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Friday, September 25, 1981

Monday Open Thread

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

19 comments:

NotMyRealName said...

KUOW's "Weekday" show will be disucssing the turning real estate market today at 9AM. A podcast will be available later today.

octopuswithafez said...

Interesting discussion. Seattle 34% over-valued. Expect slowing appreciation and single digit growth for several years, as populations and incomes catch-up. Every is rosy as the Fed lands this puppy...

blueskitten said...

I'm sure there will be a post about this, but I just had to mention the 1.7% YOY decrease in prices nationwide from Aug 05 to 06.

"But... prices never go down!"

0x029A said...

We might be hearing horror stories from Florida but I'm still waiting to see hard evidence of a crash in the Seattle metro area.

I was in Bellevue yesterday and noticed there was an open house for the following listing: http://tinyurl.com/ekdx8 (MLS ID#: 26153445). It looked pretty busy. I must've driven by 3 or 4 times between the hours of 2 and 5 PM and there was always somebody coming or leaving.

I'll definitely keep an eye out to see if this sells (and for how much). No doubt real estate is overvalued, no doubt the increases of the past few years were unwarranted, but I'm still not convinced Seattle is in for precipitous price drops.

On the other hand some markets have turned pretty abruptly so who knows?

synthetik said...

>I'm sure there will be a post about this

Yeah, that was big news this morning. I think I'm going to try to stick to Tim's idea about posting most Seattle related RE and economic news. It's widely available on Ben's and most of the national blogs.

My wife works less than 1/2 a mile from our house however I usually end up driving her (she's from LA originally).

We've got sirius radio which doesn't find the satellite until we've left the garage. Over the past few weeks, almost without fail, just as we leave the garage the first words are usually "So, Tom, is real estate moving the market today?"

tacoland said...

Housing date out today and down again…… Real Estate still continues up with no stop in site. The “bubble” has burst in like 4 cities in the US. I’m really beginning to think it will take 2 salaries & 60% of your income to buy a house. History & the data says otherwise…. But it is getting harder & harder to believe anymore.

ob said...

I have also seen a recent bump in sales, and a decrease in inventory in the local area. (Outlying Bellingham area)
Sure, it’s disheartening but you gotta have faith in the cycle. That is how cyclical markets work, or else they would not work.
There are a few things working against us bears here.
Sales are typically up in Aug.
Interest rates have not moved up at all, even slightly downward.
All the media talk has been “it’s a buyers market”

Really most people even if they know housing won’t be doing as well in the future aren’t afraid to pull the trigger. It is still just too easy to get that option ARM with 0 down.
Especially in an area like WA where jobs seem good, quality of living is good, and it seems there is no reason to believe that things will “really” go down.

synthetik said...

>I'm still waiting to see hard evidence of a crash in the Seattle metro area.

Seattle is following the same natural curve of other bubble markets. Visual evidence of an impending crash is all around you. Listen to the conversations at restaurants and in coffee houses; listen to your friends. Then look at the data.

It's no different from San Diego in 2004/2005. Lots of speculation, lots of toxic loans = near term wailing, gnashing of teeth and the lamentation of the soccer moms.

0x029A said...

Seattle is following the same natural curve of other bubble markets

Is there any hard data that shows appreciation/inventory/etc in Seattle is following the same pattern as in other cities that have since gone bust?

Listen to the conversations at restaurants and in coffee houses

I support a family of 5 on my salary alone. I don't waste too much of my time or money in such places.

listen to your friends

My friends are like me. Not the kind of people to believe you can make a "killing" in anything without hard work.

When we do talk about RE it is to share our amazement that most of us wouldn't be able to buy the homes we bought 5, 3 or even 2 years ago at today's prices.

Despite obvious signs of "mania" I'm still quite skeptical on the whole "crash" theory. I lived in Europe for a very long time and even in the early 90's when RE was supposedly down 40% I didn't see much of a drop in the low end of the individual homes market. Sure people who were investing millions in office space took a bath, but for most working stiffs it was business as usual. I recently talked to somebody who was raised in western Europe by his working class single mother and she couldn't afford to buy in the late 80's. In the mid-90's after the supposed 40% price drop she wasn't any closer to home ownership. Obviously the market segment she was interested in didn't take a 40% plunge.

Barring a complete economic collapse (which I know some people wish for) I think that those of us who bought “normal” homes with “normal” financing (as opposed to McMansions with option ARMs) will be just fine.

Andy said...

Nobody knows what's going to happen. Nobody has a crystal ball. Any prediction of the future is no more than an ananlysis of the current vectors and trends to make a guess about what it might or might not be like tomorrow.
We are in a historically unprecedented scenario with RE right now. This is being exascerbated by the economic condition of this country(ie savings level lowest since great depression). All things considered I personally find it highly unlikely that RE is going to continue climbing in Seattle, because like it or not Seattle is attached to the rest of the US. and the rest of the US is already showing some serious cracks in the damn. Will it all melt down? Who knows? Will it be a "soft landing?" Maybe. But I for one, as a first time homebuyer, deciding whether to buy now, or wait until the forecast because a little clearer, feel it's prudent to sit on the sidelines for a bit longer to see how all this plays out... Am I getting "priced out" of the market? Maybe. But I'd rather get priced out, than find myself underwater on a mortgage I can barely afford next year, or the year after.

Merger Dog said...

0x029a, I agree with you that if someone can't afford a home now, he probably won't be able to afford one a few years down the road unless he lowers his standards. Much like technology, some families are being left behind with a 56k modem or no internet connection while the others have cable and Treo. Many families have two incomes now and the old days are not coming back. One income family can't compete with the ones with 2 incomes in housing.

mercer_island_guy said...

I've been expecting an entry on the PMI report from last week. Did I miss the discussion on that? Their risk index shows Seattle at 15.3%. In June 2006, it was 10.8% and in August 2005, it was 6.4%.

http://media.corporate-ir.net/media_files/irol/63/63356/ERET_FALL_2006.pdf

http://biz.yahoo.com/prnews/060919/sftu072.html?.v=73

CRichard said...

Some South Snohomish observations:

I went to several open houses and agent showings this weekend. The realtor responses were quite varied:

1) Two kool-aid drinkers advised me to "not pay too much attention to what you hear in the news because, according to their weekly realtor meetings, Seattle is different from the rest of the country." Also, everyone is moving here and there is a housing shortage (27,000 incoming vs. 18,000 new housing permits - never mind that 27k/2.5 = 10.8k households)."

2) During an open house for a very nice but aggressively priced house that was already sold after 4 days, the realtor said that business was good.

3) During a showing for a house that turned out to be a total POS (house was actually competing with #2, but more expensive), the realtor awkwardly and unenthusiastically went through the motions, despite being clearly embarrassed about the listing. The “Are you F’ing kidding me” expressions on my wife and I did not help put the realtor at ease.

4) One realtor who was showing a nice house and, with whom we talked to for quite a while, flat out admitted that it was a buyers market in Snohomish County and that it had been for a while. He was having to persuade several sellers to drop their prices, and he had already advised some of his buyers that they would be better off waiting. I have been expecting/awaiting a slowdown for quite some time, but was caught off guard by this realtors candor.

synthetik said...

>Is there any hard data that shows appreciation/inventory/etc in Seattle is following the same pattern as in other cities that have since gone bust?

You can compare Seattle to San Diego, which is often identified as the RE "canary in the coalmine".

Here is one way of looking at things.

Median Prices throughout each year:

$ 269,400 2000 San Diego
$ 230,100 2000 Seattle
$ 298,600 2001 San Diego
$ 245,400 2001 Seattle
$ 364,200 2002 San Diego
$ 254,000 2002 Seattle

San Diego had a big head start while Seattle was trying to finish dusting itself off due to being top heavy with TECH and AIRLINES during stock-crash, 9/11 and corporate scandals.

San Diego topped out at around $565K median price in 2004 before having almost 2 years of no growth.

You can also take a look at inventory levels on various sites; http://bubbletracking.blogspot.com/ shows that listing per population ratio:

On 02/05 was 1:360 in San Diego
On 01/06 was 1:305 in Seattle
On 07/05 was 1:216 in San Diego
On 08/06 was 1:197 in Seattle

Nothing scientific, but it appears that it's about a year apart on both counts - inventory and appreciation.

Today in Seattle there are 14K listings. A year ago in San Diego there were about 16K listings, then then inventory started going nuts...

San Diego thought they were different too. Mountains to the north and Mexico to the south. In 2004 I was being told that SD's population would double by 2010 - and where would all these people live?

Every region thought they were different, go back and look at the archives in blogs a year or two ago.

Boston is another fun city to compare Seattle to.

Realistically, as San Diego's median drops even closer to Seattle - why on earth would you expect prices to remain inflated in Seattle? Its' 70F year round down there!

Now that we have MSM reporting gloom and doom full swing, I just can't see how it would take a full two years to start seeing price reductions in Seattle.

This is a national bubble which will effect the entire country, no doubt about it. I know people don't watch TeeVee here, but the word will get out eventually.

Consumer confidence is going to take a massive acid bath which will result in probably the worst recession of my life.... I -hope- that doesn't happen -- but so far no one has been able to show me what the next big economic driver will be. The FED isn't going to save us... If there is some new thing to spend our money on it'll just delay the inevitable anyway.

we're going to make like Windows and reboot!

And the biggest toolie McTool Award goes to Dennis & Sunshine Smith - your friendly San Diego Realtors! Sunshine?

synthetik said...

I really don't mean to offend, but it's just plain common sense at this point.

If every other bubble market in the country is unraveling what on earth would make you think we would be any different?

We're obvious at a peak, and if you buy now you're in for a major shock.

I see people with 2-5 year ARM's and I see future pain. You can't expect a market like this to do a 180 in 5 years.

I think people that purchased prior to 2001 w/ a conventional loan who work in an industry that won't be affected by a national recession will be just fine.

Seriously, give me one -good- reason why you shouldn't SELL your house and move into a rental at this moment in time. How much evidence do you need?

Why do people believe in things they can't see, yet refuse to see things right in front of them?

synthetik said...

...a 360 I meant.

synthetik said...
This comment has been removed by a blog administrator.
Crashcadia said...

Notice how the FED fluffs some good news about the economy in order to offset the bad news out of the housing sector.

Annual Existing Home Sales Prices Tumble

http://biz.yahoo.com/ap/060925/economy.html?.v=8



Dow Ends Up 68, Nasdaq Gains 30 After Fed Official Suggest Inflation Will Dampen.

http://biz.yahoo.com/ap/060925/wall_street.html?.v=41



Once the real bad new hits, the FED will probably throw a party for the MSM. Free cool aid for everyone.

Crashcadia said...

Looks like Seattle has turned negative.

http://housing-watch.com/home.aspx?d=90