Add to the construction job losses, the losses that are already starting in the mortgage lending industry. Then take away a good chunk of the fat commissions that the real estate agents have eaten up. Then think about all the people who lose their homes when option ARMS, etc, adjust, and are forced to leave the state for cheaper pastures. Welcome to the next california recession, coming to a theatre near you in 2007-8.
Keep in mind the weather effect however; march and april were very wet in NorCal, which will account for some of the job loss. Watch the may info for a real picture of the health of the industry.
Rising interest rates have caused the creative financing schemes to slow down. Although with the advent of the 50-yr mortgage, it's not like the mortgage companies aren't trying. I suppose what we need now is some wage inflation. Maybe Arnold will get that minimum wage up, and it'll percolate up through all the wages (raising the floor pushes up the walls and the ceiling), so that a $3000 mortgage payment seems ridiculously low compared to folks' take home pay.
(Don't laugh. Just 15 years ago folks struggled with $1000 mortgage payments. That seems cheap these days.)
My favorite quote: "Lenders ARE and WILL BE laying off, on that you can be assured. Offices will be closing (we've seen it already) and any lender currently in business should proceed cautiously."
The stat does not break out residential construction and so the impact of commercial and industrial construction, which both look relatively attractive now, softens the real picture. Faced with the decision of losing serious money continuing with residential contracts, construction firms may take on C&I contracts that were not as attractive in the past.
It's still early --as the graphs illustrate.
One vital underpinning of the bubble was purchases by young people driven by the beliefs that housing was a can't-lose investment and/or that if they didn't find some way to buy they'd be priced out forever. Never having seen a decline personally, or perhaps having seen that the early-'90s decline was immediately followed by a boom taking prices to new and ever-more-unaffordable heights, they were easy prey for such arguments, which even now are being regularly buttressed by "experts'" statements that the worst that will happen is that prices will stagnate for a while.
But so many young people have been sucked in by this that the home ownership rates of the younger age cohorts are at record highs. Since so many of them have already bought, there is that much less future first-time buyer supply in the pipeline, and without first-time buyers to sell to, most move-up buyers can't move up.
As young people directly experience the downside of home ownership, this psychological cornerstone will crumble, and the edifice will collapse.
Don't forget, those are good blue collar jobs that are starting to disappear. A talented carpenter with a high school education won't make that kind of money anywhere else.
I like jm's report that the market has brought forward sales from young people who traditionally waited till they had that chunky down payment. Sounds right to me esp with the newer mortgage arrangements. In effect, with all the new wizardry of financing, there is the not so wizardly payback period. I can't say I thought too much about that aspect (apart from where the current first time buyers are in relation to the folks with the money: boomers).
I wonder if Boomer thinks that a carpenter can afford an OC medina home or whether he is likely to be augmenting that income with something else?
It is good to know that Arnold has the state's real economy in view and not merely his political ambitions. We'll see if these infrastructure projects are all they are cracked up to be shortly.
Add to the construction job losses, the losses that are already starting in the mortgage lending industry. Then take away a good chunk of the fat commissions that the real estate agents have eaten up. Then think about all the people who lose their homes when option ARMS, etc, adjust, and are forced to leave the state for cheaper pastures. Welcome to the next california recession, coming to a theatre near you in 2007-8.
Keep in mind the weather effect however; march and april were very wet in NorCal, which will account for some of the job loss. Watch the may info for a real picture of the health of the industry.
I smell something burning....
Rising interest rates have caused the creative financing schemes to slow down. Although with the advent of the 50-yr mortgage, it's not like the mortgage companies aren't trying. I suppose what we need now is some wage inflation. Maybe Arnold will get that minimum wage up, and it'll percolate up through all the wages (raising the floor pushes up the walls and the ceiling), so that a $3000 mortgage payment seems ridiculously low compared to folks' take home pay.
(Don't laugh. Just 15 years ago folks struggled with $1000 mortgage payments. That seems cheap these days.)
Do you read Jon Lansner's blog?
Excellent inteview with a mortgage industry insider today.
Lansner on Real Estate : The Orange County Register
My favorite quote: "Lenders ARE and WILL BE laying off, on that you can be assured. Offices will be closing (we've seen it already) and any lender currently in business should proceed cautiously."
Yikes.
The stat does not break out residential construction and so the impact of commercial and industrial construction, which both look relatively attractive now, softens the real picture. Faced with the decision of losing serious money continuing with residential contracts, construction firms may take on C&I contracts that were not as attractive in the past.
It's still early --as the graphs illustrate.
One vital underpinning of the bubble was purchases by young people driven by the beliefs that housing was a can't-lose investment and/or that if they didn't find some way to buy they'd be priced out forever. Never having seen a decline personally, or perhaps having seen that the early-'90s decline was immediately followed by a boom taking prices to new and ever-more-unaffordable heights, they were easy prey for such arguments, which even now are being regularly buttressed by "experts'" statements that the worst that will happen is that prices will stagnate for a while.
But so many young people have been sucked in by this that the home ownership rates of the younger age cohorts are at record highs. Since so many of them have already bought, there is that much less future first-time buyer supply in the pipeline, and without first-time buyers to sell to, most move-up buyers can't move up.
As young people directly experience the downside of home ownership, this psychological cornerstone will crumble, and the edifice will collapse.
Don't forget, those are good blue collar jobs that are starting to disappear. A talented carpenter with a high school education won't make that kind of money anywhere else.
The CA leadership has already taken steps to intervene with the billions borrowed to plan to upgrade CA infrastructures. They know what is coming.
I like jm's report that the market has brought forward sales from young people who traditionally waited till they had that chunky down payment. Sounds right to me esp with the newer mortgage arrangements. In effect, with all the new wizardry of financing, there is the not so wizardly payback period. I can't say I thought too much about that aspect (apart from where the current first time buyers are in relation to the folks with the money: boomers).
I wonder if Boomer thinks that a carpenter can afford an OC medina home or whether he is likely to be augmenting that income with something else?
It is good to know that Arnold has the state's real economy in view and not merely his political ambitions. We'll see if these infrastructure projects are all they are cracked up to be shortly.
So what are these infrastructure projects anyway? A bigger wall across the Mexican border?