From Bloomberg:
Immigrant Dreams to Keep Sparking U.S. Housing Recovery
Efforts to revamp U.S. immigration laws may bring at least one unintended benefit for the economy: The nascent housing recovery will probably get an added boost.
The number of foreign-born homeowners will increase by 2.8 million in the decade ending 2020, compared with a 2.4 million gain in the previous 10 years, according to a Mortgage Bankers Association study that didn’t assess the potential impact of any new legislation. Research by a group of Hispanic real-estate agents concludes the increase could be even bigger if undocumented workers were put on a path to citizenship.
Immigrants, who hold more positive views toward owning a home than native-born Americans, are increasingly likely to buy a house the longer they live in the U.S. and the more prosperous they become, the research shows. They will account for more than 50 percent of the rise in home buying in six states this decade, including California and New York, according to the report.
“We’ve probably underappreciated this powerful force that is already resident here and is so upwardly mobile that it pushes up the housing market from the bottom,” said Dowell Myers, author of the MBA study and a public policy professor at the University of Southern California in Los Angeles who studies housing demography. “There’s this incremental momentum that’s built up.”
Friskies
From the Record:
Economy elevates North Jersey property tax appeals to new high
The number of tax appeals filed in Bergen County is expected to hit record highs as property owners seeking lower tax bills continue to challenge their assessments.
Taxpayers started queuing up early Monday, the last day property owners in most communities in the county could file appeals with the county Board of Taxation. They were there before the office opened, with a steady flow all day, said Robert Layton, county tax administrator.
His staff was still processing the “piles” of applications on Tuesday and a final tally would not be made until June or July. But Layton said he expected appeals to hover around 14,000 or 15,000 — a record in his 34 years with the Tax Board.
Meanwhile, a similar scene unfolded in Passaic County, where Tax Administrator Jay R. Schwartz said he expected at least as many appeals as in 2012 — itself a record at nearly 10,300.
“We had people … snaked through our lobby, out the front door, down the side of the building, and into the next lot,” he said. “It was about a three-hour line to get to file the appeal.”
“In the 15 years, it’s the most that I have seen,” he said. “It’s gone up the last three years exponentially.”
The flood in tax appeals is the result of the continuing slump in the real estate market.
Municipal governments facing the deluge have already been crushed by the pressure of reimbursing taxpayers thousands — and sometimes millions — of dollars as a result of past successful appeals. And the towns are turning to the state Legislature for at least partial relief.
what’s up with that basketball NJ coach? why sports rule college? No lesson learned since Papa Joe. Shameful
We’ve probably underappreciated this powerful force that is already resident here and is so upwardly mobile that it pushes up the housing market from the bottom,”
It is what some of our parents and many of our grandparents did. It did not create an increase in pricing, but it did create an increase in building. There isn’t that much land left around here. Someone needs to move out west or down south.
Immigrant population as of 2010
California – 27.2%
New York – 22.2%
New Jersey – 21.0%
Florida – 19.4%
Nevada – 18.8%
Hawaii – 18.2%
Texas – 16.4%
Massachusetts – 15%
Maryland – 13.9%
Illinois – 13.4%
…
Everyone else
…
West Virginia – 1.2%
Fabius Maximus says:
April 2, 2013 at 11:29 pm
Coming to a subdivision near you.
There a re a few things that really worry me about this. Leaving aside the real estate side of buying a house with a pipeline underneath, I do wish we still had Kettle around to discuss.
We have a pipeline built in the 40s to pipe oil north now re-purposed to pump the output of the tar sands with a higher viscosity(therefore higher pressure) south, reversing the pressures in parts of the pipeline.
With these buried pipelines and the new incidences of localized earthquakes associated with fracking, when the licenses are issued to the gas companies are they factoring in that buried pipelines may be hit with seismic shocks.
Never let a specious argument prevent someone from the soapbox…..
REVIEW & OUTLOOK
Greens fret over pipeline leaks but are mute about train derailments
What’s the difference between an oil spill from a pipeline and an oil spill from a train? Answer: A lesson in political opportunism.
The media have played up Friday’s discovery of an oil leak in an old Exxon XOM -0.21%Mobil pipeline near Mayflower, Arkansas. It isn’t clear how much oil escaped from the 850-mile Pegasus pipeline, but Exxon says it responded with teams and equipment able to handle as much as 10,000 barrels and that by early Saturday it had stopped the flow and begun cleanup.
The real reason for the headlines is that Pegasus was delivering heavy crude from the Canadian oil sands to Texas. This is similar to the oil the proposed Keystone XL pipeline would deliver from Canada to the Gulf Coast, and the anti-Keystone capos are using the Exxon spill to scare up political opposition to the new pipeline.
Massachusetts Congressman Ed Markey rewrote a familiar press release, and Sierra Club Executive Director Michael Brune said “this latest toxic mess” proves that “it’s not a matter of if spills will occur on dangerous pipelines like Keystone XL, but rather, when.”
All of this is in marked contrast to the non-reaction last week when a Canadian Pacific Railway CP.T -2.06%train carrying crude to Chicago derailed in western Minnesota, spilling about 15,000 gallons. Much of the press also ignored the train accident, though the spill was certainly serious and also took place near a town.
The train wreck illustrates one economic reality of the U.S. shale drilling boom, which is that energy companies have turned to shipping by rail as pipeline capacity has been filled. The volume of oil transported by U.S. rail has surged to 233,811 carloads in 2012 from 9,500 as recently as 2008. This means boom times for freight rail lines, including Burlington Northern Santa Fe, which is owned by Warren Buffett and Berkshire Hathaway BRKB +1.61%.
Rail is not the safest way to transport oil, however. Journal reporters recently analyzed federal data and found that railroad-related oil incidents are soaring, with 112 oil spills reported from 2010 to 2012 compared to 10 in the previous three years. The spills are small compared to the volumes that trains are carrying, and railways are essential in areas that aren’t connected to pipelines.
By contrast, oil pipelines carry far more crude and have fewer leaks per mile. They also present fewer safety risks than the 2008 explosions when Burlington Northern Santa Fe oil cars caught fire in Oklahoma, requiring evacuations. “Railroads travel through population centers. The safest form of transport for this type of product is a pipeline,” former Clinton National Transportation Safety Board Chairman Jim Hall told Reuters after the Minnesota accident.
The greens are flogging claims that Canada’s oil-sands crude is more corrosive to pipelines than is other oil, and that this makes the Pegasus leak (and future Keystone leaks) inevitable. Oil experts refute that claim. In any case Pegasus was built in the 1940s, and about half of America’s 2.3 million miles of pipeline were built more than 40 years ago. The best way to minimize leaks is to replace this aging network with modern pipelines such as the one planned for the Keystone XL, which use technology that instantly recognizes leaks and immediately shuts down oil flow.
No form of energy production or transport is without risks, so the issue is how to do it as safely and efficiently as possible. Canada and North Dakota are going to keep producing oil as long as America and the world keep using it, which is likely to be many decades. The tale of these two oil spills is one more argument to build the Keystone XL.
Good Morning New Jersey
It is what some of our parents and many of our grandparents did. It did not create an increase in pricing, but it did create an increase in building.
In 1960, NJ was the 3rd most expensive place in the US to by a house.
Hawaii – $20,900
DC – $15,400
CT – $16,700
NJ – $15,600 (31% higher than US Median)
NY – $15,300
US Median – $11,900
And as far back as I have data, 1940s, it was even more expensive:
DC – $7,568
CT – $4,615
NJ – $4,528 (54% higher than US median)
NY – $4,389
US Median – $2,938
6 –
My first gut reaction to Fab’s post last night was that since the failed AK pipeline was so old, it supports the argument that we should build new pipelines to prevent accidents. Otherwise, we will continue to use older pipelines or repurpose old pipelines whose original design was not to move tar sands oil from north to south.
Arguing against the construction of newer pipelines might actually put people and the environment at greater risk.
New Jersey prices were always higher because of our proximity to NY, do you have the data in the percentage of increase within the state from one year to the next mirroring what has happened to house prices here in the past 8 years?
what’s up with that basketball NJ coach?
If this made the news and is getting this much attention, then there are many more coaches out there in middle school, high school, college, and pros who will need to get fired.
Long time reader here. Looking to finally buy my first home. The only town that I found that offers diversity, decent schools and decent commute to midtown is Fair Lawn. Anybody here live in Fair Lawn or have any knowledge about the town? Only things I’ve been staying away from when browsing homes in Fair Lawn is to look closer to the Paramus/Glen Rock borders and stay far away from the Paterson side. I’ve also been having a hard time finding an updated floodzone map of Fair Lawn.
Thanks for everybody’s help
Natasha that was my first thought. Getting used as a tackling dummy while getting verbally abused by my HS football coach finally made me give the game up. I won’t even tell my wife about my first two hockey coaches she would never let the little pains lace them up.
We have become a nation of pansies.
Grim,
You have the average tax bill historically? That should tell the story of our times.
#12
I live next to Fair Lawn in Hawthorne (as a renter though).
Fair Lawn seems like a decent town to me, but as you say, you would want to stay away from the Passaic river side (both to keep away from Patterson and to keep away from flooding…There were some times in the past few years where I couldn’t take Rt. 20 for weeks). Also, I heard there was some secret mafia war between jews, russians, and russian jews, which resulted in a car bomb going off in someone’s driveway about a year and a half ago. That’s probably a bit over-blown though.
The parts of Fair Lawn that border Glen Rock/Ridgewood/Paramus are very nice though. The thing that will probably infuriate you the most about Fair Lawn is it’s bizarre system for street address numbers, which involve two two-digit numbers and dashes. I wish someone would explain that to me actually.
FTB congrats and good luck anything near route 4 is within the burgulary zone of Paterson. Had a friend who grew up there and their house by midland ave was robbed 4 times during his childhood. Others in the area had a similar experience. It floods near saddle brook park. I remeber it going up to the higfh school at least twice once being Hurricane Floyd. that is about all that I can tell you about Fairlawn
Hey does anyone know what info you need to qualify for a condo loan from building itself. What do banks want? Meeting minutes, cash on hand, amount of maint delinquencies etc.
I qualify but I am pretty sure building does not qualify only cause they have no records since 2011 as they lost all records in Sandy and are not recreating any.
Grim
to continue our conversation from yestarday-
85 Knollton Rd. Allendale must have been one that fell off listings because it is on for 180+ days and no pictures, hmmmm wonder why
15 Franklin, Montvale is one that is new, but it is a dormered cape as far as I am concerned-looks like my cape from the front, built in 1900 and way overpriced.
#15 – Thanks and yeah the street address system is indeed bizarre.
#16 – Haven’t heard or read anything about burglaries so thanks for the heads up. Would you say it’s better to look on the north side of rt 208 then?
#13 Painhrtz
My daughter had a very tough basketball coach (male) when in middle school. He acted exactly the same when parents were there as he did when we weren’t. If we didn’t like his methods we could pull our kid off the team. He didn’t care how good or bad a player they were, he treated them all the same. He told my daughter to stop running like a girl:) My daughter respected that and learned a lot from him (she wasn’t the best athlete). She had another coach who was much softer, but hated playing for him because she felt invisible-he only focused on the “good” players.
Hate the dashes, as far as I’m concerned they were invented to make finding comps by looking at street number ranges impossible.
There will be another 2 million homebuyers eligible to buy a home after losing their homes to foreclosure and short sale during the downturn
http://www.bloomberg.com/news/2013-04-03/americans-seize-second-chance-post-foreclosure-mortgages.html
do you have the data in the percentage of increase within the state from one year to the next mirroring what has happened to house prices here in the past 8 years?
http://www.ritholtz.com/blog/wp-content/uploads/2013/01/case-shiller.jpg
Do you guys know of any agents that are really familiar with Fair Lawn? I had a weichert agent contact me about a listing but I noticed she’s based out of Wyckoff and lives in Wyckoff so I’m not sure how familiar she is with Fair Lawn. I’d rather use someone that lives in the town.
#23
ok that shows the bubble of 2005-2007, where is the data showing a similar bubble in the 60’s?
Wow, now immigrants are going to reinflate a housing bubble? This echo bubble is proceeding very quickly! I remember the same immigrant fallacy from circa 2006 during the recent run-up to the housing bust.
I guess we’re already in the final stages of this echo bubble.
24 – My broker lives in Fair Lawn, Steve Kopf, email me and I’ll send you his number.
ok that shows the bubble of 2005-2007, where is the data showing a similar bubble in the 60′s?
There is very little housing data from 50 years ago. Would take years of research, and lots of money, to put together anything even remotely like Case Shiller from that era.
26
Add the previous homeowners that lost their homes to foreclosure and shortsale. By 2014,2 million will qualify and continue to grow year after that. Demand for homes will grow. Millenials will start going on their own. Their numbers is larger than the boomers
#27 – Thx Grim. I should prob know this but what is your email address?
I made a statement about prices of houses that may have been misunderstood then. In reference to immigrants causing the prices to rise yet again perpetuating the bubble, I said in our parents’ time they built more houses. You gave me data showing that NJ prices were higher then too-yes they were high but that doesn’t mean there was this huge bubble that inflated prices to unnatural and unsustainable levels.
CoreLogic showing strong growth in year over year home prices in NJ in Feb:
http://www.corelogic.com/research/hpi/february-2013-home-price-index-report.pdf
NY Metro
SF Including Distressed up 9.7% YOY
SF Excluding Distressed up 10% YOY
NJ Statewide
SF Including Distressed up 3.3% YOY
SF Excluding Distressed up 3.7% YOY
Grim,
Thanks for the info on radon yesterday. We’re probably not going to make an offer on the place (in Doylestown.) We’d have to redo a 1994 kitchen and two baths, replace carpet floors in most of the rooms with wood, ditch some family antiques we were hoping to keep, and do without two rooms we want. None of them on its own is a show stopper but taken all together, not worth the sacrifice. What surprised me was a comp that was slightly larger in the same development. It had a 2012 tax bill of 6.3k. The one we were considering had a 2013 bill of 7.5k. Either an uneven assessment or we’re in for more surprises on what we assumed our taxes would be.
Unnatural and unsustainable period
Most places near me would advertise a 1994 kitchen as a updated kitchen.
Heck when my realtor sold me my house in December 1999 she listed the middle bathroom from 1971 as updated, compared to the original 1955 bathroom it was.
Anedotal just heard from another friend in Hoboken, lots of condos being snapped up at way higher prices I am now hearing 1.7 M for a 3BR waterfront condo. Money from overseas mostly Singapore AKA Chinese buyers, and parts yonder, some buying multiple units for the extended family. We even have another new Chinese family at daycare. Mom had trouble with the locking door, was kind of funny hearing her curse at a door because she did not know how to press the exit button.
re: Fairlawn Radburn area is it’s own little fiefdom with an association. If you like indoctrination move there.
http://www.radburn.org/
When I bought my house in 1996, the house was listed as having an “updated kitchen” — with dark plastic laminate refaced cabinets, yellow countertops, harvest gold appliances, geometric yellow/gold floor, and yellow striped sanitas wallpaper. Sure, it was updated — in 1979.
Anedotal just heard from another friend in Hoboken, lots of condos being snapped up at way higher prices I am now hearing 1.7 M for a 3BR waterfront condo. Money from overseas mostly Singapore AKA Chinese buyers, and parts yonder, some buying multiple units for the extended family
I guess we had all better prepare our children to be the new minority in the US. They will be occupying the run down apartment houses in the worst parts of Newark, Jersey City, Paterson, etc.
http://www.beefissuesquarterly.com/millennialswilldisplacebabyboomersasdominantdemographic.aspx
Really? Beef Issues Quarterly?
39 – Only the lazy, entitled ones. Class is the new race, it doesn’t matter what color you are, as long as you are wealthy enough.
We are going to get a repeat of Bob Toll’s 2007 famous call where he said “We’re killing ’em in Hoboken”
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=apxf8VonbX4U&refer=us
History rhymes thank the FED’s cheap borrowing the s+hite storm in Europe and pending housing bubble bust in Asia.
they fired the coach. a civilized society has no place for child abuse. Wonder what would happen if your boss decided to get physical with you.
JJ, after your pending real estate transaction….where are you putting your money?
“JJ, after your pending real estate transaction….where are you putting your money?”
That’s easy. Into the house warming party.
Grew up in Fair Lawn. High school friend owns the Dutch House, historical bar in town. There is no secret war between Russian /Jews and Jews . The town has become more orthodox, but not enough to affect it’s services (Suffern). Still a solid town .
#47 – Thanks. My family and I are Korean so even if there was some sort of war, I don’t know if it would directly impact me if we bought in Fair Lawn. Do you have any recommendations of which areas of the town I should stay away from? I noticed Radburn has an extra association fee that residents have to pay. Is it worth paying that fee or should I look outside of the Radburn district? Thanks again for your help.
I am almost certain Fair Lawn has an ordinance prohibiting any overnight parking of vehicles on residential streets. My friends tell me they just have to notify the police if we are going to stay overnight. Their driveway barely fits 2 cars and they are close to the Raeburn exit area. Probably not a deal breaker..but something I would want to know if I were moving to the town.
I found that out after I moved into my town and recieved a love note from the local police.
I think laws like that are designed to discourage parking on the street so that SFH’s don’t get broken into illegal rentals. You can’t overcrowd a SFH if people don’t have a place to park.
49.HouseWhineWine says:
April 3, 2013 at 11:04 am
I am almost certain Fair Lawn has an ordinance prohibiting any overnight parking of vehicles on residential streets. My friends tell me they just have to notify the police if we are going to stay overnight. Their driveway barely fits 2 cars and they are close to the Raeburn exit area. Probably not a deal breaker..but something I would want to know if I were moving to the town.
Brian,
That is the reason precisely. Though if you ask the town leaders, they’ll make up some kind of crime-prevention excuse.
A town that prohibits overnight on-street parking should be a MUST for anyone buying a home in NJ.
I will only have cash if deal falls through. I am still in contract wiggling on price.
Here is the sticky point. The condo unit is empty. Couple moved out. Unit had minor stuff in inspection such as loose hand rail, deck needs some refinishing, some dead electric outlets, some electric covers missing, a water hose that is busted etc.
Owners are not fixing. Also I found out that condo may be ineligible for a mortgage. Even if I can get a mortgage building is missing a lot of paper work it could drag on for 2-3 months. Given it is a beach unit. The need to furnish it and rent asap as summer is in a a few weeks. Or if they go to another buyer who does it contingent upon a mortgage if deal falls apart in a few weeks when buyer cant get a mortgage they are sitting on an empty unfurnished unit in July, too late to get a tenant in. Plus unit costs then like $1.400 a month
I am thinking they should give me 10K off, let me close ASAP in cash. I know I agreed on a price already. But they need to sell. And I think it is what it is. We could get this done today if they want. 10K aint much. If I walk away I just lose $1,000 if they walk away they could lose maybe 10k-30K the unit is bleeding them out $1,400 a month or they have to pay 7K to furnish it to get a tenant. And still eat 2-3 month and have to carry it through winter.
Libtard in Union says:
April 3, 2013 at 10:55 am
“JJ, after your pending real estate transaction….where are you putting your money?”
That’s easy. Into the house warming party.
#51
Even then it doesn’t always work. About 5 years ago, me and my buddy were looking at renting a small 2 BR SFH in Whippany. The old tenants were busted b/c they were harboring people in the basement. They still had the bunks nailed into the walls of the basement when we were looking at the place.
It had a spacious enough driveway to fit all the necessary cars, but that’s probably how they were caught.
cars are so 1999, who owns cars anymore.
grim says:
April 3, 2013 at 11:21 am
A town that prohibits overnight on-street parking should be a MUST for anyone buying a home in NJ.
Agenda 21 yo.
“cars are so 1999, who owns cars anymore. “
Re 52, so agree with Grim. I made a point of this in my town when I noticed someone actually having the nerve to rotate 4 cars, putting one of them on the grass. Seriously?? Police told me they weren’t sure an ordinance existed prohibiting this sort of thing. With the insane increase I received in taxes for renovation, I told town that if they didn’t do so something about it quick, I would gladly park on my front lawn too. Was told this was never an issue here. I said, well get used to it, rev up your ordinances quick and get used to more attempts now that junior has moved back home.
TV,
Be even more worried if cinder blocks accompany the car parked on the lawn.
Re 48. Each area has pluses and minues. I’m happy to address any specific questions you have. Radburn does have it’s own pool and identity. Not sure if fees justify its association.
Already some warn notices posted for April http://lwd.state.nj.us/WorkForceDirectory/warn.jsp?printacrossID=1&StartDate=04/01/2013&EndDate=04/30/2013&DisplayDate=April%202013
Looked in Fair Lawn almost thirteen years ago-I think Radbun section house prices were higher then rest of Fair Lawn too. I could be wrong.
Fair Lawn, there are no bad neighborhoods. Larger lots and bigger homes make for higher priced homes in certain areas of town. Generally if you are further away from B’way and the Passaic River the prices are higher. Off Maple Ave, south of 208 is also smaller homes and lots with cheaper prices. Flood zones are generally along the Saddle River and Passaic River. T. J. is considered the better of the 2 middle schools and Radburn and Milnes are the preferred grade schools.
With regard to Radburn, the fees are generally about $2400 per year. There are 2 pools which are for Radburn residents only. Radburn Association has a variety of activities and programs for residents only. There are the original Radburn homes as well as homes built later that are not historical but a part of the Radburn Association.
There are 2 train stations along the Bergen Line. One is in the heart of town near the intersection of Plaza Rd & Fair Lawn Ave and the other on B’way near the Elmwood Park border.
Happy to answer specific questions if you have them. I lived in Fair Lawn for several years and have been working at an office in Fair Lawn since 2006.
#60 – Do you know if Saddle River Rd (south of Rt4) is prone to flooding? I know Saddle River Cty Park floods but wondering about the area south of 4. Thanks again.
#64 – The Fair Lawn area on the Saddle Brook side of Route 4 is generally at a high enough elevation that it does not flood, but there are exceptions. Agents have flood maps available through MLS. Not sure if they are the recently released flood maps.
Each house has its own flood rating. Just punch your address into NFIP to find your rating
JSMC [54];
I once looked at a FK in Holmdel (!) that was converted for illegal boarding house rental. The bath for the downstairs portion was a clawfoot tub stuck in the mechanical room, under a valve/shower head tapped off the overhead pipes. I don’t recall if there was even a toilet (besides the place as a whole).
Re 33: Wife likes the house. Apparently nothing is too hard for those who do not have to do it themselves. We’re now going to ask our agent to make a video of it (we’re out of country) and have a relative accompany the agent for a third party impression. I was sure my laundry list of issues would sway the scales. Just shows you, there are few problems money does not solve.
http://www.trulia.com/property/1039849867-49-E-Hudson-St-Long-Beach-NY-11561#photo-10
49 Hudson St Long Beach , NY 11561
This is the worst house I have ever seen for sale for sale in my entire life. Look at the pictures. I dare anyone to come up with a house with more horrible pictures in a for sale ad. I dare you!!!
The ADP National Employment Report revealed Wednesday that private employers hired 158,000 workers in March — the smallest gain in five months and below economists’ forecasts of around 200,000.
Many of the added jobs are also in low-paying sectors such as retail, food services and health care.
Thank goodness we’re insulated here and everyone is prestigious. And, is it true that Manhattan moves 2 feet closer to Ridgewood every year?
#69
Provided by: Americas Real Estate Advisors
Broker: Americas Real Estate Advisors
Listing Agent: Adam Herman
Even if he didn’t take the pictures, Mr. Herman should be fired just for letting them get put on the listing.
Those are typically the kinds of pictures an agent would post up if the intent was to convince the bank to sell a property significantly below market value.
#72
Oh.
In that case I take that back. Mr. Herman should get a promotion. ;)
Below market value for that house would be a negative number
grim says:
April 3, 2013 at 1:31 pm
Those are typically the kinds of pictures an agent would post up if the intent was to convince the bank to sell a property significantly below market value.
Seattle broker launches homebuying tournament platform for listings: For those home sellers in Seattle who know that a playoff system is the best way to determine a winner (see college football), Seattle brokerage Findwell has launched a new “March Madness”-like bracket system that will help them find the best buyers.
Eight buyers –- six chosen based solely on ranking of initial offer price and two at-large bids — will be pitted against each other in three single-elimination rounds,
The two homebuyers that make it to the championship round will try to woo the neighbors at a soiree at the home to win the tournament and the home.
.
JJ [75];
F that. I wanted to get five sellers in a hotel conference room and show off a briefcase full of money then hold a reverse auction.
Scarface!
Anon E. Moose says:
April 3, 2013 at 2:02 pm
JJ [75];
F that. I wanted to get five sellers in a hotel conference room and show off a briefcase full of money then hold a reverse auction.
73 – Promotion … indicted for fraud … all the same really
http://www.forbes.com/sites/ericbasu/2013/04/02/americas-baby-bust-busted-immigrants-are-the-answer-and-the-next-generation-of-entrepreneurs/
4/02/2013 @ 9:12AM
America’s Baby Bust – Busted. Immigrants are the answer and the next generation of entrepreneurs.
The Wall Street Journal posted a very interesting article talking about “America’s Baby Bust” by Jonathan V. Last. The one sentence summary is that America (along with other developed nations) is headed for economic disaster because of decreasing birth rates unless we encourage more Americans to have babies. I think this article highlights an important ailment that befalls all developed countries but prescribes the wrong cure. The answer is not to create economic policies to encourage Americans to have more babies but instead to encourage immigrants to come to America to have more babies.
The topic of reduced birth rates in developed nations has been of interest to me for several reasons. Having grown up in the 70s and been subjected to flicks such as “Soylent Green”and “Z.P.G.”, or the Star Trek episode “The Mark of Gideon”, the bogeyman that plagued doomsayers back then was overpopulation of the earth by people who just couldn’t stop having babies. This doomsaying was demonstrated most appropriately by Paul Erlich in his 1968 “The Population Bomb”, which began (in early editions) with the sentence “The battle to feed all of humanity is over. In the 1970s hundreds of millions of people will starve to death in spite of any crash programs embarked upon now. At this late date nothing can prevent a substantial increase in the world death rate..” Some of this existential hand-wringing is possibly due to humanity’s love affair with a good apocalyptic theory, postulated by Michael Shermer, intriguingly, as having been hard-wired into us by millennia of evolution in the face of persistent dangers.
A few decades later, it has become clear that not only is the world population as a whole not starving to death (obesity is a much greater problem for developed nations) but also that the average U.S. birth rate is decreasing, at least among white American women. Minorities and immigrants tend to have higher birth rates, which has led to xenophobic cries that America is being “outbred” by **fill in the name** of whoever is blamed for the most recent population boom. These fears and concerns completely ignore the fact that America is a land of immigrants (with the notable exception of Native American Indians) and that immigrants coming to the U.S. for the most part do become American citizens and bear the next generation of future American citizens, all of whom contribute to the economy through labor, taxes, purchases, and investment.
Hans Rosling has in several of his videos debunked the notion that the world will be overcome by huge numbers of human beings breeding and consuming everything in sight by cleverly and clearly demonstrating something obvious to any undergraduate biology student – people, like most other species, have less offspring when the child mortality rate drops to enable a balancing of the ecosystem. The child mortality rate, of course, is directly tied to the standard of living that a culture experiences.
“
There is a another, similar video by Mr. Rosling video on the Wall Street Journal’s website, at this link.
http://online.wsj.com/video/birth-rate-vs-child-mortality-the-river-of-myths/FB651C0B-E4E8-4D7E-9A30-862FC56F7B48.html?KEYWORDS=birth
As Mr. Rosling visualizes, reduced child mortality is clearly related to lower birth rates, which allows greater focus upon each child, which in turn allows more children to get a higher education and enjoy a higher quality of life. Thus the lower birth rate leads to less people, but happier people.
There is also some thought, as put forth by Carl Bialik, that the fertility figures themselves are skewed by the tendency of women in developed countries to have children later in their lives.
So, back to the Baby Bust, the question must be considered as to why we should change the clear trend in any developed country to have less people who lead happier lives? Why should we either encourage people to have more babies or encourage higher immigration rates to increase the population rather than following the apparently natural course of developing societies?
Quite simply, the answer is survival of the nation. Without a population that produces a higher birth rate than that at which developing nations historically have stabilized, the reduced working youth employee base cannot support the ever increasing aging population.
One factor mitigating this trend is that in developing nations people live healthier, longer lives and therefore can work much longer, increasing their lifetime economic contributions. In addition, with modern technologies and the emphasis on information as a method of currency, people can work in information and knowledge jobs much longer than they could in factory or other manual labor jobs, and can do so from their homes. As long as entitlement programs designed with an assumption of frailty and inability to produce are adjusted to accomodate these trends, this becomes a large mitigation factor for the smaller youthful employee base providing for a larger elderly non-working demographic. Combined with an aggressive immigration strategy, this will allow America to be the nation of choice for entrepreneurs and wealth creators for decades to come. I propose increased immigration as an alternative towards encouraging the curent population to have more children out of simple practicality. The idea of trying to encourage an existing population that clearly has negative incentives to have more children (assuming they have the choice to have more children, the fact that they choose not to indicates they perceive significant negative incentives associated with that choice) is not promising. In addition, if such a strategy were effective, it would be assumed that other nations that face a similar problem would have tried and had success with this approach.
Countries by birth rate in 2008 (Photo credit: Wikipedia)
America can and should attempt to attract the best and brightest young people from other nations, who will both benefit from the egalitarian, entrepreneurial environment and will in turn contribute to our economy.
There is significant research on how immigrants are more likely than native born Americans to start their own business and be successful. This is a very good thing for the entire country because of the jobs, wealth, and tax contributions that these businesses create, and the obvious desire would be to encourage more entrepreneurial-minded immigrants to come and stay. We need to seek out these future American success stories, encourage them to come, and encourage them to stay and open businesses here.
For this to happen, however, some things must take place:
1.Entitlements must change – if people can contribute to the economy until they are 70 or eventually 80, they should. The age to receive social security should be raised in accordance with the average national age, with another metric, the “average national productivity age” also factored in. The latter metric should reflect the % of jobs available that are knowledge based vs. manual.
2.The U.S. must follow a sensible immigration policy, without any trace of xenophobia, but with an emphasis on attracting the best and brightest to our country. We need to aggressively pursue and recruit those who will contribute to the country, but be firm in requiring those who are allowed entry to work and contribute to the tax base. Another metric would be useful here, the “average contribution per person”, measuring the monetary contribution towards society of an individual over a lifetime, minus the withdrawals from society in terms of entitlements. Another interesting metric would be the “average contribution per family”, which would average the withdrawals from a single mother on welfare with the contributions of her children whom she put through college, as an example.
3.America needs to pursue business friendly policies that encourage the startup and growth of businesses, rather than seeing businesses that grow much larger than a corner restaurant as evil capitalist entities that must be taxed into submission.
Good health, peace, and prosperity also work. Lower the infant death rate, and women tend to have fewer babies.
http://www.gapminder.org/videos/200-years-that-changed-the-world-bbc/
47.Scrapple Cannon says:
April 2, 2013 at 11:07 am
In the good old days, we had world wars to help thin the herd.
Now? Even if we managed to get into it with a jerkwater like N. Korea, it’d be over by lunch, and we could watch the mushroom cloud on CNN.
Curious what others think is the appropriate annual income to purchase and maintain the following two houses. The second house in particular has an enormous burn rate.
— HOUSE # 1 —
Selling price: $1,300,000
5 bedrooms, 5 baths
Square footage: 4,000
Year built: 1930
Property taxes: $26,000
Acres: 0.5
— HOUSE # 2 —
Selling price: $1,500,000
6 bedrooms, 7 baths
Square footage: 5,500
Year built: 1995
Property taxes: $28,000
Acres: 1.5
81 – How much of the selling price would need to be mortgaged in those cases?
Only a cop married to a teacher could afford such a house in NJ
Statler Waldorf says:
April 3, 2013 at 3:30 pm
Curious what others think is the appropriate annual income to purchase and maintain the following two houses. The second house in particular has an enormous burn rate.
Grim, let’s use the standard 20% down, and also 50% down.
Any numbers JJ?
Talking with people at a layover at San Francisco airport. One lady’s daughter and son in law are looking to buy in San Diego and are getting over bid by cash buyers. She said they offered the full $450,000 ask with a mortgage and cash buyer took it at $500,000. Another lady said her son is paying $2000 a month rent for a basement studio in San Francisco. She said the Chinese are buying everything in sight with cash.
20% down? Nobody’s got business buying either of those houses if they can only afford 20% down.
I’d say somewhere in the $400-600k range is point of entry with a lower DP.
only up to one million is deductible on a mortgage. So on the 1.5 million dollar home it makes no sense to put down less than 500K.
NARs official number for last year on the Chinese home buyers in the USA was 7 Billion. I would gather that number does not include investment funds snapping up properties all over.
JJ raises a good point about mortgage deduction limit.
Even with 50% down both houses are White Elephants. The first house because the ongoing maintenance in such a large old house + taxes, etc. The second house because it is absurdly large both inside and out + taxes, etc.
I know that both buyers do not make anywhere near $600k, and have both gone off the deep end.
Next bubble car loans?
http://finance.yahoo.com/news/special-report-fed-fueled-explosion-subprime-auto-loans-110501752.html
#86
NJCoast, spent the weekend with my college roommate a few weeks ago. He recently bought near Irvine and it sounded similar. He was outbid on a number of homes in the last year and the money was all coming in from out of state. In fact, the home he ended up buying was bought by an investor a few years ago. Not sure if they were Chinese, but it was definitely investor cash he was seeing.
Coast [86];
Chinese are buying everything in sight with cash.
A) They’ve got plenty of it, and its only going down in value — might as well buy some hard assets. Even they aren’t stupid enough to continue buying our Treasuries — the Fed is picking up that end now.
and/or
B) How good’s the ‘cash’? From what I’ve heard the Norks were into the ‘cash’ business for a while, too.
Grim,
Is a detached garage vs an attached garage a dealbreaker on a purchase? Or if you were rebuilding a property, would an attached garage be a necessity?
Sorry for the spam Grim.
Rich Dad is back, seminars in NY this week.
(No he won’t be there).
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At this workshop, you’ll be introduced to:
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The chinese are playing the currency market. The dollar lost 25 percent of its value since 2005 against the yuan. By buying real estate the chinese can use the property. Kids get a residence tuition going to university. Sell with built equity and a strong dollar. No matter what they win
If the law pass, foreigners with homes in US can get a residence visa.
so i’m checking out neighbors of a house we recently bid on and are now stalled. anyhow, house 2 doors down was for sale last year, we went in it and passed. So, I’m checking the new owners out, see what people are doing, and found another one. They put 10K down on a $525K purchase.
I know I’ve mentioned I’ve seen a lot of this. annoying.
All over, but for the crying. Prepare for the endtimes.
Bears – call me for pep talk if you need it. The biggest housing cheerleader ain’t me either.
re # 96 – Yome experience walks. I hired two folks H-1Bs from Sinapore over a decade ago, and I was lucky to learn a bit.
Both were CCP backed money. This generation of CCP kids cannot lose whatever they spend it on, they did not earn it they are young and perhaps foolish. They won’t go back to the old country, they are bring extended family here etc, whatever they took via Singapore or other banking centers won’t be going back ever.
juice, text me your email.
Grim, you down for some house counseling too? Can I cut you both an email on a house, get your thoughts? Chi, your neighborhood. If you’d like a CC, let me know.
I know it’s late in the day to chime in here, but I grew up in Radburn and thought and still think its it a great place. My parents still live there. Radburn is definitely the best part of fair lawn and worth the premium if you have kids and will use the services. Express train from Radburn to secaucus makes it a very quick commute to the city. Even with the added charge taxes are still lower (by a lot) neighboring glen rock.
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