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Sunday, October 18, 1981

Wednesday Open Thread

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


Nolaguy said...

We hear it all the time - the people stating "the market will have a soft landing and return to normal appreciation". I'm always puzzled by their logic.

I found a great post at MessThatGreenspanMade that takes this to task and explains what I couldn't put in words myself. A small snippet:

"If the boom is indeed over, after a huge run-up in prices in recent years, why would price appreciation return to normal?

Isn't it more likely that prices would return to normal, as in a regression to the mean?

In probability and statistics, regression to the mean describes the tendency for things to return to normal, whatever it is that normal might be. In the case of housing, a regression to the mean would imply a return to long established price trends based on historical levels of appreciation."

I encourage you all to read the entire article. Great stuff!

Eleua said...

Prices returning to the historical norm of 2x-3x income would be a breathtaking sight (picture Bainbridge Island with a median home price in the high 100s.)

Rental houses returning to a cap rate of 7 would shave about 3/4 off the price.

Rental houses being able to cash-flow (normal investment parameters), would also reduce the price that amount.

Interest rates returning to 'normal' rates in 8-11% range would gut housing prices. The FEDERAL RESERVE knows this, which is why rates are so low.

If the REIC wants to say that returning to normal is a soft landing, then they are welcome to it.

Kaleetan said...

I think we should take an add out that says

" We are so sick of watching everyone ride the equity train up while we are sitting in our apartments because we are too smart to buy into this crazy market so please, please quit buying homes that will continue to price us out further.
- the bubbleheads "

Eleua said...

Does the "equity train" ever go in reverse?

Eleua said...


Nice tongue-in-cheek response.

As a "bubblehead," let me say what I would like to happen (if I could control all the different parameters).

I actually FAVOR the madness of the homebuying crowd. I WANT people (as a group) to overpay, and use extraordinarily kinky financing to make it happen. I HOPE that maximum leverage is used.

That way, when the bubble pops, there will be absolutely no safety net on the way down.

The lumpeninvestoriat learns a painful lesson, financial sanity is restored, and housing is historically cheap without a buyer in sight, but lots of inventory.

I guess that would be the "equity train wreck."

Kaleetan said...

...and the number one reason why apartment living sucks is..

Peepers! damn this is creepy..saw this on the news last night.

Peter Taylor said...

"Equity Train"
"Priced out forever"

You forgot to add in the other talking points.


"RE never goes down"
"Seattle is immune"
"They're not making more land"

seattle_slow said...

Great quote below reported by Inman news on buyers sitting on the fence caused by rising inventory and slow sales...

“'There’s a very big standoff going on. It’s like a buffet table at a banquet where they keep bringing more plates from the kitchen,’ said David Michonski, CEO of a large brokerage firm in Manhattan. It’s as if buyers are thinking, ‘I like this shrimp, but maybe there’s lobster coming out,’ he said.”

The Tim said...

...and the number one reason why apartment living sucks is..


Good point. Because no one can possibly peer into your home with binoculars when you live in a house or condo.

flopfolder said...

Is today the day that I am going to be priced out forever?

Lake Hills Renter said...

I want to say for the record that I'm sick of all of the personal attacks and arguing on this blog lately, to the point that I rarely even visit any more. It's really dragging this place down IMO. I'm all for contrary opinions, but personal attacks only detract from your position and make you look childish. For people wanting actual discussion, it's a waste of time.

Grivetti said...

Is today the day that I am going to be priced out forever?

No flopfolder, you won't be priced out and why? Well, you got the memo that Seattle's experiencing robust job growth, so just go out there and get one of those robust jobs and you'll be able to swing it... what's so hard about that? But you better hurry quick, I'm giving you a month or so before you'll be priced out forever, then you'll have to get a new robust job, etcetera...

synthetik said...

Just as a question, would anyone be interested in getting involved in a local investment group?

Specifically, one that focuses on the coming bear market?

I still have a long way to go in my understand of the stock market, economics, etc, but it's obvious we are poised for a serious correction in RE, equity markets and the global credit bubble.

Geon said...

My biggest fear is my landlord (developer) will ask us to leave-thus forcing us to buy in this market or find another place to rent. We sold him the house, and the one next door, a year ago and he is short platting it. He said we could rent until we find another place.

I never thought we would be here almost a year later, but we are and not in a big hurry to move. So far, no "land proposal:" sign yet, but he informed me yesterday that he'll be over here doing some measuring for property lines...he had it surveyed long ago.

I don't mind renting a nicer place, but we may have a little problem with 2 dogs and 2 cats. I just recently have settled my wife down somewhat on buying immediately by conveying the housing bubble data. Her boss even acknowledged to her that we may have sold near the top, well close. That definately helped he psyche.

Well, we plan on having dinner with him this week, so I'll try to find out his plans in more detail, without raising too much bubble talk.

synthetik said...

>He said we could rent until we find another place.

Did you sign a lease with him?

My wife and I have two dogs and are renting... Seattle has been very pet-friendly toward renters from what I've seen.

I don't think you'll have a problem, although you may have to pay an exorbitant amount for pet deposit.

Still, that will be much less than the idea of buying back into the market at the peak.....

Grivetti said...

robust job growth... er... come on... robust job growth

//dice roll

Man, what's left? limited land? hmm... heck I give up.

Icos sale a blow to local biotech

The takeover means the Northwest will lose many of the jobs at Icos — the sort of high-skilled, high-paying jobs that local officials have touted in recent years as the reason to cultivate the biotech industry.

Icos has 700 employees, 500 of them in Washington state

Christina said...

I still have a long way to go in my understand of the stock market, economics, etc, but it's obvious we are poised for a serious correction in RE, equity markets and the global credit bubble.

Obvious enough to economic newbies like you and me. I'm always up for discussing investments, but right now I'm into international and high-dividend ETFs, gold mutual funds, home energy investments and paying off the mortgage by 2014. Microlending looks good too -- it avoids major banking centers.

(In case any jeers come my homeowner way, I'll mention I bought last millennium and have over 50% equity. And I have room to take in foreclosure casualty renters.)

Richard said...

I'm not surprised to see this...

WaMu Profit Tumbles 9%

Doesn't the writer look like Shrek's wife?