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Sunday, September 27, 1981

Wednesday Open Thread

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

29 comments:

octopuswithafez said...

How about bringing back the anonymous comments? The traffic here has dropped by more than half and the discussions aren't as ....lively ;-) .

The Tim said...

Actually traffic (as measured by site hits) is still about the same. But I do notice that there are a lot fewer comments. I want to give the experiment a full week. This weekend I may turn anon commenting back on.

Kaleetan said...

Ok, I signed up so I could post something here. This is a BLAH(G) without all the comments...so boring.

Here a softball for all the renters(er.. i mean bears)..

It looks like a definate soft landing as we are starting to see some great economic news lately. Consumer confidence is UP, New housing starts are UP, Inflation is being Contained nicely, interest rates are trending DOWN. Are people still thinking we are going to see some gloom and doom crash? I don't see any evidence of that...unless your a subprime borrower. If we are in a bubble, its not popping any time soon.

Kaleetan said...

Sorry..not home starts...New Home Sales are up
======================
New Home Sales in U.S. Rise in August to 1.05 Million Pace

Sept. 27 (Bloomberg) -- New home sales in the U.S. unexpectedly rose in August from a three-year low the month before, signaling a possible pause in the housing slowdown.

octopuswithafez said...

Well, there is still the larger macro-trend of housing affordability being several multiples of median income then the historical trend. Especially in the light of median wage drops in this state...

Nolaguy said...

I don't see any evidence of that...unless your a subprime borrower

Based on numbers from S-crow, most of the new loans are sub-prime.

So I ask you, how many comps set the price in a neighborhood?


The Housing Report That Mattered:

http://tinyurl.com/l6zgz

Nolaguy said...

"Joe Soccer Mom is running out of available cash. Latest data on demand deposits on hand shows only $266.9 billion, the lowest number since 1991.

Unfortunately, Joe has a heck of alot more debt and high costs to service than in the past, see chart 1 and 2. On the third chart notice the wide, but declining defibs over the last three years in demand deposits. This simply shows the impact of mortgage payments towards expensive housing, and then the dependency on borrowings to keep cash on hand. According to a new report from Piscataqua Research, consumers relied on new debt for 88% of their cash flow in 2005."

http://www.xanga.com/russwinter

MisterBubble said...

AP article on August new home sales (via the PI).

Choice quotes:

"The increase in new home sales contrasted with earlier reports showing that sales of existing homes fell in August for a fifth straight month..."

"Sales of new homes were up in every region of the country except the West, where they dropped a sharp 17.7 percent."

Also interesting...the August macroeconomic data looks bad. Spending is down, big-ticket purchases are down, and commercial aircraft sales are flying into the ground:

"last month...orders for commercial aircraft fell by 21.9 percent. Orders for military aircraft rose by 9.8 percent."

...goodbye Space City, hello Motor City?

CRichard said...

I think that it is still too early to call the bubble over in Seattle. Had the August numbers come in lower, it would have been a strong indicator of the end. August was a big month, but still not as big as it was last year. The downward trend is clearly there but I think that there is still a lot of momentum in the market.

CRichard said...

"Also interesting...the August macroeconomic data looks bad. Spending is down, big-ticket purchases are down, and commercial aircraft sales are flying into the ground:"

These kinds of month-to-month numbers are mostly meaningless. House sales were up in August because they hugely tanked in July. And if I remember correctly, aircraft sales in July were unusually high. The August figures mostly capture regression towards the mean.

MisterBubble said...

These kinds of month-to-month numbers are mostly meaningless.

Agreed. However, this is the fifth consecutive month of declining existing-home sales, and that seems like a trend. The broader macroeconomic data just indicates that there might be an economic slowdown underway.

I don't know why new-home sales would be on the rise, unless it's just a statistical hiccup.

Nolaguy said...

From Paper Money:

The fact is, July’s national new home sales number was revised down 5%, yielding a more dramatic percentage change to the August number which will, in all likelihood, be revised down as well.

Additionally, look at the other numbers found in today’s report:

National

1. New home sales were down 17.4% as compared to August 2005.
2. The number of new homes currently for sale increased 19.1% as compared to August 2005.
3. The number of months’ supply of the new homes has increased 43.5% as compared to 2005.

Regional

1. The West was down 17.7% as compared to July 2006 and down 34.7% as compared to August of 2005.
2. The Midwest was down 19.6% as compared to August 2005.
3. The South was down 10.2% as compared to August 2005.

plymster said...

Don't give up yet, Tim. Maybe some of the regulars are off on vacation or something.

kaleetan - Thanks for the softball.
* Leading Indicators are falling.
* The Dollar is falling.
*Median prices are dopping for the first time in 11 years, even as inventory climbs.
* How can Consumer Confidence be considered "up" to
104.5, when it was 107 in the previous month? What's more this is likely based on the price of gas, which has clearly been manipulated (when was the last time you saw gas prices go DOWN just before Labor Day).
* And as Mr. Bubble points out, new home sales are still down 17% on the west coast.
* Inflation being contained means that rental rates aren't increasing - even more reason not to buy, and further incentive to sell (since homedebtors can't rely on rent to cover their higher payments).

meshugy said...

Hi All...I like the no anon policy. I hope it stays.

I'm playing at a big festival this week...busiest time of the year for me so I'll be laying low until I get back.

S Crow said...

This just in...

1) A purchase transaction placed in our office fails to close on time due to borrowers own home failing to close in a state south of Washington State that is experiencing, as the appraiser involved in the sale says, "falling home values."

2) Short Sales are becoming more frequent. One of the more recent ones was a mind blowing loss to the lender. Yes, lender fraud was involved.

Big deal you say, foreclosures occur all the time. Yep, but,our office closed next to zero short sales in 03','04, and '05. Why? The market was screaming along so people could sell with ease, possibly making a profit.

The short sales we were involved in were obviously financed with 100% ARM products.

3) Had met with and helped a seller with signing documents who asked, "the buyer is getting a 100% loan and we increased my sales price over the list price to offset the closing costs we paid on behalf of the buyer. Is this common?"

I smiled and said, "yes, 100% loans are exceptionally common."

-------------

Gotta love our weather though! Nearly October and 75-80 degrees!

SDtoSEA said...

It looks like a definate soft landing as we are starting to see some great economic news lately. Consumer confidence is UP, New housing starts are UP, Inflation is being Contained nicely, interest rates are trending DOWN. Are people still thinking we are going to see some gloom and doom crash? I don't see any evidence of that...unless your a subprime borrower. If we are in a bubble, its not popping any time soon.

These things move very slowing. We're only just at the beginning. If you ever want to look into the future, take a look at San Diego. I'd say that SD is about 6-9 months ahead of Seattle.

seattlenative said...

I work in the industry and IT is happening here. Though some people feel we are different, we are not. DR Horton just announced that they are sleling ALL of their projects in Thurston, Whatcom and north Snohomish. We had zero sales last week. Soundbuilt Homes is sitting on 160 finished houses. And nothing has really even started yet. It is happenign much quicker than I had anticipated.

I do not welcome this and would be affected directly but really see no stopping it.

MisterBubble said...

Of course you like the anon policy, Meshugy...75% of the people calling your bluff post as anons.

That said, I used to post anonymously, and I probably still would, if only because blogger makes it obnoxiously difficult to post using an account (I had to retype my password/CAPTCHA 3 times to make this post!)

MisterBubble said...

S Crow:

Define "short sale"...I'm unfamiliar with the terminology (applied to real estate, anyway).

S Crow said...

Seattle Native APB-

Please e-mail me at tim@legacyescrow.net. I'd like to talk with you about the DR Horton issue. Your e-mail will be kept confidential.

------------

MisterBubble-

Short sale defined:

A short sale is generally when a homeowner owes the lender more than they can sell the home for and the homeowner may also be currently in default (usually the case.) When this occurs escrow then is in contact with the lender and assists in negotiating the lender taking less than owed. THIS DOES NOT NECESSARILY RELIEVE THE BORROWER FROM THE DEBT.

For example: An owner owes the bank $100,000 (after refinancing 3 or 4 times or obtaining the home financed at 100%, I digress). The owner is forced to sell because he has already received a NOD (notice of default) letter from the lender (some lenders actually record this at the county in which the home is located) OR realizes in order to cut his looming losses further and try to salvage credit rating, they elect to sell.

Unfortunately, in a FLAT or single digit appreciating market or Falling market, the owner realizes a few things:

1) The home is only worth $89,950. They owe $100K. They have selling costs such as Realtor fees at 6% of the sales price,title & escrow fees, recording fees, reconveyance fees, & excise tax. All said, this seller is probably underwater to the tune of around 10% of the sales price or more.

2)they may have to bring money to close

3)the home CANNOT be sold with enough sale proceeds to cover the mortgage debt, thus it is a SHORT SALE---and escrow then is in contact with the lender regarding the short sale.

Note: in most of these short sale scenarios most lenders require the seller to make -0-, nothing, nada, zippo on the sale.

Eleua said...

The traffic here has dropped by more than half and the discussions aren't as ....lively

While I can't take responsibility for the livliness of the conversation, the fact I'm in the middle of a move, a whopper work schedule, a bazillion kiddie activities, and getting rear-ended, I have not had the time to clog up the threads, as is my habit.

I assure all those that yearn for pointless, and long-winded bloviations from The Big E, you shall be satisfied in the very near future.

Tim,

Keep the anon posts off the site. It's better this way.

Eleua said...

Here a softball for all the renters(er.. i mean bears)..

It looks like a definate soft landing as we are starting to see some great economic news lately. Consumer confidence is UP, New housing starts are UP, Inflation is being Contained nicely, interest rates are trending DOWN. Are people still thinking we are going to see some gloom and doom crash? I don't see any evidence of that...unless your a subprime borrower. If we are in a bubble, its not popping any time soon.


Reference stocks in the winter of 2000, and get back to me.

Just about all the good news on the stock market has companies resorting to all sorts of excuses, one time charges, and accounting gimmicks. There really isn't much in the way of fantastic news - certainly not the kind that justifies the current stock prices.

Government econ numbers are just numbers the gov't churns out to make Wall St. tick. They are political and vary in definition from administration to administration.

I wouldn't chirp too much about gov't inflation numbers. They back out things like food, energy, housing - you know, the frills that nobody uses. They weight heavily on consumer electronics, because they show rapid deflation. So, if you are an anorexic, Amish that rents and uses alot of BestBuy stuff, those inflation numbers are meaninful. If not...

The soft-landing bravo-sierra is just the Wall Street Industrial Complex keeping their puppets in power this November.

I am a Republican, but even I can see just how transparent all this is.

Eleua said...

New home sales in the U.S. unexpectedly rose in August from a three-year low the month before, signaling a possible pause in the housing slowdown.

Mortgage apps are down 5%, and sales only rose when compared to adjusted numbers. With an apples-apples comparison, sales fell.

Eleua said...

Here a softball for all the renters(er.. i mean bears)..

Plymaster just cranked a 500' homerun

nolaguy put one in the cheap seats

mrbubble hit a screamer down the 3rd base line

crichard lined one to the left field gap

kaleetan,
Do you pitch for the M's?

Oddleif said...

Actually, Plymster hit for the cycle...

I'm considering calling my RE Agent and telling her to quit bothering me until she's down to me as her last client... By then, I may be interested in looking for the 'house I plan to die in' barring a major change in employment or livability of this region.

My wife and I were involved in a few bidding wars that saw escalation clauses over the asking price of $60k in West Seattle and $50k in Kent (That's right; Kent.).

My real wake up call was the house in WSeattle in May of '05. The 'winning' bid (there were only two bids on the house) gave the $60k escalation along with waiving the inspection and all liens against the house that the state or public utilities could have put against it. Insane.

On the note of escalating prices due to creative financing of debt: Our house we sold in Feral Way went for $10k over our asking price so that the buyer could finance the closing costs and new furniture and carpets... As soon as we sold and were moving out, the neighbors two houses down put theirs on the market (it was 300sqft smaller) for $5k under ours...

The other criminal element to this entire bubble is that the industry regulators seem to be pawns of the RE Agents and lenders... When was the last time a house didn't appraise for it's list price? I hope I can get examples of Appraisers that called BS on some of these trasactions because they, as a group, are playing a large role in this bubble as well.

Lake Hills Renter said...

I have been extremely busy at both work and home lately as well, and thus haven't been able to visit much. This probably won't change for the next few weeks, so I may still be a bit scarce. I still check in once or twice a day to see what's going on, and I like it without the "tomoato-throwing ghosts" as someone put it. I'd prefer we kept the anonumous posting out.

CRichard said...

"I like it without the tomoato-throwing ghosts" as someone put it. I'd prefer we kept the anonumous posting out."

I agree. I am a long time lurker, and although the number of posts seems to be down, it is much easier to follow the thread without anonymous postings.

John Doe said...

New housing starts are UP,
Builders are offering huge incentives right now. If they weren't, then sales probably wouldn't be where they are right now or prices would be down even more than 1.7% YOY.


Inflation is being Contained nicely,
Agree with eleua on this one.

interest rates are trending DOWN.
They've only been trending down since July. I don't think this is indicative of the longer term trend. Remember: Interest rates (mortgage rates, not overnight rates) headed South between November 05 and January 06. This was not indicative of the longer term trend.


Are people still thinking we are going to see some gloom and doom crash?
I don't think everyone is proposing a gloom and doom crash.


I don't see any evidence of that...
You're correct for a doom and gloom crash. However, it's difficult to argue that the housing market has not cooled (not difficult when there's a record year). Nationally, housing prices (median) are down 1.7% YOY. That's not that big of a deal, but what happens when inventory reaches 9-10 months supply? The market would probably have a difficult time recovering from that.

unless your a subprime borrower.
There will be a lot of people in trouble when 2.7 trillion in ARMS readjust in '07.

If we are in a bubble,
We are.

its not popping any time soon.
It is very likely that it has already popped.

seattle long term owner said...

being a "new" home buyer I can relate to why new home sales are up vs existing homes sales...

New homes are being offered with great incentives and at a lower price than most existing homes...

New homes come with a warranty and inspection is usually a non-issue vs existing homes that potentially could be a money pit...

Builders also have a bigger incentive to sell the house... an existing home seller needs to move one house... a builder needs to move 100 homes...

Interestingly, when I shopped for houses in May, the builders were laughing when I asked for free upgrades/incentives... so I walked away from them... that same house is still on the market 3 months later... I know they must be sweating bullets by now and prices are about to drop...