Can we weather another ‘dip’?
If housing is the primary force behind the U.S. economic cycle, then the recession early warning bells just started ringing.
Sales of new single-family homes recorded a shocking fall in February, tumbling by 16.9 percent, to a seasonally adjusted 250,000 annual rate, hitting the lowest such figures since records began in 1963.
[…]
Put simply, far from being an engine of growth after several years of contraction, investment in housing looks to be a drag on the economy in 2011.“We continue to believe that this dip in housing will translate into a double dip on the overall U.S. economy, further rolling forward any stimulus-exit plans set by the Fed, and setting the stage for an announcement of QE3 in July,” said said Douglas Borthwick of Faros Trading. “Jobs and housing remain the focus for the Fed, and both areas continue to face severe difficulties.”
[…]
The number of properties in foreclosure hit a record 2.2 million in January, according to Lender Processing Services, while something on the order of one-in-five homeowners with a mortgage are in negative equity, with mortgage debt exceeding the value of the house. In Florida 20 percent of dwellings stand empty, a statistic implying not just a few quarters of slump in building but several years.This matters to the economy in two important ways. Firstly, housing activity, from building to buying to outfitting, is one of the prime drivers of the economic cycle. Secondly, if a slump is deep and protracted the bad debts it will produce will once again threaten to capsize the banking system.
[…]
“Of the components of GDP, residential investment offers by far the best early warning sign of an oncoming recession,” Leamer wrote.
A condo your Uncle Dave used to own in Reno is selling for less than 1/4 of what I sold it for seven years ago. With large numbers of unemployed giving up even trying to find jobs, who can afford even that?
It is all in oil prices.
Before 2008 recession fundamental causes could have lingered for few more years before the tumble. Exploding oil prices was the executing factor. I still believe (based on who and how have speculated with the oil at the time) that the econo-political forces who wanted Obama in the WH intentionally caused the spike when and where it have happened.
What is happening now is almost karmic: Obama Administration own energy policy and international policy are causing new oil spike. While without it economy was weakly recovering, with it it can’t . The moment when oil passed 100$ price this time was the start of new recession (this time trigger level is lower because economy is weaker).
This is a very broad subject..
We could debate the subject of SINGLE family homes compared to being BOXED UP in apartments in large cities. (high density cities)
We could debate that Corps LIKE you in BOX BUILDINGS as they can build 1 sopping mall to cover Everyone, over Small communities where they have to make Shops in Every little town area. (more work available in the TOWN areas)
We could debate Small/large families..
We could debate that police controls over City areas, is easier for police..or is it easier when you when you CAN KNOW all 5000-10,000 people in a small town.
This is a big subject.
How about I start this with a thought.
It used to be that a FAMILY HOME, was large enough to give EACH child a room, and the parents enough SPACE to get away from each other. Figure a piece of property 100’x100′, a 2 story home (attic/basement??) and a home taking about 30×30′ up to 40×40′ of the LAND. and it DIDNT COST you a TON of property tax to KEEP IT.
I blame the interest rates and the banks. We’ve been running on cheap credit for so long we became addicted to it. Now we’re being somewhat more prudent with handing out loans, and revolving credit is simply unaffordable for ANYBODY. So the economy sputters. It will recover eventually but getting off the crack will take several more years. Sure wouldn’t hurt if we’d simply take over these oil countries we’re liberating and take out the oil for cost. But we’re not empire builders so this can’t happen. See you in 2020.
Along with that was a FEW things that happened in the past.
WE ship our wood products to CHINA, we then IMPORT wood from CANADA, they THEN added a 25% TAX to all imported wood(against NAFTA reg) to raise more money for the WARS..
Then the promises that the OIL from Afghanistan and IRAQ, was supposed to PAY for the war…YES IT IS..as they started increasing the FUEL PRICES TO ALL OF US.. Then GOLD goes up in Value, as it REFLECTS the price of OIL..
Debt forgiveness- locking the mortgage in a tin box and burying it for 100 years. But of course, this only works with everyone’s approval including the insurers and banks, and maybe credit card companies.
“A condo you’re Uncle Dave used to own in Reno is selling for less than 1/4 what I sold it for seven years ago.” /// Is that selling or just the listing/asking price?
I almost bought a condo in Reno about 7 years ago–downtown just West of the Truckee. An older unit near the DMV/Car Museum?
I’m sure I’d be way upside down right now. I know the homes here in Calif are listed for half what they were 5 years ago and NONE of them are selling.
Wasn’t the alternative to the bank bailout to let them all fail and have the Feds create “new” funds of money for lending–perhaps even through the banks/S&L’s that remained? Surely, we aren’t going to continue bailing these frauds out are we?
Are we????
Barack is doing a heck of a job.
get off it…
ALL the money given to the banks to HELP the mortgages?? DIDNT goto the mortgage HOLDERS..
it WENT to the BANKs..
What economy. Everything is made in China.
Saying that housing is the economy is like saying prostitution is the economy. They don’t add value to the economy, and are a luxury item that you don’t need.
You need an affordable place to live when you aren’t working. Housing went from this to being something you get to impress people with your wild out-of-control spending.
With the shrinking tax base, property taxes are going to go through the roof. You’d be dumb to buy a house now, as they are going to tax you out of it in the next ten years. The “State” is the everlasting landlord.
Not that taxes are bad, just that the whole economy is upside down.
Cheap energy is the key, always has been.
Alfie, here’s some different thoughts:
If home or real estate prices stay low, it will be easier for home purchasers (or real estate speculators, etc.) to buy that real estate.
If prices of real estate go up, those unoccupied homes (or businesses) may stay unoccupied.
I do agree with others that we’re in a recession, but it’s better to invest money in lower value (but decent quality) real estate than in overpriced real estate. We did something like this when buying a house in the early 1990s, and our house kept its value because we maintained the house, replaced the roof, and so forth.
I think the tsunami and reactor problems in Japan will stay there, or the US and other countries may profit from repairing the tsunami damage.
#5 so somebody who most likely can’t cover the cost of maintenance or the property taxes gets a free home. The lenders go belly up or the public gets stuck with the bill which in this case means add it to the nation dept we can never pay off and the potential buyers are no better off.
Some facts not dealt with. The economy still bleeps. The real unemployment rate is maybe 20%. The cost of food and fuel is climbing no matter what the liers in Washington may say about the cost of living.
Smart people take a look the national dept and see an on coming freight train at the end of the tunnel.
The cold hard nasty fact is that Americans can’t afford the kind of housing that is being offered and they don’t want to move down to the tiny cheek by jowl homes they just might be able to afford nor do builders wish to build homes on razor thin profit margins. Cities don’t like the idea either because it means their property tax base is going to dry up and what they can afford to pay their workers is going to fall.
Let’s be clear here. We have made bad choices and this nation is turning into a third world nation.
The global economy is also moving jobs to places where labor is truly cheap and not everybody is going to get a job on wall street. The ultra rich are finding ways to shield themselves and their money. You can call it out sourcing or off shoring or anything you want but the cold hard facts are the jobs are going away. The cash cow is dieing or moving away and we are left to cope with the new reality.
We are stagnant or worse as is much of the EU while many other locations are growing at about 6%.
You righties are completely clueless when it comes to oil.
Oil prices are not high by design. They are high because growing economies like China and India are willing to pay higher prices than the US is wiling to pay. They are high because the countries with excess oil are exporting less and less. They are high because we reached “peak oil” 6 years ago, and people are only starting to take notice.
The “Drill baby Drill” mentality of the right is not helpful. Awarding drilling claims to oil companies will not help supply at all, it will just make the oil companies assets go up whether they exploit those claims or not, and most likely they will not.
As for real estate, I am not surprised at all. It was a combination of real estate and oil prices that caused the massive crash in 2008, and so far 2011 is playing out exactly the same way.
If politicians want to find a solution, they need to find a way to increase salaries, so people could buy more. The GOP still insists “tinkle down” is the way to go despite growing evidence that it is doing the exact opposite.
This was all known, -that this was going to happen, in 2007.
60 minutes did a hit piece the housing and mortgages “issue” back in 2007 and Credit Suisse, i think its called, had provided a graph which showed time-line of all those cheap ARM loans and when the rates&terms of the loans “reset” to higher percentage rates..
The graph, if i recall, showed a reset peak in 2008-9 time period, a small lull at the end of 2009 into 2010, then another, *larger* peak than 2008, beginning at the end of 2010 and on through 2011-12 time span, finally dropping off rapidly as the graph entered into 2013 and into 2014.
The 2010-11 and into 2012 peak showed a stronger bias to commercial loans with housing just under it. however, both were still larger than the 2008-9 peak.
I had saved a snap of the graph back in 2008-9 but for the life of me, cannot find it now.
Anyway.. this is all scripted and was made known back then via the “hide it plain sight” method. IN PART, “they” count on the fact that the majority of people have been programmed to forget anything “important” within a week or so..
No surprises here..
-s
Turn off your TV
I’ve been noticing plenty of bad signs here in Florida. Business seems to have dropped dead again. While it seems like plenty of place are hiring salaries pay seems to be back down to what it was a decade ago. If I went back to my old profession now I would be making about what I was 7 years ago.
It seems like there are tons of low level problems that are being totally ignored. You should not need to work 2 full time jobs to live above poverty level.
People who thought we could be dancing to a happy tune by now, if only we’d elected an old guy for president, are simply oblivious to how much economic and psychological destruction the loss of so much money can cause. As it turns out, nine trillion bucks is quite a lot of money, even when it’s just on paper…
http://businessinsider.com/zillow-9-trillion-2010-12
It’s hard to have a healthy housing construction industry when in many markets, there’s a large unsold inventory of used homes priced much less than comparable brand-new homes. On top of that, there’s been a dramatic shift in the way home ownership is viewed by the average person. From an employment perspective, though, just remember that when the health of the housing sector finally returns, it will be significantly less robust than it was during the days when it appeared to be on crack.
The second big depression may be the catalyst used to force us into the NAU, North American Union. Between the federal dept, state dept and a trouble economy they will push for a trade block approach like the Euro-Union Dictatorship.
If you read United States history you’ll find that the Constitution was passed in part by the Federal Government assuming the dept of the poorer states, they’re going to use the same tactic to force into the NAU, that or completely collapse our economy.
This is why they want a second Global Monetary reserve, in preparation to our collapse. But no will believe this, just like no believes that there is movement afoot to bring about a centralized Commmie/Dictactorship-Muslim Global Government.
Think about it Communism(or like a North Korean Monarchy) as practiced with Islam would allow the central government at all levels to control everything, and I mean everything
Whatever……………………………………..
Traaxx
PS: I’m listening to George Obama, committing treason in Libya and bringing to power a Al-Qaeda government to power, he he ha ha he he ha ha LOL what a joke on US. So much for congress and like any lawyer, George Obama studied the constitution not to obey it, but to get around it. Sad, we have a Indonesian born Muslim as President.
Whatever… 🙁
Cities collected extra tax money from the higher property values. Are they now cutting the assessments, and lowering their spending accordingly?
I know of a city that is cutting assessments AND raising prop taxes.
What I’ve noticed is that people with power and influence are, both:
1) not very bright
2) great bullstory tellers
3) hungry for a larger slice of the pie
While, on the other side of the coin, I’ve noticed:
1) smart people see the truth, in all it’s complexity
2) know that with power comes large responisbility
3) don’t want the hassle of explaining the truth to people who are easily swayed buy the ones that tell a good bullstory
This is why we have this mess. The leaders everywhere are not wise, speak only bullstories, and will do anything to get more for them. No one of any substance can defeat the Palins of the world, and they don’t even try.
The USA is now a communist country, but we’re still waiting for our Chinese masters to tell us our orders.
Slump?! What slump?
Just like politics, all of the economy is local. Northern Virginia’s real estate market is going gang-busters now.
I get to a place to look at it and it’s already gone. Happened to all three places that were semi decent. Cars with realtors/buyers coming one after the other. Someone sold their half a mil. townhouse in two days.
Same thing with rentals, going like cup cakes, they can’t even build them fast enough and the built quality is total crap. Apartments, one week it’s $1,695/mo for a 2 br, the next week it’s $1,790 available in May, maybe. Can easily find ones for $3,800/mo, mind you this ain’t DC or Manhattan and even they go within weeks.
Well that’s just fuckin great.
Getting a home mortgage is difficult nowadays. In the 1990s and 2000s people were buying homes as an investment, getting a mortgage was easy even without a long credit history, and the whole “flipping houses” thing was huge. It was so big they even had a show about it on TV (Flip This House). I actually own a couple houses but luckily I didn’t have problems paying my mortgages and now I have two homes paid off. But a lot of people had problems paying those mortgages and lenders won’t lend anymore. Also I think the home market was and still may be overpriced in many areas. Look at it this way, in the 1940’s through 1980’s many people were able to buy a home on a one or two year salary, now it seems like an average home would be four or five times the average person’s yearly salary. Maybe the problem is that the middle class salary is too low, but it seems like Fox News wants us to fight for the rich man and not the middle class.
Rent in my area is at its highest point ever and demand is the highest ever. I rent out two houses and when I advertised one last week I received over a hundred calls, years ago it would have been maybe a dozen. Most of the prospective tenants were renting for the same reason: bad credit.
The snowed in people are too busy digging out to look for a new home.
It’s Winter. /was
“Your ditty against Fox news is odd, they present both sides with a zeal the others don’t match.”
Both sides indeed, the far right, and the radical right.
There you go making an ass out of yourself again. Didn’t vote for Obama, vote mostly conservative. Still think FOX is a stinking pile of shit just like the rest, and still waiting on that sunshine request.
35 Come on alfie sing it “Ive got sunshine on a cloudy day.” Come on you know the words. I really hope you call. Remember its the St Louis Regional Office of the Missouri Department of Natural Resources.
As another note, do you actually read what you post? I mean how screwed up or lazy do you have to be to call yourself an idiot when responding yo your own post?
Don’t believe me? check out your posts in “Republican Prosecutor Suggests Phony Assassination Attempt to Build Sympathy for Wisconsin Governor” check 84 and 88. Can’t keep track of your lies anymore.
Didn’t vote for Bush jr. by the way. You assume that being conservative requires that you sing the party line. That explains quite a bit about your thought process.
#38 So What:
TeaDud has the party line wrapped around his neck and its cutting off his oxygen.