Home ownership today versus depression
Common Sense Forecaster has a post that outlines the number of homes that have more owing on the mortgage then the homes are worth.
About 68 percent of U.S. adults own their own homes, and about two-thirds of them have mortgages.
So, .68*.67*.18 gives 8% of all households in the owing more then their their home is worth, and it looks like that will increase to about 10% if prices decline another 5%.
When I consider Vancouver's economy through my adult life the economy simply seemed stagnant. Certainly there were people in certain industries doing well, but low end wages were squeezed lower. Retail sales growth was anemic. There just didn't seem to be profits circulating in the economy.
More so then most I followed the declining standard of living. When I was a young woman single people managed to buy a place, certainly not a house, but they could manage a 2 or 3 bedroom townhouse or an apartment. I remember 10-15 years ago discussing making ends meet with a single woman who had worked the same office job all her life. She said she always had to manage her money, but had always been able, but lately it seemed tighter and tigher.
The trend for declining lifestyle for most people was already in full force in Vancouver and I am sure that that trend started in the 80s.
As I thought through what I saw happening around me it seemed that the declining disposible income was squeezing economic growth.
It is absolute BS that minimum wage laws are a problem and economists regularly promote that position. Rather, there have been times when minimum wage has been set too high. But right now minimum wage is way to low and the economy is choking on the lack of disposible income and it is a downward spiral that is simply getting worse.
And further, the BS that minimum wage is too high and business can't afford it, yet look at the price the commerical space commands. I am sure that relative to wages the cost for renting business premises has skyrocketed, yet these same economists do not go on about that and there simply isn't any justification for those prices. They have simply been enabled by squeezing workers.
If you paid workers decent wages there wouldn't be that excessive amount available for the retail rent, and hence, bubbles would be smaller.
That over priced business space creates highly inequitable wealth for the person who owns the business space and at the same time it suffocates itself by squeezing disposible income.
In Vancouver the degree of the economic squeeze on disposible income has crossed any reasonable line that can be drawn. University educated people struggle to make ends meet and low income workers stand in food bank line ups in order to have food on the table. A year ago on my drive north I was saddened to listen to a single parent with a full time job talk about how important it was to her that people put things like tampons in the bin to the food bank because they were completely unaffordable to her.
Anyone who reads my posts knows I've been highly bearish. I think what I have seen in Vancouver is spreading.
Without turning around the wage squeeze I don't see how this gets better and with rising unemployment, well, it is an employer's market and there is little worker power to increase wages and the cycle of declining disposible income and economic squeeze continues.
It seems to be a big thing that today has in common with just prior to the great depression was the vastly increasing inequity in distribution of wealth.
Of course, there are other big things that seem to be in common.