So today we learned that consumer confidence is not that bad, but these readings were taken before record gas prices, rising oil prices, yet more war breaking out in the Middle East, and a slowing housing market. I’d like to examine the housing market in more detail today.
Although Mr. Bernanke tells us that “The downturn in the housing market so far appears to be orderly,” it is worth noting that he admits the housing market is having a downturn. The Washington Post outlines the numbers for us: sales slowest since January; weakest price increases in 11 years; condo sales “tumbled”; a decline in sales of 8.9 compared to June of last year; 6.8 months supply of homes on the market, when most realtors sign 90 day agreements. It isn’t a disaster, but it isn’t good either.
This morning, as I was listening to the duelling pundits on CNBC, somebody offered the semi-helpful advice that you shouldn’t “worry” about a declining real estate market unless you are in an “overheated” area of the country — and he wasn’t talking about the weather.
That got me thinking about this item from over the weekend about how high housing prices are squeezing the middle class who can’t afford luxury homes, yet make too much for subsidized housing. But look at some of the cities mentioned. They are the obvious suspects: New York, Los Angeles, San Francisco, Chicago, Boston, San Diego. Places where the local economy is OK and conditions in the city are improving. But unfortunately places where enough people want to live that home prices are rising faster than the wages that would pay for such a home. Although that particular article does not mention the Seattle area, today’s local news informs me that even in suburban areas a county over basic 2 bedroom homes (with no view and a small lot) are half a million dollars.
All these housing markets are in “Blue” states.
Remember this story about people getting out of overheated housing markets? Most of those overheated markets are in liberal areas. The Atlanta Journal Constitution tells us the housing market in the South is holding up well, but then they mention that “Atlanta’s price increases have been far less dramatic” than in other areas of the country. The South was pretty Republican last election. The Real Estate Journal helpfully tells us that Some Housing Markets Are Grossly Overheated
It’s one thing to look at a and it’s another thing to look at a map. And now, compare that map of hot housing markets to this map of 2004 electoral votes.
When you look at those maps together, it becomes even more clear that with the exception of Florida, most of the overheated housing markets — where everybody wants to live and work regardless of cost — are in areas that vote with a progressive agenda. It is reasonable to suspect that voting on local and state issues is more or less in line with voting on Federal issues.
Why is that?
Could it be that progressive policies result in desirable living conditions? Do progressive policies result in relatively stronger local economies?
Alternatively, could it be that states with very conservative policies end up having less desirable living/economic conditions?
Just asking.
In closing: Barry Manilow may be harmful to your budget; a food columnist at the L. A. Times describes KFC’s “Famous Bowls” (because they contain pretty much everything KFC is “famous” for, get it) as “It’s like throwing up in reverse”; “This Isn’t World War III”; normal everyday people might end up on international terror watchlists simply because it’s been a slow month as a result of air marshal incident quotas; survey shows Americans beleive a lot of things that are untrue about Iraq (see sources such as this item on reconstruction and this item on Americans ordered to kill all military aged men and boys — way to win hearts and minds, create desperately poor widows in a society where women can’t work, and commit war crimes all at once — and this item on how the WMD being found are all from the 1980s); The New York Times reports that most states aren’t meeting NCLB requirements; and finally 95 Theses for the technological age.
the correlation between housing values and progressive political leanings needs fleshing out. but Ill throw one out there too: could the correlation between progressive political leanings and exploding housing prices show also as a correlation between higher wages and the ability to afford the taxation that progressive policies seem to invariably require?…
i love the dallas fed officer’s comment about the middle class being able to just accrue jobs in order to pay rent/mortgage; as if it is an enjoyable life fulfilling prospect.