This Housing Mess is Getting Ugly and Your Face Shows it. Unintended Consequences of Lost Home Equity.
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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17 Responses to “This Housing Mess is Getting Ugly and Your Face Shows it. Unintended Consequences of Lost Home Equity.”
I always find how various sectors of our economy correlate. I never would have predicted the housing slump to have an effect on botox and breast implants! This sounds like something for another chapter in Freakonomics!
Tim
TheMoneyKings.com
The original story in LAT detailed how the Hollingsworth “who once weighed more than 300 pounds, had gastric bypass surgery and shed 170 pounds” so she had great gobs of hanging skin and needs a tummuy tuck. Gluttony (food) and lack of discipline and self-control caused her problem and now more gluttony (credit) won’t solve it since it is now longer available. Guess she’ll have to FINALLY exercise some old-fashioned discipline and self-control and SAVE the money up first. Who said that this whole falling-house-values-credit-crunch thing wasn’t ‘good for people’? It most certainly does help them develop some strength of character and self-discipline.
I know a woman who works as a Teacher’s Assistant for LAUSD. She pulled $9000 of equity out of her house to get lipo and a tummy tuck. She looked good for all of 3 months, then gradually began to re-gain the weight. 1 year later and visually you cannot tell that she ever had anything done. She never changed her eating habits or lifestyle so all of the weight (and then some) returned AND she still has to pay back the $9000, not to mention that I’m sure her home value has taken a hit as well. What a waste!!
As an independent patient consultant for plastic surgery I was thrilled to see this article. I’ve been very vocal about our industry pretending that the economy doesn’t affect us. Yes, people did have “extreme makeovers” with the equity in their houses, but the bigger tragedy is that average surgeons with average talent actually thought they were good, because they were busy. The money was flowing and people were jumping on the table. The good news for the consumer who does choose to have plastic surgery is that after a couple of years the average and below average surgeons will be flushed out and only the truly talented will remain. The economy has hurt our business. This is the first article that I’ve seen where it was actually admitted. Remember knowledge is power. http://www.Angelasegal.com
I’m 56 and I can’t imagine why a 41 year old woman would feel she needs Botox.
To me she is almost ‘jail bait’ anyway. Why women think older men ALL want to go out with teenagers ( or worse) is beyond me. I’ll take a few pounds around the hips, some ‘crows feet’ around the eyes and a few other age related blemishes over a ‘Valley Girl” anyday. This story is almost as ridiculous as the mortgage broker who decided he would turn ‘surfing instructor’ at age 62. Come on! The Tangerine Colored Kool Aid Acid Test” is about as current as The Canterbury Tales. In fact speaking 13th Century English would rate a lot higher, I imagine, than 1960’s gibberish in the neologisms of the young. Try it. Walk up to a teen and, with a knowing glance turn and spurt out ” April is the Cruelest Month”. The kids will go nuts with your profundity.
Seems like people are now moving to the malls for their botox fix:
http://money.cnn.com/2008/03/21/news/companies/mall_tenants/index.htm?section=money_news_economy
Everyone’s heard of pergraniteel. Now we have botoboobsass.
If these guys really are doctors, they can go work in Massachusetts, which due to everyone having health care, is drastically short on doctors. This downturn will also enforce discipline and needed dose of reality on all the medical doctors going into specialties to get the super big bucks rather than doing primary care.
I also know some people to travel to Caribbean and have a cheap plastic surgery. But they never say it’s their primary reason for going their, its a vacation where they just picked up some doc to make them look a bit better.
People got whatever they wanted. Now they get what they deserve.
Of course, it is not ending here. The government is going to save us. Whee!
What does that mean? Simple, taxes will be used to prop up Wall Street (done), home builders (done), and home owners (soon). So what is wrong with that?
Simple, our tax dollars are being used to pay for the botox and the liposuction.
Got it? We are all paying for greedy, stupid fat people’s cheeseburgers and plastic surgery.
AnnScott and Dr HB, you both are more than a little mean in this case. The woman who lost 300 pounds two years ago now weighs 130–she hasn’t achieved that by lying around being gluttonous. The excess skin thing is a real issue–you may not have seen what happens to very fat people who lose weight (by any means, including diet and exercise)–the are flaps and folds of loos skin and they are deeply unattractive. Rather than condeming these people, (I’d be shocked if either of you hadn’t a single ounce of excess fat on ya), how about saving your scorn for people who have not, as this woman did, done something drastic to improve their lives and health.
@ Jes: AnnScott and Dr HB, you both are more than a little mean in this case. The woman who lost 300 pounds two years ago now weighs 130–she hasn’t achieved that by lying around being gluttonous.
****Oh really? She didn’t get FAT by not being a glutton? She put on the execessive weight because she had no self-control and no discipline. Either she stuffede the food down her throat or the gremlins force fed her (and the odss of that happening are somewhere around zero.) If she hadn’t been a glutton, she wouldn’t have blown up to 300 lbs. Then she didn’t even have the self-control, discipline, patience and perseverance to lose the weight the old-fashioned way: (1) stop beinding her elbow and (2) get off her backside and get a lot of exercise. She opted for the fast method – surgery and most likely put the cost of it into her mortgage in a refi. (Which she now has to pay off.)
****Seems pretty similar to her mortgage problems. She has the house mortgages to the max and thus was (1) a zero-down since she couldn’t be bothered to save up a nice downpayment or (2) HELOCed to hell and back (probably on top of a zero down after it ‘went up in value.) Now she wants to spend more money on more surgery but doesn’t have the cash – sounds a lot like her weight problem from wanting to eat more food than she could burn off. Her comment about not wanting anyone in the family to have to give up anything in order to achieve a goal (here, paying for more surgery) is pretty obviously the comment of someone with no self-control, no self-denial to achieve a goal and a huge sense of entitlement.
*****Her problem is a fundamental personality flaw of being unable to exercise self-control. discipline, patience, self-denial and sheer physical effort. All personality traits necessary to avoid getting fat (let alone grossly obese like she was), to losing weight and to not making stupid financial decisions like buying a house that maxs out discretionary income and then HELOCing to bejesus and nack to pay for ‘stuff.’
***Self-indulgence, laziness and greediness. The defining characteristic of the American masses.
I knew one of the inventors of Botox, a doctor. He invented it to cure a nerve disease that hits the face and he did not patent it. It’s a perversion of this fine work to use it for human vanity. Besides it’s neurotoxic. A recession might help some people realize what’s important in life. Unfortunately the innocent have to suffer too.
Comment by A. Zarkov
I knew one of the inventors of Botox, a doctor. He invented it to cure a nerve disease that hits the face and he did not patent it.
***** Actually Botox is the vaccine for botulism – a deadly disease that is contracted through spores in the environment in the soil. (People are not generally at risk unless they go out and graze like cows or horses.) The Botox vaccine is used in large animals.
AnnScott
What’s gotten into you? You sound like me now. You nailed the bullseye on all your recent comments. Personal responsibility, I like it!!
Actually, botox is a neurotoxin produced by the bacteria that causes botulism. In minute doses, it can be used therapeutically. In larger doses, it is lethal (through ingestion of spoiled foods, for example).
Definitely not a vaccine.
Plastic bags full of gel. Plastic threads under the skin. injected neurotoxins. Tell me what’s not going to bite our ass later.
I remember an episode of The Operation where the surgeon had his hands underneath the face of a patient getting a facelift. Yikes!
Girls, us guys aren’t really worth it.
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