Again, with the B.S.
Bend Oregon Real Estate Blog: "The Recession is Over. Existing Home Sales Move Up in August."
Except, if you dig a little deeper, like over on KTVZ:
"....August"..." the second-worst month for sales in more than a decade."
"Sales were down 19 percent from the same month a year earlier. July was the worst month for sales in 15 years."
That's nationally, of course, which probably bears little resemblance to Bend, Oregon.
It's like saying, "Hey, I think that corpse just twitched!"
I mean, I could see muttering to yourself, while quivering in the corner, that "things are better.....it's better than last month....really, I think things are getting better......"
But to go on Bend Blogs and trumpet it, is just stuff and nonsense.
Technically, true. And totally false.
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There seems to be a ton of things to comment about -- none of which are of earth-shaking importance. So I write an entry, then ask myself if it has heavy enough content to post. If not, I move on.
So today, I'm going to post a bunch of these little posts into one and hope that all together they say something.
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The Bulletin editorial about minimum wage. Well, here's one employer of minimum wage employees who isn't worried at all about the .10 increase. In fact, I start my employees at 9.00 an hour, anyway.
Really, either you can afford an employee, or you can't.
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There is a whole lotta gloom in the comic biz these days. 20% drop in comic sales nationwide in August. There's a whole lotta gloom in the book trade, too. There's a whole lot of gloom in the game business, for that matter. Hell, cards and toys have already suffered Armageddon.
But string them all together?
We gotta winner!!!!
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Talk about lowered expectations.
I went into September expecting very, very little. In fact, if you had told me in March of this year, that I'd be expecting the kind of numbers I'm getting today, I would've been shocked. I guess that's what happens when you have four down months in a row.
Basically, we're back to 2008 numbers again.
Oh, I could put a shine on it. "I'm doing my projected numbers," I could say. But what the hell does that mean? I can project any old numbers I please.
Still, it does mean something. If I 'expect' and 'project' lowered numbers, and I adjust my spending accordingly, we can come out the other end just fine. I've always said, it isn't what you make it's what you spend.
So I've been totally relaxed this month -- in fact, rather pleased with the sales level. Which just seems weird, when I think about it. But it's true.
It's expectation that can be disappointed. As long as the expectation is realistic, I'm just fine with it.
As I mentioned before, once I realized -- about mid-August -- that we weren't going to come even close to the kind of profits I was hoping for, that we were probably only going to break-even, it totally removed the pressure. Breaking even is a much easier goal, a much easier expectation to meet.
It's the Great Recession, after all. And the W of the double dip is starting to look more like a little squiggle tailing off at the end.....
To put the biggest cliche of the last few years to work: "Breaking Even is the New Black." I use it because it's true.
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8 comments:
As a renter who will be having to move in the coming months as our landlord is going into foreclosure on our house, I've been rather stunned by what I see in the overall housing market. Looking at 3 bedroom, single family homes with yards, continuing to rent will be more costly on a monthly cash basis than owning. Rents are around $950-$1000/month, and have held steady, even rising a bit due to the number of people losing ownership, while comparable homes for sale are going for around $130-$150K. With FHA mortgage rates at around 4.5% & 15% down, you are looking at a mortgage of around $700/mo. Add 20% to that for taxes & insurance, and you are still looking at a monthly outlay of less than average rents. Is it a bottom? I don't think so, but I wouldn't be surprised to see more 1st time buyers trying to buy while rents continue to do what they are doing, even if values continue to drop....
"Really, either you can afford an employee, or you can't."
Bingo. This argument that employers would hire more people if the minimum wage was lower, or if there wasn't any minimum, is just bullshit.
A well-run business has as many employees as it needs to have -- no more, no less. You don't add people to the payroll just because you can; you add them when you NEED them. (Well, unless your wife makes you hire your brother-in-law or something like that.)
"Is it a bottom? I don't think so"
I think we're going to experience what I call "the bungee cord effect." Home prices will drop BELOW the realistic value in reaction to the extreme over-pricing that we saw in the bubble days. Then they'll bounce back up and settle at a realistic level. Because prices dropped from such an enormous height, the bungee cord is gonna stretch a considerable distance before it rebounds.
If house prices are so cheap in Bend, while rents are so high (at least according to yokem55), why aren't more investors leaping into the market to buy houses and rent them out?
I would guess that there is presently a "bubble" in the rental market that will pop at some point.
It is because yokem55's math is a bit off. Taxes and insurance in most cases will be higher than 20%. In his calculations there is only $140/mo for both. I looked at a number of properties that were for sale between $120k and $130k and the lowest taxes were $1865/yr, and the highest were $2850/yr. Add insurance to that and it is probably slightly more to own than it would rent for. He also doesn't figure in the 2-3% of purchase price yearly maintenance that is suggested ($215/mo on the low end to $375/mo on the high end). If you are a buyer you probably won't see much tax benefit over renting as your interest and taxes at that level will most likely be less than the standard deduction. If you are buying it to rent it out you have to figure in vacancies and other overhead.
Blackdog,
Incremental costs impact the decision. A couple of days ago I asked Duncan if he would have his current employees if he had to pay them benefits. His answer was no.
Now he certainly needs them becuase he has them today. But there is a level of cost at which he nolonger needs them because they do not yield sufficient benefit vs cost.
When dealing with jobs in the marco sense you are dealing with thresholds. In Duncans case he pays more then minimum wage, but not willing to go to the degree that benefits would cost. Other employers with different margins and different demands might look at the levels in a much different way. Especially for business that have very tight margins that directly relate to labor hours.
Historically the group most impact by minimum wage is teen and early 20's with out a work history or looking for part time work. A group that has very high unemployment numbers today.
In todays economy 25 cents an hour might be enough of a hurdle that an helper is not hired or is fired. When you are talking millions of people it can have an impact.
All of the little hurdles, 25 cents here, an extra form there, all add up and in the end can become rather major hurdles.
Thanks Duncan for your blog. It's always interesting, honest, and you put your point of view across very respectfully. It is refreshing to hear your candid views about running a business in a difficult time. You don't lash out or spread negativity like some of the other Bend based blogs do. Bravo! Glad to hear that September has picked up for you after a few down months!
Well, to be honest, when I say sales retreated to 2008 levels, it means they went down from 2009 levels.
I've been around long enough to look for the negatives in the positives and the positives in the negatives.
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