I ran across this in the USA today this morning:
"WASHINGTON — Despite an economy starting to wobble, incomes were up and more people had health insurance last year, the Census Bureau reported Tuesday. Income inequality even shrank a bit.
The snapshot was taken before 2008, when the housing market collapse accelerated and job losses soared.
The nation has lost 463,000 jobs since the start of 2008, after adding 1.1 million in 2007, so it's not clear whether the economic gains of last year are continuing.
CENSUS AND POVERTY: See figures for your state
EXPERTS: Economy may stall push for health care
CITY STATS: Most affluent city might surprise you
The Census reported:
•Income. Median household income rose to $50,233 in 2007 after adjusting for inflation. That's $665 more than a year earlier but still below the peak of 1999. Income in black households rose for the first time since 1999.
•Poverty. The poverty rate remained stable at 12.5% of households.
•Equality. The top one-fifth of households took home slightly less of the nation's income in 2007. The middle and lower-middle class gained the most.
•Insurance. The number of people without health insurance dropped 1.3 million to 45.7 million. The uninsured fell to 15.3% from 15.8%. The primary reason for decline: More people, especially children, are covered by government-sponsored insurance."
My Take:
Hmmm...A quick question here. Why has the price of a house DOUBLED since 1999 when incomes are less than they were in 1999?
Anyone thinking we are close to the bottom is housing needs to think about this little statistic. Gee, do you think maybe the banks devised exotic mortgage products that allowed them to blow up a housing bubble?
Folks, all of these lending products are now GONE at a time when incomes are below 1999. There are no more 100% neg. am, subprime, or Alt-A loans anymore. Foreclosures are rising by the day and there seems to be no end in sight. Prices continue to drop.
My second question is this: If the lending products are gone, and incomes are the same or lower than 1999, doesn't it make sense that housing prices will drop back to 1999 levels?
I can't see why they wouldn't. The bank lending standards are probably even tougher now than they were in 1999. The banks also have significantly less capital today versus 1999. Maybe this combination will result in even lower prices than 1999!
Anyone thinking that housing can sustain a 100% jump in prices when income levels haven't changed needs their heads examined!
We sit here today with a 15% correction in housing prices, and the bottom callers are out screaming that we are through the "worst of it". How can homebuilders be up 10% today when you read numbers like this. Fannie/Freddie are both up 20-50% for the week. The spec traders are playing with fire here. When reality finally hits this market its going to be ugly. The numbers don't lie, and the long spec traders are going to get caught holding the bag one day.
I say BULL**** to the idea that housing is stabilizing! Looking at the numbers above, the correction has only begun.
1999 home prices here we come!
7 comments:
Totally agree!
Nobody can talk about wages and cost of living without talking about house prices. The holy trifecta is about correlation and if wages aren't moving and costs are going up, then house prices are going down. DOWN, DOWN, DOWN in massive way.
I predict another 10% slide until the election - then, once of the Republicans get kicked out, another 20% on top. It's gonna be urrrgly.
Minton
I see the same losses you do! Increased taxes by the dems will only exacerbate the problems.
I don't understand how the financial media can continue to ignore such simple math.
They would rather spend time talking about "bubbleland" versus the reality of whats really about to happen in the economy.
Yup. I think you're dead on. If underwriting guidelines demand 20% down, verifiable income and 36% DTI, values will continue to re-adjust.
However, we still have the externality of how far and deep this recession will be.
Jeff,
I'm going to go out on a limb here and say the dems probably won't raise taxes for the middle class or even the upper middle. Instead they'll adjust the tax rate of the top 1%.
Since "supply side' has proven abysmally wrong, there is more political wind do "demonize" the wealthy without alienating jo-public.
Besides, imo, we'll see the equivalent of a public works program over the coming years to ignite the new economy. Should be cool to see.....
growler
I see your point on the "supply side" arguement. Obama wants to tax anyone over 250K so I see your point.
I think he might have trouble with this argue ment in cities like New York because 250k is a middle class income there.
I have been a republican all of my life, but after watching this fraud, I find myself on the fence for the first time ever in terms of who to vote for.
The pigmen are totally out of control and they must be stopped.
We will find something to work out of this and public works makes a lot of sense.
I think we need to bring the jobs back to America that we shipped overseas to Chindia.
Hopefully through building infrastrucure etc, we can get back to a bull market. I am afraid its going to be awhile until we get there.
Jeff, I hope you can get another post in for today but if not have a great Labor Day weekend (and don't use those credit cards). :-)
Its comin Minton!
Working on it now. Got home late!
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