Irvine Housing Blog

This is coming from wage deflation:

“But the news isn’t so good if you happen to be a subcontractor or a rank-in-file construction worker.

Thanks to cutthroat competition, these cuts are coming out of their hides.”

“We’ve reacted to the market,” Swain said. “We’ve seen that our competitors have lowered their labor rates, and we’ve done to same to stay competitive.”

But cuts in labor remain the key element.

Company matches for 401(k) retirement plans have been “suspended.” Employers no longer pay 100 percent of health insurance costs.

And in some cases, hourly wages have been shifted to “piece work” rates, under which workers get paid for the amount of work completed, not the hours worked.

“A typical laborer used to make between $150 and $180 a day,” observed McKernan. “Now (he or she is) making $60. Yeah, it’s sad.”

***

Price drops for materials like lumber and drywall have helped some, but not much, industry officials say. And there have been reports that drywall costs could rise as much as 25 percent in coming months.

Costs for nails have doubled thanks to rising steel prices.

Ganahl Lumber’s purchasing Vice President Pete Meichtry says that overall material costs are down – at best – 5 to 10 percent.

***

or just read the article?

wait, i thought all commodity prices were increasing across the board because of inflation

Don’t Be Fooled: Inflation Has The Upper Hand

Wednesday, December 8, 2010, 5:23 pm, by cmartenson

Here at Martenson Central, we are endlessly keeping a close eye out for the emergence of deflation, defined here as the purchasing power of the dollar going up.

The reason that the inflation vs. deflation debate has been so noisy, yet simultaneously so murky, is that all of these intersecting variables impact the final equation.  It is like the difference between trying to balance a single broomstick on your outstretched hand vs. trying to balance a broomstick with three well-greased hinges at points along its length.  The former is tricky enough to balance; the latter would be impossible for nearly everyone.

Prices
On the plus side for inflation are commodity prices, which are again nearing their all-time peak and which have been compounding at an average annual rate of slightly more than 10% over the past decade.

But commodities are just a small component of the overall price landscape.  If one trusts the CPI statistic—and I really have my doubts about its construction and methodologies (that’s putting it mildly)—then it would seem that prices are actually quite tame and that disinflation (in which inflation is declining slightly month-by-month but still rising overall) is the greater concern, as the Fed has claimed.

With regard to prices alone favoring inflation, we find that commodities, stocks, bonds, medical costs, college tuition, and the CPI itself are all up over the past year, and in the case of everything but stocks, the past decade.

Costs should be going down.  We are still in an economic contraction.

It follows that CPI and GDP would be negative in an economic contraction.  Why are they not?

If prices should be falling 10%, but only fall 1% due to government and central bank subsidy, what do you call that?

It’s a good sign when we have to defend a decision to own/finance a home, as opposed to 2000-2006 when renters had to defend their decision to rent.

The people in my small office happen to be very conservative (financially).  Everyone must defend any large purchase, especially cars.  It’s almost shameful if you have to come in here one day and admit that you bought a new car.

I bought in sept

Sucker.

Crickets chirping…..

It’s just a dead cat jump.

Rates will be back down.

(I don’t really know… I just wanted to use that phrase)

WTF perspective…

Perhaps you failed math… 2 + 2 = ?

It is true that properties purchased before the bubble can only increase 2% per year.  Properties purchased during the bubble were valued at bubble prices.  Property tax collections in CA are falling, they fell last year and will fall again this year, and they are projected to fall more than they fell last year.  County assessors are swamped with re-evaluations.  While the swing in property tax collections was not as massive as the bubble, property tax revenue IS FALLING in CA, it is not “stable” and will not return to stability for at least three to five years.

Careful, don’t mention anything positive about the Irvine market like demand for new homes or that people are still buying.

Oh stop it ... this blog is still about Irvine REAL ESTATE.  There are other cities around the country that detail different aspects of this massive pile of shit.  These other example cities give many in here foresight, and further education.

From Lasner..

“72% of the 1st installemnt’s tax roll is collected vs. 59% in same period last year.”

So collections are up 12% and 13% more people paid their taxes on time this year…  Big whoop

Doesn’t mean that total collections will be up 12% over last year in the end as you seem to imply from your comment.

Since this blog tangentially used to be about Irvine before it became the Las Vegas/Phoenix/Florida Housing Blog,

You should start up a blog.  The only reason I show up is to read your opinion.  We might as well cut out the middle man.

I look forward to posts about how great things are over there.  Maybe you will even post a live stream of you wanking yourself in front of a nice little 700K tract house?

Every time a house sells the back taxes must be paid.  I wonder if there’s any breakdown of the increase in takings - how much is attributable to, say, the sales of expensive new homes by TIC, vs. how much is from homes that have been flipped or put through the foreclosure mill.  That would be a more precise indicator of where things are going.

Sorry, that is 1/10/11