Month: October 2023

Sales of both new and existing homes have fallen over the past year, but that doesn't capture the magnitude of the impact on the mortgage industry. Many of the houses still on the market are being sold for cash, and even refis are scarce because so many existing mortgages were refinanced years ago at ultra-low rates. The result is grim:

The mortgage industry is notoriously boom or bust, but this bust is especially bad—and it’s only getting started.  Unlike previous housing downturns, there’s no obvious way out. If the economy keeps chugging along, then the Federal Reserve will continue to keep rates high—which would in turn keep the housing market in the dumps. If the economy sinks, the Fed may loosen rates—but a recession wouldn’t do the housing market much good either.

....Some former regulators and industry officials say the current period is worse than the 2008 financial crisis, when at least falling rates spurred a large refinancing wave. Because so many borrowers already locked in ultralow-rate mortgages during the pandemic, there’s no big refinancing rescue on the way. “I’ve been in this business 40 years and I don’t remember a correction like this,” said David Stevens, a former housing-finance regulator who now consults for the industry.

Before the pandemic big banks were writing about $150 billion worth of mortgages each quarter. That rose during the recent housing boom but has since plummeted by more than half from its normal level:

If you're in the real estate biz, the economy seems terrible no matter which party you belong to.

The Redding Rancheria, a group of three California Indian tribes, operates a casino on Highway 273 near Redding. They want to relocate and build a bigger casino a few miles south along Interstate 5, a project they've been working on for nearly 20 years:

But the proposal has been buffeted by influential opponents, including the city of Redding, neighborhood groups and the billionaire next door — who happens to be the largest private landowner in America. The naysayers list a cavalcade of complaints against the new Win-River casino complex, saying it would despoil prime farmland, exacerbate traffic, increase police and fire protection costs and threaten native fish in the Sacramento River.

This year two neighboring tribes suddenly brought up a new objection:

Construction of the casino would desecrate what the tribes say should be hallowed ground — the site of an 1846 rampage by the U.S. Cavalry that historians say probably killed hundreds of Native people.

For 20 years nobody cared about this. It was all but forgotten even among the local tribes. There are no monuments, no memorials, not even a signpost. It's not even clear exactly where the massacre happened. The whole "hallowed ground" protest is plainly invented from thin air as an excuse to oppose the casino.

This is yet another example of why so many people are skeptical about claims of sacred areas or burial sites or ancient hunting grounds. Too often they appear to be all too conveniently manufactured out of nothing.

Conor Sen suggests that lots of people view the economy poorly because interest rates have gone up for things like credit card debt and car payments:

Food and energy as a % of disposable personal income is around where it was in the mid-2010’s. Personal interest payments as a % of income are skyrocketing: pic.twitter.com/LpVZMMUTIg

— Conor Sen (@conorsen) October 28, 2023

How soon we forget! Remember all the pre-2022 whining about how it was impossible for ordinary schmoes to increase their savings because banks were paying interest rates of 1% or less? At least those days are over.

So let's add together personal interest payments and personal interest income:

It's been sliding downward for a long time, but nothing extraordinary has happened over the past year or two. It's been a wash.

Now, it's quite possible that the interest payers are more annoyed than the interest earners are happy. Who knows? But honestly, it's not worth looking into. The reason people are unhappy with the economy is obvious:

It's not "people" who are unhappy about the economy. It's Republicans. And it's not because they're personally doing poorly. It's because Fox News and Donald Trump keep telling them the economy is lousy. Compared to the massive effect of this, everything else fades into irrelevance.

I caught some of Bill Maher's show last night, and midway through he began a rant about bureaucrats making it harder and harder to build anything. These "petty tyrants," he said, are constantly coming up with new rules that force you to jump through ever more hoops to get anything done.

Maher is wrong to assign blame where he does. There are good and bad bureaucrats, just like everything else, but for the most part all the new rules come from elected legislators: city councils, county commissioners, state legislatures, Congress, water boards, school boards, and so forth. The reason there are so many hoops to jump through is largely because (a) we elect people who put them in place and (b) construction opponents tie things up in court endlessly.

But aside from assigning blame, this got me curious: Is it really impossible to build stuff anymore? If it is, we should be building less stuff as time goes by. Are we?

Looking at the value of construction does no good. The cost of construction can change for lots of reasons. What we need is the raw quantity of construction, and that's not easy to come by. But it isn't impossible. For example, here's the number of miles of public roads built each year over the past half century:

There's a lot of noise here but no trend. The average today is the same as it was 50 years ago. Here's housing:

The raw amount of housing has gone up, but that's not a fair comparison since population has also gone up. What I've done here is adjust new housing for annual population growth. That is, the number of houses built each year divided by the increase in population for that year. It's not perfect, and perhaps it should be based on lagged population growth since it's adults who buy houses, but it gives a good sense of things. Again, there are ups and downs, but it's stable overall with a noticeable rise over the past few years.

Now here's commercial development:

Once again, this is amount of construction per year adjusted for population growth in that year. Commercial construction has been down over the past decade, but the trend is generally upward in the postwar era.

This is hardly definitive, but generally speaking it looks as if we're building about as much stuff as ever, even when you account for population growth. It might take longer and it might be more expensive—I can't tell on either count—but one way or another all the new rules don't seem to be stopping anything.

POSTSCRIPT: For what it's worth, the reason these statistics might be surprising is that a lot of people cherry pick to make them look worse than they are. In particular, California is famously resistant to new housing, and our CEPA law is infamously abused to slow down construction. New York City is also an outlier, where construction is difficult and expensive and time consuming. If you focus on California and New York City, it's easy to make things look bad. If you include the rest of the country things aren't so bad after all.

The most surprising thing about this LA Times story is not discovering that California kids have lousy teeth. It's that someone has measured this in the first place:

Louisiana kids have the worst teeth and Rhode Island kids have the best. Allegedly. But why? Is it fluoridation?

Doesn't seem like it. The fit is lousy and there's only a tiny effect anyway. My guess is there's a correlation with average income, but I'm too lazy to check it out right now. In any case, California would be an outlier there too.

One of my pet peeves is the slow disappearance of mailboxes. I finally got around to looking at the USPS map of my neighborhood, and there is exactly one (1) mailbox left within a couple of miles of me:

I know, I know: people don't mail as much stuff as they used to; mailboxes are objects of vandalism; and there are still UPS and FedEx stores around where you can mail letters. And, of course, you can leave things in your own mailbox for the letter carrier to pick up.

But it's still annoying. I want a mailbox near me, like I used to have. Hmmph.

Commenter fortenforge interrupted catblogging today for remarks on the real world, which is a major violation of blog etiquette. Still, his comment is reasonable: "I think it's high-time for a Jamaal Bowman update now that the video was released like you asked for. Honestly it leaves me more confused than ever."

The video was released yesterday and it's only a few seconds long, so go ahead and watch it for yourself:

New Video: Jamaal Bowman Pulling The Fire Alarm and Walking Awayhttps://t.co/OKjqdl9OGb

— Mr Producer (@RichSementa) October 26, 2023

Bowman walks up to the doors, removes both the emergency exit signs, and then quickly pulls the fire alarm and walks away.

The whole thing is still a little inexplicable, but it's pretty obvious he wasn't trying to exit the building and got confused. He never even tries to exit. He just takes down the signs, triggers the alarm, and immediately walks off.

I dunno. Was he thinking he could delay a budget vote by triggering the alarm, as Republicans say? That still doesn't make any sense—it's a different building and Bowman voted for the budget measure—but Bowman's story obviously doesn't hold water either. It's all very strange.

Since core services are the most stubborn component of inflation, it's worth keeping an eye on. Here's the 3-month rolling average:

After nine quarters at about 5%, core services inflation finally fell to 3.5% in Q2 but then stayed there in Q3. Stay tuned for Q4.

This is Charlie in the front yard looking over his shoulder at the very end of a short photo session. His pose reminds me of Vermeer's "Girl With a Pearl Earring."

According to Gallup, here is Joe Biden's approval rating over the past two years:

It's been rock steady among all groups since the beginning of 2022....

....Until this month, when it suddenly slipped by 11 points among Democrats. Why? Presumably it's related to his hawkish pro-Israel stance, which has prompted losses among the far left. It seems unlikely this will be a long-term decline, but it certainly seems to suggest a strong depth of feeling among at least a segment of the Democratic Party.