. government-backed Federal Home Loan Mortgage Corporation (also called “Freddie Mac”) was found dead on April 22. Police in Vienna, Va., have said the death may be a suicide. According to reports from media quoting unnamed police sources, Kellermann was found hanged in the basement of his home. The details on Kellermann’s death are still forthcoming and until an official autopsy is conducted the exact cause of death, and circumstances surrounding it, will remain unknown.
Kellermann was named a senior vice president and acting chief financial officer at Freddie Mac in the September 2008 government-initiated shake up. Prior to holding those posts he was the principal accounting officer and corporate controller — essentially the main accountant — for the mortgage giant. He was one of the longest-tenured members of the current, and government-revamped, Freddie Mac executive board and had worked for the institution for 16 years.
Part of the government’s plan for Freddie Mac was to take over the institution, replace the leadership and start sifting through the incomprehensible maze of packaged mortgages that were sold to investors as mortgage backed securities. With Kellermann’s death, however, this task — which was already approaching Sisyphean proportions — becomes most likely impossible...
Kellermann was not an outside appointee; he was promoted from within and represents the core institutional memory of Freddie Mac. Most importantly, he represents the accounting institutional memory, which means that he not only most likely knew about all of the bad decisions that were made regarding securitization, but also knew of them as they were being made. Under any circumstances, in any organization, the loss of a person of Kellermann’s stature would be crippling; under the circumstances at Freddie Mac, it is catastrophic.
The death of Freddie Mac’s most important accounting and financial employee now puts the government’s plans for Freddie Mac’s continued existence into question. Assets held by Freddie Mac are still very valuable; only a small percentage of the entire mortgage market is actually non-performing (although defaults are rising due to the effects of the recession) and far from all of that is in foreclosure, so there is a lot of value left in the institution. Without possession of first-hand knowledge to trace back and unwind the process through which securities were created, there would be little point in maintaining Freddie Mac as a single institution. It could get broken up by the government and sold in pieces, letting private investors sift though much smaller chunks of the mess on their own time.
What this would mean for the mortgage market is at present unclear. With total assets of $2.2 trillion, Freddie Mac would be the biggest institution the U.S. government has ever dismantled. But the real kicker is that this would be just the prelude to an even bigger unwinding. Everything that has beset Freddie Mac has also plagued its sister company, Fannie Mae — which has $3.11 trillion in total assets and is also in conservatorship.
U3
The hub is "saving up" for a new car. It will take quite a while. Will the money be there when he wants to spend it?
Remember "saving up"?
We can deal w/o new cars for many years, making do.
~~~~~
Like Cuba !
Throughout history, every time a new weapon has been developed, the duration of time between when it in the hands of just a few, and in the hands of many, has never been more than a few generations, be it a bow and arrow or a nuclear bomb.
but .... did Kellerman leave a note ?
Thanks, SAC, I think.
One guy dead will prevent an army of investigators from figuring this out?
Humm, will they forget who to pay the income streams they are still getting to?
What would a few strategic computer failures do?
One guy dead will prevent an army of investigators from figuring this out?
Looks like we'll need a bigger bonus.
"U.S.: A Death at Freddie Mac
Stratfor Today » April 22, 2009 | 2102 GMT"
This is an argument for indispensability. I am skeptical whenever I encounter such an argument.
I can't imagine ever killing myself, but if I were to do so, it sure wouldn't be by hanging.
Surely od-ing on some pleasant legal or illegal drug would be far preferable?
You might say the current proliferation of handguns is akin to the proliferation of nuclear weapons, a no win situation fueled by fear.
Relocation rates may be very low for 2008, but I predict that is going to change, as involuntary relocations become all the rage: relocating to free housing in whatever form that happens to take.
Well, now they have someone to point to and blame. He did it!! He did it all.
It wasn't me!!
"few generations, be it a bow and arrow or a nuclear bomb."
True, but a bow and arrow can only kill one at a time and from close up. Pakistan is scaring the piss out of me.
Yet again, we appear to be zero bound. Mobility is overrated anyway. I know people that haven't ventured off of Long Island in since the 1960s.
I would think carbon monoxide would be the easiest and least painful suicide.
"but .... did Kellerman leave a note ? "
It is a well-established fact that not all suicides leave notes.
Forget notes. Handwritten notes only make an investigation easier, but the content of the note is important.
I guess if you become homeless that's counted as not moving ...
No impact from this??
Central Valley Business Times
These projects had been on hold since December 2008 because of the state’s budget problems. California is the first state in the nation to sell “Build America Bonds,” taking advantage of this new opportunity provided by the federal Recovery Act.
“California is restarting thousands of critical infrastructure projects that have been frozen because of tight credit markets and the state’s cash crisis,” says Gov. Arnold Schwarzenegger. “And that, in turn, means that we can retain jobs, create jobs, and give California’s economy an additional boost at a time when it needs it the most.”
Also, to be boringly obvious, Sellers fix up their homes a bit to sell, and Buyers nearly always buy stuff when they move in. I imagine added up, these are fairly huge sums.
Yes, the end of the housing boom has been a catastrophe for the furniture industry and home decorating industries. Several major furniture sellers have already gone down (Wickes and Levitz here in LA).
The sad part about nuclear weapons, is we never needed them.
Dr. Emilio Szilárd (not his real first name-homage to Buckaroo Banzai) convinced Einstein and he in turn convinced FDR that we needed them.
When Heisenberg & fellow scientists were being held under house-arrest in the UK in August of 1945, they were told that an atomic weapon had been used in Japan and no more details. The house they were in had been bugged nine ways to Sunday, and the conversations among the cream of the crop of nazism couldn't believe we had done it, because the weapon would have had to be as big as a house. They were never close to building a bomb, as we had feared.
Forget notes.
~~~~
Either he did or he didn't ...
leave a note ...
I'm saying this guy would have left a note to explain ...
no mention of instability or depression ...
No impact from this??
Central Valley Business Times
~~~~
a blip ... not much ...
most construction is materials cost not labor usage ...
Best suicide. Crack plus viagra while riding the sybian. Oh Heart be still!
Best suicide. Crack plus viagra while riding the sybian. Oh Heart be still!
The only way shutting down for 9 weeks would make any sense is if GM is in BK proceedings by then, or it's an unpaid leave of absence for all the line workers. I don't think you get one without the other.
This is going to put a dent in the GDP number, as well. I doubt Kasriel included this in his forecasts.
Hi Fair.
Good to see you back!
You might say the current proliferation of handguns is akin to the proliferation of nuclear weapons, a no win situation fueled by fear.
What?!? There's no comparison whatsoever.
"I'm saying this guy would have left a note to explain ..."
Would have, could have, should have. Who knows?
In all of the published reports I've read, there's no mention of a note. If a note exists, maybe "they" have decided not to reveal its existence or content.
As far as I'm concerned, it makes no difference. The guy's association with Freddie Mac is good enough for me.
To me, it means Freddie is toast, regardless of whether that's the reason given for his suicide.
Our country has put billions into weapons development over the past 70 years. I'm not sure if I believe that nuclear weapons are the most fearful weapons in our arsenal.
I vote for the FIRE sector and CDS/CDO creation as the most destructive weapon we ever invented and used.
Weapons are useless when they reach mass numbers.
Does anybody feel safer with Pakistan and North Korea having nukes?
To me, it means Freddie is toast, regardless of whether that's the reason given for his suicide.
~~~~
They won't let Freddie Mac go until the banksters have off-loaded all their toxic MBS ...
The guy's association with Freddie Mac is good enough for me.
Me too. It's getting ugly.
Ok, Freddie is toast, but what exactly does being toast consist of?
C&C-
do fuloughed factory workers count?
fwiw-
I say 15% because of deflation...scant profit margins make it hard to hire new employees.....
700,000 auto loans denied this qtr..will break down by fica range in f/u post
Best suicide. Crack plus viagra while riding the sybian. Oh Heart be still!
Please tell me your a bird....
Max,
Great graphs. We just bought in Cool a place that would have been $3 to $4 mill down in Woodside. It was advertised as a short and went to REO as we were looking. It had been on the market for over a year with offers that couldn't complete. We were in no hurry as we had another place to live and as they say cash is king.
"Does anybody feel safer with Pakistan and North Korea having nukes? "
I feel much safer with them having nukes than I would with them having CDS/CDO technology.
Sayonara is right. That's by far the most destructive weapons technology this country has ever developed.
I wrote about this subject years ago; The immobilization of a mobile society. It's funny how so far behind the MSM is.
Does anybody feel safer with Pakistan and North Korea having nukes?
"To me, it means Freddie is toast"
Occam's Razor right?
....................
His wife was about to leave him, because an $800K bonus doesn't cover her expenses.
"Ok, Freddie is toast, but what exactly does being toast consist of? "
$2.2 trillion in burned "bread."
Way off topic:
"I haven't heard any evidence that the competitive market isn't working," said Rep. Jeb Hensarling, R-Texas. "In the absence of that, why are you attacking risk-based pricing?"
From this article, which is unrelated to my question.
Do the banks really compete with each other? I am wondering whether non-competitiveness of the banks contributed to the mess we're in.
" crispy&cole (homepage) wrote on Wed, 4/22/2009 - 3:33 pm
No impact from this??
http://www.centralvalleybusinesstimes.com/stories/001/?ID=11752"
It is exactly that sort of thing that has me worried. That money has to be paid back somehow by someone. I don't see how we will ever have the means to pay it all back. Is all the spending going to productive projects that will generate future income that can be used to pay back the debt?
Or do we eventually default, and the Chinese have to send their debt collectors after us?
Does this mean employees/computers will no longer keep track of things? Was Freddie guaranteeing new loans anyhow? I thought it was in run off.
The sad part about nuclear weapons, is we never needed them.
Dr. Emilio Szilárd (not his real first name-homage to Buckaroo Banzai) convinced Einstein and he in turn convinced FDR that we needed them.
When Heisenberg & fellow scientists were being held under house-arrest in the UK in August of 1945, they were told that an atomic weapon had been used in Japan and no more details. The house they were in had been bugged nine ways to Sunday, and the conversations among the cream of the crop of nazism couldn't believe we had done it, because the weapon would have had to be as big as a house. They were never close to building a bomb, as we had feared.
.
Nukes weren't used to scare the Nazis; they were used to scare the Russians.
Haha, mp.
Note that the bonds are also being used to pay unpaid bills. No income generation there.
Snatch blade of treasury note from hand, Grasshopper.
Maybe the Freddie suicide was passed over for the "permanent" job. He was "acting" CFO.
Outta here, nitey-nite.
Once earnings season is over, the market will NOT be able to deflect these headlines. All these headlines are from today.
EBay 1st-qtr profit, sales fall on weak economy-
AP Falling bank stocks unravel stock rally-
AP Freddie Mac exec death apparent suicide-
Reuters Geithner says crisis unprecedented in modern times-
AP Global economy to shrink for first time in 6 decades-
AP GM may skip $1B bond payment due to exchange offer-
AP Morgan Stanley losses worse than expected-
AP Boeing open to split contract on $35B tanker deal-
AP Mauldin: Don’t trust the rally
"Does this mean employees/computers will no longer keep track of things? Was Freddie guaranteeing new loans anyhow? I thought it was in run off."
Did it matter if there was an electrician in the bowels of the Titanic monitoring the main electrical distribution panel in a vain attempt to keep the lights burning?
To me, his suicide is simply another symptom of a system that is coming unglued.
TJ and the Bear:
You might say the current proliferation of handguns is akin to the proliferation of nuclear weapons, a no win situation fueled by fear.
What?!? There's no comparison whatsoever.
--
True dat, Teejay!
Nuclear weapons aren't going to hold you up or off you on a whim. OTOH, they are useful for making the rest of the world tolerate the rampages of your armies, do your sweatshop labor, breathe your pollution and buy your toxic securities. So don't leave home without 'em.
Arbitrage Macht Frei wrote on Wed, 4/22/2009 - 6:35 pm
The sad part about nuclear weapons, is we never needed them.
Wow, and here I was feeling bad about laying into you this morning.
Ask the people without them how much they mean.
I must have missed the gloating over spilled blood by lucifer and Michael in reference to the unfortunate death of Mr. Kellerman today. I seem to recall their vociferous cries for just such "justice".
To me, his suicide is simply another symptom of a system that is coming unglued.
~~~~
Popping rivets ...
like a zipper ...
bending steel ...
like a giant moan ...
This is true mobility
.............
Nuclear weapons aren't going to hold you up or off you on a whim.
Nukes could "off you" and a few hundred thousand of your closest friends "on a whim". Hardly the point, though.
All the people that would hold you up or off you on a whim already have guns, therefore the proliferation of handguns is occurring among the law-abiding and thus ultimately makes us safer, both from criminals... and tyrants.
This recession is also broad based in terms of industry and geography. I don't know of any areas with labor shortages. I would expect that imbalances - labor shortages in some areas vs. surplus in others - usually drives moves. So does new job creation. So the lack of those conditions also may go a long way towards explaining the low moves.
Japan's Experiment with a "livable N. Korea."
Here, you will encounter working socialism. The link is not for the faint of heart.
nukes are peace keepers until........
Byz,
You like weapons a lot, and I wish you the best in your endeavors. If things come to pass are you up to the task of being a gunslinger 24/7/365?
"Does anybody feel safer with Pakistan and North Korea having nukes?"
The MSM sounds like a raving lunatic on this subject. They are trying to ease us into another war! Who has to gives a shit if another country gets nukes? Not me. My country's got thousands of them, Israel's got hundreds. WTF are they going to do with them even if they do get them? Iran could be turned to glass within a matter of hours with Israeli nukes and the Palestinians cremated as well. That Hannity shithead is constantly fanning the flames of more war. Turn those war pushers off people.
Since GM is shutting down this Summer, so will the suppliers . I the auto supplier in my town was already on half schedule. They'll probably shut doors now.
@Arbitrage "The sad part about nuclear weapons, is we never needed them."
You forget that these are foreign policy tools and not combat tools. They were, and still are, used very thoroughly for their intended purposes.
You might ask yourself how many major-power conflicts we might have had in the past 60+ years without them. The Korea and Vietnam conflicts, among others, could have been very different if the U.S., Russia and China were not nuclear powers! I'll take 1949-2009 over the 1889-1949 period anyday.
There's no way to get rid of these weapons while the nation-state system exists, because once a nation has them they are vital to national security. The proliferation problem is a real nightmare. But the world we've had for the past 60+ years has almost certainly been more peaceful as a result.
"To me, his suicide is simply another symptom of a system that is coming unglued."
Yes, mp.
It's striking, aren't all suicides, but it's probably best seen in personal terms. None of us knew him, therefore none of us knows what were his demons. He may have been a Vince Foster -- sensitive, unable to bear the tasks set for him. Or something different entirely. I have my suspicions and they're worthless.
But what it represents... The creaks and groans of a system coming undone will sound sometimes like stressed rope around a bent neck.
Faustian bargains are always quite dear.
Since GM is shutting down this Summer, so will the suppliers . I the auto supplier in my town was already on half schedule. They'll probably shut doors now.
~~~~
creative destruction will save us ...
Wasn't there an Enron bigshot who was reported suicide just when investigations started?
Anyone want to bet 1000 shares that the Freddy Mac CFO's death was NOT a suicide? ... shares of FRE being all but worthless in any case, it's a safe bet...
Anyone want to bet 1000 shares that the Freddy Mac CFO's death was NOT a suicide? ... shares of FRE being all but worthless in any case, it's a safe bet...
I wonder if the mobility stats include bandos, gypsies and burgeoning tent cities?
"Wasn't there an Enron bigshot who was reported suicide just when investigations started? "
Yes, the vice-chairman, whose name escapes me.
Anyone want to bet 1000 shares that the Freddy Mac CFO's death was NOT a suicide? ... shares of FRE being all but worthless in any case, it's a safe bet..
~~~~
We'll never know if it wasn't ...
Unless they find gambling debts ...
conveniently ...
The old CR made it difficult to double post. Is there a software fix for this?
new post!
@tew: "I don't know of any areas with labor shortages."
North Dakota still has a labor shortage for several skill sets. Companies were having trouble hiring enough locals with the right expertise, and pulling up shop as a result. (Shallow labor markets are not the best places to try to grow a business.) I understand they also need sandbaggers for the flooding rivers these days... Don't know what happened to their little oil patch boom, though.
@tew: "I don't know of any areas with labor shortages."
North Dakota still has a labor shortage for several skill sets. Companies were having trouble hiring enough locals with the right expertise, and pulling up shop as a result. (Shallow labor markets are not the best places to try to grow a business.) I understand they also need sandbaggers for the flooding rivers these days... Don't know what happened to their little oil patch boom, though.
Double posts are a problem due to firewall here, sorry.
Yes, the vice-chairman, whose name escapes me.
tragic
MP- enron vp Baxter
The Mysterious Death Of An Enron Exec - CBS Evening News - CBS News
Arbitrage Macht Frei wrote on Wed, 4/22/2009 - 7:00 pm
Byz,
You like weapons a lot, and I wish you the best in your endeavors.
I don't like weapons. War is an incredible waste, of money, human capital, destroyed resources. Trust me, I long ago got past the neat gadgets.
Three hundred pounds per annum spent
On making brain and body meeter
For all the murderous intent
Comprised in "villanous saltpetre!"
And after—ask the Yusufzaies
What comes of all our 'ologies.
A scrimmage in a Border Station—
A canter down some dark defile—
Two thousand pounds of education
Drops to a ten-rupee jezail—
The Crammer's boast, the Squadron's pride,
Shot like a rabbit in a ride!
The practice of violence is unquestionably odious, harmful to both body and soul. It is unfortunate that the alternatives -- a life lived in fear without a means of defense, a live lived in servile bondage to tyranny, a life ended in the death camps -- are worse. I can think pacifism is an idiot philosophy without being a bloodthirsty killer.
Ethics from the Barrel of a Gun
If things come to pass are you up to the task of being a gunslinger 24/7/365?
I don't really think it matters what I'm "up to" -- more like what role I'm compelled to fill by circumstance.
Some may suffer and some may burn
But i know that one day my people will learn
As sure as the sun shines, way up in the sky
Today i stand here a victim the truth is I'll never die
When did being a liberal and having a social conscience turn into being a whiny pacifist?
The issue with the Pakistani nukes is if the government gets rolled, who controls them and what do they do - real game changers like floating one into Ras Tanura and lighting it off...
“I’m not a psychologist, but if you ask me whether there has been a sea change in consumption in society, I would say yes,” Jamie Dimon (JPM) writes in an op-ed for Fortune. “If people are a little more thoughtful, more conservative, and if their fundamental values are more important than how much money they make, those are all good things. These changes are not going to destroy our country; they’re good for our country.”