Idiotic Analysts

With their report on the decline in previously occupied housing sales, WashingtonPost.com

has today established they need to hire competent reporters.

OK … the opening line is cool: “WASHINGTON -- Sales of previously occupied homes plunged last month to the lowest level in 15 years, despite the lowest mortgage rates in decades and bargain prices in many areas.”

But the promotional line contained in the e-mail notification:  “Sales of previously occupied homes unexpectedly plunged 27 percent in July from a month earlier to 3.83 million…”  now this is reveals the stupidity of the writer and editor.

You don’t see it?  Read it again … and consider that one word: “unexpectedly”!  Really?  Has there staff no concept of Baby Boom?  Are they completely ignorant of demographics?  The whole article makes good points about intelligent economic decision making – but to read it, you realize that the writer was completely out of that loop.

Quick Lesson:

1. Baby Boomers are turning 65.

2. People retire at 65 (they have option to retire at 62 and the economy is giving perks to early retirees – who get shifted to other areas of corporate & governmental balance sheets and budgets – where the governmental often allows for full retirement after 55).

3. If you retire, you don’t need to live near work – so you sell your existing home (but it isn’t selling in this market).  On the other hand, record low mortgages, tax incentives and poor investment performance,  make it economically wise – given that you will retire in a few months or, at most, within two years -- to buy that retirement home now.

4. Buy now?  Use your reduced nest-egg?  Hum?  On the face, for some (the young reporter under 50, for example), this might not make sense.  But for those who know money, you invest in a house that will grow in value (because it is a retirement location – low energy needs, low maintenance, and low mortgage).  The home you have isn’t going to sell today – but you don’t need the money:  a) you have your nest-egg to cover you; b) you’re working and can cover the debt; c) the economy, & your investments, will improve in a year or so – and your existing home will probably sell by then.  d) even if you need to drop your asking price later, there is no reason to drop it now.  If your investments do well, they will offset a later reduction in asking price.  If they do poorly – well – the nation will be going down the crapper with no possibility of retire and you take what you can get … in any case, you will have the option of staying or moving … and if moving, you had time to get the new place in order without having the work done “over your head” with you living in the dirt and mess.

Right now we are seeing the start of the economic gambles – the ones that will “last a lifetime.”

Housing is NOT a viable economic indicator!

The housing market is distorted by the retirement needs of the Baby Boom generation.  Housing prices will begin to plummet for real within the next ten years – while land prices in various regions will climb.  People are going to be building new homes – not claiming older ones.

You’ll see the first signs when you realize just how many older homes are being knocked down and the lots turned into yards for the neighboring houses.  It will not pay to carry the taxes on the old place – and there will be nobody to buy it.  This will be exacerbated by a strong Republican showing on the issue of immigration – without immigrants seeking a better life, there will be nobody to purchase your old life.

But HEY!  Who gives a shit!  Those of us who are already retired are only interested in whether or not our kids want our place when we die.   And even there –- unless they are having kids of their own –- unless our place is as energy efficient as possible –- unless we are situated in a location where the property taxes are low – the house will be abandoned, because nobody wants to, or needs to, buy or occupy it.

If you want to use abandoned, or soon to be abandoned, house sales as a measure of economic growth … ok … but that is, in reality, traditional Republican economic idiocy.