So i just heard on the news this morning that Florida is in an actual recession (their economy shrank from last year); California has a budget crisis that it cant meet payments and Gov shwarz just laid off 22,000 employees… It seems like all these micro-economies in the US are showing what is eventually in store for the US…
Its like the white elephant in the room, no body in the media or government wants to use the “R” word… Amazing, its not rocket science… You take away jobs, houses, raise gas, food and inflation in general… What are we supposed to think is gonna happen…
Let’s look at what we’ve been told by the “EXPERTS” so far…
“There is no housing bubble.”
( This was HOTLY debated in 2005- early 2006 people here were saying it was “the sky is falling” and it wouldn’t get that bad.
“The sub-prime mortgage crisis IS CONTAINED.”
(Oh really?? Fannie and Freddie may beg to differ, so would Bear Stearns, Idy Mac, Nevada and Arizona Savings Banks and the other 90 on the FDIC watch list)
" We will miss a recession"…OH MY GOD!!! Where should I start…Historically NEVER BEFORE SEEN OIL PRICES, or how about the FACT that economies AROUND THE WORLD are sinking, car sales SUCK, unemployment has moved up every month.
It’s all right there in front of you. All you have to do is LOOK for it.
Bill Gross the head of PIMCO (which amnages $900 BILLION) that’s Billion with a “B”, recently said that his managers actually went out in 2005 and sat down with mortgage brokers to SEE who was getting mortgages. They came back and reported that the crdit risks would propbably be better if these banks loaned CRACK HEADS money, than giving it to people that had NO ABILITY to repay these loans when they re-adjusted. Pimco moved their clients money into BONDS, they made that move EARLY and got beat up a little intially. BUT…as this MESS unfolded the profits came ROARING in.
Pimco did what ANY one of us could do…they WATCHED what was happening AROUND them. Not what WALL St. was saying.
I believe certain sectors are in a recession; but not the economy as a whole. The last time I checked, the definition of a recession was 2 consecutive quarters of declining GDP. Our GDP is growing at a VERY slow rate…the key word being SLOW. I mean in NE Florida our port is booming we are exporting more than we can handle. Our tourism is level not growing but level. Our housing prices are falling. But I can’t get a parking space at Outback Steakhouse on a Wednesday night or the mall for crying out loud!!! Just because everything is going gangbusters doesn’t mean its a “recession”, just a tough time!
In NE Florida you don’t have cold winters. So your heating bill isn’t $2000 - $3000 per season. I also don;t think you have a state income tax. Furthermore, Florida has a lot of retirees that aren;t living paycheck to paycheck to support a family. I think the increase in exports is due to the dollar losing value. Countie are buying America on the cheap. :cool
I’d be paying VERY close attention to the overseas economies. I agree that exports are the ONLY thing supporting our economy at this time, but from everything I’m looking at and hearing…foreign economies will join us VERY SOON in this down turn. Want to see all that activity at those ports dry up??? All it will take is some strength in the US Dollar and the export business will follow real estate right into the ground.
Florida’s property taxes and INSURANCE rates are INSANE. I have many friends who are being eaten alive by those costs right now.
Example…friends 3 bed 1 bath ranch purchased in 1996 for $86,000. Taxes in 2001 were $800/year…Taxes in 2008…$4000/ year (thanks housing boom!!)
Same house…insurance rate in 2001…$500/ year…Insurance rate in 2008…CAN NOT GET PRIVATE INSURANCE!!! (THANKS HURRICANES) Had to go into the State plan at…$3000/ year!!! YIKES!!!
Wow! That’s a big jump in taxes. Is the MV at least in line with the taxes? If the property is still worth close to what it was in 2001, I hope they at least took you friend to dinner first. That sucks.
I am in the same boat as your friends…with my personal home and the rental that I purchased; but I take these things into account when I buy. You can still make money even with unGodly taxes and insurance rates.
I never said that a recession was coming…its just not here yet and luckily my area has experienced less economic downturn than others for the moment.
My take, and I’ll stay factual and informational, Jake, nothing positive, so don’t yell. :smile
The “economies” you mentioned are just two that were leading the housing boom years. The current bust added with the current economic situation SHOULD throw them in a recession. It can’t be good all the time.
Even if the U.S.A. goes into a formal recession (I should say WHEN), there will be local economies that will not be. That held true even during the Great Depression era, so I believe that it’s a pretty safe bet here.
My market is a good example. While most were experiencing double digit value increases, my market WAS in a recession. Housing value was declining. We only experienced a small shot of housing value before the big bust, so hardly an experience here.
Also, my area is probably one of the first to experience what I believe will start happening more, which is jobs coming BACK from China. Several of the furniture plants around here that shut down and sent their wares to be built overseas have opened their plants back up here because Chinese are starting to demand higher pay (think industrial revolution for today). If they pay more there, then it becomes cheaper in the long run to be built HERE.
The state of the national economy and your position on it strongly relates to how your market is currenting being affected. Fdjake and propertymanager, for example are in markets that have basically imploded (from the posts read). Mine has basically held stable. That’s not saying that “it’s all good.” The current economic situation is something to be closely monitered.
Excellent points. Especially regarding jobs coming BACK from China. I’ve seen this myself. With oil at record levels shipping all those goods half way across the planet (from China to USA) has become extremely expensive.
I agree with you, economies can be very localized.