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Predicting the Housing Market

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It’s Like Clockwork (but without the batteries)


The Clock Without Batteries

I have a charming tabletop clock. I bought it because I thought it would look nice in my living room (that place no one goes except to dust), and I was right. Shortly after bringing it home and placing it proudly on the end table, I made a mental note to put batteries in it. It seems that it operates quite nicely as a decorator item on solar power alone; to operate as a time-telling device, however, requires some external help. I never did.

Occasionally, though, I still find myself glancing at the clock, when I breeze through looking for my husband’s car keys or my missing brisket. I can’t help myself. And when I do, I am reminded it is 10:47. It is always 10:47, but it rarely is. Approximately twice a day, I can count on my clock to be correct, and when that happens, it is an exciting moment. “What a great clock! So precise!”

The reality, though, is that my little temporal barometer hasn’t a clue. I know this, but I still look at it, paying attention to what it has to say every time I pass by. It’s become a game of sorts, watching and waiting for that inevitable moment of accuracy. I have found that I don’t really need the clock to sort of know what time it is. I can look outside the window and get a pretty good idea. If the sun is high in the sky, it’s noonish. If it is low and to the east, it is early morning. And if it’s dark, it’s time to hole up until the sun comes out again, which it always does – like clockwork. But even my method of watching the skies is flawed. When it is cloudy, when a storm is brewing, I’m screwed.

Storms are funny things. You can never really know how much rainfall you will get or when it might end. What starts as a light mist can become a downpour, or things might clear up quickly. Having sold my Doppler device at a garage sale years ago, I have to rely on my instincts — and on the weather reports. Unfortunately, weather reports are rarely precise. A 20% chance of rain means there is an 80% chance it won’t.

A Chance of Continued Showers

So back to the other AG and what I think of his latest prediction about the housing market recovery. It is raining cats and dogs at the moment. No one knows how long it will last or how bad it will get before we see blue skies again and, until we do, no one can accurately predict the time. Alan Greenspan is a lot like my stopped clock. He will be right at some point. Is he right now? It’s hard for me to say. I am still getting storm warnings.

PHOTO CREDIT: https://www.flickr.com/photos/thomasjleonard/

Kris Berg is Broker/Owner of San Diego Castles Realty. She is the perpetrator of the San Diego Home Blog, a locally-focused real estate blog, and in her spare time enjoys fencing, luge, and kittens.

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12 Comments

12 Comments

  1. Lisa Sanderson

    October 18, 2008 at 9:46 am

    Kris, what a perfect analogy. You are amazing!

  2. jf.sellsius

    October 18, 2008 at 9:52 am

    Maybe it’s time for the 100 year mortgage

  3. Benn Rosales

    October 18, 2008 at 9:56 am

    Joe, your link was broken, try again.

  4. Paula Henry

    October 18, 2008 at 10:22 am

    This is great, Kris – If real estate is cyclical, we can expect Greenspan to be right at least once in the next 16 years. Whether or not that “one time” will be next year; I think it’s a coin toss.

  5. Jay Thompson

    October 18, 2008 at 10:42 am

    August 24, 2009. Mark it down. That’s the day the housing recovery hits.

    Hey, I have as good a shot as any at being right. And if I am right, I’ll look like a freaking genius. If I’m wrong? I’ll just join the ranks of all the other failed predictions.

    About all anyone knows is what will happen today. And even that’s a crap shoot.

  6. Mark Eibner

    October 18, 2008 at 10:47 am

    Kris- Greenspan and his cartel of little central banker friends (private banks) have steered us into this mess. Research Bretton Woods and 1971. This is far from over and the face of the world will change. Expect 5 years minimum. 2009 is a pipe dream…just do the math. When the DOW hits 6000…we will be there.

  7. Danilo Bogdanovic

    October 18, 2008 at 11:10 am

    Awesome analogy Kris! What’s scary is that the weather report is more accurate than some of these “expert’s” opinions.

  8. Benn Rosales

    October 18, 2008 at 11:12 am

    Now you know why Greenspan wears those B.S. goggles… just sayin.

  9. Steve Simon

    October 18, 2008 at 12:41 pm

    There is no recovery coming, period. Not in this life time. That is if you call a recovery a return to previous price levels…
    What will happen is a bottom will be reached and then a bounce or two off the bottom and a retest or two of the bottom. Followed by very slow growth. I doubt very strongly if prices (adjusted for inflation yet to happen) will return to levels that were at the peak of the run.
    More likely those levels are reached in the next generation. They were an artificial result of five or six factors being “Just Right”. If I were to wait to sell my home for the $325,000 I could have gotten in the back end of 2005, I think I would be waiting until I am about 97 (not likely to happen given my family’s longevity)…
    That’s not to say you can’t make money! You can. Buy right from here, improve where the return is greatest (see my post on PP&C on my blog), and negotiate well; you will make money.
    Or do the above to evena mediocre level but do it with multi-family property, with lots of renters pulling your wagon, you will make money.
    Do not buy in anticipation of a recovery in the traditional sense (a return to what was); it isn’t going to happen within the next twenty years.
    Now if your investment window is twenty or twenty-five years (the census will tell you where population is going) you should see the rise to at least meet the high levels we fell from.
    A better approach is to buy low, PP&C, and hold for about foour or five them sell with terms to obtain price.
    Just my thoughts:)

  10. Kris Berg

    October 18, 2008 at 12:43 pm

    Jay – No Birthday Blogging allowed.

    As for the “When will we get there?” I tend to agree that 2009 is extremely optimistic. My husband, on the other hand, thinks Mr. Greenspan (and Jay Thompson) may be close to correct.

  11. Russell Shaw

    October 18, 2008 at 1:38 pm

    >>Kris, what a perfect analogy. You are amazing!

    Ditto.

  12. Bob

    October 18, 2008 at 5:35 pm

    No one has been even close to right about this market. 6 months ago, few considered sane would have thought that the Feds would invest a minimum of $250 billion in banks, or that only independent stock brokerages would be all that is left.

    When you have investment bankers with 40 years experience stating that they have never seen anything like this in their lifetimes, any predictions about recovery might as well be published in the Weekly World News with a picture of Nostradamus.

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Economic News

How small businesses can keep up with the changing workforce

(ECONOMIC) Trade schools are booming as career outlook grows. College enrollment is down. The workforce is changing. How can small business keep up?

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Trade employees in the workforce

College enrollment has dropped off by three million in the last decade, with a drop-off of one million due in the last several years as a direct side effect of the Covid-19 pandemic. This phenomenon clearly does not bode well for the future of the United States’ economy and workforce, with students who attend low-income schools and come from low-income families being the most affected. These changes are disproportionately affecting students from low-income schools and families, the very people who need higher education the most, and are erasing much of the work done in the last decade to help close the income and race gap between students, colleges, and socioeconomic backgrounds.

Enrollment in trade schools is skyrocketing.

Recently, trade schools have seen a 40% bump in enrollment across the board. Many students are enticed by the fact that trade schools are affordable and offer a quick turnaround, with students paying $16,000 or less for their program, and their training taking a year or less to complete. Beyond that, those who complete trade school is all but guaranteed a job on graduation day. Their earning potential is often two or even three times higher than the initial cost of attending the program. As many have found, the same cannot always be said about those who pursue a college education.

While the average cost of college at an in-state and public institution hovers at around $28,775 per year (according to Forbes) and takes an average of four years to complete means that trade students have a cheaper educational cost, (between $16,000 to $33,000 for the entire program, or about equal to just one year of a public college tuition) can get work in their field more quickly, and can usually make more than their educational costs in their first year on the job. Tradespeople make an average of $54,000 fresh out of trade school, which rivals the role average college student’s first salary of $55,000. It’s no wonder so many people are choosing to forgo a formal education for trade school!

The almost insurmountable cost of college combined with ever-growing inflation and a lengthy list of requirements just to get a post-college job, all for a low salary and with students having hefty loans to pay back, also play a key role in the downturn in the popularity of college.

The implication of fewer college-educated people, however, means that over time, the United States as a whole could face an economic downturn, as it gives rise to many more blue-collar workers. This can irrevocably alter the makeup of the workforce. Despite current unemployment rates being among the lowest they’ve ever been, the American people are already starting to see a shift in the labor market.

Already, we see a strain in the labor market when 25% of skilled workers in the U.S. exited the workforce following the Covid-19 pandemic. The economy has become so highly specialized that if the U.S. were to keep up the trend of losing college-educated workers, there could irreversible damage to the United States’ economy, deepening the ever-growing divide between the middle class and the working class, further reducing the ability to affect the global economy, knocking the United States out of the classification of a “global superpower.” To make matters worse, much of the United States labor pool is outsourced, and we are seeing the rise of artificial intelligence and robotics taking over many jobs, especially minimum wage jobs. While none of these factors alone vastly affect the U.S. labor market, this is only the tip of the iceberg.

So what can employers do when the makeup of the workforce starts to shift?

Employers could shift the focus on the years of experience rather than the type of education the potential employees have, as well as offering more extensive on-the-job training, which is already commonplace in some industries. Even for those with a college education, the requirements for entry-level jobs seldom match the salary, with many employers requiring a four-year degree, two or more years of experience, and fluency in different programs which vary from company to company. Employers, if possible, need to offer higher salaries with fewer requirements, as many young people are finding the pursuit of college, plus the various other requirements just to be considered for a barely above minimum wage job, while they’re drowning in student debt fruitless, so they forgo college altogether.

A post-pandemic society looks vastly different, and employers must adapt to keep up.

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Economic News

Boomers retirement may be the true reason behind the labor shortage

(ECONOMY) Millennials and Gen Z were quick to be blamed for the labor shortage, citing lazy work ethic- the cause could actually be Boomers retirement.

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Older man pictured in cafe with laptop nearby representing boomers retirement discrimination.

In July, we reported on the Great Resignation. With record numbers of resignations, there’s a huge labor shortage in the United States. Although there were many speculations about the reasons why, from “lazy” millennials to the number of deaths from Covid. Just recently, CNN reported that in November another 3.6 million Americans left the labor force. It’s been suggested that the younger generations don’t want to work but retiring Boomers might be the bigger culprit.

Why Boomers are leaving the labor force

CNN Business reports that 90% of the Americans who left the workplace were over 55 years old. It’s now being suggested that many of the people who have left the labor force since the beginning of the pandemic were older Americans, not Millennials or Gen Z, as we originally thought. Here are the reasons why:

  • Boomers are more concerned about catching COVID-19 than their younger counterparts, so they aren’t returning to work. Boomers are less willing to risk their health.
  • The robust real estate market has benefitted Boomers, who have more equity in their homes. Boomers have more options on the table than just returning to work.
  • Employers aren’t creating or posting jobs that lure people out of retirement or those near retirement age.

As Boomers retire, how does this impact the overall labor economy?

According to CNN Business, there are signs that the labor shortage is abating. Employers are starting to see record number of applicants to most posted jobs. FedEx, for example, just got 111,000 applications in one week, the highest it has ever recorded. The U.S. Bureau of Labor Statistics projects that the pandemic-induced increase in retirement is only temporary. People who retired due to the risk of the pandemic will return to work as new strategies emerge to reduce the risk to their health. With new varients popping up, we will have to keep an eye on how the trend ultimately plays out.

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Economic News

Is the real estate industry endorsing Carson’s nomination to HUD?

(BUSINESS NEWS) Ben Carson’s initial appointment to HUD was controversial given his lack of experience in housing, but what is the pulse now?

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NAR strongly backs Dr. Carson’s nomination

When President-Elect Donald Trump put forth Dr. Ben Carson’s name as the nominee for Secretary of Housing and Urban Development, NAR President William E. Brown said, “While we’ve made great strides in recent years, far more can be done to put the dream of homeownership in reach for more Americans.”

At the time of nomination, the National Association of Realtors (the largest trade organization in the nation) offered a positive tone regarding Dr. Carson and said the industry looks forward to working with him. But does that hold true today?

The confirmation hearings yesterday were far less controversial than one would expect, especially in light of how many initially reacted to his nomination. Given his lack of experience in housing, questions seemed to often center around protecting the LGBT community and veterans, both of which he pledged to support.

In fact, Dr. Carson said the Fair Housing Act is “one of the best pieces of legislation we’ve ever had in this country,” promising to issue a “world-class plan” for housing upon his confirmation…

>>>>>Click to continue reading…<<<<<

#CarsonHUD

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