Friday Open Thread
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8 comments:
Notes toward a Seattle bubble glossary:
30-year latte - buy a Starbucks, pay with a VISA, then pay the bill with your HELOC. Enjoy!
HELOC - a second mortgage
Allentown - the luxury condo urban village disaster formally known as South Lake Union, built with SPAM.
SPAM - Spending Paul Allen's Money. A Seattle tradition, since his one big score back in the 80s.
$200K Ballard SFH - what a $500K Ballard SFH will be in 2009.
Savings - extra money that renters put in the bank each month, because they can.
Cash-n-Carry - the calculation a doomed homedebtor makes as to when to stop paying the mortgage altogether, stashing as much raw cash as possible under the mattress before foreclosure and BK arrive, as they must.
Microsoft - a large regional employer in Puget Sound, whose products include a knock-off of Java, an upcoming bad copy of Mac OS X, and a doomed music player (with wireless!). Chief competitors include free software, better software from companies like Apple, and the 'good-enough' software they sold you 5 years ago, that hardly needs replacing.
It's coming, folks. Prepare for the great deflation.
Actually, I think a better tagline for the 30-year latte is "Taste the amortization!"
And I shouldn't be so hard on Paul Allen. After all, the Experience Music Project is a perfectly good museum to visit ... once.
I'll add one.
SAT - (Still A Turd) What a FB realizes when the lipstick wears off the pig.
If someone can find a case where it was placed under the borrower's name, please let me know and I'll stand corrected.
SSNs on were common on DoTs many years ago. I know for a fact that both my parents' SSNs were on their DoT (purchased 1988). I advised them to ask to have their DoT removed.
Sorry dude. I'd show you, but they aren't available anymore.
People are talking about the housing market bubble on ChangeEverything http://www.changeeverything.ca
formerly hot South Florida: "The market has evaporated. Even the affordable stuff can't be given away. Desperation among developers, bankers, and speculators is palpable."
So, is this what it looks like when your market goes from "special" to ordinary reality?
Remember, South Florida was "special." I think Seattle has a rude awakening ahead.
The more I look at this, the more abrupt I think the change will be. Look how the late summer caught the REIC by surprise. Mid-summer, they were saying all is well, by late summer they were sniffing out a slowdown.
My RE agent contacts have told me that business on the KP/OP has just stopped. My sampler homes have just been sitting vacant. 'For rent' signs are replacing 'for sale' signs.
If they don't get a miracle by the end of the year, 2Q-07 is shaping up to be pretty ugly. I think that is when panic will be commonplace. 4Q-07 will be a complete meltdown of psychology.
The only thing that can even "save" the REIC/bulls is lowering of interest rates. Even with a completely irresponsible FED, they can only lower rates so much, and I doubt they can do it before the bulls run out of time.
It isn't enough, but they don't know that. Some of the other headwinds are:
-pre-election "fixes" will be out of the system.
-Iran/PRNK problems
-Possible change of Congress (taxes going up)
-Dollar trouble
-Feds investigating kinky loans
-Fannie Mae
-ARM resets
-bubble psychology shifting
-lofty stock valuations burning up on re-entry.
I think the housing bulls are drawing dead. I also think the break in the market will be fairly binary. One day all will be well, and the next, it will be curtains.
So, where are we? I see it this way:
Phase I - market puts in a top (complete)
Phase II - Buyers and sellers in a standoff (just started)
Phase III - Sellers capitulate (4Q-07 est.)
Phase IV - The descent
Phase V - The bottoming
Phase VI - Time to buy on the cheap.
How long can the sellers hold out? As you can see, I'm guessing they won't want to see the winter of 07/08. That is when I think their lenders will start to lean on them. The only deus-ex-machina that I see is the Feds will try to soften the blow with some sort of legeslation that will deal with debt abayance. It will only make the problem worse, but it could put off "judgment day" for a little while. Personally, I don't think they have the money. They will be too busy trying to cope with all of the people in the REIC and retail sectors that have lost everything.
This should be interesting.
BTW, has anyone heard from 'Shug? I'm curious how Ballard is holding up. Perhaps someone should stop by to make sure he is OK. He didn't miss a thread for 10 months, and then as soon as the market peaks, he disappears.
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