Friday, July 18, 2008

Why there aren't a lot of foreclosures around me. My perception

Seems like there's not very many "working first time home buyers" in Bellingham. Working people are more likely to be renters.

As for the homeowners, a large percentage may not even owe mortgages. Sometimes they payed for their house by just getting out the checkbook and writing a check. $400,000. Just write a check. They sold their house someplace else. In some cases, they inherited the money.

Yes, there's a disconnect between working people and the housing market. It's especially visible here.

Housing market seems like an escalator without the beginning rungs. If you got on it a long time ago when the lower rungs were there, you rode up with inflation. Now it seems like the lower rungs are out of reach for most working people.

Seems like there aren't many first time working home buyers in this area. Those are the ones likely to be on the precarious edge of foreclosure.

In some other areas of USA, the percentage of working home buyers seems higher.

Bellingham is often said to offer nothing much in the way of "career jobs." Nothing much outside of educational institutions who can't employ all their own graduates.

Local people are often students or retired.

Working people tend to be in the low wage service economy and don't try to buy, unless they've already been on that escalator for quite a while.

Ironically, this might mean less of a foreclosure problem.

Living can be fun anyway as money isn't everything.

Watch skate borders roll down Holly Street.

Then again, there can be foreclosure from people borrowing on their home equity. Trying to live off the vast amount of money they thought they had from selling a house. They're trying to start a business, or something. After that money runs out and the business doesn't really get off the ground, watch out. Trouble.

Are there more entrepreneurial business dreams in Bellingham than there are paying customers?

Should the vast supply of local massage therapists just give each other massages and not worry about money?

Yes, there is a disconnect between home values and wages. It's particularly evident here.

Now, thinking about the bigger picture, say the federal government decides to do big bailouts of various banks and bailout home buyers on the precarious edge.

I would guess, mass inflation would result.

Maybe it's better to just let home values fall till workers can afford to enter the housing market. Sure, a lot of folks are being shaken out of the market, but home prices have been too high. Many of these people just "got in" on too much optimism and deceptive lending practices from banks.

To do the bailout, government would have to borrow like mad. Borrow even more than it's borrowing now and it's like mad now.

Does that mean Federal Reserve just prints up the money?

Where does all that money come from? It seems that the government never has problems finding money to borrow.

Often I'm left scratching my head when I ponder the economy. Maybe the printing presses at the Federal Reserve just roll.

That means lots of dollars in circulation.


I assume eventually wages go up with inflation.

Imagine; bottom of the wage range being $35 per hour.

It's just the rest of the economy catching up with astronomical home values.

A candy bar for $10?

Then working people who are first time home buyers could afford houses again.

Either houses have to drop in value, or wages have to go way up for this large segment of our population to afford buying.

The home value escalator gets it's bottom rungs again? Economy back in balance? If the economy is ever in balance.

It's just money. It's just numbers.

Eventually we'll just retire the penny. Retire the nickle too. Make dimes the bottom rung. They're smallest in actual size anyway.

Just put another zero left of the decimal point and every thing's cool.

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