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Shiller: Housing market comeback may be an illusion


By HousingBoom   Follow   Fri, 25 Jan 2013, 1:41am PST   6,716 views   104 comments   Watch (2)   Share   Quote   Permalink   Like (2)   Dislike  

http://www.nj.com/business/index.ssf/2013/01/shiller_housing_market_comebac.html

The housing market has been declining for something like six years now, it could go on, that’s my worry,” Shiller daid. “The short-term indicators are up now, it definitely looks better, but we saw that in 2009.

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Sakman   befriend   ignore   Mon, 28 Jan 2013, 8:02am PST   Share   Quote   Like   Dislike     Comment 65

robertoaribas says

Yes, the US economy is so bad that housing prices cannot possibly increase... That is why the have been dropping over the past 12 months...

Oh, they've actually been increasing over the past 12 months... That doesn't count! My analysis is perfect, so any increase must be manipulated or fake!

"I don't like reality to get it the way of my theories!" - Every armchair economist when they get plowed by market movements.

thomaswong.1986   befriend   ignore   Mon, 28 Jan 2013, 8:10am PST   Share   Quote   Like   Dislike (1)     Comment 66

Vicente says

If it were, we'd be at or very close to an actual bottom now. Instead, every effort is extended to prop things up, so we're not there. Yet.

like to Govt sees it.. cant have people get thrown out of their home..
not to mention see local city/county prop tax revenue take a hit..
did you see all this govt interference in RE in prior decades.. No!

of course they want to see prices go up beyond any rationality.

Vicente   befriend   ignore   Mon, 28 Jan 2013, 8:14am PST   Share   Quote   Like   Dislike     Comment 67

thomaswong.1986 says

did you see all this govt interference in RE in prior decades.. No!

Wrong. It goes back further. "Helping" the real estate market has been around a LOOONG time. At least as long as the home mortgage interest deduction has been around. I would argue further back than that. And it's not unwelcome is the thing, people actively lobby both citizens and real estate types for it. In my own community when a new development was proposed a few years ago, existing homeowners KILLED it dead because that might lower their property values which they wanted propped right where they were.

Raw   befriend   ignore   Mon, 28 Jan 2013, 8:15am PST   Share   Quote   Like   Dislike     Comment 68

thomaswong.1986 says

Vicente says

If it were, we'd be at or very close to an actual bottom now. Instead, every effort is extended to prop things up, so we're not there. Yet.

like to Govt sees it.. cant have people get thrown out of their home..

not to mention see local city/county prop tax revenue take a hit..

did you see all this govt interference in RE in prior decades.. No!

of course they want to see prices go up beyond any rationality.

Not a fair assessment.
We did not have a crash of this magnitude since the great depression, so there was no need for the government to interfere until now. Real estate was crashing....major banks were collapsing and we were on the verge of a catastrophe. Government interference is what prevented doomsday for us.
The credit goes to Obama and Bernanke. How can we ever thank them.

thomaswong.1986   befriend   ignore   Mon, 28 Jan 2013, 8:25am PST   Share   Quote   Like   Dislike (1)     Comment 69

tatupu70 says

Not to ruin your good story, but I think it has more to do with the fact that people in other countries work in sweatshops for $1/day.

1 dollar a day or 20 dollars an hour make no difference.. when your talking increasing unit production... 1000s of units a day.. $160-250/day gets "absorbed" into product costing.. they become pennies per unit.

only the journalists and the left use labor as excuse.. and never ask the CEOs about the real issues of modern mfg in the USA.

thomaswong.1986   befriend   ignore   Mon, 28 Jan 2013, 8:28am PST   Share   Quote   Like   Dislike (1)     Comment 70

TODAY | Aired on December 06, 2012
Exclusive: Brian Williams interviews Apple CEO
In his first television interview since taking over from the late Steve Jobs, Apple CEO Tim Cook has made some profound changes at the company including one economic change that he shared exclusively with NBC’s Brian Williams.

http://video.today.msnbc.msn.com/today/50100299#50100299

>> let's say our constitution was a little different and president obama called you in tomorrow and said get everybody out of china and do whatever you have to do, make these, make everything you make in the united states . what would that do to the price of this device?

>> honestly, it's not so much about price, it's about the skills et cetera . over time , there are skills that are associated with manufacturing that have left the u.s. not necessarily people, but the education to stop producing them.

>> that's sad. how do we get that back?

tatupu70   befriend   ignore   Mon, 28 Jan 2013, 8:54am PST   Share   Quote   Like   Dislike     Comment 71

thomaswong.1986 says

only the journalists and the left use labor as excuse.. and never ask the
CEOs about the real issues of modern mfg in the USA.

Thomas--you can't be that naive. You know that jobs go to China because of labor cost. Whether you can admit it to yourself or not, you know it to be true.

Why do companies move from California to Texas? It's certainly not beacause of the "skills" difference. Or from the union states to non-union states? Again--certainly not because of skills.

CEOs may be politically correct in public, but you ask any CEO of a manufacturing company and labor costs are a HUGE focus.

thomaswong.1986   befriend   ignore   Mon, 28 Jan 2013, 9:23am PST   Share   Quote   Like   Dislike (1)     Comment 72

SFace says

nominated

I have no idea it takes 10 man-hours a day to manufacture 1000 units. Bubble gum maybe

absorption .. In January 2012, Apple reported its best quarterly earnings ever, with 53% of its revenue coming from the sale of 37 million iPhones.

it doesnt have to be iphones.. you can pick t-shirts...frankly many consumers already bought 30 millions pieces of underwear during the same quarter. The concept is the same.

Its everything else besides direct materials and direct labor in the realm of overhead costs that get hit the most. OH is certainly cheaper in Texas compared to CA.

Bap33   befriend   ignore   Tue, 29 Jan 2013, 1:08am PST   Share   Quote   Like   Dislike (1)     Comment 73

tatupu70 says

Thomas--you can't be that naive. You know that jobs go to China because of labor
cost. Whether you can admit it to yourself or not, you know it to be true.

I submit there is more than the regulations of wages to be avoided when manufacturing jobs move to China. The EPA regs, the OSHA regs, Gov-State-and local taxes, plus the permitting of so many aspects of a plant and its componants .. as well as the same entities cost increases tied to each point of a product - tranportation of raw materials, manufactuing, transportation of completed materials, marketing, wholesaling, distributing, retailing - I think those things play a large portion of the reason a job (such as manufactuing) goes to china, along with the labor cost. Right?

tatupu70   befriend   ignore   Tue, 29 Jan 2013, 1:28am PST   Share   Quote   Like   Dislike     Comment 74

Bap33 says

I submit there is more than the regulations of wages to be avoided when
manufacturing jobs move to China. The EPA regs, the OSHA regs, Gov-State-and
local taxes, plus the permitting of so many aspects of a plant and its
componants .. as well as the same entities cost increases tied to each point of
a product - tranportation of raw materials, manufactuing, transportation of
completed materials, marketing, wholesaling, distributing, retailing - I think
those things play a large portion of the reason a job (such as manufactuing)
goes to china, along with the labor cost. Right?

Yes and no. There is some cost to meeting EPA and OSHA regulations, permits, etc., but those costs are FAR less than the difference in labor costs.

Quick and dirty calculation for you. Assume $25/hr difference in wage & benefit costs across 150 people in the plant at any time? Reasonable? That's $3,750 per hour. Or $90,000 per day. Does that put things in perspective?

The other stuff you mention--transportation of finished good is much more expensive when you manufacture in China, transportation of raw materials is hard to say--depends on what your raw materials are, marketing, wholesaling, distributing, retailing--not sure what you mean. Why would any of those be cheaper when you manufacture in China??

dublin hillz   befriend   ignore   Tue, 29 Jan 2013, 3:46am PST   Share   Quote   Like   Dislike     Comment 75

Perhaps the housing bears can explain the following development - how come in many parts of bay area, the rent zestimate for single family homes is about $1,000 more than estimated mortgage payment for same property (this is for single family homes). Please no asinine conspiracy theories questioning the accuracy of zillow as there are some folks I know who decided to rent single family homes and their rent is extremely close to the zestimate. In other words, what is the driving force for why current rents are so much higher than mortgage payments if as you claim renting is so much better because the market is "rigged."? Thanks!

gbenson   befriend   ignore   Tue, 29 Jan 2013, 4:25am PST   Share   Quote   Like (2)   Dislike     Comment 76

SFace says

A US company makes a sample, say a Disney Princess Doll

I don't disagree with your example figures, however there are some things that we as American's (or buyers at Disney) fail to consider.

- Your China manufacturer may use toxic materials and subject consumers to health issues (major liability concerns) and employ child labor (bad press). So now you have to spend another $1/doll testing, enforcement, and maintain PR.

- Each dollar that leaves the US is not reinvested in your consumer base. If you pay a US worker the $6 more in labor, they can go buy dolls for their kids.

The last point really irks me that more people don't think about the ramifications of what this means to the US. You make a product that you want to sell to the American people, but in an effort to make it cheap, you take away their jobs so they can't afford to buy your product. It's a downward spiral with a smaller and smaller consumer base that leads to (Apocalypsefuck usually shows up at this point in the story)

Vicente   befriend   ignore   Tue, 29 Jan 2013, 4:26am PST   Share   Quote   Like (1)   Dislike     Comment 77

tatupu70 says

CEOs may be politically correct in public, but you ask any CEO of a manufacturing company and labor costs are a HUGE focus.

This is why all that "job creator" business is complete bullshit.

Jobs are an undesired cost for a CEO. If they could replace everyone with robots they would do so. Except themselves of course, they are indispensible!

David Losh   befriend   ignore   Tue, 29 Jan 2013, 4:54am PST   Share   Quote   Like   Dislike     Comment 78

dublin hillz says

the driving force for why current rents are so much higher than mortgage payments

Because the renter doesn't carry the debt load, the land lord does. Many people, myself included, would love to dump the property I pay a mortgage on, and rent.

It's a demand side of the equation. Also over time the rents will come down, that mortgage payment will remain the same.

ELC   befriend   ignore   Tue, 29 Jan 2013, 8:14am PST   Share   Quote   Like   Dislike     Comment 79

Vicente says

If they could replace everyone with robots they would do so.

I used to have cold callers as well as auto dialing machines. It's a total waste of time and money employing cold callers. The machines outperformed the humans every time for a fraction of the cost and no personal problems to deal with.

ELC   befriend   ignore   Tue, 29 Jan 2013, 8:27am PST   Share   Quote   Like (1)   Dislike     Comment 80

gbenson says

The last point really irks me that more people don't think about the ramifications of what this means to the US. You make a product that you want to sell to the American people, but in an effort to make it cheap, you take away their jobs so they can't afford to buy your product. It's a downward spiral with a smaller and smaller consumer base that leads to (Apocalypsefuck usually shows up at this point in the story)

There was a time when it benefitted America to sit back and allow certain countries to stay in poverty. Now it's biting us back. Call it Globalization, karma, invevitability... whatever. It can't be reversed. Americans have to put down their beer and porn and get serious about success. It's kinda hard to compete with a chinaman when you've got your dick in one hand and your remote in the other flipping back and forth between the porn channel and Fox News and your biggest worry in life is that your little gun might get taken away.

ELC   befriend   ignore   Tue, 29 Jan 2013, 2:36pm PST   Share   Quote   Like   Dislike     Comment 81

robertoaribas says

Not to mention, all of the lead toddlers will get by sucking on these dolls.

There's supposed to be stickers on them that say, "Made In China Wash Throughly." But Disney removes the stickers. However, every once in a while they forget to remove the sticker.

Mick Russom   befriend   ignore   Tue, 29 Jan 2013, 4:38pm PST   Share   Quote   Like   Dislike     Comment 82

robertoaribas says

My analysis is perfect, so any increase must be manipulated or fake

Any trend that benefits me (and none of the people renting from me) is TRUTH, and propaganda must be crafted to support this trent, not matter what! I will use my position, credentials and a housing crash blog to sell it.

Mick Russom   befriend   ignore   Tue, 29 Jan 2013, 4:41pm PST   Share   Quote   Like (1)   Dislike     Comment 83

tatupu70 says

Looking at the US as a whole, consumers are not broke.

Really. The average net worth in 2010 including home equity was 77,000.

Without plastic the nation would be halted.

Mick Russom   befriend   ignore   Tue, 29 Jan 2013, 4:41pm PST   Share   Quote   Like   Dislike     Comment 84

robertoaribas says

Not to mention, all of the lead toddlers will get by sucking on these dolls.

Or paint chips from the nasty hovels you rent to the working wage slaves so you can keep earning unearned income.

thomaswong.1986   befriend   ignore   Tue, 29 Jan 2013, 5:00pm PST   Share   Quote   Like   Dislike (1)     Comment 85

tatupu70 says

That's $3,750 per hour. Or $90,000 per day. Does that put things in perspective?

$90,000 x 90 days (quarter) $8.1M direct labor costs spread that across 37M units ( produced and sold) comes down to .21 /unit of direct labor costs.

Clearly even Tim Cooks comments illustrate this...Its not price/costs...

thomaswong.1986   befriend   ignore   Tue, 29 Jan 2013, 5:08pm PST   Share   Quote   Like   Dislike (1)     Comment 86

SFace says

US manufacturer with their high labor cost can only go as low as $15 per unit ($6 material and $9 labor), save on shipping.

China manufacturer can quote $9 ($6 material and $3 labor ) plus another $2 for container ship. Total is $11.

$9 labor per hour.. how many do you make per hour... how about you make 10 units per hour and therefore direct labor shrinks to .90 per unit. With automation as is the case for many industries may well be even lower down to .09 /unit... how different is that from .03 /unit.. Your assuming a great deal of inefficiencies in capacity using 1 unit produced per hour... How do you make 22M or 47M units of an item per quarter as in the case of Apple below. This is why journalist fail to provide a fair picture.. it certainly doesnt escape the many Finance professions working in Business/Industry.

Apple Reports Record Results
47.8 Million iPhones Sold; 22.9 Million iPads Sold
CUPERTINO, California—January 23, 2013

tatupu70   befriend   ignore   Tue, 29 Jan 2013, 8:20pm PST   Share   Quote   Like   Dislike     Comment 87

thomaswong.1986 says

$90,000 x 90 days (quarter) $8.1M direct labor costs spread that across 37M
units ( produced and sold) comes down to .21 /unit of direct labor costs.


Clearly even Tim Cooks comments illustrate this...Its not price/costs...

OK--if the total cost is .50/unit, then I'd say .21/unit savings is pretty damn signicant. Wouldn't you?

The cost savings/unit is somewhat important, but what good managers look at is the total cost savings. How much extra will be added to the bottom line by moving to China.

ELC   befriend   ignore   Tue, 29 Jan 2013, 9:07pm PST   Share   Quote   Like   Dislike     Comment 88

SFace says

I doubt anyone goes to Disneyland CA Adventures, come out from a ride say radiator springs racer, go to the gift shop and say, gee that Lightning McQueen RC is made from China. That's a deal breaker.

As far as I know, even 1 yo. toddlers don't eat their toys. You know, they recognize it is not food. A slap in the mouth would discourage behavior.

I'm sure those warning labels telling you to wash before using are there for a reason. Removing the label should be illegal. At the very least it's dishonest. It was brought to my attention by a stranger who was very upset because she had kids.

ELC   befriend   ignore   Tue, 29 Jan 2013, 9:16pm PST   Share   Quote   Like   Dislike     Comment 89

robertoaribas says

you aren't getting lead based paint out by washing the thing.

It's probably for chemical residue from the manufacturing process. I was researching stainless steel pet bowls and some had unacceptable levels of radiation when coming from China. I wonder if all this is really a concern or just propaganda to get people to overpay for American products?

tatupu70   befriend   ignore   Tue, 29 Jan 2013, 9:20pm PST   Share   Quote   Like   Dislike     Comment 90

ELC says

There's supposed to be stickers on them that say, "Made In China Wash
Throughly." But Disney removes the stickers. However, every once in a while they
forget to remove the sticker

So, your theory is that the Chinese plant puts the sticker on even though Disney doesn't want them to--then Disney pays their employees to remove the stickers?? Really?

If Disney is paying the Chinese factory to make the toys, you don't think they could tell them NOT to put the stickers on the toys in the first place?

ja   befriend   ignore   Tue, 29 Jan 2013, 11:18pm PST   Share   Quote   Like (1)   Dislike     Comment 91

gbenson says

The last point really irks me that more people don't think about the ramifications of what this means to the US. You make a product that you want to sell to the American people, but in an effort to make it cheap, you take away their jobs so they can't afford to buy your product. It's a downward spiral with a smaller and smaller consumer base that leads to (Apocalypsefuck usually shows up at this point in the story)

What about the opportunity cost? You cannot do anything better with the $4 you save? (e.g. invest in nanotechnology instead of making dolls).

It's ironic how easy is hearing that Adam's Smith theories are incomplete, but at the same time people forget its most basic principles. It's like justifying on Einstein that the Earth doesn't move around the Sun

http://en.wikipedia.org/wiki/Comparative_advantage

Goran_K   befriend   ignore   Tue, 29 Jan 2013, 11:58pm PST   Share   Quote   Like   Dislike     Comment 92

I was in Los Angeles for a client meeting. By some dumb luck, my belt buckle was loose, and starting to fall off of the belt. These pants being a bit loose, I needed to go buy a belt.

I went to a store by this plaza on Hoover street. It was a small asian version of a thrift store. I asked the lady for where the belts were and she pointed me to a small section on a rack. There were 3 belts. One of them had comic heroes on it. The second one was a girl's belt. The last one was a thin, no frills black belt. I thought, well it's better than not having one and having my pants drop to the floor during our meeting.

I bought the belt, it was $2.25. As I was walking out of the store, I started to smell something. It didn't smell pleasant, kind of like a really strong chemical smell. I looked around, nothing around me but students, and some homeless. I figured out it was coming from the belt itself. I pulled it to my nose, and I nearly fainted. I literally got dizzy, and had to gather myself for a minute. I thought to myself, this can't be legal to sell? What was this belt treated with?

There was a small piece of white paper stuck to the back of the belt, in 12 point font, probably Times New Roman, it said "Made in China."

David Losh   befriend   ignore   Wed, 30 Jan 2013, 12:42am PST   Share   Quote   Like   Dislike     Comment 93