The second leg down in the deflation of the housing bubble is hitting markets previously thought to be immune from price declines. Affordability is improving for ordinary families as prices fall.
Irvine Home Address … 49 CARVER Irvine, CA 92620
Resale Home Price …… $739,900
I am a new day rising
I'm a brand new sky
to hang the stars upon tonight
I am a little divided
do I stay or run away
and leave it all behind?
Foo Fighters — Times Like These
As the deflation of the housing bubble has proceeded, each state, region, town and neighborhood that once thought they were immune to the laws of supply and demand have succumbed to the Ponzi lending virus. Prices didn't become inflated by strong demand from cash-rich foreigners or ordinary borrowers using sound lending programs. Prices in every market needed to correct back to levels sustainable by incomes. Some markets like Las Vegas took the shortest route — straight down. Markets like coastal California have been enjoying a slow downward glide punctuated by turbulence from the occasional REO going for 45% off.
Before the housing bubble is resolved all markets will tumble, its only a matter of when and how much. The bubble will deflate until local incomes support prices. If the tumble is too great, strategic default pushes prices well below fundamental valuations.
If the tumble is a mere stumble, the market slowly drops on a low-volume slide where only the most motivated buyers prevail.
Perhaps Irvine wage growth will continue to outpace California, the US, and internationally. If that happens, house prices here will appreciate at a pace greater than inflation and buyers here will get to enjoy the HELOC riches that accompanies wage growth and house price appreciation. It pays to buy where high wage earners want to congregate. It also pays to buy in areas coveted by savers.
Of course, if the gravy train of high wage growth and HELOC-producing appreciation could be endangered by a any of a number of factors. We have a dysfunctional California government and regulatory system. We are pressured by wage arbitrage from overseas. Existing high home prices make it difficult to attract workers.
Irvine will always command a premium in Orange County, but how much of a premium can OC or California expect to sustain against the rest of the nation or the world?
Housing Crash Is Hitting Cities Once Thought to Be Stable
By DAVID STREITFELD — Published: February 13, 2011
SEATTLE — Few believed the housing market here would ever collapse. Now they wonder if it will ever stop slumping.
The rolling real estate crash that ravaged Florida and the Southwest is delivering a new wave of distress to communities once thought to be immune — economically diversified cities where the boom was relatively restrained.
In the last year, home prices in Seattle had a bigger decline than in Las Vegas. Minneapolis dropped more than Miami, and Atlanta fared worse than Phoenix.
The bubble markets, where builders, buyers and banks ran wild, began falling first, economists say, so they are close to the end of the cycle and in some cases on their way back up. Nearly everyone else still has another season of pain.
Fiserv Case-Shiller: after five years of record declines, slow grinding bottom ahead
The fallacy of a painless housing market recovery
“When I go out and talk to people around town, they say, ‘Wow, I thought we were going to have a 12 percent correction and call it a day,’ ” said Stan Humphries, chief economist for the housing site Zillow, which is based in Seattle. “But this thing just keeps on going.”
Seattle is down about 31 percent from its mid-2007 peak and, according to Zillow’s calculations, still has as much as 10 percent to fall. Mr. Humphries estimates the rest of the country will drop a further 5 and 7 percent as last year’s tax credits for home buyers continue to wear off.
“We went into 2010 feeling gangbusters, thanks to Uncle Sam,” Mr. Humphries said. “We ended it feeling penniless, with home values tanking.”
The market entered the year in denial fostered by a doomed bear rally. The market ended the year facing the reality of the painful decline it thought it had avoided. The market is moving from denial, through fear, and into acceptance. 
The fact that even a fairly prosperous area like Seattle was ensnared in the downturn shows just how much of a national phenomenon the crash has been. The slump began when the low-quality loans that drove the latter stage of the boom began to go bad, but the resulting recession greatly enlarged the crisis. Many people could not get a mortgage, and others simply gave up the hunt.
Now, though the overall economy seems to be mending, housing remains stubbornly weak. That presents a vexing problem for the Obama administration, which has introduced several initiatives intended to help homeowners, with mixed success.
Mixed success? Which program specifically had any success whatsoever?
CoreLogic, a data firm, said last week that American home prices fell 5.5 percent in 2010, back to the recession low of March 2009. New home sales are scraping along the bottom. Mortgage applications are near a 15-year low, boding ill for the rest of the winter.
It has been a long, painful slide. At the peak, a downturn in real estate in Seattle was nearly unthinkable. In September 2006, after prices started falling in many parts of the country but were still increasing here, The Seattle Times noted that the last time prices in the city dropped on a quarterly basis was during the severe recession of 1982.
Two local economists were quoted all but guaranteeing that Seattle was immune “if history is any indication.” A risk index from PMI Mortgage Insurance gave the odds of Seattle prices dropping at a negligible 11 percent.
If history is any indication, there are always a fool who makes a statement saying their market is “immune” because it is “different.” Or is it that markets have reached a permanently high plateau?
These days, the mood here is chastened when not downright fatalistic. If a recovery depends on a belief in better times, that seems a long way off.
Those who must sell close their eyes and hope for the best. Those who hope to buy see lower prices but often have lighter wallets, removing any sense of urgency.
Those that have no hope simply walk away and never look back.
Arne Klubberud and Melissa Lee-Klubberud paid $358,000 for a new, 960-square-foot townhouse on trendy Capitol Hill a few weeks after that Seattle Times article was published. Now, with one child and with hopes for more, they need more space. They just put the townhouse on the market for $300,000.
“Obviously, this is not the ideal situation,” said Ms. Lee-Klubberud, a 32-year-old lawyer. They are hoping to take advantage of the sour market to buy at a good price, but first, they must sell for an amount that is acceptable. “Everyone has their limits,” she said. “We have ours.”
On a dark, dank Sunday, a handful of people came to look at the three-level unit. One of them was Katherine Davis, who had just sold her house in the far eastern suburbs. It took 14 months, during which she had to drop the price several times. The equity she had accumulated over the decades disappeared quickly.
Perhaps the equity bestowed on her by the housing bubble disappeared quickly, but if she owned for decades and paid down her mortgage, she will still end up with the equity she would have had if there were no housing bubble. What she is really letting go of is her imaginings of riches not to be.
“At first, I thought it would be nice to come out of this with $200,000, but I adjusted my expectations,” Ms. Davis said. She ended up with less than half of that. Her goal is to buy a small place in the city, but not yet. “Selfishly, I’m hoping the market continues to drop,” she said.
Increasing numbers of sellers are simply surrendering.
This is market capitulation. I know I have used the psychology chart often lately, but these man-on-the-street stories illustrate these stages, and now that several markets are reaching capitulation and despair, these stories put real-life examples behind the abstract concepts.
Put yourself in the shoes of these borrowers as you read their stories. The circumstances they face and the emotions they feel about those circumstances are the essence of capitulation and despair..jpg)
Megan and Ryan Dortch tried to sell their one-bedroom Eastlake condo for $325,000 two years ago. They rejected an offer of $295,000 as inadequate. A year later, they relisted it for $289,000, then $279,000, which was less than they paid. Without a sale at that price, they could not afford to buy a place big enough for them and their new baby.
They have given up on real estate. They are renting out their old apartment at a small loss every month, and living in a rented house. “I don’t expect the market to get better,” said Ms. Dortch, 31, a customer service consultant.
Neither does Gene Burrus, another frustrated seller who became a landlord. “Rent is so cheap it doesn’t make sense to buy now,” he said. He might reconsider if 10 or 15 percent more comes out of the market.
Take a deeper look at Mr. Burrus's despondency. He needs house prices to go up, but he also recognizes that buying makes no sense. House prices will not be going up because there won't be stampedes of buyers and loose credit. He is wise enough to recognize that the herd reacting to the same information also recognizes it is a poor time to buy putting him on the wrong side of the trade. He is screwed, and he knows it. The moment he realized it was capitulation. Now he is feeling despair.
Redfin, a real estate brokerage firm based in Seattle, says foot traffic began picking up in the last several weeks. Mortgage rates are rising, which could nudge those who need to buy to make a deal now for fear rates will rise even more.
But whenever the market finally does pick up, all those accidental landlords will want to unload, putting another burden on the market. “So many sellers are waiting in the shadows,” said Redfin’s chief executive, Glenn Kelman. “The inventory is going to expand and expand and expand. I don’t see any basis for significant price increases.”
While almost every economist is expecting another round of price declines for the next few months, many see a leveling off in the second half of the year. Fiserv, the company that produces the monthly Case-Shiller Home Price Indexes, analyzed prices in 375 communities. About three-quarters of them will be stable by December, Fiserv calculates.
“We’re at a period near the bottom but with more volatility than we normally see at this point,” said David Stiff, Fiserv’s chief economist. “This sort of double dip is unprecedented for housing.”
Maybe that is why belief in a bottom is as elusive now as fears of a top were in 2006.
“We would love to have a house,” said Dan Cunningham, a 41-year-old renter. “I have more than enough for a down payment. I’m preapproved for a loan. But I have to have confidence it’s not going to lose another 20 percent.” He plans to wait until he sees prices rising before making any offers.
If Dan lives in an inflated market like ours, his caution is warranted. Although I don't expect a 20% drop here, our prices are inflated, and a decline in prices at the mid to high end is ongoing.
If Dan lives in a deflated subprime-dominated market, then his caution is not warranted unless he is buying an above-median priced house. If Dan is looking at a $150,000 property in Phoenix, he doesn't have much to worry about.
For CalculatedRisk's take on the situation, please read Housing: For many cities “another season of pain”. 
A little Ponzi
It doesn't take hundreds of thousands of dollars in HELOC abuse to make a borrower insolvent. Sometimes only a modest increase in debt can be too much if someone becomes unemployed.
The owner of today's featured property bought back in 1999 for $375,000. His mortgage information is not available. He made a number of small refinances, and on 1/9/2007 he refinanced with a $372,000 ARM. His mortgage debt doesn't exceed his original purchase price, an accomplishment from what I observe. He quit paying in late 2008, and he is still there.
Foreclosure Record
Recording Date: 04/28/2009
Document Type: Notice of Rescission
Foreclosure Record
Recording Date: 03/25/2009
Document Type: Notice of Default
It shouldn't be surprising that houses like this one populate shadow inventory. Banks book missed interest payments as income. They would prefer the borrower actually repay, but from an accounting standpoint, they treat it the same, if they can assume 100% recovery at foreclosure.
On properties like this one that have 40% equity or more, they will allow this debtor to be delinquent forever. The debtor is basically cannibalizing their own equity. With no payment at all, the compounding interest and penalties are like an Option ARM on steroids consuming about 1.5% of equity per month. This guy has been delinquent about 25 months, so that 40% equity is nearly gone.
Irvine Home Address … 49 CARVER Irvine, CA 92620 
Resale Home Price … $739,900
Home Purchase Price … $375,000
Home Purchase Date …. 8/13/1999
Net Gain (Loss) ………. $320,506
Percent Change ………. 85.5%
Annual Appreciation … 5.8%
Cost of Ownership
————————————————-
$739,900 ………. Asking Price
$147,980 ………. 20% Down Conventional
4.99% …………… Mortgage Interest Rate
$591,920 ………. 30-Year Mortgage
$153,029 ………. Income Requirement
$3,174 ………. Monthly Mortgage Payment
$641 ………. Property Tax
$0 ………. Special Taxes and Levies (Mello Roos)
$123 ………. Homeowners Insurance
$0 ………. Homeowners Association Fees
============================================
$3,939 ………. Monthly Cash Outlays
-$776 ………. Tax Savings (% of Interest and Property Tax)
-$713 ………. Equity Hidden in Payment
$287 ………. Lost Income to Down Payment (net of taxes)
$92 ………. Maintenance and Replacement Reserves
============================================
$2,830 ………. Monthly Cost of Ownership
Cash Acquisition Demands
——————————————————————————
$7,399 ………. Furnishing and Move In @1%
$7,399 ………. Closing Costs @1%
$5,919 ………… Interest Points @1% of Loan
$147,980 ………. Down Payment
============================================
$168,697 ………. Total Cash Costs
$43,300 ………… Emergency Cash Reserves
============================================
$211,997 ………. Total Savings Needed
Property Details for 49 CARVER Irvine, CA 92620
—————————————————————————— .jpg)
Beds: 4
Baths: 3
Sq. Ft.: 2438
$303/SF
Lot Size: 5,115 Sq. Ft.
Property Type: Residential, Single Family
Style: Two Level, Cape Cod
Year Built: 1980
Community: Northwood
County: Orange
MLS#: S646433
Source: SoCalMLS
Status: Backup Offers Accepted
On Redfin: 7 days
——————————————————————————
Great opportunity in the village of Northwood. Corner lot with great curb appeal. Freshly painted inside and out. Newer roof, brand new A/C and heating, new carpet and more. Desirable floorplan with open floorplan. Four bedrooms upstairs and large bonus. Master with walk-in closet and spacious master bath. Three car garages and large private yard. No assoc. dues and no mello-roos. Steps from park, and mintues from schools, shopping and freeways. Priced to sell.
It is true the longer the buyer stays without paying, the more equity is lost.
However, the equity only materializes once a sucessful sale takes place. With taxes, realtard commission, and other fees, he is lucky to walk away with 70% of his equity.
However, a strategic default gives the homeowner cash every month. At a 375,000 mortgage his payments are most likely 3000-3800 per month.
In 2 years he can get most of the money he would have received at closing, with none of the hassles of trying to find a buyer of going through the sales process.
Can you say SQUAT?
“In 2 years he can get most of the money he would have received at closing, with none of the hassles of trying to find a buyer of going through the sales process.”
There is a special bonus for those who are underwater: they get to save the payment even if they have no equity. Financially, it is wiser to strategically default and squat than continue to pay on a hopeless mortgage. That’s why so many are doing it.
Why not deal with hassle to get money from sale and not worry about getting kicked out or having horrible credit? I don’t see the benefit and hassle usually isn’t enough reason to ruin your credit. This one doesn’t make sense to me.
Agreed, it sounds like bitterness due to the quarter million dollar profit they will make.
“Hassle of finding a buyer”, LOL this is already in escrow.
“At a 375,000 mortgage his payments are most likely 3000-3800 per month.”
What interest rate are you using? 10%?
If he refinanced into an 0ARM in 2007, most likely he is paying only ~5% interest which is more like $2000.
Question: Does the ‘Notice of Rescission’ mean the owner is no longer delinquent?
Was there really any lost equity if owner is now current on the loan? Seems like there are some assumptions being made here that I can’t really confirm based on what is being presented.
And this house went pending after only 4 days on the market, they even had to raise their list price for back-up offers.
That’s pretty good considering this is a 30-year old home… it must be the 3-car garage!
Notice of Rescission means the NOD or NTS has been canceled, but does not mean the loan has been brought current per the original terms.
I stand corrected…
Yet, when I financed my 315K mortgage for 6.75% in 2005, my propery taxes and insurance left me with a payment of nearly 3K.
I was erroneously using my situation for the above buyer.
So suffice it to say, as values tanked 50%, I found it really easy to put on my running shoes and head for the door.
So you are right. Each situation is different.
Irvine inventory, aka Homes for Sale:
765 ~ 2/15/2011
501 ~ 2/14/2010
That’s a 53% percent increase in homes for sale at the beginning of this year vs last year.
I’m not sure what your point is here:
717 ~ 2/14/2009
940 ~ 2/13/2008
828 ~ 2/11/2007
The average number of homes for sale at this time for the last 5 years was about 750. Is it a good thing or bad thing we are close to that number now?
The sky is falling, at only 3.5 months of inventory LOL. Houses like today’s featured property better stop going into escrow in only 2 weeks.
PR makes a good point. Inventory number alone isnt a good gauge. Months of inventory is much more relevant.
And with sales rates 20% below normal and inventory above normal, the time to clear the market is higher than normal, and certainly higher than 3.5 months.
PR – where did you pull 3.5 months of inventory from? Is that a good number or bad number for Irvine?
You make a lot of sense and your logic is usually sound but the problem is that your data never has any source so it sounds like BS.
In any case, a nice addition to IHB would be months of inventory.
Google “dataquick orange county”. From what I can tell PR’s numbers are more or less correct.
rkp to PR: “You make a lot of sense and your logic is usually sound”
BWAHAHAHAHA!!! Oh, please stop! Give us some warning or something, please! Bwahahahaha!!!
-Darth
…currently cleaning soda off his monitor
Wow IR is so angry he won’t even acknowledge the simple formula that inventory divided by monthly sales is months inventory.
Big money salsa, thanks for acknowledging I’m correct. Not that I needed it, but at least you are reasonable.
IR angry? You’re trying to make the discussion about emotions, which is trolling. Don’t be a troll.
it wasn’t my post… but to me the point would be that the trend is headed in the wrong direction. It was improving, and made a step back to worse than the 2009 figure.
The trend is that Irvine inventory continues to be very low. An inventory of 500 is a feverish sellers market at only 2-2.5 months inventory. In the markets that were crushed inventory soared to over 10 months, that’s 3 times current. We have a long way to go 6 years into the Irvine “crash” to get anywhere near that.
Wrong. The current state is that Irvine months of inventory is low. The TREND is that it’s moving higher. That was Lee’s whole point.
Irvine prices have declined significantly in the last 6 years despite the months of inventory never reaching 10 months. So your comment makes the point that we don’t have to have a very high months of inventory figure to have declining prices. Not exactly what you were going for I’m sure, but there it is.
@bigmoney:
Is that a global “Irvine prices have declined significantly”?
If you’re just talking about low-end condos and way overpriced Shady Canyon… you are correct… but there are many areas of newer homes that have sold between $800k to $1.1mil that have not declined *significantly* in the last 6 years. For example, QH SFRs in the 2000sf-2500sf range originally sold in the first half of 2000 for $700-800k… these are still selling above $1mil and if one actually sells at $950k… it’s a “comp killer”.
What would lend more credence to those numbers is percentage-wise, how does Irvine’s inventory numbers compare to other OC cities?
As far as I know, and even Shevy posted this a while back, Irvine inventory is relatively low for the “good” stuff, and thus also priced higher than it should be.
Seems like some ‘hoods/products in Irvine are more immune than others. It has to be because they are different or else why would IR admit that there is an Irvine premium?
“Is that a global “Irvine prices have declined significantly”?”
Yes.
Certainly not every neighboorhood of Irvine has declined equally. But the vast majority of homes even in the best areas would sell for less today than in 2005-2006. Maybe not 30% less like some of the condos or Shady Canyon, but enough less for interested parties to take notice. I’m not sure why you are quoting prices from 2000… was that a typo? Are Quail Hill SFRs still fetching what they would have at the peak in 2005-2006? If so that’s news to me.
Holy crap, did you just compare 2000 numbers with 2011 in order to say that prices have not declined significantly? Let me ask that a different way: did you just to a 2000 to 2011 comparison in order to refute the contention that prices have dropped signifcantly since 2005 (i.e. 6 years ago)?
I must be something. And if so, I’m betting you’d like to point it out to me.
@bgm:
Apologies… “first half of 2000” meant “first half of the 2000s”… QH didn’t start selling until about 2003, so that timespan is up to 2005.
I actually believe some QH SFRs are still fetching 05/06 prices.
I guess you need to define “significantly”. Selling for $1.1m then and $1m now is only a 10% decline.
Remember… everyone on the IHB said Irvine would drop 40-50% across the board to pre-2003 prices and no act of God or government could prevent it. I’m hopeful.. but still waiting.
And here is some news for you (using Redfin last 3 months SFR sales in Quail Hill < $1.5m): 110 Treehouse 12/21/10 $1,120,000 06/09/05 $1,250,000 135 Treehouse 01/04/11 $1,129,500 11/25/03 $877,500 103 Retreat 12/28/10 $1,380,000 06/29/10 $1,251,000 (foreclosed) 12/15/04 $1,280,500 119 Capeberry 12/10/10 $1,320,000 06/09/04 $1,016,500 113 Tearose 01/31/11 $1,430,000 05/24/08 $1,500,000 12/23/04 $1,500,000
The trend is that Irvine inventory continues to be very low.
Wrong’o … my point is that the number of homes for sale is 50% more than this time last year. Nothing more, nothing less!
I don’t care what the inventory was prior to the financial collapse. This is a new economic world.
@iho
Thank you for the clarification.
Of the five sales, two contain “before” sales that are from 2005 or later, and both sold for less in 2010 or 2011. So in fact these data points indicate I was correct in saying prices had declined.
As for what “significantly” means, I’d say it means enough to affect peoples decisions about buying. Here’s an interesting thought experiment: what percentage of Irvine home buyers in 2005 would have still bought if they had been able to correctly surmise where the value of their home would be today?
And about your statement: “Remember… everyone on the IHB said Irvine would drop 40-50% across the board to pre-2003 prices and no act of God or government could prevent it. I’m hopeful.. but still waiting.”
Last time I gave you the benefit of the doubt and assumed you simply made a typo. This time, I’m going to assume that you are exagerating for effect and aren’t really making the crazy straw-man argument it sounds like.
Lee, what bold new economic world are we in? The one in which the median down payment in Irvine is around 30%, the same as it was in 2010, the same as it was in 2009…. The same as it was in 2008……. The bold new economic world where more than 200 homes are selling per month in Irvine?
Wow that is freaking bold, 3.5 months inventory?
@bms:
“So in fact these data points indicate I was correct in saying prices had declined.”
But not significantly. I’m not sure how you see that data like that considering 3 of the 5 are more than their 03/04 sales (first half of 2000s) and 2 that are not are not more than about 10% off.
As for that crazy straw-man argument… you may want to check some old IHB posts, those claims were there, even IR admits to having to adjust his predictions based on government intervention that was not supposed to happen.
Which brings me to his statement in today’s post that confused me a bit:
“Mixed success? Which program specifically had any success whatsoever?”
Am I to understand that record low rates and jump-in-the-pool credits did not do ANYTHING? Why was IR’s prediction at the beginning of this year only a 5% loss for Irvine for 2011? Isn’t that “something”? Even *I* think we’re still looking at 10% reductions.
IHO don’t forget according to IR:
1. The government intervention was not going to happen
2. When he realized it was happening the tune changed to: it wouldn’t work to impact prices
Then finally the tune changed completely to: it happened and it impact prices
The Irvine crash never happened. Prices dropped in some areas less than others, prices may continue to drop in some areas less than others, 6 years in the “crash” has been an epic fail in Irvine
“IHO don’t forget according to IR:
1. The government intervention was not going to happen
2. When he realized it was happening the tune changed to: it wouldn’t work to impact prices
Then finally the tune changed completely to: it happened and it impact prices”
If you are going to put words in my mouth and attempt to revise history, make sure it is not complete bullshit.
I clearly did say that government intervention was going to happen. I wrote a long post about bailouts and false hopes in 2007. I have always said government intervention would occur, and that it would not work. We can debate its effectiveness — it did keep prices somewhat inflated — but don’t try to undermine me by making stuff up. I have four years of writing for this blog that provides plenty of quotes from me if you care to look for them.
Yes, IR (and others) did NOT say there would be no intervention.
I’m just a bit puzzled because there is some capitulation here too:
Before: The government will try but they will not be able to intervene.
Later: We are suprised as to what lengths the government intervened and they have slowed the fall in some areas.
Now: We don’t think the government intervention was effective.
I think an “as” needs to be placed in the ‘Now’ statement. It has slowed the bleeding somewhat, and to that end, it had *some* effect.
And again, if the lone result is it delayed it and that we are still looking at 20% or more drops in Irvine prices (which not even IR is claiming), what more does that mean for other areas?
The trend so far is that the highly educated are faring much better then the lower educated. If that trend continues then by definition Irvine will do better than most of CA and the US because a large portion of the people who live in Irvine had college (and even master or PhD degrees). And therefore, the housing in Irvine should do better as well.
Exactly, and as inflation rears it’s ugly head in the coming years this trend will get even worse. The highly educated with high paying jobs will continue to get their salary increases while the lower half stagnates.
From the weekend thread: Congratulations to IR on a successful trustee flip. More stories like that would be very interesting. You could keep the economic details to a minimum, and focus on the speciic human interactions and general business maneuvers in specific LV neighborhoods.
Side comment the school district that Las Vegas house feeds into looks horrible on redfin? Scores of 3, 4, 5 out of ten? The elementary school is a 3 out of 10. People in Irvine worry if their child is at a 9 out ten.
Where do I sign up for a Irvine home 1300 sq ft brand new on a 7000 sq ft lot? I wish they built those in OC. It would never happen, too bad.
Your description of the FHA buyer from the weekend post makes it sounds like you are helping them to make it a 0% down payment loan, let the good times roll. While you are at it throw in some money for new furniture.
I wonder about this. I am seeing too many people with extremely good credentials become unemployed for long periods of time, notably older people and people in extremely specialized fields.
It’s tragic. We have so many engineers and scientists for whom there is no longer employment while we stagnate technologically. We will need a growing manufacturing sector to employ these men.
I meet others in “high tech” occupations who were very hot and cutting edge just ten years ago, but who now have to retrain.
Another nasty circumstance is that 80% of the unemployed are male, probably because not only are about 95% of all construction workers male, but most of people trained in demanding, arcane engineering and technical specialties, male. I would wish the misery were a little more evenly distributed, although women are probably the majority of the underemployed.
The only people who are winning now are the financial elite. It is a very bad time for our country when opportunities for highly intelligent, able, and well-trained engineers and scientists are fewer all the time, while opportunities for financial scammers of all types and grades expand.
Laura sorry but you are flat wrong. The economy is booming right now for well trained engineers and scientists who speak english well. Salaries continue to trend up for these folks and unemployment is minuscule. If people you know haven’t keep their skill set up to date, that was a big mistake.
“The economy is booming right now for well trained engineers and scientists who speak english well. Salaries continue to trend up for these folks and unemployment is minuscule.”
You are obviously not talking about civil engineers or anyone working in an engineering field related to real estate. In fact, with unemployment near 10%, I really don’t know who you are talking about.
If your skill set is not in demand don’t take it out on me. The economy is booming for well trained engineers and scientist you are free to believe your own reality. I wasn’t counting civil engineering in that group, and definitely not RE.
There is only one person who could have stopped you from starting your Electrical Engineering degree back in 2004 or 2005. You could already have your PhD in one of the lucrative sciences. There is almost zero unemployment for these folks, and plenty of opportunity.
Booming for engineers in India and China..laugh.
What’s your point? I have PhD engineer friends currently working in both China and India. They are permanet US residents. They did go to some of the best schools. You control your own destiny, if you knew what would happen to housing in 2004, respond accordingly. I understand misery loves company, but get real there is ample opportunity for the talented with skills in demand. There are 2 economies, best to move into the upper half economy.
Your employment opportunities depend upon your specialty. Many demanding specialties that were hugely in demand a decade ago, say, are cold as ice now.
And there is no question that there is far less demand for engineers in general than when we had a fully functional manufacturing sector.
The thing about these professions is that a person must spend many, many years in school to become truly qualified in them. A hydraulic engineer, say, cannot decide to switch specialties on a dime- it means years more of retraining and requalifying, at massive cost. Given that a large number of those under age 45 are paying off huge college loans of as much as 5K, going back to school for another few years is off the table, especially should they be unemployed and unable to pay on outstanding balances they already have. Not being able to make timely payments on your college debt is a DISASTER, given the way penalties and interest and “collection” fees accrue on this type of debt- don’t even get me started on what a scam college financing is in this country.
I sympathize with these talented, able people and am glad I’m not in their position even though my own is pretty tenuous right now. But even though my medium level job in finance will never pay anything like as much as the top engineering and technical specialties, I have flexibility, for my relatively undemanding skills are useful in a lot of fields. I may not make a high 6 digit income, but it is easier for people like me to remain employed at SOMETHING, even if not at the pay level we are used to. For extremely specialized people, the choice is either high paid employment in a field that might be shrinking rapidly, or employment at whatever minimum wage job he can grab.
I hope fervently that we can re-invigorate our manufacturing with the thousands of skill sets it employs. Seems to me that we have lost many, many job niches in the past two decades. Worse, we are experiencing a “brain drain” as able people either decline to school for occupations which might not exist after they have rung up over $100K in college debt; or they are going abroad to growing economies hungry for talent. Either way, we lose.
Sorry, I meant to say they are paying off loans as much as $175K.
38 years as a senior electronics tech w/a 2 year associate degree. Laid off May 1998 and haven’t seen a single suitable opening here since. Can’t move because of my wife’s career and proximity to her family but the ‘cutting-edge’ electronics industry I put my life into is gone, to India, China & points beyond. It won’t be back in my lifetime, either. Retrain for what? At my age? Yeah, right…
Chinese engineers get paid $600 ~ $1500 a month. You can get 5 ~ 8 engineers in China for the price of one here. Chinese Blue collar workers get $100 ~ 200 a month and are crammed 6 people to a dorm. You wanna compete with that you can’t.
I have factories in China. I know.
My friends are getting paid over $250,000 per year in Asia. They must be bringing something unique to the table. What are you making zubs?
“You wanna compete with that you can’t.”
It’s only possible if your mortgage / rent is no more than $300 to $500 / month, and your health insurance needs to be no more than $50 / month which means your doctor needs to be making a lot less too…. we need deflation not inflation, or a much devalued dollar (high inflation in dollar terms).
I make $20,000,000/year posting on irvinehousingblog. You?
The workers who go to the coast to work in cities like Shanghai or Guanzhou or Dong Guan usually live in dorms provided by the factory. They get about $200 now plus meals.
After the suicide problem at Foxconn, there was an upward pressure on salaries. Plus the Bernanke is printing money like crazy and to keep the RMB pegged, inflation is massive in China right now.
I was actually asking what product do you make, poorly asked I know. But you made my point in a different way. Your income is obviously very high. Times are good.
I move production from US companies to Asian companies much to the consternation of the unemployed engineers here.
All the extra money that we make from moving production overseas comes in corporate profits and gets passed to shareholders as well as lobbyists and politicians.
So while US workers get laid off, they can take solace in the fact that the owners of the company are getting richer.
Let the good times roll.
We sure do hear a lot about Planet Reality’s “friends”. Almost as much as we’ve heard about how “it’s like Xmas at the IRVINE SPECTRUM!!!”
You realize you have a chronic tic where you repeat the same thing over and over again, right? I don’t mean the same general idea, but the same slogans, like an automaton. Maybe your “Ph.D. engineer friends” can help fix your bug for you.
PR speaks the truth – I did this exactly. I quit my well-paying semi professional job ~ 13 yrs ago and got a computer engineering degree from a top 20 school, finally graduating 10 yrs after I should have. This required personal and family sacrifice but we made it happen. Getting it from the right school was the key because all the good jobs come via on campus interviews. I also happened to land in the middle of the tech bubble which made getting a job easier, but I felt the real accomplishment was keeping it in the recesssion of 2001-2 when offers were getting pulled routinely across sectors.
So PR is not blowing hot air – if I did it on my own, anyone here can.
Boston2theBay,
Well done, go beavers
” I am seeing too many people with extremely good credentials become unemployed for long periods of time, notably older people and people in extremely specialized fields.”
I totally agree. I’m one of those UNEMPLOYED engineers.
I would love to bring jobs back to USA, but you guys just can’t compete against people who are crammed 6 people into a dorm and get paid $200 / month.
This is global wage arbitrage and as our world shrinks, you are competing against people who will take your job at 25% of your pay.
Currently China is inflating, and salaries are rising, so the next cheap labor farm will be Vietnam. Capitalism knows no boundaries.
Yeah, by the time the world becomes “flat” (ref: Tom Friedman’s book “The world is flat”), I will be dead. Time to think about working in retail selling Vietnamese products… 🙂
It’s interesting that New York has such an ownership premium. Isn’t that the home of the banking and hedge fund
wizards who managed to make huge bonuses for themselves during the bubble, then shorted during the crash
to make even more money, and then got taxpayers
to make good in the lost money and then
some to get bonuses yet again? Why are they so
into buying houses now? Heck, even the “real estate bear” Roubini recently bought a place (http://blogs.forbes.com/afontevecchia/2010/12/17/roubini-bullish-on-housing-dr-doom-buys-a-5-5-million-manhattan-condo/).
Makes you wonder if the money wizards
know something we don’t (ex inflation?)
and will make money off the taxpayers (via abnormally low Fed interest rates) yet again …
Another completely inept housing bubble story from the NY times. The only people who ever believed that markets like Seattle were “immune” are the same people who denied they existence of the housing bubble in the first place. All it takes is a quick glance at the Case-Shiller numbers to see that Seattle participated in the bubble wholeheartedly. And all economic bubbles end the same way. I have family in the area, and believe me they all had a million different explanations for why prices had held up better than in the rest of the country. Some of the lame reasoning I heard was even eerily similar to the nonsense we hear about Irvine (hint: there’s a lot of people of Asian descent in the Pacific Northwest).
Good luck selling your overpriced house after the doors of Fannie Mae and Freddie Mac will be closed.
Private investors will be happy to give your buyer a 7-10-year mortgage for 10-15%.
http://online.wsj.com/article/SB10001424052748704657104576141891006477826.html
Eventually, people will be happy to invest into economy and jobs instead of throwing half or more of their salaries into home payments.
Room for Rent — in a Mansion
http://www.smartmoney.com/personal-finance/real-estate/room-for-rent–in-a-mansion-1297274862469/