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Wednesday, October 07, 1981

Weekend Open Thread

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


synthetik said...

My wife and I had our first party last night. All the guests were people that we've seen just a few times at various social networking events.

Most of these people are transplants, while others are from this area but may be looking for new friends, (recently divorced, socially inept, etc)

This morning I woke up and my wife says "John told me that he's about to put an offer on a condo for $475K, his payment is going to be around $3000 a month". I say "Jezus! um, did you tell him the market was about to sh*t itself???" She says "err.. no..."

Evidently he then said "now all I do is find 3 roomates".

Two things:

First, even though we are acquaintances and I risk becoming an outcast I'm still going to say something to him. I'd hope someone else would do the same for me.

Second, why would you buy a 500K home only to share it with 3 other people? I wonder if he thinks he's missing out on the "equity train".

If we had tighter lending standards this wouldn't even be an issue... of course, the house wouldnt' cost $475K either.

Peckhammer said...

Remember Moda -- the mausoleum with 296 square foot crypts? Well, they are 100% sold out.

As I reported a few weeks ago, 85% of the units were sold the first day. There is still a waiting list for some unit types that are several hundred people long. Even if a bunch of lemmings bail, there will be many more to take their place.

It appears that the bubblicious news of isn't penetrating the average skull.

SeattleMoose said...

Date / Listings / Delta / %
07-May / 7302 / /
15-May / 7486 / 184 / 3%
21-May / 7665 / 179 / 5%
11-Jun / 8099 / 434 / 11%
18-Jun / 8154 / 55 / 12%
24-Jun / 8352 / 198 / 14%
01-Jul / 8417 / 65 / 15%
08-Jul / 8758 / 341 / 20%
15-Jul / 9057 / 299 / 24%
22-Jul / 9139 / 82 / 25%
29-Jul / 9044 / -95 / 24%
05-Aug / 9059 / 15 / 24%
12-Aug / 9191 / 132 / 26%
19-Aug / 9348 / 157 / 28%
26-Aug / 9442 / 94 / 29%
02-Sep / 9363 / -79 / 28%
09-Sep / 9597 / 234 / 31%
16-Sep / 9959 / 362 / 36%
21-Sep / 10121 / 162 / 39%
28-Sep / 10639 / 518 / 46%
05-Oct / 10434 / -205 / 43%

Biggest single week runup in listings followed by single biggest drop in listings. Still trend is increasing inventory.

stephen said...

IMHO I think most people do not appreciate unsolicited advice about something they have told someone they are doing. It puts them in the uncomfortable position of defending themselves AFTER they have made the decision.

Synthetik, the paragraph above probably ticks you off a little which of course makes my point ;-)

Not sure I agree that it's not getting close to the right time to buy or not. The market IS/has been in a bubble, I agree, but the difficult question now is "Is the local market really going to correct or stagnate". The local Seattle metro may have started with low enough prices that the area will retain all but the last 20% or so of the run up, which as I have pointed out in previous post is only the funny dollars tacked on at the end of the frenzy anyway.

Many of the folks who post here are very articulate in stating their position but I do wonder if often the debate is less thoughtful and simply support of a rigid position that prices are outrageous and MUST come down, a lot.

Does anyone here think it's possible that only the past six eight months of appreciation will drop off and then the prices may just level for a while?

SeattleMoose said...

"Does anyone here think it's possible that only the past six eight months of appreciation will drop off and then the prices may just level for a while?"

No. It is all about fundamentals and they are so whacked right now a severe correction is the only viable way for the pressure to be released from the biggest RE runup in the history of RE.

synthetik said...

>It puts them in the uncomfortable position of defending themselves AFTER they have made the decision.

Of course, that's obvious. The choice is to not tell him and let him lose his home, go BK, etc, or risk a possible friendship.

You make me sound like a "true believer"; the prostletyzing born-again christian who must "save" everyone from the fires of hell.

Those people are annoying as hell.

The difference is that there is actual visual evidence all around us about the housing and credit bubble.

You can't even SEE Jesus. There is no "proof".

>Synthetik, the paragraph above probably ticks you off a little which of course makes my point ;-)

It doesn't tick me off at all. Just look at all the conflicting economic data that we've been getting for the last few weeks/months. Weak housing numbers then strong corporate earnings. Weak consumer confidence, then strong consumer confidence. Peak oil, then 52-week low oil. Weak dollar, strong dollar.

I looked at moose' numbers and thought "doesn't surprise me, but I bet next month will show an even larger increase in inventory" I'm happy that he/she's not twisting or fabricating numbers.

stephen said...

If you made a very large decision such as buying a piece of property would you really want unsolicited opinions from folks you mention it to about how you shouldn't do it.

I honestly don't think many people want others setting them straight on things such as this. It's been my experience that it not only makes people feel defensive, they rarely will alter course based what someone they didn't ask says they should do.

Obviously if the man asked your opinion then he's still in the decision process and I'm sure it would be welcomed.

Besides you might very well be wrong, even though it seems so obvious to you. Nothing at this stage of the game is set in stone and 20-50% price declines are by no means a certainty. Also if you don't like condos you will never think it's a good idea for anyone to buy one...

synthetik said...

>I honestly don't think many people want others setting them straight on things such as this

No SH#T. I'm not doing it to be a complete tool, I'm doing it because I don't want to see someone in financial ruin.

If you are buying a house right now, you will be in financial ruin; period, end of story.

If his feelings get hurt - TFB, my conscious is clean.

And, no, I'm not wrong. I have been studying this crap for the last several years. People that are buying homes right now aren't being prudent and don't have the information necessary to make proper decision.

I can't tell you exactly how bad it will be, but most likely it will be worse than anything we've seen since the depression.

I'm expecting a return to 1999-00' prices and a massive, nationwide recession by mid-2007. I could be wrong.. It could happen sooner than that.

As far as condos, no, I don't think they are a wise investment. Condo mania and condo conversions always signify the end of a RE boom. That means all those units are most likely hyper inflated in price. You've got the same taxes plus $300-2000/mo in maint/assoc. fees. Not the best way to build equity.

However, there are many benefits of condo and downtown city living. If you can buy at a valley vs. a peak and you feel the benefits outweight the negatives; by all means - get yourself a condo.

Over the long haul you'll do much better by owning actual land.

synthetik said...

Specuvestor seattleeric has a post on Rain City Guide called "The Wisdom of Crowds"

I wonder if he'd be in the mess he's in if he hadn't followed the "wisdom" of the crowd.

stephen said...

Seattlemoose, but isn't the only real thing about the fundamentals that's truly whacked is the lending practices. If interest rates stay low, say below 7 or so, isn't possible that prices may drop 20 or so percent and then just stagnate for a few years while the bad loans shake out. Obviously those that bought recently and have to sell will get hosed even on a 20 percent drop, but most folks will just stay put if they can't sell.

Synthetik, if I bought a house right now today on a 30 year fixed loan in my budget (and more and more homes are coming on the market daily that fall into that category) I would not be in financial ruin. Since I'm not making an investment, but buying a place to live it really would not affect my financial security in the least. Now I'm a little different than most in that I will very likely live in my next house for the foreseeable future and once I buy do not really care what the market does. If it goes way down it would eliminate any upward moves but my taxes would go down :-)

About the only risk I would readily acknowledge is that the bank could call on collateral deficiency if it really tanked.

I think you may be taking this too seriously. I'm in the low end of the market. I want a 10,000 square foot lot, 1400-1600 sq ft hse and I'm trying to avoid spending 60-70 grand more than I need to to get a decent house, nothing fancy. If I blow it it means driving an older car and a few less monthly dollars for retirement, not good but certainly not financial ruin.