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The fact is that incomes and affordable house prices are related. House prices have appreciated significantly in Colorado...wages have not kept up.
not really if you consider the considerable influx of out of state and out of country money into colorado real estate over the last 20 years. colorado is to the rest of the states like aspen is to colorado...locals are squeezed out of home ownership as prices go up and income stagnates. wages will never keep up as long as there is a scenery tax. someone will live in a cardboard box or their car and work for minimum wages for the privilege of playing in colorado.
it's been here for a long time and it's called modular housing...small and low cost, but most folks won't have it cuz it's too small and cheap. 2K sq ft is entry level these days for a family of four.
I don't disagree, but a 2000 footer has evolved to be the de-facto entry level because of the existence of financing that put it into reach, albeit precarious reach.
I liked Sterlinggirl's analogy...just as people are going to have to get away from SUVs and drive smaller cars, people are going to have to adjust to smaller houses again...if not for reasons of home affordability, then for reasons of the costs of energy to heat/cool the same.
not really if you consider the considerable influx of out of state and out of country money into colorado real estate over the last 20 years. colorado is to the rest of the states like aspen is to colorado...locals are squeezed out of home ownership as prices go up and income stagnates. wages will never keep up as long as there is a scenery tax. someone will live in a cardboard box or their car and work for minimum wages for the privilege of playing in colorado.
I'll agree that we see that effect in the ski towns like Aspen and Vail, I don't buy that argument in the main population centers like Colorado Springs and Denver. If that argument held true there, we wouldn't be seeing the declines we are seeing now.
I liked Sterlinggirl's analogy...just as people are going to have to get away from SUVs and drive smaller cars, people are going to have to adjust to smaller houses again...if not for reasons of home affordability, then for reasons of the costs of energy to heat/cool the same.
or build more energy efficient houses such as a passive solar and high thermal mass designs...you could have the cheap square footage (sweat equity) while eliminating space heating/cooling costs, with the only energy expenditure for electricity. i grew up living in a 900 sq ft house and it sucked, especially during the winter. psychological considerations (cabin fever) as one ages are as important as energy ones.
I liked Sterlinggirl's analogy...just as people are going to have to get away from SUVs and drive smaller cars, people are going to have to adjust to smaller houses again...if not for reasons of home affordability, then for reasons of the costs of energy to heat/cool the same.
I believe that you and sterlinggirl are right about this transition to smaller vehichles and homes. I've always liked this E. F. Schumacher slogan, Small is Beautiful. Maybe it will extend to smaller bodies too, making obesity a thing of the past.
Depression. There is one hell of a debate that's been going on here--and now over on the "national" forum--about whether that is going to happen or is happening on the national level. The question for this forum is whether or not it happens in Colorado. There seems to be three scenarios:
1. There won't be a depression on the national level and there won't be one here.
2. There likely will be one on the national level, but Colorado won't feel it or it will be much shallower here than elsewhere.
3. There likely will be a national depression, and it will affect Colorado as adversely or even more adversely than the rest of the country.
My personal opinion is that we are headed for Scenario #3. I don't want this post deleted, so I will henceforth limit my comment here on the national scene to saying that enough waste, policy mischief, and stupid decisions by people all the way from John Q. Citizen to the President of the United States have been made across the nation to make a national depression inevitable. There are a ton of posts over on the Politics and Economics forums to describe that viewpoint quite eloquently.
Now, as to why I think Colorado is in trouble specifically: Much of the state economy is tied up in real estate speculation and development--the very activities that will fall first in a depression. I've said that umpteen times before, but few want to acknowledge that reality. Colorado has been also busy subdividing, paving over, and de-watering a good chunk of its ag industry--the one industry in the US and Colorado that actually has some hope of benefiting from the coming economic turmoil. Colorado is heavily reliant on tourism to sustain its economy--more specifically tourism that is very energy-dependent. With the airline industry circling the drain, gasoline approaching $4 and probably higher, and disposable income being mostly spent at the gas station and grocery store, how can anyone think that tourism is not going to take a big hit? Maybe not this summer, but probably by next winter and for a long time thereafter. Then there's that "mailbox economy" of retirees, pensions, and equity transfers into Colorado from many other--now formerly--booming real estate markets in places like California, etc. All of that money is now shrinking--either from downright deflation in the equity, debt, and real estate markets, or by being eaten up by commodity price and living cost inflation on the expenditure end. The cash cow is drying up. Finally, there is all of the other industrial and commercial activity in the state. Despite its growth in the last few years, Colorado is not an industrial powerhouse and hasn't been for several decades. If ones deducts the amount of industrial activity associated with construction and real estate development from the industrial base, there isn't a hell of lot left in Colorado. As for service and retail, it depends on the health of the rest of the economy. If the rest of the economy is a hurtin' frog, it's gonna be, too.
That leaves the energy industry to try to carry most of the Colorado private sector economy on its back. Of course, the same high energy prices that make it possible for people to make a living in that industry are the same high prices that erode the buying power of everyone else trying to live in the state. So, even that positive economic note has its negative side. And energy can't support the whole Colorado population and economy alone.
What's left? Government employment. Of course, how secure can that be with federal deficits and debt exploding--and promising to go even higher when revenues falter in a downturn/depression? As for the state and local government, they rely on the economic health of the rest of the Colorado economy for their revenue stream. In case no one has noticed, they have been essentially living hand-to-mouth during the boom. What do you suppose the outcome will be in a bust?
From the onset of the Silver Panic in 1893 until after World War II, Colorado was pretty much a state with beautiful scenery and a jerkwater economy that grew very slowly for decades. Three things made the economic growth and population growth possible in the last few decades: cheap energy and transportation, a prosperous national economy with lots of discretionary income, and a huge and disproportionate influx of federal dollars into the state. With at least two of those factors, and probably all three, facing serious and possible permanent decline in the next years, the Colorado ahead will likely behave a lot more like that Colorado of 1893-1945--very slow, if any growth, stagnant income and wages, and a stagnant or declining material living standard. All very possibly mixed in with a population that is stagnant or declining. Soon we will be talking not about how many people can or will be able to move into the state, but how many people will HAVE to move out because there is no longer any way for them to make a living here. And, no, it won't be the first time that has happened in the state's history.
Neither of us has anything to gain from what we post here.
now you know that that's not exactly true...by your own admission, you own rails and talk em up quite a bit on this forum. so if rails go up, you stand to gain. so let the reader beware.
my boilerplate: i'm a geologist who explores for and exploits natural resources, primarily oil and gas, precious and base metals, and gemstones. i'm also a trader and speculator who hedges and speculates on those natural resources among others. my advice to anyone who wants to get into the trading business is don't! but if you think that it's your calling, then find a successful trader and ask him/her to become your mentor. and then be prepared to spend years of study and being broke until you figure it out, if you ever do. this business is not a get rich quick one. if anyone here thinks that someone can make the markets dance to their wishes then they are fools. remember the lesson of bunky and herbert hunt who damn near cornered the silver market in 1979-1980 until the exchange changed the rules. never forget that exchange rules trump money and government who prints money trumps everyone. i do not stand to gain at all by posting opinions here cuz my influence is laughably nil.
Well, multitrak, I have about as much influence over things as you do, probably less. I'll also bet we know some of the same people. I knew some folks who were involved in the hard rock mining industry in Colorado before the aftermath of the Hunt affair pretty much killed the base and precious metals mining industry in Colorado. Those mining folks pretty much all had to pursue "alternative career paths" after that happened--most of them outside of Colorado. That was just another aspect of the "bust" in the 1980's that raised hell in a good chunk of Colorado. Some of the stuff that's going on now smells an awful lot like like that speculative horse**** that busted things back then--just in different industries this time--like real estate. As a history professor of mine once said, the hardest thing about being a historian is watching people make the same damned mistakes over and over again.
Bob and I have something in common: Neither of us has anything to gain from what we post here.
Quote:
Originally Posted by multitrak
now you know that that's not exactly true...by your own admission, you own rails and talk em up quite a bit on this forum. so if rails go up, you stand to gain. so let the reader beware..
Now, as to why I think Colorado is in trouble specifically: Much of the state economy is tied up in real estate speculation and development--the very activities that will fall first in a depression. I've said that umpteen times before, but few want to acknowledge that reality. Colorado has been also busy subdividing, paving over, and de-watering a good chunk of its ag industry--the one industry in the US and Colorado that actually has some hope of benefiting from the coming economic turmoil. Colorado is heavily reliant on tourism to sustain its economy--more specifically tourism that is very energy-dependent. With the airline industry circling the drain, gasoline approaching $4 and probably higher, and disposable income being mostly spent at the gas station and grocery store, how can anyone think that tourism is not going to take a big hit? Maybe not this summer, but probably by next winter and for a long time thereafter. Then there's that "mailbox economy" of retirees, pensions, and equity transfers into Colorado from many other--now formerly--booming real estate markets in places like California, etc. All of that money is now shrinking--either from downright deflation in the equity, debt, and real estate markets, or by being eaten up by commodity price and living cost inflation on the expenditure end. The cash cow is drying up. Finally, there is all of the other industrial and commercial activity in the state. Despite its growth in the last few years, Colorado is not an industrial powerhouse and hasn't been for several decades. If ones deducts the amount of industrial activity associated with construction and real estate development from the industrial base, there isn't a hell of lot left in Colorado. As for service and retail, it depends on the health of the rest of the economy. If the rest of the economy is a hurtin' frog, it's gonna be, too.
Okay, so if Colorado is in trouble specifically, then exactly which states (and which specific cities) are in good shape? I'm listening....
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2K sq ft is entry level these days for a family of four.
