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Dang I’m up early, and get the first post.
For those in Florida, I’m considering the Skypoint in downtown Tampa for my next residence. It’s a 30-ish story condominum located in the middle of downtown - read: nothing open after 5 PM.
In that spirit, let’s discuss the difference between suburban and urban living and which trend will be preferred in the next 10 years. We’ve heard that boomers/artisans/yuppies all want to live in ubran areas instead of boring suburbs, but is this just marketing hyperbole? Are suburbs stuck in 1980s blandness and homogeneity?
Trends will be fairly meaningless…
The rest of our lives will be centered around living in places that have freshwater available, no water, no life~
All over the world drought conditions are worsening, and many would like to think we are and island unto itself, but what makes us so different from Africa or Australia, which are suffering horribly?
We are in the early stages of our drought here…
Substance, not style.
Aladinsane- You’re a wise man.
http://www.summitglobal.com/index.php
A Water Investment Firm
http://www.summitglobal.com/acrobat_pdf/Alpha_6_2007_LiquidAssets.pdf
Under the media section- PDF. I think this is a silent winner, along with infrastructure for investment, besides PM.
a Caret admin economist said upstate NY would boom cause it has water=whoops
Not to mention hydropower from Niagara Falls. Buffalo boomed on it; and it can boom again. Lots of good farmland around there too. Heck, I could see Buffalo harvesting and shipping all their snow to drought-sticken areas. Why the heck not? We ship bottled water from Fiji.
Remaking the rust belt smartly, will be very important.
no water, no life~
I thought it was, “No life … without wife”.
“No life with strife”
LOL aladin: you put a damper on Moman’s comments! I hope we don’t have to live through another drought, but I’m not ready to move back to Michigan, where they have plenty of fresh water.
I’ve seen elderly people who want to move back to the city to have better access to services/health care, but can’t even think of selling now. It’s taking its toll on them - having to hire people to drive them from the suburbs to the city, etc. Still, the idea of living in a highrise condo has little appeal. Maybe a small house in the city would be better.
Our “see me-dig me” lifestyle can’t last.
Agreed, Sir Insane. Particularly in South California where the water supply is so tenuous as to be criminal. Either a desalinization unit will have to be added to many water and power plants–at huge cost. Or agriculture will have to be severely curtailed (yeah, right,) or Mommy Nature willl have to get all Mendalian on our asses. The political and even military implications of a planet with dwindling fresh water availability will be staggering. (Thank you for recommending Cadillac Desert, btw.)
To this end, I am noticing a distinct uptick of successful (read: lucky) urban flippers who are seeking to purchase larger (40 acres up to a section or two,) of arable, rural land WITH WATER SOURCES. Not to subdivide and develop, but upon which to build private homes/ranches for themselves and maybe their children’s families. Many urbanites of my acquaintance are sick of human beings and couldn’t care less if they are within driving distance of a CostCo. They can get all the daily visits to symphonies, museums, libraries, galleries, and lectures they want online. They know how to cook. They can generate their own power onsite. They can plant fruit trees.
Once you decide that driving somewhere every day is not a lifestyle, and that self-sufficiency has its charms, it’s pretty easy to kiss “population centers” goodbye. I see a return to multi-generational housing, small “villages” of less than fifty people, planed inaccessibility, and communal food production for today’s affluent. The irony will be complete when Mexico is successfully assimilated into California, and California’s retirees have fled to Mexico…where it’s more affordable.
Me? I’ve spent the entire week up on the mountian digging out a springbox. Mud is a hoot in the October sunshine.
I find the need for 24/7 guacamole is no biggie and being over 20 miles from a stop light is about right…
I too am noticing people getting out of dodge and moving to the hinterlands, lots of people.
I wouldn’t want to be anywhere near a big city, as an ever pervading sense of false entitlement, rips them asunder, let alone all the plunder, that will be going on.
We have 3 sources of freshwater on our property, including a well that pumps out about 50 g.p.m.
The beauty of it, is we don’t waste anything, as it goes right back in the ground from whence it came…
Glad you enjoyed the book, here’s another beauty:
“The Great Thirst” by Hundley. All about water in California
“Once you decide that driving somewhere every day is not a lifestyle, and that self-sufficiency has its charms, it’s pretty easy to kiss “population centers” goodbye.”
Obviously said by someone who hasn’t driven 3/4 hour to get to the nearest decent grocery store. The charm wears off and pretty soon you wish you had that extra hour and half back to spend playing ball with your kids, neighbors, spouse, etc.
Sorry for the biyatch tone. After too many years I’m tired of spending all my free time driving back and forth to civiliation and know lots of others with similar sentiments. A great chef is fine and I’ve got mine (husband) but sometimes ya just want some good take-out!
The quick check mart doesn’t seem to carry soccer gear or instrument rentals either. And when Talbots is the local’s idea of high fashion, sometimes ya just want civilization again. 
One doesn’t need to be a cog in a machine, you obviously don’t like…
Ah, Sweet CarrieAnn,
The nearest grocery store is 65 miles away. I know.
If the peak-oil crowd has it right, then it seems that living in much denser communities will be a necessity. There is a substantial amount of energy wasted when people have to drive their cars everywhere, housing unit have to be individually heated and cooled, and distribution systems are spread out. Personally, I’d love to be able to walk or bicycle everywhere I go (not going to happen where I live), but the air quality is a concern. e.g. New York literally stinks.
I started bicycling to work in August. I wish I had done it 20 years ago. An hour and 40 minutes of low-impact exercise a day, at a net cost of 10 mintues vs. subway commuting.
In my case, this has nothing to do with cheap (the subway is pretty cheap) or the environment and energy (the subway is pretty good for the environment and energy). The subway even provided some exercise, since I walked a mile a day and climbed over 200 stairs taking it. It’s just fun, and much more exercise.
Haven’t been run over or had the bike stolen yet, though following the lead of the savvy I’ve observed in the area, the locks and chains I use weigh more than the bike.
If you think you might want to do it, my advice is to do it next spring. I always hated exercise for the sake of exercise, but before I had kids I used to run for 20 minutes five times per week. Then we had kids, I became time stressed, and put on 50 pounds over time. Riding a bike to work is exercise without time.
I used to bike 14 miles one way to work, over a rutted very hilly road. It was awesome, I never felt better in my life. highly recommend, but only if it’s a safe ride. Not worth risking your life, which I can say after nearly getting killed on another bike ride (not to work). Still have roadrash scars on my arms.
I use to work with a person who biked to work everyday. One day someone hit him really messed him up but especially his bike. A couple of minutes later they backed up to see if he was OK, ran over him, put him in the hospital for months.
The more I think about this, the more I’m not sure. If peak oil truly hits, then its won’t be a matter of just going to work or the store on a bike. There might not even BE “going to work” in a traditional sense — like, who cares if you bike or drive to some useless marketing job? And maybe we can get to the store, but how will food get to the store? Not to mention the civil unrest.
The traditional 1/4 acre suburbs might be able to support themselves with drilled wells and victory gardens, but the new scrunch-up subdividions with a teeny yard won’t. And all that new profit-vehicle attached-product stuff is toast. It will be a good time to be Amish.
Got attached product?
I agree with what you’re saying if there is basically no energy available, but I don’t think that is likely. While I definitely don’t think alternative energy sources can replace oil at our present rate of consumption (btw, ethanol seems to be really stupid idea), perhaps if we made our way of living dramatically more efficient, we could get by.
Peak oil means oil gets more and more expensive. It does not mean no oil. There is still a lot of oil … for a price.
I’m sure we could do with something like 75% less energy and the have generally the same quality of life (maybe even a lot better), although with some lifestyle changes. Just look at the energy consumption in say the fifties and add the blessings of newer technology; shouldn’t be a problem at all, the problem is that big business and politics is only interested in ‘economic growth’ = more energy/materials consumption every year.
I’m going to have to improve drastically on links, but I recently read an article which argued if all our light bulbs alone were replace w/fluorencents, we could close 22 coal-fired electricity plants.
On the transport side, I’m with Buffet in that much now shipped by truck will be later shipped by rail. As for cars, I’m crossing my fingers the SUV phenomenon will be handled by cost alone over the next couple of years. Our ‘05 Corolla gets 38 mpg, which is a long way from perfect, worlds better than the standard SUV.
Still, I’m pessimistic. We seem to require being knocked up longside the head by a 20 lb trout before we begin to make changes.
Very good point, nhz.
I lived in Breda as an exchange student in the late ’60’s and was inspired by the Dutch bike/motorcycle paths along all the main routes throughout the country. I spent the nest twenty years trying to convince various governmental agencies in LA to do likewise Had a few successes. There’s a bike path pretty much from SD to SM now, and routes along most of the storm channels. In the 80’s, I set my sights on equestrian/hiking pathways along the PCT and other state and nationally-designated trails. We’re getting there.
Although they’re more recreational than practical, it’s good to know there’s an exit alternative to I-5 when disaster hits.
I drive my car about once per month to go into the Big City for supplies, professional, medical/bureaucratic issues, etc. UPS, USPS, DirecWay and obliging neighbors who bring me stuff in exchange for gas money pick up the slack. The rest I grow, trade online, or do without.
Not saying this is practical for The Masses, but for a spoilt, anti-authoritarian, luxury-loving tomboy like me, it’s definitely do-able…satisfying even.
If peak oil truly hits, then its won’t be a matter of just going to work or the store on a bike. There might not even BE “going to work” in a traditional sense — like, who cares if you bike or drive to some useless marketing job? And maybe we can get to the store, but how will food get to the store? Not to mention the civil unrest.
Ok, let’s get a grip. As much as I think our lifestyle sucks and we deserve some pain… hopefully some can learn.
If we don’t adapt, the rest of the world will.
I live in Canyon Lake, Texas - have plenty of water. My home office has 10Mbps internet - as fast as you can get! So I go get grociers in bulk from Costco and Sams.
The cost of food in the USA is profit/marketing/package in a big way. It really doesn’t cost that much more to ship a 32 Oz steak as it does a 20 Oz steak.
It is the single-person commuter that is the person we need to eliminate. Why the hell do we have so much land, so many great houses, yet we ALL Insist on driving to work every date at exactly 8:30am one person per car.
The people in parts of the world who can’t even AFFORD a car will do your job with a lot less overhead. Russia hasn’t gone away. Etc.
Canyon Lake, what a small world. I used to live on the edge of Hunter. Last time I went buy the lake, all the development made me kinda sad.
“It is the single-person commuter that is the person we need to eliminate”
Exactly. I’m doing a lot of that right now and I hate it. Public transportation in the Tampa area sucks. There’s a fellow locally who has put together a great plan and I’m hoping the county commission will see reason, although I’m not holding my breath.
There may be some hope there, fellas.
Large Fortune 100 companies near me (CT) are actively looking at getting their workforce to work at home (WAH) so that they can reduce their footprint for cubicles, etc.
M.B.A.,
Just what I was thinking. Many, many, jobs can be done at home, most of the time, because of the internet.
All that is eliminated is “face time”, an artifact of a by-gone era. You can just as easily monitor someone’s productivity remotely as you can on site and, its productivity that matters, no?
I see a future where seasoned, valuable and serious employees get an option to work remotely, if not full time at least a significant part of the time.
As commuting costs grow, this will be one way for employers to compensate valued employees without additional cash outlays.
Work-At-Home is a great idea but the bosses don’t like it because there’s nobody in the workplace to lord it over. Besides, a ‘virtual’ brown-noser just won’t cut it. After all, your boss’s a$$ can’t kiss itself!
Telecommuting is dead. If you can do your job from your computer at your home, then Apu can do your job from his home in Mumbai — at half the price.
All - I was involved in planning WAH for a national co. with 35,000 ees. I would not say that all these jobs will exist here 20 years from now, but there are some industries that will not put all jobs overseas. Yes: programming and call centers, but NO: strategic, core stuff.
You will notice a big uptick w/WAH in the coming few years. As far as a$$kissing and managers who don’t trust, etc…. WAH is not for everyone. You need a proven track record and must be reliably efficient without oversight. You also cannot use it as substitute daycare (crying kids on conference calls, anyone?). As for the managers, they need to exhibit different competencies and some will not make the transition. In fact, micro-managers will be dinosaurs (BIG YES!!!! :D). And people who are very social (’E”s on MyersBriggs) should NOT sign on for WAH as they will get isolated.
If you want more information on this topic, the federal government actually has info out there on the pros and cons and what training needs to be involved, etc. and is a place to start.
Within 5 years, you will see a big increase in WAH.
Good Point…..
A century ago, the well-to-do left work for the suburbs to get away from all the stink, noise and crowds of city life. Today many people of all economic strata flee to the suburbs daily. The irony is that having replaced coal with other fuels, the biggest noise and air pollution comes from automobiles coming and going from town. Without them (and without the typical ring of poverty around the CBD), city living would be quite tollerable for anyone.
I’m a suburb guy. I like my acre and my little forest out back. If I had to, I could bike four miles to work on most days, and spend $20/gallon for gas on the other days. There’s no substitute, however, for a car in getting your 4-year-old to kindergarten. It just doesn’t have to be an SUV.
Until they do something about the horrific crime rates in the average city, where you trip over druggies and bums on your way out the door and pray you don’t get shot, urban living just will not cut it. Trying to cram even more people into the average lifeless, grey, soul-crushing pit that is the average inner city neighbhorhood will just increase crime. And cities pollute terribly, too.
Nope - I see a future of far more small towns that are semi-self sufficient, where people actually DO some sort of useful work instead of shifting around reports and unneeded projects from one another, and probably one of fewer people. But who knows what the future holds…
There’s no substitute, however, for a car in getting your 4-year-old to kindergarten. It just doesn’t have to be an SUV.
I took a school bus to kindergarten, and I turned out OK.
“I took a school bus to kindergarten, and I turned out OK.”
Now HERE’s a weekend topic for y’all….
If you can’t be there to walk your (very young,) kid to kindergarten in the morning and home again in the afternoon, why did you bother to have one? (Most US elementary schools are within the neighborhood, and rarely more than a mile or so from the homes they serve.) Is your contribution to the state really more indispensable than the one to your genepool?
I’m loving it in Gainesville. It’s like a suburban city. Most of the buildings downtown aren’t over two stories (except for a certain mistake from the end of the 1920’s boom), so no rickets here, though many of the new rentals are being built to 4 stories–ha ha!
Lots of trees, feels very suburban in the densest quarter (Pleasant St neighborhood). Some parts of Boston and generally any old city are like this, but the downtowns are usually built for cars not people. Dirty, dusty, polluted, no grass, no trees (except on the Common).
The only thing that stinks about Gainesville is the giant hobo population. There are homeless, too, but they have jobs and generally don’t bug anybody. Actually, if rents come down enough, we should have less homeless (we only have 1000 every winter to a population of 120K, so that’s doing pretty good). However, we have a visible and entitled-feeling hobo population. They made much better money panhandling than most of us do working on a daily basis until the City finally shut that down. We even have a hobo advocate, who goes to public meetings and berates the city council will all these bogus stories. (For example, it’s common to say that so-and-so is a vet, but the vets for the most part get monthly checks and rent motel rooms so they can get strung out and drunk all month–not hobos. Some vets do live in the woods due to their crack habit. But whatever. There was one guy missing a leg who had a sign that said “disabled vet”. Turns out he lost the leg a few years ago right here at home to gangrene, after refusing treatment at Shands until they had to amputate. Btw, he’s not homeless either, he lives in College Manor, if you call that living.)
I’m from the NE where we’ve had homeless problems for years, but we have also learned that a) those begging on the street are generally lying through their teeth, and b) the really desperate ones are on drugs, so giving them money is basically assisted suicide. I give food, that’s it. I haven’t had anyone refuse that (I’m picky about who I give it to), but many have. (Okay, I admit I’ve given some dudes a quarter to make bus fare, but I knew they were bus riders and you can’t get much beer for that these days anyway.)
The problem here in Gainesville is all the HIPPIES. They give these bozos beer (and crack) money, all the while chanting “Go! Go!” There used to be a place in town that gave out free beer (until it closed last year). When people get sick of the hobos (winos), the HIPPIES jump in and start making these illogical, fact-free rants to everyone in authority.
I had a personal WTF moment when I was a junior or senior in college and I was walking through the Berklee campus (in Boston) and this Black dude was trying to separate me from my money. I thought: whoa, you need help?! I’m $13K in the hole in student debt! You probably have a greater net worth than I do. I should be asking YOU for money!*
*-this is before lending standards went to hell, although after the Community Lending act of ‘93 or ‘94, so you could get, say, a car loan on a used car as a low-income member of a minority group–and many did–, but not a 0% down cash back neg-amort mortgage so you can put a downpayment on a brand new Escalade. No wonder there was “bling bling” fever in the ghetto … no longer drug dealers, a new class of criminal, the mortgage fraudster, suddenly had mad money.
Tar’n'feather me and call me a liberal (it’s true), but I f’in’ hate hippies.
Cardboard sign held by homeless man:
WONT WORK
NEED FOOD
—-
You’re a conundrum, a “liberal” who dislikes Hippies, “black dudes” and phony vets.
Who says I dislike black dudes? Hello? I’m a bus driver. Whites are practically a minority in this business. I see it as learning a new culture. I do have an advantage: besides studying Latin, French, German, and Japanese, I also studied Black English in school. Made it easier to adjust.
Also, here’s a cup of reality: if Blacks were generous with flim flam scammer beggars in the street, then why would he have to take his act to white college student central? Duh.
In NYC on the subway this past weekend. A white woman begs for money. All the blacks on the train gave her money, while the whites read their papers.
Yeah,
I lived in Gainesville for four years. The clutch went out on my car with a year or so of grad school left. I ditched the car can and rode my bike the rest of the time. Grocery shopping would have been a problem if my girlfriend didn’t have a car!
There definitely were quite a few hobos like you say.
I agree on groceries. I did learn when living in Amherst (rural hellhole), Mass how to take my groceries home on the bike, but before I started doing that I used to call a cab to get home from the grocery store.
Well…. Gainesville cabs are literally the highest I have seen anywhere in the world.
Huh? put some paniers on the bike. My husband and I both have 2 collapsible ones on each bike. That’s 4 bags of groceries per trip.
Only thing we ever use the car for is the monthly run to Costco. Before the car, we shared the trip into Sac with a neighborhood couple each month. We’re not young and/or poor. Just early 40s and cheap >; )
And in Davis, lots of people bike their kids into daycare kindegraten, soccer, etc.
Gainesville has always had a large “sub-culture” going way back to the 1960’s. I tell people who are planning to move here that we put a nut on every corner at no extra charge. It’s always been a problem especially downtown near my office. The main problem is that these people are making serious money just asking for it. The Gainesville Sun did an article several years ago about the panhandling, including a statement that the corner location at Sam’s Club would produce over $300 per day!
During my first week as a Freshman in G’ville, I went to buy groceries at “Food4Less” (long since gone). While walking in, some guy approached me carrying a small plastic gas tank. He explained that he had run out of gas and was late for work but didn’t have a cent to fill up his tank. He explained that his boss was going to fire him if he was late one more time.
So, I gave in $2.00 and went on to grocery shopping. I felt like a good Samaritan.
About three months later, I was approached in the same parking lot, by the same guy, carrying the same gas tank, telling me the same exact story.
For the next four years while living in G’ville, I saw that guy and his gas tank everywhere.
That was 20 years ago. He’s probably still walking around G’ville with his gas tank.
IMO and generally speaking, where one lives will be a matter of conserving money, having a job and staying employed.
basically, buy something close to one’s work in an area that offers industries with a large job market related to one’s field..
wealthy retirees can do as they please, where they please..
that sounds like it belongs in an article from Popular Mechanics circa 1950 about pre-planned, efficient cities of the future..
What were they smoking back then, I’d like to know?
And why did so many small cities raze their downtowns in the 1960’s and try to bring in some Mussolini-style “city of tomorrow”? If you’ve ever seen the 1960’s pipe dream for Rockville, you know what I mean. That’s not the future, that’s the past: the 1930’s. And guess what, they tore all that sh** down in Italy because it’s ugly and hateful to human beings.
I personally kinda dig the railway station in Milano, it reeks of Mussolini…
Italy is a great country by foot and rail. We enjoyed great food, and came back 2-3 sizes smaller. The subway system was great. Same for France. The one thing the Europeans get (forced to - taxes) is getting around without a car.
Mix-Use development is starting to take off, but personally its not my flavor. It was common to live above your store once. My grandma (lived to 104) use to tell me stories about her retail store in the Great Depression, and how they lived above it, then having to move into the back of the store. Older folks can be living history books. Mix-Use is the new strip mall, IMO.
keep in mind that in most of Europe public transport is no longer a viable alternative (like it used to be one or two generations ago). Fortunately in the Netherlands you still are allowed to have your own bike instead of paying the government for not taking care of it
Forcing a structured social order on a free people is not as easy to accomplish as it may at first appear..
Where to now………………?
Inflation or deflation?
We’ll be going stag for a little while, and then the floodgates of inflation open up…
Based on?
Everything we need is going up in price dramatically, everything that we don’t need is going down in price.
Food costs in particular will ramp up spectacularly, wheat crops in Canada and Australia have been wiped out. Here in our country, it’s either not enough rain or too much, that has taken down much of our growing capacity.
It’s only just dawning on cities and people, whats going on.
Fresno got religion just a few days ago, about the extent of the California drought. I knew what was happening 6 months ago, by just looking out my window, at the Sierra Nevada. They have a view of the same mountains as I do, why did they do nothing until now?
“According to the Board of Supervisors’ resolution, western Fresno County might receive no more than 45% of its usual water allocation from state and federal facilities. A lack of water will trigger changes in crop patterns and force farmers to leave land empty that might otherwise grow fruits, vegetables or other field crops.”
http://www.redorbit.com/news/science/1087992/fresno_co_seeks_a_state_of_emergency_supervisors_petition_governor/index.html
The Canadian wheat crop will be wiped out, you say?
“OTTAWA - Oct 4/07 - SNS — Canada’s wheat harvest will be somewhat larger than initially expected, according to the latest crop production estimates from Statistics Canada.
Prairie farmers reported that they expect to harvest an estimated 15.3 million metric tons (MT) of wheat excluding durum, a decline of 19.6%, or 3.7 million MT, from 2006. The five-year average is 16.3 million MT.”
If that is being wiped out, I can’t imagine the superlatives you would use for the current drop in housing prices.
Best wishes,
NR
I’ll have to pull up where I read it wasn’t much, as my information doesn’t look like much… ha
Oh Canada,
Forgive me, my mother’s native land…
I was off a bit~
“Wheat is another crop that has been all but decimated by lack of irrigation. In Australia, the world’s third largest producer of wheat, the 2007 crop fell a staggering 29%, down almost 10-million tones. On the other side of the equator, droughts in Canada have contributed to its wheat production forecast being cut by up to one fifth and China’s output is estimated to come up around a tenth lower thanks to water- related catastrophes - both drought and floods. Over in the Ukraine, the world’s 7th largest wheat producing country, shipments will be a full 58% lighter this year thanks to, you guessed it, drought.”
“These shortages, coupled with rapidly increasing demand from emerging nations, has seen wheat prices soar to record levels. Last week, wheat traded for US$7.44 a bushel on the Chicago Board of Trade. In the UK, bread making wheat was trading at almost US$400 per tone… double last year’s price.”
http://www.dailyreckoning.com.au/drought-2/2007/08/31/#more-1380
Regarding droughts and trends, the housing bubble should be ample proof that it is unwise to predict trends based on extremes in activity. Once an extreme event occurs, the trend will eventually reverse.
Tell that to Lake Chad…
“In the 1960s it had an area of more than 26,000 km², making it the fourth largest lake in Africa. By 2000 its extent had fallen to less than 1,500 km².”
http://en.wikipedia.org/wiki/Lake_Chad
This really is the economic question of the age, Milton Friedman said excess money supply creates inflation, yet money was created like mad in the 90’s and gold lagged. Perhaps we’ve gotten to the ‘pushing on a string’ moment for central banks? Here’s one reason the Fed can’t just do whatever they want:
‘Food and taxes. Gas and insurance. Prescription drugs and utilities.
Anyone with a life knows that getting through that life financially is a lot tougher than even a few years ago, especially for folks on a fixed income.’
‘Larry Dann of Port Orange doesn’t need a study by the Senior Citizens League to know it’s more difficult for him and his wife to cover expenses. Retired people like them have lost 40 percent of their buying power since 2000, and costs are rising three times faster than the annual Social Security Cost of Living Adjustment (COLA), according to the not-for-profit organization.’
‘It’s a fact, definitely,’ said Dann, 83, a retired government worker who receives a pension. ‘They give with one hand and take away more with the other.’
I got to watch the fall of the iron curtain, up close and personal…
My relatives were used to communism, not that they liked it all that much, but when you’ve lived in a system like that all your life, what else do you know?
They didn’t transition all that well, but younger people under 20 weren’t so burdened with it, and did fine.
The fall of consumerism here in our country, isn’t far away.
What replaces our strip mall culture?
Nice post Ben….
“What replaces our strip mall culture?”
Blackmarketeering? E-bay comes close already. Private money/barter systems operating out of the same storefronts?
Less packaging, more authenticity. Fewer franchise “branded” operations and more source-based trade. Consumption out of necessity rather than as entertainment?
Definitely fewer nail salons and “Hallmark” stores.
One’s health at dusk appears to be a common issue; good thing we are a heathier population these days!
Yep, I know alot of retired people who tell me that inflation is killing them ,especially the food prices at the stores and medical costs .
Also ,its interesting how the global money supply served to help create the excess money supply that made the housing boom so possible .
Yep, I know alot of retired people who tell me that inflation is killing them ,especially the food prices at the stores and medical costs .
I think a lot of older people just don’t know how to live without a steady income, or to cut back. “Old habits hard to break” and all that.
Isn’t this partly Darwin at work? We artificially extend our lives by using drugs that cost us tons and tons and tons of money. Old people go through medical services… but complain about the cost.
Sorry, don’t think history shows people are entitled to live to 95 years old. It is good and all, but it sure isn’t free! It costs HUGE money to extend life.
RoundSparrow, your ideas are very controversial. I keep arguing about this with myself. On the one hand, it’s a given that life is precious. And cardiac treatments and miracle drugs can keep people alive to 90 years even if they didn’t take care of themselves when they were young. But should we continue to spend so much to extend life at the end? This is a timely topic. I read today that the Bush administration is proposing changing the philosophy of Medicare by requiring that higher-income seniors pay more for their Part D prescription benefit.
RoundSparrow - add to that the fact that the “retiree” historically has lived with children in an extended family until the mid-20th century, so not only are we living longer, but as independent homeowners we tie up housing stock which forces new homes to be built and prices on existing homes to rise for our kids and grandkids. It’s a reversable choice, but as long as where we retire to is usually not where we can find gainful employment, things won’t change.
Death gets a bad rap.
“add to that the fact that the “retiree” historically has lived with children in an extended family”
In the middle of the 20th century, there WERE children and extended families to live with. Low birthrate boomers+ don’t have that choice. It is [i]not[/i] reversible, if the family doesn’t exist. Thus the interest among some wanna be policy makers for encouraging earlier child bearing, or unbridled immigration among the already paniced.
the reality is that current central bank policy hugely benefits certain citizens while stealing from others (savers / renters / fixed income etc.). I don’t think that will change, the politicians have already made their choices and continue the current road until the bitter end. And their choices about who to support are not much different in the US or Europe.
In Netherlands over the last 15 years or so, homeowners have seen their income from equity gains far outpace the higher expenses for daily life. Even with the current 5-10% yoy home appreciation the equity gains probably outweigh the inflation losses, that is: if you are a homeowner. Central banks and politicians know this, so they keep inflating.
Our realtors are now warning that there is a looming ’shortage of homes because of high prices’ in the Randstad (the big Dutch cities): home prices are getting unaffordable for most of the population, but on the other side home prices have to keep rising to keep the middle class homeowners happy, they simply need the extra income…
One commonly accepted concept is that central banks are all powerful. I just don’t buy it.
the central banks seem to be very powerful as long as the game (the fiat currency) lasts; or maybe I should say, as long as they work for Wall Street and Capitol Hill. Trouble is that when the fiat cheating game stops we (the normal citizens) loose too.
So if all those extra Dutch people move into all those empty Spanish houses…….everything will be OK?
it’s already happening, although the numbers are apparently not big enough. Many Dutch pensioners move to Spain every year because of lower home prices, lower cost of living and better climate (a bit like the steady flux into FL up to a few years ago). Together with pensioners and speculators from UK and Ireland they support the high homeprices in Spain. Don’t know where the poor Spanish pensioners are moving to though …
I don’t think this has much influence on Dutch home prices. There is no real ’shortage’ of homes as the Dutch population is hardly growing. The shortage is artificial, pentup demand from people who want to move up as long as the government or tax office pays the extra cost, and many renters who want to own a home because that is the easy way to richess. The price level of Dutch homes is most of all the result of all the free money the Dutch government and the banks keep pumping into the housing market.
Since the social security COLA was enacted, no senior has been on a fixed income.
Until recently, however, those earning the minimum wage were on a fixed income.
I think what is fair to say is that inflation is hitting the poor harder, because basic essentials are rising in price faster than luxuries. If these were the kind of seniors who took a lot of cruises, they might be raving about the deals they are getting.
Note, moreover, that those on a government pension in the article didn’t express much sympathy for those with nothing but Social Security coming.
Yeah, but with fixed COLA and fixed inflation, it’s pretty much a wash … however, min. wage has fluctuated, as during the Clinton boom employers usually had to pay a premium over min. wage to get workers, especially on certain shifts. During bust, it’s back to minimum. Meanwhile consumer goods were low, now they’re high. So those of us who have worked low end jobs during this period (gotta pay those tuition bills somehow) have seen our fortunes rise and fall.
The urban poor have some potential advantages though. Across the midwest, there are tons and tons of poor people living near abandoned lots and more and more cities are giving those lots away for urban farming. Detroit, Milwaukee, Chicago, Youngstown, etc all have programs where people come into your neighborhood and show you how to grow your own food.
sound like a good idea; hope that they check the soil for contamination before they start farming …
sound like a good idea; hope that they check the soil for contamination before they start farming …
They don’t bother with it - they just assume it is contaminated and help you build a raised bed and fill it with clean dirt.
In some of that Detroit “farmland” you better throw up some razor wire around your cornfield if you want to keep it, and plan on being well armed if you want to get to it.
We are in the midst of building a 30 x 12 greenhouse…
Now, if I only had a green thumb to go with it?
We’ll learn.
I would love to go OFF THE GRID.
Greenhouse: $5,000
Solar: $20,000
Well: $15,000
I have #3 - need to save up some $$$ and do the others, although I do not think solar is so great for northern states or I would be pushing myself to do it with more urgency….
Germany, well know hot spot…
Has 3% of their houses solared up
Anyone with solar experience north of the Mason-Dixon line? Preferably New England?
I’ve done a little research, but am certainly no expert. That said, here’s a couple of maps that’ll give you an idea of how well your area is suited to solar energy.
http://www.solar4power.com/solar-power-global-maps.html
earl, much obliged!
Since the social security COLA was enacted, no senior has been on a fixed income.
Disingenuous.
Realistic estimates by John Williams (Shadow Government) indicate that if the SS COLA tracked the actual cost of living increases then SS checks would be at least 75% higher. So, while your statement is TECHNICALLY true, it is meaningless. Retirees who depend to any major extent on SS have been hit hard by undeclared inflation.
Few retires care much about the YOY improvement in computing power they can buy from Dell (a number used to diminish government inflation statistics) but do care a lot about food and energy prices (think warm and well fed).
Just about everybody I know is on a fixed income, including those working for wages. It’s not like they can simply increase their income on demand, and most have no COLA as do SS recipients.
Especially if you are salaried. At least in the old days you ask your foreman for overtime if you needed extra cash to pay a bill or two.
Just about everybody I know is on a fixed income, including those working for wages. It’s not like they can simply increase their income on demand, and most have no COLA as do SS recipients.
Are you seriously saying that almost no one you know gets an annual raise bigger than whichever nominal inflation index drives the SS COLA? I can’t imagine this being true in most parts of the USA, except maybe the rust belt.
“…‘Food and taxes. Gas and insurance. Prescription drugs and utilities”
Hey Ben,
you’ve just described the Warren Buffett hedge.
‘…At the core of his strategy were insurance companies, due to the large cash reserves they must keep on hand to pay out future claims. Essentially, the insurer does not own the reserve, but may invest it and keep any proceeds.”
http://en.wikipedia.org/wiki/Warren_Buffett
In the 90s inflation pressures created by excess money did not go to gold, that is true. Instead they went into two successive bubbles, stocks and housing. Also, the effects of outsourcing/globalization were highly deflationary in the consumer goods sector. This one-time deflationary effect is now over, and we have seen since 2000 gold outperform the stock market. Inflationary pressures at work in Asian export markets will now spill over into our economies as well and we will see that inflation was only postponed, not reversed. Combined with weakening USD, growing demand for goods in developing nations, and rising commodity prices this is a recipe for hyper-inflation IMO.
i dunno.. look to Japan as a model? People seem to like to compare that scenario with the current one.
They are still trying to recover from their last bubble collapse which drew down industries of all types, reversed growth and caused severe deflation..
we see deflation now. A dollar buys much more house today than it did yesterday.
As people’s ability to purchase thing dries up further, a buck will buy more of just about anything than it can today.
Housing is deflating just like Enron and Worldcom stock deflated. It was overpriced and with similar lies.
The industry in Japan most impacted by the deflation were financial firms. It was keeping the banks solvent that resulted in a generation of deficits. Manufacturers were not impacted with lack of buyers, Japan is an export oriented country.
Tis not prudent to call a credit bubble collapse in housing deflation. The misnomer is the perception of houses as assets when they should more properly be thought of as liabilities.
The misnomer is the perception of houses as assets when they should more properly be thought of as liabilities.
i can’t say i’m completely clear about your point.. but let me suggest that a house is a real thing.. solid.. bricks and wood.
Under any conditions, some entity owns all or a part of it, and that entity sees it as an asset.
At the same time, it may also be a liability to some other entity, and in the normal course of things it likely is.
How this particular distinction helps in predicting macroeconomic conditions escapes me..
If nobody can afford to buy that house, regardless of our POV of it as an asset or liability, it’s price will deflate.. no?
I would think that in most cases, aside from architecturally significant properties, most if not all of the (long-term sustainable) value increase is due to the land, not the decaying structure standing on it.
Outside of bubbles or the handful of cities where it’s nearly impossible to build a new building (SF and NY), the only way you can say that the building itself appreciates in value is to neglect the maintenance and other carrying costs.
I vote for deflation. There’s too much money destined to be destroyed by the coming economic contraction.
Cash will be king, even USDs.
that’s about it. The country will still have the hard assets and natural resources and goods and services available for sale.. (most) people will just lack the money to purchase them.
High demand is nullified by the lack of ability to pay the price. Add high inventory .. in what direction do price tags go?
People bemoan the negative savings rate in this country, as they should, and as a country the pain will be felt.
But an individual in this country who bucked the trend and saved instead of borrowed will be in a great bargaining position in the days to come.
Because saved dollars are few and thus scarce their value will increase. Much of the borrowed dollars will simply disappear.
IF the government decides that the dollar is to be saved, you will be correct. A bargaining position requires having something that others want. Saved dollars may not cut it.
Hard assets and natural resources will be bought by foreigners with strong currencies. Global demand far exceeds US demand; China now consumes half the worlds’ concrete, and 25% of milk production. Why do you think oil is over $80 per barrel and milk $4 per gallon? You will pay the market price or it will be sold to another country, that simple.
As for goods and services, foreigners have no use for our haircuts, or legal services, therefore the price of these things may stagnate.
That sounds like the definition of a 3rd world economy.
Chinese buying all that milk.. i thought the Asians were lactose intolerant.
China is not as strong as people make it out to be.. they have fundamental problems. They still do things like leave the big bulldozers back in the yard when building major projects, and instead recruit 10’s of thousands of people with picks and shovels.. just for the sake of keeping the population employed, lest the constant undercurrent of dissatisfaction with that govt finally boil over into a general revolution.
And we are a global market. I don’t for a minute think that any country will come out of this smelling like a rose, nor will any foreign economies weather this storm better than we will.
The USA sneezes and the whole world catches pneumonia.
High oil prices raise fears of economic strain
But some say recession would cause costs to fall
By Michael M. Grynbaum
NEW YORK TIMES NEWS SERVICE
October 5, 2007
http://www.signonsandiego.com/uniontrib/20071005/news_1b5oilecon.html
I am not sure if we are headed toward inflation or deflation. I just know we are headed down and if something is not done about Wall Street, we have no way to get out of this mess. Wall Street seems to think a company is not good unless its earnings grow constantly. This is just not a sustainable proposition. Outside of new product innovation, a company can only show increased earnings each quarter by cutting fixed costs, cutting variable costs, or through acquisitions of other companies. As a result, we have seen companies cut wages, cut benefits, cut jobs, cut the quality of their products, and move production to the 3rd world to keep Wall Street happy. American companies have been gutted from within, and are now increasingly turning to fraudulent accounting and pyramid schemes to show faux growth..
Meanwhile, the American middle class is going bye-bye due to wage stagnation, combined with inflation of the cost of things critical for survival. So things are not good on Main Street. And they are not getting any better. But without the middle class, our economy as we know it ceases to exist. . To paraphrase Henry Ford “I’ve never seen someone living in their car buy a house.”
“Things got worse and worse. Finally there came the awful day of reckoning for the bulls and the optimists and the wishful thinkers and those vast hordes that, dreading the pain of a small loss at the beginning, were now about to suffer total amputation-without anesthetics. A day I shall never forget, October 24, 1907″
Jesse Livermore, from the book “Reminiscences of a Stock Operator”
This came out just a few days before La Jolla property values plunged on about 100 homes… Timely
http://www.whiskeyandgunpowder.com/Archives/2007/20071002.html
The old infrastructure economy…. not that I have a problem with that >; )
Where to now………………?
Inflation or deflation?
Hell in a hand basket?
I say stagflation. Markets move in these 18-20 year cycles. We’re in about year 7 of this cycle which started in 2001. Eventually the economy will rollover like it did in the 70s and there will be a crisis. That will be the impetus for real change.
Deflation in Orlando
Flip This Skyscraper!
http://www.dallasnews.com/sharedcontent/dws/bus/stories/100507dnbusinvest.35aced8.html
Despite what Craig Hall (LOCAL developer who went bust in the last property recession and came back) says a few weeks ago, these fools from out of state think they know better. And read about the funny financing they’re getting! It’s the FB on a much larger scale!
What these current masters of the universe don’t know or don’t remember is in about 1990, more than half the Dallas skyline was in foreclosure.
Forbes has declared dallas “stable”
I saw that and the other article listing it as “No. 1″ for appreciation next year. Gotta love the uninformed experts from out of state. This place has already crested the wave and is about to drop down the other side.
i use to live in dallas in the 90s until 2001. Cities like Dallas, Denver and Atlanta always get hit last because of the domino effect of California and the coasts. The same was true of the tech bust in 2000 and 2001. Once the spigot from the coasts are shutoff, the middle part of country will get hit equally as hard.
But txchick, don’t you know it’s different this time?
How about that dolt in NYC who took 50 million in family money and levered up to purchase 7 billion in office buildings at the PEAK of the market with a RECOURSE loan! Talk about a financial ass-pounding! That guy will be down on the wharf servicing bums for rent money in no time. Sorry, don’t have the link, but Ben covered him a few weeks ago. Great stuff!
How about: When the recession comes to your neighborhood -which non-housing businesses will be the first to go? And which can weather the storm?
My partner and I were discussing how many gourmet coffee/muffin places we’re seeing in our neighborhood - our prediction is that they’ll get hit hard -and high end restaurants. Eating in and making your own coffee are fairly easy adjustments to make in harder times. Any other thoughts?
High-end restaurants in Gainesville are doing a desultory trade, unless they are not really high-end, but “trendy” (charging high-end prices, of course), in which case the sorostitute + med school boyfriend putting everything on credit cards crowd will come in flocks.
At non-trendy restaurants, the college students are known for being cheap. It’s funny. Some of the big chains have carefully crafted their menus to make sure the kids spend enough to keep them profitable (this is why I avoid ripoff big chains like TGIF, rated biggest ripoff by Consumer Reports readers a few years back).
One chef just took a job in Denmark. Hell, if HE’s going to Denmark (which btw has gay marriage), why aren’t WE going there?! Less horrid sunlight to ruin my Irish skin, good track record with Jews, educated … I could learn Danish, sure! If a chef can make the switch, so can a commercial driver … right? (I hear Spain is overrun with ILlegal South American immigrants. Obviously you don’t need a PhD to get a job in Europe and besides they think American PhD’s are toilet paper anyway.)
“sorostitute”
I’m sorry, what is this? A George Soros prostitute?
And you don’t need to learn Danish. All the Scandinavians: Norway, Sweden, Denmark, and Netherlands too, learn English when they are kids.
I admire George Soros, a trader, not a traitor…
Maybe it’s my Magyarness showing?
I tried to learn Hungarian when I was a teen. I gave up after a few months.
I believe this is the first time I have seen someone, besides me, use the word ‘desultory’ in conversation. I’m going to mark it on my calendar.
Oh, good points, too.
“My partner and I were discussing how many gourmet coffee/muffin places we’re seeing in our neighborhood”.
I dunno, but I think that people shop at locally owned gourmet coffee shops for a lot of reasons…these coffee shops have regular customers, so there’s the sense of community and the free wireless internet adds to the customers’ perception of good value.
My guess is that travel/leisure industry will get whacked hard in the coming months.
When I switched from working in tech and making 55/hr to working for the Univ at 1/3 of my old salary, my daily 3.50 skim latte was the first thing to go. The next things to toss were going out to lunch, cable TV, and the gym.
I’d have ditched the cellphone too if I didn’t need it for work. Luckily I was already driving a paid-off car with good gas mileage. A couple years later, we moved to within 2 miles of work so we could bike or work each day saving more.
I see that as the evolution of financial belt tightening for the childless crowd.
What about the child crowd? They still need to ditch their cable. I am thinking of flying a high def antenna and ditching cable TV altogether - huge ripoff. I cannot, however, ditch broadband and go back to the dark ages of internet connectivity.
If you’ve never seen it before, you will be amazed at how well over-the-air HDTV works. All you need is a decent UHF antenna (the FCC places digital channels in the existing UHF spectrum) - no need for a special (ripoff) HDTV antenna or even a VHF antenna. Back in the early 2000s I lived about 35 miles from the downtown Chicago broadcast antennas and had no problem receiving perfect signals using a $3 radio shack UHF bowtie antenna, hanging out of my 1st floor window.
Anyway, over-the-air digital channels provide more than their cable equivalent - the signal is so efficient that there is room for multiple video streams in one broadcast channel. For example, my local ABC station broadcasts the main signal in high definition, but also has a “subchannel” that broadcasts a 24-hour news feed in standard definition and a second “subchannel” that broadcasts a 24-hour weather/radar feed in standard definition.
Well here we do crazy things like read. Univ library 2 mi from my house with open stacks (a dissappearing phenomenom these days).
Last summer on a camping trip, we all brought books and read to each other. Best time camping I ever had.
liquor stores and bars will do ok as will things that service the baser instincts, needs and predilictions of the human animal.
Alcoholism among Black teenagers is up. Crack use is up across the board in Alachua County.
Early warning signs?
I hate to say it, but the “disadvantaged neighborhoods” know we’re in a recession six to twelve months before the upper middle class even thinks to discuss the possibility.
Someone tell me what is going to displace those REIC jobs? I keep reading about $300k, $500k jobs for sales positions that simply no longer exist and if they do now pay $70k (at best).
Got popcorn?
Neil
oops.. it’s predilection.. for those like me who don’t know how to spell it..
I think the question many younger couples who read here have is “when will we be able to buy a house at a fair price?”
Let’s assume that the potential buyers are not looking to use the house as an investment, but wish to avoid nominal declines so they could sell if they had to, want to be able to be able to buy in a place where people like themselves have typically lived in the past while paying what used to be a typical share of their income for housing, and want to be secure that whatever foreclosure-related neighborhood effects that they see going in is most of what they will get.
Anyone care to give a year for capitulation? It’s beginning to look like 2009+ in NYC.
2025+ in Europe …
That is very much on my mind. I’m also wondering how to cope with waiting and the frustration of seeing houses come on the market at >2005 prices.
Also: if anyone has any advice about how to move house without getting scammed, that would be pertinent. We’re thinking about moving when our lease is up because rents keep getting softer and softer, we could probably get a great deal on a SF house. I was thinking of renting a truck myself and somehow hiring movers (we would pay generously, more than the moving companies do) but how to ensure they show up? As some folks probably know, movers are famous for holding your stuff hostage and scamming people so I am concerned about finding a way to avoid this.
Also: how to get a rental from the MLS or when the time comes, buy without using a buyer’s agent. I do not need their services but it’s very difficult to get to see a lot of houses without using one. The system is now set up to force you into this, how to get around this?
BTW: I have contemplated putting an ad in Craigslist that says “I will buy your house for a non-bubble price” to be calculated at 1999 price + 3% YOY (which I think is generous.) Just to see what kind of feedback I’d get.
Hi Catherine. I’m astounded at how high SF rent prices are. I’ve been looking for a place for my son’s girlfriend, who just took a job making $36K annually in SF. People are advertising $900/month just to rent a room in a one-bathroom house, no parking. We paid $1300 to rent a nice row house in the Sunset in the early nineties. Are the Craigslist prices typical? Would we be better off driving the neighborhood to look for a place?
As to moving, we’ve had good luck with newspaper ads for guys who own their own trucks, as opposed to the national moving companies. If you’re doing a local move, that’s a good way to go.
As to your last point, it’s actually very easy to get a real estate license. You can get the three required courses on-line for $169, and the exams are pass/fail. The CA state licensing exam is also cheap. Since buying time won’t be here until at least 2009, there’s plenty of time to get a license. I’m thinking about getting a brokers license (five more courses) before that time, so I wouldn’t have to work for a broker. It would be fun to help family and friends buy houses in the future.
Oops, I meant SF as in single-family, not SF as in San Francisco. However what you’re saying is completely pertinent because my area (DC) is about as bubbly as San Fran anyway.
I have thought about getting licensed, but here in MD you need to have a broker pledge that you will be working for them. I will have to look into the broker’s license here to see if that works. I am very interested in this approach to the problem.
Agents tell us that we need their knowledge and expertise to get through a transaction. This is nonsense, I know more than most of them. If only all of the FBs had paid a few hundred to have a lawyer to review their documents, instead of tens of thousands to be snowed by an agent, we wouldn’t be having this problem right now.
Also, I’ve found craigslist to be very helpful. Yes, it has a lot of FBs with unrealistic wishing prices and wishing rents, but it is also the place to find a deal. We would never have found the rental we’re in now without it. We are in a luxury unit with many amenities, paid no security deposit and got some free rent along with package. The people running these repartments advertised aggressively on CL. And I am guessing I will find the next good deal on rent on CL as well.
I worked for a major beer distributor in ‘90-’91 recession and what changed as far as sales was where beer was being sold.
On premise sales dropped but off premise soared.
Same consumption, but people stayed home and drank.
Bar sales will drop.
I plan on making my own! Need to stay buzzed if the world is falling down around you!
I would like a topic:
What are we going to do with all the excess inventory? Seriously! This is going to be a drain on local governments, with resulting vagrancy and blight. Do we:
1. Take a torch to them?
2. Let the termites feast?
3. Let people live there free, turn a blind eye - if they mow the lawn?
4. Turn it all to Section 8?
5. Let the FBs stay?
???
It will depend on where you live. In urban areas the bombed out neighborhoods must be controlled lest they become a haven for armed countyerculture. They’ll be torched. In rural areas unused homes will be lived in for a while and then become a source of heat in the proper wood buring furnace. In between? - Section 8.
Whatever the solution, count on more government “help,” err… interference.
Armed counterculture?
I used to go to police auctions, occasionally…
One of the sorriest lots that always came up, was a cardboard box with 25 tape decks that some criminal had lifted from cars, and got caught in the act.
A box full would sell for $100-300.
The damage to the autos from whence they came?
$10-50K
Once uninhabited homes get stripped of anything of “recyclable” value like copper piping, a house has dubious value and use.
‘According to a report by investment bank Punk Ziegel, there are 17.4 million vacant houses in the country, and only 4.3 million of those are second homes. That means there are more ownerless houses in the United States today as a percentage of total inventory than at any time since records have been kept.’
‘Not only are there not enough qualified households available to take them over, but demographics are heading the opposite direction. A Punk Ziegel analysis shows that the number of people aged 25 to 34 — the age of most home buyers — peaked in 1989 and will not get back to that level until 2013.’
…and boomers will realize that they don’t like that $200+ electric and $500+/mo heating bills and DOWNSIZE. This leaving even more seas of McMansions weathering in the breeze.
Chance, get the bulldozers lubed up. We got a lot of flattening to do this decade.
As long as there is a broken window problem, why not fix it by demolishing the rest of the house with a bulldozer?
One more thing — we have all heard about the Fed’s helicopter armada. Do they also have a fleet of bulldozers available to demolish the excess housing their loose money policies have encouraged?
I think they can borrow the bulldozers on the cheap from the Dutch housing corporations; plenty of experience with demolishing perfectly OK ‘excess’ homes here (but probably the FED will have to wait until the Dutch bubble bursts).
A bulldozer is not required for most of the poorly constructed bubble homes–a good swift kick to a load bearing wall is probably all that’s needed. Since all these new houses are built so close together, I imagine if one falls, the rest of the neighborhood would go down like dominos.
Ron Steigler: Mr. Gardner, uh, my editors and I have been wondering if you would consider writing a book for us, something about your um, political philosophy, what do you say?
Chance the Gardener: I can’t write.
Ron Steigler: Heh, heh, of course not, who can nowadays? Listen, I have trouble writing a postcard to my children. Look uhh, we can give you a six figure advance, I’ll provide you with the very best ghost-writer, proof-readers…
Chance the Gardener: I can’t read.
Ron Steigler: Of course you can’t! No one has the time! We, we glance at things, we watch television…
Chance the Gardener: I like to watch TV.
Ron Steigler: Oh, oh, oh sure you do. No one reads!
“…17.4 million vacant houses in the country, and only 4.3 million of those are second homes…”
Can this possibly be correct? Last time I saw a ‘number of vacant homes’ figure in the MSM, it was 2.6m. Since there are 114m U.S. households, this figure suggests there is roughly two vacant houses per every thirteen U.S. households — quite a bit of excess relative to fundamental demand.
Who owns these, and how do they benefit by holding them vacant and letting them crumble to the ground, rather than dropping the selling price to the market-clearing level where an owner-occupant can afford to move in and assume maintenance costs? It seems like the status quo is a lose-lose situation.
yes, strange number … I’n not very good at searching online but all I could dig up are references on housing blogs etc., not one real source …
Option 3 + a construction moratorium will absorb most housing stock in a few years. Torching is simply wastefull. These homes will have value when they are needed for shelter.
Perhaps if blight becomes a problem then emminent domain should kick in and the city use them for low income housing or rent-to-own properties. If these properties drain government resources without contributing to the tax base, they should be taken.
“Option 3 + a construction moratorium will absorb most housing stock in a few years.” This assumes demand doesn’t retract
“These homes will have value when they are needed for shelter.” - This is wishful thinking and the severity of the depreciation is location dependent. My parents house in the NW is 94 this year. My Texas house is 10 and the previous owners replaced the roof due to hail damage in the second year. Mold is a big problem in Texas and elsewhere… in homes that are climate conditioned. In my part of Texas, foundations ALSO need regular care.
How about a topic in regards as to how this bubble is different. I am not being sarcastic. In the last bubble HBs tried to hold the line on price (late 80’s early 90s) but eventually realized they had to slash & burn inventory or go under due to the servicing of an ever crushing debt load. This time HBs are slashing an burning and new home prices are down 10% while pre-existing homes are only down 3%. If HBs continue this trend then sooner or later individual home owners will have to follows suit. Add in toxic loans and even if individual home owners want to hold the line on price they will not be financially able to and thus will either match price cuts to HBs & short sale (hopefully w/ a tax foregivemenss plan recently floated by congress) or be forced into foreclosure.
My perspective is that we’ve reached a much bigger high & thus we need a much bigger drop to revert to the mean. But if RE prices stay sticky as in the past then we are in for a very long time horizon for the drop. But with HBs cutting in combination with toxic loans & gov’t incentives the necessary drop may be accelerated and we could have the necessary reversion in a much shorter time horizon from this bigger high (relative to past RE bubbles). Its as if there is a new lubricant and/or accelerant in this bubble that will permit a more rapid correction. If so then what will be the 2ndary effects on the greater economy of such a rapid drop in just a few more years verses previous peak to trough RE drops.
I guess the current slashing of new home prices cannot continue much longer (maybe a year or so) because builders will not start building new homes at a loss. And in that case the supply of new homes will drop to zero, unless the real cost of building a home goes down a lot too (I have no idea if that is realistic in the US, but in Europe I am sure home construction costs are in a bubble just like the homes themselves).
If home prices devalue slowly we Joe 6 can acclimate to it. Within a short period of time everyone will have friends who have lost their houses… expect clusters of ‘housing foreclosure veterans’ living in apartment complexes and in SFH rentals. Things will move slowly, but they will move. Former apartment and condo renters will slowly begin the homeowner exodus and begin to lavish loving care on the properties they waited so patiently to buy.
A really sudden drop can result in a shocked population. We comment here on how few ‘get it.’ Now imagine millions of people suddenly scrounging around for rental housing, still licking their wounds from the ‘housing wars.’ And, still thinking the world owes them a living.
It can get ugly. Resentment sets in, resentment toward the new homeowners – “how dare they move into my old house” – and resentment toward the government for ‘not doing enough.’
I would argue the reverse might apply to some extent.
A really sudden drop could, as you say, result in a shocked population, but there would also be a lot of “we couldn’t possibly have predicted this” type thinking. So people won’t feel personally responsible for the mess they’re in.
Sure, they’re going to press for bailouts. Sorta like the New Orleans aftermath writ large. But they won’t feel as if the system failed them.
Now contrast that with a slow grind down in prices a-la 90’s Japan. Now that’s going to hurt and keep on hurting. People who bought many years ago or who own outright watching equity wealth fall, and fall, and fall some more are going to be bitterly resentful. Herein lies the stuff of extremist politics, as we saw in the 1930’s worldwide.
- More overbuilding
- More debt people
Fake CPI numbers and inflation.
I follow commodities and they are just exploding since helicoptor bob = bernake, lowered interest rates.
Yet the CPI for 2007 is set to come in at like 1.8%.
Why because they strip out the VOLATILE food and energy like none of us have to eat, heat our homes, go to work, etc.
Fake number meant to keep government, insurance payments tied to CPI artificially low. They have a calculation which takes into account the ‘improvements’ in the computer power and therefore we actually DEPRECIATE THE CPI due to this one component.
Don’t worry we haven’t seen inflation YET.
just visit shadowstats.org for the real numbers and let the rest of the public live their pipe dream as long as it lasts …
sorry, that should be shadowstats.com …
Here’s my weekend topic suggestion:
“You get a phone call from George W. He wants *you* to be the Mortgage Czar. You accept the position.
What would you, as Mortgage Car, do?”
SHOW. NO. MERCY.
Oh wait, *first* thing? Order a BIG desk and hire sycophantic assistants!
Get myself an intern??
Yeah! I’d get a cute intern! A bunch of them!
The first thing I’d do is get a handle on the value (or the the money put into) much mortgage backed securities domestically, and how much was bought by foreign investors. Then I’d figure out how much of that was leveraged purchases, and how much was cash the investor could afford to lose in the market.
Just because I’d like to know.
I’d begin my television address with: “My fellow citizens, you are sooooo f$%#ked”
Give my wealthy friends cash from the US Treasury?
“What would you, as Mortgage Czar, do?”
I’d shift the DOJ duties from prosecuting drug crimes to prosecuting mortgage fraud, appraisal fraud, income fraud, tax fraud, etc., and wouldn’t stop until the jails were packed full with these fraudsters from white collar pricks to subprime scam-artists! Then I’d shutdown all the government housing programs, fannie, freddie, HUD, etc., and let the marketplace set the true price of shelter.
I’d love to see a topic on wealth preservation across a bust.
My best idea so far is shorting and puts on industries and player most likely to go bust, but even 40% annual return on my money doesn’t help much if we start to see 500% inflation, or if the FDIC says they will no longer cover losses, or retroactively lowers loss coverage.
I’m thinking about times suchas the french revolution, the depression, the wiemar, the mexican, filipino, and argentine crisies.
Ideas?
dude,
In times of fiat based hyperinflation, every last time it happened…
Those that had Gold, did just fine
Hyper’s happened perhaps a 100 times to countries, in the past 100 years.
Fail Safe
During the peak of the housing bubble, when all my friends were flipping, I, a very conservative investor decided that 20% of my equity-based portfolio (which is about half of total) should be in foreign stocks.
Here’s what I bought, and how they did, percentagewise:
SNP CHINA PETROLEUM & CHEM CORP SPON ADR REPSTG H SHS
217.69%
FHKCX FIDELITY CHINA REGION
125.36%
FLATX FIDELITY LATIN AMERICA
79.95%
FNORX FIDELITY NORDIC
64.15%
FICDX FIDELITY CANADA
44.17%
I think Canada has some more growth left in it.
(But don’t get your investment advice from the Internet. All I’m saying is look a little bit outside the USA)
I had a fiat once, bad experience.
Fiat.
Fix It Again Tony.
Feeble Italian Attempt @Technology
1) What kind of bailouts are in the pipeline?
2) Will they succeed to reflate the bubble?
3) What (additional) long-term damage will they inflict on the propensity of households and lenders to make poor financial decisions with the assurance that someone else will pay the price if things turn out for the worse?
No More Risky Business?
Charlotte, NC 28262
October 5 2007
…
Decisions being made at the highest levels of government are making the current real estate crash worse according to business expert Alan Stafford. In addition to the recent rate cut by the Federal Reserve Bank, the United States Congress is considering legislation that would bail out struggling mortgage lenders, over-extended homeowners, or both. “This has short-term, political appeal”, says Stafford, “but the long-term effects will be damaging to the country. These policies would also create the conditions for another real estate rout in the future.”
http://www.expertclick.com/NewsReleaseWire/default.cfm?Action=ReleaseDetail&ID=18182
Add this to the list of pie-in-the-sky bailout proposals. Who would get to pick up the tab for “converting” subprime loans on houses the occupants could not afford to buy in the first place to fixed-rate loans which will be still-less affordable without a major govt subsidy?
Associated Press
FDIC Head Suggests Mortgage Changes
Associated Press 10.05.07, 2:30 PM ET
WASHINGTON -
One of the country’s top bank regulators wants loan servicer to consider broadly converting certain adjustable-rate subprime loans into fixed-rate products to prevent major housing problems from escalating.
“We have a huge problem on our hands,” Federal Deposit Insurance Corp. Chairman Sheila Bair said at a conference in New York Thursday, according to prepared remarks. “We can’t just sit here doing this kind of case-by-case, laborious restructuring process with all these millions of subprime hybrid” adjustable-rate mortgages.
http://www.forbes.com/feeds/ap/2007/10/05/ap4192318.html
In companion with PBear: How do we go about debunking all the victim stories in the MSM. Decisions at every level of government are being made based on these false stories of serial refiers or flippers being portrayed as victims.
Good topic .Your not a victim unless you lost your job ,had a unexpected medical set-back ,a death of a main bread winner ,a plane fell on your house ,etc. I’m sure a small % was a victim of fraud and a huge % of FB’s were a victim of sales hype of “real estate always goes up ,so you can refinance .”
Hedge funds, IBs, GSEs and home builders = true beneficiaries of proposed D-rat bailouts. FBs would remain F’d.
Lew Uhler: Bailouts Wreak Havoc on the Economy
Friday, October 5, 2007 11:14 AM
Everyone is for free markets when times are good — borrowers, lenders, builders, investors, manufacturers, retailers. As long as they are making money, they want the government to stay out of their affairs. Cut regulation and taxes, and they are happy. But the moment someone goes bust, money gets tight, or the economy slows, people start screaming for a bailout.
Never mind if they knowingly made a risky investment.
Never mind if they collected healthy profits until things went south.
Would the taxpayers be so kind as to cover their losses?
http://www.newsmax.com/us/end_bailouts/2007/10/05/38467.html
Kohn is setting up expectations for another “surprise” FFR cut. Will it be 1/4 pct or 1/2 pct next time?
THE FED
Half-point rate cut may be enough: Fed’s Kohn
By Greg Robb, MarketWatch
Last Update: 10:44 AM ET Oct 5, 2007
WASHINGTON (MarketWatch) — The Federal Reserve’s Sept. 18 interest-rate cut of half a percentage point may be enough to keep the U.S. economy from sinking as a result of the financial markets’ recent turmoil, Fed vice-chairman Donald Kohn said Friday.
http://www.marketwatch.com/news/story/half-point-interest-rate-cut-may-enough/story.aspx?guid=%7B0DC061FB%2DA688%2D464F%2DA2F8%2D1DA2C4DC1FFF%7D
17.4 million vacant houses? I heard that there’s only 86 - 87 million houses in the whole country. That number can’t be right.
I’d believe it. Not in your established neighborhoods, but when you add in all the vacant new developments in every ‘burb….
Can anyone who has independent verification of the 17.4m vacant houses please provide it? Meanwhile, I am taking this incredible figure with a large grain of salt…
Yesterday I drove out to Antioch and Oakley CA, 50 miles east of San Francisco. They are still putting up new McMansion subdivisions everywhere next to orchards and vineyards. I visited 2 sales offices to see what they were selling. McMansions by Centex and DR Horton, $600,000 for 3000sf. Some discounts but still quite expensive. This is basically edge of central valley. The energy use of these new developments astounds me. 3000sf is quite expensive to heat and air condition. Some driveways had 3 vehicles usually giant SUV and minivans. Lots of boats and some RVs. At 5pm, the freeway was complete standstill for 30 miles, again with lots of giant SUVs.
What happens to exurb McMansion developments with higher energy prices? How can people spend $500 month for electricity, $400 month for gas. Maybe its not significant for people spending $5000 a month on their house. Does this entire lifestyle depend on easy credit and serial cash out refinancing?
Across the delta there is a giant windfarm. Its kind of depressing that one wind tower powers about 10 homes (when its windy). So we need an equal amount of land to power all these beasts on a sustainable basis in addition to the land for the house. Not to mention the amount of land for corn to generate methanol for all these SUV commuters.
When gas is $10 a gallon, and elecftricity 20c / kwh what happens to all these suvs and exurbs. Will they be viable at all?
There are lots of homebuilders acting like headless chickens, continuing to merrily build away as though there is no credit crunch. I see the same thing happening in San Diego. The transition away from denial to a square look at reality is going to be so ugly!
The smokin’ lamp is lit…
Mellow Yellow’s up $4.20
Here’s my 2nd “Weekend Topic Suggestion:”
What do you think happened to this couple since they moved into the house that Suzanne Researched?
http://www.youtube.com/watch?v=Ubsd-tWYmZw