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News and discussion about real estate & the housing bubble, specifically as it pertains to the Seattle area.
The latest editorial cartoon from the Seattle Times:
< Pee-Wee Herman Chuckle> Heehehehe < /Pee-Wee Herman Chuckle>Oooh, all this negative reporting and hysteria! If the media wasn't filled with news of sputtering sales, toxic loans, and foreclosures 24/7 this market would be just fine! Why can't they get back to the good old days of discussing what kind of sealant one needs to use on their Italian granite countertops to spike the home prices by another 50K or so... geez, now that was some feel-good reporting! All this bad news... just so depressing BTW, sarcasm people.. FYI
David Liarreah (DL) is piloting space shuttle Seattle under the guidance of Seattle Control (SC).SC: "Appreciometer pointing straight up David, low interest and zero down holding steady"DL: "Roger, copy that, its gravity's day off boys, what a great ride"..."maybe I'll write a book".SC: "Ah David, could you check your interest rate, we are seeing an increase"DL: "Negative, no change here, you guys been blogging or something?"SC: "One other thing David, we are also seeing a gravintory anomaly and we are starting to see the appreciometer flatline.....please confirm"DL: "Just a minute....nope, everything is fine. Straight up boys." SC: "Our tracking stations on Whidbey Island and on Fox Island both show decreasing appreciation and increasing gravintory...please confirm"DL: "No problems here, well except for a stuck gauge....I am tapping it right now and yes it does show increasing gravintory but I assume the gauge is stuck. Must have been made by "the blog". You guys DID see Star Trek the movie....right"SC: "Ah David we seem to have a discrepancy in our data. We show your appreciometer with a rate approaching zero....can you PLEASE confirm!"DL: "No problem here, you guys need to get with the program, I expect to be in orbit within minutes"SC: "David we show zero vertical acceleration. In fact we now show a falling appreciometer and gravintory is rising quickly.DL: "Good Day Sunshine (humming), you guys like the Beatles?'SC: "David can you hear us? Repeat, can you hear us?"DL: "Uh oh...Seattle we have a problem"
I went to an art opening tonight in Bell Town. I just cannot shut my f'ing mouth about real estate and I don't think I'll ever make any friends here!I swear it only comes from a desire to help.. anyway.So I meet this guy and he asks my opinion of the RE market. I tell him I'm no expert but I believe it will mirror the other "bubble" markets.He's a homeowner but doesn't get defensive - and wants my opinion about a business opportunity.Here's the deal: They sell you the land, you agree to build a house on it; then, after you sell it, they credit you back 30% of the cost of the land.He wants to know if this is a good deal or not?? He's a microsoft Millionaire.I told him that in my honest opinion it sounded like a complete scam -- that in all likelyhood he wouldn't be able to sell the house(s) because the market would have already droppedAND they know this and they're trying to dump their properties.I asked "why don't they just build the f'ing houses"answer: "they have expanded too fast and don't have the credit available"This guy was a lot smarter than I am - computer programmer.I WISH I could somehow take the URL for this blog and Ben's Blog and just SHOW it to them... wake up!!!
re: seattlemoose ROFL!I met another, really, really nice young woman tonight who purchased a home near lake union during the bidding wars of late 2005.My GOD she was just so freaking nice that I ... couldn't help myself and... yeah, well.Anyway, turns out she bought using a 5-year ARM. Said she's already seen "considerable" appreciation.She feels "uneasy" about her situation but she's not sure why... She LOVES her place and wants to stay.I went on to explain the -likely- scenario of how the 5-year ARM might not protect her. Again, couldn't help myself. Where will interest rates be in 2010? If she doesn't sell NOW, how likely will she be able to sell in 6 months? (not likely) I've had 2 ARM's (see, I'm not smart!) in my life and both times they went up. I don't care what rates are doing, they always go up.We've had non-stop negative national media attention since beg. of August, why doesn't anyone see it?
When the cartoonists get into the game, you know things are heating up. They have to tell a story with very few words, so it has to be a topic their readers can grasp quickly, usually something currently in the public consciousness. Nobody would have run this 6 months ago in Seattle.
Just had an idea...Could you possibly archive Meshugy's posts and in about 6 months or so come up with a post on Meshugy's best lines (showing one from every month until the tone changes)...ARMS's always go up... even if the interest rates hold steady most ARM's are set on an index that even if it were to reset the same day the loan was originated, it would already go up at least a percentage...Rates would have to drop very low for ARM's to even drop...It's actually a good formula to keep the refi business alive...
I personally don't think Seattle can escape the fate of all the other bubblicious cities that are currently seeing the impending collapse of home prices, such as Boston, Miami, Phoenix, Las Vegas and San Diego. There is nothing different about Seattle, except for the fact that our housing prices did not appreciate quite as much as the prices in these other cities and therefore our price collapse is likely to be later and somewhat milder than what is going to happen in the worse bubble cities. Nevertheless, I think a drop of 10-20% that will last for years is quite possible.
I figure there will be a 20% drop as the flippers stop buying and then another 20% to 30% on top of that as the flippers start selling and as the economy gets toasted in the coming recession.I can see a 50% drop.Start investigating the specuvestors via the county websites and you will start to see the enormity of the problem.
Seattle Long Term Owner states:"It's (ARM's) actually a good formula to keep the refi business alive..."It is propping up the business of many in the business who may otherwise be looking to throw in the towel. My best guess is that refinance business will continue** for several years because people will be unable to refinance into 30 yr fixed rates (the old fashioned thing). Borrowers will refinance into longer term ARM's that are fixed for a period of 10 yrs or so. This is exactly what our escrow office is seeing in our current market.**caveat is: the borrowers who are already 100% tapped out or after their their 2nd refinance, they are now tapped out. Of course, if the market goes flat in our area, then the only recourse is to sell, adding to the inventory which has its own ramifications(downward pressure on prices, increase of short sales, etc), or lose the home.Seems like the market is in a pickle with the prevailing thought at this fork in the road: "what now?"From my own perspective, if we lost just 30-50% of the refinance business our office closes, we would have no choice but to consider staff reductions. I don't forecast that to happen because I know that many consumers with short term ARM's (6 mos.,1yr & 2yr )will inevitably have to refinance again.OT- interesting market response to the Oil issue. Cost me about $8 less to fill up this morning than in previous weeks.The behind the closed door meetings at the FED must be very interesting. Someone or some group must have signaled the Oil companies to get the prices down because without price declines it could exacerbate the problems the housing market may be having on the economy. Anyone agree?
I believe the FED wanted higher oil prices so that it could pause from its rate hike campaign for a session or two. High oil forces countries to reserve dollars for purchase of oil. It thus props up the dollar.The side effect is that our fragile economy will drop into recession should the consumer stop spending. With two thirds of the GPD being consumer spending driven, we are in a pickle.So with the GDP declining, the relaxation on oil prices is required. Now the dollar will come under pressure internationally. But inflation numbers, both domestic and internationally, are lagging indicators. So it won’t show up on the charts for a while.Once we make it past the elections, the numbers will show the dollars decline. With the increased inflation numbers, the FED will have to raise rates again and again.If oil goes up, the dollar is strengthened abroad but we fall into recession.If oil goes down, the dollar declines and we have to raise rates to prop it up or we won’t be able to sell our debt. Worse yet, those who own our debt could flood the market with dollars.Either way we will enter into recession, and that will be the end of this asset bubble.
I can see a 50% drop.Man I am sooo tired of the trolls on this site. Who are you shilling for? I know you are supposed to just ignore trolls! I can't help myself though. Everyone with half a brain knows the values will drop from 75% up to 90% in some neighborhoods in Seattle.
Okay, that ^^^ was funny.
Anon,I am not a troll and I have been following this asset bubble for many years now.The greater recession\depression that is coming will also be accompanied by inflation.My 50% prediction is conservative and assumes there will be a substantial decline in the dollar. I see lots and lots on inflation and interest rates up around 15% to 20%The FED will have to allow as much inflation to occur as possible while propping up the dollar just enough to prevent its collapse on the world market.Do you see any other way out of this dilemma?I see debt people.
Yes S crow, I think there was heavy pressure to drop oil prices at this point.The American consumer has been conditioned over the past several years to look at 2 things when considering their own economic viability.One is house appreciation and the other is the price of fossil fuels.People are starting to realize housing is toast. There goes one of their "bouyancy factors".The only thing left is fuel. Drive those prices down to try to bolster up the sputtering American consumer.The PTB need to convince the consumer to keep spending to keep all these other economic #'s looking good for a short time.They are doing everything they can to save the party that is this non-producing "Wonder Economy". Including the Senate encouraging the NAR to interfere with rate decisions by the Fed.There will be stop gap fanagling with key asset prices in an effort to cajole people into thinking everythng's fine for a few more months, or until Americans wake up and realize that the surreal economy is finished and it's time to get serious about making distinctions between what they want and what they need and plan accordingly.We are about to graduate from being spoiled teenagers to responsible adults. A hard transition but God knows we need it.
we're all gonna be eating soylent green soon.But seriously folks, I'm seeing a lot of trash comeup for sale in Shoreline and S seattle, and its coming down in value back under 300k. Granted, its garbage, and you could get the same in 2004. The difference in Seattle is that the dotcom bubble stung well into02-03, so we're behind the curve, plus our values are much lower than the East Coast, and the Pacific Rim is finally turning into the economic tiger it was always called.Who wants ot live in the NE? That place is rotting. The midwest is finished, and Fl's going underwater.CA is full of invaders, iw ouldnt be surprised if the NW becomes the only part of the country anyone wants to live. Just a thought. I'd still ike to see it go down, but not if it means economic armageddon. Thats not gonna be fun for anyone. Dont wish for it.
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