|
The Bush Boom Party is Over
The U.S. housing bubble is popping. Interest rates are up and will not go down soon. Many people who recently signed Adjustable Rate Mortgages will learn that they can not afford their houses. But by then housing markets will be down and foreclosure will come. More offers will further turn down the market prices. Construction workers will lose their jobs. Homebuilders will shut down.
This will get really nasty next year when $1 trillion in ARMs are in for readjustment. Finally the Bush boom party is over.
The National Association of Realtors reported that sales of existing homes and condominiums dropped by 4.1% in July from June to a seasonally adjusted annual rate of 6.33 million – the lowest level since January 2004. Economists were forecasting the pace of sales to fall to 6.55 million.
The fragile housing market….
Resource Investor
Some illustrating headlines:
Housing affordability drops to record low, home builders say
Market Watch
Affordability conundrum: Prices dip, yet homes remain out of reach
Palm Beach Post
Affordable homes still scarce here
Los Angeles Daily News
Luxury housing market sliding
phillyBurbs
Chill cast over KC housing market
The Kansas City Star
It’s a housing market for buyers
Arizon Daily Star
Debtors on Borrowed Time
Press of Atlantic City
Homeowners feel pinch of mortgage rate
Washington Times
Study Warns of Homeowner "Rate Shock"
Consumer Affairs
Stalled housing market clouds Lowe’s outlook
Houston Chronicle
Weak housing-market hurts Toll Brothers’ profit
The Salt Lake Tribune
Dollar May Decline on Speculation of Cooling Housing Market
Bloomberg
Well put, debs is dead, really an excellent description of the problem all through the developed world seen through your personal lens.
After the sugar plantations failed around the turn of the last century (1900) due to the rise of the European sugar beet industry, St. Croix democratized into a poor island of relatively small landholdings. The land assessors used the cover of the depression to monkey around with taxes, and pushed the working poor off the land. Eventually seven families controlled the island — the judgeships and courts, the harbors for smuggling, the politics, the flow of drugs to disempower the poor, the productive land, the whole shebang. Eventually Stateside investment money wormed its way in, led by the Rockefellers, developing fancy tourist resorts, while the landless locals had to beg for ill-paid,no benefit service jobs.This led to the Fountain Valley Massacre where eight people were pointlessly killed at the Rockefeller-owned gated community Golf Course. It is a fascinating multi-layered story — the link doesn”t begin to do it justice — with many ironies, and motives and plotlines, which I will not go into here. Suffice it to say that anger was deflected from rich local oppressors to rich stateside oppressors. Property prices fell by 30-50% instantly, and the dream of St. Croix ever becoming a so-called “world class” tourist destination was forever gone. So, the island became poor and tacky.
I guess the point of this story is that repressed social forces often go unforeseen until they erupt, which they always eventually do. Then the well-off property owning class always act surprised, “Why do they hate us?” Sound familiar? When the shit hits fan, the rich blame the poor for their lack of “foresight” and for “not understanding their own interests.” But the poor, while slightly poorer, are really no worse off — in some ways they are better off with the crash of the boom economy. They are less an overstocked commodity and more a force tobe reckoned with.
@jj:
Boston is famous for its conflicts between “warm-hearted” liberals, and its working class. Two particular tales intersected: School busing, and the intentional destruction of the working class Jewish community of Mattapan.
The school busing saga is probably well known by many. It is usually portrayed in the press as a conflict between the prejudiced poor Irish who didn’t want to go to school with blacks, and the great liberal defenders of social justice. Of course, it was nothing of the sort.
Boston is a very small city geographically. The wealthy suburbs of Newton and Wellesley are as close to the downtown hub and the working class neighborhoods of Mattapan and Hyde Park. But, schools are funded by property taxes — so the suburbs have great schools and the city has mediocre underfunded schools. God forbid the suburbs integrate their schools with the city system, or tax revenues be allocated statewide thus equalizing school funding. Instead the wealthy suburbans concocted the scheme of school busing whereby kids, instead of being able to walk to school with their friends, had to take 30-60 minute bus rides twice a day. No one wanted this. But of course it went through, deflecting attention from the income disparities between city core and suburbs, which was the real problem. Let me reiterate: All the liberals from Newton, Welesley, etc. were in favor of the plan, but NONE of them wanted to opt in and see there kids bussed to poor black inner city schools.
The destruction of the Jewish community of Mattapan went like this: Mattapan was a working class inner-city Jewish community, where everyone’s parents grew up and the streets were lined with delicatessens and pickle shops. It was an aging community. Most of the kids grew up and, better off then their immigrant parents, they moved to the suburbs. Slowly lower middle-class blacks were buying the houses that came on the market. The neighborhood was integrating slowly and peacefully. But the bankers weren’t happy because most of the mortgages in the neighborhood were payed off and they weren’t making any money off the neighborhood. So they started blockbusting: getting in cahoots with the realtors and selling the houses that did come on the market for no money down to poor blacks who were not stable enough to own homes. Instantly, there was pandemonium. Crime came in, houses were deteriorating, being repossessed and recycled on to the market again. Property prices fell to half of what they were, and the elder Jews saw much of their life savings wiped out. Jew and black fell into conflict.
But, perhaps most ironic, the conflict split the Jewish community along class lines. The second generation Jews who had moved to the suburbs now had significant ties to the banking and real estate industries. These ties caused them to become instant liberals, siding against the interests of the working class Jews — accusing them of racism — and becoming best friends with poor blacks they had never met, and would never meet. Of course, their neighborhoods remained lily-white, and had rising property values.
So, eventually the Jewish neighborhood of Mattapan was destroyed. The working class Jews fled, often finding it difficult to buy houses in other neighborhoods. The lucky ones were now sixty years old and saddled with new 30 year mortgages. The great synagogues of Blue Hill Avenue stood empty. Once the neighborhood was destroyed and turned into a semi-slum,the banks stopped their blockbusting and began demanding sizable downpayments to purchase a house. And the suburban Jews bought up property for a song as rental income.
Ain’t liberalism great? The two books that tell these stories are “Common Ground” and “Death of an American Jewish Community”
Posted by: Malooga | Aug 24 2006 16:30 utc | 49
This whole business of closing down debate on the analysis of the impact of the large scale entry of women into the workforce that has occurred in our lifetimes, on the grounds that such analysis seeks to ‘blame’ women, and is therefore sexist, is so fucking destructive to the economic independence that women were seeking when they fought to get into and remain within the permanent established labour force; that I really want to comment a little more, even though others are probably tired of this type of debate since it has been a recurring theme for decades.
If I can just ask some of the women who have commented in thread and whose point of view I have a great deal of respect for, to suspend disbelief, and try and regard what I am saying as the comment of a someone attempting to study our modern economy objectively, I shall try and explain what I mean.
Firstly what I am about to say is not some sort of weird rearguard action being fought by a bloke trying to chain women back into the kitchen and convince them that housework will set them free. Women have entered the workforce successfully and permanently, therefore we need to be asking ourselves that given this is the case, why is that so many women have gained so little economic benefit?
Gylangirl, I know that you attribute part of this to the exigencies of the US taxation regime, yet as we have discussed here before, many other countries do not punish married women for working by over-taxing them in the way that the amerikan taxation system does, and yet those countries also have a situation where married women have not benefited from their labour to the extent that they should have done.
One of the most apparent injustices has taken place in the property market where as pb put it far more succinctly than I did “Prices rise to absorb the money available”
Talking about this is NOT seeking to ‘blame’ women for this state of affairs. The reason I said it was going to be difficult to ameliorate this cause was precisely because it has to be done in a way which won’t negatively effect women’s status in the labour market.
Now Gylangirl, I just went back into the thread to grab pb’s quote and saw your last post which is unfortunate.
I had decided to wait until I felt a little less heated about some of the names that had been flung around in the thread before I commented further on this issue. So I will say “Please don’t put words/statements in my mouth. If you want to re-iterate something I said stick to what I actually said and not what you reckon I said.”
Anyway back to the issue which is that of the housing market and how it came about that when family incomes increased in real terms once both partners in a marriage were part of the permanent workforce real housing prices increased to the point where a big chunk of the economic advantage that should have resulted was lost.
Yes I know that single women were able to get property in their own name for the first time ever because of the movement toward de- genderfication of the labour market and that is a great achievement, but that hasn’t altered the reality which, is that the majority of owner occupied domestic residences are owned by the traditional family unit.
So, what has happened to the traditional family situation, has had a larger effect on real property prices than the changes to single people’s property owning status. That said though, 20 years ago single women friends, were usually buying larger houses which may not have always been suitable for them, but they were getting much better value for money than they are now that all the average single income will fund is a cardboard ‘suicide shell’ of a coupla hundred square feet in a metropolis filled with these ‘hutches’.
The problem has been on the ‘supply’ side. Demand for quality housing surged when families found themselves with the extra cash that a second income provided, but since this occurred at a time when western economies abandoned all pretense of looking after the ordinary person, no attempt was made by regulatory authorities to free up tracts of land which were generally either held by them or had moved into some former politician’s family trust. There is no need to go into specifics, but apart from Manhattan, which being an island has certain physical boundaries that while they aren’t completely insurmountable, are ‘difficult’, most labour force centres do have huge amounts of spare land close by to them, that were grabbed back in the day, and sat upon by elites or politicians acting on behalf of elites.
The land supply/cost factor is the determinant in housing prices, because although construction and material costs have risen steeply as well, that has been more a case of tagging along behind, jacking up prices which are already so high that every individual increase has been impossible to spot.
Not talking about the impact that the entry of women into the workforce has had on property prices is not doing women a favour, it is contributing to their dis empowerment because unless the situation is examined openly it is difficult to make the changes which must be made. And I guess since this is such an emotive issue for some I need to restate that those changes do not include ‘turning the clock back’ to the time when women didn’t fully participate in the labour market.
Now the reason I didn’t go into the supply side so extensively in my initial post was that we have discussed the deleterious effects of a demand driven economy round MoA for a very long time so I assumed that by stating that the increase in ‘real’ incomes going to families in a demand driven market economy was one of the strongest forces pushing up property prices was sufficient for most people to grasp what I meant.
Similarly when discussing the effect that us fucking baby-boomers’ had on the economy I wasn’t saying anything like “70’s women friends saving tips to buy your house is exactly what screwed your son’s chances of being able to afford one now.” to Annie. I’ll just calm down for a moment and point out that I had imagined that you were better than that Gylangirl. Pulling an intellectually dishonest stunt like re-interpreting my criticism of baby boomers buying second, third, and even fourth houses in the 21st century for the capital gain, as being some sort of criticism of people who bought a property for them and their family as soon as possible on entry to adulthood back in the 70’s and 80’s is pretty fucking disingenuous to say the least.
I am about the only person I know of my age that only owns one home in a labour market centre. Other property holdings I have are a share with (at the time) teen aged or early 20’s friends and family ,in a huge block of land miles from anywhere with no reticulated power or water, but over half a mile of beach frontage. Now that was most certainly not an investment, as the articles of incorporation for the company which bought the land and which each of us then bought a share of, prohibit the land or the R**** B*** Company Limited from engaging in any ‘for profit’ enterprise. This clause has caused the odd ruction over the decades as not everybody stuck to their anti-materialistic beliefs ( that is an understatement of some magnitude).
The fact that what we bought for a few thousand dollars (which we slogged our guts out for, I worked in a fish packing plant 16/7 throughout vacations and 8/7 during the term, as did others) is now worth millions as were are told when harassed from time to time by resort developers, and their 10%ers, is irrelevant. It is impossible to borrow money against the shares thank goodness, and they can only be passed on to someone else with the approval of the other shareholders. So far everyone’s children, most of whom have fond memories of summers at ‘The Bay’ want to keep the arrangement running. Doubtless by the third generation when most of us have long shuffled off, some budding asshole looking for a stake to get him to the table will hire a shark shyster and tear the company memorandum to pieces.
I thought I had better make that declaration before I get to the point which I want to discuss which is that many of us bought properties at a time when the median income/property price ratio was 3:1 whereas now it is about 9:1. For many people my age that has meant that once their children finished their tertiary education and set out to establish themselves, many baby boomers found themselves with a cash flow surplus for the first time ever. Those that still had house payments often had payments on loans raised on pretty low purchase prices from back in the day. Good on them, most deserved it.
However it is the next step which many took that doesn’t sit well. That is that worrying about their retirement, and having lost faith in the securities market, or wanting to ‘diversify’ outside of securities, they began investing directly into the residential property market. This was seen as a ‘sure fire bet’ as “they’re not making any more land” and all the other cliches were trotted out.
When anyone politely pointed out that they were fucking over everyone else’s future because a/ This is a dead money investment, in that it doesn’t increase the productivity or wealth of the community. ( yeah right try that debating point on. Within a second you will be told “how fucking dare you tell me and my …. to endanger their future to the sharks out their ripping off everyone, just because I need to worry about some other bludger getting a job.” They don’t call us the Me Generation for nothing.)
2/ There was no return to the community from their new income stream (make no bones about this. It may be an investment, but with returns frequently in excess of 25% per annum on a few hundred thousand dollars, this is income, substantial income) because where I live there is no capital gains tax on profit from selling domestic residences whether you own one or 1001. Those with a 1001 frequently do so through a ‘family property trust’ which ensures that Ma and Pa Pot get their government funded super-annuation plus access to state funded geriatric residential care in their twilight years. My investment in the failed commune all those years ago will probably keep me out of a ‘retirement home’ but bugger it, the kids can put up with me for a little bit or pour mogadon into my milk or somesuch.
Hell even those with just a couple of others’ family homes have a trust ownership structure. This keeps the lawyers happy and it’s cheaper than taxes although it does nothing for our health or education systems.
There will be no attempt to change this by legislation in NZ as a squizz at the Parliamentarians’ declarations of financial status reveals that out of the 120 MP’s less than ten don’t own a second domestic dwelling.
Now I fully concede that this problem is particularly bad here in NZ, because of our taxation structure but it does exist in one way or another in most other developed nations.
The reasons are understandable, trusting your savings to Ken Lay and his ilk has been a proven non-starter and there are a lot of genuine issues about holding investments in corporations currently profiting from killing Arabs but domestic property investment is a powerful force on domestic property prices.
It is impractical and unfair to expect young people at the start of their economic lives, to compete directly with older established economic units that the baby-boomer, and in a short while generation X, families are.
If people choose to re-interpret any of the above as ‘blame’ that is their issue/foible not mine. The issue is not blame it is about how communities can set about ensuring that young people can buy their house too.
p.s. any typos or whatever are gonna be left to fester. My eyes just don’t cope with these interminable spiels any longer (cheers from the whiners), so if anyone does fine tooth comb this looking for proof of Did’s political unreliability, finds some ambiguity which can be twisted into such proof, tough shit you’ve only proven your vehemence exceeds my patience.
Posted by: Debs is dead | Aug 27 2006 23:05 utc | 87
gylangirl, you have enough time to call me sexist but not enough to reference it w/my own statement? that’s cherry. i don’t need to re read the conversation to know what i wrote, i too am sorry you don’t get what i’m saying. you were fairly blunt and explict, so i think i read you loud and clear.
Single Women Plunge Into Real Estate
No Longer Waiting For Husbands, Women Are Changing The Housing Market
(CBS) In a trend that is changing the landscape of the real estate market, single women are becoming homeowners at a rate never seen before.
It’s a trend that is reversing the traditional pattern, in which women wait to get married before taking the plunge into the housing market.
Mariela Azcuy is 29 years old and single. Three months ago, she gave up her rented apartment in New York City and bought her very own one bedroom. She needed a five-year adjustable rate and 30-year fixed rate mortgage to afford it. But the financial burden doesn’t scare her. She sees it as an accomplishment.
“It makes me think I made a smart financial decision and I’m on my way to making other smart financial decisions in my future,” Azcuy said. “It’s one of the most satisfying things I’ve ever done.”
And Azcuy is in good company. Judith Lief is a realtor in New York City and says about 30 percent of her clients are single women, while few are single men.
“It’s a ratio of about five to one, single women to single men looking (for homes),” she says.
The Early Show investigated the trend Monday morning, with the help of Vera Gibbons, special correspondent for Kiplinger’s Personal Finance magazine.
She said that last year, 1.5 million homes were sold to single women.
“Nearly twice as many homes as were sold to single men,” she told co-anchor Rene Syler. And there’s “no sign of this trend slowing down,” she says. “Fannie Mae is estimating by 2010 as many as 31 million single women will be homeowners. That accounts for 28 percent of all U.S. households.”
…. .
Another factor is the social change that comes from women gaining financial clout in the workforce.
“Women are much more independent today,” Gibbons told Syler. “We are marrying later, that is, if we choose to marry at all. We are much less reliant on the man to be the provider because we have our own money, more money than ever because we are college educated. We are in the work force.”
“For a single woman, in particular, it provides us with this huge sense of accomplishment, personal security, financial security, it’s a big thing. But it’s a good thing,” she said.
Single Women Become
A Force in Home-Buying
Ms. Goldman is part of a wave of single women who aren’t waiting for marriage to settle down and start nesting. Armed with buying power and investment prowess, they are buying condos, co-ops, townhouses and single-family homes in record numbers.
The percentage of women home buyers had held steady in a range of 15% to 17% since about 1993, but jumped to 21% in 2003. It’s a “substantial increase, especially when you consider that the overall number of home sales also jumped from five million to six million,” says Cathy Whatley, immediate past president of the National Association of Realtors, which conducts biannual surveys of the home-buying market.
Why Wait?
This jump makes single women the second-biggest category of buyers, says Ms. Whatley, behind married couples, who make up 59% of homebuyers, but well ahead of single men, who make up only 11%.
Ms. Whatley and other real-estate analysts cite women’s delayed plans for marriage, greater financial savvy and a better home-buying market as factors contributing most significantly to the trend, although high divorce rates also add to the single-woman homeowner population.
“Women are not seeing marriage as a first step to buying a home, and they are marrying later,” says Rachel Drew, research specialist for the Harvard Joint Center for Housing Studies. She says that women are not necessarily buying at younger ages, but that they are taking the real-estate plunge before the relationship leap.
According to the U.S. Census, the median marrying age in 2000 was 25.1, a considerable increase when compared with 20.8 in 1970, says Ms. Drew, who has been studying the rise in unmarried female homeowners. More significantly, she says, the prime years for first-time home buyers are between ages 30 and 35, the years when many professional women are beginning to hit their stride and have the financial ability to buy a home. “Education and income have increased for women, and they feel like they’re in a better position to buy a home,” she says.
Women’s evolving role in the work force also has given them more financial agility, says Pam Liebman, president and chief executive officer of The Corcoran Group in New York. “They are a significant part of the work force, and they’re staying a significant part of the work force. Women have always been primarily responsible for home-buying decisions, whether they’re buying alone or with someone. Now, they are just more financially responsible,” says Ms. Liebman, whose clientele of single women has increased sharply over the past few years.
Ms. Liebman says that much of her company’s outreach to the women’s market happens through women’s professional groups. Significantly, more women are shopping in the upper price ranges alongside families and professionally established men, and more women are buying second homes on their own.
“We’re not just marrying any guy who comes along. It’s this sense of empowerment, because you’re relying on yourself, and there’s not this concept of having to be married first,” says Pamela Emery, a Realtor at Jameson Realty in Chicago. Ms. Emery bought her first condominium in 1997 for $140,000. She sold it for $241,000 in 2002 and bought a two-bedroom duplex in a mixed-income development and subsequently became involved in the real-estate business, earning her license earlier in the year.
Long-Term Investments
She says that five of her six current clients are single women in their 30s looking for first homes, trade-up properties and investment opportunities. “Once you own something in real estate, it draws you into more financial planning,” she says.
Ms. Whatley says many women are buying their first home as a residence and then building real estate into their long-term investment strategies.
In addition to women who have never married, divorced and widowed women are also a growing segment of the market, says Ms. Whatley. “Where there was hesitancy before, where a divorced woman may not have felt she could purchase a home on her own, there is now a level of confidence that we haven’t seen before,” she says.
But even if they are making high incomes and buying second homes or investment properties, single women in the upper price ranges still endure more scrutiny for their lifestyle choices than single men, brokers say.
“There’s this sense of disbelief that this highly successful, unmarried woman, who is not unhappy, by the way, wants a big apartment,” says Lisa Lippman, a broker and senior vice president with The Corcoran Group in New York whose clients are shopping in the $1.5 million to $6 million range.
She says that when she takes single-women clients to see large apartments, the sellers always want to hear about a husband or they ask how many children she has.
“It’s a double standard. If I have a single man, an investment banker, who wants to see the apartment, they are not surprised. But if it’s a woman, it’s seen differently,” she says.
so, you think i should re read a little more slowly, and that i am sexist. i think you are lucky i’m not in a mood to chew you a new one. i’ll forgive you in the morning, right now i’m stewing in your hypocrisy.
Posted by: annie | Aug 29 2006 3:40 utc | 100
|
