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It's Not All Good News

By
Real Estate Broker/Owner with New Paradigm Partners LLC EB #1326335

Every once in a while I feel the need to put on my economist hat, and this is one of those times. We all watch very closely, trying to figure out how each bit of political theatre or twitch in the world of finance will affect the way our industry functions. Sometimes we're looking at short term effects, and sometimes we get a glimpse of the long run. And we've all ridden the roller coaster, with our stomachs traveling between our knees and our throats.

I got an excellent view of the long-term last night and I didn't like it much.

Let me preface this by saying that I don't believe that we're the masters of our domain. I don't think real estate drives the economy - to me, it is a derivative activity that depends on jobs, earnings, wealth, economic growth and many other factors. When those are weak, home sales are too, and vice versa. Our personal prosperity is held hostage to all the exterior stimuli that the socio-politico-economic world can throw at us.

You may disagree with this view of the way the world works - I know a lot of you do, and I'm not here to change your mind. But I think you should spend 6 or so minutes watching the video below. It is highly disturbing because it highlights a trend - well-documented - that simply put, bodes very poorly for the long-term ability of people to buy homes. And that is certainly going to have consequences we'll all have to deal with.

 

Posted by
Mary & Dick

Mary & Dick Greenberg
New Paradigm Partners LLC
2601 S. Lemay Ave. #41
Fort Collins, CO 80525
970-689-4663
www.maryanddick.com

 

Data Source: IRES MLS

Comments(35)

Beth Atalay
Cam Realty and Property Management - Clermont, FL
Cam Realty of Clermont FL

Dick, I had seen this video but watched it again, has my stomach turning once again. I agree with Gary, we're certainly going towards rentals, it has begun! While numbers on the video are scary, I have no doubt real numbers are even scarier. What once an American dream is no more..

Oct 22, 2013 09:12 AM
Marie Story
Coldwell Banker - Pinecrest (Miami) - Pinecrest, FL
Broker Associate, Pinecrest (Miami) Specialist

Dick, this video is sad and disturbing; I almost wish I had not seen it.

Oct 22, 2013 09:52 AM
Debbie Laity
Cedaredge Land Company - Cedaredge, CO
Your Real Estate Resource for Delta County, CO

When the video showed the actual distribution of the wealth using money...WHOA...that hit home. My eyes got big when I saw that graph. It's very sad. Thanks have to change, and I do agree with you...real estate doesn't drive the economy.

Oct 22, 2013 09:56 AM
Tom White
Franklin Homes Realty LLC (615) 495-0752 or www.FranklinHomesRealty.com - Franklin, TN
Franklin Homes Realty LLC, Franklin TN

I think most of us agree that this video is more than a little depressing. Unfortunately I don't see an answer to the problems that are brought up...

Oct 22, 2013 10:48 AM
Joan Whitebook
BHG The Masiello Group - Nashua, NH
Consumer Focused Real Estate Services

This is a very disturbing video. I think that it has impacts far beyond the real estate inustry.

Oct 22, 2013 10:50 AM
Charles Stallions Property Manager
Charles Stallions Real Estate Services - Pace, FL
Pensacola, Pace & Gulf Breeze Property Management

Let's all rally the troups around the 47% and get FREE stuff while burying our heads in the sand. This crisis was bound to happen regardless of who the president was because America cares only about what is in it for me.

Oct 22, 2013 11:16 AM
Michael Jacobs
Pasadena, CA
Pasadena And Southern California 818.516.4393

Dick -- head between knees, going into the fetal position, grasping straws .... sometimes it seems like wanting to stop the world so I can jump off may not be such a bad thought.

While I've read/see the data before but this presentation clearly illustrates the actual distribution versus what most think exists or wish for as an ideal.   

Very interesting.  It deserves a bigger audience...

Oct 22, 2013 11:22 AM
Kelly Young
The Platinum Group Realtors - Colorado Springs, CO
Colorado Springs Real Estate ~ 719-226-0126

Dick, it is very sad to watch and I guess it is one of those realities that somewhere I know exists but don't really want to know.  How to plan and prepare and also be part of a solution.  This is something to take on a revisit with where can we go and what can we do, as individuals and collectively.

Oct 22, 2013 11:50 AM
Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

I saw this a week or so ago and thought it was quite interesting.  And then I started to feel sad, then I got happy.  Not sure why. 

Oct 22, 2013 12:24 PM
Ralph Gorgoglione
Metro Life Homes - Palm Springs, CA
California and Hawaii Real Estate (310) 497-9407

Wow. The short video clip's charts and graphs really put wealth disparity into perspective. Thanks for sharing.

Oct 22, 2013 12:55 PM
Bruce Walter
Keller Williams Realty Lafayette/West Lafayette, Indiana - West Lafayette, IN

Very interesting that the figures are close to what the wealthy pay as a percentage of individual income tax revenues collected by the federal government according to the latest data made available by the IRS:

The wealthiest 1%  pay 37% of the total individual income tax revenue collected.

The wealthiest 5%  pay 59% of the total individual income tax revenue collected.

The wealthiest 10% pay 71% of the total individual income tax revenue collected.

The wealthiest 25% pay 87% of the total individual income tax revenue collected.

The bottom half of Americans pay less than 3% of the total individual income tax revenue collected.

Shareholders could always revolt and let their board of directors know that those excessive salaries for the CEOs of the corporations are unacceptable, just as sports fans could revolt and not pay $60-$75 for an NFL ticket to bring down those excessive salaries of the pro athletes.  It isn't going to happen though!  A CEO, brain surgeon, and pro basketball player is always going to be paid more than a fry cook at a fast food restaurant. 

 

The world economy has changed dramatically since the post WW II era when world trade was dominated by the US and the Soviet Union and China were restricting world trade and not competing against us.  Be careful what you wish for (world democracy and capitalism) as our former communist(Russia, Eastern Europe)  and current communist nations(China and Vietnam) have dramatically impacted US industry and the American worker with their embracing of capitalism.

Oct 22, 2013 01:45 PM
Charles Buell
Charles Buell Inspections Inc. - Seattle, WA
Seattle Home Inspector

Dick it is all too similar to a famous board game---come to life!

Oct 22, 2013 02:54 PM
Bob Crane
Woodland Management Service / Woodland Real Estate, KW Diversified - Stevens Point, WI
Forestland Experts! 715-204-9671

Scary stuff Dick, I have seen many of these figures before and I fear for the future of our country when that 1% finally goes too far.

Not a fan of socialism and I strongly believe in the incentives of capitalism, but we have gone too far and we do need to find a peaceful way to help out the middle and poor.  Not a handout, but a way for them to earn and compete.

I have no answers, hopefully you economists can figure this solution out.

Oct 22, 2013 03:51 PM
Debbie Gartner
The Flooring Girl - White Plains, NY
The Flooring Girl & Blog Stylist -Dynamo Marketers

Yes, quite a visualization.  It's even more lopsided than what I thought.

Oct 22, 2013 08:32 PM
Bill and MaryAnn Wagner
Wagner Real Estate Group - Ocean City, NJ
Jersey Shore and South Jersey Real Estate
Dick, Saw this a few days ago and I have to agree with you, should the trend continue, many fewer people will qualify to purchase homes in the future.
Oct 22, 2013 11:09 PM
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

The gap between rich and poor is widening...Middle class is in danger. You are either going to be poor or be rich if this is allowed to become the norm...Dangerous because the poor wont put up with it for long

Oct 22, 2013 11:39 PM
Chris and Dick Dovorany
Homes for Sale in Naples, Bonita Springs and Estero, Florida - Naples, FL
Broker/Associate at Premiere Plus Realty

Dick, I have been hearing more and more about this.  The solution for me would be to work harder to insure my grandkids can buy with cash.

Oct 22, 2013 11:40 PM
David Shamansky
US Mortgages - David Shamansky - Highlands Ranch, CO
Creative, Aggressive & 560 FICO - OK, Colorado Mtg

Why is this shocking to anyone?

The liberals act like they help and all they do is "buy" votes with false promises of a better life and small token handouts. Its disgusting and the biggest problem is KNOWLEDGE!

If you strive for an education and have a hard work ethic you can survive and THRIVE in America but the reality is many relegate their lives to whatever they are used to.

Oct 23, 2013 12:34 AM
Chris Ann Cleland
Long and Foster Real Estate - Gainesville, VA
Associate Broker, Bristow, VA

I don't see that this is going to affect real estate agents much.  Someone is going to be out there buying up homes.  It may not be the guys and gals ont the far left of this graph, but it will be someone on the middle-right  or far right renting to the far left.  

It is disturbing that there is no basis of what it costs to live in this country, making the statements in the video subjective.  

What drives me nuts is the inequity in the taxes paid.  The wealthiest pay the least.  Making them wealthier.  

Oct 23, 2013 02:11 AM
Jeanne Dufort
Coldwell Banker Lake Country - Madison, GA
Madison and Lake Oconee GA

Its important to add the historical context about the American economy that is missing from this piece - the extreme concentration of wealth and income (two different measures) documented in this piece has not been seen in America since the 20's.  And we know that followed that spike - global depression resolved only by a world war.

The post war boom decades were accompanied by a more equitable distribution of wealth and income.

So.... should the top earn more and have more than the bottom? Absolutely. But when the top earns and has extremely more - the kind of extreme documented in this piece - history tells us that economies stall out.

Because it takes production and consumption by many, not just a few, to create living-wage jobs for most. And without living wage jobs for most, societies face the terrible choice of subsidy or starvation.

Henry Ford understood this - Companies like Costco and Publix understand this - why can't we return to the compensation patterns normal in America in the 50's and 60's?

Oct 23, 2013 09:50 PM