We’ve been hearing a lot of speculation recently that goes something along these lines:
There is basically this enormous teeming horde of potential home buyers out there lurking on the sidelines for no good reason. All we need to do is come up with the right concoction of incentives to get these pent-up buyers off the fence and the housing market will recover!
Here’s just one example of that kind of reasoning from an article yesterday’s Tacoma News Tribune:
According to Dick Beeson, a Windermere broker and a director of Northwest MLS, the latest numbers reflect “a lot of pent-up demand. A lot more people are realizing closed sales.”
As regular readers of these pages will recall, I do not buy the claim that there is a large mass of “pent-up demand.” In fact, I believe quite the opposite is true: that during the bubble (thanks to virtually non-existant lending standards and a mass get-rich-quick hysteria) and now post-bubble (thanks to various bailouts, tax incentives, and artificially low interest rates) a significant amount of demand has been borrowed from the future.
Let’s take a few moments to visualize the concept of borrowed demand using data on closed sales and population. Here are our working assumptions:
- The number of closed sales in the year 2000 is a reasonable baseline for a healthy market.
- In a normal market, closed sales will grow linearly as a function of households.
- Household size since the 2000 Census has remained steady at 2.39 people per household.
- For 2009, fourth quarter closed sales will come in 10% above 2008.
Based on these assumptions, here’s a view of the cumulative “borrowed demand” by year since 2000.
While sales in 2001 and 2002 were fairly close to what our assumptions would have predicted (slightly lower, probably due to the dot-com bubble fallout), as the housing bubble began to inflate in 2003 the number of borrowed sales started to pile up at an alarming pace, peaking at over 23,000 in 2006.
Since 2005 when closed sales peaked at 31,939 (vs. a forecast “normal” level of 24,118), the number of closed sales has dropped significantly, falling to roughly half the peak level in 2008 at 15,991. To real estate agents, these declining sales numbers indicate that there must be a building volume of “pent-up demand.” However, as the chart above demonstrates, this is merely what it looks like when the market is forced to pay back the demand that was borrowed from the future.
If sales had been allowed to continue correcting at the natural rate we were seeing in the first few months of the year, the entire borrowed demand debt would likely have been paid in full in 2009, allowing sales volumes to begin to recover to a more normal level in 2010. Instead, the market has been innundated with misguided attempts to bring out the non-existant “pent-up demand,” and the way things are shaping up right now it looks like last-ditch borrowing of future demand will leave us with a few thousand sales still to be paid back sometime in the future, likely resulting in a continued drag on demand in 2010 and 2011.
“Pent-up demand” is a myth. That’s not to say that there aren’t some legitimate potential buyers out there with the ability to purchase who are sitting on the sidelines waiting for a better market opportunity. However, they are most certainly far outnumbered by the buyers who purchased prematurely in 2003-2006 that would otherwise have waited a few years to buy once their finances were more in order.
I’m part of this “pent up” demand. And I know others. However, we are all waiting for prices to return to historical multiples of income/rents. And having been smart enough not to get caught up in the bubble, the real estate industry will be sad to know that we aren’t likely to engage in wild bidding wars once some mythical switch is flipped.
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Nice. I like the logic in this, it makes a lot of sense. Not only is there no extra pent up demand there is likely a damm of supply ready to burst due to buyers that bought more home that they can afford. Many of these homes will come back on the market as foreclosures which also means that the sellers will most likely not be able to re-enter the market in a few years.
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RE: sead97 @ 1 – Agreed.
Like I said, there are definitely some capable buyers sitting on the sidelines right now. Heck, I’m one of them too. My point here is that even when these buyers come back, the market is really only going to be looking at a slow return to a more sustainable level of sales, not a sudden flip back to the bidding wars and waived inspections common during the bubble, which is what the real estate agents seem to think will happen once the mythical massive horde of “pent-up demand” is unleashed.
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RE: The Tim @ 3 – Prices have been high for many years.
On the one hand one must live life today, without the chance to repeat.
On the other hand, dumb financial moves today will cost one in the future.
So what is one to do when one is a poor man living in a rich man’s world?
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I’m also one of the capable buyers who is sitting on the sidelines waiting for prices to return to a reasonable level before I buy anything.
I don’t qualify for the $8K tax credit but it wouldn’t have influenced my decision anyway. I think all of these subsidiaries are keeping prices from dropping back to normal levels. I don’t expect we’ll see prices hit bottom until the subsidies end and unemployment stabilizes.
I’ve contributed to some of the much talked about open house traffic. I think many homes are still ridiculously overpriced on Queen Anne and Magnolia. In many cases, the sellers are still trying to get bubble level prices. I expect we’ll see prices continue to deflate this fall and winter.
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I knew quite a few Pent-Up Buyers who came to Seattle and priced out during the boom years, They have shipping box unopend and waiting for the bubble to be deflated. Based on conversation with them, they are now looking to buy. I knew a couple sold after the peak in 2008 and bought a 1 mil house by the Lk Washington for 800. Housing is very personal. Not like gold or piece of meat sold by the pound. I would pay more for the location and property I like rather by the sqf/$ or the price to drop. Waiting will only have two outcomes: the lower price or higher price. remember you will compete with the same people here when everyone know we are out of the recession and want that house. Maybe someday you will meet the Bubble headers in a bidding war,. Who knows?
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I don’t buy the analysis at all. First, it really smacks of picking a starting point in time to determine the result. How about not picking a year we were heading into recession for a “normal” year? Only Al Gore thought 2000 was a normal year. Second, demand is much more personal that looking at 2.35 persons per household and other census data. Third, if you wanted to rely on census data, it would need to be much more complex, because people in different age groups behave differently.
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RE: Kary L. Krismer @ 7 –
Take a look at the latest videos from Jim the REALTOR, in particular his latest video:
http://www.youtube.com/watch?v=0R2FYggYGeQ
The video was prompted from a few posts on his bubble blog suggesting that the market was much stronger today than in recent months.
Jim’s blog is here: http://www.bubbleinfo.com
Jim does point out, however, that he is unsure if this burst of activity will last very long.
The whole collection, including his more typical discussion in the past of falling values is at:
http://www.youtube.com/jimtherealtor
Two questions:
Has supply been cut short enough to bring the market into a sustainable normal balance?
Right along that lines of thinking, will prices on a macro basis continue to erode from other economic issues, such as unemployment rates, future spikes in foreclosure activity? Maybe those future spikes in foreclosures will be tempered with a much tighter market?
I still see great downward pressure in the next few months, even if there are temporary attempts to prop values up.
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I love this:
It’s the prices stupid! When the prices start to come down, we will jump off the fence.
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I, too, have difficulty with the way you calculate the metric. Why not use historical rates of home ownership coupled with numbers of households…
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Inventory of homes for sale right now is fairly low compared to what it’s been in the last couple of years. Is it because buyers are snapping up everything available? Or is it because there are a lot of discouraged sellers out there who have taken their homes off the market waiting for prices to rise, or rented their homes out.
Sounds to me that there’s just as much pent up supply, if not more.
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Demand is pretty tricky to quantify isn’t it? We can only really look in the rear view mirror to see what did happen versus what is happening right now.
In my market (Leavenworth), which is influenced by the Seattle market, but definitely quite distinct from it, I would say there is high demand. This is based on the number of offers written, the number of requests for more information and the amount of traffic on my website, especially searches of homes for sale.
I would characterize the demand as being widespread, but very shallow.
People want to buy homes, but ONLY at a big discount. Buyers want to buy short sales and foreclosures in a market that doesn’t have many. If a new construction condo is discounted at 40% below peak, the buyers still want another 30% discount on top.
In my market, the majority of sellers are pretty content to wait it out too. Most offers don’t seem to be turning into pending sales.
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RE: Geordie Romer | Leavenworth WA @ 12 – Clearly you are a supporter of the Efficient Market Hypothesis.
People who support trend analysis suggest that rear-vision mirror is indicative of the future…
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RE: AMS @ 8 – That’s a 10 minute video. I’d rather watch The Humpty Dance twice than spend 10 minutes watching that. ;-)
http://www.youtube.com/watch?v=cj9_yW8tZxs
I have no idea whether there is pent up demand. There undoubtedly is pent up supply. Demand will increase when peoples’ perception of the future improves. We probably are stealing a bit of future demand, but I doubt it’s as bad as what Cash For Clunkers was.
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My bet is that some of buyers like me who want lower prices can wait out the sellers who want higher prices.
Rents are declining and the sellers have to continue to pay taxes, maintenance, etc. Not to mention the risk of selling in the future when prices may be even lower.
For example, I saw some homes for sale last year that went off the market and were rented out. I’ve seen some of those homes back on the market lately. Of course the market is about 15% lower than it was last year at this time so they would have been better off lowering their price last year to get it sold.
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RE: Kary L. Krismer @ 14 – Jim the REALTOR has been pointing out the degradation of the market for some time. Suddenly, recently he noticed a shift.
Unsophisticated buyers seem to be overly attracted to that $8k.
I would never spend $350k, or more, at an $8k discount unless I was going to buy anyway. There may be a whole bunch of buyers who hear “get $8k in tax credit” and they think, “God, I know I get $$$ in tax credits for each of my two children, and now I can add another $8k to the refund!” With each baby daddy paying child support, plus the earned income tax credit, plus the first-time home buyer credit, why not buy a new home?
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RE: Kary L. Krismer @ 7 –
Agree. Though I agree in principal with the assertion that the heightened buying from the bubble years represents borrowing demand from the future, I think the data here is a bit too simplistic.
Using 2000′s closed sales does not account for several factors:
- demographics (some years will have a greater % of population enter the “home buying age”). The “baby boom echo” generation (children of boomers) now entering home buying years is larger than the previous. On the other hand, boomers may shortly start selling their large family homes as they retire, downsize, move to retirement/vacation homes and eventually die (no offense to boomers =)
- local immigration/emmigration. The years where Microsoft/Boeing/Amazon were hiring and importing workers will affect home buying demand for subsequent years (some people buy when they move, while others often wait 2yrs+ after moving to an area to actually buy a home) and the hiring freeze we are currently seeing will affect demand in the opposite direction for several years out.
- Increases in population. The baseline demand really needs to be “inflation adjusted” for population increases
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I am also in the same situation. I am qualified for tax credit.
Now the main thing which is boozing me is interest rate.
If i buy a home today for 300k for mortage rate of 4.75% then my total monthly payement be 2019.94 (as per zillow calc).
If i buy a home in future for 290k for mortage rate of 5% then my total monthly payement be 1996.62 (as per zillow calc).
If i buy a home in future for 275k for mortage rate of 5.5% then my total monthly payement be 1978.51 (as per zillow calc).
If i buy a home in future for 250k for mortgage rate of 6% then my total monthly payement be 1878.04 (as per zillow calc).
I think home value will fall for some more time. But i don’t know about interest rate, So i came up with the above data assuming home price will fall and interest rate will go up.
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RE: Kary L. Krismer @ 7 – If you have closed sales data for years prior to 2000, I would be happy to look at using a different year as the base. The data I have been able to find only goes back to 2000, so that’s what I used because it seemed better than choosing 2001 or 2002 when the recession was in full force.
RE: Lurker @ 10 – Because that would not account for the people who are just moving to a different neighborhood in the same region, trading up to a bigger house, etc.
RE: Ira Sacharoff @ 11 – I agree, “pent-up supply” is the little secret that none of the market-pumping agents seem to want to talk about.
RE: Ross Jordan @ 17 – I am adjusting the demand based on population. Look at the second bullet point: “closed sales will grow linearly as a function of households” and also the text on the chart itself: “2001-2009 expected demand adjusted based on OFM population estimates.” Yes there are many other factors, but save for some sort of Detroit-style meltdown or a sudden massive localized economic boom, in general, in a normal market a relatively constant percentage of households will purchase a home each year.
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RE: Raj @ 18 – As I’ve mentioned in the past a few times, I would strongly prefer a higher interest rate at a lower sale price assuming payments are about the same. The lower cost means less of a down payment and a chance to re-finance at a lower rate in the future.
I too am part of the “pent up demand” and I might jump at a place I loved if it were at least 15-20% below current “fair value”. I’m quite happy renting and not dealing with the issues that come with home ownership (or owership) at the moment, so it would take a real gem to get me to buy anytime soon.
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Great Topic Idea Tim
I was blogging with the Roubini gang on somewhat the same subject; like why do they predict the current re(de?)pre(ce?)ssion bottoming out this summer with severe underemployment of about 1/5th of America’s workers getting worse to 1/4th?
Let’s face it, about 50% of Seattle’s households make more than $50K/yr and expecting the top half of households to suddenly swoop down to Macy’s to fill their closets or go buy that new Prius to bail out the economy in these stressful times, is totally ludicrous.
But they can always hope….LOL
The local housing market is still tied to the deteriorating average household wages, i.e., employment levels; and the top 50% thanking their lucky stars to just have jobs, aren’t in the spending mood…..especially for high cost houses.
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RE: Gene @ 20 – “As I’ve mentioned in the past a few times, I would strongly prefer a higher interest rate at a lower sale price assuming payments are about the same.” I assume the duration is the same too. Same down payment, and so on.
Oh, yea! I’d gladly buy a home at a higher interest rate if the payments are the same, as what you are actually doing is reducing the principal. Given equal payments, duration and amortization method, the loan with the highest payment will have the lowest principal balance.
If you can buy a home at 5% for the same payment I can buy at 25% interest, clearly I have made a better buy. Rather than 25%, I’d prefer to pay 26% with the same payment, and so on and so forth.
If, however, you hold the principal balance constant, then you want the lowest possible interest rate.
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To me, “enormous teeming hordes” evokes a mental visual of thousands of nomadic Mongols pillaging and plundering the countryside. I’ve always wanted to pillage and plunder.
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RE: The Tim @ 19 – The easy data I have also goes back to 2000. I’ll see if I can find something earlier, but I still don’t know how you’d pick a “normal” year.
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Sales are up and inventory is down. Lower inventory leads to stability in prices, just like high inventory leads to lower prices.
This recent chart building reminds me of people who predict stock prices based on chart patterns. Fine science, to be sure, until stock price breaks the pattern in either direction. And then you can build another chart.
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A slightly different way of saying what The Tim’s post does is that the loose lending standards created additional demand by enabling more people to sign on the dotted line. When lending standards tigthened this additonal demand seized to exist . This loss of demand is not building a pool of pent-up demand, this demand is gone, hopefully forever since noone should want a return of lax lending.
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Tim @ 19,
of course it wouldn’t count those people. Why should they be counted? They have a house to sell and a house to buy. Which means they’re both pent up supply and pent up demand. Additionally, how much new house they can afford is directly dependent on how much they can receive for the old house. Their net affect on sale prices should be zero. You only get additional demand when you get new buyers. And we pulled almost all of them forward during the bubble…
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By 2kt @ 25:
It’s not that simple. This is real estate, not widgets.
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Tim, here’s what I found going back to 2006, which seemed to be a fairly stable year adjusted for inflation, but also a low sales year.
19926 1996
22324
23498
24453 1999
Is 23163 what you have for 2000? The reports changed a lot in 2000, which is probably why the easy data only goes back so far.
I still don’t buy the idea that population growth is perfectly correlated with basic census data.
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Is it possible that the graph overreports the numbers in the sense that it can’t compare a baseline average occupancy/ownership term to what I suspect is a shorter one during the bubble years? Tim refers to “the buyers who purchased prematurely in 2003-2006″ — I think an accurate characterization on the whole, but it is a fair assumption that a significant proportion of buyers who purchased in 2003-2004, say, bought again, flipping successfully or moving up from a condo to a house, from 2005-2006. I don’t know if we can count such a buyer as a +2 in the Borrowed Demand column, because we’re talking about only +1 unit of demand for a house. I would count these two transactions as 1 unit of demand for a house and 1 unit of demand for profit — because in a more normal market than 2003-2006 where big profit is not the expectation, buyers are less likely to think of purchase #1 as a starter house.
Am I making any sense here? Am I totally off base? It’s just that I don’t want to understate what seems to me to be an enormous change in the perception of what homeownership is *for* — I feel like I want a different unit of measurement, almost. A few years ago almost no one I knew who was interested in buying was thinking in terms of a long-term place to live, and now every single person is. A friend in her mid-thirties is looking at one-level houses so that if her joints start giving her trouble as an old lady as tends to happen in her family, she will still be happy living there (which btw is another reason I think this townhouse trend is going to get not so fresh in a hurry one day): many of us have gone from a starter-house to a finisher-house mentality.
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RE: AMS @ 8 – Jim also had an interesting feature on a new development which I actually am familiar with, where some insane prices of $700k+ and all homes are sold out and there is a waiting list. Thats insane to me, but the backend investor is doing awesome!!!
http://www.youtube.com/watch?v=0yeWknZm81k
Found the video
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I think there actually is a good bit of “pent up demand” — but I wish I had good statistics to back it up! Based on anecdotal evidence, I perceive that there are two kinds of actual pent up demand, both of which are emotional states arising from people’s plans placed on indefinite hold:
1) Sellers are pent up, waiting to sell and make a profit
So you decided to follow conventional wisdom; buy an older house, do a quick renovation and use the extra cash / increased prices to “trade up” to a larger home. You’re frustrated that your family is going to be stuck in a smaller house than you want, because prices are too low to sell. Sure, prices were inflated during the bubble, but you’re not one of the greedy luxury condo developers — you’ve added so much value with the kitchen upgrade, surely your house actually IS worth more than it was in 2006! Once those buyers stop being so skittish, they’ll realize that this place really is special. And hey, you’ll finally be able to move your kid’s bed from the closet you told your wife could be a bedroom!
2) Buyers are pent up waiting for lower prices
You’ve been careful and not bought a house because prices were too high, and you figured things would equalize eventually… but prices still haven’t come down “enough.” It probably looked like prices were too high in the dot-com bubble, but it’s downright affordable by comparison! Now, there is a real threat of inflation, stubborn sellers who bought too high to sell, and banks who can take TARP until prices are high again… Maybe housing prices will NEVER be a real bargain in Seattle… Maybe you really HAVE been priced out forever by greedy townhome developers, gov’t bailouts, banks, and flippers!
I posit that housing is driven by fragile emotional states more than reason and analytics. :) If everyone strongly believed that prices were imminently CRASHING over the next year — say 50% off, no hope in sight — they may sell / forclose / short sale now, while they still can. Once prices actually hit crazy deal level (not RE Pro hyped as we see now) we’d start to see the high volume people associate with a recovery. Instead, prices trickle so slowly that groups #1 and #2 are simply trying to wait it out, hence low sales volume.
If this pattern continues, with no added panic to stimulate price drops, we’ll just have to wait for wage inflation to catch up. Even then, housing in Seattle will become the new CA / NYC — infamously known for un-affordability.
–akfish (apparently I wasn’t logged in)
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RE: Civil Servant @ 30 – One other issue is the numbers include sales to investors for rentals.
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RE: Civil Servant @ 30 –
You are making sense, but the bubble mentality was the aberration. Prior to that time, people mostly thought of houses as places to live, not places to flip, and now again that is the case….
And….I think the townhouse trend is already not so fresh. There are an awful lot of them sitting empty unsold.
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RE: mukoh @ 31 –
“last time we were here this was dirt–about six months ago.”
“They are popping out of the ground like green shoots.”
High 6s to low 7s sold out? INSANE! 250 person waiting list? INSANE!
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RE: Civil Servant @ 30 –
“but it is a fair assumption that a significant proportion of buyers who purchased in 2003-2004, say, bought again, flipping successfully or moving up from a condo to a house, from 2005-2006. I don’t know if we can count such a buyer as a +2 in the Borrowed Demand column”
Probably not, but you can likely count it as demand lost. The craze to own multiple homes as investments for non professionals ( wage earners ) and demand from other amateur flippers is likely gone for a very long time. There you have two big demand segments gone. Buyers enabled by lax lending and amateur speculators encouraged by unprecendented appreciation. So no pent-up demand there, just lost demand. The able buyers that are now on the sidelines most likely do not make up any additional demand above what is typical, more likely the borrowing from the future more than balances it at or below typical demand. The real issue is supply not demand, how long will supply be able to be kept so tight? How tight is it compared to typical supply? And so on.
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RE: akfish @ 32 –
“I posit that housing is driven by fragile emotional states more than reason and analytics. :)”
I’d go one further and posit that housing is driven by whatever debt a typical person can get. For the sad majority ,affordability is defined by whatever their lender will give them; not reason, logic, or analytics. We’re all just a bunch of monkeys (some more than others).
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RE: Raj @ 18 – Great comment.
For your scenario, the question unanswerable at this stage is how long would it take (mos. or years) for an additional 17-20% drop in housing prices off of where they are at for a given area. And, if it took 2 years or more for that drop to occur could you live with holding off to obtain that $200 difference in payment? If one is financially disciplined many would argue, “no, I’m not putting my plans or family on hold for another two years when I could pay toward principal reduction from the get go.” It depends upon ones situation and potential selling horizon.
This is the foggy zone I think we may be entering. Everyone here can’t control what others are doing and that to me is the Wild Card with rates so low. We are busy in our office. Will the Fed. Tax credit continue, be dropped or modified? We will see. Will there be a world event or another jolt to our financial system that would be a set back and impact buying behavior?
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Re Ross @ 17…..
boomers may shortly start selling their large family homes as they retire, downsize, move to retirement/vacation homes and eventually die (no offense to boomers =)
Hey I’m a boomer at age 57 and have two sons in college and I call my home my “toe-tag house”. I think you know what I mean. And given my family history (and my wifes of 35 years) we have a good shot at another 30 years.
That’s a myth that boomers all want to retire to Sun City.
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RE: Tim @ 38 –
“Will there be a world event or another jolt to our financial system that would be a set back and impact buying behavior?”
Yes. Fasten your seat belts.
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RE: meadows @ 39 -Sun City probably is a myth and even a bit of a cliché. What is not a myth is that boomers are financially ill-prepared for retirement. Many were counting on home equity to help fund their retirement. How do you cash in on that equity? Downsize, as one still needs a roof over their head. The problem is, much of that equity went ‘poof’. So much for the ‘forced savings plan’.
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By patient @ 36:
Humans are not that rational. There is a huge herding effect to their behavior. That’s why people buy when prices are rising over 15% a year and they have to put in an offer within 24 hours of a property being listed, and compete with multiple offers. If everyone is doing it, it must be the right thing to do. And if no one is doing it, few want to do it either.
Think of it like the classic yelling fire in a theater story, or the confederate in the physiology experiment ignoring the smoke entering the room.
Markets are largely over-reaction followed by over-reaction the other direction.
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BTW, that herd mentality is why I favor extending the $8,000 credit only a few of months. I’m afraid if there are news reports of greatly falling sales, that will turn people off again, but that if it expires when sales tend to increase, the two will counter each other. Although I suspect the 8k effect would be larger than the seasonal effect, at least you wouldn’t have both going in the same direction at the same time.
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RE: Kary L. Krismer @ 43 – What happens a few months from now?
$8k per qualified buyer only to push the problem a few months from now?
Addicted to $8k: Give me another hit!
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What happens a few months from now is the seasonal trend where more buyers start coming out. Between Thanksgiving and Xmas can be rather dead. Even a December 31 expiration would be better than a November 30 expiration. That’s probably the worst possible month end date they could have picked, but from what I’ve seen, some of the extension proposals are repeating the mistake by extending for exactly a year.
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RE: Kary L. Krismer @ 45 – How did the market survive all those past years of the lull in sales?
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RE: AMS @ 46 – My point is it’s two negative effects at the same time. It would be like if your car were having a hard time climbing a hill, and you turned on your AC and lowered your windows too.
Anytime you have a stimulus there will be a relative lull after that ends (unless it was ineffective).
About the only good thing is the comparisons to last year can’t be too bad because Dec-Feb were horrible months. So maybe in that regard, November 30 is good.
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RE: Kary L. Krismer @ 47 – Let’s be careful here, as in the past when I drove up this same hill, sure I slowed down, but I already had my AC on with the windows lowered. The $8k stimulus effectively turned the AC off. Now I will turn it back on.
In the past I always had it on, so how close to the summit should I be to turn the AC back on?
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RE: mukoh @ 31 – I just noticed something, and I think it is critical as to why demand in the “6s and low 7s” has been so strong.
From CR, citing Pinto, “‘FHA is making much larger loans than in the past. Its top dollar limit is $729,500 versus its old top of $362,000 in 2008.’ This exposes the FHA more to high risk states like California.”
With such high FHA loan limits, this might explain why the demand is so strong in that price range.
That said, “FHA Shortfall Seen at $54 Billion May Lead to Bailout.” Thus we, the taxpayers, are funding and paying for these $600,000 to $700,000 mortgages. Source: http://www.bloomberg.com/apps/news?pid=20601087&sid=aOmu318hOZr4
http://www.calculatedriskblog.com/2009/10/fha-bailout-seen.html
If we keep dumping Dumpsters full of money on homes, then the values will continue to inflate. At the same time, what is the balancing cost to all of this? Will we be prepared when the roosters come back home to roost?
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RE: meadows @ 39 –
I’m With You
Getting rid of the adult kids is like getting rid of lice right now [don't clean out their rooms just yet if they're in college]. Add in the fact that even a good percentage of the Boomer parents are in dire straits right now and knocking at their kids’ doors with suit cases; and you have a “no sale” atmosphere for Boomer houses too.
Add in the fact that most of our retirements today with dinky or risky interest wouldn’t feed a fly; and couple that grim fact with the current social insecurity system overpopulation debt cess pool….and you get Boomers working until they die.
Let’s look at the 9/30/09 Q3 BEA Data in part:
“Advance Estimate Second Estimate Third Estimate
(Percent change from preceding quarter)
Real GDP…………………………… -1.0 -1.0 -0.7″
The rest of the BEA URL:
http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm
Gee, if the recession is over, how come the GDP is still negatively contracting, especially after the horrifying Q1 contractions [we'd need some real big positive 2009 GDP growth, not Q2/Q3 contractions, to make up for the lost Q1 ground, IMO]?
It seems a lot our pink pony economists have a variety of 2009 “recession’s over” negative GDP rationales that contradict the one’s they had before…LOL
The recession is obviously alive and kicking IMO. The recession over fairy tale is clear mathematical fiction and the news is covering it up.
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Nice post.
A similar effect occured with the “Cash for clunkers” program. There is a ton of articles saying that car sales in September (after the program expired) came down crashing.
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RE: Kary L. Krismer @ 47 – Kary, when you say that Dec-Feb were horrible aren’t you thinking short-term? A very low sales volume will rapidly deflate prices. There probably aren’t much pent-up demand above the typical buyer pool but I think we can all agree that the potential buyer pool is huge. My guess is that +95% of all house holds would prefer to own instead of renting if the cost were the same or lower for owning and the depreciation risk was low. Less than 70% of all households own their home today, the potential is huge. So what is the problem? It’s the bubble prices and the artificial propping of prices at what many suspects are unsustainable levels. So, if you think long-term a very low sales volume is most likely the best that can happen to you and your collegues since it will speed up the road to a market that starts tapping the potential buyer pool with the result of higher and more stable volume lining your pockets. With the current path of stimilus you are likely looking at a very,very long road to decent volumes.
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RE: patient @ 52 – Let’s just say I’d prefer news stories that are neither too much hype or too much fear, and I’m afraid with the credit expiring in November, the headlines could be too much fear, leading to at least short term issues. Where it goes from there, who knows.
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Well the local unemployment office was certainly teeming with “hordes”……
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