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Wednesday, August 19, 2009
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43 comments:
Yeah, new bucket! Thanks Harriet.
Someone sent this to me today:
'By the same token, families are increasingly unable to depend on their health plans when they need them the most. This has contributed to the mortgage foreclosure crisis and the rise in personal bankruptcies'.
Sincerely,
Jim Webb
United States Senator"
Does anyone know anyone personally who had a foreclosure or bankruptcy because of poor health insurance? Just curious for WaPo-style anecdotes. I'd rather not start a debate on health care, though.
I know of several foreclosures in my circle, and the participants had "gold plated" company-provided health care.
No reason to apologize. I think it's amazing how you've kept this up, especially all the database updates when new numbers come out.
I only know one person who's gone through bankruptcy (and told me about it), and that definitely wasn't the reason.
I think Jim Webb's just using Elizabeth Warren's conclusions.
Cara --
I've been completely distracted lately. :-) ! There's so much in the public sphere to keep up with.
Thanks for the Elizabeth Warren reference -- I looked it up.
Has anyone else tried the show Flipping Out? I have been watching it and although I dislike flippers I actually find the star of it amusing. I also enjoy seeing the home renovations even though those shows are part of what got us into this mess.
As one would expect the first episode that premiered last night noted he was doing very poorly. He's pretty much done with flipping homes and is remodeling now. He noted he built up his flipping career over the past 10 years which would mean 2000-2009 or so. Meaning he was always flipping during a hot market until recently.
I wonder if it ever really was a career outside of crazy markets.
The nice thing about him is he does do a good job renovating a place and does it in a way that very few individual homeowners could do -- which is not true for most of the flips around here (where they install hardwood floors and kitchen appliances that anyone could manage themselves.)
tbw,
Thanks for the heads up, I didn't know it existed. More Bravo TV!! And looking at the website informed me that the next Top Chef season starts tonight. Thanks!
http://franklymls.com/FX6902792
SS $240k TH in Burke
under contract July 4th, back active August 19th. Guess this SS buyer has given up on hearing back from the bank and gotten out of his contract.
If however, the bank has started the process at all, this might be a decent SS to jump in on...(if the $8k is not important to you).
Or wait, the price went up to $240k, maybe the bank's approved that, and the original buyer had bid under list and was unwilling to go to $240k. Doesn't say, bank approved or anything though, so I wouldn't count on it...
Cara,
If the bank wants more money maybe they should snap a new exterior photo. The Obama/Biden yard sign next door is a pretty quick indicator that the home has been on the market since 2008. Not that anyone nowadays has any trouble finding out how long a home has been listed.
tbw,
I don't think anyone cares how long a SS has sat on the market in Burke these days. There's so little inventory, anything with any price approaching reasonableness is gone in days. Some interior photos would be nice, though. If they could actually guaruntee closing within 45 days at list this would be gone in under a week (unless it's a real piece of work on the inside).
Cara,
There's so little inventory, anything with any price approaching reasonableness is gone in days.
Doesn't that mean this home is not reasonably priced then? I presume it's horrible on the inside because of the lack of photos. Whenever something is not photographed I assume they are trying to hide something. With digital cameras and modern realtor websites it is pretty easy to have a ton of pictures.
I think they should offer a picture of both the front and back exterior and every major room (LR, DR, FR, each BR, each BA, kitchen, deck/patio, and basement). I don't need every square inch photographed of course -- that's for my tour. But no reason I can't get a feel for each room.
Thankfully, most realtors do that now and it's so much quicker for home shoppers to remove homes from the list. Going back to our quicker home selling process b/c of the internet discussion.
tbw,
It doesn't say so, but it just went back active today. It had been under contract since July 4th.
This realtor apparently specializes in listings with no pictures.
frankly search on the realtor
21 listings only 1 with more than 1 picture, 17 of them short sales, Only 4 listings not "under contract". 7 closed sales, all of them shorts.
re: http://franklymls.com/FX6902792
You know, I think I went to that townhouse when I first started looking in late March/early April. I can't remember if that was the one where they had just accepted a contract half an hour before my realtor and I showed up on their doorstep or the one where the tenants installed a deadbolt, thus rendering the key in the lockbox useless.
bankruptcy/health care (Webb's right):
A recent study found that 62 percent of all bankruptcies filed in 2007 were linked to medical expenses. Of those who filed for bankruptcy, nearly 80 percent had health insurance.
Himmelstein, D, E., et al, “Medical Bankruptcy in the United States, 2007: Results of a National Study, American Journal of Medicine, May 2009.
I think it is a little misleading to *blame* foreclosures on medical costs. People overextended themselves to the point that any number of triggers could have pushed them over the edge.
Apologies for the name confusion, I was playing with changing my nickname to slightly obfuscate my presence here :)
I'll be using "Eldon" from here on out, but "Jeff B" = "Jeff C" = "Eldon".
Kristin My son has been teaching at Osbourn Park High School in Manassas for the last 20 or so years. He said that the changes in the school's demographics have been dramatic in the last 5 years with the new house construction in the area. Kids are actually not only going to college but are trying to get into top tier schools. Discipline problems have also fallen sharply. The biggest issue is parking because the kids are more affluent and have cars. When he started teaching there, most of the graduates went to work or the military. The same thing will probably happen as your children move through the Manassas Park schools.
I don't make this stuff up
reecon,
Thanks for your input re Manassas area schools. Very interesting to read about your son's perspective. The area is undergoing massive changes. I hope to contribute in some way to the excellence in the schools too by being a hands-on parent and volunteer.
I have also learned from a MP High School student that there is a lot of cooperation between the high schools, so if there are courses that one school offers that are unique, students can take those courses at the neighboring school as well as attend their own school. I thought that was pretty swell.
Robert,
That is mind-bending. Absolutely incredible.
I've been living and working in the D.C. area since 1998 and have roughly monitored job listings in the area every year during that time. No where else in the country are the listings so bloated with questionable contract listings, at least in the tech sector. I can go through 200 listings in a day and instantly discount the majority of them by skipping the 50 listings from Robert Half, etc. It's not like that elsewhere. So I'd guess the number of listings on Indeed for D.C. are quite skewed.
Robert,
Frictional unemployment exists because both jobs and workers are heterogeneous, and a mismatch can result between the characteristics of supply and demand. Such a mismatch can be related to skills, payment, worktime, location, attitude, taste, and a multitude of other factors. Workers as well as employers accept a certain level of imperfection, risk or compromise, but usually not right away; they will invest some time and effort to find a better match. This is in fact beneficial to the economy since it results in a better allocation of resources. However, if the search takes too long and mismatches are too frequent, the economy suffers, since some work will not get done.
Structural unemployment involves a mismatch between the sufficiently skilled workers looking for jobs and the vacancies available. Even though the number of vacancies may be equal to the number of the unemployed, the unemployed workers lack the skills needed for the jobs — or are in the wrong part of the country or world to take the jobs offered. It is a mismatch of skills and opportunities due to the structure of the economy changing. That is, it is very expensive to unite the workers with jobs. One possible example in the rich countries is the present combination of the shortage of nurses with an excess labor supply in Information Technology. Unemployed programmers cannot easily become nurses, because of the need for new specialized training, the willingness to switch into the available jobs, and the legal requirements of such professions.
Structural unemployment is a result of the dynamics of the labor market and the fact that these can never be as flexible as, e.g., financial markets. Workers are "left behind" due to costs of training and moving (e.g., the cost of selling one's house in a depressed local economy), plus inefficiencies in the labor markets, such as discrimination or monopoly power.
Robert -- DC will recover quicker than many cities. I don't think anyone here disputes that. But it's not like this is an area of people in unskilled labor jobs. Most jobs are pretty specific and only a small group of people have the skill set and experience to fill them.
Plus all the federal job listings that are secretly earmarked for people who already work there. Le sigh.
"Most jobs are pretty specific and only a small group of people have the skill set and experience to fill them."
Robert, TBW and Mesh, in my recent experience, you are all correct.
There are no jobs for those with no skills, no experience, no education.
There are many jobs but these are going to the well qualified.
This has not affected prices in the immunozone; too few houses in the Immundria and Immunington. A central location benefits those who work at Ft. Meade one year, the Pentagon the next and Springfield the year after.
At any instant in time, all locations look equal but over time, and under stress economic conditions, the power of a central location exerts itself.
This defined the immunozone over the last several years.
J@J You brought up a good topic about housing shortage in Alex and Arl. Last night I was at the wake of a lady who worked successfully for years to keep a pittance of affordable housing in Arlington. Almost no one there lived in Arlington any more. These are old people like me who took the money and ran during the bubble. Their houses weren't anything special but they sold them to people who made much more money than they ever did. In Arlington you are paying for the location and a lot of people will do that.
I second Meshell. Most federal job postings are actually someone's promotion. You can tell by the ridiculously specific skill sets they ask for. So it's not unemployeed people who are applying and getting them.
Jeff B he's my uncle.
Perfect anaolgy...
Like a guy looking for a date who goes where the most women are to increase his chances, so goes the search for a job.
Go where the most jobs are and the least number of applicants, and you're more likely to find a job.
Link
Cara, you can poke plenty of holes in that survey or data collection, but you can't dismiss it.
TBW, wouldn't unemployment in the rest of the country actually be helpful to WDC? I understand your point about limited mobility, but it's not zero mobility. For example, a nurse loses his job in Seattle. There happens to be 200 unfilled positions in WDC. She gets the job and moves to the area. Job would be unfilled, but unemployment elsewhere create supply.
I don't understand what is wrong with Robert Half. I checked the website. Seems like a genuine staffing firm.
Graphic of the same indeed.com data:
Link
Your uncle's name is Eldon Cara? I'm confused.
Robert I just chose Robert Half because they seem to have a pretty bad reputation:
Jobvent on Robert Half
I'm not one to be happy working for work's sake so that makes me leery of the big contracting companies. Plenty of them are fine I'm sure but it's not my cup of tea. I do feel they post more jobs than they're really looking for.
Robert,
Indeed, one can't totally dismiss it. It must mean something and it's certainly better to have more job listings than unemployed persons. But it does take more work to calibrate than that simple graphic. You can't tell how many are promotions (not a bad thing for housing!) how many are transitory positions that thus provide only an unsteady/unreliable stream of income (i.e. a lot of people doing contract work demands a higher number of postings to be sustainable). One could think of others.
Numbers that might be more informative:
average number of months for an unemployed person to find a new job (and distribution)
Average and distribution of income change from one job to the next, with and without a time of unemployment.
I highly suspect that we would still rank either the best in the nation in these two metrics or close to it. But I submit that these would be fairer measures. Why? Because there are secular differences in hiring practices and types of employment from city to city, but these should be mitigated since they enter into both halves of the equation for a person leaving an old job and starting a new job in the same industry...
Eldon,
That's not why you picked the handle? Ed's uncle Eldon? Barenaked Ladies?
No, no, I'm much nerdier than that:
Eldon Tyrell
I don't doubt the general gist of what that Indeed graph is saying. I just think the data they're using (number of listings on their site) isn't really an accurate gauge of the actual number of positions open in this area.
Robert,
Another way to look at it is, does this tell us something that the raw unemployment number does not? If these job listings were actually providing new long-term jobs for those who have lost their old jobs, then the unemployment rate should go down. UNLESS, people are leaving these jobs at the same rate as people are getting them. Alternatively you have my and Meshell's hypothesis, that many of these listings don't represent net new jobs at all. People getting promoted don't necessarily get a new hire underneath them to replace them at their old level.
Which leaves us with the conclusion that unless these listings result in a downturn in the unemplyment figure for the area in the next quarter or so, then all you're measuring is either the "fake" or the transitory nature of our employment practices here.
It's a nice graphic, and one that on it's face makes us look really great. But there are consequences to the conclusions that you draw from it, and those consequences are testable.
So, I personally doubt that you're seeing anything other than a metric that conflates our relatively low unemployment with the nature of our job postings.
People will keep moving to this area for work, our employment picture is still relatively solid and should return to the pre-recession levels of under 4% within the nest year, year and a half. Commenters on this blog may quibble with my choice of numbers but very few dispute the general claim.
What's up for dispute is how much of NoVA can retain SF starter home prices above that which would be dictated from a simple 2.5x or even 3x median income.
The prices in Arlington don't just need jobs they need wealth. TH's in Vienna or Reston commanding $400k requires wealth and demand exceeding supply, not just jobs.
One way of maintaining that wealth is to retain it. I.e. for foreclosures to subside substantially in FFX County and continue to leave Arlington mostly unscathed. This would allow the existing home prices to be self-sustaining through move-up equity. Hence the long-slow flat period everyone's predicting. Because that doesn't generate any new wealth.
Cara,
Uh, okay. I can't dig as deep or interpret the data like you can. I'm serious. I'm superficial. I just see the big red dot over WDC.
If you look at something like careerbuilder.com, the data show per capita more jobs in WDC. The reason I like that site is that employers have to pay to list.
Robert,
Graphs are fabulously persuasive aren't they? A good figure is worth 3 pages of text if not more.
Cara,
We've talked about the unemployment rate and why it isn't the best indicator of area wealth generation or support for home prices.
2.5x, 3.0x income. We'll wasn't the DC area above 2.5x income for six or seven years in a row. Actually it's still over that right? So, like 9 years above the trend line. Who's to say it doesn't stay above 2.5x income for another 9 years before dropping back?
Where are the people going that get kicked out of their house due to foreclosure? I would think a substantial amount simply, 50+%, become renters. Why would they leave this area? I've heard of a few returning to their home countries, but most would do any job to stay in America.
So, what is the net result of a foreclosure to the area economy? If an investor scoops up an REO and then rents it out to some chap that was foreclosed upon. Maybe I'm missing something, but I don't see economic loss.
Robert,
"We've talked about the unemployment rate and why it isn't the best indicator of area wealth generation or support for home prices."
We have discussed this, it sounds as though you came away with a different conclusion than I did, though. We don't have to reopen it now though.
"2.5x, 3.0x income. We'll wasn't the DC area above 2.5x income for six or seven years in a row. Actually it's still over that right? So, like 9 years above the trend line. Who's to say it doesn't stay above 2.5x income for another 9 years before dropping back?"
Which 6-7 years? the ones after the last bubble broke or the ones during this bubble run-up?
I'm trying to make a more subtle point. No one cares what that multiplier is for DC as a whole. People only care what the price is that they're going to have to pay to live where they want to live and if there will be other alternatives that are less expensive or provide more bang for the buck in some way that's important to them.
Since 2.5x-3.0x income is the factor you get simply from financing the transaction with 20% down or less (i.e. amounts that don't require wealth or move-up equity), the question is what kind of housing and where will be at that price level? Some desirable areas will be able to sustain a housing ladder whereby either wealth or equity from a lesser home are required to purchase a "standard" home, (by which I mean a 3/2 or 4/3 SFH with more than 1500 sq feet and some reasonable yard.)
One way to do this may be related to what you're envisioning with the jobs numbers. Mid-career moves to DC by people who owned homes with substantial equity.
But aside from that, I still think there will be regions in FFX where a "standard" home will come back down to 3x the median HH income. And not just run-down junky ones in what I call "greater Alexandria" i.e. the swath of undesirable areas between Kingstowne and Mount Vernon.
But you're right, it may take inflation to make that happen.
For the housing ladder to work everyone has to believe in the housing ladder. Will the absolute beating THs and condos have gotten so far in FFX Lou, and PWC reinforce or erode the belief in the housing ladder?
Robert,
regarding foreclosures.
It's not a loss in that sense, but it is a loss of wealth in the sense that a paper loss must be realized, and it is a potential loss to housing prices since it provides a steady stream of motivated supply.
In fact, in the vein you took, it represents a gain. The new renters now have more money in their pockets because they'll probably pick something much cheaper to rent than the mortgage they couldn't afford, and the new ll gets a steady stream of income. The bank's loss is more widely distributed throughout the nation's economy.
However, FFX county foreclosures are on the rise, not the decline, and have the potential to outstrip the pent-up demand just at the time when pulling future demand forward from the $8k and low interest rates will stop being effective by virtue of having obtained a new shifted steady state.
I can tell you that due to the vast number of consulting and contracting companies in this area that the job postings are inflated. These companies post job listings for every contract - jobs which expire when the contract is done in 6 months. They then post a listing for the next contract, even though the same person might be getting the same "job" all over again.
Well, some LA Times reporter decided to run a story on the indeed.com survey. Personally, I had never heard of indeed.com before a link showed up in my e-mail from Google Alerts.
Link
There are many holes in the indeed.com survey. I'm surprised no one else ran the numbers. I can give you a link, but there are about 3 million jobs in the DC area and about 200,000 unemployed. Multiply 200,000 by 6 (number of jobs per unemployed) and you get 1.2M jobs. There are nothing close to 1.2M jobs available in the area.
Cara,
Seems like the loss on a foreclosure is absorbed by the bank or whoever holds the mortgage backed security. I guess it drags down home values, but if I sell my house, does that drag down home values?
Robert,
Thanks for your honesty in backtracking the indeed.com numbers for sanity. In addition to all our arguments for how the numbers could get distorted, the sanity check is compelling.
9% unemployment x 6 job openings would mean more than half as many new jobs available as there are jobs currently held which is nuts, unless you take into account the contract nature of those jobs.
If you try to sell your house and can't until you price it lower then yes, it does drag down values. Are you serious or pulling my leg to see if I'll launch another multi-paragraph overly pendantic explanation?
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