patrick.net

sorry about the extra italics --not intentional

I feel I can’t agree about illegal immigrants being a problem.

The problem is arbitrary enforcement. Legitimate businesses should not be force to break immigration and labor laws just to stay competitive.

First off, what percentage of jobs do the illegals have.

In some industries, such as agriculture, construction, hotel staff, food preparation, etc. the percentage is almost 100%. Of course, it's hard by definition to produce exact stats, because such hiring is illegal.

Second, don’t the factories in Indonesia that make NIKE’s pay alot less than workers in America. Therefore there are none of these factory jobs in America to be had by illegals??

The benefactor in this is the American consumer that has the oppurtunity to pay less for goods.

AntiTroll, I'm not sure I get your point here. Are you arguing that because there's so much offshoring/outsourcing to asia, there can't be much illegal immigration in California? The census here (and direct observation) says otherwise. I can assure you as a native Californian that the flood of illegal immigration is very real, and labor arbitrage here is alive and well.

The benefactor in this is the American consumer that has the oppurtunity to pay less for goods.

How is this an advantage? Well, it masks true inflation. Then what?

Taking the topic further, can we predict the social impact after an RE bust?

Some things I see:
• Homebuyers become much more skeptical towards realtors, demanding objective appraisals and other market info.
• A lot of lifestyle down-sizing. After many retailers slide into the red, a secondary market of slightly-used goods will boom: buy that Wüsthof knife set for 1/2 off. A lot of estate sales to get cash flow.
• Many will have less money to play with, and consequently find ways to actually do something with their lives. I predict higher-quaility cultural output: pain is good for the soul.
• Of course, there will those who whine, blame and point fingers at whomever they can--despite the fact they followed the herd. I'm sure some will even get litigious.
• Others will predict the "next big opportunity" just around the corner. Some fools will actually buy RE low, expecting an upturn soon.
• Some Americans may actually demand the govt. focuses its attention on the domestic scene--and get its butt out of Iraq.
• Will credit debt become unfashionable?

AntiTroll, I’m not sure I get your point here. Are you arguing that because there’s so much offshoring/outsourcing to asia, there can’t be much illegal immigration in California? The census here (and direct observation) says otherwise. I can assure you as a native Californian that the flood of illegal immigration is very real, and labor arbitrage here is alive and well.

I'm not saying that illegal immigration is not happening.
What I am saying is that if a business can only stay competitive by using illegals then wouldn't the business have to close without the use of illegals (hence loss of jobs, both legal and illegal).

AND if many businesses are competiting so hard, doesn't the consumer see lower prices as a result?

What I am saying is that if a business can only stay competitive by using illegals then wouldn’t the business have to close without the use of illegals (hence loss of jobs, both legal and illegal).

Huh? Compete against whom?

Harm,
I am also saying that by using outsourcing etc, the low paid job is somewhere else and not as noticable as having an illegal living next door!

I am also saying that by using outsourcing etc, the low paid job is somewhere else and not as noticable as having an illegal living next door!

But how can we "outsource" hotel maids and gardeners? We can outsource construction workers using the concept of modular homes though. ;)

Peter P,
How many jobs have been created by illegals?

CHEWBECCA

Peter P,
How many jobs have been created by illegals?

Maybe quite a few. My point is: perhaps we should legalize them so that law-abiding businesses can hire them. However, we cannot have a wink-wink quasi-law.

The Association of Realtors’ predictions have been wrong because they assumed interest rates were going to go up a lot more than they have….if/when that DOES happen, then sales and prices will subside.

Also, this shows that their studies have been completely useless.

"Taking the topic further, can we predict the social impact after an RE bust?"

Maybe there will even be a cultural renaissance of sorts. If everyone isn't out buying crap, maybe there will be a renewed interest in composing great music, writing great books, creating great art... Kids will read books and the next generation will become brilliant scientists, mathmaticians, artists...Hey, I can dream right?

But more realistically...

Board game nights will be really hip.

Cheap liquor will suddenly be in. People will drink wine coolers instead of wine.

Walmart will be the new Bergdorfs.

Garage sale chic will be bigger than ever (and recalling HARM's reference to Zoolander and the Derelictque (sp?) line of fashion...)

America will finally embrace hybrid vehicles...if car makers get a clue and stop making them look like weird little bubble cars.

Walking/biking to work will be the new form of exercise. Gyms across the country will go out of business as people finally figure out that if they'd just get off their asses they wouldn't need to go to the gym.

Americans will lose weight. Or maybe not...just recalled that study about how poorer people have a greater chance of obesity. Hmm.

Jack, it is a stated-OUTCOME study. They wanted a conclusion that looks sustainable and plausible. Hence the "correct" direction and inaccurate magnitude.

I’m not saying that illegal immigration is not happening. What I am saying is that if a business can only stay competitive by using illegals then wouldn’t the business have to close without the use of illegals (hence loss of jobs, both legal and illegal).

AntiTroll, this argument is used here quite often (mainly by businesses trying to justify their hiring of illegal workers). I see it as disingenuous and a self-fulfilling justification. In the current environment, yes, many honest companies are pretty much forced to lower wages/cut benefits in order to "compete" with dishonest ones exploiting cheap illegal labor. However, if immigration (and hiring) laws were enforced, there would be no pressure for them to do so. They would not be at a competitive disadvantage by not hiring illegals.

AND if many businesses are competiting so hard, doesn’t the consumer see lower prices as a result?

Possibly in some areas --food prices for one-- but not in others. For example, housing is almost 100% built by illegal labor. Do I see prices falling in CA? I don't think so! ;-). Personally, I'm willing to pay a few extra cents on a head of lettuce to keep wages high, our state infrastructure maintained, and cut down on pollution & overcrowding.

...I am also saying that by using outsourcing etc, the low paid job is somewhere else and not as noticable as having an illegal living next door!

Well... this may be a comparative benefit of outsourcing over illegal immigration, but it doesn't address the economic & social problems caused by illegal immigration here. I doubt there's much we can (or should) do about outsourcing, as it's a function of macro globalization, and erecting trade barriers would likely make things worse. There is something we can do about illegal immigration though: enforce our borders and employment laws, and fine/punish those who break them.

3.2 AND GROWING RAPIDLY BY THE DAY is what they should say.

Add to the mix, data on growing inventory/lagging sales:
http://tinyurl.com/aocnh
http://tinyurl.com/a2gz8
This is something we've observed too!

And, just now--this was overheard from my coworker's office:

"Bubble? there is no bubble. (sounding dismissive)...California is going to be fairly immune to it"

So much confidence...so little data.

Of course--coming from a guy who's heavily invested/HELOC'd (just bought a new Land Rover and M5) If a bust comes, think he'll be blindsided? I do. Last week, I sent him some cautionary data; he seems as locked in as MP.

There is something we can do about illegal immigration though: enforce our borders and employment laws, and fine/punish those who break them.

Maybe employ the illegals for border patrol, and enforement? ;)

Maybe employ the illegals for border patrol, and enforement?

Good idea!

What I am saying is that if a business can only stay competitive by using illegals then wouldn’t the business have to close without the use of illegals (hence loss of jobs, both legal and illegal).

Here's a need that illegals cover in California: agricultural labor. I may have mentioned it before, but how many CA residents would want an ag job, especially given the current cost of housing? It won't happen, therefore the illegals meet the need. The same applies in Europe; transients perform the jobs that Germans, Swiss, etc. don't want to "dirty their hands" on.

The 10 per cent appreciation is not rah rah though, (because even YOU Peter P, have said prices may continue upward yoy next year.)

Yes, buy now or be priced-out forever!

BTW, I think median price will continue to go up because I think credit-dependent lower-end homes will sit while higher-end (prime) homes may continue to sell for a while. ;)

Maybe employ the illegals for border patrol, and enforement?

Good idea!

LOL! Hey, I hear they work cheap --could really save a bundle not having to hire all those lazy, spoiled Americans. Plus they already speak Spanish!

LOL! Hey, I hear they work cheap –could really save a bundle not having to hire all those lazy, spoiled Americans. Plus they already speak Spanish!

Will they collaborate with the Border Watch Minutemen though?

A recent legal immigrant myself, I dislike illegal immigration just as much as anyone does. But, I respect those Latinos who work hard on farms or pick up undesirable cleaning jobs simply because some of our own citizens would rather sit on their fat ass to claim food stamps and watch TV all day than work. Seeking a better life is a basic human need, I was born to a better situation overseas, so I can afford to emigrate to any country legally. If I was born to the same situation as those illegal immigrants, would I risk everything to go across the border? Hell Yes. That is simply an economic force hard to fend off.

Plus, their children will automatically become American citizens anyway, unless everyone wants to amend the Constitution. I am all for that, I think this is long overdue, we and Canada are the only two idiot countries that hand out citizenship left and right to any births on US/Canadian soil. Australia stopped doing that, Europe stopped doing that, I don't see us that desperate for population growth. If children born to foreign parents are no longer recognized as US citizens and denied all social benefits, there will definitely much less of a motive for someone to cross the border.

There is also nothing wrong with outsourcing, business seeks profits, and that is the only raison d'etre for any company. America is supposed to discard these low-paying, low-productivity jobs to third world countries so that our more elite labor force can move up the food chain. But do we have enough education to go around to make our labor force elites that can take up all the best jobs in the world? Obviously not, because our public school system is a JOKE.

..."long-term average supply of 6.5 months"

Does that "average" strike anyone as rather high? And, how accurate is "days on market" really? Realtors would only have an accurate figure if demand is relatively stable, which is NOT the present situation.

Does that “average” strike anyone as rather high? And, how accurate is “days on market” really? Realtors would only have an accurate figure if demand is relatively stable, which is NOT the present situation.

When did they start looking at historical averages? Let's see, the average real appreciation of real estate is...

The NAR, as they have in the past, will continue to forcast the future a helluva lot more accurately than have the bubbleheads.

Were there bubbleheads in the past?

Excellent points, Owneroccupier.

Um, yes. I was recently going over my Merrill Lynch files, they “called the top” over two years ago, almost three. Schiller? Same thing. I could go on and on.

Well, last year, I predicted the bubble will end in 3-5 years. Looks like I is coming early now. I am not accurate. :(

Just a word of caution for those who want to pick up cheap properties after the bubble, be patient. Wait for at least 5 years.

I have witnessed this first hand in Tokyo and Hong Kong after the RE bubble bursts. RE bubble takes a LONNNNNNNNG time to deflate. Those who jumped in at the 6th year after the peak still found themselves trapped in a downward spiral. You won't get your dream property for 50% of what it is going for today. A prime property in any of these markets never lost that much, although the general market headed down 60-80%.

When does it bottom out? The last BA bubble took 5 years to hit the bottom. The RE of today's scale may easily take a decade to reach the bottom. If you are renting, find yourself a nice pad, be prepared to camp out there for at least 6-8 years before you commit yourself to buying, if you care about picking up the best deal on earth.

I do think 6 months sounds about “normal” up until about 5 years ago..

Yeah--that's what I was wondering about! If that's what they're doing, it would be rather funny, because they're citing old data to compare new "bubble" data, while ignoring past growth trends (10+ years), and hailing current sales/pricing as a new paradigm. From the coworker's convos, to the realtor spin, I find this all very amusing. It's not a bad reason to grab a beer, take a seat on the sideliness, and enjoy the show! :)

What about Ocotober? (I know, not the bubble burstiing, just some mysterious “event” that will LEAD to the demise of all human kind?)

We will see. I will get you a beer if I am wrong, okay?

If you think inventory in CA will reach correction levels any time soon, good luck. I wonder how many even know what the inventory was going into the last correction in order to put the current numbers in perspective?

go ahead--tell us.
If the situation in San Diego is any indication, we should know soon.
Inventory first, prices follow.

If you think inventory in CA will reach correction levels any time soon, good luck. I wonder how many even know what the inventory was going into the last correction in order to put the current numbers in perspective?

Reflexivity. Correction brings inventory brings correction brings inventory...

Moreover, demand decreases when inventory increases (!). This will swing around inventory level (inventory/sales) rather quickly.

One big difference in the last BA bubble vs the current one is, last one was driven by owner-occupiers. There were very few investors flipping multiple properties in marginal areas. This time, there are far more investors holding on to 2+ properties with our newly invented interest-only loans in lots of marginal areas (because the cost of holding properties in nice areas is simply too prohibitive).

After the bubble, we shall see a widening differential between the prime and non-prime areas in BA. Place that are currently undesirable will be much more so afterwards, all the abandoned homes and forclosures will lead to further financial straining for the local councils, worse school system and inadequate funds for local police force. In short, the rich gets hurt a bit, the poor gets hurt a lot, disproportionately. It will be sad to see some up-and-coming neighborhoods becoming ghost towns after the retreat of investors.

One big difference in the last BA bubble vs the current one is, last one was driven by owner-occupiers.

So it was caused by people like you!

You are claiming that THEY are saying “new paradigm” –and at the same time, you are nailing them for using OLD “days on market” norms?

Well, I am not by any means saying that the OLD “days on market” norms are out the window. The market is not crashing YET. However, I shall maintain that "days on market" will reach correction level more quickly than before. Hurricanes are forming much more quickly nowadays.

Van Kouver, I would love to buy in Vancouver a few years later, seriously. My wife loves False Creek and Coal Harbour.

Owner-occupiers are fine, we just want a roof over our head. I am not going to abandon my home or take a loss as long as I can cover my mortgage. It is the investors who are bringing the biggest damage to this market. They are ready to jump ship any time.

Owner occupier is your friend, we are in the same trench.

Owner occupier is your friend, we are in the same trench.

I know. Just could not resist. ;)