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.

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Quality of Hire Metrics

24 04 2012

In recruitment and business statistic circles, the term quality of hire is popular as of late. Many firms are discovering new methods to track and quantify this data.

One of the most important ways for a business to gather these statistics is by tracking the source of applicants. This white paper by Indeed should be required reading for recruiters and anybody who does recruitment advertising.  The article stresses the importance of quantifying your applicants based on source.  A quick comparison of average applications from Craigslist, Monster and Career Building paints a pretty clear picture of why the later two are in decline (provided by Craigslist though). Craigslist provides far more average page views for a fraction of the cost. Specialized job boards however are doing quite well in the recruitment advertizing market. To track your hiring metrics you need a feature in your applicant tracking system. If you still get resumes via email then you can tack them via a simple spreadsheet as well. Once a company has a good grasp of its recruitment statistics, the next step is too compare them with quality of hire metrics.

Quality of hire is a broad term but it can be any number that compares the hiring source, job expectations or qualifications with eventual results. For example Company Z hired 200 employees in 2011. Of those 100 employees only 50 stayed on through a full year. In that particular snap shot, the quality of hire would be 50% for the entire recruitment process. However that is only one simple method of evaluating quality of hire. Another method might compare quality of hire of external versus internally referred applicants.  A company could even compare the quality of hire between recruitment from different colleges, staffing vendors or job posting sites.  These statistics could be used to create mathematical models predicting success of applicants based on some specific qualifier. Smaller businesses should note that a small sample size is not enough to make assumptions and that correlation does not imply causation. At the very least though, quality of hire metrics can help evaluate better spending on recruitment advertising.

Additional reading:

http://www.shrm.org/Research/Articles/Articles/Documents/Whitepaper_Quality_of_Hire.pdf






Bankruptcy Index

17 02 2010

In the spirit of the highly successful University of Oregon Index of Economic Indicators, I decided to start work on an Oregon Bankruptcy Index.

The goal of this index would be to provide a summary of the vast available economic data as it pertains to bankruptcy filing and bankruptcy risk in Oregon.

The method behind this index might gauge unemployment levels, interest rates, business loans, and other economic criteria.  The data I review and include will depend highly on how my econometric analysis from earlier posts turns out.  Data with a large correlation would be prime for more research and possible addition into the index.  A solid index of numbers might then allow for prediction of future bankruptcy filings.

The obvious benefit of this index could be for real estate companies, banks and investors.  The index might help gauge economic and legal/litigation risk levels.  After the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, bankruptcies went down significantly only to rise up slowly towards the current economic downturn.  Bankruptcy lawyers have learned the law and are now better at getting their clients though the new regulations with five years of experience against the 2005 legal changes.  The index might be able to include and factor in such changes in the regulatory environment.





Bankruptcy Charts

25 01 2010

Below are early graphs of my Bankruptcy data project.

The data seems pretty straight forward at first.  Bankruptcies slowly climb upward from early 2008.  Divorces stayed fairly steady and the Federal funds rate and employment statistics are too small to contribute significantly to this chart.   However the next chart examines the same numbers with the log value of each one.

Notice the complete collapse of the Fed rate.  This is in connection with the economic recession and intended  lowering of interest rates.  The log version shows the Bankruptcy and Divorce data almost converging.    It will be interesting to see how the regression analysis runs with this data.

The data is from the following sources:

http://www.bankruptcy-statistics.com/ (Bankruptcy numbers)

http://www.dhs.state.or.us/dhs/ph/chs/data/div.shtml (Divorce numbers)

http://www.bls.gov/ (Unemployment Numbers)

http://www.newyorkfed.org/markets/omo/dmm/fedfundsdata.cfm (Federal Funds Rate)





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.





I have an Equation

30 12 2009

For my bankruptcy project I intend to study the relationship of Oregon and/or nationwide bankruptcy filings against a series of factors.  I became curious of this subject in my bankruptcy work.

This is a continuation of an earlier post on an economic project I am working on.

The main variable being The number of Bankruptcy filings in a region every month for a series of years. The realtion of this value will be tested relatively to the following variables (each according to monthly numbers).

  • The Federal Funds rate, the interest rates that which banks offer each other loans.
  • Regional unemployment statistics.
  • Home prices (ie median value, assessed value or market prices).

Those three are the primary values I expect to have significant relationships to bankruptcy filings.  There is however an additional “wild card” variable:  Divorce data.  I will include divorce filings by state to include them in the equation.

Hopefully when the data is compiled we can see if there is a meaningful correlation between bankruptcy and divorce filings.  Expect more to come on this subject.  There is quite a bit of data to mine.





American Debt Levels

24 12 2009

NYT Interactive Feature on American Debt

The NYT has a great piece on American debt levels.    This picture should be a flashing red warning light to anybody.  Debt can be a useful tool in buying a home, or car.  However there is clearly not enough saving by Americans.  When credit is in high demand or short supply, interest rates go up.  So when individuals, business, and governments all seek credit, it drives up interest rates.  However one might note that US real interest rates are extremely low.  The world economy is an open system and when other nations save it allows the United States to keep interest rates low by borrowing internationally.

This chart puts the increasing US Debt levels into perspective.  The chart shows the falling US historic capital formation.  Investment is extremely  cyclical.  Companies typically don’t make huge investments when cash and credit are in short supply.  Greg Mankiw also has a great article on economic investment.

The WJS has a great piece I quoted below on this subject.  Mr Varian is the chief economist at Google as well.  His article scores the need for private investment.

“Unfortunately, savings are currently not getting translated into investment for three reasons. First, one of the largest categories of physical capital is real estate, and we have already overinvested in that area. Second, businesses are reluctant to invest in new plant and equipment due to the weakening economy. Third, the sorry condition of bank balance sheets has made them reluctant to lend. The net result is that money is piling up in ultrasafe assets like Treasury bills, without being invested in ways that would build a more productive economy.”

Clearly there is a need for more long term investment in the US economy.  This is where the government needs to promote infrastructure spending by businesses and states.  Encouraging them to do that is the tricky part.

Creditor-Debtor tip #2:

Learn your states debt statutes.  What does that mean to you? If you don’t not make payment on an old unsecured debt for X years, the debt is often NOT COLLECTABLE.  Of course this does not apply to many forms of debt like Student loans and mortgages.  Each states has its own set of rules for how long creditors can collect old debts.  So each payment you make can establish the debt as valid for another X number of years.  As always make sure you consult with a lawyer regarding legal matters.








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