Forum Replies Created
-
AuthorPosts
-
powayseller
ParticipantDaniel, our full employment rate is decreasing, and we have lost jobs during Busch’s tenure. The economy would meet my standards of doing well if we were as productive as our consumption. As it is today, our economy produced $330 billion per year LESS than we consume. So we have become a debtor nation.
ach year, more types of jobs are outsourced to countries with an educated lower-paid work force. I had read about radiology outsourcing some years ago, but thought that surgery was a safe profession. Not any more. Elective and scheduled expensive surgeries are now outsourced, as are CPAs (thousands of Ernst & Young CPAs are Indians). Lawyers?
Daniel, what are the millions of new jobs that you refer to?
Yes, living standards improved, but only because China is willing to give us IOUs; once they cannot continue doing so, our standard of living will come crashing down to the level where we can consume only what we produce. Any country that consumes more than it produces, or whose work force cannot afford the goods it produces, has a weak economy. Perhaps the US economy can turn around, but it is not looking good at all. It is downright scary.
Daniel says the economy does “pretty well”, and “overall we’re in pretty good shape”. That doesn’t sound very convincing. Do you mean we are average, chugging along, or do you see any hopes for improvement? Will we ever leave behind the debtor nation label and become a producer nation again?
What bright spots does anyone on this forum see for our economy?
ParticipantDoes she want to buy another house, or is she mad about all the time you spend on piggington?
ParticipantThis analysis could be modified to start in 1998 for the available data, with the caveat that there were not enough high end homes to draw any conclusions. It simply isn’t accurate to start a trend line after the trend started. Also, if we think about where prices will end up, we have to remember rising wages and adjust accordingly. I don’t think prices could go back to 1998 or 1999 levels, because rising wages will support higher prices. People will jump in and start buying when rents, supported by wages, are cash flow positive from a purchase.
To me, that is the bottom. That is when the bottom feeders and investors will come back in, when rents are cash flow positive, i.e. house price = 8 * annual rent. At whatever level the annual rent falls. That is a return to fundamentals.
BTW, is that what happened in the last bust? Did it stop falling when house prices were a multiple of 8 or 10 times rents?
ParticipantVery interesting. We know that 30% of homes bought in the last few years were for investment purposes. Are none of them on the market yet?
ParticipantA median price drop of 37% – 50% that I project, applies to Rich’s data of historic price/income for ALL resales. I expect SFH to fall 30-45%, condos to fall 45-65%. Attached somewhere inbetween. With SFH already down 10-15% in many places, I am thinking I am too conservative.
Great post, sdrealtor. Can you find out more about how these price segments fared in the last housing bust?
I also wonder why you chose 2001 as your starting point. The housing run-up started in the late 1990’s. Wouldn’t 1998 or 1999 be a more accurate time to start a comparison?
By 2000, prices were 30% higher vs. 1999, in the Poway homes I was checking out, and 25% higher in the Escondido homes, so I wonder how your analysis would run if you started it from the *beginning* of the housing bubble, rather than the point where you think the rise stopped making sense. Because with the way you did it, somebody could easily start with 2003 or 2004, because that’s when that person thinks the runup stopped making sense. So it’s important to backdate to the *beginning* of the run-up.
ParticipantBob007, I will estimate that in 5 years, someone will write
“Sd’s median home price fell from $502K to $300K because their buyers were disappearing. People were moving out, adjusting ARMs led to rising foreclosures, and jobs created during the housing bubble disappeared. Buyers became fearful of falling prices and disappeared. Many moved to cheaper areas, like Texas and Utah, where better deals were found.”
ParticipantIt’s the S&P 500 homebuilders index. It dropped 50% this year.
ParticipantThe American economy is being outsourced in its entirety. What will remain? Service techs, that’s all. CPAs, lawyers, doctors, can do your work remotely in India, or you can travel there to have it done for less. But need your carpet shampoed? The guy who does that has job security.
ParticipantThe worst part about being leveraged is when your asset declines and you get a margin call.
Can banks do that? They appraise a neighboring home, realize that you owe more on your house than it is worth, and ask you to pay the difference?
Participantsduuuude, Leading Indicator Charts. Gee, you are an intellectual! You will like this site then.
Bear markets begin when growth in real consumer spending (PCE) peaks and begins to slow
“The relationship between economic slowdowns and bear markets is remarkably consistent, though not infallible, over many cycles. Most bear markets begin when the year-over-year rate of growth in consumer spending is peaking, and investor and general business optimism are at their highest! Considerable courage is required to reduce investments at such times.” – Joseph Elliott, Ahead of the CurveEd Leamer uses that same chart to make his forecast. Read his quote from the Wall Street Journal Real Estate section
“Ed Leamer: The history of residential investment offers a Hobson’s choice: either a housing-induced recession or a war the magnitude of Vietnam or Korea.
The figure here depicts real residential investment per worker since 1948, with the official recessions shaded. (Residential investment includes new homes and brokerage fees, but doesn’t include housing appreciation.)
This spending on homes varies from recession lows of about $2,500 per worker to expansion peaks near $4,000. During the recession of 2001, we were at that high $4,000 level, but we ploughed right through the recession without noticing it, and in the second quarter of 2005 we achieved the all-time high — $5,233 per worker. Cut that back by $1,000 to get it into “normal high” range and you lose $1,000 times 140 million workers. That’s $140 billion in lower spending. That’s enough to cause a recession, if it occurs rapidly.
Can we get out of this mess? There have been two “false positives” — problems in the housing sector that didn’t precede recessions. One was in 1966-67. Spending on the Vietnam War saved the economy that time. The other was 1950-51. Then it was the Korean War. Pretty dismal news, for sure.
For perspective, Defense Department spending on Iraq and Afghanistan was 4.8% of gross domestic product in 2004 according to the Bureau of Economic Analysis. During the Vietnam and Korean wars it was as high as 10.2% and 15% of GDP, respectively.”
ParticipantSurgeons make $250K/year, even in small towns. That seems reasonable, for all the expenses and work of medical school, right? Lawyers make that much, too, even in San Diego. It’s much harder to make it through med school than law school. I have a brother and a sister in each profession, making at the top of their pay range. It was hard work to get there.
ParticipantWhy are they leaving CA for Tennessee?
ParticipantSubmitted by LA_Renter on July 31, 2006 – 8:06am.
EVERBANK
Here is the link; http://www.everbank.com/main.asp?affid=eb
You can invest in a wide variety of world currency accounts.
VCJIM – I don’t want to buy a mutual fund as a roundabout way of diversifying out of dollars, because I do not want to own any stocks right now, besides the COP and BRK.B I already own. I believe mutual funds will lose value. Perhaps there is a dollar-shorting fund? I think Rydex might have it. But shorting is too risky for me. The Everbank account is the way to go for me. I will research it more.
July 31, 2006 at 11:31 AM in reply to: Dowtown condo buyer “unconcerned” about overpaying $24K on commission #30161ParticipantI agree with you; the buyer goofed.
-
AuthorPosts
