Why Portland Home Prices and Building Permits Rise While the Suburbs Recover Slowly

3 12 2012

The full answer to the question in the title is in the Census Bureau statistics and details, however you can see what is happening in this simple statement I received via email correspondence with a Portland area economist.

“But many suburbs look like they aren’t returning to normal any time soon. Excess inventory – still unsold – must be scaring off developers in certain communities. For those cities, this is a very nervous making. Will they ever fully recover?

Meanwhile, developers seem optimistic that they can continue selling apartments and condos to the huge numbers of younger adults with college degrees that keep moving to the City of Portland and avoiding the suburbs.

That is it in a nut shell.





Icelandic Debt Problems and Vote

15 01 2010

http://www.economist.com/businessfinance/displayStory.cfm?story_id=15213705

The economist has a great article on the Icelandic debt woes.  It outlines the possibility of a future flood of government and international defaults.

My analysis of this is that the investors took the risk in this case.  The “savers” in this case should have exercised more caution in picking their accounts.  A higher rate of return should be assumed to come with a higher rate of risk or volatility.  My suggestion?

  • Consider any investment/savings in a foreign country with “high returns” to be a risky investment, even if it is a “savings” account.
  • Never use a savings account without a Government or Government corporation (ie FDIC) guarantee.  In the case of Icesave, even the savings insurance plan failed investors and savers.

Below are some links that illustrate how much we underestimate endemic risk.

http://www.moneyweek.com/personal-finance/which-bank-will-give-you-52-on-your-savings.aspx

http://www.lovemoney.com/news/manage-your-finances/is-saving-with-icelandic-banks-safe-2954.aspx

An investor or saver reading one of the above articles might think they were secured by a government guarantee.  However the Economist article clarifies in the text I copied below.

“Landsbanki’s products were not covered by the domestic deposit-insurance schemes of the target countries. Under a passport system covering the European Economic Area (a broader, watered-down version of the European Union), investors were supposedly covered by the Icelandic deposit-insurance scheme.”

Clearly now that the European countries paid back their savers and they now want to money from Iceland.  Now a vote will decide the issue.  I think there is serious confusion on how savers are protected domestically and internationally.  Clearly there is confusion and misinformation about international savings.  Governments need to better inform, outline and legislate how transnational investments are covered under Deposit Insurance plans.

My advice to savers? Find a good domestic Credit Union or established bank.





Bankruptcy Surge

5 01 2010

http://www.huffingtonpost.com/2010/01/04/bankruptcies-surge-32-per_n_410824.html

I copied relevant portions of the text from the article above below.  There is some really good analysis of the 2005 Bankruptcy law.  John Pottow, the bankruptcy professor from the University of Michigan is correct in his points that the law just made more paperwork while not changing the dynamics of people in serious debt.

Its also really fascinating that Alaska and Nebraska, the states with the lowest bankruptcy increases saw bankruptcies grown by 12%.  Thats still a big jump in bankruptcies.

“For three years, filings have been steadily rising back toward levels reached early in the decade before Congress overhauled the nation’s bankruptcy laws. The 2005 alterations made bankruptcy filings more cumbersome, a move that followed fears from lenders that some consumers were abusing the system to wipe away debts.

Bankruptcies surged to slightly more than 2 million in 2005 as consumers rushed to file before the new law took effect but then plummeted to 600,000 in 2006. They’ve been climbing ever since and in 2009 became the seventh-highest year on record, behind only the years 1998 and 2001-2005.

The 2005 spike had been preceded by a steady climb from 1.5 million in 2001 to 1.6 million in 2005.

John Pottow, a bankruptcy professor at the University of Michigan, said the return to the highs of earlier this decade illustrates the failures of the 2005 overhaul bill. He said the measure largely made filings more costly and time-consuming by forcing consumers to undergo a paperwork-heavy test to determine eligibility for Chapter 7 bankruptcy and adding liability for attorneys who provide help.

“It never made sense in the first place that you could change the laws and make all these bankruptcies go away,” said Pottow, who would like to see the 2005 law changes repealed. “If people are encountering financial distress, you can only scare them away for so long before they come back again.”

While every state saw a rise in bankruptcies, Alaska (up 12 percent), Nebraska (12 percent) and North Dakota (14 percent) performed best.”








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