# Recession?



## Dleg (Mar 27, 2008)

I haven't lived in the mainland US since 1995. So maybe I'm a bit out of touch. But, I do get plenty of news out here. And lately, it seems like everyone is talking about a recession, and perhaps the worst one in a generation (as said on NPR two days ago). I've also read opinion pieces from economists that sound extremely negative, as if the US is on a permanent decline, with China-Russia-India poised to become the new world economic powers.

I'm just wondering what the feeling about our (US) economic condition is with all of you living back there. I'm wondering if I might be better off in the long term just staying out here, closer to the potential economic future. Or, if moving back to the states will be a better idea, as it has appeared to be for a long time until now. Do you guys think housing prices will fall significantly, for example? (so I can afford to live there!)


----------



## FLBuff PE (Mar 27, 2008)

Dleg said:


> I haven't lived in the mainland US since 1995. So maybe I'm a bit out of touch. But, I do get plenty of news out here. And lately, it seems like everyone is talking about a recession, and perhaps the worst one in a generation (as said on NPR two days ago). I've also read opinion pieces from economists that sound extremely negative, as if the US is on a permanent decline, with China-Russia-India poised to become the new world economic powers.
> I'm just wondering what the feeling about our (US) economic condition is with all of you living back there. I'm wondering if I might be better off in the long term just staying out here, closer to the potential economic future. Or, if moving back to the states will be a better idea, as it has appeared to be for a long time until now. Do you guys think housing prices will fall significantly, for example? (so I can afford to live there!)


Housing prices have been dropping like a rock! Not so much by me in the mountains of CO, but I know Denver has seen a huge drop.


----------



## FusionWhite (Mar 27, 2008)

I think this recession is probably overblown. Yes we'll take a hit, people will lose their houses/stock portfolios/jobs but in 6 months to a year we'll be fine and the stock market will be skyrocketing again and everything will be back to normal.

BUT.... I think the massive debt the US government is collecting combined with a failing social security system and massive expenditures in Medicare are really really really scary. I think in our lifetime we will see a Great Depression style collapse in our economy because of the massive debt we're building up. Democrats think helping the poor and increasing taxes will help, Republicans think giving the taxes back to the rich will help. I think they're both idiots and are all driving us into the poor house to keep themselves elected.


----------



## Dleg (Mar 27, 2008)

On the bigger picture, though, don't you guys worry about the fact that the US is no longer manufacturing much in the way of goods? It seems the whole balance of things has shifted to Asia. What will be the source of wealth in the US in the near and distant future, if all the consumer goods we buy are coming from overseas?


----------



## FusionWhite (Mar 27, 2008)

I dont see the lack of manufacturing as a big problem. The US economy is shifting and developing in ways the world has never seen and I think the offshoring of manufacturing is a sign of this.

On this note though what I do find scary is the potential for the US to lose its scientific advantage. Losing manufacturing doesnt hurt as long as we're cranking out innovative products and discoveries, if we lose that then Ill be worried.


----------



## Guest (Mar 27, 2008)

Dleg,

As far as house prices, they have been falling in the larger, more expensive cities. When I was in Miami a few months ago, there were entire neighborhoods that had been foreclosed and many people looking to get out of there looking for greener pastures. I have heard that housing prices were generally more stable in, of all places, college towns. I would say that is consistent based on what I am seeing locally - not too much drop off in the price of real estate except for the higher-end market.

FWIW - I always wondered how the median price of a house in a particular market could be priced well above what the median salary of a family in that market could afford. If anything, the housing market is just re-adjusting to what people can afford. I don't know what it means long-term because I don't know how salaries are going to fare long-term, but I feel confident in saying that run the housing market has had COULD NOT have been sustained for very long.

I agree with FW in large part - while our economy is taking it on the chin for a lot of different reasons, it will slowly begin to stabilize again. You may have read about the debacle with the Bear Stearns investment bankers losing &gt;50% of thier worth in stock within minutes and eventually getting bought out by a competitor. For them, they got hit from over-speculating on the sub-prime mortgage market. While this sounds like a doom-and-gloom scenario when a behemouth company like Bear Stearns goes belly up - thier competitors are actually posting record gains. Wall Street THRIVES on people who can adequately manage risk because if you aren't taking a risk, you aren't getting ahead. And while there are signs of trouble, there is still a viable, lucrative market of making money.

I also agree with FW about the debt our country is amassing. At some point the system is going to become so tilted towards debt (or at least debt + recurring expenses) that it will be impossible to fix. Much like FW - I am not happy with how either major political party has handled it, but then again, I don't have a crystal ball to make recommendations to fix it. Our aging workforce that is moving towards retirement is also going to strain reserves for health insurance, company cash flow, and money going INTO our economy.

Back to your point though, the biggest signs I see of a recession or maybe closer to your point the 'affordability' of living, I would say housing, food, gas, and salary/pay are good indicators. While I agree that the price of houses have gone up significantly, I would actually note that the food has probably gone up even more in a relative sense. My wife and I were having huge fights over the price of groceries and I am only now coming to realize that groceries really ARE that expensive now. Gas prices factor in simply because I think there is a *HUGE* potential for those costs to really eat away at the quality of life for the average person. While + $1/gallon gas can realistically be absorbed, I also believe that people who already have it tough are going to have it that much tougher.

Which really brings me to the point that I wanted to make but unfortunately I am just long-winded. For many, I think we *FEEL* a recession because we are having to budget our money. Americans, in general, are very spoiled and being put into a situation of having to put our disposable income into the recurring expenses column on a permanent basis is not very satisfying. I know I have been less than pleased with my personal recession, so I can only begin to imagine what it is like for others.

One other thought:

I think a person can still do well in this country/economy if they are willing to be flexible with thier selection of vocation/profession AND with relocating. It seems that many businesses are having to change with the times and if your employer (industry) is making changes then you had better be prepared to make changes too if you plan on staying at the top. That flexibility also extends to a willingness to change employers to stay on top of your game.

:2cents:

JR


----------



## Dleg (Mar 27, 2008)

Here's an opinion piece from last week that got me a little worried. Now, keep in mind it was printed in our local Saipan newspaper, but it is by a guy who runs a consulting business from the states, that serves businesses doing business in Asia, not just our little backwaters. (He also writes a column for a pilots magazine). I think he knows what he is talking about:

link



> By Ed Stephens Jr.Special to the Saipan Tribune
> 
> For many years, I have warned Saipan Tribune readers that the U.S. dollar, and the pile of toxic debt it is built on, will all collapse in an ugly heap.
> 
> ...


----------



## C-Dog (Mar 28, 2008)

It is all because of our huge government debt, which funds the unjust occupation of another nation, all because of oil. Thanks GWB, you have out done Herbert Hoover as being the worst president ever!


----------



## Capt Worley PE (Mar 28, 2008)

Well a recession is two quarters of negative growth, and we haven't had one quarter yet (although last quarters growth at 0.4% wasn't stellar), so we may, at the most, be on the outset of one.

I don't think we are though, and here's why: the housing market has needed a corection for some time. The markets that have been overvalued are getting slammed, whiule others have remained fairly steady. Most journalists live in big cities, and those are the markets that have suffered the most. So journalist report what they see.

FW is dead on with the oncoming entitlement disaster. Quite frankly, I'd give up all the money I allready have in Social Security if they'd just let me invest my 15% contribution for the rest of my life. I damn sure could do better than what the gov does.


----------



## benbo (Mar 28, 2008)

C-Dog said:


> It is all because of our huge government debt, which funds the unjust occupation of another nation, all because of oil. Thanks GWB, you have out done Herbert Hoover as being the worst president ever!


I won't debate the merits of the war, because although I have strong opinions on a lot of things, the War is one thing I am probably right in the middle on, and readily admit I probably don't have the expertise to evaluate it. However, I will point out that, as the military is fully voluntary, your statement implies that all soldiers, sailors, airmen and marines are either -

1. Willfully complicit in an illegal occupation for oil

or

2. Mindless dupes of an evil government.

I am certain that neither of those things are true. So, you might want to save the fierce rhetoric for the Daily Kos, rather than an engineering message board.


----------



## benbo (Mar 28, 2008)

On topic, they say a recession is when your neighbor loses their job, a depression is when you lose your job. We may be heading into a recession, or even a depression for all I know, but as for now, everybody I know has a job. When I interviewed the other day, all the candidates who came in already had jobs and were looking for better ones. The unemployment rate is somewhere around 5% - whereas I think it was around 15 or 20% in the depression.

Granted, most of my friends have lost maybe 10% of the 100% gains they made in real estate, and my stocks haven't gone anywhere in a year, but as for right now I don't see it.

But if you are unemployed, then you are already in a depression, so I feel for you.

Inflation, especially gas prices, is another thing,


----------



## Road Guy (Mar 28, 2008)

peoples personal debt skyrocketing is a bigger problem than our governments debt, and then when they buy a house $100,000 more than they can afford they expect some type of bailout?

I watched this trend in Atlanta, people would buy a house for $250K, sell it a year later and move into a $350K house, do the same thing, buy a $450K house in hopes of selling it before you realize you cant afford the payment, except reality finally caught up with the market and people stopped buying houses, especially ones that cost $400K.

Technically a recession is 2 or more quarters of negative growth, have we had that? I dont know, things are not as well as they wer 2 years ago. But I still see full lines at the home depot, lots of new cars being bought, Target is always slammed on the weekends, etc, of course most are probably adding to their Visa bill.

Maybe Obama's or Hillary's social health care plan will help pull the economy out of the red


----------



## Capt Worley PE (Mar 28, 2008)

benbo, would you believe 34% unemployment at the height of the depression?

Honestly, I think the recession in 2000 (dot com bubble) was worse than the economy today and the 80-81 recession blows 2000 away. It was really bad then with some loans going at 17%. Shoot, when I bought my first new car in 89, the best interest rate I could get out of my credit union was 11%!

People just need to live within their means and put some money aside for a rainy day. I'm shocked by how many people are planning to use their tax rebate to buy big screen TVs.


----------



## MA_PE (Mar 28, 2008)

Dleg said:


> On the bigger picture, though, don't you guys worry about the fact that the US is no longer manufacturing much in the way of goods? It seems the whole balance of things has shifted to Asia. What will be the source of wealth in the US in the near and distant future, if all the consumer goods we buy are coming from overseas?


Dleg:

Personally, I see this as a big problem, because we don't have a self-sustaining economy. Americans want to make money in the manufacturing business and the basic labor force demands a wage providing a comfortable living here. This forces the end cost of the product to be hgigher than those same workers are willing to pay, given the less expensive overseas manufactured alternatives.

A lot of US wealth is from the "business" or finance side, and is making some individuals very wealthy while Joe Hard Hat goes down the tubes.

They always say it's an easier ride to the top than it is to stay there. We're trying to maintain a standard of living while a lot of the world is rising up to ours. Whenever something "levels" anything above the level tends to come down.


----------



## MA_PE (Mar 28, 2008)

> People just need to live within their means and put some money aside for a rainy day. I'm shocked by how many people are planning to use their tax rebate to buy big screen TVs.


That's what the governement wants you to do to throw more money into the economy and keep the sales force (jobs) alive.


----------



## ODB_PE (Mar 28, 2008)

I blame it all on personal spending habits, too. I don't know how people do it. I know I don't make as much as I like but when it comes down to it I am well paid and it is hard to make ends meet. Around here the median house is just under $300K and the math tells you that most people can't afford to live there AND pay for the two new SUVs out front, but that's all you see. It is quite puzzling to me.


----------



## Capt Worley PE (Mar 28, 2008)

Regarding the 2 SUVs in front of the 300K home: A buddy of mine said that 41% of all car loans are for 7 years.


----------



## snickerd3 (Mar 28, 2008)

Captain Worley PE said:


> Regarding the 2 SUVs in front of the 300K home: A buddy of mine said that 41% of all car loans are for 7 years.



OUCH


----------



## udpolo15 (Mar 28, 2008)

Captain Worley PE said:


> Regarding the 2 SUVs in front of the 300K home: A buddy of mine said that 41% of all car loans are for 7 years.


i am addicted to the housing flippinh shows and they recently had a hairdresser from something that looked like supercuts driving a lexus SC who was flipping a house.

those shows really illustrate the problem with housing. people would come in and make shitty improvements and walk away with a $60K profit after 4 weeks.


----------



## Katiebug (Mar 28, 2008)

Captain Worley PE said:


> Well a recession is two quarters of negative growth, and we haven't had one quarter yet (although last quarters growth at 0.4% wasn't stellar), so we may, at the most, be on the outset of one.
> I don't think we are though, and here's why: the housing market has needed a corection for some time. The markets that have been overvalued are getting slammed, whiule others have remained fairly steady. Most journalists live in big cities, and those are the markets that have suffered the most. So journalist report what they see.
> 
> FW is dead on with the oncoming entitlement disaster. Quite frankly, I'd give up all the money I allready have in Social Security if they'd just let me invest my 15% contribution for the rest of my life. I damn sure could do better than what the gov does.


Agreed on all points.



Road Guy said:


> peoples personal debt skyrocketing is a bigger problem than our governments debt, and then when they buy a house $100,000 more than they can afford they expect some type of bailout?


Huge pet peeve of mine. We bought a starter house that's not fancy or in a rich suburb - because we couldn't afford our dream home in our mid-20s. We got a house that we could comfortably afford. We have _so_ many friends and relatives our age who are in debt up to their eyeballs. People with comparable income to us spent $100-150K+ more on a mortgage, often for a smaller/older house than ours (all to live in a more affluent area). I have no idea how they afford it.

Student loan debt is a huge problem. Mr. Bug worked his way through college part-time (he's on his last class now) and I used a combination of scholarships and a small federal student loan to finance my undergrad. I chose to work for a company with good educational benefits, and they paid for grad school. We are the exception among people we know, though. I have a coworker who's 28 and still lives at home with his parents, because he has $120K in student loans to pay off (he very stupidly just bought a $30K SUV because he was "bored" with his old car). Mr. Bug's sister just HAD to go to a very expensive grad school, and a few years later is upset that she can't be a stay-at-home mom, solely because of her pile of student loan debt.

We have two paid-for cars...almost everyone we know has at least one car loan, usually two. And these people aren't buying a 2 or 3 year old used car, they buy new and loaded with options. Financed for 6 or 7 years, too, and when they get tired with the car after a few years they trade in and just go more upside-down on the next loan! I don't mind one small-ish car loan at a time, but two would just suck.

We're weird in that we save up to pay in cash for home improvements, vacations, and luxury items. Everyone else uses home equity lines or credit cards (surfing the balance for lower interest rates) to pay for what they want. It's like it's a novel concept to only buy what you can afford.

Almost no one has significant savings. Mr. Bug and I are working on saving up enough to cover all expenses for 4-6 months and again, it's like we're weird. These are educated young couples and families with six-figure incomes, yet they still live paycheck to paycheck. Growing up, my parents were laid off or downsized often enough that I know to NEVER trust in job stability or security.

I'm worried about the economy. Mr. Bug and I _desperately_ want to start our family, but daycare's expensive. Private school's expensive. Food's expensive. College savings is expensive. Kids in general are expensive. We do plan to try for a baby in the next year or so, but we've held off longer than we originally wanted to - primarily due to financial worries. We want a nice fat emergency fund in the bank and to be at a good level of savings before taking on the financial pressures of children.


----------



## kevo_55 (Mar 28, 2008)

Katiebug said:


> Agreed on all points. Huge pet peeve of mine. We bought a starter house that's not fancy or in a rich suburb - because we couldn't afford our dream home in our mid-20s. We got a house that we could comfortably afford. We have _so_ many friends and relatives our age who are in debt up to their eyeballs. People with comparable income to us spent $100-150K+ more on a mortgage, often for a smaller/older house than ours (all to live in a more affluent area). I have no idea how they afford it.
> 
> Student loan debt is a huge problem. Mr. Bug worked his way through college part-time (he's on his last class now) and I used a combination of scholarships and a small federal student loan to finance my undergrad. I chose to work for a company with good educational benefits, and they paid for grad school. We are the exception among people we know, though. I have a coworker who's 28 and still lives at home with his parents, because he has $120K in student loans to pay off (he very stupidly just bought a $30K SUV because he was "bored" with his old car). Mr. Bug's sister just HAD to go to a very expensive grad school, and a few years later is upset that she can't be a stay-at-home mom, solely because of her pile of student loan debt.
> 
> ...


I'm somewhat in the same boat as you are. We've got maybe 6-7 months of cash for a "rainy day fund" but everyone I know thinks that Mrs kevo and I are crazy for doing this. The only debt we have are my school loans and our home loan.

Mrs kevo is going to grad school right now but she's paying for it herself with cash. The only way we can do this is if she would work during the day and take night classes. So, we're doing that.

The only crazy thing I see with the economy is housing. It takes a lot longer to sell a house in my area. A typical starter home costs $160,000 around here. As for work, my company is super busy and we are looking to hire 1 or 2 more engineers. Business doesn't seem to want to slow down. :screwloose:


----------



## snickerd3 (Mar 28, 2008)

Katiebug said:


> I'm worried about the economy. Mr. Bug and I _desperately_ want to start our family, but daycare's expensive. Private school's expensive. Food's expensive. College savings is expensive. Kids in general are expensive. We do plan to try for a baby in the next year or so, but we've held off longer than we originally wanted to - primarily due to financial worries. We want a nice fat emergency fund in the bank and to be at a good level of savings before taking on the financial pressures of children.


Same here. We want a nest egg and the debt (mortgage and student loan) to a point we can handle it only on the hubbys paycheck so I can be a stay at home mom for 6 to 12 monthes. It took the detailed explaination of this to family to stop the when are you having kids...everyone else has started (there were like 5 weddings in the family all within a years time, we are the only couple sans baby right now)


----------



## Road Guy (Mar 28, 2008)

^- reminds me of the idiocracy movie, everyone who shouldnt be having kids having more than they can afford, and the ones who can afford them are waiting for the best time.

But for most of us "midde class" folks, there really isnt a special formula to have to save enough to have kids, those little buggers eat up a lot of income thats for sure, not as bad as you may think though....


----------



## ktulu (Mar 28, 2008)

I guess it's time I go dig up the mason jars.


----------



## mudpuppy (Mar 28, 2008)

As Error_matrix can attest, things here in MI are not good. The state has been in decline for the past several years. Since June 2001, we've lost 260,000 jobs; approximately 4.4% of the total job pool. Unemployement is currently 7.2%. My mom got laid off 4 years ago and has not been able to get another job since. She is now taking classes trying to get a job in a totally different field (medical).

We did catch the housing boom a little bit, but prices are on the way back down. Housing prices in most areas are well below the national median and falling. One of my co-workers' property tax assessment fell 17% this year. Mine only went down 6%, but I'm in a low-price area where no one will buy. My neighbor has had his house for sale for 2 full years now.

Most of the job losses have been industrial-- primarily automotive--and construction (housing bust) but there have been some other high-profile losses like Pfizer shutting down a research facility with something like 2000 jobs.


----------



## EM_PS (Mar 28, 2008)

Yes, Michigan's makin' me cry -

4 yrs ago i was gainfully employed as a design tech - based on my job dissatisfaction and desire to move to higher levels, my wife &amp; i figured we'd take the brief window of opportunity afforded at that particular time in life for me to return to school to get the necess. ABET degree to be able to become licensed. Now, I can't find a job even below what i was earning 4 yrs ago, and i got a 30k loan to pay off! Many, many land development firms have sucessfully migrated to offices out-of-state (whereever the work is). Ex bosses &amp; my network would love to hire me back or in, if their budget would just allow, yada-yada. For the first time ever in my home-owning adult life, our state equalized value (SEV) on our house actually went down!! That never happens!!! Seriously!

Yes virginia, there may be no recession in your neck of the woods, but here in the Great Lakes state, its as bad as the early 80's (Reagan-nomics)


----------



## benbo (Mar 29, 2008)

error_matrix said:


> Yes, Michigan's makin' me cry -4 yrs ago i was gainfully employed as a design tech - based on my job dissatisfaction and desire to move to higher levels, my wife &amp; i figured we'd take the brief window of opportunity afforded at that particular time in life for me to return to school to get the necess. ABET degree to be able to become licensed. Now, I can't find a job even below what i was earning 4 yrs ago, and i got a 30k loan to pay off! Many, many land development firms have sucessfully migrated to offices out-of-state (whereever the work is). Ex bosses &amp; my network would love to hire me back or in, if their budget would just allow, yada-yada. For the first time ever in my home-owning adult life, our state equalized value (SEV) on our house actually went down!! That never happens!!! Seriously!
> 
> Yes virginia, there may be no recession in your neck of the woods, but here in the Great Lakes state, its as bad as the early 80's (Reagan-nomics)


Have you considered moving? I don't think every place in the country is as bad as Michigan. It sure doesn't seem that bad in California. At least not yet.


----------



## EM_PS (Mar 29, 2008)

^^Would that i was, maybe 15 yrs younger. We have a budding family (an almost 2 &amp; 3+ yr old), a 16 yr old on the verge of finishing high school, in addition to all our family being here, and my wife having a very proficient career (computer related). So my gripin' is all from my frustrated point of view - of taking the steps to improve my career track, only to have none of it pan out the way i envisioned (such is life). it'll pay off eventally, its a long-term investment - if only ill advised to have undertaken, given the state of the State.

It would have to take a whale of an opportunity for us to pick up &amp; head for 'greener' pastures. Its not impossible, just improbable presently.


----------



## Road Guy (Mar 30, 2008)

Dleg said:


> I haven't lived in the mainland US since 1995. So maybe I'm a bit out of touch. But, I do get plenty of news out here. And lately, it seems like everyone is talking about a recession, and perhaps the worst one in a generation (as said on NPR two days ago). I've also read opinion pieces from economists that sound extremely negative, as if the US is on a permanent decline, with China-Russia-India poised to become the new world economic powers.
> I'm just wondering what the feeling about our (US) economic condition is with all of you living back there. I'm wondering if I might be better off in the long term just staying out here, closer to the potential economic future. Or, if moving back to the states will be a better idea, as it has appeared to be for a long time until now. Do you guys think housing prices will fall significantly, for example? (so I can afford to live there!)



but I guess to your question, there is always going to be affordable housing here, just depends if you mind living with rednecks or not?

It hasnt really hit the South East , other than residential market, that bad, but Atlanta isnt a "blue colar" city, theres not much manufacturing here, mainly "office" type jobs. I wonder if all the illegals who were here working in the residential market have left to go to the high paying jobs in Mexico? &lt;-- When that happens we'll be in a recession...

But if you will recall the last time the news was this frantic about the economy was the last election, and then the one before, then the one before that, etc, etc,


----------



## Dleg (Mar 30, 2008)

^^Well, maybe it's that our local economy is in near-depression here ( all my neighbors have lost their jobs and moved away to the states - we're the only ones left), but from out here, on the doorstep of Asia, things aren't looking very good at all. Especially when you look back 10 years or so.


----------



## C-Dog (Mar 31, 2008)

Road Guy said:


> But if you will recall the last time the news was this frantic about the economy was the last election, and then the one before, then the one before that, etc, etc,


Hmmm, I sense a pattern....


----------



## squishles10 (Mar 31, 2008)

benbo said:


> Have you considered moving? I don't think every place in the country is as bad as Michigan. It sure doesn't seem that bad in California. At least not yet.


Having been paid off in California a year ago, I think California is doing terribly. My first company was around 150 when I left 2 years ago, and is now nearing 50. The last of my friends there got laid off last week, and every single person that had left to go work for developers has been laid off over a year. (That, of course, is the price you pay- huge salary, no job security.) The last round of layoffs was 13, and the 6 I have heard about are all leaving the state.

My now fiance (YAY!) even had a hard time finding a job as a pediatrician, which hasn't happened in decades, if at all. I made him move to me (Dallas) because I didn't think I could get a job somewhere else. Texas is starting to get hit too- TxDOT is on a hiring freeze, and a lot of places around here aren't actively looking, but it's not NEARLY as bad as California, Michigan, and Florida (am I missing somewhere?).

I found it easy to find a job once I was willing to leave CA. I don't think it would still be quite as easy this year as it was last year (two offers in one day, both during phone interviews :true: ). I sent my resume out to probably 30 places in California, had 4 interviews, none of which ended up resulting in anything.

I won't even get started on people being able to pay their mortgage and zero-down, interest-only loans...


----------



## benbo (Mar 31, 2008)

squishles10 said:


> Having been paid off in California a year ago, I think California is doing terribly. My first company was around 150 when I left 2 years ago, and is now nearing 50. The last of my friends there got laid off last week, and every single person that had left to go work for developers has been laid off over a year. (That, of course, is the price you pay- huge salary, no job security.) The last round of layoffs was 13, and the 6 I have heard about are all leaving the state.
> My now fiance (YAY!) even had a hard time finding a job as a pediatrician, which hasn't happened in decades, if at all. I made him move to me (Dallas) because I didn't think I could get a job somewhere else. Texas is starting to get hit too- TxDOT is on a hiring freeze, and a lot of places around here aren't actively looking, but it's not NEARLY as bad as California, Michigan, and Florida (am I missing somewhere?).
> 
> I found it easy to find a job once I was willing to leave CA. I don't think it would still be quite as easy this year as it was last year (two offers in one day, both during phone interviews :true: ). I sent my resume out to probably 30 places in California, had 4 interviews, none of which ended up resulting in anything.
> ...


Sorry that was your experience, but that isn't my experience. Everybody I know is employed, although they are mainly electrical engineers. I admit I don't know much about civil engineer employment. Maybe the civil people just got hurt worse because the real estate and development boom is now over. In the place where I work (state government) we are still hiring because the engineers are mainly exempt from the current hiring freeze. I just sat on employment panels where we interviewed a total of 10 people, all of whom had jobs but were looking for better jobs. Granted, we don't make a fortune, but we are around 100K.

I am really surprised a doctor couldn't find a job. Is that what you're saying? There are no jobs for doctors in California? Because frankly, that is really surprising.


----------



## squishles10 (Mar 31, 2008)

benbo said:


> I am really surprised a doctor couldn't find a job. Is that what you're saying? There are no jobs for doctors in California? Because frankly, that is really surprising.


No, I meant in Texas and the midwest specifically. I had already moved to Dallas so he wasn't looking there, so I'm not sure how it is out there for doctors. He didn't want to deal with the California medical system and refused to go there so the move the TX worked out anyway. I'm not sure about jobs in California, but in the rest of the country they were pretty hard to come by. I think he ended up only getting 3 interviews, which was about average for his class. Last year they were averaging over 10.


----------



## benbo (Mar 31, 2008)

squishles10 said:


> No, I meant in Texas and the midwest specifically. I had already moved to Dallas so he wasn't looking there, so I'm not sure how it is out there for doctors. He didn't want to deal with the California medical system and refused to go there so the move the TX worked out anyway. I'm not sure about jobs in California, but in the rest of the country they were pretty hard to come by. I think he ended up only getting 3 interviews, which was about average for his class. Last year they were averaging over 10.


Well, that is not a good sign. Luckily he did find something.

Maybe I'm just lucky. I hope it doesn't get too much worse then. because I sure don't want to have to look for a new job.


----------



## Katiebug (Mar 31, 2008)

benbo said:


> Sorry that was your experience, but that isn't my experience. Everybody I know is employed, although they are mainly electrical engineers. I admit I don't know much about civil engineer employment. Maybe the civil people just got hurt worse because the real estate and development boom is now over. In the place where I work (state government) we are still hiring because the engineers are mainly exempt from the current hiring freeze. I just sat on employment panels where we interviewed a total of 10 people, all of whom had jobs but were looking for better jobs. Granted, we don't make a fortune, but we are around 100K.
> I am really surprised a doctor couldn't find a job. Is that what you're saying? There are no jobs for doctors in California? Because frankly, that is really surprising.


I'm in mechanical, but my experience is similar. Everyone who I went to college with is gainfully employed or in academia. When I graduated in '03, I had committed to my employer 5 months before graduation. Everyone who graduated in May (as opposed to the following December - the 4.5 year plan) had a job at graduation day, most of us with multiple offers.

I've sat on many interview panels over the last 6 months to fill two positions in our group...without exception, our interviewees were employed in the field but looking for something new. We only had one guy who was clearly in dire straits (unfortunately for him he wasn't remotely qualified). We made two offers that were declined due to 1) the guy wanting more pay than we were offering, and 2) a guy who wasn't actually serious about wanting to change jobs.

My cousin is a civil, a PE, and she and her hubby are trying to head back to Michigan after a year in Illinois due to his job. She's having a heck of a time finding a job in the part of the state where they want to live. Granted, Michigan is all kinds of messed up right now in terms of employment/economy, but her old firm just doesn't have a job to give her. You couldn't pay me enough money to move to Michigan now - and my family is FROM there!

Mr. Bug has been working in electronics sales for about 2.5 years now and things aren't looking good in retail at all. Folks have less disposable income for those things and he's seen his hours cut by about 10% over the last quarter or so. Since he's paid hourly, he's bringing home a little less money than he used to. Unfortunately he's finishing up his degree (will be done in August) and is having a miserable time finding a better job in his field of study (marketing). Being brutally honest, he'll never land the type of work he really wants. Kind of sad that he's worked so hard for a decade to get through school, only to be job hunting during a tight job market. He also should have probably gone into the health care field or teaching, not into marketing/business. Oh, well.

Thank heavens I'm in a pretty stable industry. Thanks to the global nature of my company we haven't been hit as hard by the construction/real estate slowdown in the US (China's going nutso and that makes up for it). However, I realized about 6 months ago that my engineering skills have become VERY specialized. That specialization is part of what's spurring me on this goal to getting a PE - it provides me with a credential that's fairly "portable". Everything I do now is very specific to the elevator world...and while people will always NEED elevators, I'm not so foolish as to think my employer will necessarily be retaining large numbers of engineers in the US, not when they can operate engineering centers so cheaply in China.

Kind of depressing to think about starting a family in this economic climate...what kind of country/world will my children have to look forward to? I truly don't know if we'd fully bounce back after a recession, or if China and India will become the new economic superpowers.


----------



## Road Guy (Mar 31, 2008)

I still trust in capitalism to ride things out, its the natual balancing act, assuming we can keep the government out of it.


----------



## Guest (Mar 31, 2008)

Katiebug said:


> Kind of depressing to think about starting a family in this economic climate...what kind of country/world will my children have to look forward to?


That was one of my concerns about starting a family. I honestly don't know what kind of country/world they are going to inherit. If it is tough for me to be satisfied with my living, I can't imagine what it will be like for them. In actuality, it turns out that I never started a family because .. I never seemed to be able to slip one past the goalie. :true:

I hope Mr. Bug's propects look up. I can only imagine how frustrating it must be to be unemployed or even underemployed in a job market that you worked so hard to break into.



Road Guy said:


> I still trust in capitalism to ride things out, its the natual balancing act, assuming we can keep the government out of it.


It sounds like the Bush Administration wants to make the largest sweep in overhauling the financial system since the Great Depression - Paulson unveils sweeping financial reform plan

Convinced that government is going to stay out of it??

JR


----------



## Desert Engineer (Mar 31, 2008)

squishles10 said:


> Having been paid off in California a year ago, I think California is doing terribly. My first company was around 150 when I left 2 years ago, and is now nearing 50. The last of my friends there got laid off last week, and every single person that had left to go work for developers has been laid off over a year. (That, of course, is the price you pay- huge salary, no job security.) The last round of layoffs was 13, and the 6 I have heard about are all leaving the state.



Not that I don't believe you, but I haven't seen any of that. I'm like the boy in a bubble with my government job. I guess I've been out of the loop for a few years. I only deal with one consulting firm and they seem busy, but they only do public/government work.


----------



## Wolverine (Apr 1, 2008)

At risk of posting another long-ey: here's an article from John Lott, an author I admire. A great read to get a balanced perspective:

http://www.foxnews.com/story/0,2933,343671,00.html



> The 'Recession' Is a Media MythMonday , March 31, 2008
> 
> By John R. Lott, Jr.
> 
> ...


----------



## Capt Worley PE (Apr 1, 2008)

Bad news sells papers. Nature of the beast. I just hope nobody buys into ti.


----------



## Wolverine (Apr 1, 2008)

One more comment: We no longer have a manufacturing or agricultural based economy in the U.S.; we have a knowledge based economy. It's all about new ideas and efficiencies.

Not only that, but we're also now intricately intertwined with the global economy more than ever.

That being said, I'm not sure the purist definition of "recession" applies anymore, certainly not here. There are certain _segments _of the economy that are receding as swirls and eddies off the main flow (housing, manufacturing, the State of Michigan), but the overall economy paints a different, turbulent-but-positive picture.

(disclaimer: but if I really knew anything, I would be debating it over at EconomistBoards.com)


----------



## squishles10 (Apr 1, 2008)

Desert Water said:


> Not that I don't believe you, but I haven't seen any of that. I'm like the boy in a bubble with my government job. I guess I've been out of the loop for a few years. I only deal with one consulting firm and they seem busy, but they only do public/government work.


It's okay if you don't believe me  just kidding. It really changes so fast...

The only work we really had was in Palm Desert, so that's probably why you're not seeing it, if that's where you are. I was in San Diego and Orange County. The companies that thought ahead and diversified into public works are still doing okay, it's the stupid ones like the one I referred to above that only did housing that got in trouble.


----------



## C-Dog (Apr 2, 2008)

Oh dear, FACTORY ORDERS DROP 2x MORE THAN EXPECTED

and it keeps on hitting the fan... Head Fed Comments


----------



## NCcarguy (Apr 2, 2008)

I CAN say this. In Raleigh, I know of 3 companies that have had layoffs in the past month. One laid off about 15, another about 10, and the biggest was 30. That's a LOT of competition that I'm probably getting ready to fight with over a job, since I won't have a THING that's job cheargeable to work on in about 2-3 weeks! It's not feeling good to me!


----------



## benbo (Apr 4, 2008)

With the jobs report this morning it looks like maybe it is a bit worse than it seems to me personally (at least so far). Hopefully this will be a short recession, and the people looking for work can find it soon.


----------



## C-Dog (Apr 15, 2008)

In an interview w/ NPR this morning, Kevin Phillips, a former Republican advisor, and economist, stated that the 1900's was the century of the US, while the 2000's will be the century of Asia. He said the US is repeating the ways of England and others who went from an industrial economy to one of moving money. It will take 10 years to recover from the current state. The US needs to stop being the worlds policeman and start concentrating on matters at home.


----------



## ktulu (Apr 15, 2008)

Someone needs to come up with a DOT approved infant carrier that can be installed on the back of a bicycle.

B/c I won't be able to drive my truck with gas at $113 a barrel.


----------



## Road Guy (Apr 15, 2008)

we need to send 100 engineers in the desert and tell them they cannot come back until they completely figure out the car engine that runs on water thing


----------



## Guest (Apr 15, 2008)

^^^ I think we could manage that on THIS board!

I will start:

Step 1: Obtain a treadmill

:Locolaugh: :Locolaugh:

JR


----------



## kevo_55 (Apr 15, 2008)

C-Dog said:


> In an interview w/ NPR this morning, Kevin Phillips, a former Republican advisor, and economist, stated that the 1900's was the century of the US, while the 2000's will be the century of Asia. He said the US is repeating the ways of England and others who went from an industrial economy to one of moving money. It will take 10 years to recover from the current state. The US needs to stop being the worlds policeman and start concentrating on matters at home.


Isn't Europe doing better than us right now?

I do agree, the US should stop being the ultimate superpower and take care of it's own. Of course, I'm not saying that we toss our "stick." I'm just saying that we take it out when we need to give out a good ass kicking to some unlucky SOB.


----------



## C-Dog (Apr 15, 2008)

From Yahoo Finance



> Throughout history, when capitalism stumbles chaos erupts and sometimes despots take over. For example:
> • In 1897, the Russian ruble was pegged to gold and a period of relative economic growth followed. Russia went off the gold standard to finance World War I. The government fell to the Bolsheviks in 1917, and the Russian mafia took control of the economy.
> 
> • After World War I, the German middle class was wiped out and Adolf Hitler was voted into power in 1933.
> ...


We, as a nation, must learn from history...


----------



## wilheldp_PE (Apr 15, 2008)

Federal Reserve = Fiat Money = Evil


----------



## Capt Worley PE (Apr 15, 2008)

I thought Fiat money was what I spent on that old 850 Sport Coupe.


----------



## EM_PS (Apr 15, 2008)

My dad had a Fiat in the 70's - neat car (4-dr sedan), rusted out like crazy though -

For the love of money:

Money money money money, money

Some people got to have it

Some people really need it

Listen to me y'all, do things, do things, do bad things with it

You wanna do things, do things, do things, good things with it

Talk about cash money, money

Talk about cash money- dollar bills, yall

For the love of money

People will steal from their mother

For the love of money

People will rob their own brother

For the love of money

People can't even walk the street

Because they never know who in the world they're gonna beat

For that lean, mean, mean green

Almighty dollar, money

For the love of money

People will lie, Lord, they will cheat

For the love of money

People don't care who they hurt or beat

For the love of money

A woman will sell her precious body

For a small piece of paper it carries a lot of weight

Call it lean, mean, mean green

Almighty dollar

-- The O'jays


----------



## Road Guy (Apr 30, 2008)

kevo_55 said:


> Isn't Europe doing better than us right now?
> I do agree, the US should stop being the ultimate superpower and take care of it's own. Of course, I'm not saying that we toss our "stick." I'm just saying that we take it out when we need to give out a good ass kicking to some unlucky SOB.



I dont think so, most countries in Europe have double digit unemployment, inflation, and declining populations (of course the declining population part might be needed here)


----------



## Dleg (Apr 30, 2008)

Well, it's in the news today that we're not technically in a "recession" because the last two quarters still showed some, albeit very small, growth.

Yet?


----------



## Road Guy (Apr 30, 2008)

whatever were in I will be glad when its over thats for sure.

here is a question for an educated crowd...

Should you be able to buy a house with no money down? We have all seen the stories on foreclosures, but how many of them bought houses, some really expensive ones, and didnt put a dime down, or back loaded half the interest payments? What I am getting at is maybe a lot, ALOT of people bought houses before they were really financially ready to do so/

If you buy a house and dont put anything down your really still renting basically.

I dont advocate 20% or anything, but back in the day, banks wouldnt even talk to you if you didnt have something to put down


----------



## Dleg (Apr 30, 2008)

Of course you are correct, and of course a lot of dumb people (and not so dumb people) jumped into those deals, without much thought of the consequences.

The question is whether or not the banking industry should be held accountable by the government for all those dumb decisions by people. Or if the government should decide, for all fo us, that we can't take out a home loan, with no downpayment. From what I understand, all those foreclosures are going to hurt all of us, in one way or another. And let's not forget that the banking/lending industry has a long, long history (going back to biblical times - need we even mention WWJD) of problems that ultimately required government intervention because of widespread consequences.


----------



## FINK_RB_PE (Apr 30, 2008)

Road Guy said:


> whatever were in I will be glad when its over thats for sure.
> here is a question for an educated crowd...
> 
> Should you be able to buy a house with no money down? We have all seen the stories on foreclosures, but how many of them bought houses, some really expensive ones, and didnt put a dime down, or back loaded half the interest payments? What I am getting at is maybe a lot, ALOT of people bought houses before they were really financially ready to do so/
> ...


We bought our house with no money down and in three years it is half paid for. I am not trying to be a smart ass but we did not have 10% to put down but we had good earning potential. I think the big problem is that lenders would not check the information on the credit application and people who were making 30K a year were putting down 50K and gettig loans they could not handle. I also think it is a smack in the face to bail people out of these mortgages. If they get help all of us who were smart and researched what we could reasonably afford and proceeded cautiously into one of the biggest decisions of our life and when times got tough we were still able to make our payments should get the same assistance.

On a side note if any one here is interested in getting out of debt and really prospering check out Dave Ramsey, the guy is great. Straight forward and no BS. probably the best thing in the home buying process was listening to his advice on his radio show.

Just my 2 cents.


----------



## Road Guy (Apr 30, 2008)

I bet you had a high liquidty index (savings) or some other "potential" which made your story different from the other millions out there.

We have never put down more than 5% on the three houses we have bought, we changed over to a 15 year mortgage 3 years ago, and its wild to think that before my youngest (5) graduates from High School, we may be free from the mortgage man, although paying that extra money hurts sometimes.


----------



## Capt Worley PE (May 1, 2008)

I put 20% down on ours, mainly because I didn't want to pay mortgage insurance.


----------



## mudpuppy (May 1, 2008)

I put down 0% on my house. I only had to pay the closing costs (about $1800--approximately 2.2% of the purchase price).

I would for sure be against a government regulation banning 0%-down mortgages, because it has worked out fairly well for me. If I had waited long enough to have a good down payment, I probably would have ended up buying at the peak of the housing bubble.

Of course, I'm in a bit of a unique situation. Housing here is dirt cheap and I deliberately bought a house below my means. As evidenced by the "What is your house worth" thread, I think I have the cheapest house of anyone on EB (at least of those who voted in the poll), and the payment on my 15-year mortgage is $100/month less than I was paying in rent.

OTOH, I think the lenders who engaged in predatory practices should go to prison for a long time, and the people who purposely milked the system or didn't bother to find out the details of their mortgages should feel some pain too.

It's a difficult problem to find a satisfactory solution to, but I think banning 0% down is like punishing everyone for the misdeeds of a couple rouges.


----------



## Dleg (May 1, 2008)

^I thought I had the cheapest house on EB. Plus, I pay $0 in mortgage payments. I went paycheck to paycheck for three years to get to that, though.


----------



## mudpuppy (May 1, 2008)

I think we're the only two who responded &lt; $100k and it looks like we're neck-and-neck:



mudpuppy said:


> It's now worth about the same as I paid for it. ~$80000.






Dleg said:


> But, I'd guess it's worth $90 to $100k at most.


OTOH, I could sell mine if I had to, but it sounds like you might have trouble selling--so I'm happy to give you the honors (especially since yours is paid off)!

I don't want to steal the thunder from RG's question, but this makes me wonder: how do others here feel about paying your house off early? I have not made any extra payments because I feel I can make better use of my money by investing it rather than paying extra on a 5% mortgage. I'm sure I would feel differently if I had a $200k mortgage or a 7% rate, but I do have enough cash to pay the payment for several months if something cataclysmic happened.


----------



## Dleg (May 1, 2008)

^True. I could not sell mine now, even if I wanted to.

I've always heard that it is better to just make the payments, and leave yourself with additional money to "invest." But if you're not actually investing any additional money, I would think that paying off early would ultimately benefit you.


----------



## benbo (May 1, 2008)

I always thought the main problem was people getting these radical interest only ARMs that readjusted to huge interest rates. They were counting on the value going up, up, up, and kept pulling equity out and ultimately there was nobody at the bottom to buy, especially when people started defaulting.

My friend is a schoolteacher. She bought a small house in Long Beach for 200K a few years ago and then resold it two years ago for around 500K. But she immediately put what equity she had in a house for $850 K !!! THats around a 500K loan - interest only, ARM. How can a teacher making around 70K afford a payment like that?

The house is now worth around 700K. Fortunately she was able to refinance, but what a bonehead move.


----------



## Guest (May 1, 2008)

benbo said:


> The house is now worth around 700K. Fortunately she was able to refinance, but what a bonehead move.


It goes hand-in-hand with the sentiments of the Toles' cartoon from a few days ago:







JR


----------



## mudpuppy (May 1, 2008)

^^^^ grrrr.... don't even get me started on _that_ rant.

Ok, I can't resist. . . How does a government manage to go $3.5 trillion in the hole in less than 8 years? I just can't wrap my mind around that.


----------



## Dleg (May 1, 2008)

wars &amp; hurricanes?


----------



## mudpuppy (May 1, 2008)

I don't have any references to back up these claims, but the estimates I've heard for the federal aid for the hurricanes was in the tens of billions, and the highest estimate I've heard on the wars is ~$1 trillion. That still leaves $2.5 trillion unaccounted for.

Just floating a theory here, but my best guess is a part of it has to do with tax cuts without corresponding spending cuts.


----------



## Dleg (May 1, 2008)

^^That would be an obvious cause, yes.

Speaking of tax cuts, what do you engineers think of McCain's &amp; Hillary's proposal to abolish the gasoline tax? Isnt' that part of what funds the federal highway administration's projects? Weren't we just talking about the crumbling state of our infrastructure, and how much money would be needed to keep it up?


----------



## benbo (May 1, 2008)

mudpuppy said:


> I don't have any references to back up these claims, but the estimates I've heard for the federal aid for the hurricanes was in the tens of billions, and the highest estimate I've heard on the wars is ~$1 trillion. That still leaves $2.5 trillion unaccounted for.
> Just floating a theory here, but my best guess is a part of it has to do with tax cuts without corresponding spending cuts.


Take it for what it's worth, but this report says income tax revenues have been rising from 2003-2006. primarily due to corporate taxes.

http://www.cbo.gov/ftpdocs/81xx/doc8116/05...TaxRevenues.pdf

This is the Congress, not the Executive branches report.

Obviously the war is expensive, and we spend a lot on everything.

And I don't know if this debt counts social security. As far as I know, social security is by far the biggest part of our budget. And well it should be, because after paying for it, I want it if I can get it.


----------



## Flyer_PE (May 1, 2008)

mudpuppy said:


> Just floating a theory here, but my best guess is a part of it has to do with tax cuts without corresponding spending cuts.


Taxes are nothing more than restrictions on economic activity. Tax revenues will actually trend upward with lower marginal tax rates since the restriction is lessened. As an example, revenue from capital gains taxes actually increased markedly due to increased trading when the rate was lowered. Prior to that, government revenues doubled in the eighties following the cut in the top marginal income tax rate from 70% to 28%. However, that increase didn't stand a chance against the increases in government spending that were happening at the same time.

The way the news media and a lot of politicians present the numbers is a little misleading. Say the tax rates are cut and revenue actually increases by 20% while spending increases by 80%. They don't bother to tell you that revenues are up, only that the deficit has increased by 60%.


----------



## mudpuppy (May 1, 2008)

(Edited due to simultaneous posting with Jim).

Yes, I've heard the thoery. Of course there must be a point of diminishing, or even negative, return. Obviously if you cut taxes to zero, revenues will fall to zero.

But that is beside the point. I will withdraw my theory and adopt Jim's: instead of spending not falling in line with taxes, spending is growing faster than taxes.

In any case, I think JR's cartoon hits the spot.

And now I am done with this rant before I make everyone including myself depressed about our economic future.


----------



## benbo (May 1, 2008)

mudpuppy said:


> ^^^Interesting report, benbo. Makes it all the more curious how the debt is growing if revenues are increasing.


You're right, where did the money go?

And to be clear, I'm not saying any level of cuts in tax rate will increase revenue. At some point it's got to be counterproductive. Obviously, a zero tax rate is not going to be very good for tax revenue. I'm no economist, so who knows what the level is, and what other conditions effect it. Also, just because the revenues went up during these years doesn't necessarily mean that's the only reason revenues went up or if there were other reasons. THat just the theory I've heard same as IFR says above. I have no real idea if it is true. I guess that's what the geniuses in the government are supposed to figure out.


----------



## Flyer_PE (May 1, 2008)

Just to add a little to mudpuppy's point, the diminishing returns works on the other end as well. If you tax at 100%, revenue goes to zero because nobody is going to pay it.


----------



## mudpuppy (May 1, 2008)

^^Yes I don't disagree with that. I'm with benbo--I'm not an economist and it's way over my head. I just wish the government was more transparent and better about explaining what they're doing with our money--it is _our_ money after all.


----------



## IlPadrino (May 2, 2008)

benbo said:


> I always thought the main problem was people getting these radical interest only ARMs that readjusted to huge interest rates. They were counting on the value going up, up, up, and kept pulling equity out and ultimately there was nobody at the bottom to buy, especially when people started defaulting.My friend is a schoolteacher. She bought a small house in Long Beach for 200K a few years ago and then resold it two years ago for around 500K. But she immediately put what equity she had in a house for $850 K !!! THats around a 500K loan - interest only, ARM. How can a teacher making around 70K afford a payment like that?
> 
> The house is now worth around 700K. Fortunately she was able to refinance, but what a bonehead move.


Right... but many of these people would have been happy to keep paying under a reasonable fixed rate but they're forced to refinance. And as market values decrease they find themselves "upside down" because they were doing interest-only all that time (though let's be honest... three years of a conventional 30-mortgage payments doesn't buy down the principle very much either).

I wonder what drives the banks to force a refinance (other than collecting all the costs again). I just don't get why it should cost me money to refinance with the same bank!

I own a house in California that I'm renting... and paying $1000/month out of pocket to cover the expenses. But I'm looking to also buy a house here in Virginia on a short sale. It's an interesting opportunity. Any here have any experience with short sale?


----------



## benbo (May 2, 2008)

IlPadrino said:


> Right... but many of these people would have been happy to keep paying under a reasonable fixed rate but they're forced to refinance. And as market values decrease they find themselves "upside down" because they were doing interest-only all that time (though let's be honest... three years of a conventional 30-mortgage payments doesn't buy down the principle very much either).
> I wonder what drives the banks to force a refinance (other than collecting all the costs again). I just don't get why it should cost me money to refinance with the same bank!
> 
> I own a house in California that I'm renting... and paying $1000/month out of pocket to cover the expenses. But I'm looking to also buy a house here in Virginia on a short sale. It's an interesting opportunity. Any here have any experience with short sale?


I have no personal experience, but every house I see for short sale is such a good deal. Whenever you read about short sales the "experts" always say don't do it because you ahve to take the place "as is." I don't really believe that, or understand it actually. Does that mean you can't have your own inspector check it out? I mean, to a certain extent you're always buying a place as is.


----------



## Katiebug (May 3, 2008)

Road Guy said:


> whatever were in I will be glad when its over thats for sure.
> here is a question for an educated crowd...
> 
> Should you be able to buy a house with no money down? We have all seen the stories on foreclosures, but how many of them bought houses, some really expensive ones, and didnt put a dime down, or back loaded half the interest payments? What I am getting at is maybe a lot, ALOT of people bought houses before they were really financially ready to do so/
> ...


We bought in '06. We were looking in the $200K range and had roughly $14K in savings at that point (we spent our first year of marriage living in a horrid little one bedroom apartment, the upside was paying only $500/month in rent, allowing substantial savings). Our realtor (useless) convinced us that not only did we HAVE to offer full asking price, but we HAD to pay our part of closing costs. We wanted to ask for a seller concession - our house had been on the market for 6 months with a $30K price drop, it's not like it was in danger of being snapped up! She convinced us to just suck it up and pay closing costs...in retrospect her only concern was with locking in a sale, not with helping us get the house we wanted for the best price. We put down about 3.5% and paid another 3% in closing costs, then had the rest of our savings for moving expenses and other costs.

We did end up spending less than $200K...for a starter home in our neck of the woods, we didn't do too badly. 30 year fixed loan at 5.125%. We've never had any difficulty paying our bills. We specifically chose a house that we could comfortably afford on one (my) income only, because of my husband's career volatility to date. In retrospect that was a very smart move, since I'm still the bigger earner, and we're now hoping to start a family and daycare ain't cheap.

Almost everyone I know who bought in the last 5 years put something down. I think 20% is unrealistic in many housing markets, though. If you've had to save something, even a little, towards a home then you may be more inclined to continue paying the mortgage even when things get tight.



mudpuppy said:


> I don't want to steal the thunder from RG's question, but this makes me wonder: how do others here feel about paying your house off early? I have not made any extra payments because I feel I can make better use of my money by investing it rather than paying extra on a 5% mortgage. I'm sure I would feel differently if I had a $200k mortgage or a 7% rate, but I do have enough cash to pay the payment for several months if something cataclysmic happened.


Our interest rate is so low that investing (over time, of course) will be a better use of extra money. We don't make extra payments.


----------



## Capt Worley PE (May 5, 2008)

Katiebug said:


> Our interest rate is so low that investing (over time, of course) will be a better use of extra money. We don't make extra payments.


I used to pay an extra hundred a month until I figured that out...


----------



## IlPadrino (May 5, 2008)

benbo said:


> I have no personal experience, but every house I see for short sale is such a good deal. Whenever you read about short sales the "experts" always say don't do it because you ahve to take the place "as is." I don't really believe that, or understand it actually. Does that mean you can't have your own inspector check it out? I mean, to a certain extent you're always buying a place as is.


I'm told the bank will insist on as-is (i.e. no home inspection contingencies) because by law they are required to reveal the results of the home inspection in all future transactions. So to answer your question, I think you can certainly pay for your own home inspection (which you'd probably have to do anyways) but you can't include any repairs in the offer.

In the case I'm working now, I'm already renting the house, so I have a pretty good idea of what I'm getting. I just worry that the short sales in the area will have an affect on future growth potential. How, I don't know...


----------



## IlPadrino (May 5, 2008)

mudpuppy said:


> I don't want to steal the thunder from RG's question, but this makes me wonder: how do others here feel about paying your house off early? I have not made any extra payments because I feel I can make better use of my money by investing it rather than paying extra on a 5% mortgage. I'm sure I would feel differently if I had a $200k mortgage or a 7% rate, but I do have enough cash to pay the payment for several months if something cataclysmic happened.


That's what scares the hell out of me on my California rental... with a mortgage payment of $2600/month I can't afford to go more than two or three months without collecting a rental check. I suppose I could take out a home equity line of credit for something longer than that but that's even more scary!


----------



## csb (May 5, 2008)

In regards to the Hillary and McCain gas tax cut- I think it's absolutely idiotic. Our nation's infrastructure is crumbling, but they want to take away the funding mechanism?? Plus, I really don't think it would make gas cheaper...for instance, I live in a state with one of the LOWEST gas taxes in the nation, yet recently our gas costs the same as that of our neighboring states which have federal tax plus a 14-16 cent higher than ours gas tax. Anyone want to guess where that extra money is going? It sure isn't paving any roads, that's for sure. And, just to be a bit of an engineer for a moment, the delayed cost of doing maintenance from the lost revenue would be huge...more than we'd ever see in tax relief. I hope the American people can see that it's a gimmick and would cost them more in the long run.

And, to throw my hat in the house discussion, we bought with very little down but we locked into a fixed rate. We bought just enough home to last us for quite awhile and have money to upgrade the house which is in a nice neighborhood. We did so in 2004 when housing prices were still okay and the rates were so freaking low. In Denver there are entire neighborhoods emptying out because people paid WAY too much for new homes in housing developments where everything looks the same and they did so with ARM. Now they are moving out all over the place and crying unfair. While I agree the banks went after these people aggressively, I also wonder why these people didn't do some research. When I took out my student loan in college I had to watch a little film about loans...why wouldn't we do the same to people borrowing much more in a much more dangerous fashion?


----------



## udpolo15 (May 5, 2008)

csb said:


> In regards to the Hillary and McCain gas tax cut- I think it's absolutely idiotic. Our nation's infrastructure is crumbling, but they want to take away the funding mechanism?? Plus, I really don't think it would make gas cheaper...for instance, I live in a state with one of the LOWEST gas taxes in the nation, yet recently our gas costs the same as that of our neighboring states which have federal tax plus a 14-16 cent higher than ours gas tax. Anyone want to guess where that extra money is going? It sure isn't paving any roads, that's for sure. And, just to be a bit of an engineer for a moment, the delayed cost of doing maintenance from the lost revenue would be huge...more than we'd ever see in tax relief. I hope the American people can see that it's a gimmick and would cost them more in the long run.


I agree with you on the gas tax. Gas isn't getting any cheaper and Americans have to learn to live with that. If we try and delay the pain, people will just slow down any lifestyle changes that high energy prices might cause. I read an article that suspending the gas tax will cause an increase in demand and therefore supply will become more limited and the prices will go even higher.

I am not sure how most people are able to put 20% down, especially first time buyers in expensive markets. I was very fortunate because my wife had enough savings to put 20% down. I know most of my friends though only have been putting down ~5%.


----------



## Capt Worley PE (May 5, 2008)

udpolo15 said:


> I am not sure how most people are able to put 20% down, especially first time buyers in expensive markets.


It really isn't that hard. Just don't spend like crazy.

We live like we're on one salary. That has the dual benefit of saving money for a rainy day and prevents extravagant, unneeded purchases. Sure, I'd like a new Mustang GT, but my six year old Sentra is paid for, gets goos mileage, and is still reliable. Same thing with TVs. Why get a new plasma when that 25" RCA from 1992 is still working fine?

Except for the house and miniscule credit card charges (probably less than $75 this month) we're debt free.


----------



## udpolo15 (May 5, 2008)

Capt Worley PE said:


> It really isn't that hard. Just don't spend like crazy.


It isn't hard over time, but if you want to buy before your 35, I think it is hard.

Look at Chicago. To get something big enough for a couple in a decent neighborhood (I am talking condos here, housing is even more out of reach, unless you want to move way outside of the city), close to transportation you are going to be spending $250K easily. 20% is 50K. Coming out of college, I was making less than 40K. If I went into super saver mode and put away 10K a year, it would take 5 years to have enough for the down payment. The reality is that saving 10K on a 40K salary is going to be next to impossible.


----------



## Capt Worley PE (May 5, 2008)

^ I hear you. Luckily, we bought in 1998, and housing in our neck of the woods is reasonable, or it was then.

Having no car payments for the 5 years before we bought helped out a lot. I think I was saving 1K a month


----------



## C-Dog (May 5, 2008)

I think you need to put something down. Is 20%, 30% or 10% the right amount, I don't know? We were lucky enough to have saved for 2 years before we bought our house. We were able to get the 20% down, just barely. Now I am watching houses in the hood not sell and others sell rather quickly at still somewhat elevated prices from years prior. The houses that are selling are the nicer, well maintained houses. The houses that are sitting are the ones that have not been maintained that well. The difference between now and a year or two ago, is that today only the maintained houses are selling while the ones that need TLC sit, where they would have sold in an up market. At least that is how it looks in my hood.


----------



## kevo_55 (May 5, 2008)

Gas tax "holiday???" What a way to fill the pockets of the gas industry and mess all the while not solving the problem with a supply and demand commodity.

And I thought that the stimulus check was a bad idea!!!!


----------



## Capt Worley PE (May 5, 2008)

C-Dog said:


> Is 20%, 30% or 10% the right amount, I don't know?


If you put down 20%, you don't have to pay for motgage insurance. That's why I went 20%


----------



## Guest (May 5, 2008)

C-Dog said:


> I think you need to put something down. Is 20%, 30% or 10% the right amount, I don't know?


I don't know is exactly the problem.

When I purchased a house, I INTENTIONALLY picked a starter home located in BFE rather than a house on the cul-de-sac in upscale Tally town. I didn't put any money down but at the same time I knew I was going to end up with a payment that I could reasonably afford and eventually make double-payments to pay down over, say a 15-yr period rather than a 30-yr period. I was more interested in getting squared away with my credit issues and getting Mrs. JR back to work.

Now I will be selling my home in a bad market but fortunately there is enough equity in the home to make a few $$ and completely pay of the note. I am just glad I didn't let Mrs. JR talk me into extending those lines of home equity credit ....

But, I digress. The real point comes back to how responsible individuals are going to be with credit and spending. It is difficult to gauge - I don't even think you can really gauge credit 'responsibility' from historical patterns since our self-actualization of wealth/worth is a random variable with respect to time, income, and employment/employability.

If anything, I blame the BANKING INDUSTRY for not having better controls or actuarial models for accounting for the volatility. It is called a risk because .... you can potentially lose your investment! Blaming individuals for taking a risk in thier personal finance to own a home when banks (investors) take a risk in making sure the individuals don't follow-thru is ... well .. you get the picture.

It does go back to the answer which is ... I don't know - that should be up to the banks to decide based on how much risk they are willing to accept.

:2cents:

JR


----------



## snickerd3 (May 5, 2008)

jregieng said:


> I am just glad I didn't let Mrs. JR talk me into extending those lines of home equity credit ....


One of best friend's Dad did that very thing. The house was owned free and clear...he took out the max home equity loan he could and then left the wife for another woman, taking the $ with him. Very bitter divorce she is still paying off the loans HE took out on the house. However sad and unfortunate, Karma does come back to bite you...my friends Dad is in the hospital with pneumonia and strep so bad they had to put him in a medically induced coma because his body wasn't responding to medications.


----------



## Capt Worley PE (May 5, 2008)

snickerd3 said:


> One of best friend's Dad did that very thing. The house was owned free and clear...he took out the max home equity loan he could and then left the wife for another woman, taking the $ with him.


What a jackass.


----------



## Guest (May 5, 2008)

Capt Worley PE said:


> What a jackass.


+1

JR


----------



## IlPadrino (May 5, 2008)

udpolo15 said:


> It isn't hard over time, but if you want to buy before your 35, I think it is hard.
> Look at Chicago. To get something big enough for a couple in a decent neighborhood (I am talking condos here, housing is even more out of reach, unless you want to move way outside of the city), close to transportation you are going to be spending $250K easily. 20% is 50K. Coming out of college, I was making less than 40K. If I went into super saver mode and put away 10K a year, it would take 5 years to have enough for the down payment. The reality is that saving 10K on a 40K salary is going to be next to impossible.


Or imagine LA or DC where you're going to spend $500k. Who's got $100k to buy a first-time house?

It's also a dilemma to weigh retirement investment against a house down payment. I put over $1100/month in IRAs and my TSP. I could have pulled that out to make a down payment but that's a risk I wasn't willing to take.

I think it's the American Dream to own a house and some people made a bad assumption (that housing prices were going to rise) that turned out to have a catastrophic consequence. But except for those that just wanted to live above their means (car lease anyone?!?), I have lots of empathy.


----------



## IlPadrino (May 5, 2008)

Capt Worley PE said:


> If you put down 20%, you don't have to pay for motgage insurance. That's why I went 20%


We got a first and second mortgage to avoid the PMI - which turned out to be a bad choice when the second variable rate started climbing. And I still don't know how I avoided PMI when I refinanced into just one loan with a 90% LTV.


----------



## wilheldp_PE (May 5, 2008)

IlPadrino said:


> We got a first and second mortgage to avoid the PMI - which turned out to be a bad choice when the second variable rate started climbing. And I still don't know how I avoided PMI when I refinanced into just one loan with a 90% LTV.


I got an 80/20 loan as well, but I forced them to lock the rate on the 20% loan. They REALLY didn't want to do it...kept telling me that it was a better rate if I went with the ARM. I basically told them that if they didn't fix the rate, I would find another funding source...so they did.


----------



## Guest (May 5, 2008)

IlPadrino said:


> Or imagine LA or DC where you're going to spend $500k. Who's got $100k to buy a first-time house?


That's exactly my thought about this conundrum - who has THAT kind of money to put down or even to finance when you look at a gross cross section of american wage earners. The problem in my mind is how can house prices continue to rise if median wages are relatively stagnant? I would be thrilled to hear any insights from an informed source. 



IlPadrino said:


> I think it's the American Dream to own a house and some people made a bad assumption (that housing prices were going to rise) that turned out to have a catastrophic consequence. But except for those that just wanted to live above their means (car lease anyone?!?), I have lots of empathy.


It's a mixed bag as to what has happened. I have seen poor examples of fiscal responsibilty and restraint around me so that tends to color my outlook but I am certainly open to the thought that things didn't work out right. I have less sympathy when I see those same people buying the latest fads in clothing or electronics.

:2cents:

JR


----------



## mudpuppy (May 5, 2008)

Great discussions everybody.

Just wanted to chime in on the gas tax. I'm with IFR &amp; udpolo &amp; kevo on this one. Price controls don't work--look at the 70's energy crisis. When price controls were implemented, there wasn't enough gas to go around, because demand was still high and gas was artifically cheap. The problem is the politicians feel obliged to do _something_ which often ends up being the wrong thing.


----------



## Road Guy (May 5, 2008)

IlPadrino said:


> We got a first and second mortgage to avoid the PMI - which turned out to be a bad choice when the second variable rate started climbing. And I still don't know how I avoided PMI when I refinanced into just one loan with a 90% LTV.



we did that also and then refinanced into a 15 year loan which also negates PMI.

I dont know how anyone in Southern Cal and other extremely high house priced markets get into one, I am assuming thats why Cal traffic is pretty bad, lots of people commuting from a hellofalongway to get into a decent house.

I watch those home improvement shows and laugh when folks up north get so excited about a deal on a 2 BR 2 BA starter home for $400,000....

but again I dont advocate a mandatory 20%, I just think it would have been better if people put at least somethig down, nice to at least actually own the door to your house!


----------



## squishles10 (May 6, 2008)

Road Guy said:


> we did that also and then refinanced into a 15 year loan which also negates PMI.
> I dont know how anyone in Southern Cal and other extremely high house priced markets get into one, I am assuming thats why Cal traffic is pretty bad, lots of people commuting from a hellofalongway to get into a decent house.
> 
> I watch those home improvement shows and laugh when folks up north get so excited about a deal on a 2 BR 2 BA starter home for $400,000....
> ...


Zero down, interest only loans. Or even better, 105% loans, no interest. It's the only way most of the time. Wasn't a problem when the bubble was expanding. You could sell after 5 years and pay off the whole thing no problem. Now you're in the hole stuck with the thing. Not at ALL claiming to be an expert, but it's all happening right now because after X years the mortgage resets? And everyone bought when the bubble was going crazy so it's all resetting at once. Not sure if "resetting" means switching from interest-only to a real payment, or the interest rates reset, or perhaps both.


----------



## C-Dog (May 6, 2008)

mudpuppy said:


> Great discussions everybody.
> Just wanted to chime in on the gas tax. I'm with IFR &amp; udpolo &amp; kevo on this one. Price controls don't work--look at the 70's energy crisis. When price controls were implemented, there wasn't enough gas to go around, because demand was still high and gas was artifically cheap. The problem is the politicians feel obliged to do _something_ which often ends up being the wrong thing.


What mud said!


----------



## IlPadrino (May 6, 2008)

Road Guy said:


> I dont know how anyone in Southern Cal and other extremely high house priced markets get into one, I am assuming thats why Cal traffic is pretty bad, lots of people commuting from a hellofalongway to get into a decent house.


I know a Master Chief stationed near LA... he wanted to buy a house and had a certain amount to spend. He started looking in LA and then expanded out in ever larger circles. He finally found what he was looking for... THREE HOURS AWAY from work. He knew he'd be retiring in a few years so he figured it was worth the commute. Crazy, I tell you.


----------



## wilheldp_PE (May 6, 2008)

IlPadrino said:


> near LA...THREE HOURS AWAY from work.


So it's, what, about 5, maybe 10 miles from work? You couldn't pay me enough to live or work in LA. I hate that place.


----------



## IlPadrino (May 6, 2008)

jregieng said:


> The problem in my mind is how can house prices continue to rise if median wages are relatively stagnant? I would be thrilled to hear any insights from an informed source.


Same question here... I don't get it, especially if interest rates increase.


----------

