Once again the media struggles
to put lipstick on a pig
By JEREMY W. PETERS Published: May 25, 2006 [from today's NY Times]
New-home sales rose last month, but failed to keep up the robust growth pace of March. The home sales numbers, along with a second government report yesterday that showed a steep decline in orders for durable goods, were seen as pointing to a softening economy.
[insert graphs here...they didn't paste!]
But the numbers did little to reassure investors hoping that the economic data would encourage the Federal Reserve not to raise interest rates when it meets next month.
Homes are still selling all right but the prices are dropping like a rock.
The Commerce Department reported yesterday that sales of new homes were up 4.9 percent in April, while orders for durable goods -- relatively costly items that are expected to last at least three years, including aircraft and home appliances -- fell 4.8 percent.
Since the Fed increased its benchmark short-term interest rate earlier this month to 5 percent, investors have been scrutinizing every economic indicator to determine what it might do at its next meeting in late June. With consumer prices on the rise and fears of inflation growing, many investors worry the Fed may raise rates for the 17th consecutive time in two years.
In as much as the home equity market is tapped out, meaning those who could afford the stiffer payment have already milked their cash cow for all it's worth, to those who still have plenty of equity but can't afford to tap it thanks to dismal wages, inflation has no where else to go.
The need to expand the economy (in order to keep up the mushrooming interest payments on the trillions of dollars of debt) must come from diluted dollars, which ultimately result in rising prices.
Durable goods orders plunged in January but were up for the next two months.
Despite all the ups and downs in recent months, Wall Street analysts were still surprised by the numbers released yesterday.
"These are two of the most volatile series that we have," said Dean Maki, chief United States economist at Barclays Capital. "And they displayed volatility in the most recent data."
While much of the drop in the durable goods figure can be attributed to fewer orders for aircraft last month, the home sales numbers are more of a reason for concern. The new housing data appear to confirm what many economists have already said: as real estate speculators bow out of a peaking market and mortgage rates rise, the torrid pace of home sales is cooling. Compared with last April, sales of new homes fell 5.7 percent.
Soaring home prices have jacked up how much the average citizen gets whacked in property taxes. Speculators in the Real Estate market don't feel this pain given the profits they make flipping properties...that and when the smoke clears they use their ill-gotten gains to by a ranch in the sticks...
Then there is the `disturbing' notion that orders for durable goods are down due to a drop off in aircraft sales? Both commercial and military aircraft are expensive but rationally speaking how much of our remaining manufacturing sector is driven by this industry that a drop in sales would be considered `worrisome?'
Having been involved in this industry for years I KNOW that a huge percentage of aircraft parts are no longer made in this country. The orders may be going to US companies but the parts are not made here...the end product may get assembled here very few parts are made here.
Sales of new homes in April were at a seasonally adjusted annual rate of 1.2 million compared with the annual rate for March of 1.1 million homes. The largest gains last month were in the Northeast and the South, which both had increases of about 8 percent.
With mortgage rates climbing, many economists believe home sales will decline this month.
"We did get this quirky increase in April," said Mr. Jones of Citigroup. "But what we will see probably is a nice, gradual, orderly decline in activity."
`Nothing to get excited about here', says Mr. Jones, everything is under control.
Is it really now? Let's take a closer look at where this is heading...
Families Add 3rd Generation to Households
By MIREYA NAVARRO Published: May 25, 2006
Tess Crescini keeps trying to limit her roommates to her fiancé and her dog, but so far she has failed miserably.
At the moment, Ms. Crescini, 51, and her fiancé are sharing her four-bedroom house in San Jose, Calif., with two of her three adult sons, a daughter-in-law, a 3-year-old granddaughter and a brother who comes and goes.
Exorbitant housing costs, layoffs and children who yearn for family togetherness have coalesced to make her the head of a multigenerational household.
In a society where the most common type of household is led by those who live alone and where the scattered family is almost a cultural institution, many grandparents, adult children and grandchildren are gathering to live under the same roof.
Okay, everyone join in as we whistle that old time favorite, `Listen to the bullshit fly!'
In a society where we are all encouraged, nay, chastised to `stand on our own two feet'...WTF?
The last census showed these "multigenerational households" -- defined as those of three or more generations -- is growing faster than any other type of housing arrangement. [!!!]
The number of multigenerational households is still relatively small: 4.2 million, or 4 percent of all types. But they grew by 38 percent from 1990 to 2000, and professionals in real estate and the building industry say the trend has accelerated since then.
As evidenced by the nation's 2.5 million (+) homeless, some of us would rather live under a bridge abutment than move `home'...in disgrace, because we couldn't `hack it' on our own.
Moving home is, for many of us, the court of last resort...which is not to say that when push comes to shove, moving in with relatives is often our only alternative to joining the homeless.
Those of us who are old enough to have parents that lived through the `Great' Depression (soon to be the good old days) have heard how whole families of siblings pooled their meager incomes just to keep one roof over their collective heads.
As soon as the situation got `better', they all moved out on their own again, post haste!
Yet this piece goes on to paint a picture of `family harmony' as the prime mover behind what most of us consider a `worst case' scenario.
Architects, developers and others in the industry are responding with home designs and planned communities that offer features suited for the different generations. At builder trade shows this year, model homes with names like Reality House have for the first time specifically catered to multigenerational living. Bedroom suites are designed with private entrances and porches, halls are wider to accommodate wheelchairs, and light switches are lower so they can be reached both by those in the wheelchairs and by children.
There are also bigger kitchens for social networking, as well as extra storage space for belongings that now range from toys to grandma's china.
"You see a lot more people dedicating a portion of their homes to loved ones," said Carlos Elenes of EBTA Architects in Irvine, Calif., who specializes in high-end homes and has worked on projects for adult children housing their parents and for grandparents sharing their home with children and grandchildren.
But fancy, multimillion-dollar homes are not the norm when generations choose to live together. Census officials say multigenerational families are most common in states like California, where the high cost of housing forces families to double up, and in states where high rates of out-of-wedlock childbearing lead to home sharing by the mother, her children and her parents.
Here's the hard truth, why all the happy talk?
Sixty-two percent of multigenerational households are led by the first generation -- that is, the grandparents.
At a time when she would otherwise have been downsizing, Ann Bristow, 66, bought a two-bedroom condo in downtown Seattle in 2004 so she could share it with her 36-year-old daughter and 20-month-old granddaughter.
Ms. Bristow, who is divorced, said she had been retiring from her job as a university librarian in Indiana just as her youngest daughter became a single mother. They moved to Seattle, where Ms. Bristow's other daughter lives with her own family. Ending up together in one apartment, the multigen grandmother said, "was just a very natural move for me."
Ms. Bristow takes care of the baby part of the week while her daughter works as a teacher. "I love small children," she said. "I absolutely enjoy taking care of her. It's not a sacrifice."
Minimal rent and a built in babysitter may be pluses for the unheard side of this monologue but the trade-off here is she's living under her mother's roof and by extension, her mother's rules.
That would be a return to the custom of the 19th century, before the decline of farming and the exodus of adult children from their parents' homes to follow jobs, said Steven Ruggles, a historian who studies changes in the American family and directs the Minnesota Population Center, a research organization at the University of Minnesota.
Many social scientists, Dr. Ruggles said, also argue that Social Security contributed to the erosion of the multigenerational household, by enabling the elderly to afford living independently. He said the percentage of people over 65 living with their children dropped steadily from 1850 to 1990, when it began inching up.
19th century? Could this be extended further back to say, the Dark Ages? Multi-generational homes were the `norm' for serfs too!
Will the tanking economy cost us our independence?
Absence makes the heart grow fonder...while familiarity breeds contempt.
Thanks for letting me hold up this crystal ball...
Gegner