Tuesday, October 6, 2009

Where is Everybody ?

That question is a bit metaphorical and facetious, but also arises from a few observations.

First , many stories have appeared in the past few months about vacant, foreclosed houses in many weak real estate markets. The sun & surf locations are worst hit: CA, FL, AZ and NV. Someone once lived in those homes or they were second homes, or perhaps, bought by speculators relying on the "greater fool theory" for a profit.

Did people in those homes move elsewhere or are they renting or something else ?

Second, today's WSJ has this story: "Apartment vacancies hit their highest point since 1986, surging in cities from Raleigh, N.C., to Tacoma, Wash., as rising unemployment continued to chip away at demand during the traditionally strong summer rental months. The U.S. vacancy rate reached 7.8%, a 23-year high, according to Reis Inc., a New York real-estate research firm that tracks vacancies and rents in the top 79 U.S. markets. The rate is expected to climb further in the fall and winter, when rental demand is weaker, pushing vacancies to the highest levels since Reis began its count in 1980."

That rules out the people moving to rental apartments.

So where are they ? Or did they never exist ? Were they virtual people ? Has the US population fallen ? Did lots of young people move back to their parents homes ?

To me, analyzing the home real estate bubble requires one to explain these facts and relationships.

We know the US population has not gone down. The growth rate may have fallen a lot, though, as illegal immigration is reported to be much lower due to to the weak employment market. There are also reports of illegal immigrants going home - even after many years here. That's no problem for me - but it would be interesting if some of the US real estate bubble was fueled by them - or not. I suspect they had little direct impact on home demand; indirect, knock-on demand is possible, though. Prices are determined on the margin. I don't know if it's a coincidence that the housing market boomed when the US was being overrun by illegal immigrants and cooled off and collapsed as fences were being built and tighter job rules were being imposed.

The panic of 2008 also caused serious retirement fund losses, so many retirees and near retirees probably ceased to desire a second home in the sun & surf area, or dropped plans to move there. And overextended retirees perhaps sold. That eliminates many "virtual people".

Speculators also are mostly crushed now, too. That eliminates more "virtual people".

What does this mean ? House prices won't recover to the prior highs for many years. This is the real estate cycle, which happened around 1981 and 1988-1990 periods. I remember in the last cycle, it took about ten years for my home to reach its prior high valuation (based on true neighborhood sale prices).

The market needs real people to replace all those virtual people. I say, a bit facetiously, what this nation needs is a new baby boom - a new cycle of increased household formation !

Young men - get married ! Young women - get married !

To quote that great song performed by Eddie Cantor in 1931, "Now's the Time to Fall in Love":

"Potatoes are cheaper, tomatoes are cheaper
Now's the time to fall in love
Why, the butcher, the baker, the old candlestick maker
Gave their price a downward shove
Grab yourself someone to fry your eggs and bacon
She can live just like a queen on what you're makin'
You'll find in some kind o' trouble
You're better off double
Now's the time to fall in love"

Word of the Day

"Ephemeral" - adjective [$10] an old one from the card file *
Ephemeral means lasting only a very short time.
Sentence: Will Obama's popularity be ephemeral ? Perhaps, since it seems based on emotions and hopes of people, not on any real actions or substance. Talk is cheap and eventually homo boobus will realize that. Obama needs to do, not talk. Acta non verba. [actions, not words]

To forestall flack, a $10 word is one that that I once had to look up in a dictionary, not knowing its meaning or just being unable to articulate that meaning clearly at that time. This word card is written in my handwriting of probably 40 years ago. That I now know its meaning does not reduce the value of the word.

38 comments:

Bud said...

good morning Bman !!!!!!!!!!!!



sorry could not get to you earlier..............was a bit busy............ya'know......was doin somethin foolish...........tryin to make some money


i don't know why i do that............shud prolly quit trading and go the beach..............money ain't everythin

Bud said...

eddie cantor.................i went to download that song from itunes


and it seems like i had already downloaded it..............now i remember..........he one of the Bman's faves



PS.......Bman do you own an ipod ?? zune ?? or you still a sony walkman guy from your days at beefer university

Bunkerman said...

Uh, Bud ...

The entire comment said that IF one already has enough money, THEN why work hard to make more ?

Bud said...

live like a queen ?? frying eggs and bacon.......huh??


eddie quite the feminist

Bunkerman said...

haha

I have an iPhone, which includes an iPod. But I don't know how to use it very well.

I never had a Walkman for years, but bought one a few weeks ago to play some Polish language drills that were only available on tape.

Bud said...

well any word that i know the meaning of ..................automatically disqualifies it from 10dollar category


remember i went to iowa state................i ain't too bright

Bunkerman said...

lolol, times were different then.

Bud said...

GS goin to 200??



'your' welcome Bman

Bunkerman said...

GS goin to $0 ?

eventually it will blow up,

they all do.

Frosty said...

Bunky...cashed the rest of those RIMM puts here under 65...nononono spinstylelifestyle play here...done with it this year, tax loss sale canidate indeed.

mfl59 said...

Bud who do you like today? Minnestoa or Detroit...

full disclosure...Rick Porcello gets his haircut by Bob the Barber...the same Bob the barber who cuts my hair...Bob told me likes it high and tight...

Bud said...

what's up frosty !!!!!!!


how ya doin ???? i hope all is well..................uhhhh.............tell me more about this 'ops expo open interest' spreadsheet..................how does it exactly work ???? these futures and options arousing my curiousity

Bud said...

bob the barber sounds like a fag

Bud said...

anyone know this site??


secretsoftraders.com


i seen him on tv and was checkin it out

mfl59 said...

Bob the barber will have you on your back within 10 seconds...fact...

Frosty said...

what's up Sal!!!!

tell me more about "releasing the club"......."how does it exactly work ????"...cheating friends of their hard earning $ with a phony yhoo hcp "arousing my curiousity"

max pain theory http://www.optionpain.com/

nonono, max pain not me "knocking your teeth out" eastside prepstyle.

Frosty said...

Bunky...please post any buck fever buys...thanks in advance.

Bunkerman said...

sheesh, frosty, I think I have an immunity to that now.

Bud said...

lmaoooooooooooooooooooo frosty



PS..............my yhoo-handicap is gonna drop no doubt..........my new hours won't let me go to the range during the week ( i used to go either minday or tuesday nite).............and i was too tired to play this wknd

Bud said...

uhhh............i meant yhoo hcp gonna rise

Frosty said...

BHP well played indeed Bunky.

Bunkerman said...

it was CLF I bought, frsoty.

declined on BHP as they are a likely buyer, not a target.

Bud said...

stanford university selling it's stakes in private equity firms at steep discount


are you interested Bman ??

Bud said...

very interesting site frosty.............at least the parts i can understand............remember i 'ain't too bright'




PS.......we are always gonna be friends !!!!!!!!

mfl59 said...

Instead of throwing money away in the eminis, you'd better get to the range and practice "releasing" the club....Feb 2010 right around the corner...

Frosty said...

SRS



nailed it !!!!!!!!!!! almost 2 points today...........is that a blip hit Sal ??????


DANKE VIELMAL MIKE !!!!!!!!!!!!!!!!!

Bud said...

i love the e-minis !!!!!!!!


it is the perfect vehicle for ping-pong lovers..........i'm thinkin about quttin stox


ace...........what f'ng moron

Bud said...

of course i am just havin some fun


i am very very very well aware of the risks in trading futures...............alos very very very well aware that it is supremely difficult to consistently make money in futures................it's only a matter of time i get taken to the back of the e-mini woodshed and get sodomized




PS...........ace......f'ng douchebag

Bud said...

lmaooooooooooooooooooo frosty




apparently workin on his wit last few days



PS........no...............2 points is a standup double



40 points my ass

Bunkerman said...

I'm holding out for 60 pts in CLF.

Bunkerman said...

got about 50 pts net in FCX.

not too shabby.

;)

Bunkerman said...

i. e., 50 pts net profit.

mfl59 said...

CLF should rise 60 pts from here by 2022...be patient sir...

Bunkerman said...

nah ... 2011.

Bunkerman said...

2011 ... the year of the "yo"

I suppose I'll be getting the Dow 1500 helmets out again then, if not sooner.

Gold 1500 ? ... nah ... 1666

;)

Bunkerman said...

ooops lololololol

Dow 15000

;)

mfl59 said...

Dow 1500....are you secretly a bear?

Freud said there are no accidents....

Bud said...

dow 15k ...............huh ???


hello mern...........where are you???............Bman is delusional..........last email from mern few days back


' the economy is very bad and gettin worse every day'