Tuesday, November 4, 2008
U.S. Auto Sales
U.S. Auto sales have plunged to levels that cannot support the auto industry under any circumstance. The bailout cometh.
Total Oil imports into the U.S. have declined in 2008 from 2007 by over 8% year to date. Cars will simply wear out slower and slower in the U.S. without the fuel needed to run up the mileage and destroy the vehicle. Same with tires, glass, steel, car insurance, etc...
Get this: If the decline rate in U.S. Oil supply remains at just over 1 million barrels per year (TOTAL petroleum products supplied declined to 19,645,000 barrels per day in 2008 from, 20,697,000 per day in 2007; imports declined from 12,176,00 barrels per day in 2007, to 11,168,000 in 2008) for the next 5 years; Then, the U.S. currently has ALL of the vehicles it will EVER NEED. We will not need a single new car, truck, or aircraft. We will need only to maintain the ones we have.
Think about that.
We are in a similar position regarding housing. Absent a massive immigration of folks from other lands (and why would they come here just as our resource picture goes off a cliff?), population growth and household/family formation will cease. We have too many homes by over 20 MILLION or so (families with second homes will have need of only one home in the absence of a growing oil supply). The U.S. needs another housing/condo development like it needs a hole in the head. The level of denial here is incredible.
Yesterday I spoke with a Real Estate broker in South Carolina. I put in a bid on some farm land and he was so offended by my bid that he let me know I was "just trying to steal something". He went on to tell me that these properties had "tremendous development potential". So I asked him: What is the inventory of unsold homes in this region of South Carolina? How many months/years will it take to work off this inventory? What is the recent median price to family income of the region? What are the employment trends in the region? When he realized that I wanted EMPIRICAL data to support his position, he changed tack and insisted that he has been doing this much longer than I have and that I would not get a deal done at my price, or at least he HOPED SO.
Get that? He HOPED. In other words, he was advising his client that my bid was too low. Based on what? He told me my price would be back to 2003 levels. Jeeash! Can you imagine? I wanted to buy property at prices that reflected economic potential rather than the "greater fool theory" hoping another buyer would come along and pay me more than I paid because he thinks another buyer will come along and pay him more than he paid, etc...
Oh, well. Real estate brokers are not economists, investment professionals, mathematicians, etc... They have harmed their clients greatly over the past decade. Their industry stands in the way of advising their clients to price their properties at a point that would clear the market. What else should I expect?
Mentatt (at) yahoo (d0t) com
Posted by The Short Story Man at 4:56 AM