Tuesday Open Thread
This is your open thread for today. Please post random links and off-topic discussions here.
Off-topic comment? Interesting link?
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Head over to the forums, or click here for open threads.
31 comments:
Fun with Toxic Mortgages in San Diego! , like crack cocaine... they just can't give out enough of these things!
But despite that cooling market, where equity is no longer "guaranteed," the exotic loans are still hot. In the first five months of this year, 67.8 percent of the purchased and refinanced mortgages in San Diego were either interest-only or negative-amortization loans, according to First American Loan Performance.
Wow, I'm glad Seattle's different, we may have fallen into this deadly negative amortization pit-fall...
Conversion Madness, as seen in the Puget Sound Business Journal:
Earlier this week, Wysong and Granite Peak paid developer Harbor and partner Heath $33.4 million for the Press 1 and 2 Apartments on Capitol Hill’s Belmont Avenue in Seattle.
The most recent Apartment Insights researchfrom Cain Inc. and RealData shows condo conversions in the second quarter of 2006 outpaced new apartment construction in the Puget Sound area, with 223 new apartment units built, compared with 401 units converted.
I am glad my apartment isn't built in the last 10 years. It would run a higher risk of being converted.
Wysong has been busy. They have bought 5 properties last year already.
http://www.cityfeet.com/News/NewsArticle.aspx?PartnerPath=&Id=16283
Here's their current properties:
http://www.wysonggroup.com/featured.php
I have come to the conclusion that the same people who have financed themselves to the hilt with ARMS and HELOCs are the same people who are financing big gas guzzling SUV's using Zero Down/Zero Percent financing for 7 years. These are the same people who are pushing the obesity levels in america to all time highs...These are the same people contributing to Strip Malls and sprawl across america.
These people do not go outside - they are indoors watching TV isolated from any culture.
This has become pure american GREED and GLUTTONY.
These condo-converters have got to be severely delusional bunch or they're extremely savvy, one or the two.
One thing is that condo-conversions take way less time to sell. Throw the old ladies out, throw a few granite countertops around, maybe even a gas fireplace if you want to hump it for a few more dollars, throw it back on the market for twice what you paid, and roll out the red carpet for the "gotta get in" newly hired 20-something Micro$oft employees with negative amortizing dime-a-dozen 'loans'...
This whole trend is all on a short fuse, a race before the bubble collapses...
Building Denny triangle condo-towers probably has a much much lower return on investment if you're a hack-Trumpster. That and by the time your 'vision' goes up, the bubble's imploded and before you know it you're throwing in Flexcar deals and free cruises. With the conversion, you can turn it around in a month or two, no zoning weirdness, minimal building permits, etcetera... sell it and run run run....
emcityjill,
Canada's already preparing for the imminent demise of the U.S. housing bubble as well. Nothing like an objective observer to make the play...
The subdivision lot just north of Microsoft has started construction, after over a year of sitting undeveloped. In that year the sign went from "From the $800's" to "From the $1M". It seems like an odd time to start building to me. Summer is almost over, so we'll be getting more and more rain as time wears on, so they have to get that roof on fast. There's also no way they'll get all the lots developed before winter, so they must be waiting to develop some next year. I just can't see the market being the same next year. On top of all that, there's three huge new McMansions almost finished just down the street. Seems like they already missed the boat to me. I'm wondering if just selling the land would have been a better deal.
From the Marin Bubble site.
A History of Home Values:
http://photos1.blogger.com/blogger/6511/1295/1600/27leon_graph2.large.gif
What a great chart! I don't know how somebody could not see an RE bubble after looking at that chart.
I've been following this blog for several months now and appreciate most of the discussions. I sense the general mood of this blog is we're going to see a correction, how much and exactly when is certainly up for debate. I'd be interested in opinions that consider where we may now be headed-flat interest rate levels or possibly a decline as the economy slows/decelerates. Recent economic data suggests that if the trend continues, we may actually see the Fed lowering interest rates in mid 2007. Don't forget, when we approach presidential elections, the fed has a history of loosening, not tightening. Thanks for your thoughts
All you Bulls gimmie an "O" for Ouch!
That would be Meshugy, he was parading around that UCLA article when it debuted on the blog... so much for the lessons of history, I guess...
Speaking of condo's, here's an interesting article on Philly's condo downturn
I'm especially fond of the quote...
While two major developers are pressing ahead, others are becoming cautious and complaining that media coverage of whether the condo market is in a boom or a bubble is causing the problem.
Damn media! Hell he should come out to Seattle where the pom-pom's are 24/7! Our media beautifully complicit and will keep your bubble going for a good 1yr+ beyond other downturns, they'll keep your condo sales office packed with bright-eyed over-leveraged 20-somethings willing to sign their life away to that i.o. loan!
Hell he should come out to Seattle where the pom-pom's are 24/7!
Not if you believe the Real Estate Professionals at the P-I blog...
Nice post, Tim. I think we'll be hearing a lot more whining until the Realtors (tm) on the Seattle PI RE Pro blog are all flipping burgers.
As an aside, get a load of Susan Ryan's fuzzy math (4th post down). It's nice to see more clear and accurate math by an unregistered user (8/24 @ 11:18 am).
With this sort of business savvy, why would anyone trust something as important as the selling/buying of their home to any of these RE yokels?
Here's what Thornberg has to say about price drops:
Housing prices may fall, but slowly
Is this going to be an economic train wreck like the one that happened in the early 1990s?
No, concludes economist Christopher Thornberg in a somewhat surprising assessment since he's been one of the biggest bears about the California real estate market.
"The housing bubble pops (and) you don't get a rapid decline in prices," Thornberg said. "Why? Stocks are very liquid, lots of trading, lots of money, lots of players. Housing is not a liquid market."
"I think there is ... potential to have a mild retraction in prices, nothing dramatic. Housing prices are going to go down. The key is they are going to go down slowly, not rapidly."
And when they bottom out in this current cycle, they will probably do so at a high level.
He expects sales to retreat to the level of 1993 or 1994 and price declines totaling 10 percent or more.
It's not a collapse, though.
"From the Marin bubble site...I don't know how somebody could not see an RE bubble after looking at that chart."
Except to most homeowners in Marin, where that chart would confirm their belief in the local "unbustable" housing market. Until they see the downside, they'll continue to coddle those illusions. I'm sure areas in Seattle share these perceptions.
Meshugy, you've posted that same link already in last week's Monday Open Thread. To which Biliruben responded with another Thornberg quote:
Thornburg:
""My guess is we're going to have a hard landing," he said. "It's ugly out there."
- Aug 14th, after leaving The Forecast and being finally able to speak freely.
Here is link that should send people into a froth. Housing values in the US since 1890
http://graphics8.nytimes.com/images/2006/08/26/weekinreview/27leon_graph2.large.gif
Could people's inability to see a bubble simply be a capacity issue?
I've always been good with data, charts, math and numbers in general. I can look at data and easily see trends and formulate conclusions. Not that I'm special - lots of people can do this.
But is it possible that there is a good percentage of people who don't have these "number crunching" skills?
Data can be interpreted many ways, but some data, like Marin_explorer's chart is glaringly obvious.
Is there chance that some people just can't interprete housing data, and therefore can't imagine price declines? What percentage of these people are the FB's of today?
Octopus-
Yes, Shiller's graph is downright scary. I don't care how "rich" you are...it should really unnverve everyone.
price declines totaling 10 percent or more.
Given what I've seen in Cali already, that "...or more" comment has significance. Anyone who's paid attention to Cali's market recently knows what a train wreck is coming. On individual homes in my town, I've already seen reductions of 25%--and this is a so-called "prime" area. It's far more ugly already in San Diego and the C.Valley.
It helps to be here and see it for yourself.
Meshugy , why is it most of your posts are just italicized parrots of articles vaguely bullish? I dunno, seems that most people that post here, quote, and then draw an arguement... besides anecdotes, I'm not really sure you have any analysis or thoughts purely your own? Am I wrong?
I wonder what the story is here:
http://seattle.craigslist.org/see/rfs/200537564.html
$799k on a short sale?
""My guess is we're going to have a hard landing," he said. "It's ugly out there."
Hi Lake...I don't think those comments are mutually exclusive. I think he's saying that a hard landing means 1 10% reduction in price.
But he's talking about CA...they have way more potential for a crash then we do.
Billruben,
Thanks for the data.
That's a nice nieghborhood, but no WAY is that box worth $800k.
I'd pay $400k for it...
In the spirit of the open thread, a good article from the Motley Fool:
http://www.fool.com/news/commentary/2006/commentary06082914.htm?ref=foolwatch
The Thornburg "reversal" was not surprising as he had been a housing bear for a long long time. It was only when the bubble started actually bursting that he started talking about a soft landing. (As if he'd be blamed for being a messsenger).
But remember the guy who did the Harvard study a few months back? The study that was so rosy on the housing market and was trotted out as proof of no crash by many a realtor, etc.? The one that was funded by the REIC?
I saw THAT guy being interviewed on CNBC a few days ago and he is NOW A BEAR!!!
Now there's an indicator for you.
Schiller's calling for at least 20% drop in median, nationwide. He says that's conservative.
see article at NNJbubble.
Has everyone heard this interview with Schiller and Yun on NPR:
Where Is the Housing Market Headed?
Yun points to Seattle as a market bucking the slow down trend. Schiller is cautious about predicting a big decline...saying that prices could hold for years. All depends on the unknown factor of market psychology. He mentioned how he thought Australia would be the poster child for real estate bubbles...but now it's bouncing back is fairly strong.
Australia? Yeah its doin' great , just hard to tell through all the flames from the crash landing it took...
Australia? Yeah its doin' great
The west coast of Australia is still doing ok. Granted, 90% of the population is not on the west coast, but Perth has lucked out so far.
I lived there for a while, and Perth is very comparable to LA, but without the pollution, crime or overpopulation problems.
Probably a temporary benefit of being the most isolated city in the world.
Thanks for linking to that article on Australia's crash Matt.
There is no end to the outright lies that people who cannot accept the fact that this market is going to crash will tell.
I guess it was the same as the dot.bombs were going down... sigh...human nature.
but at least when links to the truth are provided it can save some from becoming yet another FB.
Shiller said a day or 2 ago that you can bank on a 20% decline.
get rid of the troll.
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