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Friday, October 23, 1981

Monday Open Thread

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

15 comments:

Mikhail said...

I see that ziprealty.com reports 91 listings for my area (east Bellevue, 98008) this morning. We've finally crossed the 90 mark after being as low at 45 back in April.

But maybe this is just normal to see an increase in inventory during the fall. I recall Meshugy said that an inventory rise in October wouldn't be abnormal.

deeplennon said...

King County Sep & Oct SFH active listings since 2000.

Sep 00: 7,131
Oct 00: 6,746

Sep 01: 8,484
Oct 01: 8,302

Sep 02: 9,176
Oct 02: 8,966

Sep 03: 8,427
Oct 03: 8,127

Sep 04: 7,109
Oct 04: 6,734

Sep 05: 6,149
Oct 05: 6,014

Sep 06: 7,919
Oct 06: ?????

So obviously, an inventory rise in October would be abnormal.

synthetik said...

From WSJ "Rising Inventories Weigh on Home Prices"

Nice graph showing 19 bubble cities, including Seattle, where Seattle ranks in the top 4 for highest percentage of REDUCED listings. (41.7%)

Source: ziprealty.com

Mikhail said...

Wow! According to the graph in the WSJ article Synthetik linked to, it shows that the number of listings in Seattle DECREASED from August to September. Is this true?

It certainly isn't what I've been seeing in east Bellevue, but maybe King County is seeing a different trend.

Slinky said...

Wow, Synthetik. 28% and 30% price reduced is bad news in Houston and Dallas, where prices didn't run up all that much to begin with.

I'm surprised to see DC at only 32% price reduced, given how much inventory has gone up there...unless it's ONLY the district they're talking about, and excluding NoVa and southern MD.

synthetik said...

I'm not sure how much these numbers really mean. I believe the WSJ posted a graph like this several months ago and Seattle was about 27%, barely making the list.

My hunch is that earlier in the RE downturn cycle you will see less acquiescense from sellers whereas in other markets sellers are "getting it", meaning they've gotten the message and have come right out of the gate with a lower price.

As for inventory in Seattle... if I were a homeowner and was currently buying in to the idea of a purely localized market - I'd probably take my house off the market and relist it at a more appropriate time. (When it's not 40F and raining, or when, historically, it made more sense)

I'd wager that inventory stays flat for october or goes down. I wouldn't interpret that as a sign that our market is healthy, although I'm sure we'll see at least 10 articles that will make that point.

Hork said...

I was thinking over the weekend about how people who purchased a home recently would simply not sell given a significant downturn in the market. This would seem to lend some credit to the argument that house prices will not go down.

I wonder how many homes were purchased during the run-up years compared to how many homes were not sold. It seems like those people who did not purchase homes recently would sell their homes at a reasonable historically appreciated price. If the number of homes sold recently is something like 2% of all the homes, I don't think they will have much affect on the market by not selling. Instead they really just bought at the wrong time and are now SOL.

Nolaguy said...

From my favorite macro-economic blog...

The Housing Market - Plateau of Denial

We keep reading about rising rents in Manhattan and San Francisco. Fine--there is still a shortage of available units in those small, hard-to-add-units spots with strong job markets and desirable amenities. But the overbuilding didn't occur in Manhattan or San Francisco; the imbalances lie elsewhere, and that's where the pain will be felt first.

http://www.oftwominds.com/blog.html

Mikhail said...

I agree that many people simply can't sell their current homes, since they would be under-water (i.e. owe more than they could sell it for).

As a result, I think that the real price declines won't happen until existing home-owners are forced out of their homes through foreclosure. The same thing goes for builders. Builders can only discount so much before they wouldn't make enough to pay their debts. It is only after the lenders re-possess the homes (from builders or otherwise) and start selling them that we will see real price declines occur.

I have been reading about cases throughout the US where even homes coming up for auction at the county court-houses (due to foreclosure) don't sell because the buyers would have to assume the existing mortgages, which are often more than what the place is worth.

Things will have to go to the next stage, where the reposession is complete, and the lenders are desperate to unload all the properties on their books.

Who knows, we might have to wait for the lenders themselves to go belly up before we see the big price declines. Many lenders may be reluctant to accept low prices for their properties because that would require write-downs in their books. The Japanese banks give a wonderful case-study in this phenomena, where they refuse to liquidate assets since they are trying to prop-up the book-values of their loansl.

Maybe we will need a Resolution Trust Corporation 2.0?

In any event, I am thinking that serious price declines will be many years off, and will NOT be offered by today's crop of owners.

synthetik said...

>I agree that many people simply can't sell their current homes, since they would be under-water (i.e. owe more than they could sell it for).

The credit bubble/greenspin effect is going to have a globe-sized snowball effect on everything.

If you bought in 2003-present using a funky loan, your payments will go up and you'll be forced into a sale. You won't be able to sell, since everyone else will have the same idea... many other areas of the country are seeing no takers for current foreclosure/short sale offerings, meaning it's likely to get much worse.

As housing takes its toll on the economy through consumer spending, builder bankruptcies, corporate profits falling, equity markets correcting, people lose their jobs, etc.

How much of our economy is tied to housing and consumer spending? 60-70%? What types of services will be hurt in the process that directly correlate to job loss? Recession means less $5 lattes (Starbucks), air travel, big-ticket purchases (BlueNile.com), less freight being shipped (PACCAR), software and computers purchased (Microsoft), shoes at Nordstrum, loans from WAMU, less timber from Plum Creek needed, and more people worried about their cell minutes (T-Mobile, Cingular) [and an oversupply in the chip market]

I agree that most people would do whatever they could to hold on to their homes, however a significant number of those people simply won't be able to make their payments due to ARM reset or job loss.

Regardless, I don't think we'll need those two things to experience dramatic price declines in this area due to the impending collapse of the national economy.

betamax said...

serious price declines will be many years off, and will NOT be offered by today's crop of owners.

Prices are set by houses that are sold, not by houses not sold.

synthetik said...

Prices are set by the market (i.e., buyers)

No more GF's=lower prices

Joe Consumer said...

Synthetic:

"If you bought in 2003-present using a funky loan, your payments will go up and you'll be forced into a sale. "

Many who fall into this category are simply refinancing at a 30 yr fixed rate at current rates. Sure, this results in a higher monthly payment, but I think blogs and news like Tim's may have the effect of pushing people to take this step, though it means a higher payment, and snapping out of the denial of endless double digit appreciation.

If this is the case, perhaps we can think the Tims of the world for precluding a wholesale dump of inventory on the market.

Just a thought.

synthetik said...

that is entirely possible... how can we get data to support an increase in refinancing activity in this area?

Also, this report from MarketWatch shows that Mortgage Originations fell 16% in first half of 2006 despite a drop in rates.

Grivetti said...

Another Seattle condo article, about square footage... but there's some gems in the word-bytes...

About 90 percent of condominiums at 2200, a mixed-use development in Seattle, sold before the sales center was open for business, said Julie McAvoy, sales director

Hmmm.... empty nesters or young urban professionals? ... or as I call it The Phantom Menace aka, out-of-state specuvestors, finding the last bastion of flippable territory in the U.S., where the bizarre ritual of bidding wars is somehow still carried out like some farflung jungle right-to-manhood ritual...

Here's a fun one at the end

"Don't just pick the unit you know that fits you today; pick one that fits you two years from now when it'll be complete," she said. "Look at the bigger picture."

The primary attraction for presale buyers is clear.

Said Jones: "You're shopping in 2008 at today's prices."


Shopping in 2008 at today's prices? Ohhhh, the irony. Hmmm... I realize condos are the only logical way onto the equity ladder, and you're really a fool not to buy now, but what does the smart money say?

The developers filed plans with the city in August to replace the 53-year-old building with two 28-story condo towers, but decided not to build because they had concerns about the current market and found a tenant to lease the entire building for more than 10 years, Wilson said Monday.

nahnahnahnah... I don't hear you smart money... nahahahahaha

//fingers in ears
The developers being...

Broadreach Capital Partners of Palo Alto, Calif.; Continental Properties, of Bellevue; and Seattle-based Unico Properties

Hmmm...