Curious about the housing market, I went to my favorite news source: Twitter. Doing a search for “housing market”, I found several articles asking if we’ve hit the bottom yet. Several articles say yes, but I disagree.
Again, I won’t say my information is based on anything but my gut and my fascination with history repeating itself. With that said, here’s my two cents on the status of the housing market and where it’s headed.
First, let’s look at the timeless child’s toy–the yo-yo. What goes down must come back up, right? Well, as many of us have found out over the years when we play with our yo-yos, the yo-yo doesn’t always come up all the way. Sometimes we miss-fire and it hangs down at the bottom, twirling at the end of the string.
Now that you have that image of the yo-yo clearly placed in your head, here is my commentary.
We’ve hit bottom and are climbing back up a little, but the real bottom hasn’t hit yet.
Here in California, the 8th largest GNP in the world, things are not fully unraveled. The state budget was just passed but the cuts will take place and be felt like a massive splash rippling in the water over the next month or two. That’s when we’ll finally hit rock bottom.
I think the housing prices are going up a little now because people are seeing more activity in house sales, but it won’t last. Why? Because once firefighters and county clerks are furloughed and their pay is cut up to 10-40%, they won’t be able to afford going out to the restaurants as much. The cook at the restaurant, won’t be able to afford what little health insurance he has, so he won’t be able to see the doctor unless he goes to the emergency room. The emergency room people will see an uptick in patients because people will start using the emergency room as their primary source of medical care, but there won’t be enough money to cover the influx of people coming in. Therefore, the hospital will have an overtaxed staff who won’t be able to sanitize the hospital as often, which will open the door to more viruses affecting staff and patients, which will make some folks more sick than ever. Several people will become so sick that they will not be able to work, and they will risk losing their homes due to overwhelming medical expenses….and so the domino effect continues to effect everyone and every industry.
To be clear, I’m not picking on the health care industry. It’s just one domino in a line of other dominoes, waiting to be affected.
So, which toy am I talking about? The yo-yo or the domino? Well, I guess both provide terrific analogies right now.
I don’t mean to ramble, but after the California budget shortfalls are corrected within the state, the domino effect will hit the other areas as well. China will be affected since it has provided so much financing for the housing market, and there will be fewer gadgets ordered from California companies. Less money will be generated out of the Golden State, and that will effect anyone dealing with the California economy, which includes agriculture, entertainment, tourism, and the financial sector. The domino effect will be felt everywhere in every industry, eventually effect people both within the United States and internationally.
I don’t mean to be all doom and gloom, but don’t believe it when they say housing is at its all-time bottom. We’re close, but even when it hits, it’ll be a long climb out.
Posted on July 29, 2009
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