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Sunday, August 09, 1981

Wednesday Open Thread

This is your open thread for today. Please post random links and off-topic discussions here.

35 comments:

synthetik said...

From Ben's Blog: stating the obvious.

http://thehousingbubbleblog.com/?p=1219

“‘It appears that the current housing slowdown is somewhat unique: It is the first downturn in the 40 years since we entered the business that was not precipitated by high interest rates, a weak economy, job losses or other macroeconomic factors,’ said CEO Robert Toll. ‘Instead, it seems to be the result of an oversupply of inventory and a decline in confidence: Speculative buyers who spurred demand in 2004 and 2005 are now sellers; builders that built speculative homes must now move their specs; and nervous buyers are canceling contracts for homes already under construction.’”

Thinking back to all the talk a few months ago on this blog by some who stated that we had to have job loss to have a downturn in real estate and land values.

S Crow said...

Had the radio on this morning and had to smirk at the ad for Keil Mortgage and Real Estate. Good company from what I hear, but the add was feeding on the penny pinchers.

Went something like this: "..buy or sell a home through us and we'll give you 500 gallons of gas." 500 Gallons?

The Tim said...

I've heard that radio ad. My response was to run the quick calculation, $3 x 500 = $1,500, and then realize that $1,500 is like pocket change when you're throwing $400,000 at a 3-bedroom, 1,200 sqft home on 1/8 acre. Which of course I'm just plain unwilling to do.

Nolaguy said...

A "monet inspired" kitchen and a formal living/dining room can be yours for just $400k.

http://seattle.craigslist.org/see/rfs/190131261.html

Do you think the 1200 sq. ft includes the oversized garage?

I predict that the words "better than a condo" get added to this listing in the future.

matt said...

"Monet inspired"?... How tacky, more like "Warhol inspired"

... I doubt Cluade M. would've approved of hanging a Kenmore microwave from the cabinets....

Anyway, where's the obligatory granite-countertops? When in this day and age in Seattle do sellers have the audacity to think they can pawn off a flipper for 400K/1200sq.ft without the granite?

Show me the granite!

richard said...

Interesting that the market has cooled so early, well before the flood of ARM adjustments.

The adjustments are going to be a giant suck on consumer spending, even if everybody refinances and nobody defaults (unlikely).

Anonymous said...

"It seems (this downturn) is the result of oversupply and a decline in confidence" ..... CEO Toll Builders.

What's this??!! A decline in confidence after 10 years of continual run-ups? Must be people are beginning to let go of the "delusions" that David Lereah of the NAR spoke of last week.

Eleua said...

A few years ago, the Center for Disease Control traced the spread of AIDS to a flight attendant from Eastern Canada - "Patient Zero."

Can we apply the same to the "Greatest Fool?" Can we trace the speculative boom all the way to the last, dumbest SOB that bought at the exact top of the market in the most speculative market in the country?

I would say that it was likely a Gen X couple from San Diego, that closed on a crappy house sometime last summer.

I wonder who will be "Fool Prime" in the Seattle area?

Where will they buy: Bainbridge, Ballard, Bellevue, Bothell?

Will it be a coffee inhaling GenX code pounder, or an X-Cal Babyboomer with the new Z4 and trophy wife?

Did they buy this spring, or are they still out there shopping for a house?

"Fool Prime - Seattle," where are you?

Anonymous said...

Thats it, i have to get granite counters now...and then my divinci inspired kitchen will be finished

I have to be the one to sell that house to the "Greatest Fool"

Lake Hills Renter said...

coffee inhaling GenX code pounder

Hey, I resemble that remark! =P

Eleua said...

If you really want to feel sorry for someone, just look at anyone that is in the supply chain of granite countertops.

When this madness ends, the unemployment rate in that industry is going to be higher than 90%.

Formica anyone?

matt said...

The Trifecta!

Gas Prices!

Oversupply Glut!

Painful ARM twisting

... The perfect storm, and we haven't even gotten to the housing-downturn inspired unemployment yet...

Nolaguy said...

Another craigslist gem. I would say this depressing and strange mess of a home most be "Salvador Dali" inspired:

http://seattle.craigslist.org/see/rfs/192083689.html

Check out all the ample parking you'll have - since the house is surrounded by GRAVEL!!!

And *only* $425k.

If ever there was an example of "lipstick on a pig", the bamboo floors in this house must be it.

Anonymous said...

I wonder who will be "Fool Prime" in the Seattle area?

I want so much to believe that a couple I know who dropped $579000, according to a warranty deed on the County website, in July on a Seattle condo (not beachfront) is not Fool Prime. I didn't offer any warnings: we never discussed the price, only that they were putting 20% down and going for a thirty-year term. I kept my mouth shut, I only offer advice when it's requested. I assume they knew what they were doing.

Maybe I'm just a financial candyass, compared to most.

Anonymous said...

well a house here in Greenwood,near me, just sold for over $875,000...no views except from the top room ( peekaboo ) with a "courtyard" lot "smirk"

Eleua said...

"Peakaboo" Realtorspeak for:

In the dead of winter, in a 50mph windstorm, and with a 10" reflector telescope, you might, if all atmospheric conditions are absolutely perfect, be able to see more than 1/4 mile for greater than 1/10th of a second at any given time.

jcricket said...

When is home ownership really not home ownership.

Yikes (mainly applies to the UK right now).

plymster said...

Nice post, jcricket. I'm curious, though: if the bank gets a third of your equity increase, do they also take a third of the loss if the home goes "underwater"? Or is it a "heads the bank wins, tails, you lose" sort of arrangement?

Anonymous said...

Monet?

I was thinking more of Munch's "The Scream"

matt said...

Here's my pitch to the hungry investor for the "new wave" investment strategy for the post-bubble mania... late 90's it was Tech, early 20's it was Real Estate, now since people have become get rich-quick fanatics and mindlessly deluded, I'm thinking AmWay?

I'm telling you, get your pyramid scheme mantra's ready and rollin' there's going to be a horde of poverty stricken bubble refugees looking for the next big gold rush!!

SourMash said...

My open thread contribution of the day:

Last week we got our King County reassessment notice on a basic 1950s rambler, and the assessed value went down more than 8%.

The interesting thing was the land value went up about 35%, but the value of the improvement dropped 27%.

I'm not complaining, since it will likely mean a lower tax bill. And I know assessment is kind of a black art.

I noticed our area was among those with actual visual inspection of sales during the last two years or so, so that probably had something to do with it. It might also reflect higher assessed values for new construction.

Or maybe the Assessor knows there's change-a-comin'. :-)

jcricket said...

plymster - If you follow the link to the Financial Times (through the link I posted) you'll see this

As an example, a home bought for £200,000 and sold after doubling in value to £400,000 would provide the lender with up to £70,000 of the capital gains, leaving the homeowner £130,000. If the home halved in value, say to £100,000, the lender loses £35,000 and the homeowner £65,000.

So, the bank loses some too, of course you're still on the hook for principle left over in the loan, I'd imagine.

This kind of stuff just freaks me out - I can't imagine sleeping well at night with these types of mortgages.

meshugy said...

I noticed our area was among those with actual visual inspection of sales during the last two years or so, so that probably had something to do with it. It might also reflect higher assessed values for new construction.

Where do you live? My house in Ballard was inspected and we got assessed 60K higher then last year!

Anonymous said...

O...M...G....

875K for a house in Greenwood?! That has GOT to be the top.

Must have realed them in by calling it "Green Lake area" in the ad.

I like Greenwood, but that is insane.

seattle price drop said...

Very interesting about the downward assessment Sourmash.

And here I thought I'd have to be banging on doors at the asessors office to get my taxes adjusted downward after the boom.

That is way accomodating.

richard said...

Wow, here's the quickest relist sale I've found yet!

Sale Date 6/16/2006 Sale Price $324,000

MLS# 26129656

List Price: $299,000

Looking at the loan papers, someone is going to be cutting the bank a substantial check at closing.

This property is a 1300 sq ft townhome in that mess just north of greenlake.

This is how comps can drop quick.

Peckhammer said...

Paradise, Reduced: Hot Market for Second Homes Hits Slump
Published in the New York Times, August 10, 2006

"As the overall housing market weakens, interest in buying vacation homes appears to be falling even faster."

Do you think this could affect inventory?

Anonymous said...

---The interesting thing was the land value went up about 35%, but the value of the improvement dropped 27%. ---


I saw a program on TV about that situation a week or so ago. The assessor said that the land is becoming more valuable than the dwellings. And, if their isn't a correction soon, King County will be a county of teardowns (for new construction). They just lowered you dwelling to balance the land appreciation.

richard said...

The assessor said that the land is becoming more valuable than the dwellings.

Well, that's the case for just about any house more than a decade old.

Consider that banks typically loan at an 80/20 ratio of structure to land price.

This is why all of the new construction is so expensive - and why a $20K increase in land value will push the value of new construction up by $80K.


With the exception of a few highly coveted styles (large craftsmans) the older houses are nearly worthless compared to the land value.

SourMash said...

Where do you live? My house in Ballard...

Assessor area 3, East Shoreline/West Lake Forest Park.

The area report actually confirms this land vs. improvement trend is area-wide.

For the whole area, land was adjusted up 25.7%, while improvements were adjusted down 7.4%. Combined was up 6.8%. (297K in 2005 to 317K in 2006).

Not sure whether it means anything significant, but I found the report to be very interesting.

jcricket said...

With the exception of a few highly coveted styles (large craftsmans) the older houses are nearly worthless compared to the land value

Woo-hoo. Go me! I've got a large craftsman in a neighborhood full of even larger craftsmen homes. About 50% updated, the remainder are being gutted and updated (not torn down) as people buy them (mostly homes owned by people who've lived in my neighborhood for 50 years).

That said, that's exactly what we did. With 100 years age on the house there's quite a lot to replace, even if the bones are good and the hardwoods can be salvaged.

biliruben said...

I live right where you live, SourMash. Off the top of Perkins.

My building assessment went up 10%, but land assessment went up a wopping 41%.

Ouch.

Should I appeal? Can I?

Anonymous said...

USA Today article:For Some, Renting Makes Sense

jcricket said...

Should I appeal? Can I?

You can - but your luck will depend on whether or not your neighbors (your block, surrounding blocks) had similar percentage assessments or not.

If your house is particularly old or crusty compared to your neighbors, or your land has some defect theirs doesn't (everyone drains onto you), you can often get the assessor to have that reflected

meshugy said...

Here's some info on Seattle's risk of a correction:

Housing market starting to wear thin



The service reported Monday that the median Seattle house and condominium price -- the point at which half sell for more and half less -- rose 14.6 percent in July over July 2005. By comparison, July 2005 was up just 10 percent from July 2004, which was up 16.67 percent from July 2003.

Richard Dekaser, chief economist at National City Corp., did a study that Global Insight released in June identifying 71 metropolitan areas, representing 39 percent of the single-family home market, as extremely overvalued in the first quarter of 2006.

Seattle was last on that list, with 34.1 percent of homes overvalued. That's up from 31 percent in the last three months of 2005 and 19.9 percent in the first quarter of 2005. The study found Bellingham, Mount Vernon, Olympia and Longview more overvalued.