Weekend Open Thread
This is your open thread for the weekend. Please post random links and off-topic discussions here.
Off-topic comment? Interesting link?
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17 comments:
Has anyone seen anyone working on the NoMa building in Ballard? I think that building must be going tits up because I never see anyone working on it and it has been at the same partially completed point for over a month, closer to two months if my memory serves. Compare it to the building across 24th Avenue from it and that one is almost completed and was started after it.
Reality is going mainstream:
This morning's NY Times reported: "The economy's growth slowed sharply in the second quarter, logging just a 2.5 percent pace as consumers tightened their belts and spending on home building suffered its deepest cut in nearly six years. Inflation, however, shot up."
Also this morning, NPR reports that housing market is slowing down, with increased inventories and falling prices. In Boston, there has been a 15% drop in condo prices.
Of course, Seattle is special. Or is it? Last summer, condos in my building were flying off the market 5 hours after they were listed, with multiple offers. Not this year. The unit for sale here has been on the market for weeks, has had an open house, and yet it languishes. I am certain that the owners enjoy making two payments -- one for the $500K house they just purchased, and one for the condo they can't sell quickly enough.
I am curious as to what effect the deluge of inventory will be in Seattle as more than 50 new condo projects are completed over the next couple years. I am sure that owners that have spent $500K+ for a one bedroom unit will enjoy a warm and fuzzy feeling if the prices of new units start drifting downward.
Has anyone seen anyone working on the NoMa building in Ballard?
Not sure...but their advertising dept. is still active. I just got some promotional stuff from them.
I guess we are different after all:
Study sees Raleigh-Durham real estate appreciation among highest in U.S.
Seattle is the only market expected to hit double-digit growth, at about 11 percent. San Bernardino, Calif., and Jacksonville, Fla., follow with home appreciation rates pegged at 9 percent.
This is an excerpt from the Federal Reserve Bank's Beige Book Report, released Wednesday July 26, 2006:
Twelfth District (San Francisco)> Real Estate and Construction:
"In the Pacific Northwest--where residential real estate markets had remained hot earlier this year--home sales reportedly softened and permits for new residential construction fell, with the exception of continued robust activity in the market for condominiums in downtown Seattle."
and Financial Institutions:
"residential mortgage origination and refinancing activity slowed further, and some contacts noted slight weakening in demand for consumer loans. Scattered reports indicated slight erosion in credit quality for residential mortgages and consumer loans."
with the exception of continued robust activity in the market for condominiums in downtown Seattle...
There is momentum behind this activity and it will take a while to qwell. Vulcan has a half-dozen condo projects in various stages of build, none of which have certificates of occupancy -- some of which won't for one or two more years. Activity will contiue, even if the prices soften.
Charles Hugh Smith's Housing Dominoes Fall is my nifty open thread link of the day.
Excerpt:
"Say it isn't so, Joe. Tell us housing never declines (not true), that debt can rise forever with no consequences (not true), that declining housing sales and lending won't trigger a rise in unemployment, that consumer spending will stay strong even as equity extraction dries up and the savings rate is negative, and indeed, that there is no bubble in housing values, as they have reached a new plateau which will never be breached, even though only 9% of the citizenry can afford the median price of homes."
9%? A single digit percentage is gloomy indeed.
Nice post, Christina. I have to wonder at some of the "Global recession" talk I've been hearing lately. Here's a line of thinking that I'm inclined to hope for instead:
It seems to me that, rather than be locked in indentured servitude forever, people will file for bankruptcy. The people who lose will be the mortgage holders.
Since mortgages have been packaged and sold off so much recently, these are largely institutional investors (pensions, insurance) and wealthy investors. As these investments turn from gold to crap, the wealthy and institutions lose a ton of paper value, and nobody buys packaged mortgages anymore. Due to this reduction of investment income, banks will have to tighten lending practices.
Once consumers are out of money, and no one will lend them anymore, they will have to start living within their means. This means renting, eating at home, grazing on Big Macs instead of chipotle-samlon burgers. People will still buy cheap crap, though (Walmart traditionally does best in bad times). European imports will likely dry up, while Chinese imports expand.
Basically, the wealthy nations get a bit less wealthy, and import demand from developing nations increases. Unemployment will be high in the US and Europe. Asset speculators will be wiped out since fewer wealthy nations will be building things.
I don't see it as a global crash, just more of a deflationary reset for US and Europe. China, India, Mexico, and other developing nations will probably be fine as long as we don't screw 'em too badly (WTO).
National Foreclosure News
Foreclosures down 16% in second quarter (from first quarter) nationally, but still up YOY. California, Florida and Washington foreclosure rates down a lot, but holy crap look at Alabama and Rhode Island.
On the site itself you can see foreclosed properties available for sale.
Interesting to mention the NoMa building. I drive/walk by this at least once everday. I dont see how it has changed in at least a month. I don't know anything about construction but the building accross the street went up damn fast.
According to the NoMar website they are 70%sold.
Wisteria Lane no more:
Meshugy likes to zero in on specifics locales such as Ballard or others. So,I did the same and just randomly picked an micro-market to drive through about an hour ago.
Willow Creek is a newer smaller development ($500-600K)around 2yrs old just Northeast of Mill Creek towards Hwy 9. I kid you not, five houses all on one street were for sale and I counted 15 homes on the market in a matter of just a few cul-de-sacs. I could not believe it. I rolled down the window and asked a neighbor who just pulled in their driveway what the heck is going on in their neighborood?
He smiled, said immediate neighbor just reduced their price (sold pending) and mentioned they moving to California. The others, he suspects from what he's hearing, and I quote, "probably have some ARM's that aren't going too well. I just moved in about 6 months ago myself and there was nothing really for sale in the neighborhood and now......" I didn't want to have that conversation with him. But, if he's a long term hold, then he should be fine.
Neighbors know what's up with each other and his comments reminded me so much of the Desperate Housewives TV show. One of the houses for sale had a HUGE newer boat in the driveway. I'm sure the neighbors appreciate that.
I recall this neighborhood very well. Just a year ago you could not drive up the streets without a "Sold sign" on the lot number when they were pouring the foundations and just starting framing. Different story today.
NY Times: "The housing industry — which largely carried the American economy through the tribulations of the 2000 stock-market crash, a recession and climbing oil prices — has lost its vigor in recent months and now has begun to bog down the broader economy"
"It hasn’t slowed down a little bit — it has slowed down a lot,” said Doug McCraw, a developer who has scrapped his plans for a 205-unit condominium tower"
Well, we don't have to worry about this in Vulcan Land, but some parts of the country are in for the crying game.
"US Economy slows down"
http://news.bbc.co.uk/2/hi/business/5224474.stm
Some interesting data from the Times about condo appreciation. Looks like studios have appreciated the most. Crazy. 2 and 3 bedrooms don't look like they've appreciated all that "frothily"
Disclaimer - Obviously written by stupid MSM cheerleaders, house is not an investment, economy's going to go into recession, all the condo projects will be cancelled, etc.
The Horizon Air inflight magazine for July 2006 has a big real estate section. On page R31 there is an article by Tom Kelly "a nationally syndicated columnist and the author of Cashing In on a Second Home in Mexico" called House Rules.
I quote:
"What's the best investment you've ever made? Probably your home. Why not attempt to do it again - while hanging on to your primary residence - and simply view the reliable real estate road as an alternative to the bumpy, unpredictable avenue of the conventional financial markets?
There's a simple strategy that will enable your next real estate purchase to serve, over time, three purposes - investment, vacation and retirement - and likely to do so tax free. If you think that this idea is way, way over the top, just consider the statistics in the most recent study on sales conducted by the 1 million member National Association of Realtors,the largest trade group in the country. The study, based on two surveys, showed that 27.7 of all homes purchased in 2005 were for investment, while another 12.2 were vacation homes.
The study showed the majority of the real gain in single-family home sales can be attributed to the vacation and investmnet property markets," says John Tuccillo, a real estate analyst and author who for years served as the Realtor's chief economist. "Not only are baby boomers looking for weekend getaways, but we are also beginning to see young retirees auditioning for their retirement location. As the boomer group ages, and the demographics change, a larger and larger number of consumers will be targeting potential retirement homes."
So according to the realtors themselves, approx. 40% of single family homes were bought for investment or vacations in 2005, that's very scary.
Also with the boomers moving into retirement (see "The Coming Generational Storm" by Kotlikoff and Burns, 2004 The MIT Press) many people will be trying to offload their McMansions shortly.
The most incongruous advertising in the real estate section was for Prium Homes. Featuring pictures of a cute kid cuddling with his mom and an elementary age girl playing her cello these condos have a by-line "LIVING THE DREAM".
They are located in downtown Tacoma. No offense to Tacoma but living there in a condo has never been my dream and I don't associate downtown with cello players.
Here are the monthly increases for various price points as interest rates increase
Loan/Rate/Increase
100K/2%
100K/4%/$107
100K/6%/$230
300K/2%
300K/4%/$323
300K/6%/$690
500K/2%
500K/4%/$539
500K/6%/$1,150
700K/2%
700K/4%/$755
700K/6%/$1,610
Assumptions:
Term: 360 months
Increase: P&I only
Error: ~10% (due to not taking into account various factors like decreasing term and loan balance)
Given that subprime ARMs have been the financing tool of choice during the last 3 years all I can say is....OUCH
Condo projects being cancelled
How long until the non-Vulcan luxury projects start getting cancelled?
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