This Housing Mess is Getting Ugly and Your Face Shows it. Unintended Consequences of Lost Home Equity.

12 04 2008

This Housing Mess is Getting Ugly and Your Face Shows it. Unintended Consequences of Lost Home Equity.

Posted by: admin in Real-estate news

A reader sent in a fascinating story from the L.A. Times (hat tip Exit) discussing the impact of the housing market on plastic surgery. If you’ve noticed recently that people are looking less like Hollywood stars and more like average folks, you can blame it on the disappearing equity. Here in Southern California […]
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A reader sent in a fascinating story from the L.A. Times (hat tip Exit) discussing the impact of the housing market on plastic surgery. If you’ve noticed recently that people are looking less like Hollywood stars and more like average folks, you can blame it on the disappearing equity. Here in Southern California in places like Los Angeles and Orange County, plastic surgery is as common as dying your hair a new shade of blonde. As much as the government wants people to keep spending, they have no idea where people will put their money. Not only were people adding granite countertops to their kitchen but also placing a few headlights on their body:

“Afterward, in a carefree mood, the ladies would dine at a popular restaurant on the Sunset Strip.

No more. The sub-prime loan crisis, the housing slump and the general decline of the economy have claimed another covey of victims. Anthony is in the real estate business, and under current conditions, the cosmetic treatments — at $1,800 or more a pop — can no longer be squeezed into her budget. It’s the same with others in the group.

“We used to make appointments together,” Anthony said. “Then they started saying, ‘I can’t go next week.’ People didn’t have the money, but they were ashamed to tell you.”

“I would rather have Botox than go out to dinner, but it’s just gotten so bad,” said Anthony, 41, who is looking for a job since her career in the mortgage business went sour. She has not had the facial treatments in months.

And what’s been happening in Beverly Hills is apparently happening around the country. After years of steady growth, the cosmetic surgery business seems to be going through a rough patch.”

I’ve noticed the lack of people talking about home equity last year at a few parties. In 2005 and 2006 the main topic usually was how much someone’s home appreciated. This is no longer the case. It seems that many people are dealing in silence now. Looking at the above, Anthony shows us an interesting perspective of priorities. She would rather get Botox than go out to dinner. Unfortunately, since the mortgage business has fallen off a cliff here, she will no longer be able to get those wonderful injections of Botulinum Toxin Type A. My question to you folks out there is what other kind of career can someone take up in the current environment to afford routine plastic surgery or touch ups? The story goes on to tell us that business is sagging nationwide:

“Doctors don’t like to talk about it publicly, but plastic surgeons from the Southland to South Florida said some colleagues are struggling to stay in business.

A leading manufacturer of breast implants recently reported that surgeries declined toward the end of last year.”

Now we have another unfortunate victim of the sub-prime mess, plastic surgeons. It is amazing the unintended consequences of bubble mania. This bubble has literally burst on many fronts. Yet there is another important caveat to this entire story and once again it uncovers the façade of this entire debt economy:

“Beyond the economics, there is another dimension: Once largely confined to movie stars and rich socialites, cosmetic surgery has been democratized — thanks in part to the popularity of “makeover” television shows and decades of prosperity that have put such treatments within reach of large numbers of people.

Botox, breast enhancement and “body sculpting” have joined designer clothes, upscale cars, and kitchen and bathroom upgrades as common symbols of the good life and success.

“No one can have a practice built on the ultra-wealthy, because there aren’t enough of those people to go around,” said Dr. Robert Kotler, a Beverly Hills surgeon who specializes in the face. “The reality is that cosmetic surgery became popular when the middle class became enamored of it: flight attendants, professional people, businesswomen — people whose appearance is important to them.”

Another extension of the desire to have a “large” life is not only seen on all the home upgrade shows but also in the life of those that want to appear as if they live like a Hollywood star. The problem with lack of ethics and values is that people pushed the housing envelope to as far as they could whether legal or not. The quote above gives us a perfect insight into the culture that not everyone is uber-wealthy not even in California even though they like to appear they are. That is why, if you’ve watched any cable show, you’ll see advertisements pumping plastic surgery on installment plans. It doesn’t strike me that an actor or actress would get plastic on 12 monthly payments. The gold rush in California didn’t make millions rich but selling Levi’s and pick axes to those chasing the dream did make many businesses prosperous.

Yet fear not. There is a silver lining with a declining dollar. Yes, everything around you costs more but thanks to your federal government’s mismanaging of the dollar, we now will deal with it by seeing more beautiful Europeans:

“In Los Angeles, a world capital for plastic surgery, doctors are hoping that globalization will provide a cushion. Some are looking to European patients, who can capitalize on the weak dollar and combine their plastic surgery with a Hollywood vacation.

“This is a mecca,” said Dr. Stuart Linder, who specializes in breast augmentation. “I have women flying in from all over the world because this is Beverly Hills.”

But Linder said his surgeries were off by about 5% in January and February. He has heard some doctors are off by 30% to 40%.”

Thanks Ben Bernanke for literally making the world a more beautiful place! There has been arguments floating around that a lower dollar is going to boost exports and help us balance our economy. Check out the major bump we’ve gotten by a falling dollar:

Don’t you feel better knowing that the U.S. Dollar index has now fallen over 21 percent in a little over 2 years? If you are feeling the pinch in your wallet there is a real reason for it. Take a look at the steady decline of the U.S. Dollar:

The story itself ends by the journalist trying to sock it to the reader and make us shed a tear:

“A tummy tuck and breast augmentation were supposed to deal with the problem, but now they’re on hold.

Her husband’s job with an engineering firm appears to be secure, but the four-bedroom home the family bought 2 1/2 years ago has lost value. On their street in a brand-new subdivision, four or five houses now sit empty.

“If we weren’t upside-down in the house, I probably would take the money out and have it done,” said Hollingsworth, but “I don’t want to make my family do without.

“I’ll have to see how long I can tolerate wearing a girdle.”

Taking money out of homes to get elective plastic surgery is definitely a new thing that this housing bubble has brought on. It is really a feat to think that we reached a point where people were simply slapping on a virtual ATM machine to the side of their homes and raiding their equity. By the way, you have to pay that equity back. That is why we have seen like this Real Home of Genius homes being taken back with larger mortgage balances than the initial purchase price. Whether it is new Mediterranean tile on your home or a new pair in your chest, the upgrade bonanza is coming to a screeching halt. Now, if you want to get these things done you may actually have to have some money saved up (at least the $600 rebate check can be a down payment for these procedures). So if people aren’t looking so hot you can add that to the list of things to blame the housing bubble on.

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