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Saturday, November 07, 1981

Tuesday Open Thread

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

27 comments:

plymster said...

I keep reading a lot about "leading indicators" of the housing bubble burst. I'm curious what people think are leading vs. lagging indicators, and what their reasoning is. I'll even kick this off:

Rising inventory (Year Over Year) coupled with falling salse (again, YOY) has been a leading indicator in other markets (Denver, Boston, SoCal, NoCal, Florida, etc.). It also makes sense that as buyers slowly refuse to buy, homeowners must choose to lower prices, or continue to not sell. Further, speculators must choose to lose a little money now (or lessen their profits), or face cash-flow issues.

Here are some other indicators that I've seen cited from time to time:

Foreclosures
Median Prices (closed or pending)
Price per Square Foot (closed or pending)
Unemployment
Rising Interest Rates
Falling Interest Rates
Housing Starts
Homebuilder Stocks

Here are some specious "indicators" to spar over:
The Superbowl
Bubble Blog Trolling
RE Agent Vacation Cycles

Kaleetan said...

Building Permits....

New Permits to Build would also be considered one of the best indicators.

Kaleetan said...
This comment has been removed by a blog administrator.
dalas said...

I disagree with building permits, that's just blown out of proportion. existing properties in developed neighborhood would contribute more toward bubble bursting than undeveloped area with new housing. there are very few lots avaliable in the heart of KC.

Foreclosures should be consider latter to new listing, as I said before, most would try to sell before foreclosing.

Kaleetan said...

Population Growth is also another factor...Here in the eastside, snoqualmie and issaquah are the fastest growing areas in the state.

Snoqualmie King 379.2%

Issaquah King 74.5%

Mill Creek also is growing as a pretty fast pace.

Mill Creek Snohomish 51.5%

meshugy said...

Home Buyers, Sellers Look Beyond Elections

In King County, which accounts for about four of every 10 sales in the MLS service area, the median price of a single family home (excluding condominiums) rose 12.8 percent, increasing from $390,000 a year ago to $440,000 for sales that closed last month. Condo prices jumped 20.8 percent, climbing from a median selling price of $215,000 twelve months ago to last month's figure of $259,700.

synthetik said...

More indicators:

Big Macs up 252%
Chicken Sandwich up 142%
Fries down 401%
Atari 2600 up 3520%
Obey Giant Stickers up 512%
Chupacabra sightings up 1598%
iPods compromised by water up 223%

Kaleetan said...

Wow, our resident economist has woken up and is hungry...must be nice to not have a job.

plymster said...

"falling salse"? Sheesh I really need to spell check the feces I post.

Kaleetan - So are you saying Building Permits are a leading indicator of a decline in price due to more supply entering the market? Or are you saying it's a leading indicator of a rise in price due to builder confidence?

Also, should we be looking at total population growth (<1% per year since 2000) for all of King County (since I see most people quoting county-wide stats)? Or should we be looking at smaller regions (Mill Creek, Issaquah, Joe Smith's house which increased by 33% since he and the misses had a kid?). How did population growth impact the SoCal markets when they started dropping?

plymster said...

Fries down 400%? That's gotta be the bottom of the market for those (I'm guessing about 10 lbs of fries, aka - the "medium", for 24 cents).

Time to load up on french fried goodness! Buy! Buy! Buy! There's never been a better time to buy or sell fries! ;-)

Grivetti said...

The return of the Rhodester!

"Housing sales are down, but this has created a greater balance in the market between buyers and sellers," said Lennox Scott, chairman and CEO of John L. Scott Real Estate. Even with the decline, "we're on track to have the third most productive year in the history of real estate," he said.

Pride goeth before a fall

Kaleetan said...

I am saying that building permits are an indicator that foreshadows future construction activity -

Also Population outflows are extremely harmful to housing markets, because they both depress demand for homes and raise the number of homes on the market.


http://www.fdic.gov/bank/analytical/fyi/2005/021005fyi.html


"The busts in California and the Northeast have been widely studied. They too featured some common elements of economic stress, including the early 1990s recession, massive defense downsizing after the end of the Cold War, a significant commercial real estate collapse, and either a sharp downturn in population growth or outright population loss. As was the case in the oil patch, the last factor, population weakness, was probably one of the most significant elements affecting price declines in these markets."

Lake Hills Renter said...

After the flooding of the last few days, I wonder how many houses will be going on the market with hidden water damage and/or mold. Lots of new waterfront property right now in places like Hamilton.

And the Sunshine Point campground at MRNP no longer exists. Crazy weather.

meshugy said...

The Breakouts are up:

Breakouts - KING COUNTY SECTORS - Northwest Multiple Listing Service OCT 2006

Seattle's median con/res price is back up to $420K...that was the peak back in July. Amazing....

Geon said...

After the flooding of the last few days, I wonder how many houses will be going on the market with hidden water damage and/or mold. Lots of new waterfront property right now in places like Hamilton.

No doubt. That's why I've excluded a lot of the eastside from our future house seach, not only does it get a little more rain, it also floods more. I'll put up with a little airport noise.

Having said that, you never know we could still end up out there....somewhere. LOL>

redmondjp said...

Geon,

Your definition of Eastside must be a bit different from mine. No flooding issues that I am aware of in most of the Eastside cities (Bellevue Kirkland Redmond Bothell Woodinville).

Now if you go farther east (Issaquah Fall City Snoqualmie Carnation Duvall Monroe Sultan Snohomish) then I will definitely agree with you. My wife works in Carnation and there is no way in/out of town right now, and may not be for a couple of days.

My crawl space sump pump at my house in Redmond has been busy lately. But anybody notice the incredibly high humidity lately? My freezer door in the garage was covered by condensation last night--never seen that in 8 years.

Slinky said...

Dalas, I look at trend in building permits as an indicator, and not an indicator in and of itself. More to the point, the trend of building permits combined with housing starts is even better. One will generally find that a rise or fall in permits lags a rise or fall in starts by 2-3 months.

With foreclosures, I don't think it's the number but the trend. If you were steady at 2% foreclosure for 10 years (all hypothetical here), and suddenly it jumps to 5%, that is a major indicator that something is wrong.

Geon said...

redmondjp,

You're right, I meant the flood prone regions. My sump pump is pretty busy at the moment too. Once it dies, I could get 3 to 4" of water in the small basement we have (storage). Believe me, I keep an eye on it constantly.

plymster said...

Damn! Look at the breakouts Meshugy posted!

Vashon Res Median Price: -32%
KC Res Active Listings:    +30%
KC Res Closed Sales:       -15%
KC Condo Active Listings: +50%
KC Condo Pending Sales:    -6%

I'm cherry-picking a little, but still, this doesn't look like a "hot" market to me.

synthetik said...

Spotlight - Washington

www.thehousingbubbleblog.com

“‘It takes about 18 months before a slowdown works its way through the market,’ Roberts said. ‘People will hold on to their Realtors’ license while they look for other alternatives.’ In the home mortgage industry, things seem to have slowed down a little, said Jeremey Beck, a mortgage loan officer at Horizon Bank.”

“Roberts said there is a glut of homes in the $350,000 to $450,000 range. ‘That will be a tough price range to sell in the coming months,’ Roberts said. ‘I’ve never seen so many homes come on the local market in that price range.’”

S Crow said...

Lennox Scott mentioned that sales were down last Dec./Jan. due to the Seahawks playoff and Superbowl run.

I thought for sure we would be hearing about the continuing softness in sales due to Alexander's broken foot. I'd guess he is choosing his words vewy, vewy carefully.

Just poking fun....no e-mails please.

;>

MisterBubble said...

"Seattle's median con/res price is back up to $420K...that was the peak back in July. Amazing...."

For once, I agree with you, Meshugy. It is amazing that median prices are up in a market where sales are off, inventories are skyrocketing, and pending sales are falling off a cliff.

(...of course, I also know that a rising median can be misleading when sales are slowing, so I've managed to temper my amazement with logic.)

redmondjp said...

Synthetik--here's what I found particularly interesting, from that same post:

" . . . Overall, there are currently about 1,100 real estate agents in Whatcom County.”

From this website I obtained the following statistics for Whatcom County:

2005 estimated population: 183,471
2004 No. of housing units: 80,637 (this may include apts.)
2000 No. of persons per household: 2.51
2003 Median household income: $41,916

Doing some basic math:

One RE agent for every 73.3 housing units.

One RE agent for every 167 people in the county. If you narrow this down using some of the other data from that website, you can get this number much smaller, as a large percentage of the population, such as those under 18, are not going to be purchasing RE.

Is it me, or do these numbers seem totally out of whack? A LOT of these RE agents must be part-time or semi-retired--there is just no way, with that many realtors, in an area with that low of a median income, that they can be making much $.

I predict that the sharks will soon be feeding upon themselves--one percent commission, anybody?

Peckhammer said...

"Kaleetan said, Building Permits.... New Permits to Build would also be considered one of the best indicators."

Of what? Projects that won't be completed?

The striking contrast tells the tale of a housing bonanza turned bust. Today, the number of unsold homes in the area has soared to almost 46,000 from just a few thousand in early 2005. And builders are pulling back as fast as they can.

dalas said...

859 is the actual number of agents according to data from NWMLS as of Oct 2006.

Keep in mind, having a license register in that database. Very inaccurate number and misleading.

dalas said...

new permits still have no bearing in the heart of KC.

synthetik said...

from a commenter "Annata" on thehousingbubbleblog.com responding to media comment:

“The rise in housing prices came later to this area than other parts of the country, so there wasn’t the same kind of run-up. Now we’re returning to more normal circumstances. Prices will level off, but I’m not anticipating lagging demand.”

I have always thought that the Portland/Seattle area got into the bubble a little later than most of the country and that some sense of pattern recognition might make the bubble a little less severe here. What I find amusing is that the current conventional “wisdom” in the Pacific Northwest is exactly the same flawed logic the rest of the country used about six months ago. (“Sure, sales are down, but that means prices will level off, not fall.”)

It reminds me of a Dilbert character with no sense of pattern recognition who gets zapped by lightening every five minutes and says, “Ouch. I’m glad that won’t happen again.”