Tag: economy

Read More

A Florist Uproots

Last night, on the NextDoor social network, I read a post about the University Heights florist moving and asking if anyone knew where. This morning, I stopped into the shop, Florabella, and asked. The 29 year-old establishment will for a time share warehouse space with a large floral distributor off of Morena Blvd. The current location is convenient and charming—inviting for walk-in sales. The temporary space is along a congested, commuting corridor.

The end of Florabella’s 24 year presence in my San Diego neighborhood is a common local retail story. At the end of May, the landlord informed the commercial tenant that the rent would triple, effective July 1st. For that month, though, the increase would be reduced to $1,000. I have heard the three-times figure often over the past 12-18 months. With a difference: The other shops closed up. The florist saunters on. 

Read More

Perpetual Prosperity Psychology and the Housing Bubble

Something about the housing bubble narrative bugs me: Conspiracy. Evil bankers conspired to bilk Americans by financing home loans to people who could never pay, to then repackage bad mortgages as good investment products. While I lauded Matt Taibbi news analyses in 2010 and 2013 for exposing financial institution malfeasance, the blame game always seemed to ignore one other party’s culpability: Borrowers.

New research paper “Changes in Buyer Composition and the Expansion of Credit During the Boom” is a fascinating post-bubble autopsy. Its conclusions, if they survive the test, rewrite the bubble narrative, which revision makes more sense to me. 

Read More

Why the Dow is So High But Consumers are So Low

Yesterday, I warned that signs of economic recovery are nothing more than a mirage. Today, I’m freaking out because Robert Reich has got an explanation so simple and so obvious. If the former US Labor Secretary’s analysis is correct, as I believe it is, the economy’s in deeper doo doo than even my worst warnings about it.

Read More

Housing Bubble Myths Pop

For more than a year I’ve warned that the housing market would retreat with wicked vengeance, with reverberations moving through the US economy as it did earlier in other countries. Today’s Fortune story “Getting real about the real estate bubble” rips apart some of the myths sustaining the bubble.

Shawn Tully whacks the hell out of four bubble myths: “As long as job growth is strong, prices can’t go down”; “the builders learned their lesson in the last downturn. They won’t swamp the market with new houses when the market turns”; “low interest rates will keep values rising, or at the very least, put a floor under prices”; “restriction on development in the suburbs ensure low supply, and guarantee rising prices”. 

Read More

Pop!

The Dec. 19, 2005, Business Week piles on more worrisome indications that the housing bubble is deflating. The story focuses on Loudon County, Va., once one of the hottest real estate markets in the country that is now cooling off. As sales slow, sellers are cutting prices. According to Business Week, “From August to October, the median sales price for houses dropped from $506,100 to $480,000”. I expect falling selling prices and rising days on the market to be the norm in most housing markets, if not now within a short time.

I first blogged on the housing bubble in August, a year after I started warning people trouble was coming. Coincidentally, not a week following the post, a good friend asked me about real estate as an investment. She had come into inheritance money and looked to help another friend, who had been successfully speculating on houses in Pennsylvania. I strongly recommended against real estate as an investment. I hope she took the advice. 

Read More

The Housing Bubble Pops

Serious are the signs that the housing bubble has started rapid deflation here in the Washington, D.C., area. Summer 2004, my family chose not to purchase a house in Bowie, Md., because, even then, I was convinced that housing prices were way over-inflated. Since, I’ve warned plenty of people the end would rapidly come.

Earlier, I expected the housing bubble to stay inflated into 2006, but Hurricane Katrina’s widespread economic rumblings appear to have put on the squeeze. As recently as October, New York-market deflation forebode coming trouble. 

Read More

It's Just Too Easy

Yesterday, I received a postal mail offer from one of the local car dealers for a pre-approved auto loan. The paper had a toll-free number to call with a code to get the loan amount. Being in a curious mood, I rang and discovered that (supposedly) I was pre-approved for $22,500. Walk in and walk out with a car, no money down.

We drive a clunker 1989 Volvo 740 that my wife curses almost everyday. So the idea of a new car is appealing, and $22,500 is lots of spending power. It’s a helluva lot of debt, too. As momentarily tempted as I was, no car loan. We’ll drive the clunker and get by.