Take your point but as I recall the SoCal aerospace and defense communities were going thru the major post-war downsizing when unemployment was peaking at 12%. Might want to add that in.
"Is the housing market vulnerable?'' he asked. "Yes, it is. But is a bubble likely to happen? No, it is not. The underlying strength of our economy is too great."
--Dr, John Husing, 2006
"It is difficult to get a man to understand something when his salary depends upon his not understanding it."
--Upton Sinclair, 1935
Take your point but as I recall the SoCal aerospace and defense communities were going thru the major post-war downsizing when unemployment was peaking at 12%. Might want to add that in.
--DaveL
Won't be a requirement for high unemployment this time. The bursting bubble alone should get us in that territory.
"...of the 243,000 private payroll jobs added in the state in the past two years, 122,000 can be directly tied to the housing market, according to UCLA Anderson. "In short, a sector of the economy that makes up 10 percent of total private sector jobs is accounting for 70 percent of the total job gains."
DaveL, I'm not sure which areas of the state were hit hardest by the aerospace / defense cutbacks in the early '90s. Obviously San Diego was hit hard - and parts of LA. But I don't how hard the impact was on Riverside / San Bernardino.
I live in Riverside and purchased my first home in 1988. I also worked in the real estate industry (and got laid off from in 1991). I can tell you that we were hit hard by the base closures of March Air Force Base (now March Air Reserve Base) and Norton. Moreno Valley and Riverside were hit hardest around here. I remember wishing I could sell my house and purchase one the many forclosures available in the mid 90's. Unfortunatly, even with my 20% down payment, we were still upside down by another 20%. Prices in my area lost at least 40% off their value from peak.
Respectfully, I must disagree with the last sentence: Although the aerospace slowdown probably precipitated the general economic slowdown in California during the early '90s, the housing slowdown had a larger impact. This time, many of us are suggesting that the housing slowdown will most likely be the precipitating event.
It doesn't appear from the data, that it was a precipitating factor. You show that DOD employment did not observe appreciable declines until nearly 1997 in San Diego (Graph #3). However, nonfarm took it in the crapper in 1991, which is clearly pointed out in your graphs (Graph #1).
DOD losses may have been reinforcing in 1997 and later, but the real unemployment happened in 1992-1993 (Graph #2).
I would argue that the 1990's collapse is much like today's collapse, it just collapsed under its own weight. In my opinion, this is what is observed in many credit-driven asset bubbles. They just go until lenders cannot stomach any more risk. The public, on the other hand, has an insatiable desire for risk.
John Doe, you have to a little careful with the graph - it is % of total employment. In the mid-90s, DoD employment was flat, but fell rapidly as a percent of employment - because other areas in California were doing great. That doesn't mean DoD was laying off employees. Maybe a graph of actual employment would illustrate that better.
I do think DoD / Aerospace was the precipitating event for the California downturn - followed by an even larger impact from housing.
I too like the galery at forsakencraft. There's a local (Sacramento) blogger that has put together a similar gallery titled "Flippers in Trouble" using MLS data. It's pretty impressive:
I lived there and can tell you that starting in 2006 by the third quarter we should start to see a decline like the 90's downturn in earnest. I moved out of the IE to the south Jan 06. Cost of living, gas, rents, housing all unsustainable. California with all of it's negetives still demands unrealistic cost to middle earners.
I'll be watching it unravel over the next few years. After record defaults shakeout there shoud be a glut of properties all over So Cal. John Husing is a cheerleader for the IE and has vested interest in the corperations that concider locating there. He is a typical conservative perma-bull totally disconnected from the average earner in the IE.
Alot of housing related employment will end beginning in 07. "Mr. Husing it is arrogant to assume that the IE is not just as vulnerable as any other area of the state".
Take your point but as I recall the SoCal aerospace and defense communities were going thru the major post-war downsizing when unemployment was peaking at 12%. Might want to add that in.
"Is the housing market vulnerable?'' he asked. "Yes, it is. But is a bubble likely to happen? No, it is not. The underlying strength of our economy is too great."
--Dr, John Husing, 2006
"It is difficult to get a man to understand something when his salary depends upon his not understanding it."
--Upton Sinclair, 1935
So why is San Bernardino county so anxious to get more homebuyers who start with negative equity?
http://www.supportdownpaymentassistance.org/Documents/SanBern-CA-Resolution.pdf
Take your point but as I recall the SoCal aerospace and defense communities were going thru the major post-war downsizing when unemployment was peaking at 12%. Might want to add that in.
--DaveL
Won't be a requirement for high unemployment this time. The bursting bubble alone should get us in that territory.
"...of the 243,000 private payroll jobs added in the state in the past two years, 122,000 can be directly tied to the housing market, according to UCLA Anderson. "In short, a sector of the economy that makes up 10 percent of total private sector jobs is accounting for 70 percent of the total job gains."
Forgot to include the link: 1.4 Million Families Have Taken Advantage of First-Time Home Buyer Tax Credit, More Claims Expected | RISMedia
DaveL, I'm not sure which areas of the state were hit hardest by the aerospace / defense cutbacks in the early '90s. Obviously San Diego was hit hard - and parts of LA. But I don't how hard the impact was on Riverside / San Bernardino.
Maybe I can find some data ...
Best Wishes.
The "strong" economy is at its core, from the housing boom.
Hence, that arguement doesn't fly. When housing goes, the rest of the economy gets a nice sucker punch as well.
It is a chain reaction: A begets B begets C begets D ete ete.
I live in Riverside and purchased my first home in 1988. I also worked in the real estate industry (and got laid off from in 1991). I can tell you that we were hit hard by the base closures of March Air Force Base (now March Air Reserve Base) and Norton. Moreno Valley and Riverside were hit hardest around here. I remember wishing I could sell my house and purchase one the many forclosures available in the mid 90's. Unfortunatly, even with my 20% down payment, we were still upside down by another 20%. Prices in my area lost at least 40% off their value from peak.
Angela
There's just too strong an economy and too much job growth...
SIGH
Just like the economy was too strong and unemployment too low at the beginning of 2001.
Likewise for the Roaring Twenties.
I hope they didn't include South Riverside in that speech..
Forsakencraft.com
upinarms, I hope everyone checks out your site. This video is hilarious.
And those listings are amazing.
Best Wishes.
This radio interview is amazing too. I've never heard the bear case summarized so well.
Hmm, that link didn't work so I'll post url -
http://www.forsakencraft.com/Schiff62706E.mp3
Calculated Risk,
Respectfully, I must disagree with the last sentence:
Although the aerospace slowdown probably precipitated the general economic slowdown in California during the early '90s, the housing slowdown had a larger impact. This time, many of us are suggesting that the housing slowdown will most likely be the precipitating event.
It doesn't appear from the data, that it was a precipitating factor. You show that DOD employment did not observe appreciable declines until nearly 1997 in San Diego (Graph #3). However, nonfarm took it in the crapper in 1991, which is clearly pointed out in your graphs (Graph #1).
DOD losses may have been reinforcing in 1997 and later, but the real unemployment happened in 1992-1993 (Graph #2).
I would argue that the 1990's collapse is much like today's collapse, it just collapsed under its own weight. In my opinion, this is what is observed in many credit-driven asset bubbles. They just go until lenders cannot stomach any more risk. The public, on the other hand, has an insatiable desire for risk.
John Doe, you have to a little careful with the graph - it is % of total employment. In the mid-90s, DoD employment was flat, but fell rapidly as a percent of employment - because other areas in California were doing great. That doesn't mean DoD was laying off employees. Maybe a graph of actual employment would illustrate that better.
I do think DoD / Aerospace was the precipitating event for the California downturn - followed by an even larger impact from housing.
Best Wishes.
I too like the galery at forsakencraft. There's a local (Sacramento) blogger that has put together a similar gallery titled "Flippers in Trouble" using MLS data. It's pretty impressive:
Sacramento Real Estate Statistics
I lived there and can tell you that starting in 2006 by the third quarter we should start to see a decline like the 90's downturn in earnest. I moved out of the IE to the south Jan 06. Cost of living, gas, rents, housing all unsustainable. California with all of it's negetives still demands unrealistic cost to middle earners.
I'll be watching it unravel over the next few years. After record defaults shakeout there shoud be a glut of properties all over So Cal. John Husing is a cheerleader for the IE and has vested interest in the corperations that concider locating there. He is a typical conservative perma-bull totally disconnected from the average earner in the IE.
Alot of housing related employment will end beginning in 07. "Mr. Husing it is arrogant to assume that the IE is not just as vulnerable as any other area of the state".