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Peter P
2005 Aug 2, 4:19am
If anyone is about to enter a job search, I would suggest him/her to do that very soon to avoid competition with former real estate agents.
Here's a rather telling article from this past weekend's Contra Costa Times entitled, "Grim words for Bay Area housing," that I e-mailed to Patrick, but he didn't post the link. Perhaps it's because registration is required, but is well worth a read if you do have access to it:
laverty,
Good link. Registration for most non-premium sites is rarely an issue anymore, thanks to bugmenot.com. Btw, I would also recommend using tinyurl.com for shortening any links you post here --it's very self-explanatory. The above link ends up looking like this: tinyurl.com/c2pj8
If anyone is about to enter a job search, I would suggest him/her to do that very soon to avoid competition with former real estate agents.
Peter, this begs the question, what jobs will former RE agents/brokers be looking for?
Peter P
2005 Aug 2, 4:50am
Peter, this begs the question, what jobs will former RE agents/brokers be looking for?
Jobs they have performed before they were real estate agents. In the Bay Area, these would be jobs that were lost in the last bust...
Last but not least Whiskey/ Champagne producers always do well in boom/bust cycles. People drink to celebrate success on the way up, and drink to drown sorrows on the way down! :-)
No doubt the foreclosure & repossession sectors will also do *very* well for years to come.
Hymie -- that's the best use of the term "paradigm shift" I've seen in years. Actually having to reduce one's current rate of consumption or even accept a lower standard of living. Changing careers in a recessionary market, seeing your paper "equity" go negative on your NAAVLP-bought "investment" properties. Paradigm shift indeed!
Hymie, I am not a speculator/day-trader/gambler type by nature. Just a guy with a (for now) relatively stable job, who someday would like to own (as in really "own", not buy on 100% credit & flip) a home in a nice neighborhood and "put down roots", as Jack & Face like to say. If you're looking for advice on hedging RE in a declining market, I'm not the one to ask.
What I am personally doing is scrutinizing my retirement portfolio & investments to make sure I have the least exposure to housing as possible. If your job is directly dependent upon real estate (mine is not), then I would suggest saving like crazy right now and giving a lot of thought to what your new career might be a year or two from now.
Peter P
2005 Aug 2, 5:31am
There is no way NOT to hire these math geniuses to “help†the boss understand what’s really happening on the bottom level of convoluted portfolios.
Sir Isaac Newton lost money in the South Sea Bubble and Myron Scholes lost people's money in the LTCM debacle. A physics god or a Nobel laureate can only help so much.
Peter P
2005 Aug 2, 5:47am
CArenter, I guess math and physics can help making steady money 99% of the times but the remaining 1% is fatal.
Peter P
2005 Aug 2, 5:54am
I’m in the Foreclosure Prevention business. You think I’m at all worried about real estate going bust?
Want investors? ;)
My husband has a client who was given his forced retirement package from HP yesterday. I wouldn't mind being a bankruptcy lawyer right about now. ;)
Peter P
2005 Aug 2, 6:30am
I wouldn’t mind being a bankruptcy lawyer right about now.
Too late for me to go through law school right now. What if the boom resumes right after I pass the bar? I will be doomed and backrupted. ;)
But perhaps I should convince my friend to change his immigration practice to bankruptcy. Who wants to sponsor employment-based immigration when you can emigrate the jobs?
Peter P
2005 Aug 2, 6:32am
Is anyone tracking bay area inventory and listings closely? From what I see on realtor.com and mlslistings.com, it does not seem it’s going up that much in bay area.
It is looking very weird because familiar listings that have been sitting are suddenly being given new pictures and dates. I am seeing a lot of re-listing going on for condos in the South Bay.
Dipanjan:
Not sure about actual BA inventory levels, but I definitely notice that properties are generally taking longer to sell. Of course, they had nowhere to go but to take longer after these heady years of the Sale pending" sign often going up within just a couple of days of the "for sale" sign.
Peter P
2005 Aug 2, 6:34am
If the next bubble is in commodities, precious metals or in oil, I don’t see how that would create a lot of jobs in bay area.
I have been thing about that. Perhaps a Series 3 Broker license?
I personally know quite a few people in bay area who worked in the tech sector during late 90s and then moved on to real estate jobs. During the tech bust, they lost their jobs. I am sure they will look for the next bubble, but not all bubbles create jobs. If the next bubble is in commodities, precious metals or in oil, I don’t see how that would create a lot of jobs in bay area.
There is also likely to be some down time before we see where another bubble may be growing. All those who've lost jobs in tech and RE might end up wandering aimlessly for awhile; or at least until something else looks obvious enough to get their attention.
I check the rental listings to see what the prices are doing, and I've noticed rentals re-list as "new" just like RE listings do. Interesting.
Peter P
2005 Aug 2, 6:51am
Dipanjan, those companies are training foreign competitors for free. What did Lenin say again? Something like a capitalist will sell you a rope to hang him? Looks like the capitalist is giving the rope away nowadays.
Peter P
2005 Aug 2, 7:16am
But wouldn’t you assign a larger share of the blame to fiscal and monetary policies?
I would perhaps just assign all blame to human nature. Unfortunately, we are the only animals that can do real harm to ourselves collectively and to the world as a whole.
Found that San Diego condo graph I was looking (2003-present). Inventory at a 2-year peak & still climbing!
tinyurl.com/849o7
Yes! (gratuitous bait for you-know-who)
CNNMoney.com: "The zero-savings problem"
tinyurl.com/aka3n
Some savings measures show households are flush, but consumers are spending every dime they make.
NEW YORK (CNN/Money) - The savings of U.S. consumers are:
a) at the lowest rate since the Depression.
b) at peaks not seen even during the stock market boom of the late 1990s.
c) all of the above.
If you're wondering how "all of the above" could be the correct answer -- and it is -- walk outside your front door and look around.
Even as a government report Tuesday showed the national savings rate at zero -- that's right nada -- the rise in the value of homes has given the average U.S. household a net worth of greater than $400,000, according to a separate report from the Federal Reserve.
Household real estate assets have risen by just over two-thirds since 1999, and the run up has enabled consumers to spend more money than they are bringing home in their paychecks. They're viewing their homes almost like ATM machines, using home equity loans and refinancings to pull out cash and support a higher level of spending.
"[Rising home values] are making people feel they don't need to save," said Lakshman Achuthan, managing director of the Economic Cycle Research Institute.
So much for the "housing demand supported by cash-rich immigrants and cash-flow savvy RE investors" theory...
Oh, boy... it gets even worse:
"Cash-out refis soar"
tinyurl.com/9ckbe
"Americans are using refinancing to take cash out of their homes -- but that can be a risky strategy."
NEW YORK (CNN/Money) - The pace of mortgage refinancing has not slowed, according to a new report from Freddie Mac. But the primary reason for refinancing may have changed.
In a growing proportion of refinancings, homeowners are taking major amounts of cash out of the transactions.
In the quarter ended June 30, 74 percent of Freddie Mac-owned loans that were refinanced resulted in principal amounts larger by at least 5 percent.
Only 9 percent of refinancings resulted in lower loan amounts.
In other words, nearly three-quarters of homeowners refinancing a $100,000 loan wound up with a loan principal of at least $105,000, usually more...the difference between the size of the old loan and the new loan is being taken out in cash.
In 2003, that was the case only 33 percent of the time. Back then refinancing was rate driven, according to Bob Moultin of Americana Mortgage Group. Homeowners reworked mortgages to take advantage of lower interest rates so they could reduce their monthly bills.
Now they refinance to put cash in their pockets or to pay for big purchases.
Peter P
2005 Aug 2, 8:14am
So much for the “housing demand supported by cash-rich immigrants and cash-flow savvy RE investors†theory…
It is not supported by Moneyed Immigrants, Rich Ancestors and Generous Expatriates? No more MIRAGE. ;)
Thanks Peter --I'd almost forgotten about that. Now we know for certain it truly was a 'MIRAGE'.
My Mom, who's always been a little bullish on the housing market, is even shaking her head these days. One house in her neighborhood is up for $1.9 million and another recently sold for $1.6 million. I don't know who is buying these, but there's no question they're paying top dollar. I think this is truly the last gasp, where prices have that last spike as inventories rise.
Peter P
2005 Aug 2, 8:39am
Now they refinance to put cash in their pockets or to pay for big purchases.
The smarter fools should use these cash to pay for their mortgages if they want staying power in the coming downturn.
As far as jobs go, I would guess that state/local government jobs (ie: anything tied to property taxes, such as education) will be hard hit once property values go down. Companies are already beginning to shed workers (Auto makers, HP, Western Wireless), so I'd say that the next bump in the road is beginning even before the RE industry casts off half it's workforce. I would bet that health care will continue to boom while the boomers crawl into peak health-care age
Additionally, alternative energy careers will probably boom in the next 10 years given the increased demand for energy coupled with the decreased availability of oil. EscapeFromDC's page, while pretty doomsdayish, is convincing about the value of that commodity in coming years. For that matter, taking a page from him, I'd bet that the defense industry will continue to be a profitmaker until some alternative energy is developed sufficiently.
Oil as a commodity would probably be a good investment in the near term. Alternative energy, while a more important investment vehicle, will probably never recoup its investment, due to the nature of utilities investments, which never seem to make the sort of money that luxury/sin investments do.
If you happen to be in the RE/Mortgage/Banking game…I hope you're good with a wrench.
LOL. Well, many of these johnny-come-latelys are landlords, right? Oh, wait, I forgot --they're mainly absentee landlords paying other people to do the maintenance for them. Too bad... :-(
Gee, I'm sorry... is my schadenfreude showing through? Gosh, I hope it doesn't have anything to do with all the arrogant bragging and "investment advice" I've been forced to swallow from swaggering trolls over the last few years...
Peter P
2005 Aug 2, 9:10am
Additionally, alternative energy careers will probably boom in the next 10 years given the increased demand for energy coupled with the decreased availability of oil.
I do not have much faith in alternative energy because the industry still lacks politcal power. I believe any future energy crisis will be "resolved" using political or military means.
Sadly, oil will remain king until unbearable pain is felt and damage is done.
History always repeat itself.
Agreed - speculative nimrods are rarely capable of learning from their past mistakes (the current RE bubble being spawned from the tech bubble is a "prime" example). And even if they could, today's herd will always be followed by a new generation of little nimrods, who have no personal experience of the last cycle and therefore no fear. Greed, however, is a constant.
Peter P
2005 Aug 2, 10:35am
Moreover, HARM, there are so many new paradigms, which are different every time. :)
@hymie - Just a suggestion, but I'd recommend using tinyurl.com to cut down on URL length.
Peter P
2005 Aug 2, 10:57am
All 309 passengers survived plan crash in Toronto today. Thank God.
Miracles do happen in crashes.
Dipanjan,
I'd love to know what each bank's actual exposure is to MBS holdings and derivatives. The MBS/GSE's connection to loose lending was actually the subject of a previous thread: "Too Big to Fail?". I know they've managed to offload quite a large % of it (half or more by some estimates), but I have yet to find anything that gives you an actual breakdown by bank/lending institution. Maybe that's because they'd rather not have us know. ;-)
Comments 1 - 40 of 151 Next » Last » Search these comments
At hymie's request:
"So much of the current economy has been dependent on this bubble. So many construction jobs, interior design etc. related to HELOCS, consumer spending in general. I truly believe that the as interest rates rise and the money available dries up, it is really going to saturate the market. When rates adjust, all payments go up. As a result, consumer spending decreases. This is not good for the business climate, but definitely necessary. I think that when consumer spending/confidence shifts, it will have a direct impact on the economy. Perhaps just a matter of time. How many people know friends whose jobs are dependend on the curent housing market? I just went to a Dodger game with a guy whose entire life depends on putting in granite countertops. I honestly would hate to be him in two years. He thinks that the FED should keep the interest rates low no matter what. I don’t get it. Does anyone believe that the current market is codependent on these sorts of things? Once again, we are not PRODUCING!!!"
Housing currently accounts for only 13% of California's overall economy: tinyurl.com/a64pl.
However, it accounts for HALF of all private sector jobs created in the past two years:
"...of the 243,000 private payroll jobs added in the state in the past two years, 122,000 can be directly tied to the housing market, according to UCLA Anderson. “In short, a sector of the economy that makes up 10 percent of total private sector jobs is accounting for 70 percent of the total job gains.†tinyurl.com/dereu
Does this mean when housing prices (and building activity) declines, a recession in CA is unavoidable? Obviously some jobs are more vulnerable to RE than others, but a downturn will no doubt affect us all to some degree. How do you think your job or company will weather the storm? Are there any "housing bubble-proof" jobs? Discuss...
#housing