Here is my latest handiwork for the Huffington Post. I posted it there on Friday but an extended weekend of rest and relaxation was simply beyond my control.
Why Housing Hasn’t Found A Bottom
>We have since welcomed a new presidential administration, seen a few million more foreclosures, a few trillion in lost home equity, a few hundred bank failures, the National Association of Realtors continues to pump out monthly pronouncements of improving housing conditions, the Fed Chair adds “green shoots” into the conversation, several million more become unemployed….
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To the extent housing and the economy is influenced by unemployment, I disagree that we have seen the worst. This is only a calm in the storm.
We pumped up an economic concoction by encouraging anyone who had a pulse or was able to fog a mirror to get a mortgage and spend like there was no tomorrow. Well, here it is tomorrow.
Our job force, after government employment, has traditionally depended on making stuff that people need and use. Now it is possible to send the jobs that make stuff we need and use overseas and ship it back here to sell it.
I read that is called market efficiency. So to make it appear that this efficiency model work a job that went overseas had to be replaced so people could buy what somebody else was making. Enter mortgages, derivatives and jobs created by mortgage activity.
That system was greatly abused, got really sick and created a lot of news lately, and it ain’t over yet.
Houses are sold to most people based on what they can afford to pay monthly. Unless we can invent something real fast to make in the US that the rest of the world needs, will use and can afford unemployment is going to rise.
Seems the administration thinks that is “green” stuff or infrastructure repair. Nothing wrong with those, but I don’t think it is enough to fill the losses on this go-round of greater efficiency.
Frankly, the more likely result will be that the US standard of living, which includes the wages that buys the houses, is now a part of the global economy. We are going to be “equalized”, and while most of us may not be living in mud huts, it is going to be something less than it has been.
Housing prices here are back to the late 90’s levels now and, according to NAR and NAHB, the dad gummed appraisers just won’t fix it.
I don’t see how unemployment and wages are ever going to heal up to anything like they were just two or three years ago and the housing market is not going to bottom out until we figure why unemployment is rising and what to do about it.