Boom in the Doom

[GRG55]

Re: Boom in the Doom

Are places such as Bakersfield going to be abondanded similar to some of the old factory cities and towns in the midwest?

How many Bakersfields are there in the U.S.? I've traveled a little bit, but not that much.

Contrary to EJ's pessimism, Bakersfield could do just fine. It's a large distribution and processing center for one of the biggest food growing regions in the world. Believe it or not we get huge amounts of fruits and vegetables here in the Arabian Gulf that are labelled from Bakersfield growers (plums, apricots, baby carrots, and so forth). As the US $ has declined I notice that US sourced food seems to be displacing stuff we used to get from South Africa and Australia.

If you believe the talk about an agricultural boom, Bakersfield may surprise us all - as long the water doesn't run out that is...:cool:

[EJ]

Re: Boom in the Doom

Contrary to EJ's pessimism, Bakersfield could do just fine. It's a large distribution and processing center for one of the biggest food growing regions in the world. Believe it or not we get huge amounts of fruits and vegetables here in the Arabian Gulf that are labelled from Bakersfield growers (plums, apricots, baby carrots, and so forth). As the US $ has declined I notice that US sourced food seems to be displacing stuff we used to get from South Africa and Australia.

If you believe the talk about an agricultural boom, Bakersfield may surprise us all - as long the water doesn't run out that is...:cool:

I Bakersfield!

[metalman]

Re: Boom in the Doom

Oh please... cut the crap.

means +

[bart]

Re: Boom in the Doom

means +

Your choice:
http://www.nowandfutures.com/grins/rimshot.mp3
or
http://www.nowandfutures.com/grins/eat_short.mp3



(by the way, my post was based on a misunderstanding)

[FRED]

Re: Boom in the Doom

means +

This has GOT to be related to the inflation/deflation debate. But I don't know how!


= +

[GRG55]

Re: Boom in the Doom

...I'm comparing the economic value of homes left over from the housing bubble to the economic value of fiber-optic cable left over from the telco bubble. The latter enables all kinds of economic activity, much as a road does, provided it isn't a road to nowhere. You can argue that a house does, too, but not if it's half finished, or abandoned and need of repair before it can be used, and is likely to stay abandoned because it is too far from areas of job growth. A house has only one use – to house people, who may or may have no economic reason for being where the house is. That's why Bakersfield came to mind. It only exists because the housing bubble made houses too expensive in suburban LA. As the housing in LA gets cheaper, guess what happens to the abandoned houses in Bakersfield?

Given the relative difference in economic value between housing and other capital investment, does it follow then that the so-called gargantuan housing bubble wasn't (in real economic value terms) nearly as "big" as it has been made out to be?

If so, then perhaps the "next bubble" doesn't need to be nearly as "big" as we have assumed, in order to be enough to sufficiently offset the negatives of the housing bubble collapse and keep the wheels on the wagon?

[c1ue]

Re: Boom in the Doom

GRG,

I don't see the suburbs getting depopulated; there are always those people who want big spreads and are willing to drive 30 miles to get it.

However, I equally don't see prices holding up.

Between the costs of maintenance, heating/cooling, and commuting, I'd estimate 50%+ price drops to maintain attractiveness.

As for Bakersfield for students - actually I disagree.

I'm seeing a gigantic surge in academy here in SF: weather isn't the greatest, but far better than month-long 100 degree spells in Bakersfield.

Just the Academy of Art alone has expanded to 3 different locations within a 10 block radius of my place.

Furthermore from a social/creative/propaganda perspective, you can trivially beat Bakersfield (I spent some formative years in the Central Valley). There is no coincidence that alcohol is the principal entertainment vehicle there.

[dbarberic]

Re: Boom in the Doom

I sniff a business opportunity to retro-fit the existing housing stock for energy efficiency with the latest, best practice technology.

Hmmm... how can this work?

[bart]

Re: Boom in the Doom

I sniff a business opportunity to retro-fit the existing housing stock for energy efficiency with the latest, best practice technology.

Hmmm... how can this work?

A 25+ page E-book sold on Amazon for under $10?

[Verrocchio]

Re: Boom in the Doom

Leinberger did tend to stretch his case a bit. To support his point that today's houses are poorly made, elsewhere in his article he wrote that the drywall is about all that's holding up the wooden frame in these houses. Having worked on a framing crew on summer "vacations" while in college, I'd say that is a fair description of some stick-built houses, but it all depends on the quality of the design, the contractor, the subs, and the workmanship; so, YMMV.

You're right, too, about cycles. Preferences for urban, suburban, or rural living are fickle, and trends go up and down. Still, his thesis lies within the realm of probability. In times like these, when major assumptions have been shown to be false, speculation about the future flourishes.

[dbarberic]

Re: Boom in the Doom

A 25+ page E-book sold on Amazon for under $10?

I can't tell if your sarcastic or not.

I'm thinking bigger. More like a general contractor that sells retrofits at a fixed price levels where a team comes in and does everything at one.

May work in the future if the federal government starts offering tax incentives to perform energy efficent home improvements.

[Slimprofits]

Re: Boom in the Doom

In an article in the March 08 Atlantic Monthly, The Next Slum, Christopher Leinberger describes a major structural change in the housing market, a reversal of the decades-old flight to the suburbs. His article is based in large part on the analysis of Arthur Nelson, who forecasts a surplus of 22 million large-lot homes by 2025.

thanks for the tip!

The Next Slum?

This future is not likely to wear well on suburban housing. Many of the inner-city neighborhoods that began their decline in the 1960s consisted of sturdily built, turn-of-the-century row houses, tough enough to withstand being broken up into apartments, and requiring relatively little upkeep. By comparison, modern suburban houses, even high-end McMansions, are cheaply built. Hollow doors and wallboard are less durable than solid-oak doors and lath-and-plaster walls. The plywood floors that lurk under wood veneers or carpeting tend to break up and warp as the glue that holds the wood together dries out; asphalt-shingle roofs typically need replacing after 10 years. Many recently built houses take what structural integrity they have from drywall—their thin wooden frames are too flimsy to hold the houses up.

As the residents of inner-city neighborhoods did before them, suburban homeowners will surely try to prevent the division of neighborhood houses into rental units, which would herald the arrival of the poor. And many will likely succeed, for a time. But eventually, the owners of these fringe houses will have to sell to someone, and they’re not likely to find many buyers; offers from would-be landlords will start to look better, and neighborhood restrictions will relax. Stopping a fundamental market shift by legislation or regulation is generally impossible.

Of course, not all suburbs will suffer this fate. Those that are affluent and relatively close to central cities—especially those along rail lines—are likely to remain in high demand. Some, especially those that offer a thriving, walkable urban core, may find that even the large-lot, residential-only neighborhoods around that core increase in value. Single-family homes next to the downtowns of Redmond, Washington; Evanston, Illinois; and Birmingham, Michigan, for example, are likely to hold their values just fine.

On the other hand, many inner suburbs that are on the wrong side of town, and poorly served by public transport, are already suffering what looks like inexorable decline. Low-income people, displaced from gentrifying inner cities, have moved in, and longtime residents, seeking more space and nicer neighborhoods, have moved out.
But much of the future decline is likely to occur on the fringes, in towns far away from the central city, not served by rail transit, and lacking any real core. In other words, some of the worst problems are likely to be seen in some of the country’s more recently developed areas—and not only those inhabited by subprime-mortgage borrowers. Many of these areas will become magnets for poverty, crime, and social dysfunction.

[GRG55]

Re: Boom in the Doom

I can't tell if your sarcastic or not.

I'm thinking bigger. More like a general contractor that sells retrofits at a fixed price levels where a team comes in and does everything at one.

May work in the future if the federal government starts offering tax incentives to perform energy efficent home improvements.

There is a very good chance that the trend you've identified is real. Depends in part on the location. The places where new build tends to beat renovations are in locations where the city is not "downtown" oriented in terms of the offices and jobs (if people can easily work in the suburbs, they'll buy new in the suburbs; but if the jobs are downtown then some will pay/renovate to reduce the ever increasing commute).

The relative cost and availability of land is another factor. If you compare Seattle or Vancouver, BC with Phoenix or Vegas, the availability of land (because of geography) is much more constrained, so there wasn't the same sort of mass tract house building by the giant national builders. These might be locations where renovating and upgrading older existing homes is a growth industry.

The neighbourhood I grew up in was new in the 1950's, and is now considered close in to downtown Vancouver. The lots are huge compared to today, and its starting to attract the attention of buyers who are doing major renovations/rebuilds. By major, I mean gutting them and replacing everything to current standards - windows, insulation, plumbing, electrical...

[cobben]

Re: Boom in the Doom

Some odd thoughts . . .

Comparing current situation to "The Great Depression", many things are turned around, or converse, such as now the US is a debtor, then a creditor . . .

Then there was a glut in oil, depressing prices, as the oil industry was new and expanding at breakneck speed going into the crash, when a lot of oil companies went bust and got taken over by their competiton or by predatory bankers.

A good read is the Frank Phillips biography "Oil Man", Phillips also by the way, besides being an extreme risk taker / wildcatter by nature, also owned the main bank in Tulsa, having learned fron his banker father-in-law how to grind the bank ax.

Phillips pushed through construction of an innovative gasoline pipeline, which many said would not work, during the worst period of the depression, with the uneasy bankers hanging around his neck like albatrosses, keeping folks employed during those hard times as well as could be arranged.

Another unrelated thought, Gene Inger has suggested that the current situation might more resemble the 1880's railway bond debacle, about which I know nothing as of yet.

[FRED]

Re: Boom in the Doom

Some odd thoughts . . .

Comparing current situation to "The Great Depression", many things are turned around, or converse, such as now the US is a debtor, then a creditor . . .

Then there was a glut in oil, depressing prices, as the oil industry was new and expanding at breakneck speed going into the crash, when a lot of oil companies went bust and got taken over by their competiton or by predatory bankers.

A good read is the Frank Phillips biography "Oil Man", Phillips also by the way, besides being an extreme risk taker / wildcatter by nature, also owned the main bank in Tulsa, having learned fron his banker father-in-law how to grind the bank ax.

Phillips pushed through construction of an innovative gasoline pipeline, which many said would not work, during the worst period of the depression, with the uneasy bankers hanging around his neck like albatrosses, keeping folks employed during those hard times as well as could be arranged.

Another unrelated thought, Gene Inger has suggested that the current situation might more resemble the 1880's railway bond debacle, about which I know nothing as of yet.

You're on the right track. In the context of iTulip Ka-Poom Theory going back to 1999. looks like the US gets a Japan style grinding debt deflation workout but inflationary vs deflationary due to US net debtor status vs Japan net creditor status.

We do enjoyed sparring with the Deflationistas, though. They are very entertaining.

If deflation is a threat anywhere on the planet, wouldn't someone be talking about it? Here's a googletrends analysis of instances of the words "deflation" and "inflation" in news stories worldwide since 2003.