Temperature still 77/55, well below my blood pressure 92/60 today. Some summer days it is warm enough to be the same, at least the top or bottom number. I saw a deer munching 5 foot tall grass 20 yards behind my deck.
The main problem is how poor uneducated LA workers can afford the median $415,000 house price. And why they would pay so much when you can get a better home for $41,500 in some better states.
I am sure a lot of poor “workers” supplement their income by selling drugs on the side for tax-free income. But that should reduce median house prices because people buying drugs will have less money to spend on their mortgage. So they would buy a cheaper house. Some rich drug growers/dealers may immigrate legally or legally to Los Angeles and push up the price of houses, even if the drugs they sold went to poor rural areas. I have heard (personally) many stories of rich Chinese crooks buying fancy houses in the USA. And read many news articles. Probably true for many crooks all over the world, whether drugs, Nigerian investment scams, or whatever. The crimes could be conducted in any currency in any country but LA prices go up if the criminals move to LA.
I would not say there was “no housing recovery” I would even say prices have recovered too much. I attach Case-Shiller charts for LA and other big cities. In both cases prices have recovered back to where they were circa 2003. Looks like another bubble. I would prefer prices stayed flat after the crash to help people afford houses and prevent inflation. Not to trigger a bubble that would benefit house flippers, house builders and their illegal employees. The article says prices are still going up 7.8% which is too much house price inflation like what is going on with the stock market price inflation. Not much volatility, just prices going straight up due to Quantitative Easing, a mistake. This is the third recent bubble. They don’t learn. Or they have learned how to manipulate bubbles to their advantage (like pad bankers bonuses with all the $ capital that Quantitative Easing has flooded into the banks).
I would also not say “no easy low interest credit” Interest rates are still very low. I attach a chart on the Mortgage rate which has been very low since the crash, around 5% or less. Low interest rates, or zero ZIRP have bad effects. Good article in Wikipedia on ZIRP.
I also would not say “no credit”. I attach a chart on mortgage debt outstanding. It shows that in this recession mortgages outstanding fell quite a bit, the first time since WWII. But many mortgages are still outstanding. $13 trillion versus $15 trillion outstanding meaning that $2 trillion more were retired than were granted (which is good because many mortgages were granted that should not have been granted). I also attach a chart on loans backed by commercial real estate showing those loans were not cut back as much as residential mortgages. Commercial and Industrial loans are actually a little higher. So credit was granted, just not as much as during the boom.
Real personal income has continued to climb as shown in the last chart, albeit at a slower rate than during most periods since Jimmy Carter was president in the 1970s. “Disposable” personal income is what people have after paying taxes. Part of this is by design. When the economy goes into recession “automatic stabilizers” kick in. People collect unemployment insurance, food stamps, welfare, etc. At the same time they pay less taxes. This causes the federal deficit to automatically widen to make up for the shortfall in demand caused by the recession. So personal income and consumption keep on chugging along, just a little slower than normal because of the recession. The Bill Clinton boom was so strong that the Federal Government started running a surplus (as recommended by Keynes) until liberals hatched ideas for new spending and then the dot com Bush crash.
> This isn’t Astrophysics. No increases in real income+No easy low interest credit= No housing recovery. The only thing that has changed since 2008 is more debt at all levels. A caveat to this in California are an increasing no. of individuals who work at a facade job during the day such as at an autobody shop and make as much as $10K per mo. tax free in the drug trade. >
> Bob wrote:
> > Sounds like one hell of a bubble. Nobody will want a mortgage when rates rise and that’s gotta be the biggest fear of Banksters. They simply can’t keep ZIRP going, I don’t believe. Wages have been stagnant or dropping for years now. > > BB
> > Most of the LA population is illegals, minorities or poorly educated white trash. Worth the minimum wage or less. How can they pay a mortgage $415,000 ? Welfare? Drug dealing? Eventually they may default. Can buy a better house around here for half that price. >
> The median price of a home sold in the six-county Southland hit $415,000, according to real estate service DataQuick.
> That number is the biggest in four years, but 18% below the market’s high point in mid-2007. > And the furious gains seen this time last year are a thing of the past.
> In the last 12 months, home prices climbed 7.8%, barely one-fourth their pace in the prior year. > > Southland housing market may finally be getting back to normal >