Wednesday, February 27, 2013

More about our Middle Class Endangered Species.

...and why our real estate crisis is not over.

It has become a regular feature in our media: The Destruction of Jobs.

As the monopolization of our economy continues at accelerated trends, the degradation of our infrastructures is every day more evident and flagrant, as the voices of our media are silenced one by one, either by the “concentration and consolidation” of TV and Radio stations, and gradual closure of our most respected newspapers and magazines, we are left to voice our admiration for the incredible gains in profitability. efficiency, and productivity of the gigantic corporations that are becoming the owners of our lives, our destinies, and our democracy.

While these too big to fail “banking institutions” continue to use incredibly sophisticated software to gamble by the trillions of dollars their customer’s deposits, (for which they basically pay zero interest),  and achieve very risky but very juicy results; while the least they perform is their basic social function which is to use depositor’s money to lend to small and medium sized businesses and start-ups, to promote construction of houses, grant loans to new home-buyers, finance rehabilitation of our roads, bridges, and take risks in encouraging and sponsoring new sources of clean and renewable energy, their accumulated wealth only results in more job reductions and misery. 

Please read the following articles published yesterday (February 26, 2013), and you will understand what I am talking about:

Can we do something about it?  It is becoming harder by the minute. But we still have a chance while our tiny voices might be still be heard. 

Here is the First Article:

NEW YORK (Reuters) - JPMorgan Chase & Co plans to cut 3,000 to 4,000 jobs in its consumer bank in 2013, representing about 1.5 percent of the company's overall workforce, as the bank tries to improve the profitability of its branches.

The cuts will come mainly through attrition, spokeswoman Kristin Lemkau said. The bank's branches have 63,500 employees, representing about a quarter of JPMorgan Chase's total employees.
JPMorgan is one of the few big U.S. banks that is still adding branches to its network, but to boost profit it plans to scale back the tellers it has on hand for routine transactions and to add some salespeople for products and services like wealth management that can boost revenue.

The net effect will be to reduce staff per branch by 20 percent through 2015, the company's head of consumer banking, Ryan McInerney, said in a presentation to investors.
In JPMorgan Chase's mortgage business, the company reiterated its previously announced plans to shed 13,000 to 15,000 jobs by 2014.

JPMorgan Chase had 5,614 branches at the end of 2012, and plans to increase its network by about 100 branches a year, it said. Chase's U.S. branch network is second to Wells Fargo & Co's in size.
The bank is hoping to focus on selling more to wealthy depositors. Its average consumer checking account has a balance of $4,276, and about half of all affluent U.S. households are within two miles a Chase branch or automated teller machine, the bank said.

JPMorgan Chase overall earned $21.9 billion last year, excluding accounting charges linked to changes in the value of its debt. The bank said it has the potential to earn about $27.5 billion, thanks in part to efficiency gains. It aims to cut overall expenses by $1 billion in 2013.

For overall staffing levels, JPMorgan Chase had 258,965 employees globally at the end of 2012. Its headcount rose following the financial crisis, to 262,882 in the second quarter of 2012 from 219,569 in the first quarter of 2009. Since last year's second quarter, staffing levels have drifted lower.
JPMorgan Chase shares were down 1.3 percent at $47.08 on Tuesday morning on the New York Stock Exchange.

And Here is the Second Article:

WASHINGTON, Feb 26 (Reuters) - The U.S. banking industry in 2012 recorded its highest earnings since before the 2007-2009 financial crisis, according to data released on Tuesday by the Federal Deposit Insurance Corp.

The FDIC said the industry's full-year earnings were the second-highest on record at $141.3 billion, an increase over 2011 of $22.9 billion, or 19.3 percent.

Bank earnings peaked in 2006 at $145.2 billion.

Much of the earnings growth in 2012 came from banks reducing the amount they set aside in case of losses on loans, the FDIC said. Banks also saw gains on loan sales and higher servicing income.

"While there is still room for further income growth, we don't expect the pace of earnings growth to continue at these levels," FDIC Chairman Martin Gruenberg said in a statement.

The report will likely be seen as a sign that the industry is healing after the financial crisis, although some bigger banks cut jobs last year to cope with persistent pressures such as declines in trading volume.

The industry's earnings for the fourth quarter of 2012 totaled $34.7 billion, up $9.3 billion, or 36.9 percent, from the same period in 2011, the FDIC said.

Net operating revenue during the fourth quarter was $169 billion, up $7.3 billion, or 4.5 percent, from a year earlier, the FDIC said.

Wednesday, February 06, 2013

Local Real Estate Buyers - Endangered Species

In more than 5 years, I haven’t sold a single home to a local resident. 
Let me repeat not even one person or one couple living in the area of South Florida has bought a house using my services since 2007.
I have done fairly well as a realtor, however, but it has only been the providential arrival of the foreigners, out-of-town buyers, snowbirds, Canadian, French, British, and affluent clients from Northeastern states.

Hard to explain? Of course not.

The first reason we will jump on is the newly found toughness of banks and lenders and their reluctance to assume any kind of risk that is not 110% covered, endorsed and required by every existing state or federal law or statute, internal rule and regulation, and this oh so pure newly assumed purist attitude of appraisers and underwriters. 
How ironic is the 180 degree turn from the thrill and craziness of those loans with “no-income-verification”, “zero-down”, 107% loan to value, “ no-interest payment” that allowed completely ineligible applicants with horrendous credit history to acquire thousands of high priced homes and condos, just five years ago.
Well we know the story, and it isn’t the subject of this article.

The second reason is even more powerful. 
Very few persons nowadays feel secure in their jobs. 

Productivity is the word that has driven small and large businesses – perhaps more so the larger corporation – to squeeze  their human resources to the maximum, pay them less, work them harder, make them feel that they are expandable, that they can and will be fired at the will of any low level supervisor, manager, director, or just by a new policy of “personnel reduction”, which will get rid of  5, 10 or 20 percent of the workforce, every now and then, so the same amount of work will be performed by the remaining and grateful ones who have perhaps escaped to the previous purge performed in  accordance with the "outsourcing" solution that feed the soul of our business elite and has turned to be the nightmare of our working class.

The pain is less felt by younger workers than by the middle-aged. It is easy to imagine the anxiety, and stress caused by the possible loss of employment which hangs on the head of any 45 or 50 years-old loyal worker who can be fired at any time for a younger, fresher and cheaper replacement.
Can you find a better reason not to get into long term debt that could leave you homeless, credit-less and hopeless?

The third reason is affordability. 
I am not into statistics and numbers, but I can say with certainty that salaries have not kept up – and by large – with inflation during the last 30 years.
People are just underpaid. 
I get working class Canadians clients looking for condos in the range of $100,000, $200,000 and more. These are their “vacation homes”, “their investments for retirement time”. (Words that have almost disappeared from the vocabulary of an American common person).
Many of these Canadians are just plain middle class, but when they present their income information to the condo associations, you will see yearly revenues of $80,000, $120,000, $150,000.
They are white or blue collar employees, working in all kind of  companies, or they are small business owners, but you don’t see the stress in their eyes. Their healthcare is free, their kids' college education is almost free, and if that doesn’t make a big difference, they also get much longer vacations, and we just look at them with envy, enjoying them here. 
Shall we say that these guys are at the point where we should have been if all our wonderful policies of "less-government" , free-market, globalization, banks supreme power and corporate monopolistic control  hadn’t been implemented in the same period?
But again, this is not a political or an economical discussion. Just some remarks on why I can’t sell a home to my fellow Florida residents.

In fact, so many “people spending so much of the country's budget
 in food stamps” are in their vast majority just trying to make ends meet because they are prisoners of the miserable seven dollars minimal hourly wage.

The so called “entitlements” that are “feeding our deficits” are undoubtedly the result of the low salaries that enrich corporations, forcing people into public health services, food stamps, and other “subsidies” or "entitlement programs"

Let's face it: the ”productivity gains” have only benefited business but massively impoverished my potential local buyers. Low paying jobs, part time jobs, unstable jobs, this is what has replaced a vibrant economy that was once the envy of the developed world.

I can't by conclude that this whole scenario is threatening our economy which is  based in the consumption and reasonable standard of living of the majority.

Are we going to address these issues? All of them?

Otherwise, it is evident that nothing is going to stop the trend of local residents renting foreign-investor-owned homes.

Here is the article I read today in, that triggered this unprofessional anger.

Survey: Economic uncertainty keeps renters renting 
CHICAGO – Feb. 6, 2013 – The average monthly apartment rental cost in the U.S. was $1,048 in fourth quarter 2012, up 3.8 percent from a year earlier, according to Reis. At the same time, the nation’s apartment vacancy rate continued a steady decline to 4.5 percent in the fourth quarter – its lowest level in more than a decade.

In response, conducted a nationwide survey of more than 1,300 renters to gain insights into their moving plans this year. In looking at the survey results, says a growing number of former homeowners are choosing to rent, while others make a move based on employment relocation, cost savings and apartment size.

“There is a growing trend toward previous homeowners choosing to rent after carefully considering economic factors such as affordability, employment opportunities and unaffordable homeownership expenses,” said Dick Burke, senior vice president and general manager, “The fiscal cliff our country was headed toward in December seems to have motivated all renters to take a realistic approach toward budgeting for 2013.”

Top 5 reasons renters choose to rent

• Renting is a more affordable option: 22.2% (down from 26.3% in 2012)
• Flexibility: 15.7% (down from 21.2% in 2012)
• Can’t afford to keep up with homeownership expenses: 14.2% (up from 10.5% in 2012)
• Relocate for employment: 13.3% (down from 20.5% in 2012)
• Lost home due to foreclosure or divorce: 11.2% (up from 5.9% in 2012)

Reasons renters plan to move in 2013

• Relocating for employment opportunities: 15%
• Shopping for a less expensive apartment: 13.2%
• Looking for a bigger apartment: 11.2%
• Change in marital status: 10.8%
• Wanting to live in a different neighborhood: 9.8%
• Relocating for educational reasons: 6.7%
• Other family reasons: 5.2%
• Recent college grad moving to their own place: 4.6%
• Looking for a smaller apartment: 3.3%
• Wanting to live alone: 2.5%

Resources used in an apartment search

All renters surveyed had used, but they also reported using other online apartment listing websites (such as Craigslist), search engines and review websites.

The opinions of others seem to play a more important role in searches than in previous years. More than half of respondents said they use review websites during their apartment search, versus 32.6 percent in 2012; 45.1 percent relied on word of mouth versus 31.5 percent in 2012.

Apartment share arrangements nearly identical to 2012

• Husband/wife/significant other and/or kids: 49.6%
• Living alone: 40.3%
• Roommate(s): 10.1%