Let's spin it, ITN. http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2005/07/17/MNG5GDPEK31.DTL The wars in Iraq and Afghanistan have already cost taxpayers $314 billion, and the Congressional Budget Office projects additional expenses of perhaps $450 billion over the next 10 years.
No let's not, but clean up the title of this post will you? The economy is doing fine;* and the War on Terror was not of this president's choosing... the War on Terror came upon us like a thief in the night and we responded... perhaps you can say we are paying for years of inattention to terror and geting by pretty cheaply if you ask me! * Unemployment: 5% (June 2005) Consumer Price Index (Apr/05) of 0.5. http://www.bls.gov/eag/eag.us.htm Housing Starts (private/public construction) are between 3-5% above predictions for this time last year http://www.census.gov/const/www/newresconstindex.html Tech Stocks are booming; a case in point, Apple (AAPL) is recently listed as showing a 400% increase... I can't cite that as an indicator of a bad economy...(http://finance.yahoo.com/q/bc?s=AAPL&t=5d&c=) The Stock Market is currently at 10,610.83; down today but a robust market as assessed by most traders. Indeed, many economists are citing the spring/summer of 2005 as the beginning of a rally and the end of the recession we have been in...
According to the Congressional Budget Office, as reported by the NYT, the economy, as measured by tax revenue, has improved at a rate of 15% greater than anticipated. The Times favorably compared what is going on right now with gains in stock market values and business taxes, to the tech boom that fueled the big runup of the '90s. IOW, this is a very favorable development. Interesting point here is that the market is now much more diverse than just the tech stuff that fueled the previous boom. Hence it is reasonable to suggest that a major bust such at the one in '99/2000, is less likely to follow. Summarily, the economy, as reported by NYT, is not in casualty status at present. http://www.nytimes.com/2005/07/13/b...l=1&adxnnlx=1121708835-SV+gAIv/+8opmSs1Cl9qZg
Then why can't anyone buy a &$#@(* house? The average single family home in NoVA is $600,000! http://washingtondc.craigslist.org/rfs/index200.html
MattR...MattR....MattR.... you don't start out with a 4 bedroom mansion in Falls Church city; there are bunches of NOVA two-bedroom apartments or condos (even fixer upper homes) in the $150,000- $200,000 range...but if you're headed for Arlington Heights then you're right... you're gonna pay half a million or more! After you have equity in such a two-bedroom apartment/condo, you can trade up to a $300,000 midrange... But beyond all this reality, high real estate prices indicate a growing economy, which adds veritas to my earlier point, and thank you for making it!
The economy is hanging on. It could have seen a bit more growth in the same time period if some things were different, but if wishes were fishes. All things considered it could easily be worse off.
Er no, they indicate low interest rates to a large extent. The San Francisco area has actually lost jobs since the dot com implosion, but it hasn't stopped house prices going through the roof.
That's got more to do with gays than the economy... The Bay area is also loosing population; one of the few areas to do so!
Interest rates are over-rated in the consideration of which house a person will buy. Lenders put together all kinds of deals to fit the monthly budget. Whether the rate is 5.5% or 6.2%, the monthly payment is not affected in a major way. The big deal is how much equity you have in your current home and your earning level. If you can hit that 70% loan/value ratio, you can have a mansion. If not, go for the 80% deal and drop back a bit. That's all.
As earnings have in no way shape or form kept pace with house prices, I don't see how income can explain house price increases. Additionally, how much equity you have in your current home is a result, rather than a cause: something has to set the process of increased prices in motion. And that 'something' is a combination of low interest rates and increasingly 'risky' loan products such as interest-only ARMS.
Wow that's not good. But have you felt it personally? I have not. I know Germany wishes there economy was as good as ours even with this. So let's thank the gods any way it can't hurt.
Because people are willing to pay even above the asking price to get a nice home. If they could not afford the price you don't buy.
These statistics have nothing to do with the welfare of ordinary people. Economy is not good to them, ask around. The simple way to test whether the economy is good or not is to ask yourself this question: "Am I better off since Bush moved in to the WH?" I bet the majority would say - No.
And much of the personal income tax increase has to do with quarterly filings from real estate agents and related professionals. Two quirks that hide problems with the tax base in the US. The deficit will reignite soon.
Actually it was the result of a deduction that would go away if they didn't use it. So they used it and it resulted in production, then profit and added tax revenues. Sounds remarkably like the function of cutting taxes to encourage businesses to spend that money on actions that would stimulate more revenue for all, doesn't it.
Equity allows you to re-invest, and move up the scale if you choose. Prices are a result of desirability and perceived value. The interest rate is a secondary consideration at the present levels. Now if interest went up to 10%, we would certainly see a decline in values but the fed will NOT let that happen. They have seen how destructive that can be back in the late '70s and will take action to stop that long before it happens again. The "interest game" is much more sophisticated now. Just for the record; the #1 determinant for families in selection of a house is...the quality of the local schools.
But yet these high-earners are exactly who some suggest should bear an even greater burden of the taxes.
Indeed, but equity happens as a result of prices increasing, not as an initial cause. Something else has to trigger an upward rise in prices to create the equity that then feeds the market. Not really. For most houses the major determinant is the amount people can borrow. Unusually low short term interest rates after the stock market bubble burst has been the catalyst for this as has, more recently, laxer underwriting standards and the introduction of 'riskier' products such as interest-only ARMs. On this, I agree.
ITN, Look: HP to slash 14,500 jobs http://money.cnn.com/2005/07/19/technology/hp_restructuring/index.htm?cnn=yes Spin it!
You are wrong. Dead wrong. Here is the reason. Every economist I have ever heard or read has the same opinion: the more narrow the tax base, the more risk to long-term stability. That was at the heart of the original comment from the NYT article. Hence, as the country begins to follow that pattern, the risk of instability increases. As the tax burden becomes greater, those higher earning people, who are the business owners, will pass on the tax increase in the form of price increases to the consumer. Once that is no longer possible due to competitive market pressure, they will move their business, along with its jobs, and their tax base to other markets leaving the taxing unit without ANY taxes, much less the increase they projected. For an example of this one needs only look at the example of California in the past 10 years where 3 businesses left the state for every 2 that came in. The #1 stated reason was the high tax rates and permit fees charged to businesses. This was documented in a fall 2003 New York Times survey that ranked California 50th in the nation, dead last, in terms of its attractiveness to business. People who assert that the answer is in higher taxes to the upper earners make that claim on the assumption that nothing can or will change if those increases are imposed. They couldn't be more wrong. Higher earners are the most mobile population group and therefore the most likely to bring about a change in the basic assumption behind the increase.
No fundamental disagreement here and what that "something" is, really doesn't matter. But the only reason people will max out their leveraging power is if they perceive value in so doing. These newer lending devices have been around since the '80s. I had an ARM in 1984.
Are you saying that it makes no difference if home prices are being driven by people's incomes rising and feeling more stable in their position and in life so they feel comfortable buying a home they will live in or if they're being driven by investors who buy properties speculating that prices will continue to rise?