Why Can't We All Just Get Along?
Have you noticed how touchy some people can be when it comes to discussing the subject of whether homes are overpriced or not? It's almost gotten as bad as politics. For the best/worst example of this, head over to the Craigslist housing forum (if you dare). I read it occasionally, but honestly not very often, because it seems like all day long, all it is over there is bickering and name-calling, from both sides of the aisle. Heck, in my first visit over there in nearly a month, I discovered someone throwing insults at me, and I barely ever post there (and when I do, it is never anonymously). If you've got something to say to me, come to my blog and say it "to my face" so to speak.
So what is it about this subject that makes people get just downright mean? Real estate enthusiasts throwing out the "bitter renter" insult, and bubble believers cheering on the economic destruction of their neighbors... Obviously not everyone involved in the debate stoops to those levels, but there are enough examples of these kinds of attitudes out there that it tends to color the entire debate.
On an almost unrelated note, I was "interviewed" by Frank Sennett for the Spokane Spokesman-Review a few weeks ago. Here's my 15 seconds of Spokane fame:
Seattle Bubble is a real-estate blog with teeth. It focuses on signs of a hard landing for the housing market. Tim Ellis, a twentysomething electrical engineer, started blogging about a bubble after encountering what he viewed as unrealistically high prices while house hunting last year.Heh... A blog with teeth. Amusing.
But unlike the proprietor of Housing Panic, who seems almost gleeful about a crash, "I try to keep a fairly level head about the subject," Ellis said via e-mail. "I don't really get why some bubble bloggers seem so excited about the very real potential for a serious economic downturn. It's certainly not a prospect that thrills me, considering that any economic pain is likely to be felt across the board, which includes me."
So like I asked in the subject... Why can't we all just get along? You've got your opinion, I've got mine, and we each do what we think is the best given all of the information available to us. What do you care if someone else doesn't see things the way you do?
(Frank Sennett, Spokesman-Review, 08.07.2006)
25 comments:
...because truth hurts.
This is true, betamax.
As a non-owner, I really only get mad when I see a 20-something know-nothing with finances far worse than my own overpaying for a home.
This isn't because I care about the know-nothing, but because I know that every moron with a open credit line makes things that much worse for the sane people.
That's what inflation is all about: turning neighbor against neighbor.
I think many confuse a spirited discussion with a fight.
I think Meshugy and I represent the opposing ends of the spectrum on this forum (although Matt is making me nervous of losing my position).
'Shug looks at the present, interprets it in light of the past, and sees a bull market. I assume he believes that real estate is different than other financial markets.
I look at the present, and interpret it through non-real estate financial markets and make my arguments for the future.
I only disagree with 'Shug from the standpoint of his predictions are wrong, based upon how the past is irrelevant. It is my belief that the things that underpinned the past markets have now changed. I don't think Meshugy believes that.
Now, absent a little benign razzing, there is no reason to make anything personal. Opinions differ. We would learn nothing in a very bland world if we were all in one accord.
I thank Tim that this forum is not an echo chamber. In fact, I wish we had more bulls on this forum. Seattlebubble is one of the most avuncular forums on the net.
Generally speaking, the most shrill are the ones that have the least tenable position.
Anyone who has been reading Bill Fleckenstein over the past few years knows that his "Hate Mail Indicator" has an uncanny ability to call market tops. Again, the most shrill are the ones on the most shaky ground.
I'll give 'Shugy some credit. By-and-large, he is pretty calm, even though he is swimming upstream on this forum.
I have no use for Tim Dunn. He claims to welcome the differing opinions, but he can't handle them.
I'll give 'Shugy some credit. By-and-large, he is pretty calm, even though he is swimming upstream on this forum.
Thanks Elua...this forum is at it's best when people are engaged in level headed discussion. I think it's fair to say I'm the most likely target for insults here...fortunately, insults from anonymous people on the internet don't really mean much to me.
What is annoying is that it distracts from the discussion...it's good that Tim has been deleting most of the personal attacks as of late.
The other reason for the anger is that it sucks for people who want to be able to buy a house but now are priced out of the market. If I were buying now, damn straight I would be actively rooting for a pricing collapse and would be a little pissed at people who had what I wanted just because they got lucky with their timing.
As for what pricing will do, I keep looking down south as examples of housing markets that are really out of control. People regularly have 1.5-2 hour commutes (NOT factoring traffic) there because that's the only way they can afford anything.
IMO, Seattle was underpriced for a while. Now it's slightly overpriced. The runup seems more dramatic due to where we started. As long as increases stop now (or maybe go down a little), inflation will catch up soon enough and things should be ok.
There's definitely a difference between an overpriced house market and an out of control one. We're just the former.
And yet another reason for anger:
This credit/real estate bubble is not a victimless crime. A lot of people live modest lifestyles, spending conservatively, saving diligently. And then you've got a significant portion of the country blowing their wad on luxury cars, houses, granite counter tops and country club memberships they can't afford. When the poop finally hits the blades, there will be a lot of collateral damage. IOW, the ants will be in the same toilet as the grasshoppers, despite their responsible and measured approach to consumerism.
People need to feel vindicated in their position. Owners have taken on risk in buying, and renters have taken on risk in not.
Some blogs, such as Housing Panic, see the real estate run up and credit bubble of a sign that "america is all wrong", and his anti US bias shows through. He is cheering on the crash of what he sees as fueling current US behavior.
Then there is the jealously angle. Everyone knows someone who takes a risk in taking on a big mortgage, and trys to live above their lifestyle, while you save and live modestly. It just does not seem "right". But sometimes the ignorant one wins just because timing works out, prices continue to rise, and they "make out" by shear luck. Sort of like the flippers who caught the upswing once, made some money, and then bought 2-4 more houses to do it again....
"Owners have taken on risk in buying"
What risk is involved in a no money down, interest only loan that you can walk away from with little more than a ding your FICO score?
Slightly off topic, but I was just hanging out with friends I hadn't seen in few months. All these guys talk about is real estate, real estate. No matter what happens, the conversation eventually turns to real estate, and then eventually how stupid I am because I'm renting. He says it with such a haughty, sarcastic tone it makes me just want to give him a good punch right in the face, but I digress. Anyways, smart guy and a couple of his flipper friends just bought a $968,000 (or thereabouts) place in the U-District. Its one of those houses right along 50th St, close to the west side if I-5. I swear, I think I even used to go to some crazy parties in that house before it obviously got remodeled...really looks like the same house. Anyways, I took the conversation straight to how much is all the damage. Mortgage: ~$6300/month. When I asked him to break that down for me, that's about where his smartness ends. It's always, "Well, I'm paying like $1000, (so and so) is paying another $1000, and THE COMPANY is paying for $4000." The Company? I thought to myself. What the hell is that shit? He said Washington Loan Network. Anyone heard of these guys? It sounds like some sort of network/marketing/investors pool type of deal, that allows members to take out mortages on investment houses, letting The Company take care of carrying costs until you make your flip. Not sure how The Company gets its commission, or how much, I couldn't weedle that info out of my friend. But it's that kind of shit that pisses me off. How am I to win against pools and pools of flipper investor KKK groups that simply buy up properties using un-Godly mortgages and then flip them over to idiots like me who want/need to buy?
Everyone is At Risk wether or Not your Buying or Renting.
Renters are at risk for Rental Rates. Then again who know when the tide goes out Renters will "I'm willing to bet will become much more creative in How they rent. For example I know several people that group together and rent a house. Though being creative they get housing costs down as low as 300. dollars a month. How does that compare with the lady I spoke with on mercer island spending 3,200. dollars to rent a house? much different. Then again they have different objectives.
The lady on Mercer island was a high income employee that wanted her children in a particular school distict. Then again if she looses that high level postition that just happens to be as an Government employee? maybe that priority will change, People adapt.. (Personally I couldn't imagine spending 3,200 dollars on a rental agreement. I much rather be saving and looking for safe investments that would further secure my childrens future. I talked to this person in depth for a while and this person struck me as someone living the paycheck to paycheck nightmare. To me it seemed she was the type of person who thought that she was giving her children what they needed by spending everything in the NOW.. and being a good parent meant buying the children every new toy that hit the market. Personally I think it as a dis-service to the childrens future, by not doing the right things for yourself your placing them at risk as well.
*Buyers are at risk of lower prices at the same time those higher tax rates sure making a lot of people that think of themselves at gainers feeling like there really now just loosing as well.
Reality is most of the General Population are all loosers in this game.
Primary Residence mortgage holders and renters alike.
People making out are the ones holding multiple properties and Government in the form of higher tax bills.
Example Guy across street holds 15 homes free and clear of Mortgage payments. He is just playing the passive income game. Nothing wrong with what he is doing. In fact when he gets a good person into a home he vary-vary rarily raises rent. He sees more value in good people. Hes just interested in the 1,400.-1,500. rental nut each and every month. At the same time he's also complaining about taxes on assessed value.
I was watching a employee at work looking up his condo value online the other day and he was all excited that his condo by the zillow values had gained approximatly 15% since he purchased it. He was talking about how he was going to use his equity to buy a house. (I said great- however on the inside I was thinking..GREAT.. Your Condo went up 15% in a 1 1/2 years meanwhile the house up the street went up 30%+ now add the additional interest loans are now going for and the nightmare gets worse.. NOW he's really making up some ground isn't he.. must feel pretty rich, problem is that all ships have risen. Condos in my opinion and in past down markets have taken the biggest hits when it comes to loosing value.
I say the Government is loving it.~!! just think you can create a market of Inflated Buyers that drive the prices up using never-ending high risk loans to pressure prices. Sure would be nice to turn on the printing presses give out money in the form of loans then charge the tenants interest of the loan and the assessed value of what they purchase with that loan every year.
Much of this market has been driven by people using loans that would of been placed under a microscope several years ago, this created an artificial market of buyers.. If you take away that market of buyers, "what do you have? The True Magnitude will be uncovered in the next couple of years.
I love the saying by Warren Buffet- when the tide goes out you find out how many people are swimming Naked.
I remember John Burley the real estate expert from Phoenix telling eveyone in the seminar I attended: that Ownership wasn't Real that the only thing thats real is control.
It took me a while to understand the concept. There is a lot of truth in that statement.
Renting and Owning are just different levels of control. Renting has a specific time frame. Then again it depends on how you do the contract to how much time you have.
Ownership has a time factor as well that you happen to have more control over..hopefully.. In some cases or many at this current moment (Then again when the Tide going out we will find out how many of people are trully swimming naked) many are going to find there Ownership/Rental aggreements with the banks or holders of there mortgage agreements that the terms of payments and taxes BECOME to much to bear finacially.
In the End Trully we are all Renters with the Ultimate Holders of our properties being the Government. All we can do is really just control what we have "hopefully at a reasonable price. When the price of whatever we do control becomes to much, it's time to find another way to do the same in a different manner.
There are many ways of Controlling without actually ever Owning.. Ownership is simply and idea that the Middle Class and Poored classes believe in. Its though this belief that many people find themselves growing poorer not richer.
Its my belief that its Government that has the biggest stake in that imaginary Belief of Ownership. Just imagine being able to artificially prop up and create a high price then collect 1% every year from the masses for instilling that belief. Who has the Biggest stake in this Game... Wasn't it just recently the big stake holders are now switching to assessing those property values every year instead of the normal 4 year.
Do you think in a falling market they would be so eager to keep assessing every year? Probably Not. They probably would find a good reason to switch back to the 4 year within a short period of time. I personally don't have a lot of confidence in What I Call "Massive Government. If you look at the employment numbers the sector at the moment hiring the most people is Big Government getting bigger. What Value is this to society? Afterall someone is paying those wages. I think the government sectors hiring are highly reflective of those higher tax assessments from real estate. In My Opinion "Without those higher taxes there is going to be a lot of Government Employees standing in Unemployment lines.
FACT:
Over 50% of Job Creation in None Farm related jobs the Last four year has been real estate related.. now the big unkown factor also is how many Government jobs are also being created out of higher Property taxes?
Just recently I read the pierce county emplyment numbers and something like 7 out of 8 jobs were educational and government postions. How many of those jobs are really linked to real estate?
Enough Said~!!
The poor are mad because they aren't getting any, whether it is stock market gains or real estate gains. The rich are just annoyed by the poor spending all their time whining and not getting a second job.
My partner and I are approaching middle age. We have never bought a house. We simply were not interested when we were younger and then when we began to look into it three years ago or so we were, frankly, quite dismayed at what we observed. Though we quickly lost our interest in buying,it did give us an interest in watching the whole mess of a market ripen (and we suspect, soon rot).
While we may be pitied as measly "renters" we think it is really all quite silly as we have substantial retirement savings, zero debt and cash for all purchases (including big ticket items).
I don't think we could have gotten this comfortable if we had bought a house, even ten or more years ago.
So do we care if we are paying our landlord's mortgage?
um, NO!
I prefer it around here, though I would prefer a more balanced group. Why would I want to debate with someone who agrees with me? Alas.
Yeah. In an effort to get the thread going, I find myself trying to draw people, with whom I agree 95%, into a discussion, only to nit-pick the 5%.
Every market is different and will react differently to change. If you want to know the market you are in right now, contact your local Board of Realtors and ask for their statistics.
The media is definately not helping the situation by scaring home buyers. Life doesn't wait for home pricing to come down and interest rates to increase.
http://www.properties.la
Anon 3:29
you present a very interesting idea...
if only that would be the truth... life would be so much simpler and there wouldn't be needs for blogs like these...
BTW I love when anons post such bright ideas...
Here is something else that is interesting:
Tim said in August of 2005 that he and his wife had been shopping for a house already "over the past year."
How much has the median house in King county gone up since August 2004? And I can't imagine the interest rate changes have been too kind to someone waiting too buy.
Maybe we all can't get along because everyone has a vested interest in the market. Whether up, or down.
Who could be posting comments on here on such a beautifull weekend?
These must be all the apartment dwellers !
All the homeowners are doing yardwork - or hanging out at home depot
How much has the median house in King county gone up since August 2004? And I can't imagine the interest rate changes have been too kind to someone waiting too buy.
King County Res/Con Median Aug 2004: $299,000
King County Res/Con Median Aug 2005: $349,950
King County Res/Con Median Jul 2006: $390,000
In Seattle:
Seattle Res/Con Median Aug 2004: $325,000
Seattle Res/Con Median Aug 2005: $375,000
Seattle Res/Con Median July 2006: $420,000
If you bought the median price house in Aug 2004 you would have saved yourself a whopping 95K. Not to mention interest rates over 1 point below the current rates. I think it's safe to say that buying a house in 2004 would have been a killer deal wen compared to today's prices and interest rates.
Instead, he started a blog about how bad it was.
disgruntledengineer
Washington Loan Network is a mortgage broker out of Renton, WA. Not surprising, they broker subprime loans.
Really at the End of the day, For myself its all about affordability.
I dont really care wether I rent or Own.. Its not as important as which is more economical.
I choose to rent in Western Washinton at the moment because of affordability and its much more flexible.
What worries me the most is the potential economic fallout. This is why Im here. I don't really care about anything else other than from an economic postiion, where are we going?
SIDENOTE:
Myself I have a home paid for free and clear in EAstern Washington.
The problem is that rentals are being sold out from under us. Had a really nice little house in Kirkland (800 sq ft- $1200) sold ($375k) after we had been there one year. Sold my house in 02 and could care less about the investment side of a house. Hope to but one on the way down and just enjoy for the forseeable future. Bubbles always create manic excitement, I used to hear folks arguing in coffee shops over stocks pre-that-bubble...
Stephen
Post a Comment