Posted on 10/25/2003 12:18:39 PM PDT by Cicero
U-Haul Economics by Rick Ackerman
A Chicago economist has come up with an interesting and seemingly plausible new economic indicator. We’ve all heard stories about the exodus of U-Haul vans from California, but the details are usually too sketchy to tell us much. Turns out they can be quantified in dollars and cents so that the flow of traffic reveals which U.S. regions are hurting and which are prospering. For instance, while it costs $1,080 to rent a 26-foot U-Haul truck for a one-way trip from Los Angeles to Las Vegas, the rental going in the opposite direction is just $133. To economist Brian Wesbury, the difference implies that people are moving out of California as opportunity diminishes and the economic slump persists. Here are a few more telling comparisons, as reported in the Financial Post: A one-way U-Haul move from Los Angeles to Phoenix costs $837 while the return costs $116. San Francisco to Boise: $2,024. Return trip: $310. But look at the Midwest and the rate differentials practically disappear. A U-Haul rental from Chicago and Detroit costs $419, while the return is $449. "Obviously, California is having a hard time keeping U-Haul trucks in the state," wrote Mr. Wesbury in a note to clients.
He thinks it will be possible to measure Arnold Schwarzenegger’s success by noting the extent to which U-Haul rate disparities grow or shrink during the new governor’s term. Wesbury says that conventional statistics, such as personal income growth, are not as useful because they reflect changes that have already occurred. But looking at market prices such as those reflected in U-Haul rates gives an accurate picture of the here and now. "Because markets bring together the decisions of millions, they always provide signals that are much more accurate than forecasters, politicians or the press," said Wesbury, as quoted by Financial Post reporter Jason Chow. Other recent rates for a 26-foot truck, one way: Los Angeles to Las Vegas: $1,080 Las Vegas to Los Angeles: $133 Los Angeles to Phoenix: $837 Phoenix to Los Angeles: $116 Los Angeles to Denver: $1,908 Denver to Los Angeles: $498 San Francisco to Boise: $2,024 Boise to San Francisco: $310 Chicago to Detroit : $419 Detroit to Chicago: US$449.
Most of the people I know are unable to profit from the rise in housing prices because they have no where else to live.
If their house appreciates 200%, that means that corresponding property also appreciates. If they were to sell high, they would still have to buy high. No net gain.
One couple I know sold high ($210,000) but bought higher ($350,000).
Now, I do know some farmers who have sold to developers and are making a mint. But we're losing some prime farm land.
But what is interesting, when someone does put an existing home on the market, it's gone fast, and offers above the asking price are almost the norm....And many are bringing mulitiple offers.....
How true. I have a friend who put his house up for sale. Somebody from the Bay Area got into a bidding war with a local. The house sold for more than asking, and faster than they expected.
But then they had no place to live. They're renting from his dad (yuck!) until they can afford to buy, again.
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