CR,
Do you remember some 3+ years ago when I was advocating for demographic and land use pattern shifts that would overwhelm existing housing supply factors? At the time I remember your calculated risk of oversupply to be far lower than your current 1.7m. Could you revisit this in current context? I saw 4m+ then and still do.
I live in Contra Costa County (Northern CA) with areas of great affluence (central county) and areas that are very "middle class." Some towns (Pinole, Hercules) have had a tremendous number of transactions at 40-50% of their peak prices. Others (Orinda, Lafayette) have had almost no transactions in the last six months, nor have prices moved much. I saw a $3.2 million open house yesterday, 15 years old, 5000 square feet, with a view, no yard to speak of, and a bit dated. And another open house, offered for $1.9 million, 3500 square feet, with tile kitchen counters, cute but kitschy. This is not capitulation to a new reality.
It appears obvious that the housing price curves will be different among different economic levels. If a house owner can wait long enough, he or she will get to the far side of the curve. If a group of homeowners, an entire community, waits long enough, doesn't that accelerate the time at which prices come back through pure supply and demand?
CR, an analysis by demographic levels would be very interesting ...
The silver lining is, this is really good news in terms of labor mobility: helps to offset some of the forced immobility of those trapped in underwater homes.
Maybe we should admit about 2 million immigrants who can (and contract to) deposit 30% on buying a house and have a promised job (verified) that shows 3x the monthly income over the monthy PITI payments. Wipe out the housing surplus in one/two years. Make this a 'blue card' program. If you default, you lose your blue card and must go back to your country of origin.
Zantage
Baby boomers retiring. There are 77 million Americans born between 1946-1964. One-third have zero retirement savings. The oldest are 62. The only money they have is equity in a house, so they must sell. - Patrick.net
It is never too late to sell. Well for some its too late... In general the longer they wait the worse it will get. Baby boomers are getting older and the younger generations are saddled with more debt even less savings.
Agree. Seniors will leave CA for NV and other lower cost/lower tax states. If you are on a Pension it will be like getting a small pay raise. Then services will follow.
Rob Dawg, I think it is difficult to put a firm number on the oversupply. I've always argued it was huge, but I originally thought it was in the 1.2 million range (or something like that). I revised that up to close to 2 million (it is probably a little less now). It is still "huge".
Zantage, I'll try to work up something on demographics in the next few weeks. Generally older people own more homes (especially in the 40s, 50s and 60s), so as the population shifts, we'd expect the homeownership rate to rise. The mortgage innovation part of the increase is being unwound!
It would be interesting to me to see how much of home equity is "owned" by the "homeowner" on a national scale. With falling values, one would expect that the banks now own much more.
Jim, there are several groups that might fill up housing in the short term, including immigrants, military returning from overseas, fewer prisoners, second homes, smaller average household size.
Immigration is currently working in the "wrong" direction for distressed areas. Michigan, Ohio, California, and Florida have either people moving out or level populations. In most of the former bubble areas, people per household is currently rising. There might be ~100,000 troops returning home, but it's not a terribly large number. Fewer prisoners might result in a similar number of people back in the general population, but they have a lower tendency to get their own housing. The number of second homes is contracting quickly. That's one of the reasons for so many homes for sale in desert areas.
As usual, people are moving toward areas which are doing comparatively well economically. Those are disproportionately places less affected by the bubble. I'm a prime example. Moving from CA to TX next month.
"The increase due to demographics (older population) will probably stick, so I expect the rate to decline to the 66% to 67% range - and not all the way back to 64% to 65%."
No way.
There are 3 million head added each year to this country with no new economic paradigm on the horizon for the foreseeable future. All against a backdrop of dwindling natural resources in house compared to the 50s - 60s glory days. The old folks will be either selling out along with shrinking portfolios to accommodate their transition to a decent old folks home. Or taking in a younger set (if one is willing) to accommodate their need for care by giving them some dibs on the extra room in their McMansion. More people will and are currently shacking up with relatives as the economic situation gets more stinky.
66-67% will be hit in 2010.
64% and decreasing will be hit in the next 5 years.
I am not one to make predictions but this is where my money will be and its worked good so far. Population and resources along with their trends tend to be gravely overlooked in the field of economics.
It would be interesting to me to see how much of home equity is "owned" by the "homeowner" on a national scale. With falling values, one would expect that the banks now own much more.
But since the government owns the liabilities of the banks we in a perverse way own them again.
Property History for 415 Jason St
Date Event Price Appreciation Source
Apr 17, 2009 Listed $99,000
Nov 06, 2000 Sold $150,000
Jun 22, 1990 Sold $115,000
( Boomers) (o)ne-third have zero retirement savings. The oldest are 62. The only money they have is equity in a house, so they must sell. - Patrick.net
"So much for the homeownership gains of the last 8+ years. Gone."
CR,
If you make a similar chart of homeowners who actually have equity, and those who are in negative equity, you'll see something interesting. Do it as a stacked area chart.
For many periods of time there is almost no one with negative equity. In the mid 1990s, you get a little of it. When you get to 2009, it's awful. The portion of the chart with people who are homeowners with positive equity overwhelms all of the other changes in the chart.
Here in Asheville, NC, developers can’t stop ‘Swigging the Spiked Kool-Aid from the Gilded Jug”.
2 major condo luxury developments come online within 1 mile of each other, while midway between them the Hotel Indigo a luxury boutique hotel just topped-out its 12th floor in construction, and a new luxury hotel, the Grand Bohemian, just opened 3 miles south at $250/night.
Asheville has only 77k people; the metro’s 4-counties have a 200k-person labor force of whom 25% are in hospitality and retail jobs with a median annual wage of $25,000 or less, typical of hospitality/tourism economies.
Worse, less than 14% of adults are in occupations with a median wage of $50k or higher.
Asheville has NO competitive advantages over white-collar job centers in Winston-Salem, Greensboro, and Charlotte, all within 110 miles of us.
Housing prices exploded 2004-2007, peaking at $250k for ratty 80-yr-old 1,000 sq.ft. frame bungalows requiring new roofs, HVAC, and electrical, plumbing upgrades, as well as the usual kitchen/bath upgrades.
Housing closings collapsed almost 2 years ago, Fall 2007. Regardless, the newest condo, Pioneer Building, still lists their 900 sq.ft 1Br, 1ba unit at $279,990 = $311/sq.ft.
The developers are dying, hotel occupancies are down, but the local government and news rags still fear them and the Chambers of Commerce which are chock full of hospitality and land-speculation firms. They ignore the ‘For lease' signs sprouting all over. We have 2 mall's, one is a permanent resident on the website, 'Dead Malls'; Steve-N-Barry's was its anchor.
They ‘learn’ no lessons in Asheville, NC.
Last Fall, after gas hit $4.40/gal, we ran out of gas for 3 weeks. Our biggest revenue producer for all industries is the Fall Tourism season when ‘Autumn Leaf-Turning’ watchers travel the mountainsides that are aglow with reds, oranges and rusts, often driving 100-mile leaf-viewing circuits. Our local leaders simply purged those horrid gas-outages memories.
And locals pray for another global mega-boom in EZ money and Homes-as-ATMs to fuel vacation packages to The Biltmore House and luxury condo closings.
[Gee what happened to Bush's ownership society ponzi scheme that Obama in large part still wants to perpetuate ?]
Slightly different strategy - Obama is gearing towards a Section8 ownership society, where taxpayers pony up for deadbeats so they can enjoy trashing properties they have no real ownership of.
Simple division on the numbers is a 7.5% mortality rate in Mexico, which is in the ungodly range for influenza...give that a 50% haircut for vast underreporting of cases and we are still over 3% which is fugly. In comparison, the 1918 pandemic has mortality rates that vary from 2% to 20%, with the peak mortality associated with the second of the three waves of infection.
Mexico: suspected swine flu deaths climb to 149
45 minutes ago
MEXICO CITY (AP) — Mexico's government is ordering closed schools nationwide as the suspected death toll from swine flu climbed to 149.
Health Secretary Jose Angel Cordova says only 20 of the deaths have been confirmed to be from swine flu and the government was awaiting tests results on the rest.
He says 1,995 people have been hospitalized with serious cases of pneumonia since the first case of swine flu was reported on April 13. The government does not yet know how many were swine flu.
Of those hospitalized, 1,070 have been released.
Cordova says school at all levels nationwide are suspended until May 6. Schools had already been suspended in Mexico City and five of Mexico's 32 states.
"But since the government owns the liabilities of the banks we in a perverse way own them again. "
I'm starting to find this idea that government ownership somehow means "taxpayer ownership" or "ownership by the people" a bit humorous. It's as if "the people" really have any say in the decisions of the government, anymore. What elements of control do we have over these "assets" that are normally associated with ownership?
Face it. Our plutocratic system of governance is a system controlled by the few. It is only those few who benefit from the so-called "ownership" by the many.
Property History for 985 W Alameda St
Date Event Price Appreciation Source
Apr 22, 2009 Price Changed $224,900 -- MetroList #90026260
Apr 17, 2009 Listed $234,900 -- MetroList #90026260
Mar 30, 2009 Sold $216,589 -42.2%/yr Public Records
May 24, 2007 Sold $598,000 11.3%/yr Public Records
Sep 22, 2004 Sold $450,000 24.8%/yr Public Records
Sep 05, 2002 Sold $286,000 -- Public Records
Avl Dao (profile) wrote on Mon, 4/27/2009 - 10:51 am reply
Here in Asheville, NC, developers can’t stop ‘Swigging the Spiked Kool-Aid from the Gilded Jug”.
Sebastian was gracious enough to capitulate. His home region is still in denial.
Tim waiting for 2012, I'll look for the demographics figures.
prack45, maybe. I think 66% to 67% is reasonable based on the research by Matthew Chambers, Carlos Garriga, and Don E. Schlagenhauf (Sep 2007): Accounting for Changes in the Homeownership Rate
The authors found that mortgage innovation accounted for between 56 and 70 percent of the recent increase in homeownership rate, and that demographic factors accounted for 16 to 31 percent. Even as we unwind some of the excesses of recent years, not all innovation is going away (securitization and some smaller down payment programs will stay). The population is still aging, so my guess is the homeownership rate will probably only decline to 66% or so, not all the way to 64% or 65%.
CR, I will bet you that homeownership goes to 63% by the end of 2011. Why? A large portion of people being foreclosed on will not return to the buying market for a while. In addition, a decent chunk of the inventory will stay vacant, and not even for sale.
The oldest are 62. The only money they have is equity in a house, so they must sell.
No. They must work.
62 is the new 52. My boomer cohort's narcissism will usher in a new era where working 'til 70 (by necessity) will be de rigeur. Universal healthcare will keep us going.
Remember, we came up with neoconservativism. So we create our own demographics (reality).
For people worried about the Federal Govt owning houses because they own banks who are stuck with REOs, this isn't so bad. The Resolution Trust Corp did an ok job in a similar situation 20 years ago. In some places, houses will be basically given away in 2010. I think they should be given away to fresh college graduates. That would help offset the cost of student loans.
So far, there has been very little complaint on registration being required for posting comments, and in fact there's been considerable positive feedback. So I've decided to keep it for now.
If anyone has difficulty with registration, either technical or otherwise, please contact me.
Somewhat along the same lines as Tim waiting for 2012, but I wonder what happens to home ownership as the Baby Boomer generation retires and then goes into assisted living homes.
Outlier,
maybe this is a NY phenom, but the number of boomers who waited til their late thirties or forties to have kids changes things as well...I'm surrounded by folks in their mid to late forties still trying to get their kids thru private school...let alone pony up for college. A couple I know are hitting up their parents, the kids grandparents, for funds.
As for working til 70, good luck. Corporate America can't wait to unload folks in their 40s and 50s...welcome to minimum wage work at retail survivors, for the lucky.
@ Tim 2012, Ur welcomed.
@ Rob Dawg, who is this 'Sebastian'?
@ Outlier,
No, the Boomers will NOT work that much longer ...at jobs of their choosing ...at salaries of their choosing ...with benefits of their choosing.
Yes, the cohorts’ absolute numbers are large, but tolerance for their continued 'presence' is growing short by the generations behind them...and by many within their ranks.
Just as many middle-age-plus white-collar workers in the 1980s & 90s felt un-welcomed in the on-rush of younger fresh faces with fresh new ideas, and were politely nudged out of 'sweet-spot' job positions, expect the same to happen to boomers, with a vengeance and glee...and often by the hand of their own cohorts/superiors.
Remember you're the cohort that knows no loyalty...just ask Bill & Hillary.
Outlier (profile) wrote on Mon, 4/27/2009 - 11:03 am
62 is the new 52. My boomer cohort's narcissism will usher in a new era where working 'til 70 (by necessity) will be de rigeur.
Yes agree but for most of those 50 and 60 something that got laid off or outsourced what jobs are they going to do when job formation in US is getting worse and worse - Home Depot, Walmart making $25 - 35K yr. to keep their life styles going ?
Anyone caught a recent estimate of R naught for this?
20 new cases of swine flu confirmed in New York City, brings total to 28
The number of killer swine flu cases identified in Queens jumped from eight to 28 overnight, but no one is gravely ill, officials said today.
Mayor Bloomberg said another 17 possible victims are being monitored but added all the cases are associated with the St. Francis Prep school in Fresh Meadows.
"We have one reported cluster of swine flu at one school," Bloomberg said.
Of course. Lots of different scenarios-- retail, part-time, consulting, etc. All at subtantial reductions from peak earnings. Just not "retired". And not in an assisted living facility at 62 as some here seem to suggest.
End of boomers born in 1962, start parenting at age 38 (ca 2000). Many won't be looking at retirement for another 25-30 years minimum.
lifeguard1999, the mid-age boomer is now 55, the leading age 65. Maybe in another 10+ years this will have an impact on housing (downsizing). I expect that to happen, but not for some time. There will probably also be another shift towards the sun states ...
I just heard from a relative of a friend who works for the insurance company, Snapper Shuler Kenner Insurance Snapper Shuler Kenner Insurance - Lynden and Bellingham - business, personal and employee benefits , associated with Homestead Northwest Homesteadnw that the founder of Homestead tried to commit suicide last Thursday, and the FBI has locked down company headquarters and seized property belonging to the founder, James Wynstra, and those of some of his children.
There is nothing in the local paper, and the good ole boy network may be keeping people from talking. I don't have time to do much poking around, so maybe y'alls are interested. Word is that it's a mere $400 mill in debt, but this will shut down a good amount of business in Whatcom County
Avl Dao - You must've lost your stream of Floridian retirees & transplants. I guess when their homes don't sell, they can't move up. From what I've heard & seen, and I used to live in both FL and NC, there was quite an exodus for a while.
Watch the old dogs out innovate the young dogs. We're talking small business creation, cooperative business ventures (shared ownership, division of labor, egalitarian to the max); tough, hard nosed competitors that understand what it means to 'do what you have to do'.
And when that magic, wished for day arrives and the technological breakthrough to a new world where money is a distant memory and life returns to one of community the oldsters will become venerated. And you young pricks will get yours then, you betcha.
Ahh SEbastian . He lived in the Raleigh NC area and probably worked in the financial industry. He would swear up and down that prices in his area were sticky and would mock others who would disagree. Last we heard he had bought another house first half of last year. Word is he fell off a cliff with the price of his home and Wachovias/BACs fortunes.
making $25 - 35K yr. to keep their life styles going
Dual income. Assume 60-70K. "Owning" 300k homes, most not. Nice rental (no maintenance chores) is doable. But not out of the workforce. And not like previous generations' demographic patterns.
"We're talking small business creation, cooperative business ventures (shared ownership, division of labor, egalitarian to the max); tough, hard nosed competitors that understand what it means to 'do what you have to do'."
Where is the capital for this venture supposed to come from? Boomers are broke.
Blackhalo: you have obviously never started a business. I have started several. I never once relied on bank financing, only once used money as start up capital (never again!) and am in one now that got going with nothing more that my wits, ambition and effort. Lots of possibilities, never a shortage of opportunity.
Raleigh ain't Asheville, not even close. My MIL lived in Hendersonville (20 mi away from AVL), sold about 18 mos ago and got out by the skin of her teeth as the market was beginning to crash. Agree with Avl Dao - lots of high income pretenders, with no local prospects for actually earning a high income. At least Raleigh has a real economy besides just tourism.
The narcissism of boomers (as buyers) is a key element of the Denial-Peddling here in Asheville regarding the depth and duration of this Economic Winter we're in and its impact on real estate & land speculation.
Most realtors in Asheville are Boomers and they even drink their own spiked kool-aid. Here's a true story of boomers, burst bubbles, denial, lack of loyalty and Ponzi schemes......
6 days after April Fools Day, the Asheville board of realtors closed on a new HQ, forking $2.15 Million to a seller w/connections to the board. The new HQ property had a tax value of $846,100, county records show; at 8,900 sq. ft., the board paid $241 per sq.ft.
Per the board's president, Kimberly Evans, “Realtors have demonstrated that we can put our money where our mouth is, and we believe Asheville real estate is a solid investment. Any Realtor who doesn’t think it’s a good time to buy or sell ought to take a look at their career choices.” Evans notes that the sale was approved by a vote of the group’s membership, which totals about 1,200; but only 275 particiapted i voting.
"The purchase was delayed by a federal investigation into the funds handled by Texas financier R. Allen Stanford. The board had about $2 million managed by the Stanford Financial Group, investments that were temporarily frozen while the Securities and Exchange Commission investigated his business dealings. On Feb. 17, the SEC filed civil charges against Stanford and two business associates, accusing them of running an $8 billion Ponzi scheme and claiming that they were selling certificates of deposit offering “improbable” rates of return.
And, yog (can I call you yog?), it gets at the essence of what it means to be a part of a community utilizing local assets, mobilizing local customers, making commerce happen on a sustainable level without poking poison into the air, earth or water.
"Blackhalo: you have obviously never started a business."
Actually, I am part owner of a bar/restaurant that just turned profitable. We used our own money to get started but have taken on loans to buy out a problematic partner and to make capital improvements. But we had money to do it with.
Boomers as a group have been the worst savers of any generation before them. I withhold judgment on Gen X, but I hope they do not follow suit.
Oh, and I hate Biltmore house. MIL would drag us out there every time we visited. It's like Disneyland for people a bit too obsessed with upward aspirations.
Amazing how a mastering a $2 calculator, savings plan and learning to read a mortgage amortization schedule can map ones financial life. All of the people who end up with substandard jobs and a crappy retirement did it to themselves. If you are 50 and still owe for a house, expect to make peak money, then you missed it.
Blackhalo: partners, use of after tax dollars and taking on debt and putting lipstick on an otherwise dreary and desperate place, got it. Been there, done that, got the tee shirt. Good for you.
asheville is beautiful with an easy mountain climate and the best short steep bicycle hills anywhere.
i hope they collapse. i would like to buy there.
spent 2 1/2 years there.
they really hate florida there.
they call floridians half-backs, meaning the losers from michigan, ohio, illinois, + indiana who failed in FL stop for a while in asheville half way back to their parent's house up north.
Will broke boomers sell their houses, work longer, or both?
Those who have "too much house" (had a family, but kids long gone), will probably sell and buy something smaller; and work or not. Probably one of them.
The DINKs (dual income, no kids) probably won't sell, because they bought less house -- unless they were idiots and bought 3000 sq ft for the two of them. In either case, they'll keep working unless they have pensions they trust -- and these days, few do.
Those who have a lot of house with the kids still around won't sell. There are a lot of unemployed 20-somethings and even 30-somethings heading back to Mom's and Dad's even as we speak -- some with their spice and children. Multigenerational household, here we come.
I started this thinking CR was too optimistic about percentage of homeowners, but as I work through this I'm not so such. There are good reasons for many boomers to hold onto their houses. If they bought ten or more years ago and didn't drink the HELOC kool-aid too heavily. But that's a big "if."
Absurd of course to generalize about such a large group as "boomers", or any generation, really, but the values of the 60's and 70's--especially reducing footprint through recycling and conservation, are finally taking hold.
I'm visiting Colorado. The lodge boasts 100% wind energy offset, disposable drinking cups made from corn, etc. Most people at these resort towns work several jobs for short shifts.
don't mean to be annal, but you'll need ~ $25 Financial Calc. or Excel to do it right. software with monte carlo simulation option will do even better.
five to ten years of rising real estate inventories.
barring massive sudden hyperinflation the real estate proposition comes down to a question of timing. the first of the boomers turn 65 in 2011, three plus years from now. the baby boomer second home buyers were largely responsible for the housing bubble and that the housing bubble is what got us in this mess of unraveling derivatives threatening banks.
The savings rate in the US is currently negative. this means the whole country is dipping into savings to pay it's bills. so, on average things are not too good and a consumer slowdown should be expected. but let's pay particular attention to the boomers money because they are supposedly just coming out of their prime earning years and they have 73% of their wealth tied up in real estate.
"In 2004, the median net worth for families headed by baby boomers between the ages of 45 and 54 was $144,700... The single largest source of wealth for retirees is often an illiquid asset, real estate.... the median holdings of financial assets for this group were only $38,600" (the difference is $106,100 or 73%)... furthermore, "in March 2005, Fidelity Investments estimated that the average 65-year-old couple retiring then would need $190,000 to cover medical costs during the next 15 to 20 years."
another estimate...
" Baby Boomers Retiring in Record Numbers With Average Retirement Savings of Only $88,000-What's Next?"
given that US life expectancy is still around 78 it should be clear that even the $200K would not be enough to fund 12 - 15 years of retirement at last year's prices, even adding in $12k average social security plus medicare benefits per year. it is clear boomers are eventually going to have to sell houses. Since we have yet to figure out how to lend money to animals they will have to either sell to a foreigner (who has to be fingerprinted to visit) or younger workers who have neither benefits, retirement plans, nor medical care and thus have extra credit risks. add to the mix the long term trend of declining real wages brought on by globalization and you get a bitter soup.
so there will be a couple of years of housing inventory piling up due to the current subprime mess and then there will be a further piling up in three years as boomers unload property out of necessity. this will coincide with a consumer slowdown that will reduce employment.
Boomers grew up in the fifties, when having a dollar in your pocket meant you were middle class. When if you wanted something you worked for it. When if you got sick the doctor stopped by, gave you a shot or some pills and your mom gave the man a half a sawbuck. Then did without something until the deficit was made up. And we made our own clothes, walked to and from school, learned how to balance a checkbook in the ninth grade and either went on to college or into the work force.
Oh, I hear you youngsters snickering. Good for you.
That day we dread is fast approaching. We know how to start a business and make it profitable from day one. We know what it means to have a clear and unshakable vision, and we know how to make it real. We also know how to stay out of the way of hubris, negative people, and jealousy. We don't need a partner. A partner is like an appendix--a useless organ that collects odd stuff until it ruptures. And if that partner is the one that counts the money, then rest assured that person has no partners. He has associates and it's his or her job to hold them at bay long enough to get rid of them. Every business has only one owner and that's the guy that handles the dough re mi. Anybody else is a high priced liability.
"We don't need a partner. A partner is like an appendix--a useless organ that collects odd stuff until it ruptures. And if that partner is the one that counts the money, then rest assured that person has no partners. He has associates and it's his or her job to hold them at bay long enough to get rid of them. Every business has only one owner and that's the guy that handles the dough re mi. Anybody else is a high priced liability."
Words to remember for anyone intending to "invest" in an operating small business.
"The Center for Disease Control (CDC), in a media call, said on April 27 that it is still unclear why the severity of the swine flu outbreak is worse in Mexico than in the United States. However, the CDC is not ruling out severe cases in the United States, which may have not been reported. The latest figures indicate that the median age of people who have caught the virus is 16 and the age range is from 7 to 54. Also, the CDC says no existing vaccines are effective. The CDC has created a seed stock for the possible cultivation of a vaccine, but has not yet decided if it will proceed with the vaccine because of the high cost of production."
@ Outsider,
Yes, the pipeline to Metro Asheville dried up. It started to coagulate in 2007 when the debt and real estate bubbles burst in our prime feeder markets of Florida and Atlanta. The 'Dream Pushers aka realtors, peddled the comforting narrative, in retort, that "as soon as people in Florida can sell their home there, they're gonna buy here." and all our elected officials dranked that fairytale.
Fast-forward to 2009 and a few Pushers still mouth those same words. Meanwhile, feeder markets in NYC tanked with the massive Fall 2008 28% slide - in 11 trading days - in equities. NYC, ATL and DC had been targeted by NYTimes & WSJ print ads for about 5 years peddling land and vacation homes, as well as 2nd homes.
The Charlotte feeder market crashed in 2 phases with Wachovia's demise and then BofA's later head-first tumbling.
So our 5 key feeder markets show little prospect for a turnaround absent reinflating the EZ $ and debt bubbles to a repeat of historic levels, and then re-inflating 101Ks and 201Ks to the early 2007 levels of 401Ks, and then ALSO re-inflating the real estate markets in Florida, NYC, DC, Atlanta and Charlotte, at a minimum.
It will happen When Pigs Fly. In celestial formations.
But for now, our business community and political leaders remain as deer-frozen-in-headlights as unemployment pierces deeper into historic highs and Asheville’s Dream Pushers find stronger mountain brews to spike the kool-aid with.
@ Comrade Knife Catcher. Ur MIL was wise or lucky...or didn’t like the odors from the spiked kool-aid being passed around.
The authors found that mortgage innovation accounted for between 56 and 70 percent of the recent increase in homeownership rate
Mortgage "innovation" had nothing to do with increasing home ownership. Mortgage fraud and a huge credit bubble were the drivers.
CR,
With all due respect, your estimate of the oversupply of houses is off by many multiples. When asset prices are rising, homes seem like a good idea - an "investment" even. Now that houses are once again recognized as consumption items rather than "investments" the true costs and rate of home ownership will be revealed.
We're back to 2000 levels? Not in terms of debt! Critical point that.
"don't mean to be annal, but you'll need ~ $25 Financial Calc. or Excel to do it right. software with monte carlo simulation option will do even better."
They did not exist back when I did it. Apple IIE and an amortization program taught me the most. Probably even easier with todays tools.
Comrade says "software with monte carlo simulation option will do even better".
In several days during 2006, I built a complete proforma and used simulations to show what happens with rent vs buy in a wide variety of real estate environments. No one I showed it to had ever seen anything like it, and I worked at a major bank with lots of financial advisors.
This is not a critique of where I worked, they were better than most. It is a critique of how with millions of people in finance and real estate this type of thing was not widely available on the web. It didn't even seem to be done by the industry or academia. I have often thought I should author a piece called "How they blew it. What was wrong with industry and academic real estate models". CR, would you like to see a draft?
volker the viking, why so passionate about this intergenerational argument? I know entrepreneurs of all generations. The generation you describe growing up in the 50s is the one that arguably led us away from that culture.
Also, I bet some of the businesses the boomers started sold clothes that the people buying didn't make themselves.
"The World Health Organization announced April 27 that an experts’ meeting on swine flu had ended and the organization will brief reporters at 1930 GMT on whether or not it will raise the pandemic alert level."
Well if you are prepared to see 1/4 negative equity, or 10mn homes, or 1/7 of all mortgages foreclose (which implies a Case-Shiller peak to trough decline of 40%+)
That would be 9.3% of homes in the US, which would bring it from 69 down to 60%, overshooting CR's target of 64-67%.
Of course prudent people rented and saved during the boom, and are/will become owners — unfortunately we find there are precious few of them. I think we ought to expect an "economic shift" in addition to CR's mention of demographic shift. Those old people, in the 55-64 category do not have the savings to maintain ownership. The house was the retirement fund, and now they only have a couple paychecks stashed away for savings, probably in stocks. Renting should be cheap for many years until the number of households grow 5 to 10% (and surplus inventory is destroyed), to re-establish 'market price' (neither constrained by supply or demand). A big variable is what inflation / interest rates will do, because it will be years before households grow by that much.
Also, try to dispose of the notion that high ownership rate = good. Has it not become apparent the increased systemic risk it brings? Labor mobility, what is that? Savings account, is that like a mortgage?
A lower home ownership rate is not a bad thing, especially now when there will be great demands on the American people and economy to be flexible. At most, I think the home ownership rate should be an afterthought and the furthest thing from a goal.
Economically 2009 will be coasting with the guidance of old assumptions, until they can be believed no longer. 2010 will be more the market re-aligning to a US economy ex-private credit bubble. It's not just the incomes/net worth credit bubbles produce, but the market growth they throw off. That market growth will cause producers to compete more competitively, accept lower margins and establish economically unjustified branch operations to secure market access -- that is gone. That economic shift will be/is larger and of greater effect to the home ownership rate than the demographic shift of the past few decades -- perhaps what CR saw was the impact of increasing incomes that the 1980-2008 credit bubble produced. I don't see 64-67% having any justification beyond grasping for optimism.
"Brazil said April 27 that Mexican authorities took too long in informing other countries about the current swine flu outbreak, Deutsche Presse-Agentur reported. Agenor Alvares, general director of Brazil’s Agency for Health Surveillance, said Mexico had been having swine flu cases since March, and “we only found out Friday.” Brazilian President Luiz Inacio Lula da Silva created a Permanent Emergency Cabinet over the weekend to deal with the flu virus. The Cabinet decided April 17 to buy 100,000 masks to be handed out at Brazilian airports to travelers from North America."
The White House said April 27 that it is too early to tell what economic effects the swine flu outbreak might have, Reuters reported. White House spokesman Robert Gibbs told reporters that the National Economic Council and a group in the Treasury Department are looking into the potential effects."
BTW, Red Pill, my father said to me once, years ago, "I doubt that your generation will have the compassion and good sense to provide for the elderly the way my generation has."
If you're lucky, you'll grow old too. And if you're smart, you'll stay close to your children, lest they dump you off at the home one day with nothing more than a medicare stipend to stay the executioner.
Will we be sensible enough to do right by the elderly? We shall see.
As for passion, well, you misconstrue passion for what amounts to conviction. I love you young people.
"I have often thought I should author a piece called "How they blew it. What was wrong with industry and academic real estate models".
People who take any model for granted as absolute truth, that is what wrong with most of financial models. No matter how good a model is, you ve got to be a bit sceptical and understand its limitations. Since our world & society are constantly changing, there are always going to be limitations.
Still, Monte Carlo is a very useful tool, especially on the user end
................I wasn't - prior to reading this quote"
I've heard this one: Scientists announce comet on course to collide with Earth in three hours. Impact will devastate the entire planet. White House spokesman urges public not to panic.
"Reid, D-Nev., writes: "'That speech was phenomenal, Barack,' I told him. And I will never forget his response. Without the barest hint of braggadocio or conceit, and with what I would describe as deep humility, he said quietly: 'I have a gift, Harry.'"
Don't end up being a knife catcher in the WNC/Asheville RE market. Look at these problematic trends:
1) 2002-2007 buyers of gated communities of luxury retirements homes now must 'Age-in-Place' as their properties prove un-saleable. The younger generations have near-zero prospects of earning the $ where-with-all to but boomers properties bought at the peak-of-the-bubble. Doesn’t matter if we wait 5, 10, years.
2) Those aging-in-place boomers repeated their mistake in the in-city condos I cited earlier; again, no one will take them off their hands when these boomers lose their independent living skills over the ensuing years.
3) The medical community lacks the resources to provide on-site care to far-flung gated communities sprung across 5-6 counties chock full of aging bodies; as Rep. Heath Shuler noted, we have 3 counties in WNC that do not have a single hospital.
1 & #2 will keep downward pressure on prices. And as explained earlier, the 5 key feeder markets of boomer buyer have died.
4) The local young workforce today is a college-educated 20-something with absolutely no job skills outside of waitress/retail/ bartending. They will not secure stronger job skills over the next 5-10 years. Yet a friendlier, Green-Economy-oriented with absolutely no management or supervisory or budgeting skills could not be found.
This workforce discourages businesses to in-migrate once they un-earth the gap between actual skills versus possessing a paper degree. The gas-dependence of WNC's tourism discourages forward-looking biz's as well.
5) The low financial acumen and extremely short-sighted vision of the current crop of hospitality biz leaders, and of the city and county elected officials, despite their sincere friendliness, discourages hopes for a home-grown economic turnaround.
So it’s a recipe for Metro Asheville to de-evolve BACK into something that has already proven to be financially sustainable from the Depression to the 1990s: an economy that operates on self-sufficient locals where annual incomes average $25/k. Real estate must descend in value until it meets this equilibrium point. The economic-demographic prospects of boomers supports this destiny; they do not deflect this.
Houses depreciate, even well-built, pre-war, in good locations. Construction costs should deflate over time as architecture learns new methods, materials, etc.
People assume their house investment will rise in value. That's only paper inflation.
"I've heard this one: Scientists announce comet on course to collide with Earth in three hours. Impact will devastate the entire planet. White House spokesman urges public not to panic."
Poverty stricken women and children to be hit the hardest...
I have tried to advise young people to plan, save, and invest, but in general they refuse to listen, so I conclude that experience will be the best teacher...
If you save 20% of what you earn for 20 years, you will have an investment income equal to your wage earnings, given some yield assumptions and of course we dont do any cliff diving in the meantime. Avoid debt completely.
That pitch does not sell with the young crowd.
The other thing is to avoid becoming a parent before age 30... lower age at parenthood is a major marker for poverty...
I don't see anything on the WHO home sight about a press conference today, or anything else for that matter for April 27. Let's wait and see. Presumably they will have to say something.
April 27 (Bloomberg) -- Federal Deposit Insurance Corp. Chairman Sheila Bair sought authority to close “systemically important” financial firms, expanding powers her agency uses to wind down failing commercial banks.
The new powers would let the FDIC take over an institution and shut it down, imposing the costs on investors and creditors rather than taxpayers who absorb losses when government protects companies deemed “too big to fail,” a concept that should be “tossed into the dustbin,” Bair said today in a luncheon speech at the Economic Club of New York.
The meeting held today was originally scheduled for tomorrow as a follow up to one held on Saturday IIRC, which would seem to speak to the level of concern...
UPDATE 1-NYC personal income tax revenues plunge in April
By Joan Gralla
NEW YORK, April 27 (Reuters) - New York City's net personal income tax revenues plunged 51 percent in the first 24 days of April, compared with the same period a year ago, the city comptroller's office said on Monday.
Henry Paulson stated that he and Bernanke considered taking over and closing the big banks, but they couldnt because the whole house of cards would be coming down at once... That's why they decided to keep them on life support from us... Also Bernanke stated firmly that the global financial system would have completely failed as a result which they considered unacceptable...
If there is to be an announcement of a heightened global pandemic alert, I would expect the parties involved in the press conference to find a way to remain busy until the US markets close. Then look for Obama on TV tonight.
I watched it live. Not so much BS as bland lip service to a vague notion. Her statements are always bland. The most emotion she showed for the hour was a smiling "no comment" in response to the Q. about Lewis, BAC, Merrill, Paulson...
"Henry Paulson stated that he and Bernanke considered taking over and closing the big banks, but they couldnt because the whole house of cards would be coming down at once..."
Brazilian President Luiz Inacio Lula da Silva created a Permanent Emergency Cabinet over the weekend to deal with the flu virus. The Cabinet decided April 17 to buy 100,000 masks to be handed out at Brazilian airports to travelers from North America."
hmmm are people allowed to wear these into banks? i hope so
From what I understand, the flu can't be passed via the meat anyway. I'll buy up whatever they discount. Heck, last week I bought a whole cup of spareribs, almost 16lbs of them for 18 bucks...
So it’s a recipe for Metro Asheville to de-evolve BACK into something that has already proven to be financially sustainable from the Depression to the 1990s: an economy that operates on self-sufficient locals where annual incomes average $25/k.
Avl Dao -- If you're still around -- to that I say GOOD. I was west of Asheville from 1982-1987, before the boom really hit. I can only imagine how the intruders after me changed the climate of the place. The locals knew how to scratch out a living. Their common sense ran strong and I can only hope they passed it down. [btw - Shindig on the Green was amazing]
Thanks for this Asheville update, and for not looking at things with rose colored glasses. I have been through Asheville late last summer, and stayed at a three star motel near Biltmore, and a mall. It had been "refurbished", i.e., it had new furnishings, but the old plumbing stank so much, it was unbelievable, as if the sewage had seeked into the structure. It was booked out, though, which was very surprising, and expensive for the kind of place it was. 300 plus per square feet is just absurd, for condos in Asheville.
@ rapunzel, you're welcome. Too bad about that sub-standard motel. But I’m willing to bet that during your next visit to Asheville you will find lodging rates to be more affordable.
@Outsider
The local hospitality/business/political triumph irate are waiting for the oft-delayed (3 years late) and way over-budget ($ 10 million = 50% over) Pack Square Memorial Park to come online so that they can re-inflate the tourism marketing machine to 'Find Your Dream In The Mountains and In Asheville' and book every musical event for the new park, including Shindig On The Green. This is the biggest boom-related project to survive the bursting of the bubbles...and they still need to raise $5 million to close that 50% budget shortfall.
Amazing...$20M for 6.5 acre ‘park’, it comes to $3.07 million per acre.
Ya gotta love that Spiked Kool-Aide they be A-Swigging from that Gilded Jug in Asheville.
Define "own".
It is almost like the Bush presidency never happened.
Well, except for that Iraq thing. And New Orleans. And $5 trillion in debt.
But other than that, clean slate.
Sticky? I was promised sticky!
Going to 1996-97 levels.
Does that rental vacancy rate include single home units for rent?
Nemo +1
The Ownership Society hard at work. Brilliant.
65% here we come!
Quake epicenter just inland from Acapulco ... SW of Mexico City.
10-degree Map Centered at 20°N,100°W
Stiglitz discussion on Charlie Rose audio:
charlie-rose-stiglitz-2009-04-25-mp3
podcast
CR,
Do you remember some 3+ years ago when I was advocating for demographic and land use pattern shifts that would overwhelm existing housing supply factors? At the time I remember your calculated risk of oversupply to be far lower than your current 1.7m. Could you revisit this in current context? I saw 4m+ then and still do.
I live in Contra Costa County (Northern CA) with areas of great affluence (central county) and areas that are very "middle class." Some towns (Pinole, Hercules) have had a tremendous number of transactions at 40-50% of their peak prices. Others (Orinda, Lafayette) have had almost no transactions in the last six months, nor have prices moved much. I saw a $3.2 million open house yesterday, 15 years old, 5000 square feet, with a view, no yard to speak of, and a bit dated. And another open house, offered for $1.9 million, 3500 square feet, with tile kitchen counters, cute but kitschy. This is not capitulation to a new reality.
It appears obvious that the housing price curves will be different among different economic levels. If a house owner can wait long enough, he or she will get to the far side of the curve. If a group of homeowners, an entire community, waits long enough, doesn't that accelerate the time at which prices come back through pure supply and demand?
CR, an analysis by demographic levels would be very interesting ...
The silver lining is, this is really good news in terms of labor mobility: helps to offset some of the forced immobility of those trapped in underwater homes.
Maybe we should admit about 2 million immigrants who can (and contract to) deposit 30% on buying a house and have a promised job (verified) that shows 3x the monthly income over the monthy PITI payments. Wipe out the housing surplus in one/two years. Make this a 'blue card' program. If you default, you lose your blue card and must go back to your country of origin.
Gee what happened to Bush's ownership society ponzi scheme that Obama in large part still wants to perpetuate ?
Zantage
Baby boomers retiring. There are 77 million Americans born between 1946-1964. One-third have zero retirement savings. The oldest are 62. The only money they have is equity in a house, so they must sell. - Patrick.net
It is never too late to sell. Well for some its too late... In general the longer they wait the worse it will get. Baby boomers are getting older and the younger generations are saddled with more debt even less savings.
CR - the conclusion is so...modestly stated. Thanks for this wonderful insight as always.
Max - thanks for the MP3 link; I'm TV-impaired (as in, no cable/satellite/broadcast) and have no real broadband - so it's sneaker-net from the office.
Tim: The new philosophy is "Aging in place." You'll see more of it soon.
Conde Nast Shutters Portfolio (magazine)
Conde Nast Shutters Portfolio. Why It Failed - BusinessWeek
It failed because it represented the boom years. How about a new magazine called "Folder" or "binder" or "sheet"
looks like currencies, which have reestablished correlation to stocks, are calling a down day.
stocks down = lower prices = deflation = increase in $ purchasing power +
deleveraging = dollar bets get settled = dollars bought.
for now.
Paradigm lost.
Agree. Seniors will leave CA for NV and other lower cost/lower tax states. If you are on a Pension it will be like getting a small pay raise. Then services will follow.
Boomers have yet to learn that the phrase "time value of money" is not a diode.
"aging in place"
Yes...with dignity.
Gettin' the best quality catfood money can buy.
Rob Dawg, I think it is difficult to put a firm number on the oversupply. I've always argued it was huge, but I originally thought it was in the 1.2 million range (or something like that). I revised that up to close to 2 million (it is probably a little less now). It is still "huge".
Zantage, I'll try to work up something on demographics in the next few weeks. Generally older people own more homes (especially in the 40s, 50s and 60s), so as the population shifts, we'd expect the homeownership rate to rise. The mortgage innovation part of the increase is being unwound!
best to all.
Cr
What about the over 62 crowd. What do home ownership rate look like in the seventies age group?
I'm TV-impaired
I am too, especially while driving. Much easier to listen.
"Define "own". "
It would be interesting to me to see how much of home equity is "owned" by the "homeowner" on a national scale. With falling values, one would expect that the banks now own much more.
Jim, there are several groups that might fill up housing in the short term, including immigrants, military returning from overseas, fewer prisoners, second homes, smaller average household size.
Immigration is currently working in the "wrong" direction for distressed areas. Michigan, Ohio, California, and Florida have either people moving out or level populations. In most of the former bubble areas, people per household is currently rising. There might be ~100,000 troops returning home, but it's not a terribly large number. Fewer prisoners might result in a similar number of people back in the general population, but they have a lower tendency to get their own housing. The number of second homes is contracting quickly. That's one of the reasons for so many homes for sale in desert areas.
As usual, people are moving toward areas which are doing comparatively well economically. Those are disproportionately places less affected by the bubble. I'm a prime example. Moving from CA to TX next month.
"The increase due to demographics (older population) will probably stick, so I expect the rate to decline to the 66% to 67% range - and not all the way back to 64% to 65%."
No way.
There are 3 million head added each year to this country with no new economic paradigm on the horizon for the foreseeable future. All against a backdrop of dwindling natural resources in house compared to the 50s - 60s glory days. The old folks will be either selling out along with shrinking portfolios to accommodate their transition to a decent old folks home. Or taking in a younger set (if one is willing) to accommodate their need for care by giving them some dibs on the extra room in their McMansion. More people will and are currently shacking up with relatives as the economic situation gets more stinky.
66-67% will be hit in 2010.
64% and decreasing will be hit in the next 5 years.
I am not one to make predictions but this is where my money will be and its worked good so far. Population and resources along with their trends tend to be gravely overlooked in the field of economics.
It would be interesting to me to see how much of home equity is "owned" by the "homeowner" on a national scale. With falling values, one would expect that the banks now own much more.
But since the government owns the liabilities of the banks we in a perverse way own them again.
Whoa. There is a Dow/S&P Mortgage Pig formation today
Intraday mortgage pigs are rare.
415 Jason St, Manteca, CA 95336
Area I'm familiar with
Property History for 415 Jason St
Date Event Price Appreciation Source
Apr 17, 2009 Listed $99,000
Nov 06, 2000 Sold $150,000
Jun 22, 1990 Sold $115,000
( Boomers) (o)ne-third have zero retirement savings. The oldest are 62. The only money they have is equity in a house, so they must sell. - Patrick.net
And buy another smaller place in which to live...
"So much for the homeownership gains of the last 8+ years. Gone."
CR,
If you make a similar chart of homeowners who actually have equity, and those who are in negative equity, you'll see something interesting. Do it as a stacked area chart.
For many periods of time there is almost no one with negative equity. In the mid 1990s, you get a little of it. When you get to 2009, it's awful. The portion of the chart with people who are homeowners with positive equity overwhelms all of the other changes in the chart.
Some investor - Increasing common pattern though. Lets add that to the TA jargon.
Cnbc- "Did you lose tons of money in Mutual Funds last year? Well we got the funds to help you make money that you lost!"
Here in Asheville, NC, developers can’t stop ‘Swigging the Spiked Kool-Aid from the Gilded Jug”.
2 major condo luxury developments come online within 1 mile of each other, while midway between them the Hotel Indigo a luxury boutique hotel just topped-out its 12th floor in construction, and a new luxury hotel, the Grand Bohemian, just opened 3 miles south at $250/night.
Asheville has only 77k people; the metro’s 4-counties have a 200k-person labor force of whom 25% are in hospitality and retail jobs with a median annual wage of $25,000 or less, typical of hospitality/tourism economies.
Worse, less than 14% of adults are in occupations with a median wage of $50k or higher.
Asheville has NO competitive advantages over white-collar job centers in Winston-Salem, Greensboro, and Charlotte, all within 110 miles of us.
Housing prices exploded 2004-2007, peaking at $250k for ratty 80-yr-old 1,000 sq.ft. frame bungalows requiring new roofs, HVAC, and electrical, plumbing upgrades, as well as the usual kitchen/bath upgrades.
Housing closings collapsed almost 2 years ago, Fall 2007. Regardless, the newest condo, Pioneer Building, still lists their 900 sq.ft 1Br, 1ba unit at $279,990 = $311/sq.ft.
The developers are dying, hotel occupancies are down, but the local government and news rags still fear them and the Chambers of Commerce which are chock full of hospitality and land-speculation firms. They ignore the ‘For lease' signs sprouting all over. We have 2 mall's, one is a permanent resident on the website, 'Dead Malls'; Steve-N-Barry's was its anchor.
They ‘learn’ no lessons in Asheville, NC.
Last Fall, after gas hit $4.40/gal, we ran out of gas for 3 weeks. Our biggest revenue producer for all industries is the Fall Tourism season when ‘Autumn Leaf-Turning’ watchers travel the mountainsides that are aglow with reds, oranges and rusts, often driving 100-mile leaf-viewing circuits. Our local leaders simply purged those horrid gas-outages memories.
And locals pray for another global mega-boom in EZ money and Homes-as-ATMs to fuel vacation packages to The Biltmore House and luxury condo closings.
[Gee what happened to Bush's ownership society ponzi scheme that Obama in large part still wants to perpetuate ?]
Slightly different strategy - Obama is gearing towards a Section8 ownership society, where taxpayers pony up for deadbeats so they can enjoy trashing properties they have no real ownership of.
Simple division on the numbers is a 7.5% mortality rate in Mexico, which is in the ungodly range for influenza...give that a 50% haircut for vast underreporting of cases and we are still over 3% which is fugly. In comparison, the 1918 pandemic has mortality rates that vary from 2% to 20%, with the peak mortality associated with the second of the three waves of infection.
Mexico: suspected swine flu deaths climb to 149
45 minutes ago
MEXICO CITY (AP) — Mexico's government is ordering closed schools nationwide as the suspected death toll from swine flu climbed to 149.
Health Secretary Jose Angel Cordova says only 20 of the deaths have been confirmed to be from swine flu and the government was awaiting tests results on the rest.
He says 1,995 people have been hospitalized with serious cases of pneumonia since the first case of swine flu was reported on April 13. The government does not yet know how many were swine flu.
Of those hospitalized, 1,070 have been released.
Cordova says school at all levels nationwide are suspended until May 6. Schools had already been suspended in Mexico City and five of Mexico's 32 states.
The article requested is no longer available.
"But since the government owns the liabilities of the banks we in a perverse way own them again. "
I'm starting to find this idea that government ownership somehow means "taxpayer ownership" or "ownership by the people" a bit humorous. It's as if "the people" really have any say in the decisions of the government, anymore. What elements of control do we have over these "assets" that are normally associated with ownership?
Face it. Our plutocratic system of governance is a system controlled by the few. It is only those few who benefit from the so-called "ownership" by the many.
Flipping gone BAD!
Property History for 985 W Alameda St
Date Event Price Appreciation Source
Apr 22, 2009 Price Changed $224,900 -- MetroList #90026260
Apr 17, 2009 Listed $234,900 -- MetroList #90026260
Mar 30, 2009 Sold $216,589 -42.2%/yr Public Records
May 24, 2007 Sold $598,000 11.3%/yr Public Records
Sep 22, 2004 Sold $450,000 24.8%/yr Public Records
Sep 05, 2002 Sold $286,000 -- Public Records
Avl Dao (profile) wrote on Mon, 4/27/2009 - 10:51 am reply
Here in Asheville, NC, developers can’t stop ‘Swigging the Spiked Kool-Aid from the Gilded Jug”.
Sebastian was gracious enough to capitulate. His home region is still in denial.
Oh, now I see why homebuilder stock prices have doubled recently!
Any disclosure from Ben concerning how much balance sheet he extended today at Treasury auction?
Tim waiting for 2012, I'll look for the demographics figures.
prack45, maybe. I think 66% to 67% is reasonable based on the research by Matthew Chambers, Carlos Garriga, and Don E. Schlagenhauf (Sep 2007): Accounting for Changes in the Homeownership Rate
The authors found that mortgage innovation accounted for between 56 and 70 percent of the recent increase in homeownership rate, and that demographic factors accounted for 16 to 31 percent. Even as we unwind some of the excesses of recent years, not all innovation is going away (securitization and some smaller down payment programs will stay). The population is still aging, so my guess is the homeownership rate will probably only decline to 66% or so, not all the way to 64% or 65%.
best to all.
Any bets as to how low the % will drop?
Overshoot would put us below 64%. Now THAT would be pain.
The transport stocks as is usual of late have led the trend.
CR, I will bet you that homeownership goes to 63% by the end of 2011. Why? A large portion of people being foreclosed on will not return to the buying market for a while. In addition, a decent chunk of the inventory will stay vacant, and not even for sale.
The oldest are 62. The only money they have is equity in a house, so they must sell.
No. They must work.
62 is the new 52. My boomer cohort's narcissism will usher in a new era where working 'til 70 (by necessity) will be de rigeur. Universal healthcare will keep us going.
Remember, we came up with neoconservativism. So we create our own demographics (reality).
THX CR
A Dao. good article. Munis thought that retail would mask a jobless recovery. Lots of empty space... Time to open the museums!
For people worried about the Federal Govt owning houses because they own banks who are stuck with REOs, this isn't so bad. The Resolution Trust Corp did an ok job in a similar situation 20 years ago. In some places, houses will be basically given away in 2010. I think they should be given away to fresh college graduates. That would help offset the cost of student loans.
So far, there has been very little complaint on registration being required for posting comments, and in fact there's been considerable positive feedback. So I've decided to keep it for now.
If anyone has difficulty with registration, either technical or otherwise, please contact me
.
Does signing a mortgage contract define homeownership ?
CR,
Somewhat along the same lines as Tim waiting for 2012, but I wonder what happens to home ownership as the Baby Boomer generation retires and then goes into assisted living homes.
Google stole Otis's Morse code idea for today.
It simply looks like the education level of money management was not up to the challenge. Reset will be 1993 levels. Going Down!
Outlier,
maybe this is a NY phenom, but the number of boomers who waited til their late thirties or forties to have kids changes things as well...I'm surrounded by folks in their mid to late forties still trying to get their kids thru private school...let alone pony up for college. A couple I know are hitting up their parents, the kids grandparents, for funds.
As for working til 70, good luck. Corporate America can't wait to unload folks in their 40s and 50s...welcome to minimum wage work at retail survivors, for the lucky.
Ken, I view the registration requirement as a huge plus.
Thanks for all that you do!
@ Tim 2012, Ur welcomed.
@ Rob Dawg, who is this 'Sebastian'?
@ Outlier,
No, the Boomers will NOT work that much longer ...at jobs of their choosing ...at salaries of their choosing ...with benefits of their choosing.
Yes, the cohorts’ absolute numbers are large, but tolerance for their continued 'presence' is growing short by the generations behind them...and by many within their ranks.
Just as many middle-age-plus white-collar workers in the 1980s & 90s felt un-welcomed in the on-rush of younger fresh faces with fresh new ideas, and were politely nudged out of 'sweet-spot' job positions, expect the same to happen to boomers, with a vengeance and glee...and often by the hand of their own cohorts/superiors.
Remember you're the cohort that knows no loyalty...just ask Bill & Hillary.
See yall at WalMart!
@ Fried. Ditto.
Outlier (profile) wrote on Mon, 4/27/2009 - 11:03 am
62 is the new 52. My boomer cohort's narcissism will usher in a new era where working 'til 70 (by necessity) will be de rigeur.
Yes agree but for most of those 50 and 60 something that got laid off or outsourced what jobs are they going to do when job formation in US is getting worse and worse - Home Depot, Walmart making $25 - 35K yr. to keep their life styles going ?
If Protectionism because of swine flu is good enough for them, Protectionism because of job losses is good enough for me.
America's Most Dangerous Cities
America's-Most-Dangerous-Cities: Personal Finance News from Yahoo! Finance
Miami? The others make sense, but Miami? What happened to D.C.?
Anyone caught a recent estimate of R naught for this?
20 new cases of swine flu confirmed in New York City, brings total to 28
The number of killer swine flu cases identified in Queens jumped from eight to 28 overnight, but no one is gravely ill, officials said today.
Mayor Bloomberg said another 17 possible victims are being monitored but added all the cases are associated with the St. Francis Prep school in Fresh Meadows.
"We have one reported cluster of swine flu at one school," Bloomberg said.
20 new cases of swine flu confirmed in New York City, brings total to 28
welcome to minimum wage work at retail survivors
Of course. Lots of different scenarios-- retail, part-time, consulting, etc. All at subtantial reductions from peak earnings. Just not "retired". And not in an assisted living facility at 62 as some here seem to suggest.
End of boomers born in 1962, start parenting at age 38 (ca 2000). Many won't be looking at retirement for another 25-30 years minimum.
Listen you freeloaders, throw hoocoodanode some cheese.
It's just clicks.
When I lived in Miami, it was easier to get a gun after midnight than a souvlaki.
lifeguard1999, the mid-age boomer is now 55, the leading age 65. Maybe in another 10+ years this will have an impact on housing (downsizing). I expect that to happen, but not for some time. There will probably also be another shift towards the sun states ...
best wishes
I just heard from a relative of a friend who works for the insurance company, Snapper Shuler Kenner Insurance Snapper Shuler Kenner Insurance - Lynden and Bellingham - business, personal and employee benefits , associated with Homestead Northwest Homesteadnw that the founder of Homestead tried to commit suicide last Thursday, and the FBI has locked down company headquarters and seized property belonging to the founder, James Wynstra, and those of some of his children.
There is nothing in the local paper, and the good ole boy network may be keeping people from talking. I don't have time to do much poking around, so maybe y'alls are interested. Word is that it's a mere $400 mill in debt, but this will shut down a good amount of business in Whatcom County
Avl Dao - You must've lost your stream of Floridian retirees & transplants. I guess when their homes don't sell, they can't move up. From what I've heard & seen, and I used to live in both FL and NC, there was quite an exodus for a while.
Good thing the epidemic was not Ebola...
Watch the old dogs out innovate the young dogs. We're talking small business creation, cooperative business ventures (shared ownership, division of labor, egalitarian to the max); tough, hard nosed competitors that understand what it means to 'do what you have to do'.
And when that magic, wished for day arrives and the technological breakthrough to a new world where money is a distant memory and life returns to one of community the oldsters will become venerated. And you young pricks will get yours then, you betcha.
Peak Swine Flu? Have we reached it yet?
"Walmart making $25 - 35K yr."
Doing what?
I think I'll use this site as a breaking new source (during the work hours).
thank you guys, keep it up.
Avl Dao
Ahh SEbastian . He lived in the Raleigh NC area and probably worked in the financial industry. He would swear up and down that prices in his area were sticky and would mock others who would disagree. Last we heard he had bought another house first half of last year. Word is he fell off a cliff with the price of his home and Wachovias/BACs fortunes.
making $25 - 35K yr. to keep their life styles going
Dual income. Assume 60-70K. "Owning" 300k homes, most not. Nice rental (no maintenance chores) is doable. But not out of the workforce. And not like previous generations' demographic patterns.
Avl Dao writes: who is this 'Sebastian'?
a concept, once thought to be real
"We're talking small business creation, cooperative business ventures (shared ownership, division of labor, egalitarian to the max); tough, hard nosed competitors that understand what it means to 'do what you have to do'."
Where is the capital for this venture supposed to come from? Boomers are broke.
p.s. with 8/hr it's hard to make 35K. I doub't Walmart is willing to let people work overtime, etc.
(actually it's hard to make 20k...)
C&C,
I'll take the over if you are making that call...just sayin'
http://www.fluwikie.com/pmwiki.php?n=Science.DiseaseTransmissionPrimer
Blackhalo: you have obviously never started a business. I have started several. I never once relied on bank financing, only once used money as start up capital (never again!) and am in one now that got going with nothing more that my wits, ambition and effort. Lots of possibilities, never a shortage of opportunity.
Don't laugh Volker, all my over 45 friends are discovering facebook.
I'm not laughing, just don't get it.
Volker speaks truth. Deflation means small businesses are cheaper to start, too. Open source hardware...JIT...rent
Raleigh ain't Asheville, not even close. My MIL lived in Hendersonville (20 mi away from AVL), sold about 18 mos ago and got out by the skin of her teeth as the market was beginning to crash. Agree with Avl Dao - lots of high income pretenders, with no local prospects for actually earning a high income. At least Raleigh has a real economy besides just tourism.
The narcissism of boomers (as buyers) is a key element of the Denial-Peddling here in Asheville regarding the depth and duration of this Economic Winter we're in and its impact on real estate & land speculation.
Most realtors in Asheville are Boomers and they even drink their own spiked kool-aid. Here's a true story of boomers, burst bubbles, denial, lack of loyalty and Ponzi schemes......
6 days after April Fools Day, the Asheville board of realtors closed on a new HQ, forking $2.15 Million to a seller w/connections to the board. The new HQ property had a tax value of $846,100, county records show; at 8,900 sq. ft., the board paid $241 per sq.ft.
Per the board's president, Kimberly Evans, “Realtors have demonstrated that we can put our money where our mouth is, and we believe Asheville real estate is a solid investment. Any Realtor who doesn’t think it’s a good time to buy or sell ought to take a look at their career choices.” Evans notes that the sale was approved by a vote of the group’s membership, which totals about 1,200; but only 275 particiapted i voting.
"The purchase was delayed by a federal investigation into the funds handled by Texas financier R. Allen Stanford. The board had about $2 million managed by the Stanford Financial Group, investments that were temporarily frozen while the Securities and Exchange Commission investigated his business dealings. On Feb. 17, the SEC filed civil charges against Stanford and two business associates, accusing them of running an $8 billion Ponzi scheme and claiming that they were selling certificates of deposit offering “improbable” rates of return.
A house divided | Asheville News | Mountain Xpress
And, yog (can I call you yog?), it gets at the essence of what it means to be a part of a community utilizing local assets, mobilizing local customers, making commerce happen on a sustainable level without poking poison into the air, earth or water.
"Blackhalo: you have obviously never started a business."
Actually, I am part owner of a bar/restaurant that just turned profitable. We used our own money to get started but have taken on loans to buy out a problematic partner and to make capital improvements. But we had money to do it with.
Boomers as a group have been the worst savers of any generation before them. I withhold judgment on Gen X, but I hope they do not follow suit.
VtV: Got that right. Capital efficiency is the new watch word for startups. Best time to start a business is at the low, not the peak.
Oh, and I hate Biltmore house. MIL would drag us out there every time we visited. It's like Disneyland for people a bit too obsessed with upward aspirations.
Not all boomers are broke, only about half of them...
Boomers are broke.
Pish posh. That never stopped us in the past. It is our destiny. Watch and learn.
Amazing how a mastering a $2 calculator, savings plan and learning to read a mortgage amortization schedule can map ones financial life. All of the people who end up with substandard jobs and a crappy retirement did it to themselves. If you are 50 and still owe for a house, expect to make peak money, then you missed it.
Blackhalo: partners, use of after tax dollars and taking on debt and putting lipstick on an otherwise dreary and desperate place, got it. Been there, done that, got the tee shirt. Good for you.
My mother sent her first e-mail yesterday. No money changed hands. Profit was realized.
Word of the Year CR
"transparency"
avl dao,
asheville is beautiful with an easy mountain climate and the best short steep bicycle hills anywhere.
i hope they collapse. i would like to buy there.
spent 2 1/2 years there.
they really hate florida there.
they call floridians half-backs, meaning the losers from michigan, ohio, illinois, + indiana who failed in FL stop for a while in asheville half way back to their parent's house up north.
Blackhalo,
Sincere congrats on beating the long odds with your business.
Will broke boomers sell their houses, work longer, or both?
Those who have "too much house" (had a family, but kids long gone), will probably sell and buy something smaller; and work or not. Probably one of them.
The DINKs (dual income, no kids) probably won't sell, because they bought less house -- unless they were idiots and bought 3000 sq ft for the two of them. In either case, they'll keep working unless they have pensions they trust -- and these days, few do.
Those who have a lot of house with the kids still around won't sell. There are a lot of unemployed 20-somethings and even 30-somethings heading back to Mom's and Dad's even as we speak -- some with their spice and children. Multigenerational household, here we come.
I started this thinking CR was too optimistic about percentage of homeowners, but as I work through this I'm not so such. There are good reasons for many boomers to hold onto their houses. If they bought ten or more years ago and didn't drink the HELOC kool-aid too heavily. But that's a big "if."
energyecon - no way!! This thing might actually be something big
m
"Obama Vows 3% of GDP For Science Research"
.........What if GDP is a minus number - does he take money back?
Also, does anyone know where I'm supposed to call or write for my stock certificates for GM, AIG, & Citi?
.....thanx in advance
Absurd of course to generalize about such a large group as "boomers", or any generation, really, but the values of the 60's and 70's--especially reducing footprint through recycling and conservation, are finally taking hold.
I'm visiting Colorado. The lodge boasts 100% wind energy offset, disposable drinking cups made from corn, etc. Most people at these resort towns work several jobs for short shifts.
"Amazing how a mastering a $2 calculator,"
don't mean to be annal, but you'll need ~ $25 Financial Calc. or Excel to do it right. software with monte carlo simulation option will do even better.
from 2007:
five to ten years of rising real estate inventories.
barring massive sudden hyperinflation the real estate proposition comes down to a question of timing. the first of the boomers turn 65 in 2011, three plus years from now. the baby boomer second home buyers were largely responsible for the housing bubble and that the housing bubble is what got us in this mess of unraveling derivatives threatening banks.
The savings rate in the US is currently negative. this means the whole country is dipping into savings to pay it's bills. so, on average things are not too good and a consumer slowdown should be expected. but let's pay particular attention to the boomers money because they are supposedly just coming out of their prime earning years and they have 73% of their wealth tied up in real estate.
FDIC: Outlook Spring 2006
FDIC: Outlook Spring 2006
"In 2004, the median net worth for families headed by baby boomers between the ages of 45 and 54 was $144,700... The single largest source of wealth for retirees is often an illiquid asset, real estate.... the median holdings of financial assets for this group were only $38,600" (the difference is $106,100 or 73%)... furthermore, "in March 2005, Fidelity Investments estimated that the average 65-year-old couple retiring then would need $190,000 to cover medical costs during the next 15 to 20 years."
another estimate...
" Baby Boomers Retiring in Record Numbers With Average Retirement Savings of Only $88,000-What's Next?"
Baby Boomers Retiring in Record Numbers With Average Retirement Savings of Only $88,000-What's Next?
given that US life expectancy is still around 78 it should be clear that even the $200K would not be enough to fund 12 - 15 years of retirement at last year's prices, even adding in $12k average social security plus medicare benefits per year. it is clear boomers are eventually going to have to sell houses. Since we have yet to figure out how to lend money to animals they will have to either sell to a foreigner (who has to be fingerprinted to visit) or younger workers who have neither benefits, retirement plans, nor medical care and thus have extra credit risks. add to the mix the long term trend of declining real wages brought on by globalization and you get a bitter soup.
so there will be a couple of years of housing inventory piling up due to the current subprime mess and then there will be a further piling up in three years as boomers unload property out of necessity. this will coincide with a consumer slowdown that will reduce employment.
Boomers grew up in the fifties, when having a dollar in your pocket meant you were middle class. When if you wanted something you worked for it. When if you got sick the doctor stopped by, gave you a shot or some pills and your mom gave the man a half a sawbuck. Then did without something until the deficit was made up. And we made our own clothes, walked to and from school, learned how to balance a checkbook in the ninth grade and either went on to college or into the work force.
Oh, I hear you youngsters snickering. Good for you.
That day we dread is fast approaching. We know how to start a business and make it profitable from day one. We know what it means to have a clear and unshakable vision, and we know how to make it real. We also know how to stay out of the way of hubris, negative people, and jealousy. We don't need a partner. A partner is like an appendix--a useless organ that collects odd stuff until it ruptures. And if that partner is the one that counts the money, then rest assured that person has no partners. He has associates and it's his or her job to hold them at bay long enough to get rid of them. Every business has only one owner and that's the guy that handles the dough re mi. Anybody else is a high priced liability.
Also, does anyone know where I'm supposed to call or write for my stock certificates for GM, AIG, & Citi?
"
Smithsonian Institution!
Smithsonian Institution
cause they 'll be ... history rather soon.
c&c,
Google map of current postives, suspected and negatives
H1N1 Swine Flu - Google Maps
Just caught some news (not MSM, foreign) that Mexican authorites are linking outbreak to Smithfield...Do they trade publically?
"We don't need a partner. A partner is like an appendix--a useless organ that collects odd stuff until it ruptures. And if that partner is the one that counts the money, then rest assured that person has no partners. He has associates and it's his or her job to hold them at bay long enough to get rid of them. Every business has only one owner and that's the guy that handles the dough re mi. Anybody else is a high priced liability."
Words to remember for anyone intending to "invest" in an operating small business.
" April 27, 2009
"The Center for Disease Control (CDC), in a media call, said on April 27 that it is still unclear why the severity of the swine flu outbreak is worse in Mexico than in the United States. However, the CDC is not ruling out severe cases in the United States, which may have not been reported. The latest figures indicate that the median age of people who have caught the virus is 16 and the age range is from 7 to 54. Also, the CDC says no existing vaccines are effective. The CDC has created a seed stock for the possible cultivation of a vaccine, but has not yet decided if it will proceed with the vaccine because of the high cost of production."
"Google stole Otis's Morse code idea for today"
too weird.
@ Outsider,
Yes, the pipeline to Metro Asheville dried up. It started to coagulate in 2007 when the debt and real estate bubbles burst in our prime feeder markets of Florida and Atlanta. The 'Dream Pushers aka realtors, peddled the comforting narrative, in retort, that "as soon as people in Florida can sell their home there, they're gonna buy here." and all our elected officials dranked that fairytale.
Fast-forward to 2009 and a few Pushers still mouth those same words. Meanwhile, feeder markets in NYC tanked with the massive Fall 2008 28% slide - in 11 trading days - in equities. NYC, ATL and DC had been targeted by NYTimes & WSJ print ads for about 5 years peddling land and vacation homes, as well as 2nd homes.
The Charlotte feeder market crashed in 2 phases with Wachovia's demise and then BofA's later head-first tumbling.
So our 5 key feeder markets show little prospect for a turnaround absent reinflating the EZ $ and debt bubbles to a repeat of historic levels, and then re-inflating 101Ks and 201Ks to the early 2007 levels of 401Ks, and then ALSO re-inflating the real estate markets in Florida, NYC, DC, Atlanta and Charlotte, at a minimum.
It will happen When Pigs Fly. In celestial formations.
But for now, our business community and political leaders remain as deer-frozen-in-headlights as unemployment pierces deeper into historic highs and Asheville’s Dream Pushers find stronger mountain brews to spike the kool-aid with.
@ Comrade Knife Catcher. Ur MIL was wise or lucky...or didn’t like the odors from the spiked kool-aid being passed around.
Right on que, here is Smithfield with a denial even before it hits MSM...
Food & Beverages News from PR Newswire
The authors found that mortgage innovation accounted for between 56 and 70 percent of the recent increase in homeownership rate
Mortgage "innovation" had nothing to do with increasing home ownership. Mortgage fraud and a huge credit bubble were the drivers.
CR,
With all due respect, your estimate of the oversupply of houses is off by many multiples. When asset prices are rising, homes seem like a good idea - an "investment" even. Now that houses are once again recognized as consumption items rather than "investments" the true costs and rate of home ownership will be revealed.
We're back to 2000 levels? Not in terms of debt! Critical point that.
"don't mean to be annal, but you'll need ~ $25 Financial Calc. or Excel to do it right. software with monte carlo simulation option will do even better."
They did not exist back when I did it. Apple IIE and an amortization program taught me the most. Probably even easier with todays tools.
Katrina, Smithfield is SFD.
Comrade says "software with monte carlo simulation option will do even better".
In several days during 2006, I built a complete proforma and used simulations to show what happens with rent vs buy in a wide variety of real estate environments. No one I showed it to had ever seen anything like it, and I worked at a major bank with lots of financial advisors.
This is not a critique of where I worked, they were better than most. It is a critique of how with millions of people in finance and real estate this type of thing was not widely available on the web. It didn't even seem to be done by the industry or academia. I have often thought I should author a piece called "How they blew it. What was wrong with industry and academic real estate models". CR, would you like to see a draft?
....geeze, I guess there is going to be a sale on pork products from Mexico now.
I noticed that the home page entered in a previous post was not mine.
My home page is actually:
The Poetry of Pavel Chichikov
Bob Dobbs: happened to you too, eh
some investor guy: I have an inventory of ISBN numbers and all the resources necessary to make your book happen.
volker the viking, why so passionate about this intergenerational argument? I know entrepreneurs of all generations. The generation you describe growing up in the 50s is the one that arguably led us away from that culture.
Also, I bet some of the businesses the boomers started sold clothes that the people buying didn't make themselves.
"The World Health Organization announced April 27 that an experts’ meeting on swine flu had ended and the organization will brief reporters at 1930 GMT on whether or not it will raise the pandemic alert level."
What will the new home ownership rate be?
Well if you are prepared to see 1/4 negative equity, or 10mn homes, or 1/7 of all mortgages foreclose (which implies a Case-Shiller peak to trough decline of 40%+)
That would be 9.3% of homes in the US, which would bring it from 69 down to 60%, overshooting CR's target of 64-67%.
Of course prudent people rented and saved during the boom, and are/will become owners — unfortunately we find there are precious few of them. I think we ought to expect an "economic shift" in addition to CR's mention of demographic shift. Those old people, in the 55-64 category do not have the savings to maintain ownership. The house was the retirement fund, and now they only have a couple paychecks stashed away for savings, probably in stocks. Renting should be cheap for many years until the number of households grow 5 to 10% (and surplus inventory is destroyed), to re-establish 'market price' (neither constrained by supply or demand). A big variable is what inflation / interest rates will do, because it will be years before households grow by that much.
Also, try to dispose of the notion that high ownership rate = good. Has it not become apparent the increased systemic risk it brings? Labor mobility, what is that? Savings account, is that like a mortgage?
A lower home ownership rate is not a bad thing, especially now when there will be great demands on the American people and economy to be flexible. At most, I think the home ownership rate should be an afterthought and the furthest thing from a goal.
Economically 2009 will be coasting with the guidance of old assumptions, until they can be believed no longer. 2010 will be more the market re-aligning to a US economy ex-private credit bubble. It's not just the incomes/net worth credit bubbles produce, but the market growth they throw off. That market growth will cause producers to compete more competitively, accept lower margins and establish economically unjustified branch operations to secure market access -- that is gone. That economic shift will be/is larger and of greater effect to the home ownership rate than the demographic shift of the past few decades -- perhaps what CR saw was the impact of increasing incomes that the 1980-2008 credit bubble produced. I don't see 64-67% having any justification beyond grasping for optimism.
" April 27, 2009
"Brazil said April 27 that Mexican authorities took too long in informing other countries about the current swine flu outbreak, Deutsche Presse-Agentur reported. Agenor Alvares, general director of Brazil’s Agency for Health Surveillance, said Mexico had been having swine flu cases since March, and “we only found out Friday.” Brazilian President Luiz Inacio Lula da Silva created a Permanent Emergency Cabinet over the weekend to deal with the flu virus. The Cabinet decided April 17 to buy 100,000 masks to be handed out at Brazilian airports to travelers from North America."
" April 27, 2009
The White House said April 27 that it is too early to tell what economic effects the swine flu outbreak might have, Reuters reported. White House spokesman Robert Gibbs told reporters that the National Economic Council and a group in the Treasury Department are looking into the potential effects."
Virus has bird, pig, human components: watchdog
this is interesting considering other stories about recent events.
Red Pill: I'm reminded of a joke where the lady says to the man driving:
You're passionate.
Why thank you very much, he says, you're passionate too.
No dumb ass, she says, the liquor store, you're pashin it!
I believe that announcement is in less than ten minutes - is that 1930 GMT a 1430 CST?
19:30 GMT is six minutes from now. Market could move if pandemic alert level is increased.
wascomat,
that's awesome! let's all wear flu masks and sunglasses!
haloweeeen all year.
I am dumbfounded by the bureaucatic mindset at times, Pavel...as global flu pandemics may have bullish upsides?!
BTW, Red Pill, my father said to me once, years ago, "I doubt that your generation will have the compassion and good sense to provide for the elderly the way my generation has."
If you're lucky, you'll grow old too. And if you're smart, you'll stay close to your children, lest they dump you off at the home one day with nothing more than a medicare stipend to stay the executioner.
Will we be sensible enough to do right by the elderly? We shall see.
As for passion, well, you misconstrue passion for what amounts to conviction. I love you young people.
"I have often thought I should author a piece called "How they blew it. What was wrong with industry and academic real estate models".
People who take any model for granted as absolute truth, that is what wrong with most of financial models. No matter how good a model is, you ve got to be a bit sceptical and understand its limitations. Since our world & society are constantly changing, there are always going to be limitations.
Still, Monte Carlo is a very useful tool, especially on the user end
I'll take the over on the WHO announcement...my WAG is we go to a 4.
volker the viking (profile) wrote on Mon, 4/27/2009 - 12:16 pm
Bob Dobbs: happened to you too, eh
No, a good buddy. Painful to watch.
MC work is interesting, but I always had the damnedest time explaining it to clients/managers... the probabalistic mindset is not widely cultivated.
".as global flu pandemics may have bullish upsides?!"
So did the 14th century plagues - if you were a survivor.
"The White House says "don’t panic,"
................I wasn't - prior to reading this quote
re: Accounting for Changes in the Homeownership Rate
Does not consider the impact of an unsustainable private credit bubble on the economy. Ne ceteris paribus
I remember when electronic calculators with those red diode numbers first came out. I'm old.
BSR: didja see the vid where O got ahead of the teleprompter? Wow!
Don't panic. Hey, they got Charlie. Aw shit, not Charlie! Yeah, but don't panic.
"".as global flu pandemics may have bullish upsides?!""
only if you invested into Vaccine related bio tech last Friday
p.s. and sell tomorrow ...
"The White House says "don’t panic,"
................I wasn't - prior to reading this quote"
I've heard this one: Scientists announce comet on course to collide with Earth in three hours. Impact will devastate the entire planet. White House spokesman urges public not to panic.
Nice catch on Smithfield Comrade Kristina...
C'Mon...........He is gifted:
"Reid, D-Nev., writes: "'That speech was phenomenal, Barack,' I told him. And I will never forget his response. Without the barest hint of braggadocio or conceit, and with what I would describe as deep humility, he said quietly: 'I have a gift, Harry.'"
@ Swamp Otis,
Don't end up being a knife catcher in the WNC/Asheville RE market. Look at these problematic trends:
1) 2002-2007 buyers of gated communities of luxury retirements homes now must 'Age-in-Place' as their properties prove un-saleable. The younger generations have near-zero prospects of earning the $ where-with-all to but boomers properties bought at the peak-of-the-bubble. Doesn’t matter if we wait 5, 10, years.
2) Those aging-in-place boomers repeated their mistake in the in-city condos I cited earlier; again, no one will take them off their hands when these boomers lose their independent living skills over the ensuing years.
3) The medical community lacks the resources to provide on-site care to far-flung gated communities sprung across 5-6 counties chock full of aging bodies; as Rep. Heath Shuler noted, we have 3 counties in WNC that do not have a single hospital.
1 & #2 will keep downward pressure on prices. And as explained earlier, the 5 key feeder markets of boomer buyer have died.
4) The local young workforce today is a college-educated 20-something with absolutely no job skills outside of waitress/retail/ bartending. They will not secure stronger job skills over the next 5-10 years. Yet a friendlier, Green-Economy-oriented with absolutely no management or supervisory or budgeting skills could not be found.
This workforce discourages businesses to in-migrate once they un-earth the gap between actual skills versus possessing a paper degree. The gas-dependence of WNC's tourism discourages forward-looking biz's as well.
5) The low financial acumen and extremely short-sighted vision of the current crop of hospitality biz leaders, and of the city and county elected officials, despite their sincere friendliness, discourages hopes for a home-grown economic turnaround.
So it’s a recipe for Metro Asheville to de-evolve BACK into something that has already proven to be financially sustainable from the Depression to the 1990s: an economy that operates on self-sufficient locals where annual incomes average $25/k. Real estate must descend in value until it meets this equilibrium point. The economic-demographic prospects of boomers supports this destiny; they do not deflect this.
'I have a gift, Harry.'"
At least he didn't say: I'm expecting a gift.
And we are now in receipt of his gift.
If you are going to panic, panic first.
so does anyone know if the WHO having their presser atm or is the GMT 1930 event an hour away?
Houses depreciate, even well-built, pre-war, in good locations. Construction costs should deflate over time as architecture learns new methods, materials, etc.
People assume their house investment will rise in value. That's only paper inflation.
"I've heard this one: Scientists announce comet on course to collide with Earth in three hours. Impact will devastate the entire planet. White House spokesman urges public not to panic."
Poverty stricken women and children to be hit the hardest...
energyecon - should be going on now ... they may be late starting. It is 19:42 GMT
Reported flu mortality rises in Mexico:
BBC NEWS | Americas | Mexico suspected flu toll soars
Pandemics are like earthquakes. Yes they can devastate, but the people most afraid of them never come anywhere near them. Relax
TAKE THE MARKET ON THAT!
I have tried to advise young people to plan, save, and invest, but in general they refuse to listen, so I conclude that experience will be the best teacher...
If you save 20% of what you earn for 20 years, you will have an investment income equal to your wage earnings, given some yield assumptions and of course we dont do any cliff diving in the meantime. Avoid debt completely.
That pitch does not sell with the young crowd.
The other thing is to avoid becoming a parent before age 30... lower age at parenthood is a major marker for poverty...
That doesnt sell very well either...
Ignore history and repeat their mistakes...
I don't see anything on the WHO home sight about a press conference today, or anything else for that matter for April 27. Let's wait and see. Presumably they will have to say something.
Bair Seeks to Expand Power, Ending ‘Too Big to Fail’ (Update1) - Bloomberg.com
April 27 (Bloomberg) -- Federal Deposit Insurance Corp. Chairman Sheila Bair sought authority to close “systemically important” financial firms, expanding powers her agency uses to wind down failing commercial banks.
The new powers would let the FDIC take over an institution and shut it down, imposing the costs on investors and creditors rather than taxpayers who absorb losses when government protects companies deemed “too big to fail,” a concept that should be “tossed into the dustbin,” Bair said today in a luncheon speech at the Economic Club of New York.
I call BS.
The meeting held today was originally scheduled for tomorrow as a follow up to one held on Saturday IIRC, which would seem to speak to the level of concern...
C.R what's your forecast for Q1 GDP ? around -5% ?
YoY decline of ~50%...ouch
UPDATE 1-NYC personal income tax revenues plunge in April
By Joan Gralla
NEW YORK, April 27 (Reuters) - New York City's net personal income tax revenues plunged 51 percent in the first 24 days of April, compared with the same period a year ago, the city comptroller's office said on Monday.
UPDATE 1-NYC personal income tax revenues plunge in April
| Reuters
Henry Paulson stated that he and Bernanke considered taking over and closing the big banks, but they couldnt because the whole house of cards would be coming down at once... That's why they decided to keep them on life support from us... Also Bernanke stated firmly that the global financial system would have completely failed as a result which they considered unacceptable...
If there is to be an announcement of a heightened global pandemic alert, I would expect the parties involved in the press conference to find a way to remain busy until the US markets close. Then look for Obama on TV tonight.
anoddamoose,
that sounds about par for the course...
Here's the WHO meeting audio
WHO | Pandemic (H1N1) 2009 press briefings
I watched it live. Not so much BS as bland lip service to a vague notion. Her statements are always bland. The most emotion she showed for the hour was a smiling "no comment" in response to the Q. about Lewis, BAC, Merrill, Paulson...
""The White House says "don’t panic,"
................I wasn't - prior to reading this quote"
Where's my towel?
Black Star Ranch indicated above he figured thered be a big sale on mex pork comming to a place near you (me) soon
i think hes right
or
maybe a rush on the production of overlay labels that say produce of USA
"Henry Paulson stated that he and Bernanke considered taking over and closing the big banks, but they couldnt because the whole house of cards would be coming down at once..."
Link?
from above
Brazilian President Luiz Inacio Lula da Silva created a Permanent Emergency Cabinet over the weekend to deal with the flu virus. The Cabinet decided April 17 to buy 100,000 masks to be handed out at Brazilian airports to travelers from North America."
hmmm are people allowed to wear these into banks? i hope so
From what I understand, the flu can't be passed via the meat anyway. I'll buy up whatever they discount. Heck, last week I bought a whole cup of spareribs, almost 16lbs of them for 18 bucks...
So it’s a recipe for Metro Asheville to de-evolve BACK into something that has already proven to be financially sustainable from the Depression to the 1990s: an economy that operates on self-sufficient locals where annual incomes average $25/k.
Avl Dao -- If you're still around -- to that I say GOOD. I was west of Asheville from 1982-1987, before the boom really hit. I can only imagine how the intruders after me changed the climate of the place. The locals knew how to scratch out a living. Their common sense ran strong and I can only hope they passed it down. [btw - Shindig on the Green was amazing]
Thanks for this Asheville update, and for not looking at things with rose colored glasses. I have been through Asheville late last summer, and stayed at a three star motel near Biltmore, and a mall. It had been "refurbished", i.e., it had new furnishings, but the old plumbing stank so much, it was unbelievable, as if the sewage had seeked into the structure. It was booked out, though, which was very surprising, and expensive for the kind of place it was. 300 plus per square feet is just absurd, for condos in Asheville.
Mortgage "innovation" had nothing to do with increasing home ownership. Mortgage fraud and a huge credit bubble were the drivers.
Mortgage fraud was the innovation, once you include fraudulent underwriting and securities.
@ rapunzel, you're welcome. Too bad about that sub-standard motel. But I’m willing to bet that during your next visit to Asheville you will find lodging rates to be more affordable.
@Outsider
The local hospitality/business/political triumph irate are waiting for the oft-delayed (3 years late) and way over-budget ($ 10 million = 50% over) Pack Square Memorial Park to come online so that they can re-inflate the tourism marketing machine to 'Find Your Dream In The Mountains and In Asheville' and book every musical event for the new park, including Shindig On The Green. This is the biggest boom-related project to survive the bursting of the bubbles...and they still need to raise $5 million to close that 50% budget shortfall.
Amazing...$20M for 6.5 acre ‘park’, it comes to $3.07 million per acre.
Ya gotta love that Spiked Kool-Aide they be A-Swigging from that Gilded Jug in Asheville.
First phase of Pack Square Park set to open next month | Asheville News | Mountain Xpress
ooops, that was not a 50% budget overrun on Pack Square Park, that $10 million overrun atop the original $10 mllion budget equals a 100% overrun.
Thu the remaining $5million to-be-raised in 2009 and beyond represents a budget shortfall of 50% of the $10million overrun.