Quotes Of The Day
“We are not seeing a catastrophic collapse in the job market, like you often see in recessions. What we are seeing instead is a steady hemorrhaging of jobs, and that is going to continue until housing stabilizes and stops dragging down the rest of the economy.” - James Glassman, senior domestic economist for JPMorgan Chase, on July’s unemployment rate, 5.7%, the highest in four years. (NY Times, Aug. 2nd)
“The high-end buyers out there are maybe more selective now, but I'm willing to wait out the storm.” – Long Island homeowner Joseph DiRenzo, who said that despite two price cuts to his now $7 million home, he doesn't plan any more. There are signs that the economic crisis in the U.S. is finally hurting the wealthy. (ABC News, Aug. 4th)
Macro Effects of the Housing Slump
Housing Crisis Likely to Wipe Out Two Decades of Family-Earned Wealth. “Center for Economic Policy & Research: If housing prices fall another 10%... families will have a net worth anywhere from 56% to 67% less than they had in 2004. That corresponds to an average decline of $41,000 in median wealth… A 2005 NAR study… showed that over two-thirds of all first time home buyers at the time had put down less than 10% to purchase their homes, and a whopping 42% of those first-time buyers had put down nothing at all… If the NAR is to be believed, none of this money was really wealth in the first place.” (REIT Wrecks in Seeking Alpha, Aug. 3rd)
Signs Are Dim, But Is Vegas’ Future? “On Friday, Boyd Gaming paused work on [the] Echelon… until it can figure out how to pay for its $4.8 billion hotel-gaming complex on the Strip. Just that fast, 800 construction workers were sent scrambling for other jobs. MGM Mirage has run into delays in financing a remaining piece of its $9.2B CityCenter project. The jobless rate in Nevada climbed to 6.4% in June, the highest rate in more than 14 years. Airlines are questioning the need for a third terminal at McCarran International Airport… Tourist spending is down. Nevada’s gaming revenue is down 15%, the worst in more than a decade.” (Las Vegas Sun, Aug. 3rd)
Economy On Brink. “In the last 12 months, unemployment in the U.S. rose by 1.6 million people… U.S. Bureau of Labor Statistics: Construction employment… saw a loss of 22,000 jobs in July. Since its peak in September 2006, construction employment has lost 557,000 jobs, with roughly three-quarters of those losses coming since October 2007. Going hand-in-hand with the decline in construction employment, construction spending fell 0.4% from May to a seasonally adjusted annual rate of $1,081.9B for June… On the residential [construction] side, spending is down 26.4% from June 2007, to a seasonally adjusted $379.7 million in June 2008. Month-over-month, construction spending declined 1.8% from May 2008.” (Builder Online, Aug. 1st)
Black & Decker Corp. Q2 2008 Earnings Call Transcript. “Mike Mangan, CFO: You saw a relatively modest restructuring plan announced in the fourth quarter with the $20 million charge. We took some actions to consolidate some operations and take out headcount. Followed that on with some more significant actions in Q1, closed two plants, our UK facility as well as the Decatur facility… Announced a significant headcount reduction as well as a restructuring of the management structure of Power Tools business. Those actions will throw off $20M of savings this year and incremental $20M again next year… We will continue to take actions if appropriate… Since year-end, we have reduced headcount in the corporation by 10%. We came into this year with 25,000 employees. We're now at 22,500.” (Seeking Alpha, July 25th)
Seeking Alpha's Housing Tracker is a collection of housing-related excerpts from various sources, grouped by topic. Feel free to post any interesting links on the subject in the comments section below.
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