A few anecdotal-ish observations about the economy

[devil21]

1. Young people are consolidating into multiple roommate situations and this is driving up rents (and maybe even sale prices) on everyone else. Single people and single families are paying more because 3 young people can pay $450 each per month easier than a single family can pay $1350 per month. It's distorting the rental market, plus property taxes are rising too.

2. Student "loans" are being used to finance lifestyles of young people without careers to eventually pay for the loans. When I went to college, loans and grants were paid directly to the school. Now, the students get the checks and spend them on a lot of things other than school. Is this a backdoor stimulus?

3. Banks are starting to lend again. It may reinflate the debt bubbles (how big can they get?) but it will lead to inflation. This is why inflation has been somewhat subdued since the bailouts started. The money hasn't been circulated but I think it's starting to make it's way into the economy now. Just for reference, the dog food I buy has gone up nearly $10 from $50 to $60 for a 30lb bag in the last 4 months. Is dog food included in CPI? Probably not.

Discuss.

[enoch150]

1. Young people are consolidating into multiple roommate situations and this is driving up rents (and maybe even sale prices) on everyone else. Single people and single families are paying more because 3 young people can pay $450 each per month easier than a single family can pay $1350 per month. It's distorting the rental market, plus property taxes are rising too.

If 3 people are living together, then they're only using 1/3rd of the units they otherwise would. That should be driving the price down. Any price increase is likely due to rising property taxes and other expenses.

But, college kids rooming together isn't new.

[Jordan]

1. Young people are consolidating into multiple roommate situations and this is driving up rents (and maybe even sale prices) on everyone else. Single people and single families are paying more because 3 young people can pay $450 each per month easier than a single family can pay $1350 per month. It's distorting the rental market, plus property taxes are rising too.

2. Student "loans" are being used to finance lifestyles of young people without careers to eventually pay for the loans. When I went to college, loans and grants were paid directly to the school. Now, the students get the checks and spend them on a lot of things other than school. Is this a backdoor stimulus?

3. Banks are starting to lend again. It may reinflate the debt bubbles (how big can they get?) but it will lead to inflation. This is why inflation has been somewhat subdued since the bailouts started. The money hasn't been circulated but I think it's starting to make it's way into the economy now. Just for reference, the dog food I buy has gone up nearly $10 from $50 to $60 for a 30lb bag in the last 4 months. Is dog food included in CPI? Probably not.

Discuss.

1. I don't think that has much effect. If anything, living together would decrease the demand for housing as 3 people living in 1 home take up 1 place vs. 3.

2. That's always been happening. The loans go to the school first, then the cash left over is distributed back to students.

3. Dog food is up because agricultural commodities as a whole are up. The drought this year was a special event, one which reduced the size of animal herds. Additionally, when temperatures are extremely high, the recoverable protein in animal carcasses is negatively affected. Supply and demand.

[devil21]

If 3 people are living together, then they're only using 1/3rd of the units they otherwise would. That should be driving the price down. Any price increase is likely due to rising property taxes and other expenses.

But, college kids rooming together isn't new.

Hmm...not sure I follow your logic here. I should have mentioned that Im talking about houses, not apartment situations.

If a property owner/landlord sees that more people are living together to split costs, they start to ask for higher rental rates across the board. To the landlord, they can attract multiple renters and charge more than a single family would otherwise be able to afford. Im having a hard time explaining my thought clearly.

In my area, there are a lot of young people with service industry jobs that don't pay a lot. When they start flocking together to rent a house (because they can't afford an apartment on their own or the apartments are full already from people that moved out of foreclosed houses), their collective ability to pay more total rent per month pushes prices on rental houses up for everyone else. Hope that makes sense.

[devil21]

1. I don't think that has much effect. If anything, living together would decrease the demand for housing as 3 people living in 1 home take up 1 place vs. 3.

See post above. Landlords watch rental prices of other properties and adjust theirs accordingly. Other rental properties may still be taken but at a higher price. It's a rental market right now, not a buying market.

2. That's always been happening. The loans go to the school first, then the cash left over is distributed back to students.

Hmm, the students I talked with last night told me straight up that they were getting "loans" and "grants" that were coming directly to them. One example that made me post this was a 21 year old that got a $5500 school loan and $5500 gov't grant. He said the checks went right into his bank account, where he then paid the school tuition, which is much less than the loan and grant combined and is now living off the remaining $5500. So basically the loan or the grant is financing his lifestyle, not his schooling. The loan has to be paid back. The grant does not. This is backdoor stimulus/welfare.

3. Dog food is up because agricultural commodities as a whole are up. The drought this year was a special event, one which reduced the size of animal herds. Additionally, when temperatures are extremely high, the recoverable protein in animal carcasses is negatively affected. Supply and demand.

Oh that's right, there's no inflation in Jordan's world. What's funny is the dog food I buy doesn't have rice, wheat, soy or corn in it.

[dannno]

What the OP is saying with regards to #1 is that usually younger single people get apartments on their own or with one other roommate, but it is actually a bit cheaper and easier for them to get three roommates to pay rent on a 4 bedroom house and then they get the benefits of living in a house. They even get their own room. The downside is they have roommates sharing the kitchen/bathrooms/etc..

They can pay more rent because there are four working people chipping in towards rent instead of 1 or 2 parents.

I would tend to agree, since that is the situation I've been in for quite a while.

[Jordan]

See post above. Landlords watch rental prices of other properties and adjust theirs accordingly. Other rental properties may still be taken but at a higher price. It's a rental market right now, not a buying market.



Hmm, the students I talked with last night told me straight up that they were getting "loans" and "grants" that were coming directly to them. One example that made me post this was a 21 year old that got a $5500 school loan and $5500 gov't grant. He said the checks went right into his bank account, where he then paid the school tuition, which is much less than the loan and grant combined and is now living off the remaining $5500. So basically the loan or the grant is financing his lifestyle, not his schooling. The loan has to be paid back. The grant does not. This is backdoor stimulus/welfare.



Oh that's right, there's no inflation in Jordan's world. What's funny is the dog food I buy doesn't have rice, wheat, soy or corn in it.

Eh, well, I'll just let the real estate thing go. You're suggesting that renters have no alternatives to renting a home, and that landlords have no carrying costs. Every landlord in the world knows its better to give up $25 a month than let a house sit empty for 6 months. Landlords don't have that much pricing power. Shouldn't there be a big supply of older large homes that seniors are vacating to live in retirement homes that are much smaller? You'd think that would bring on supply, huh?

Your example students have no idea how their loans work. Learn directly from the DOE: http://www.direct.ed.gov/inschool.html

I know quite a bit about the business of turning food waste into dog food. If there are fewer animals and they sit in the heat rotting longer, the protein is no longer recoverable. That's just how this business works. That's what I know.

Now, what I don't know, and will happily admit, is that I don't know about your specific supplier of dog food. I don't know about their cost structure, what it costs them to purchase materials or make the food. I don't even know if they just decided to raise prices because they thought they could charge more. That's the bummer with anecdotal information - it's as worthless as polling one person to determine the outcome of an election. It doesn't tell the full story.

[Cody1]

See post above. Landlords watch rental prices of other properties and adjust theirs accordingly. Other rental properties may still be taken but at a higher price. It's a rental market right now, not a buying market.



Hmm, the students I talked with last night told me straight up that they were getting "loans" and "grants" that were coming directly to them. One example that made me post this was a 21 year old that got a $5500 school loan and $5500 gov't grant. He said the checks went right into his bank account, where he then paid the school tuition, which is much less than the loan and grant combined and is now living off the remaining $5500. So basically the loan or the grant is financing his lifestyle, not his schooling. The loan has to be paid back. The grant does not. This is backdoor stimulus/welfare.



Oh that's right, there's no inflation in Jordan's world. What's funny is the dog food I buy doesn't have rice, wheat, soy or corn in it.

I think either you misheard or someone was feeding you a line of bullshit about the student loan management. I have been in college for a while now and my loan amounts are deposited in my school account and the remaining balance which is usually around 150 bucks or so is sent to me in the form of a stipend which I send back to the loan agency towards my balance. I have never received the full loan amount, subsidized or unsubsidized, in a personal bank account. If that were the case I would have probably close to 35 grand in savings right now which I will be the first to tell you it's less than that. A lot less :/

[devil21]

Eh, well, I'll just let the real estate thing go. You're suggesting that renters have no alternatives to renting a home, and that landlords have no carrying costs. Every landlord in the world knows its better to give up $25 a month than let a house sit empty for 6 months. Landlords don't have that much pricing power. Shouldn't there be a big supply of older large homes that seniors are vacating to live in retirement homes that are much smaller? You'd think that would bring on supply, huh?

Landlords don't have much pricing power? What are you smoking? They set their prices! I did mention that property taxes are rising so this is also pushing up prices. In my area, ymmv, I can tell you for a fact that rental prices are up because of taxes and the multiple roommate arrangements on the rise. With the large amount of empty foreclosed houses (shadow inventory or not), people have to move SOMEWHERE to live. It's a simple reallocation of resources (malinvestment in a way) and it affects those of us that rent and live on our own when other people start pooling resources, thus being able to afford more collectively.

It's interesting that you mention the older large homes coming onto the market. Ive observed a move toward turning these sorts of houses into "apartments" instead of keeping them single family homes. The amount of rent one of those properties can bring in isn't ignored by neighboring landlords and to "keep up", prices rise for the other properties in the vicinity.

Your example students have no idea how their loans work. Learn directly from the DOE: http://www.direct.ed.gov/inschool.html

Maybe. There's a ton of search hits for things like "student loans for living expenses". Loans designed and marketed to pay for living expenses as a student. This is such a bad idea for so many reasons but it's being taken advantage of.

http://www.studentloanconsolidation....-expenses.html

http://www.ehow.com/how_5325719_appl...dent-loan.html

http://www.loan.com/student-loans/ho...-expenses.html

http://www.ehow.com/list_5949218_gov...ng-school.html

Most federal government grants for students can be applied to living expenses, if your tuition is already covered via other financial means. Grant payments are dispersed through your school’s financial aid office. There, they will either hand you a check directly, or apply the disbursement to your outstanding balance with the college and give you the difference.

It's possible the people I spoke to didn't understand the exact process under which they receive the money but that's neither here nor there. Loans and grants are being used for student living expenses, not school itself, and that's backdoor stimulus/welfare. No wonder the school loan bubble is past a trillion dollars now.

I know quite a bit about the business of turning food waste into dog food. If there are fewer animals and they sit in the heat rotting longer, the protein is no longer recoverable. That's just how this business works. That's what I know.

Now, what I don't know, and will happily admit, is that I don't know about your specific supplier of dog food. I don't know about their cost structure, what it costs them to purchase materials or make the food. I don't even know if they just decided to raise prices because they thought they could charge more. That's the bummer with anecdotal information - it's as worthless as polling one person to determine the outcome of an election. It doesn't tell the full story.

This is occuring regardless of manufacturer or food content. High quality food, low quality food, whatever. The dog food example was just an example of something that I noticed in particular, hence "anecdotal-ish". It wasn't a linchpin for my observation that banks are starting to lend again and inflation is taking hold.

[devil21]

I think either you misheard or someone was feeding you a line of bullshit about the student loan management. I have been in college for a while now and my loan amounts are deposited in my school account and the remaining balance which is usually around 150 bucks or so is sent to me in the form of a stipend which I send back to the loan agency towards my balance. I have never received the full loan amount, subsidized or unsubsidized, in a personal bank account. If that were the case I would have probably close to 35 grand in savings right now which I will be the first to tell you it's less than that. A lot less :/

Same reply as above:

http://www.ehow.com/list_5949218_gov...ng-school.html

Most federal government grants for students can be applied to living expenses, if your tuition is already covered via other financial means. Grant payments are dispersed through your school’s financial aid office. There, they will either hand you a check directly, or apply the disbursement to your outstanding balance with the college and give you the difference.

It's possible the people I spoke to didn't understand the exact process under which they receive the money but that's neither here nor there. Loans and grants are being used for student living expenses, not school itself, and that's backdoor stimulus/welfare. No wonder the school loan bubble is past a trillion dollars now. The amounts surely vary from student to student and Ill bet most aren't as responsible as you are!