Friday Open Thread
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25 comments:
I heard on NPR this morning how GM, Ford and Chrysler have very high levels of 2006 inventory. They can't sell their cars and trucks, and a link was made to the downward economic trend in housing development. Tying the two industries together: with no housing development activity, no stimulus to buy a truck for transporting construction materials.
Yet Japanese auto manufacturers Honda, Toyota and Nissan continue to sell well here.
Story time:
Two guys I work with, both in their late 20's early 30's. I start talking to one of them and somehow we get on the subject of real estate. He seems to think that the market here is going to keep going up at least 10 percent this year. I ask him "why do you think that". He replies "strong job growth, Microsoft, Amazon, Boeing, etc". I say, "so if MS hires 4,000 new employees at 60,000 a year you think that is going to drive house prices up past 450,000????" No response.
So the next day the guy sends me "Seattle is Bubbleproof article". I reply by sending him the www.seattlebubble.com link. So the guy wants to bet me that we will not see any market depreciation in 2007 or early 2008. He is convinced that the market will skyrocket. I send him a few lines about why this market is out of control etc.
Well then I start talking to another guy I work with and turns out that he and his buddy own several houses in the Green Lake area that they are fixing up, renting, and planning on selling in the next year or two. These are TWO GUYS IN THEIR 20'S and they own at least 3 houses EACH!!!! And people want to act like their aren't a lot of "investors" in this area. These are two guys that know nothing about RE other than they bought a couple of repair books at Home Depot. Wow, that was a big eye opener to me.
Let me clarify one thing, the second guy I was talking to was referring to the first guy from the story.
It's after Halloween, Matthew. You can stop telling scary stories now.
I've met inexperienced investors who buy homes in Texas (in fact, I just met one yesterday) sight unseen. They can't even point to the city their homes are in on a map.
It's no different than in 2000 when an acquaintance told me he had just bought shares of Broadwing, or another had just bought shares of Lucent. Neither of these guys had the vaguest clue about how the IT or communications industries worked. Both lost their shirts.
I'd say it's sad, but these morons get what they deserve. People spend more time deciding whether or not to buy Ibuprofin or Advil than they do making investment decisions that will affect the rest of their lives.
Good to be reassured we're bubble-proof. I still have yet to find any convincing argument against a return to historical mean, which will certainly look like a bursting bubble, whether it fits the exact definition of a bubble or not.
Matthew,
I hear the same stuff.
I was waiting in line at the 5th Ave Happy Teriyaki for my speical #1, and overheard these gals, who must have been about 23, talking about how the market is just too HOT HOT HOT to do a silly thing like have a pre-close inspection required in the sales contract.
When I was 23, I was more concerned about making sure I had started an IRA/401K and starting the savings toward my 20%. It took a while. I could have never pulled off home ownership at that age, but it was a different world back then.
LHR,
Did you see my comments on there? Sometimes it can be very frustrating trying to have a discussion with certain people. Like when they take what you say totally out of context, and completely misrepresent the point you're trying to make.
Bleh.
Yea, I saw your posts, Tim. I posted there as well, addressing the constant disparraging and stereotyping of renters as just being poor people that can't afford a house. I thought about diving into the other topics as well, but decided against it as accomplishing nothing.
It thought it pretty ironic that you were called entrenched and your points cliched, considering how unbudging some of the commenters there seem, including Ardell. There's even some of the classic bull cliches -- real estate never goes down, they aren't building any more land, buy now or be priced out forever!
As I said in my post there, I've seen no convincing arguments to explain sustaining the current run up in prices, when the data certainly points to otherwise. I guess that makes me entrenched.
I can't help but cringe when I hear realtors telling people they need to buy in this market. But then I guess that's what realtors do. Has anyone ever heard a realtor tell someone it's better to not buy? I haven't.
Has anyone ever heard a realtor tell someone it's better to not buy? I haven't.
I actually have.
One of the Windermere Bainbridge agents said that, but only when asked. Granted, this was back in '02, and we know that she was wrong, but she is one of those that is a closet bear, and thinks everyone if f-ing nuts.
I still keep in loose contact, and she thinks this is going to be an enormous, fugly mess.
She keeps her opinions to herself, but will be honest if asked.
Her job is to move property and put people into homes. If someone is so smart or so arrogant that they don't ask if their purchase can go really, really bad, then they have only the man-in-the-mirror to blame.
She would be at home here on SB.
While we are seeing a teensy weensy weakness in October vs. August and September prices, the run up from January of 2005 to present has been insane
insane
adj 1: afflicted with or characteristic of mental derangement; "was declared insane"; "insane laughter" [ant: sane] 2: very foolish; "harebrained ideas"; "took insane risks behind the wheel"; "a completely mad scheme to build a bridge between two mountains" [syn: harebrained, mad]
I don't think Ardell realizes it, but even her own words refute her assertion. I better get my Realtor on the horn and book a ticket for the last spaceship.
DJIA looks like it is about to lay an egg for the 6th consecutive day.
If we don't get the perfunctory "post-Thanksgiving/Santa Clause/No-news period" rally, I'll be in the Swedish ICU for complications relating to laughing hysterically for 6 straight weeks. I'll need to be sedated, just to have a normal Christmas.
I never believed in market manipulation until the last 3 months.
Wow, this floored me:
Am I saying no one can “save up” to purchase a house? That is somewhat irrelevant, since anyone can buy almost anything these days, given the loose lending situation. No one needs to save up to buy.
Regarding the RCG post that LakeHillsRenter recently mentioned, these are some of my favorite quotes:
"Considering a bubble can, by definition, only be identified after it pops..." Will W
Actually, quite a few people can recognize a bubble on its way up. It's like realizing that you are on a hill before you get to the ledge on the other side.
"Seattle IS bubble proof, at least in the $300,000 and under market. " - Ardell
So... that would be for the one Single Family Crackhouse that's still left in White Center?
"Even though many of you point to reams of data, time and time again, the only previous bubble ‘experience’ referenced is the stock market correction of 2000-01." - SeattleEric
I agree wholeheartedly. How can reams of data possibly compare to the "experience" of a Realtor trying to con you into buying? Don't be distracted by the facts around you! Buy now - the salesman says you should!
"You can’t compare housing to the stock market." - Ardell
Absolutely correct! Very few people bought into the stock market at 5% or less on margin. This is pretty common (I want to say about 2/3 of all new home buyers, but someone else can look up the data if you're interested). When the stock market craters, people lose their savings. When housing craters, people are trapped in debt for the rest of their lives (thanks, Congress for enacting recent BK legislation!).
Here's one of my favorite bubble quotes of all time:
"I see debt people. They don't see each other. They only see what they want to see. They don't know they're in debt." - Peter P, Patrick's Housing Bubble Blog
"Ardell, on the other hand, is simply someone who is attempting to reach beyond their intellectual means. She honestly believes she has a point but is incapable of either articulating it or supporting it."
I get down on Ardell, but I feel somewhat bad for her. I think she's being honest when she claims not to see the current slowdown.
My sympathy, however, is tempered by my general sense of ill-will for every salesman who has ever tried to sell me bullshit with fast talk and logical fallacies. In my mind, Realtors are nothing more than the used-car salesmen of the new millenium.
SeattleTimes today talks about the job loss that will happen as the viaduct is shut down... Estimate range from 16,000-32,000, mostly retail and manufacturing jobs lost
Bear market in housing futures
Trading in the Case Shiller indices say prices are heading down.
By Les Christie, CNNMoney.com
November 2 2006: 3:16 PM EST
site
Turning down your own bed is for renters: They'll even turn down your bed at these condos
What does Ardell mean when she says things like this:
"In fact a modest correction is well warranted, but I do not see single family homes dropping in price back to where they were in January of 2005 for many, many…if ever…years."
Does that mean she thinks houses are overpriced. If so, why does she think prices won't drop?
Using her logic, I should snap up this quickly.
It's "immaculate" and "spacious".
http://seattle.craigslist.org/est/rfs/229658796.html
I noticed the following on the urbnlivn blog:
Price reductions on Capitol Hill
Sorry for all non-Capitol Hill folks but I follow Capitol Hill more closely than other neighborhoods and noticed some price reductions recently that might interest you (both newer and older units):
Mezzo (711 E Denny Way #201): $10,000 drop to $335,000
Mezzo (711 E Denny Way #107): $10,000 drop to $365,000
303 E Pike St #502: $14,950 drop to $475,000 (this is way over priced at $586/sq ft for an 8 year old unit)
Monique Lofts (1505 11th Ave #401): $40,000 drop to $799,900
Hey... I thought prices can only go up in Seattle?
What does Ardell mean...
She just clarified over at RCG, she seems to believe that condos/townhomes will correct but not single family homes. The houses in my neighborhood in Bellevue have increased value ~60% in four years -- and that's actual sale prices, not appraisals. I fail to see how that's sustainable. Wages certainly haven't gone up 60%.
Speaking of reductions...
I have mentioned a condo unit for sale in my building a few times here. The unit was originally listed for $369,500 Today, after 72 days on the market and ZERO offers, the price was just reduced to $349,950.
The market is hot, hot, hot!
synthetik,
Eric responded to RedmondJP's same question in comment #35 on the RCG "bubble proof" article.
eleua,
Here are some Kitsap Sept & October stats for you. Still no give on price, and the volume is slowing at just about the same rate as King Cty, ca. 25% yoy.
1. Units
2. Avg SqFt
3. Med SqFt
4. Avg Price
5. Med Price
6. Med Price/SqFt
7. Days on Market (avg/median)
Mo.|_9/05_|_10/05_|...|_9/06_|_10/06_|
--------------
1|____467|___355|...|____337|___275|
2|___2006|__1890|...|___1873|__1920|
3|___1800|__1735|...|___1752|__1773|
4|345,004|320,675|...|340,567|364,993|
5|271,700|256,000|...|273,900|295,000|
6|_154.93|_159.76|...|_170.69|_176.01|
7|__56/35|__55/38|...|__66/49|__66/45|
LHR,
Don't buy now unless you can trade down.
I'm not a Realtor, though. The NAR is private, and the front for THE largest PAC in the U.S. They even sent me their voters' guide on "pro-Realtor(R)" candidates. No mention of issues, of course. They also have a code of ethics, an utter travesty. Thankfully, I can do business without signing up, perfectly legally.
geon,
here's a quick reference on links
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