Sadly........the next British Prime Minster

[Mega]

[Mega]

Re: Sadly........the next British Prime Minster

Up shot of this is:-
Mega will be TAXED to MARS
Mega will have his fast car taken off him
Mega will be forced to pay for HUGH numbers of 3rd World types invading his nation
Mega will see his currance (thus savings) crushed
Mega will be forced to pay for sh1t heads to live by him who will repay his kindness by breaking into his house.

I could go on, but you get the point...........they only good news is:-

The Tory will ensure Britex is a done deal before they go
The price of Gold will ROCKET Baby
The price of House will crash
Buy-2-Let landlords will DIE
Cheap credit will DIE
Diesels will DIE

[GRG55]

Re: Sadly........the next British Prime Minster

Reports here suggest the Prime Minister is having difficulty coming to an arrangement to form a government.
Maybe the Conservatives don't last long enough to see Brexit through?

[Mega]

Re: Sadly........the next British Prime Minster

Hi G
If i was JEZZA i want the Tory ship to stay afloat for just a bit longer............say 6-12 months.
Tory want to go NOW (hence why they threw the election)

[Mega]

Re: Sadly........the next British Prime Minster

From 1996...........he is NO friend of Euro-scum

[GRG55]

Re: Sadly........the next British Prime Minster

Looks like the Prime Minister cut a deal after all!

[Mega]

Re: Sadly........the next British Prime Minster

He going to be brought in to do a number jobs:-

1. End British IBCM project:- Anything but British, because of the work by Prof Chris Busby we know the Warheads came from Hanford, so i don't think we be able to fire them by ourselves anyway.

2. Wreck the econemy:- the insane house prices have to go!

[dcarrigg]

Re: Sadly........the next British Prime Minster

2. Wreck the econemy:- the insane house prices have to go!

It's both sides of the pond. I went back and looked at the history of my tiny, little house in town built in 1890 (60m^2) with a tiny little spot of garden (20m^2). Adjusted for inflation, it goes something like this. That tiny little dip in 2010 you see is the 'end of the housing bubble.' Sure...sure it is. PS: We have gained 20% of our 2000 population in retirees and lost about 10% of our 1990 population in under 18s and 5% in 19-35s.

So we're 5% population up in nearly a generation. But it's all blue hairs. We had 7, 24hr businesses back in 2010. We're down to 2 today. A pharmacy for the blue hairs and a gas station just in case they need some dinosaur juice to get to their pills. Coffee shops, grocery stores, the whole bit close around when the sun goes down now. Even the new bar down the road shuts down at 10pm. And they can't get rid of commercial spaces fast enough as nightlife dies. Because if there aren't a few kids out drinking and playing pool, they also aren't buying pizza or kabobs. Can rent a 100m^2 commercial space for $350/mo easy now. If you put a shower in it and call it residential, and it would go for $1,500/mo instantly if the town re-zoned. Commercial rent is so cheap compared to residential that weird cat lady hoarder junk stores and new-age Jesus cults and magic hippies that will heal your pets with crystals have started moving into the storefronts. But this is something abnormal for New England, at least in my memory.

These people, of course, are living in the commercial spaces and showering at the Y. I'm certain of it. The business is a front for cheap rent now that the cheapest place in town is $1,000 per month for a 0 bed, and that requires you to earn median income to be affordable. The bottom half has to go somewhere...and so they find a way. Meanwhile, the town just fired a dozen or more teachers out of the blue. Not enough kids to teach. And now they want to bulldoze a school they just built in 2007. They just built 4 new developments. Biggest is a massive pile of luxury condos. They can't sell them. You need to earn top 2% money for those things to be affordable. So now they are desperately trying to rent them. But they won't drop the price below about $1,600 per bedroom and they are mostly 2 to 3 bedroom units, so nobody who can afford that wants to do it, since they could have a nicer house at that price with no HOA nannies or fees. The other 3 developments are 55+ year old communities where children are not allowed. The only affordable housing in the town that's not Section 8 is in these 55+ communities. I've heard more than one young couple sigh and wish they were allowed to move into those places and buy a small house on a small plot of land for an affordable price. But they ban them, because they may have kids, and kids means teachers, and teachers means property taxes...

The thing they forget is the other half of that coin...kids also means daycares, and teachers also means taxpayers, and kids also means clothing and diapers and groceries and ice cream and hardware and lumber and all the other stuff that keeps the local commercial sector going. Grandma and Grandpa just go to the drug store and the grocery store and go home. Recently our downtown lumber store that had been in business since before the civil war went under. No competition moved in. It's just nobody's building onto their homes. The only construction of any kind is at doctors offices and drug stores. The average age is going up up up. I can see the hard crash coming. It won't be long now with youth priced out of the housing market and not having kids that you'll end up with a dead town and a boarded up downtown full of blue hairs scared to leave their homes and the few doctors who earn enough to afford to live in town to take care of them.

There's plenty of towns out in the sticks where this same process already occurred. Hell, a huge chunk of the Atlantic coast between Portland to Moncton (not inclusive) is pretty much over that hump. Only very old people live there for the most part. Downtown is totally boarded up. Construction has not been updated in 30+ years. Fishing restrictions and new lumber monopolies kill those jobs. Kids flee or die of heroin overdoses. And the real estate prices that were unaffordable along the coast for a while? Now that there are no jobs, real estate is dirt cheap. You can buy a 100 acre abandoned college campus for half the average price of a London flat. The entire central block downtown with 12 apartments and 6 storefronts goes for about the price of a BMW 5-series. A decent, clean, workable middle class home with nothing major broken goes for maybe the price of a new Toyota Camry with a few options in spots. For $20,000 more you can find oceanfront or lakefront.

But it's always location, and they are 4 hours from the Hub up there. We're only an hour or so. Which means it's commutable. Which means maybe it's not gonna die the same way. But it sure feels like it's dying the same way. The old T-shirt shops and restaurants and bowling alleys are shutting down for junk shps and new age churches and hippie communes. The plywood boards are next. Stupid thing is, if they'd just build some non-luxury, non-55+ housing down here, kids would snap it up and we'd be back on track instead of heading for a demographic wall. But for some reason neither the town nor developers like making that kind of housing any more. They haven't built any since the 1990s. Only luxury and specialty and dorm rooms.

[wayiwalk]

Re: Sadly........the next British Prime Minster

Nice thoughtful reply, dc. I always find it so disturbing when I see the boarded up towns, that sort of change always seems to carry such fearful foreshadowing.

My eye is on how Illinois gets itself out of its mess. I also wonder how NJ will fare going forward (my state). We're only a hop and a skip behind them.

[thriftyandboringinohio]

Re: Sadly........the next British Prime Minster

Fascinating DC.
You have described a decline caused by aging population and rising prices.
I have seem a decline that looks exactly the same, but from different causes.

My family originates in western Minnesota, over near Fargo/Moorhead.
All those little prairie towns went through a similar pattern of decline. The whole large center part of the nation, really.
A wave of immigrants settled the small towns there about 150 years ago. They were given land to farm, and they farmed it.
Little towns sprung up and thrived.
After WWII, when agriculture mechanized there was little other real work in the rural parts of Minnesota , or Nebraska, or Illinois. The young adults moved to the big cities to find work and a better quality of life.
The small towns dwindled and died, with just a few elderly resident or the odd family with some source of income.

That death spiral always had the same last 3 final stages of decline.
- First the last local grocery store closes for lack of local business.
- Next the local independent school system is shut down. With too few children, they join the regional consolidated school system and have a long bus ride to the next town over.
- Last, the local post office closes.

It struck me how you described the same outcome when people are priced out of housing, rather than being starved of wages.
.
.
.

[dcarrigg]

Re: Sadly........the next British Prime Minster

I think the most important thing in the end is disposable income. It's funny, right, because when people invest in corporations they don't just look at P/E. They look at EV/EBITDA and all sorts of other metrics. But they rarely apply similar logic to households. And I think the cash-flow issue is always a big one. So the questions are:

1. What is total compensation doing? (going up, down, or sideways adjusted for inflation).
2. What is the salary component of total compensation doing? (even if TC is going up, if healthcare costs are eating the increase and then some, nobody will feel it).
3. What are the standard expenses doing? (housing, transportation, food, clothing, utilities, etc adjusted for inflation).
4. What percentage of salary are standard expenses? (do they exceed salaries at the median? if so, something is very wrong).
5. How much disposable income do people have? (pocket money. can they buy toys without credit? have bread and roses? save some to get ahead?)
6. What is happening with disposable income over time? (do people have more or less of it? this will affect consumer debt, savings rates, consumption, etc)
7. How fast are any of these metrics changing over time? (the speed at which the delta occurs correlates better with price swings than the delta itself).

In the case of my little town:

1. It is roughly flat. Not even across sectors. But overall, flat.
2. Same story as the rest of the US. Even if it's flat, healthcare premiums eat up more and more of that paycheck each and every year. God forbid you have to pay a deductible...
3. Housing is the big squeeze here. You know we have pushing 30% vacant property now according to the Census? It was down under 10% in 2000. But the vacant property isn't just poor neighborhoods and business strips boarded up. Most of it is waterfront luxury condos or homes snatched up by investors. Nobody lives in these things. Nobody even rents them out. They are empty for more than 10 months per year for the US to deem them 'vacant.' Luckily the commodity crash took some pressure off utilities and transport.
4. This is where the number keeps going up and gets obviously unsustainable. Rents and housing prices continue to increase--in some areas much faster than others--despite what wages are doing at the median.
5. This is the big change from 20 years ago. The pocket money is gone.
6. So this generally is an historically low figure.
7. And the rate of change in the above control prices for obvious reasons.

Think of it this way--if the only new jobs hiring in people from out of town are fancy software and finance exec jobs, then those are going to be the only buyers in the real estate market, and they'll bid each other up to the moon. Meanwhile, assessors will use the sales figures to determine the market rate of your home. But if they are only building luxury units starting at half-a-mill, and there are no new moderate income homes built in the past generation, and people aren't moving out of the existing ones, well, the market's going to look red hot, even though it's totally dysfunctional and not accommodating anyone of childbearing age earning under $100k/year. But the second there's a capital hiccup, and some of that VC dries up, and you people start losing their $200k/year jobs as data scientists at DogMakeupSurprise - the app for your pretty pooch -- then the buyers dry up pretty quickly.

Back in 2012, a couple towns up there was a little old cape cod house. Nothing too fancy about it. But it was built pretty well. And it had the tiniest sliver of waterfront. No beach or room for docks or anything. Just enough you could set up a small table for two and have drinks and catch a breeze and look down at the water lapping at a bit of a cliff wall. Well, it was going for about $200k, and I thought about snatching it up. Bigger than what we're in now. And I figured when prices came back up, maybe in 10 or 20 years, that that little bit of waterfront would be worth bank. But in the end, I didn't pull the trigger.

Boy was I wrong and stupid. Whoever did buy it back then just sold it for $389 a couple of months ago. Probably would have gotten over 4 by now. Double your money by sitting on your hands for 5 years and paying property taxes for rent. Pretty damned nice. Oh well. We've all let a few swim away.

Anyways, the real question is, does anybody with any sense of arithmetic really believe that the graph below can keep on going how it's going forever? For a while you can make apartments and bedrooms smaller. You can double and triple people up. You can use new-ish tools like AirBnB to facilitate making sure that a guest room is hardly ever empty. Efficient, if stressful as hell, use of space and maximizing the value of it. But renting out a room or a couch 24/7/365 is becoming standard in SF, Bos, and NYC these days. No other way to afford living there.