Living In A New Reality
It’s Friday desk clearing time for this blogger. “The housing malaise is in large part responsible for the consumer malaise. Houses have been the largest and most visible economic assets for Americans. We don’t save, so we ‘invest’ in houses and the appreciating value of our properties makes us feel good. So we go to the mall and the car dealer and the electronics store and spend like crazy. After all, we can run up our credit cards and take out big second mortgages since the value of our homes keep going up.”
“But, oops, when the value of our home suddenly declines, we become very conservative, stop spending, don’t buy new homes (more people are renting instead), and the economy grins to a halt. The latest economic growth numbers are sobering and grim — an annual rate of only 1.8 percent, which is less than most developing countries.”
“That’s where politics comes into the picture.”
“Many economists believe that 2012 is not normal. It comes in the aftermath of a severe economic crisis that psychologically has been the equivalent of the Great Depression. We are also living in a new reality, where the American economy is not as dynamic and robust as we like to think, where American innovation, creativity, inventiveness and ingenuity produce great patents that are, for the most part, executed in China, India and other countries.”
“The Eastern Connecticut Association of Realtors is banding together with its state affiliate and with the Builders Association of Eastern Connecticut in opposing Senate Bill 1019, which would levy a 1 percent conveyance tax on buyers of homes. Steve and Shannon Christian, of North Stonington, are selling their home and looking to buy a larger one in town for them and their six children. The tax would put the couple in a financial bind. ‘The value of my house has gone down, but my taxes haven’t gone down,’ Steve Christian said. ‘Most of the down payment for our new house will come from the equity of the house we live in now. If that’s reduced, we could be in trouble.’”
“Connecticut is losing its 25 to 34 demographic faster than any other state, he said. But the types of homes available is a major cause of these departures as well as the depressed state of housing sales. ‘We’re lacking starter homes,’ said David Fink, the Partnership for Strong Communities policy and communications chief. ‘We haven’t been building the right kind of homes in more than a decade. This is the issue that needs to be addressed.’”
“RealSource Association of Realtors from across northern New Jersey recently urged members of Congress to keep housing first on the nation’s public policy agenda during the National Association of Realtors (NAR) 2011 Midyear Legislative Meetings & Trade Expo in Washington, D.C. ‘Tax incentives for home ownership have been a part of our tax system for decades and are deeply woven into our economic fabric,’ said Patricia A. Sudal, RealSource president. ‘Reducing or eliminating the MID is a de facto tax increase on home owners, who already pay 80 to 90 percent of U.S. federal income tax.’”
“Last week thousands of Realtors from across the country convened in Washington, D.C. I was honored to be among them. During this annual event our senators and representatives set aside some time out of their busy schedules to meet with us and listen to our concerns about private property rights. We had three key messages: Home mortgage interest deductions must be kept; our country needs a successor to Fannie Mae and Freddie Mac that will preserve the secondary mortgage loan market, and to vote against any proposed legislation requiring a minimum of 20 percent down for all mortgage loans.”
“NAR First VP, Gary Thomas says ‘A functioning real estate market can again lead this country out of recession.’”
“Oregon Senator Jeff Merkley said lawmakers need to act now to put housing at the top of the national agenda. ‘Nearly three years after an economic collapse caused by the actions of Wall Street, the big financial firms are back on their feet, but homeowners are not. Falling home prices are wiping out the investments made by American families, hurting our economy and triggering another wave of foreclosures. We must act now to stem this tide and keep families in their homes.’”
“‘We need to take action now to put housing at the top of our national agenda,’ Merkley continued. ‘That includes a much improved mortgage modification system and common sense foreclosure intervention including third party mediation and a national short refinance program. It doesn’t make sense to force families into foreclosures that further drive down prices.’”
“Nikkie Hartmann’s Albany Park condo is now worth $80,000, 44 percent less than the $143,000 she paid for it in 2006. She carries a mortgage for 100 percent of the purchase price. ‘I am so underwater in my loan that I don’t believe I will be able to sell it for many years,’ Hartmann said. Hartmann’s condo is part of the ’shadow’ inventory of properties waiting to be sold if and when home prices rebound. Other properties in this category are delinquent, in foreclosure or bank-owned.”
“In fact, Illinois has the third-largest shadow inventory in the nation, following Florida and California, with 121,266 properties waiting to be sold, according to the National Association of Realtors in a March report. The Obama administration has taken many steps to stabilize the housing market including its Home Affordable Modification Program (HAMP) that is designed to help financially struggling homeowners avoid foreclosure by modifying loans to a level that is affordable for the borrowers.”
“Opponents say HAMP has only prolonged the housing downturn and built up shadow inventories by delaying foreclosures rather than preventing them. Delores Conway, a real estate professor at the Rochester Business School, said there may be some validity to that argument, but that a prolonged housing recession is probably inevitable and even necessary, given the depth of the crisis.”
“‘Maybe we need to prolong it for a while because prices have dropped too sharply and too quickly and that could create some other problems,’ Conway said.”
“With the latest news out over the weekend on the dismal housing values here in Southern California one can assume that all the government acronyms HAMP, HARP, HASP, NSP, FHFA, HAFA, etc., are all brought to you today by the letter ‘F,’ as in failure. Lest you be led over the cliff, stop for a minute, take the blinders off and look objectively at the truth. And the truth of the matter is, loan- modification programs were not meant to save the struggling homeowner, but to keep the banks from inheriting a flood of foreclosures.”
“It appears the truth about HAMP was that it was meant to help banks stem foreclosures. Any benefit realized by homeowners was an afterthought. In that context, the whole struggle for homeowners to actually get permanent modifications makes sense. No one really cares if a homeowner gets one. All the pressure on lenders by the government to approve more modifications has been done to slow foreclosures and the number of properties banks take back - not keep taxpayers in their homes.”
“I am led once again to write about this, because I and all the other active Realtors out there are on the front lines of this housing mess. I have just completed some BPOs (broker price opinions) for some struggling homeowners who are killing themselves and their families trying to stay in homes they can’t afford. Instead, they could easily facilitate a short sale.”
“CoreLogic’s Home Price Index for April showed that any recovery in U.S. home sales has not reached Idaho. In March, Valley prices dropped 12.1 percent from March 2010, with distressed sales included, and 8.37 without. ‘You have to include the distressed sales,’ said Brian Greber, director of the Center for Business Research and Economic Development at Boise State University. ‘If you exclude them, you’re just fooling yourself.’”
“Greber said Idaho’s problems today are complicated by factors that contributed to the boom that inflated the state’s real estate market. For the 10 years leading up to the 2007 housing crisis, much of the sales activity was second homes and investment properties — sales that ended when the economy weakened. And even people who bought homes to live in were out-of-staters who sold a home elsewhere and relocated to Idaho, he added.”
“The number of vacation homes in Montana has skyrocketed over the past decade, although most of the growth came before the recession. Jim Sylvester, an economist at the University of Montana, said that between 2000 and 2010, Montana’s statewide seasonal housing grew 59 percent, or about 14,000 homes. In some counties, seasonal housing now represents 25 percent or more of the entire housing market.”
“Jim Kelley, of Kelley Appraisal in Kalispell, said Flathead Valley’s vacation homes are a mix of modest cabins on the Bitterroot and Ashley lakes and high-end homes on Flathead and Whitefish lakes. The influx of pricey lakeside homes before the recession helped drive up prices in the local housing market, Kelley said. ‘People coming in and building these large multi-million homes largely contributed to the increase in property values we saw up to 2007,’ Kelley said.”
“The Twin Cities had the unfortunate distinction in March of having the biggest home price decline in the Standard & Poor’s/Case-Shiller Home Price Index. ‘What I think is unfortunate is we don’t seem to be at the bottom. We actually seem to have a double dip,’ said economist Jeanne Boeh of Augsburg College.”
“Boeh says as prices descend, more homeowners will be underwater on their mortgages — owing more than their home is worth. And that will inhibit people from selling their homes. The result: the market will continue to be dominated by foreclosures and short sales. ‘All that means we are not coming out of this housing market anytime soon,’ she said.”
“In the seven years before its peak in July 2006, the home-price index surged 155 percent. Since then, it’s fallen 33 percent.”
“Q: We recently completed a short sale and yesterday a collection agency called and told us that we still owed more money since the property was sold for less than what we owed the bank. Do we have to pay? A: Maybe.”
“Q: We lost our foreclosure case and are afraid that the sheriff will throw us out. How does this process work? A: After the court rules for a lender in a foreclosure case, you have roughly two to four months before you have to leave the home.”
“Q: We are in foreclosure and are trying to obtain a loan modification on our rental house. Our tenant found out about it and said that since we were not paying the mortgage, she would not pay the rent. Can she do that? A: Not without being evicted.”
“Neil Conner always thought he’d be a real estate agent. He made real estate his livelihood, a job path that he planned to nurture for the rest of his working life. The real estate market collapse sent his best laid career plans spinning.”
“In November 2007, just before home sales nose-dived nationally, Conner opened his own firm in Salem. He hired several sales agents and settled into his new role, including a yearlong stint as president of Roanoke’s real estate professionals association and spokesman for local market conditions. In a good year, Conner sold 45 to 50 houses. In 2008, he booked less than half that number of transactions.”
“‘My overhead went up, my income was cut in half,’ he said. ‘It was just the perfect storm.’”
“Conner closed PropertyPros in late 2008 and early the next year landed a job in sales for Renaissance Contract Lighting & Furnishings, a Roanoke manufacturing facility. ‘I didn’t know what would happen,’ said Conner. ‘I always thought I’d be a Realtor, and life handed me a set of circumstances that said that may not be true.’”
“People should be flocking to the Golden State, and for a while they were: between 1940 and 1990, 12.4 million Americans immigrated to California. But then people started leaving. Since 1990, four million more people have moved from California to other states than have moved from other states to California. Companies are leaving, too. In just the first three and a half months of this year, 70 companies left the state.”
“It’s hard to blame them. California now has the country’s highest cost of living, highest sales tax, third-highest marginal income tax rate, worst business climate, second-worst roads, fifth-highest gas prices, worst air quality, second-highest unemployment rate, highest home prices, and third-highest foreclosure rate.”
“So is it time for Californians to move to Arizona? Probably, but I haven’t given up on the Golden State (although I did leave California — where I was born and raised — five years ago and have no plans of returning), because I think its long-term future is bright.”
“The state will probably still be a disaster 10 or 20 years from now, but eventually, maybe in 2060 or so, California will recover. The state can’t stay moribund forever; it has too many things going for it. Sure, California has problems, but most of those problems are solvable. At some point, things will become so bad that a critical mass of fed-up voters will demand reforms. But that could take a while.”
A busy week with lots of traveling for me and now it’s time to get back to a regular posting schedule. My thanks to those who support this blog. Please check back this weekend for news, your topics and market observations
Thanks to you Ben.
Apparently while you were gone it became 2012. Did you fly across the dateline or something?
Yeah, I just read that. 2012. Ahh, I just love the level of journalism out there these days.
“The state will probably still be a disaster 10 or 20 years from now, but eventually, maybe in 2060 or so, California will recover.”
The same could be said of the United States.
Of course it took Europe several centuries to recovery from the collapse of Rome.
“The state will probably still be a disaster 10 or 20 years from now, but eventually, maybe in 2060 or so, California will recover.”
Great - I’ll be to retire there when I’m 108….:)
When food can no longer be subsidized by worthless paper, and in fact becomes the defacto currency I would rather live in the number one producer of food and not the 41st. http://www.ers.usda.gov/Data/StateExports/2010/totsx5yr.xls
Almost no one is willing to countenance the possibility that the state has peaked and it’s all downhill from here. In my opinion, the natural resource inputs needed to run modern California simply won’t be there in the future.
“Many economists believe that 2012 is not normal.”
Are economists now seers of the future?
I wonder if they thought 2005 WAS normal?
Hopefully their crystal balls are working better as regards the 2012 outlook than they have over the past decade or so, which should have led to mass resignation of economic forecasters out of embarrassment over their collective ineptitude.
“Connecticut is losing its 25 to 34 demographic faster than any other state, he said. But the types of homes available is a major cause of these departures as well as the depressed state of housing sales. ‘We’re lacking starter homes,’ said David Fink, the Partnership for Strong Communities policy and communications chief. ‘We haven’t been building the right kind of homes in more than a decade. This is the issue that needs to be addressed.’”
High taxes, insane public unions, high housing prices = all the kids leave to “red” low tax, right to work, lower housing prices states.
I can’t remember, is red Republican? Which one of those states has high employment, decent wages, low house prices, or a combination of at least two of those? I’d like to know where it is, really.
“right to work for less” states you mean Banana.
You recently stated that you’re a wage earner right banana?
It doesn’t exist. Sure, those Conneticut kids can move to Alabama, they just won’t be too happy with their paychecks.
Anecdote:
I used to work for a small company (100 employees, in Colorado) that was purchased by bigger company (3000 employees in Boston)
Anyhoo, we had this tech support guy from the mothership come out to see us on a biz trip. He fell in love with Colorado and applied for a transfer to our group.
Until he found out that the relo would involve a FORTY PERCENT PAY CUT, plus our bennies sucked compared to what he was getting.
Needless to say he lost interest REALLY fast.
Until about 2006, the standard procedure was for Californians to sell their 900sf crapshack in SoCal for about half a million bucks, and buy 160 acres locally for about half that, and “retire” off the difference.
Better yet, when the railroad closed their big maintenance shop in California, and all those blue-collar transferees bought/built houses in the toney developments where all the doctors and big local business officers lived. Pretty schweet, seeing a McManshion with an old Camaro sitting on cinderblocks out front.
Not so much going the other direction. Almost nobody transfers the other way. Guy I know had to quit his job, rather than accept a transfer. His house that sells for $150K around here was selling for $700K plus in the Bay area. And of course, whatever pay raise was being offered to transfer didn’t come close to covering the increase in the cost of living.
Until he found out that the relo would involve a FORTY PERCENT PAY CUT…
Uh, did he bother to actually run the numbers? The cost of living is substantially lower even in the Denver area than it is in Boston. It wouldn’t be a 40% loss compared to the real cost of living. In my job, the average salary for someone with my experience and title is about $48,000 a year in Texas and $93,000 in San Francisco. So…. I have a much nicer place to live, more real disposable income, and a better quality of life by living in Texas despite making, you know, 40% less.
Back in the 1980s, my dad was offered three different positions in his company, one in San Fran, one in Philadelphia, and one in Dallas. He talked to reps in all three locations, asked what they really spent for gas, food, mortgages, everything, and Dallas was so much cheaper (despite the lower salary) that he said it wasn’t even close. In fact, the guy from Philly tried to apply for the Dallas job when he found out what the cost of living was.
Uh, did he bother to actually run the numbers?
I think a lot of times people don’t bother running the numbers because they intuitively know it’s a one way trip. Just like cashing out your hovel on the coast and buying a castle in flyover country. Works well as long as you never want to go back. Or maybe I’m wrong…but I have a hard time seeing a company giving me a 60% raise to come work for them on the coast.
“High taxes, insane public unions, high housing prices = all the kids leave to “red” low tax, right to work, lower housing prices states.”
You’re missing the main point. Zoning. People in Connecticut don’t want the less well of in town.
Interesting Bloomberg discussion today..
All this “incentivization” by local and state governments to induce business to move to their location? Wall Street is now saying it’s counter intuitive and poor practice. Obviously there is no net gain in jobs was their point…. (I thought wall street was smart)
You are exactly right WT Darien has NO new rental apartments in what 30 40 years…except for the couple dozen that were grandfathered in near the train station over the 2 story commercial buildings. and most of those went commercial since the rents were higher.
They did build luxury condozes which has restrictions on renting
Greenwich as a 4 acre zoning….New Canaan and Wilton has large lot sizes
And the truth of the matter is, loan- modification programs were not meant to save the struggling homeowner, but to keep the banks from inheriting a flood of foreclosures.”
Ding Ding Ding! - we have a winner!
“…to keep the banks from inheriting a flood of foreclosures.”
How’d that work out for them?
It’s working so well that they’re drowning in an inventory of empty houses.
But not foreclosed yet in many cases, right? So maybe they DID avoid inheriting a flood of foreclosures…
… but they’re awash in a sea of “assets” which are priced to render them still solvent. And that’s what it’s all about boyz and girlz.
I think it is working really well.
There are aspects of the loan modifican programs that are quite active and which support the two unstated policies of:
1. No FB dollar shall be allowed to escape, and
2. Keep hope alive.
Numbers 1 and 2 are mutually suporting and reinforcing.
Bleed the FBs of money until they are dry of the stuff, then cast them out into the street so as to make room for the next batch of FBs.
Love the NAR, and Save the Banks.
Did you say weiner or winner?
“We don’t save, so we ‘invest’ in houses ”
Oh, “we” do, do “we”? Speak for yourself, **swipe.
“Q: We recently completed a short sale and yesterday a collection agency called and told us that we still owed more money since the property was sold for less than what we owed the bank. Do we have to pay? A: Maybe.”
“Q: We lost our foreclosure case and are afraid that the sheriff will throw us out. How does this process work? A: After the court rules for a lender in a foreclosure case, you have roughly two to four months before you have to leave the home.”
“Q: We are in foreclosure and are trying to obtain a loan modification on our rental house. Our tenant found out about it and said that since we were not paying the mortgage, she would not pay the rent. Can she do that? A: Not without being evicted.”
EVERYONE wants something for nothing…
Why not? It is now the American way.
Hey, if it works for the banksters, why not for the “little people”?
If anyone wants to discuss people who are “parasites”, the discussing should start with the MNC/bankster class.
They’ve been sluffing off expenses to their employees and government for years, and they STILL manage to screw things up bad enough that their survival is contingent on receiving free money from the Bank of Uncle Sam.
Our tenant found out about it and said that since we were not paying the mortgage, she would not pay the rent.
If I were the tenant, I’d get the heck outta Dodge. As in, find another place to rent right-quick.
I’d also be telling everyone I know about the landlord. Nothing like letting the landlord get stuck with an empty rental house on which he/she isn’t paying the mortgage. Call it payback time.
Besides, isn’t it illegal to collect rent without paying the mortgage? I thought if you had income properties, you had to put the rent toward the mortgage first. The tenant should just explain that she is keeping the landlord from ccommitting a felony.
“The state will probably still be a disaster 10 or 20 years from now, but eventually, maybe in 2060 or so, California will recover. The state can’t stay moribund forever; it has too many things going for it. Sure, California has problems, but most of those problems are solvable. At some point, things will become so bad that a critical mass of fed-up voters will demand reforms. But that could take a while.”
Yes - Eventually they will:
Crush the public unions
Throw out the illegals
Slash taxes
Slash entitlements
Slash regulations
etc.
Gosh - which political part of the spectrum does that sound like???
Dear TutiFruity:
Most people understand the secret to prosperity lies in high employment, which must necessitate an end to offshoring (i.e., a return to tariffs).
Hard to conflate all that with unions, Social Security, and regulations.
Indeed, if this was true Alabama would be the most prosperous state in the nation.
Ho ho, hah hah, hehehehehehe, BwaHaHaAhHAHAHAHAHAHA!!! (Cantankerous Intellectual Bomb-thrower™)
Actually, SoSec puts an immediate 16% tax on all legal workers, while all the other regulation (OSHA, EEOC, etc) adds as much as 20%. So, that is a huge incentive to use illegal labor.
Tariffs have nothing to do with outsourcing because, um, they’re not related, but they do drive up the costs of goods, prevent competition, and can cause trade wars that limit the ability to sell our exports. It’s all kind of related.
The unions relate to fiscal policy. Unfunded public pensions and health plans have liabilities in the trillions of dollars, which causes horrible problems for all levels of government, meaning a lovely combination of insolvency and high taxation without visible benefit. Again — not really that unrelated to any kind of economic discussion.
ella:
“SS provides an incentive to use illegal labor”
-The solution to this is to enforce the laws against using illegal labor. The same reasoning applies to all crimes.
“Tarifss have nothing to do with outsourcing because, um, they’re not related.”
-That’s a circular argument. A because of A. Doesn’t work. Tariffs on imports are a correction factor for currency disparities. We are currently in a trade war. It’s a special type of trade war called a currency war. Tariffs obliterate that sort of thing. That’s why all our trading partners have such huge tariffs against our stuff. What is limiting our ability to export right now is the disruptions caused by currency wars.
“Public unions relate to fiscal policy.”
-If our wages were not being eroded so dramatically by offshoring, then our tax base would be sufficient to pay public employees a comfortable living w/pensions, etc. We would all be living better.
IMO, the solution is to realistically address the problem of globalization, whereby we allow our productive capacity and our prosperity to be offshored.
It’s only a new reality for the majority who live on W2 income. The pigs in NYC/Greenwich, CT rolled through 2007-2009 like a speed bump.
There is a lot of grumbling on this blog about riots, revolution, et cetera, but until these “Masters of the Universe” as Tom Wolfe called them face real consequences for their actions a la Maria Antoinette, nothing will change.
It is very obviously the case that consumer economic activity is being sustained from millions who are no longer paying their mortgages. That freed up a huge margin of cash, even for the unemployed. So Americans are going on a comparable spending spree, and that is literally the only thing holding up the retail end. Since Americans are the most insane population on earth, they aren’t saving any noticeable amount, and are just spending wildly, enjoying today and storing up nothing for the future … just like the elite projected they would.
Is there no limit to the number of tricks that Bernie and Timmay can pull to keep the “extend and pretend” going?
Americans are not the most insane population on Earth. That’s just crazy talk. Did you read the story about the Chinese kid who sold is kidney so he could buy an iPad?
He who travels sees stupidity everywhere.
-Big V
I don’t know, perhaps not a kidney, but many people go to work every day at jobs they hate and which are causing all manner of stress and health issues so they can have an iPad, house etc…
Oh yeah, that’s totally the same.
No of course not!
GH:
Its not a want anymore Jobs REQUIRE you to own a laptop ipad iphone or else you have no JOB. Even intern no pay jobs.
Home mortgage interest deductions must be kept; our country needs a successor to Fannie Mae and Freddie Mac that will preserve the secondary mortgage loan market, and to vote against any proposed legislation requiring a minimum of 20 percent down for all mortgage loans.”
I can’t think of a more succinct description of what caused the bubble in the first place; too bad the NAR lobbyists forgot to mention low interest rates.
And oh by the way NAR, there is NO legislation “requiring” 20% down for a mortgage,* and I will fight your propaganda on that point until my keyboard falls apart.
———-
*the only time 20% down is required is if the bank wants to securitize 100% of the loan. If an FB and a bank agree to put 0% down and pay a higher interest rate, and the bank agrees is willing to securitize only 95%, then nobody will stop them.
“I can’t think of a more succinct description of what caused the bubble in the first place…”
See Einstein quote below…
People are tards.
-Big V
“Home mortgage interest deductions must be kept; our country needs a successor to Fannie Mae and Freddie Mac that will preserve the secondary mortgage loan market, and to vote against any proposed legislation requiring a minimum of 20 percent down for all mortgage loans.”
And in other news …
The National Association of Realtors released a press release informing the American public that slipping on a banana peel really is funny. Everyone thinks it’s funny, and only nasty misers think otherwise. You don’t want to be a nasty miser, do you?
‘It doesn’t make sense to force families into foreclosures that further drive down prices.’
Makes you wonder how many investment properties Senator Merkley owns…
My higher-up at work went through a short sale nearly 5 years ago. She’s a lucky duck. The hit to her credit will be removed soon, and she will be back in the market for a house, this time at a 50% discount.
Forcing families to get lower house payments, since 2005.
-Big V
This article seems to fit this thread perfectly.
It also recalls to mind the ill-timed “Home $weet Home” Newsweek cover from a few years ago — the contrarian indicator of the century thus far!
WRITING ON THE WALL
JUNE 1, 2011, 11:36 P.M. ET
When the Value of Housing Ruins the Home
Even For Americans Who Can Pay the Mortgage, Home Is Not So Sweet
By DAVID WEIDNER
The bad news about housing just keeps coming.
On Tuesday, the S&P/Case-Schiller National Index showed that prices fell nationwide by 4.2% in the first quarter. That followed a 3.6% decline in the fourth quarter.
The result: Housing prices now stand at 2002 levels, meaning nearly a decade’s worth of appreciation has been wiped out. If you bought anytime in the last 10 years, chances are your house is worth less than you paid. You’re trapped in a loss.
The housing funk is even seeping into popular culture. In his new album, called “10 Songs For the New Depression,” Loudon Wainwright sings to a wife seeking divorce in the tune “House:” “There’s no way we can sell our house now so we’ll just have to stay.”
He also ponders: “Suppose we found a buyer so we could go our separate ways.”
Mr. Wainwright has captured the moment. The economy has wreaked havoc on personal lives, he writes, transforming decision-making in the household.
Psychologists say the phenomenon is more than just a musical expression.
“More and more divorced couples are forced to remain in their homes while their houses are for sale, which creates extreme stress on the couple and their children,” says Margo Meeker, a clinical psychologist. “Having to live under one roof post-divorce and then having to stage and show the house while the family is going through such a major transition and loss creates even more anguish in an already stressful situation.”
A recent survey by the National Foundation for Credit Counseling concluded that financial distress was having an impact on our marriages, our roles as parents, our jobs, health and even sleeping patterns.
Just 6% of respondents said financial distress wasn’t a factor in their daily lives.
Good luck finding them.
Falling housing prices aren’t just rattling families. Psychologist Elizabeth Lombardo told me last year that bankers who deal with customers have stress, too. There’s anxiety about whether the economy will really recover. That adversely affects job performance, health and sleep. And there’s the loss of money: their own and that of their clients.
Bankers also take the stress of their job home. As Ms. Lombardo put it, “a grumpy Wall Streeter who comes home can wreak havoc on the entire family without even meaning to.”
The ripple effect has become larger partly because so many Americans have tied up their wealth in housing. In 1985, 12% of personal disposable income came from savings, while just 1% came from home-equity lines, according to the Federal Reserve and Congressional Budget Office.
By 2007, 10% of personal disposable income came from housing credit: second mortgages, home-equity lines and so on. Less than 1% came from savings.
Today, Americans are saving more and spending less. Their homes are no longer piggybanks or sources of free money. That’s a good thing, but we spend less when we’re saving. Falling home prices have failed to translate into demand. People who want to buy homes still can’t afford them.
In another National Foundation for Credit Counseling survey, nearly half of respondents said they could never come up with a down payment for a new home. Another 17% said they would have to borrow from family or friends. And 21% said they would need to get a low down payment if they used their own funds.
The confluence of sellers unable to sell and buyers unable to buy has created what Ms. Meeker calls a “housing trap.” People who anticipated home prices rising-or at least staying level-can’t afford the economic hit even if they choose to move to a place that is less expensive.
“There is definitely an increased sense of feeling trapped, and panicked with no great option,” Ms. Meeker says. “Most folks are holding tight and praying that things will turn around eventually, but no one knows how long that may be, creating a silent sense of quiet despair but having to put on a very brave face out in the real world.”
…
Did you say Weidner or weiner?
“Just 6% of respondents said financial distress wasn’t a factor in their daily lives.
Good luck finding them.
Not that hard, you just have to drive into the right neighborhoods. My son tells me that the “rich kids” at the local HS have parents who own the local businesses: One kid’s familiy owns the 2 local McDonalds. Another one owns a few flophouse motels and chain restaurants. The local Ford dealership, etc.
Those who work for Corporate America? Not so much.
I don’t know a friend did a computer related project at a Social Security office in Orange County, CA and he found the administrators would occasionally take breaks from their social time to do some work. Might be boring as all heck, but government work does have a lot going for it these days and it is all but impossible to get fired once you get some seniority.
One of my friends said the same thing about her son’s computing-related stint at American Express in Phoenix.
Bob (not his real name) would get to the office no later than 5 a.m. Reason: He had to. Much of the work he was doing had to be done when no one else was on the network.
Any-hoo, later in the morning, say, between 8 a.m. and 9 a.m. was when the day slugs came in. To hear my friend tell the story, it seemed as though a major topic of conversation was where they went to breakfast and where they were planning on going to lunch.
Oh, yes, they did slide a little work in here and there. And, of course, Bob the computer support guy was there to assist if the Windows Solitaire game wasn’t working.
As for Bob’s quittin’ time, he’d leave the office at 1 p.m. The day slugs would give him a hard time about this. He’d very politely remind them that he’d already put in a day’s work. With emphasis on the word “work.”
Sounds like all of the school administrators in CA that I witnessed first hand. Dont forget they used work time to plan vacations.
All our current problems come down to one simple thing:
Your typical J6P/ middle class working stiff hasn’t received a single cent of the country’s productivity gains since 1985. Thanks to policies supported/paid for by the top 5% ers.
Until that situation is redressed, we’ll continue to circle around the toilet bowl.
I’ve been “preaching” over in STL this week. My favorite thing to do is ask my co-workers what they were making when they started in the business 20 years ago. Then I put that into one of the online “inflation calculators”
To a man, every one of them is making less that they were as new hires (inflation corrected). No “premium” for any of your training and experience.
Your typical J6P/ middle class working stiff hasn’t received a single cent of the country’s productivity gains since 1985
I would disagree. Perhaps you’re referring simply to cold hard cash, but consider “quality of life” improvements. People have more free/leisure time. They have the internet, cheap, big TVs. Easier transport.
All of these are results of the productivity gains…and nearly all have benefited*.
* Note: many would argue these things aren’t actually benefits…I think it’s safe to say that J6P does believe they are.
People have more free/leisure time than twenty years ago? If they’re working they don’t. This sounds like those utopian predictions from the 1950s that Americans would someday have a 20-hour workweek while technology did all the heavy lifting.
As for televisions and other expensive consumer goods, it was a working spouse and debt that made those things accessible to Joe Six Pack, not productivity gains passed on to workers.
People have more free/leisure time than twenty years ago?
You really think that’s not the case if you fix all other variables? Imagine someone with the same size house/land/family. You really think they have *less* free time now? If not, what are they spending time doing that they didn’t used to?
it was a working spouse and debt that made those things accessible to Joe Six Pack
That would be true if J6P had these things due to higher income. I’d argue instead they are accessible due to reduced costs. Things that used to be luxuries are ubiquitous now. IMO that’s not because we’re all rolling in the dough now…
Those who work for Corporate America? Not so much.
speak for yourself. I work for corporate america - don’t own a mcdonalds or a hotel, and I don’t feel financial stress.
A very large % of the population could be in this group if they’d simply SPEND LESS THAN THEY earn. Not that hard, really, and works at almost every level of the income spectrum.
Sure, there are folks who don’t make enough even to afford food and a decent roof over their heads..but I’d guess this # is considerably less than 50% of the population…probably less than 20%.
Your vantage point is a lot less stable than you think.
Your vantage point is a lot less stable than you think.
and you, like most others here, love to make assumptions about what I think.
Just 6% of respondents said financial distress wasn’t a factor in their daily lives.
It’s not a factor in my daily life. Whether that’s subject to change or not is a different topic.
Hey drummin did you upgrade the Joshua tree ext for Firefox 4?
Thanks
did you upgrade the Joshua tree ext for Firefox 4?
Yes. It’s up on the website, version 1.5.1.
“speak for yourself. I work for corporate america - don’t own a mcdonalds or a hotel, and I don’t feel financial stress.”
Just saying that in Corporate America the spectre of being laid off is always a step away. Which is probably why moat of my CA friends are saving every penny they can, skipping vacations and driving beaters while local biz owners like show me their new 7 series BMWs.
Time to dust off that old chestnut:
Visualize Economic Collapse
The scam that just keeps going…
————————–
The truth behind Chrysler’s fake auto bailout pay back
Washington Examinier | 5/24/11 | Conn Carroll
It is not every day that the White House and Democratic National Committee celebrate a supposedly private company’s debt restructuring plan, but such is the marriage of big government and big business under the Obama administration. The New York Times reports: “Chrysler said Tuesday that it had paid back $7.6 billion in loans from the American and Canadian governments, marking another significant step in the revival of the company, the smallest of the Detroit automakers.”
Back in November of 2009, when GM announced that it would repay its government loans, it didn’t take much investigation to realize that The General was simply shuffling government money from one pocket to the other and that true “payback” was still a ways off. … And now that our government finds itself “contemplating a runaway deficit and getting rid of its 8 percent of Chrysler’s equity,” would you believe that a similar federal money-shuffle is under way? Believe it.
American taxpayers have already spent more than $13 billion bailing out Chrysler. The Obama administration already forgave more than $4 billion of that debt when the company filed for bankruptcy in 2009. Taxpayers are never getting that money back. But how is Chrysler now paying off the rest of the $7.6 billion they owe the Treasury Department?
The Obama administration’s bailout agreement with Fiat gave the Italian car company a “Incremental Call Option” that allows it to buy up to 16% of Chrysler stock at a reduced price. But in order to exercise the option, Fiat had to first pay back at least $3.5 billion of its loan to the Treasury Department. But Fiat was having trouble getting private banks to lend it the money. Enter Obama Energy Secretary Steven Chu who has signaled that he will approve a fuel-efficient vehicle loan to Chrysler for … wait for it … $3.5 billion.
So, to recap, the Obama Energy Department is loaning a foreign car company $3.5 billion so that it can pay the Treasury Department $7.6 billion even though American taxpayers spent $13 billion to save an American car company that is currently only worth $5 billion.
Oh, and Obama plans to make this “success” a centerpiece of his 2012 campaign.
Can you imagine what kind of car industry and future we would have if even a tiny amount of this had been invested in Tesla?
“So is it time for Californians to move to Arizona? Probably, but I haven’t given up on the Golden State (although I did leave California — where I was born and raised — five years ago and have no plans of returning), because I think its long-term future is bright.”
Sounds like the writer gave up on California five years ago. What am I missing?
Over the years, I’ve met a number of ex-Californians. While many have said that they prefer our slower pace of life, or that they felt a spiritual calling to this special place in the desert, one guy was honest enough to cite the Rodney King riots as his reason for moving here.
I’ve also met ex-Californians who claim it was their first direct experience with a magnitude 7.0+ earthquake that drove them away.
I was in a BIG quake in Lima Peru in 1970 - strong shaking side to side if I recall and it has left its calling card with me… That said I know there is a real risk of a very big quake 9.0+ here in Ca, but I guess like everyone else when it comes to quakes you just don’t give it much thought until it actually happens.
Look at the tsunami in Japan recently. The areas that were hard hit were inundated about every 400 years and were “due”. Same goes for Northern CA, Oregon and Washington coasts which are inundated every 300 - 600 or so years (last 100 foot wave hit in 1700), but there have been 6 in the last 2600 years, so about the same risk as the recent Japan tsunami, yet the coasts are built up and people living there have forgotten… What is certain is not if, but when the next will strike. The same is true of Southern California. Not if, but when!
“…risk of a very big quake 9.0+ here in Ca…”
I think not. If you can produce evidence in modern times of a strike-slip fault (like the San Andreas fault family members) producing a quake of that magnitude, I am interested, but I wish you good luck.
My limited knowledge of geology suggests you need a subduction zone to produce quakes above 9.0 on the Richter scale.
From what I’ve read the CA earthquakes should top out in the 7.5-8.0 range, but you can get a 9.0 nearer to Seattle.
I just passed by a construction site. None of the guys were Mexicans, and they were all speaking English. Hey wait, I thought those were the jobs Americans wouldn’t do. It was a repair/remodel project on a commercial building, btw.
Funny you should mention this. I’m watching some workers from South of the Border add a porch to a neighbor’s house.
The carpentry looks okay, but the roofing work looks slapdash at best. (Guys, it’s okay to cut the roofing paper to fit the actual size of the surface you’re trying to cover. Really, it’s okay.)
Then there’s the drain line from the swamp cooler. It’s PVC, and right now, it terminates above the roof of the new porch. (Fellas, get a length of PVC and extend that drain line so empties into a vent stack. That’s what my cooler’s drain line does, and I’ll bet you’ve seen it while you’ve been working. Or run the drain line to the ground where it can irrigate the plants.)
Wow, do you still have single-pass swamp coolers down your way? Growing up in dry, eastern WA as a kid one of my jobs for my rental-owning dad was to get all of the swamp coolers up and running every spring. We had a couple that were what I would call “single-pass”, but most of them had a recirculation pump inside with a float valve to only admit make-up water. No drain line on those.
There are single-pass coolers, but they’re the older ones. As for the water, it does need to be refreshed now and then. My cooler does that. The “used” water gets flushed down the drain line.
“Neil Conner always thought he’d be a real estate agent.”
Are our aspirations truly that low? I thought people dreamed of becoming athletes, physicians or astronauts. This is like a boy dreaming of growing up to sell cars.
Housing bubble, hmmm, does it also track the medical bubble?
Medical Bubble?
think of it this way. Everyone wants the best medical care, and everyone wanted the McMansions!
But the can’t pay for the best medical care so they take out insurance to cover the cost.
Now they are faced with $5,000-10,000 in medical insurance a year costs, which cause them not to be able to afford the McMansions they bought, or want to buy!
Just think how many people could pay their mortgage if they didn’t have medical insurance charges!
Now we have to think of how to get the people to realize that they can not have the best medical care unless they can pay for it.
How about this. Insurance company writes life insurance policy with increased premium and then pays medical bills above $5,000 and lowers the life insurance policy payout on death by the amount paid.
So the public could have life insurance, and medical insurance, in one policy at a lower price.
But , maybe not!
Better yet,they could just buy a catastrophic policy and keep an interest-bearing savings account for emergencies.
…”where American innovation, creativity, inventiveness and ingenuity produce great
patentsscams and swindles.”There, fixed it for you, Ben.
How long does “temporary” last?
U.S. unemployment rises to 9.1% as hiring plunges
A net 54,000 jobs are created in May, less than half what’s needed to keep pace with growth in the working-age population. There are indications that temporary factors caused some of that weakness.
…
I fear it will only get worse from here.
I am feeling pretty bearish right now myself; not sure that is just a reflection of my ursine nature, or if conditions are further depressing my already-gloomy outlook.
Or maybe it is just the alcoholic beverage I am drinking as I type…
Thank heavens someone is willing to take a stand against the climate change wackos who claim that global warming explains this year’s unusually large number of twisters.
Weather variations lead to increase in tornadoes
By Jonathan Ernst, Beacon intern
Posted 10:53 am Fri., 6.3.11
More than 500 tornadoes were reported in the United States at this time last year. That number has more than doubled in 2011 as nearly 1,300 twisters tore through the Midwest between March and May, leaving a path of destruction and more than 500 people dead. Adding to the unusually active season, at least two tornadoes struck western and central Massachusetts Wednesday, leaving four people dead so far.
Climate scientists expect the heavy tornado season to end in June.
“Some of the outbreaks this season are well beyond anything we were expecting to see,” said Harold Brooks, meteorologist with the National Severe Storms Laboratory at the University of Oklahoma. “The biggest question that remains is why the death toll was so high this year.”
At least 134 people lost their lives as a result of the massive tornado that struck Joplin, Mo., on May 22. Studies have shown that advanced warnings of five to 15 minutes can reduce fatalities by more than 40 percent. Residents in Joplin were given a 24-minute warning. Even so, more than 900 people were reported injured by the storm system.
“It was a well forecasted event, but this was a one-in-20-years event and it was just extremely bad luck for Joplin,” Brooks said.
Brooks, who studies historical weather patterns, said no evidence suggests that tornadoes are becoming more frequent in the long term. Brooks said that each month and each tornado season have its variations. This variation is evident with April and May. May saw 202 tornadoes, one of the slowest months on record. By comparison, April was one of the most active months on record with more than 875 tornadoes.
…
Fast facts on Tornadoes
Less than 1 percent of all thunderstorms produce tornadoes.
Because of the tremendous pressure differences associated with a strong tornado, maximum winds can sometimes approach 300 miles per hour.
Pressures within some tornadoes have been estimated to be as much as 10 percent lower than immediately outside the storm.
Tornadoes have been reported in every state in the US and also in every season.
The chances that a tornado is an F5, the highest classification for a tornado on the F-scale, is less than 0.1%.
Tornadoes are most likely to occur between 3 and 9 p.m. but have been known to occur at all hours of the day or night.
Source: National Weather Service
“We don’t save, so we ‘invest’ in houses and the appreciating value of our properties makes us feel good. So we go to the mall and the car dealer and the electronics store and spend like crazy. After all, we can run up our credit cards and take out big second mortgages since the value of our homes keep going up.”
That was 2006; this is now:
Analysis: Employer’s market can’t last without jobs, demand
People wait in line to attend a job fair for military veterans and other unemployed people in Los Angeles, California, October 7, 2010. REUTERS/Lucy Nicholson
By Pedro da Costa and Leah Schnurr
WASHINGTON/NEW YORK | Fri Jun 3, 2011 7:48pm EDT
(Reuters) - Not everyone is lamenting a weak recovery that again looks to be running out of steam.
For managers at Wal-Mart Stores Inc. (WMT.N), the jobless rebound has made it easier to hire qualified employees — and enabled the company to work them a little harder.
Yet this benign environment is unlikely to last if consumers’ buying power is sufficiently dented that it begins to bite back at businesses.
U.S. employment figures for May released on Friday were unequivocally dismal. The economy added a paltry 54,000 jobs last month, far below what is needed to keep up with population growth. The jobless rate also climbed, to 9.1 percent.
For some large corporations this has actually boosted their ability to attract great workers.
“People are thankful to have good jobs … and are working much more efficiently,” said Bill Simon, president and CEO of Walmart U.S., the box-store discount retailer. “Labor productivity has been phenomenal.”
The flipside of that of course is that 14 million Americans who are actively looking for a job are unable to find one.
For smaller businesses that depend on the financial well-being of their customers in order to make a profit, the damage to household balance sheets has been difficult to shrug off.
“We’ve been in business for 37 years and survived five recessions,” said Frank Goodnight, president of Diversified Graphics, a commercial printer and publisher in Salisbury, North Carolina.
“This recession will be equal to all five put together plus about double. And we don’t think it’s really going to turn around in another year.”
ESCAPE VELOCITY MEETS GRAVITY
…
The housing market double dip clearly shows up at contemporaneous lags in home prices and construction spending.
Home prices and construction spending
Year-on-year percentage change
I’ll take this job !
http://www.cnn.com/2011/US/06/02/georgia.immigration.farm.workers/index.html?hpt=us_c2
To address unemployment, Georgia governor proposes farm work
By John Sepulvado, CNN Radio
June 3, 2011 11:02 a.m. EDT
Atlanta (CNN) — Are you out of work? Are you looking for a job? Do you live in Georgia?
If the answer to those questions is “yes,” Gov. Nathan Deal has an idea for you: Become a farm worker.
“We still have an unemployment level here that is unacceptably high, whether or not we can provide some way of transitioning some of those individuals,” Deal said last week.
“Perhaps it requires some relocation in some cases for them to be able to fill some of these jobs. We’re going to explore all of those things.”
Deal is looking for ways to fill a farm worker gap after some areas lost more than 50% of their laborers, the Georgia Fruit and Vegetable Growers Association said. Many workers left Georgia after the governor signed an Arizona-inspired immigration law allowing local police to identify and detain illegal immigrants, the group said.
Growers: Migrant workers avoiding Georgia
Other countries have tried similar ideas to stimulate growth. Japan has a program to put young underemployed workers on farms during the summer. The program was moderately successful until a tsunami hit the country in March.
In Colorado, 1,799 U.S. citizens applied for farm jobs in 2009, according to the state’s Department of Labor and Employment. That was up from 39 in 2008, although state officials say the number again fell in 2010 to the “low hundreds.”
With a 9.6% unemployment rate in Georgia, University of Georgia Economist Jeff Humphries thinks the governor’s plan could work.
“Employers have the upper hand, and people looking for jobs are more desperate than ever before,” Humphries said. “Given that unemployment benefits are starting to run out for an increasing number of workers…this is the best time to try it out.”
For some unemployed Georgians, however, the idea is not so appealing.
Marci Mosley, who lives in Atlanta, has been out of work for more than a year. She said she would only work on a farm as a last resort.
“I have a phobia of snakes,” Mosley said. “I hate spiders…You have to get up early in the morning, and it’s hot.”
Mosley, an African-American, said she used to work on her grandfather’s farm in Texas, where he stressed the importance of a good education to get off the farm. Mosley believes Deal’s plan would be a tough sell for many other African Americans, who saw their older relatives struggle farming.
“It could be a setback for people,” Mosley said. “The only people that would even think about doing that are people who have nothing else left…An educated black person does not have time for that. They didn’t go to school to work on a farm, and they’re not going to do it.”
As for unemployed white Georgians, they’re not showing up for agriculture jobs either, farm managers said.
In Peach County, more than half of residents are white, according to the U.S. Census Bureau, and 26% are out of work, according to the Georgia Department of Labor. The county is kept afloat by agriculture jobs.
“Any benefit realized by homeowners was an afterthought. In that context, the whole struggle for homeowners to actually get permanent modifications makes sense. No one really cares if a homeowner gets one.”
The Democrats went way overboard trying to sell the HAMP as ‘helping hoemowners avoid foreclosure.’
Someone has a lot of ’splaining to do…
Dow Average Has Its Longest Weekly Slump Since 2004 on Employment Report
By Inyoung Hwang - Jun 3, 2011 9:00 PM PT
U.S. stocks fell this week, sending the Dow Jones Industrial Average to its longest streak of losses since 2004, after worse-than-estimated reports on jobs and manufacturing fueled concern earnings growth will slow.
All 10 Standard & Poor’s 500 Index groups dropped, with declines exceeding 1.3 percent. Newell Rubbermaid Inc. (NWL) sank 15 percent, leading declines in the Standard & Poor’s 500 Index, after cutting its profit forecast. J.C. Penney Co. and Stanley Black & Decker Inc. (SWK) slumped more than 6 percent as investors sold companies tied to economic growth. General Motors Co. (GM) and Ford Motor Co. (F) decreased at least 4 percent after sales growth missed projections.
The S&P 500 lost 2.3 percent to 1,300.16, the biggest weekly decline since August. Its five-week losing streak is the longest since 2008 and puts the index at its lowest level since March. The Dow fell 290.32 points, or 2.3 percent, to 12,151.26, also posting a fifth-straight weekly slump.
“It was a C-minus week for the economy,” said David Sowerby, a Bloomfield Hills, Michigan-based money manager at Loomis Sayles & Co., which oversees more than $150 billion. “These are the kind of weeks that remind investors stocks don’t just go straight up. There was enough data this week to begin to connect the dots that uncertainty remains.”
…