KeNo's Housing and Economic Portal: Friday November 26 Housing and Economic stories

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More Americans opt for high-deductible health insurance plans - (www.latimes.com) Looking to save money in a weak economy, Americans increasingly are turning to health insurance plans with low premiums and high deductibles — prompting doctors and health experts to worry that consumers may be skipping routine care that could head off serious ailments. Nationally, the number of workers with individual deductibles of at least $1,000 has nearly tripled over the last four years, reaching about 20 million, according to a recent survey of employers. Some have pushed their deductibles as high as $10,000, and, to keep medical bills low, are forgoing colonoscopies, blood tests and other preventive procedures. This month, when most workers enroll for another year of health benefits, the number of people who opt for high-deductible plans — or are forced into them by their employers — is expected to rise yet again.

Uneasy future for Mass. housing market - (www.boston.com) Don’t expect the Massachusetts housing market to make a broad recovery anytime soon. Home sales this fall are certain to be well below last year, analysts said, and the expiration of home buyers’ tax credits now leaves the market on its own to face the formidable headwinds of high unemployment and tight credit. Although economists see another real estate crash as unlikely, the outlook remains distinctly unimpressive. Like the overall economy, housing is generally forecast to recover only gradually and unevenly through the middle of next year. “We’re in the choppy bottom, improving, but at a slow pace,’’ said Rick Loughlin, president of Coldwell Banker Residential Brokerage New England, which has 70 offices in Massachusetts. “The real key issues are jobs and consumer confidence; when jobs come back, you’ll see more of a recovery in housing.’’ Home sales have plunged since June, when most of the purchases driven by tax credits closed, and most real estate agents expect them to remain below year-ago levels for several months. The tax credits — up to $8,000 for home buyers — expired in the spring. Until then, they had sped up home sales, encouraging buyers to act.

Government, Scars from Housing Bubble Both Raising Unemployment - (www.theatlantic.com) There are three things happening here. First, jobless benefits pay unemployed people for up to 99 weeks. This is smart policy -- both humane and cash-effective -- but it also pays some people to stay unemployed who might otherwise find a job. How many people? The San Francisco Fed estimates that the unemployment rate would be about 9 percent without extended benefits. Second, the median duration of unemployment today is about half a year. When workers spend six months out of a job, they lose contacts, lose skills, and sometimes lose entire industries they once belonged to, making it harder to rejoin the labor force. In this way, long-term unemployment can become a structural problem, branding millions of workers will dangerous signals of skill-atrophy that elevates the unemployment rate even after consumer demand returns to pre-recession levels. Third, the epicenter of the recession was real estate and housing-related jobs continue to suffer uniquely. Construction employment declined nearly 25% from the start of the recession through the end of 2009 and there's reason to think we might not have hit the bottom. Some economists believe that the economy is structurally scarred, which means we suffer from not only a shortage of demand, but a mismatch of labor skills and employer needs. In other words, there is reason to think that unemployment insurance and the popped housing bubble might be lifting joblessness.

Hooters Shows Why Deflation May Never Go Away - (www.bloomberg.com) Japan’s newest sensation is one of the world’s oldest: scantily clad women serving cheap booze. Yes, Hooters Inc. has made its way to Tokyo. Normally when hundreds of Japanese men huddle in line it’s for a new iPhone or video game. These days, it’s to be served beer and chicken wings by waitresses in white tank tops and orange short-shorts. The American chain is gaining popularity in Japan. It’s also an unlikely sign that deflation will be with Japan for a long, long time. Anyone who still thinks falling prices are a cyclical phenomenon isn’t looking closely. It’s secular, and the sudden ubiquity of discount outfits shows how Japanese consumption has become a race to the bottom of the pricing spectrum.

Over 7 Million 'Shadow Houses' May Take 40 Months to Clear - (www.realestatechannel.com) If you thought the U.S. housing market is showing any signs of improvement, a new report by New York City-based Fitch Ratings puts the damper on that view. Fitch says seven million homes in the "shadows" will take 40 months to clear. The agency defines the shadow supply of properties as loans that are delinquent, in foreclosure, or real-estate-owned (REO) by the servicer. Fitch says based on recent liquidation trends, it will take at least 3 ½ years to clear this existing distressed inventory. DSNews.com reports that according to the ratings agency, the number of months between the date of the borrower's last payment and the date of liquidation has steadily increased over the past several years, and is now at more than 18 months on average. Fitch says that is the highest figure on record. While the volume of newly delinquent mortgages has begun to improve in recent quarters, Fitch says liquidation rates of existing distressed properties have been constrained by weak demand and expanded initiatives to modify loans for troubled borrowers, DSNews reports. On top of that, the agency's analysts believe the recent discovery of defects in the residential mortgage foreclosure process will further extend liquidation timelines, slowing the resolution of distressed properties in the shadow inventory and preventing home prices from finding a floor.