While I’ve been of the strong belief that the housing market is crashing and burning, a few anomalies have left me perplexed.
The first has to do with median home prices. Why are those numbers still climbing in some markets, especially in Los Angeles?
As I understand it – correct me if I’m wrong – homes sold at auction or via foreclosure are not included in median averages. I never was fully satisfied by that explanation; it seemed like some other detail was missing.
Buried in a Los Angeles Times story about how foreclosures are skyrocketing in California was the simple explanation: While high-end homes continue to sell at a brisk pace, there are relatively few transactions on the bottom-end of the market.
In other words, with stricter lending rules, home prices beyond the means of average Angelinos and the expectation that homes will soon be cheaper, only the wealthy are buying.
The same pattern can be seen here in Chicago, though less distinctly, and other markets as well.
Another recent statistic that left me scratching my head was improved employment numbers. A colleague clued me in on Monday and a New York Times story confirmed his theory on Tuesday: The first round of job cuts has been statistically invisible illegal aliens and independent contractors who build many of America’s homes.
In an odd twist, the increase in employment may reflect out-of-work construction workers taking on service jobs to pay bills.
The good news in all this is that it will clearly take time for the full effect to be felt on the overall economy. This gives families time to batten down the hatches and prepare for the likely coming economic storm.
The bad news is that the drop will be slow, leaving families like my own stuck in rentals for a while to come.
Additional:
Meanwhile, the housing market continues to implode. That Los Angeles Times story I mentioned reveals that 900 California families a week (11,033 Jan-March) are losing their homes through foreclosures. That’s an 800 percent jump since last year.
More than 46,760 homeowners were in default during the same period. “For this rise in foreclosures to be happening in the midst of a strong labor market is truly unique and scary,” analyst Christopher Thornberg of Beacon Economics tells the Times.
It’s about time analysts start using phrases like “unique and scary.”
While I’ve been of the strong belief that the housing market is crashing and burning, a few anomalies have left me perplexed.
The first has to do with median home prices. Why are those numbers still climbing in some markets, especially in Los Angeles?
As I understand it – correct me if I’m wrong – homes sold at auction or via foreclosure are not included in median averages. I never was fully satisfied by that explanation; it seemed like some other detail was missing.
Buried in a Los Angeles Times story about how foreclosures are skyrocketing in California was the simple explanation: While high-end homes continue to sell at a brisk pace, there are relatively few transactions on the bottom-end of the market.
In other words, with stricter lending rules, home prices beyond the means of average Angelinos and the expectation that homes will soon be cheaper, only the wealthy are buying.
The same pattern can be seen here in Chicago, though less distinctly, and other markets as well.
Another recent statistic that left me scratching my head was improved employment numbers. A colleague clued me in on Monday and a New York Times story confirmed his theory on Tuesday: The first round of job cuts has been statistically invisible illegal aliens and independent contractors who build many of America’s homes.
In an odd twist, the increase in employment may reflect out-of-work construction workers taking on service jobs to pay bills.
The good news in all this is that it will clearly take time for the full effect to be felt on the overall economy. This gives families time to batten down the hatches and prepare for the likely coming economic storm.
The bad news is that the drop will be slow, leaving families like my own stuck in rentals for a while to come.
Additional:
Meanwhile, the housing market continues to implode. That Los Angeles Times story I mentioned reveals that 900 California families a week (11,033 Jan-March) are losing their homes through foreclosures. That’s an 800 percent jump since last year.
More than 46,760 homeowners were in default during the same period. “For this rise in foreclosures to be happening in the midst of a strong labor market is truly unique and scary,” analyst Christopher Thornberg of Beacon Economics tells the Times.
It’s about time analysts start using phrases like “unique and scary.”