Job Growth Turning to Losses, Rents Holding Steady

Here’s a pair of interesting articles from the Puget Sound Business Journal this weekend.

Puget Sound job growth slowing to trickle

The [Puget Sound] Economic Forecaster, published for the last 15 years and used by companies and governments across the region, is predicting the four-county region will add just 5,900 jobs in the third quarter of this year, boosting employment a fraction of a percent to 1.86 million.

In the fourth quarter, the region is expected to lose 4,100 jobs — a 0.22 percent decrease from the previous quarter — ending the year with employment of 1.856 million.

That’s in contrast to the 2.9 percent annual growth rate in 2007, compared with 2006. The region added 51,500 jobs in 2007. Conway expects a growth rate of 1.7 percent in 2008.

“We’ve seen the economy all of a sudden go limp recently, largely because of the collapse of the housing and credit markets,” said Conway, who also is the senior member of the Governor’s Council of Economic Advisors.

Much of the slowing job growth can be traced to the construction and financial sectors, which have been shedding jobs statewide over the past few months.

I thought our strong local economy was based on Boeing and Microsoft, not this shakey construction and financial stuff that’s been causing so much trouble everywhere else. Well, that’s what they were telling us anyway.

But if you’re a landlord, fear not. “Experts seem comfortable with rent levels.”

Residential Real Estate: Demand from Puget Sound area renters sustains a ‘landlord’s market’

…experts crunching local rental-unit supply and renter-demand projections seem comfortable with the rent levels expected over the coming year or two.

Even with a surge in unsold homes and condos competing in the rental arena, the consensus counts on sufficient rental-minded residents to keep vacancies and rents at landlord’s-market levels.

Residential real estate distress nationwide, in fact, is actually giving something of a boost to the local rental arena, observed veteran rental agent Michael Wilson, broker/owner at Windermere Property Management in Seattle. The relatively healthy local employment scene is still attracting newcomers, he said, “but they’re nervous about buying, so they’re renting instead.”

Meanwhile, the Seattle vicinity remains one of the most attractive markets for savvy apartment investors able to identify and provide what renters want today, added Bob Hart, president of Beverly Hills, Calif.-based Kennedy Wilson Inc.’s hyperactive KW Multifamily division.

Despite the slightly lower prices investors have been willing to pay for apartment properties here and elsewhere of late, Hart said, it would take a real economic calamity to significantly diminish renter demand.

Oh, good. Luckily, there’s no economic calamity on the horizon, whatsoever. Erm… wait…

(Kirsten Grind, Puget Sound Business Journal, 09.12.2008)
(Brad Berton, Puget Sound Business Journal, 09.12.2008)

0.00 avg. rating (0% score) - 0 votes

About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market. Tim also hosts the weekly improv comedy sci-fi podcast Dispatches from the Multiverse.

57 comments:

  1. 1
    timber says:

    “Despite the slightly lower prices investors have been willing to pay for apartment properties here and elsewhere of late, Hart said, it would take a real economic calamity to significantly diminish renter demand.”

    Like people have been saying on here, people can easily share rooms and double up in apartments and houses until the crisis passes. The amount of renters in a region is more elastic than I think most people realize. Also it appears that the negative momentum at this point with the recent Lehman Brothers fiasco is just heating up and its only going to get much worse.

  2. 2

    HOLD ON TO YOU HATS FELLOW BLOGGERS

    Now that Dr. Doom (Roubini) is considered mainstream media news now, you just know its a lot worse than any of us were predicting.

    If we keep allowing the bottom 80% of Seattle household incomes (lunchbox Joe) to stagnate and decline with hyper-inflation, with a root cause of uncontrolled population growth (In-sourcing)….real estate is doomed and do I see a light at the end of the tunnel?

    Yes I do, its an economic gloom train about to hit us….lol

  3. 3
    david losh says:

    If rents hold steady the value of Real Estate stays steady. A comment yesterday has stuck with me. The value of Real Estate is it’s rental income rather than paper equity. If rents hold steady, or increase, the value, actual value, of the Real Estate holds steady and increases.
    Even though pricing may recede the core value of Real Estate is getting to be a better deal for the land lords. Once again the rich get richer.

  4. 4
    budbrad says:

    Commercial RE is next. Mark my words.

  5. 5
    Ubersalad, Ph.D says:

    budbrad…

    That has been said already. Your word is quoting words of those before you. Mark your words…

  6. 6
    patient says:

    David Loash said,

    “The value of Real Estate is it’s rental income rather than paper equity. If rents hold steady, or increase, the value, actual value, of the Real Estate holds steady and increases.”

    Ture, it’s another way of saying that cost of owning should be similar to cost of renting for prices to reflect value, i.e be fair and sane.

  7. 7
    patient says:

    Sorry for the hasty,bad spelling, now how do you edit a comment again…?

  8. 8
    The Tim says:

    You should be able to edit a comment within 2 minutes of posting it. During that time, a little “Edit” link with a pencil icon will appear below your comment, along with a countdown timer of your 2 minutes.

  9. 9
    Dash Pointer says:

    “We’ve seen the economy all of a sudden go limp recently, largely because of the collapse of the housing and credit markets,”

    I think we’ll inevitably discover how many sectors of our economy have been floated by excessive credit liquidity. Does anyone really think the tech sector is immune?

    Trillions wasted on Wall St schemes means little money left for real business investment. We might as well bid farewell to our nice salaries–if we still have that job.

  10. 10
    Sniglet says:

    If rents hold steady, or increase, the value, actual value, of the Real Estate holds steady and increases.

    Unfortunately, I strongly suspect we will see rents fall substantially. Many people will simply decide to down-size their housing needs, or move to shared accomodations, in order to save money. Further, once the downturn picks up in our region a LOT more owners will start to rent out their properties in desperation when they are unable to sell for the prices they need.

    Just look at the masses of supply about to come on-line in the next couple years once all these massive condo projects are finished (the forests of cranes in downtown Bellevue speak volumes). Most of those units will wind up as rentals one way or another.

    The final hit to the health of rental properties will be when the BIG stalwart Puget Sound employers actually start laying people off at the end of 2009 and on through 2010 (i.e. when their revenue begins to contract due to the global recession).

  11. 11
    Thomas B. says:

    How can rental prices remain high while people lose jobs and there is no job growth? What are these people looking at?

  12. 12
    alex says:

    Sniglet@10: haven’t the BIG stalwart Puget Sound employers already begun to lay people off? I thought Starbucks anounced a 1000-people downsize the other day…

  13. 13
    Ray Pepper says:

    Where else will they go Tom? We continue to raise all our rents in Washington, Oregon, and Nevada. We place every home on a rent-to-own status where the home owner has to do no maintenance while the tenants feels good about having their rent actually go to something. Tenant assumes all responsibilities of home repair. It goes like this:

    House rented 2 years ago for 950.00
    We bump to 1125 on a Rent to Own
    Landlord gives 200.00 back a month for up to 3 years towards Buyers down payment/concessions/ etc…About 7200
    If the landlord gets cashed out GREAT. He has to pay no Realtor fees and just sold the home with no disruption in cash flow.
    If the Landlord doesnt get cashed out GREAT. He got paid 15% or more each month and had to do no maintenance.

    You should be asking yourself one last question. Whats the price of the home??

    Easy. Price is determined by appraisal from buyers Lender at the time tenant is ready to cash out the landlord. If there is a discrepancy in the appraisal another will be purchased by Landlord. If a problem still exists the 3rd appraisal will be purchased by both landlord and tenant and the price arrived at will be the selling price!

  14. 14
    Ubersalad, Ph.D says:

    Alex, that was “Alaska Airline”…

  15. 15
    TheHulk says:

    Whoa! the dow is almost at 11000. Wow, Whowoudathunkit??

  16. 16
  17. 17
    Markor says:

    david losh: A comment yesterday has stuck with me. The value of Real Estate is it’s rental income rather than paper equity.

    A simple extreme example show that this is false, despite what any economics book might say. Suppose you are a landlord who rents out a house worth $100K. Add loads of easily obtainable credit, so that the house explodes in value to $500K. You’d be a fool to not increase the rent, because the rent you charge should fully compensate for the fact that you could make a small fortune by selling the house.

    It follows that we can’t tell the value of a house by just looking at what it would rent for. A larger picture must be considered.

    I agree with sniglet that rent reductions are in store. I think it will take at least a year from now.

  18. 18
    explorer says:

    I would bet on Singlet’s assessment of the rental market. When you double up, that creates one less unit of demand. Where are people going to go? Back home, to family, to a van down by the river, start a communue, etc, you name it. Add no jobs to that and you have no money to rent at anything approaching the “market” rate around here.

    My recent experience with an economic eviction, anecdote ahead: People are staying put in the places that are good deals, more so than usual. It’s been a landlord’s market for over two years, and that was before the acknowledgment of the economic perfect storm coming in.

    The majority of people who rent are only “elastic” in their sense of survival, not in the amount of money they have to rent a house or failed condo. Homeless is an involutary option. We will be seeing more of it.

  19. 19
    EconE says:

    Sheesh.

    I just wish certain people would stop crowing about their investments.

    Ray…could you tell us once again at what price point you went long on WB…$20 was in the bag wasn’t it?

    There’s a recent post with the all the details. I’m just too lazy to look for it.

    I’m sure Tim could find it quicker than the price seems to be falling.

  20. 20
    Sniglet says:

    I know of single colleagues who have decided to stop renting their own appartments and move into roommate situations. These people haven’t seen their incomes fall (some of them were recently promoted). Instead, they talk about their fears for the economy and a desire to save more.

    Something is definitely changing…

  21. 21
    Buceri says:

    Dow down 495 points at 4:05PM………

  22. 22
    Ray Pepper says:

    hahahaha…I knew someone would remember …Remember when it rallied to 19.72 It never hit my 20.00 but when it dropped below 19 I set a stop limit at 18.66 and was taken out…..Luckily I might say. I may jump back in tomorrow for 1/2 the amount at 9.33…With another stop limit….I wish I could say the same for my EGHT…I’m loaded to the GILLS of 85k at 1.05…No debt..15 mill in cash..But, we will see what happens with this investor conference.

    BTW I said Dow wouldn’t drop below 10k..Damn…I still have 900 points to go..So I’m still in the GREEN! Mkt will rally when/ig AIG finds a Buyer! book it!

  23. 23
    victorchai says:

    ” Damn media….”
    Don’t listen to the media….

  24. 24
    Sniglet says:

    BTW I said Dow wouldn’t drop below 10k..

    For what its worth, I have been predicting the Dow would fall below 10,000 before the end of 2008. I expect the Dow to be below 7,000 by the end of 2009, and below 5000 by the end of 2010. Its not just real-estate prices I expect to drop more than 50%.

    My one caveat is that these declines could happen faster.

  25. 25
    Joel says:

    I also think that rents will eventually come down some. How much does everyone else think they will come down in the next few years?

  26. 26
    Ray Pepper says:

    Sniglet…My God! Dow 5000.!! Bold call!

  27. 27
    patient says:

    I see this as the opportunity of a lifetime for me and my wife to secure a good retirement. We plan put in 15% of our income every two weeks into highly diversified retirement funds which I believe will be able to buying stocks to steep discounts the next couple of years and payout nicely 25 years from now. Thank heavens that gave us common sense enough to not go and mortgage our cash flow away so we can do this.

  28. 28
    david losh says:

    First, most investors in Real Estate look at the cost basis of the property rented. The rents increase by what the market will bear. It’s the new investors that are pushing up rents to pay for a higher acquisition cost. The vast majority of investors will keep rents within reason to attract or keep good renters.
    Second, the value of the investment/rental properties are many times related to the return on investment, both today and in the future. Some people pay negatives or average the income between several properties because in fifteen years, or there abouts the principle balance begins to amortize.
    What I’m thinking is that some owners will be, or should be getting rid of rental properties to take advantage of the equity positions, then reinvest later at lower prices. Does this seem right? Isn’t that the way it should work, the same as some one selling a home and waiting for prices to drop?
    That’s the only way I can see for rents to come down. If rents do come down the incentive to keep rental property goes down. Rentals, in my opinion, are a lot of work.
    Lastly, the global recession is a dream, like pink ponies. We all wish the world was in the same trouble we are, or Europe, of devloped countries are, but they are in a totally different economy. Many people live within the borders of where they can get food, water, and shelter, if need be. You’d be wishing for a military controlled global economy to think that people who are looking for food are going to be stymied by bank credit to get it. If you have nothing, with no hope of getting anything, things can become very desperate quickly. That’s where the global over population theory is important.

  29. 29
    deejayoh says:

    For what its worth, I have been predicting the Dow would fall below 10,000 before the end of 2008. I expect the Dow to be below 7,000 by the end of 2009, and below 5000 by the end of 2010. Its not just real-estate prices I expect to drop more than 50%.

    My one caveat is that these declines could happen faster.

    you are just a ray of sunshine, sniglet! :)

  30. 30
    alex says:

    patient, I echo your sentiments… but I tell ya, it’s hard to keep repeating that motto when you see that:

    a) the people who were careless and mortgage themselves to their necks are all living the good life in their beautiful houses – and have been for a few years. no one can take that away from them;

    b) my 401k seems to eat up all the money I put into it, and then some.

  31. 31
    Pegasus says:

    I track rents of SFH in South King Co. in several areas. I have found the amount of homes for rent steadily increasing each month. The listings have doubled in the last year. The rents are all over the place. The only answer that I have come up with for the erratic pricing is that a lot of new renting homeowners are optimistic when they first decide to rent their home and base it not on “the Market” but their mortgage and other costs. Needless to say many of these homes stay for rent for many months. What they actually rent for I have no way of knowing. The increasing supply has to eventually start knocking the rents downward when the job growth is stalling.

  32. 32
    John says:

    If the Dow drops to 5000, most people’s retirements would be gone. Even a drop to 8000 would be brutal.

  33. 33
    Markor says:

    patient: I see this as the opportunity of a lifetime for me and my wife to secure a good retirement. We plan put in 15% of our income every two weeks into highly diversified retirement funds which I believe will be able to buying stocks to steep discounts the next couple of years and payout nicely 25 years from now.

    Good strategy. I’d wait until the bottom of stocks though. They have a long way to fall, esp. considering that $trillions were borrowed from future generations to boost them, and the ability to keep borrowing to keep them boosted is waning (just maintaining the current debt load will put downward pressure on stocks). I’ll probably buy a house first.

  34. 34
    Markor says:

    Pegasus: The rents are all over the place. The only answer that I have come up with for the erratic pricing is that a lot of new renting homeowners are optimistic when they first decide to rent their home and base it not on “the Market” but their mortgage and other costs. Needless to say many of these homes stay for rent for many months.

    Good report. I’ve noticed the same. It’s like they don’t check out the competition at all, just like so many house sellers don’t when they list their houses.

  35. 35
    patient says:

    Markor said:

    “Good strategy. I’d wait until the bottom of stocks though”

    Stocks are truly volatile compared to housing that is very slow to change direction and frankly predictable. Personally I don’t have time to day-trade so it’s suits me good to buy at very frequent intervals during a “depressed” period. You will get some stocks a low price and some at lower which is fine with me. A home is a one-time or two time purchase for us so with the home we will be trying to time the bottom or close to which I think will be pretty easy.

  36. 36
    Garth says:

    Housing to rent and housing to sell are two completely diferent products.

    If you have to switch between the two there is almost always a substantial cost to down / upgrade depending on which way you are going

  37. 37
    economist says:

    Add loads of easily obtainable credit, so that the house explodes in value to $500K. You’d be a fool to not increase the rent, because the rent you charge should fully compensate for the fact that you could make a small fortune by selling the house.

    It follows that we can’t tell the value of a house by just looking at what it would rent for. A larger picture must be considered.

    This is absolutely absurd. This is like saying that if the share price of pets.com goes up it can raise the cost of its products to compensate for the increased share price.

    What you don’t seem to get is that landlords always charge the maximum rent they can, i.e. the market rent, which depends on the supply of and demand for rental housing. This has nothing to do with the current market price of housing or with how much any individual landlord paid for a house. This is exactly the reason why recently purchased properties in the current bubble rent for large negative cashflows.

    Income determines the market price of capital in the long run, in the case of housing that means rents determine market price of housing in the long run. NOT the other way around.

  38. 38
    AndyMiami says:

    Asian mkts down 5% tonight…this is 1929 all over again..wake up Seattle..homes down 50%……DEFLATION is amongst us..and keep your SUVS…petrol falling like a lead balloon…I guess that’s a good thing..I hope all investments are in your mattress tonight because financial meltdown is happening and main street will soon be totally screwed…you are about to experience a DEPRESSION…and I am not happy about it and people need to be help accountable and screw the free market since it just leads to avaricious behavior, especially by those who are already super wealthy and just want MORE…this sucks..I truly hate capitalism…

  39. 39
    jimmythev says:

    Wamu will be gone by the end of the week… that’s another 5,000 people unemployed in the Seattle region. This train wreck is gaining speed… AIG going down… that is going to have massive ripples around the word.

    HP is laying off 25,000 people… and don’t kid yourself, Microsoft, with Kevin (thank you for all that you do) Turner at the helm, will make sure there are less employee’s next year than there is this year.

  40. 40

    “I truly hate capitalism…”

    Under capitalism, it’s dog eat dog.
    Under communism, it’s just the opposite.

  41. 41
    BrianL says:

    Or deflation now while everyone scrambles for liquidity and the fed/government pours money into the system, inflation next year when all that extra money starts sits around.

    Careful with the long term predictions; even the macro economic experts are looking at the current situation as highly volatile.

    The funny/scary thing is, if we do get hit with significant inflation, people who manage to keep their jobs clear a good portion of their debt.

    Under long term deflation, anyone with debt is screwed. That would be a massive disaster – the kind where the majority of houses in the US go into foreclosure, most buisnesses close their doors, etc. The government and fed will fight against that harder than they’ll fight inflation.

  42. 42
    Buceri says:

    It’s truly scary to hear Wall Street Journal reporters say “things keep happening that were inconceivable just a week earlier.”

    “It is not unfair to mention 1929; BUT today there is much more money on the line and global factors we can not control.” An economist on NPR.

    This is really uncharted territory; and it makes any “tin foil hat” prediction worth keeping on file.

    By the way Sniglet – you do know that Kirkland Signature aluminum foil is the only one you can use for the hats, right?? The Bush Administration has bugged all the other brands. Now you know.

  43. 43
    LeftOverpricedSeattle says:

    While I am not sure a 5000 Dow is going to happen, I definitely believe that an 8000-9000 Dow between now and the end of 2009 is going to be a reality. I think the coming price declines are going to be so deep in real estate that a lot of people are going to find themselves retiring on Social Security and nothing else.

    All those boomers who were spending equity now in anticipation of continual RE increases when it’s time to sell the home are going to be in a world of hurt and will keep working well past 65 just to be able to survive.

    401k’s are going to be decimated.

    I remember 2001 and the wipeout that happened. This one will be far, far worse with more long term pain.

    Who’s next after WAMU?

    NCC?

    WB?

    It’s all ugly…

    Get into cash and save everything now to pay cash later.

    If the bank won’t loan on that waterfront property, the cash buyer will be in a sweet position make a killer deal.

  44. 44
    Meadows says:

    Ira @ 40……

    Under capitalism, it’s dog eat dog.
    Under communism, it’s just the opposite.

    Good one! But the Chinese seem to do capitalism pretty well…. it’s unregulated capitalism that implodes, this Republican ideology of some free market pink-pony world of self-regulating systems. A well-worn lie from The Elitist Handbook.

  45. 45
    shane says:

    The fact we have less regulated markets isn’t necessarily the problem. It’s that for the last two decades the negative feedback loop that is required to keep the system in check has been dampened. Instead of letting companies fail when their risk management is terrible they could always count on that wretched little troll, and the rest of .gov, to bail them out of their messes. If we want less regulated markets then we need to be able to stomach the consequences when things don’t go well. If we can’t handle that lets just go socialist and get it over with. This scheme of privatize the profits and socialize the losses seems like a bad system.

  46. 46
    Markor says:

    patient: Stocks are truly volatile compared to housing that is very slow to change direction and frankly predictable. Personally I don’t have time to day-trade so it’s suits me good to buy at very frequent intervals during a “depressed” period. You will get some stocks a low price and some at lower which is fine with me.

    I think stocks are predictable now too, in the long run. They’ve become a giant Ponzi scheme (a bubble) just like housing. In my book, the main purpose of 401K accounts is to over-inflate stocks so money can be transferred from the middle class to the rich, who don’t incur a 10% penalty when they withdraw (and withdraw they are doing en masse now, because they know the game is up). In any event, the Dow has managed just 5% since 1928, and you can get that risk-free in a CD today.

  47. 47
    John says:

    Letting Wall Street use leverage, significant enough to possibly bring down the system, is not a good idea. If there is one area to regulate, this is it. Those who are responsible for this crisis are not giving back their giant bonuses. They have everything to gain by gambling with 30 times their capital and nothing to lose.

  48. 48
    Markor says:

    economist: This is absolutely absurd. This is like saying that if the share price of pets.com goes up it can raise the cost of its products to compensate for the increased share price.

    No, that’s apples and oranges. It’s like saying that if the value of dog food goes up, pets.com can raise the price of dog food. If a dog owner won’t buy it, pets.com will sell it to the guy who got a no-money-down loan to buy the dog food and do nothing with it.

    What you don’t seem to get is that landlords always charge the maximum rent they can, i.e. the market rent, which depends on the supply of and demand for rental housing. This has nothing to do with the current market price of housing or with how much any individual landlord paid for a house.

    You’re right on the first statement, wrong on the second. Let’s make the example more extreme. The house you bought for $100K and rent out for $1K per month is now worth $1 billion. Do you still charge $1K per month, because wages are unchanged and so that’s all you can get from a tenant, or do you sell it for $1 billion? When you sell it and the next guy (who owns ten houses–no money down!) can’t get a tenant to pay $10 million per month, what happens to rents?

    Income determines the market price of capital in the long run, in the case of housing that means rents determine market price of housing in the long run. NOT the other way around.

    Income does not exactly determine rent. At most, it determines a ceiling on rent. Until people are eating rice & beans every day, the ceiling is not reached. When you inject a lot of easy money into the housing market, there’s going to be inflation in rents, which means that rent is not a good determiner of the market price of houses. If you were right, I could walk into Safeway now and tell the manager, “hey, you can’t increase the price of beans, my wage didn’t go up!” and she’d say “so sorry sir, we’ll lower that price pronto.”

  49. 49
    david losh says:

    The mess we see today is more of the same we have seen in the past ten years. Large companies are getting larger and as they are getting larger the federal government is putting more eggs in fewer baskets. We have corporate welfare, or privatized socialism.
    Large corporations provide health care, retirement programs, and your 401Ks are invested in the economic health of these huge multi national corporations. The stock market takes the pulse of these huge institutions to see if they will bring us all bigger profits. They won’t unless you continue to consume.
    Now you’re talking about jobs. Jobs are the way you are able to consume. You want higher wages. You want jobs so you can spend more to make more profits for the corporations that will give you health care and retirements benefits.
    This is a housing blog so let’s look at the principles we are seeing from rental income compared to the price of Real Estate. Investors pay what the property will reasonably return over the course of time. Investors invest in the core value of Real Estate. If the price is too high they won’t pay it, or will negotiate for a lower price, or a higher value.
    Why would a consumer do anything else? Why would any one pay more than a property is worth? Why do we have the vast difference between house prices and the core value of a house?
    You have to take that responsibility. You are talking about money in a mattress. Other people are talking about the value of the 401K. Some people are concerned about the stock market. The only thing you have control of is your own finances. Working a job is putting your life in some one elses hands. Renting is giving control of your financlial well being to your land lord.
    Why is your land lord smarter than you? How did your land lord decide to pay a reasonable price for a reasonable rent? Is it time? Is it because the land lord bought years ago and is now passing that gift onto you? I think we are seeing in this post the difference between what you will do for yourselves and what we will hand over to others to control for us.

  50. 50
    Markor says:

    John: Those who are responsible for this crisis are not giving back their giant bonuses. They have everything to gain by gambling with 30 times their capital and nothing to lose.

    Which is why they fervently support Republicans.

  51. 51
    Markor says:

    LeftOverpricedSeattle: I think the coming price declines are going to be so deep in real estate that a lot of people are going to find themselves retiring on Social Security and nothing else.

    Social Security is not an option. All that’s left in the vault are IOUs. The money was wasted elsewhere, to make the rich richer. (Half the nation wanted giant tax cuts for the rich, mind you.) The only option for the majority of people is to work until they die.

  52. 52
    deejayoh says:

    I see Ardell just dropped the price of her house by another $50k. Everything is off 5% yesterday!

  53. 53
    Markor says:

    BrianL: The funny/scary thing is, if we do get hit with significant inflation, people who manage to keep their jobs clear a good portion of their debt.

    Not when their wages don’t go up. And why would they go up during a recession/depression?

  54. 54
    Markor says:

    Ira Sacharoff: Under capitalism, it’s dog eat dog.
    Under communism, it’s just the opposite.

    Good thing there’s another option then! Socialism, where people enjoy the highest standard of living in the world.

  55. 55
    k2000k says:

    “Good one! But the Chinese seem to do capitalism pretty well…. it’s unregulated capitalism that implodes, this Republican ideology of some free market pink-pony world of self-regulating systems. A well-worn lie from The Elitist Handbook.”

    China will not be in any better shape than the US. I was in Shanghai last summer and the housing situation there was far worse in terms of ludicrous pricing than anywhere else in the country. I believe at the time housing in Seattle was around 15x disposable income whereas in Shanghai it was 50x. BTW it is no seceret that China’s industry is still very inefficient, and though it is developing, it has yet to be seasoned through an economic downturn. You are about to find out.

    Quote: The housing bubble has broken in Seattle, Great! Now if only that damn political one would burst too.

  56. 56
    Markor says:

    k2000k: BTW it is no seceret that China’s industry is still very inefficient, and though it is developing, it has yet to be seasoned through an economic downturn. You are about to find out.

    China is capitalism at its worst. In one city they are scraping off a mountain to let the smog clear, rather than cap emissions. But never mind, because loads of factories in China are shuttering now, due to too-high labor costs. Soon it will be time for the Amercian elite to choose another dumping ground.

  57. 57
    david losh says:

    I think rents are going down. As rents go down the core value of the Real Estate decreases. If you couple lower rents with shrinking equity why would a person keep a rental portfolio?
    If rental property owners sell who will be the buyer? Think about it before you make the comment. If there is less incentive to have a rental porfolio where will rental properties come from?
    If we take rental properties out of the equation that’s where the problems really begin.

Leave a Reply

Use your email address to sign up with Gravatar for a custom avatar.
Your email address will not be published.

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

Please read the rules before posting a comment.