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Wednesday, November 04, 1981

Weekend Open Thread

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

23 comments:

wansuiclay said...

I just found an interesting article in the Orlando Sentinel that reveals that maybe 70-90% of home buyers are finding their own home using various online MILS sources such as realtor.com and others.

http://wurl.us/c43

PugetHouse said...

that's one fantastic commercial for the Sentinel's favorite local agent:

Jerry W. Jackson can be reached at . . .

SeattleMoose said...

Inventory up a bit this week. So far October inventory is holding higher than September.

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%
14-Oct / 10428/ -6 / 43%
21-Oct / 10446/ 18 / 43%
28-Oct / 10374/ -72 / 42%
04-Nov / 10496/ 122 / 44%

Starting to hear ads on the radio for Condos...heard one yesterday for HOT DEALS on Kirkland waterfront condos starting at $379K. Of course it "won't last"....

The other thing I am noticing are the industries that are the first to get hit when things go south (luxury cars, resorts, jewelry, etc.) starting to advertise more. This is an important bellweather and right now...all signs point to the storm of the century.

MisterBubble said...

Last night at the gym, I was flipping through the channels, and came across a sickening condo advertisement disguised as a story during the Q13 10PM news.

I forget the name of the complex (it was on Queen Anne), but they basically used the cnnmoney.com "bubble-proof cities" fluff-piece to lead into a graphic with the date, time and location of an open house for "fantastically priced" condos ("starting at $239,000!!!") that were "sure to go fast."

They closed the "segment" with some witty talking head banter:

Diane: "boy...can you remember when $239,000 for a condominium was considered a bargain?"

Jack: "I know, Diane...these days, anything with four walls and a roof is a bargain!! Ha ha!"

Aren't there some sort of FCC rules on the separation of advertisement content from newscasts? This was so blatant that it should be illegal....

seattle long term owner said...

I saw that one... luxury condos in Queen Anne...

Small little boxes in a very old building... and sale starts today... stand in line outside in the rain or you'll miss out... NOT

Geon said...

Dang! Is this the weekend (month) that all the Cal buyers start feeling buyers remorse? I know I have and I have lived here all my life. LOL.

Torrential rainfall at the moments, just fixed some minor flooding issues, maybe they are finding a few too.

I went buy a new-constuction home in Marine Hill Fed. Way this after during a downpour and the house was nearly flooded. It sets at the low of the street and it had whitecaps flowing over the curb to the house, nearly to the door. The garage door was holding back about 3" of water from what I could see. I saw drainage issues a few weeks ago, with a little rain.

I called the realtor to let her know, then she asked me if I was interested in the house. :) Yeah, right!

Grivetti said...

Most visitors to open houses aren't in the market to buy a new home

...Ssssshocking! But this is Seattle, right? we're different, I thought people are lining up around the block to get a peak at the next under 500K craftsmans?... houses sell themselves around here, why even bother with an open house at all?

synthetik said...

Question: Do you guys go to open houses even though you have no intention of buying?

I personally like it but the wife sees no point in it. She's not good with the delayed gratification thing.

Lake Hills Renter said...

Do you guys go to open houses even though you have no intention of buying?

Nah. Waste of my time. Rather be in the mountains.

MisterBubble said...

Sigh. Just realized that I messed up the talking-head banter.

Diane, of course, said that she could remember when $239,000 was expensive for a condo.

Then they did a live interview outside the condo with Trisha Takanawa. (kidding!)

patriotz said...

a sickening condo advertisement disguised as a story during the Q13 10PM news.

Yeah but Q13 is Fox, isn't it? So whaddya expect? You want news, watch a real station, not that sewerpipe.

Haven't watched that station since ST-TNG finished.

WaitinginMarysville said...

"she could remember when $239,000 was expensive for a condo."

I remember, when the first condo's came out, hearing my mom talking with some relatives about the incredibly high price people were paying for an apartment; $20K.

As for open houses, I did stop at one because I actually want to buy a house on acreage, and I happened to drive buy. The house was built in 1916 and sort of updated. The property was nice with a barn, but I would have wanted to tear down the house and build a new one, but she had it priced like it was a lot nicer home. She counted all the upstairs rooms as bedrooms even though they were about 8 feet square with the ceiling coming in at the top so you could only walk down one side of the room. All this on 5 undividable acres out in the boonies for 500K. She has lowered the price by 20K now but even in this inflated market I figure it isn't worth more than 400K, and in a rational market it would be worth about 250k. (the owner was the RE agent)

dalas said...

rational market? determined by your expertise in appraising farm land?

how are you guys different by jumping on the "other" bandwagon and speculating.

WaitinginMarysville said...

"rational market? determined by your expertise in appraising farm land?"

This is not farmland, this is a 4.67 acre horse property. We have owned similar properties two times in the past. I feel the current market is not rational because prices have reached an unsustainable level by rising far more quickly than incomes.

"how are you guys different by jumping on the "other" bandwagon and speculating."

Speculation is when someone buys and sells something in order to make a profit purely from an increase in value, without adding value to the item. Not buying something because you think it is too expensive is not speculation.

By the way, I have no problem with people speculating, if I thought that home prices were too low in comparison with incomes and rents and were going to go up, I might speculate, too. It's just that I think the prices are too high and will go down.

Christina said...

I was on the phone with my mortgagor asking which was less gouging for the mortgagee: PMI or HELOC, and I slipped something about "housing bubble" -- I got the kneejerk "bubble-proof" commentary from the customer service rep, big surprise there.

Despite my housing bubble opinion and attitude, I have been invited to more housewarming parties this year than I have in the prior six.

A friend told me her roommate was (once again) considering buying a house. I rolled my eyes and my friend said sharply to me: "DON'T GIVE ME THAT LOOK!" I said that she should "accidentally" leave her browser open to seattlebubble.blogspot.com.

I kinda wanna have a bet going with the spouse and neighbours about how long the $548K house will sit on the market, and what its eventual selling price will be. If only I were brave enough to bring my schadenfreude out in the open!

Ardell DellaLoggia said...

A present for you.

http://www.homevisors.com/buckfoley/index.html

S Crow said...

Thanks Ardell. Too funny! :)

synthetik said...

From Mish's blog:

Shell Shocked in Key West

As longtime readers of this board know, I live in Key West where Real Estate tripled, quadrupled, and quintupled in the past 6 to 7 years.

I alerted this board to the most unprecedented "happening" in Key West in my 16 years down here which took place yesterday, Saturday: an attempt to sell 22 homes at auction in a stalled real estate market.

Last week in Key West, only 1 home sold. The week before, 2 homes sold. The week before that either 2 or 3 homes sold.

Mind you that we now have 1400 to 1600 homes on the market, depending on the source of your information. Know too that there are approximately 300 to 600 homes being sold by owner which are not even listed in the MLS.

If we sold 2 homes a week in Key West, this inventory would last, oh, about 14 to 19 years at this rate. And as you will read, the asking prices of these homes are so out of reach for most people that the sellers must now face either foreclosure or drop their prices even more rapidly than they have already dropped.

vfsv said...

Silicon Valley's reported median prices may be holding up. However, we increasingly see evidence of manipulation of the data.

We see it in our own neighborhood:
http://www.viewfromsiliconvalley.com/id277.html

and also in reported county-wide stats:
http://www.viewfromsiliconvalley.com/id125.html

Keep checking
www.viewfromsiliconvalley.com for all the latest numbers and news.

Thanks!

Alan said...

I was trying to post this on raincityguide in response to Ardell's comments at http://www.raincityguide.com/2006/11/02/is-seattle-bubble-proof/, but my post isn't showing up for some reason so I am posting it here. I'm hoping someone can explain to me how trading-up in a hot housing market makes sense. I don't know, maybe my numbers are too extreme.

I do not understand the trade-up argument.

Let's suppose there are three houses selling at $100k, $300k, and $600k. A TU moves from the cheapest to the most expensive over a series of years. Each time he moves the sales prices at each level increases 50%.

He buys A with 20% down at 6% on a 30-year fixed. His mortage payment is $450. Say he pays down $5k of his principal. He sells A for $150 and has $75k to put into B.

He buys B for $450k and plunks down $75k. Now his mortage payment is $2,200. Assuming our TU did not buy way under his ability, he would need to be making over 4 times his previous income to trade up. Let's say he pays down $20k on this principal. He sells B for $675k and after paying off his mortgage he has $320k. Now he wants to buy C.

C has also appreciated 50% twice over and is now selling for $1.35M. He puts down $320k (23%) at the same deal and now has a mortgage of $6200/month -- requiring another tripling of his income.

Trading up isn't really helping him much. Yes, his equity is increasing, but the prices of larger homes are increasing just as fast and the loan amount he will need is even larger.

As for housing prices dropping, thehousingbubbleblog.com links to an article describing a neighborhood in San Diego where prices have dropped 62% (http://www.signonsandiego.com/uniontrib/20061105/news_1h05peak.html). It is in the upper range as you expect it would be, but that means a $3.2 million house dropping to $1.17 million. A $600,000 house dropping by the same amount would be $228,000. I do not have enough confidence in this market to put that amount of equity at risk.

What happens to our TU after he buys C if prices drop $30? He loses ALL of the equity he has built over the years plus an extra $85k. If is loses his job, get sick, or is transferred and forced to sell he goes pretty deep into debt (although maybe that doesn't matter much since he is brining home $15k month to pay for that last mortgage). Still, how else might he have played this?

Our TU thinks that housing might drop 30% and he sells B, but then rents (Gasp!) Say that rent is running at prices equivalent to price he purchased B (which seems to be representative of the Puget Sound areas as far as I can tell). That is he can rent B for the same prices as his mortgage. He sells B, pockets $320k and rents a similar house for $2200. Based on his equity increase only ($195k) he can rent this house for seven years before breaking even on housing (although that assumes no change in rent -- unlikely unless the market is stagnant). If he can get 10% on his money in the stock market, he can live there for 14 years. If the housing market drops 30% anytime during those seven years (or if managed to find a better deal over seven years) he comes out at least $85k ahead.

Of course if the market continues on its meteoric rise, then he misses out on a great investment. But who can really predict any market. His real mistake was not leveraging himself as much as possible when he bought his first house and taking all of the equity increases and pouring them into investment properties (assuming that those 50% increases were over a short number of years). You (Ardell) seem to be espousing the exact opposite of this. If you truly think housing prices are going to continue rising, you should be encouraging people to buy as much as they can possibly afford (sort of like the guy over at iamfacingforeclosure.com -- but with better decisions and fewer illegalities).

synthetik said...

>how trading-up in a hot housing market makes sense

well, this isn't a hot market. If it were a normal market, I think trading up would be perfectly fine - especially if you needed more house.

Trading up in a bubble market doesn't make a lot of sense if you are increasing your debt load. More house, more debt, more exposure.

Trading up or buying anything in this market is darwinism at its finest.

dalas said...

first of all, if you are planning on trading up, you would never consider 30 year fixed.

second, it's really simple math, but normally these people that plan this type of things don't just buy one house.

disgruntledengineer said...

"it's really simple math, but normally these people that plan this type of things don't just buy one house."

Can I see an example of the really simple math? It still sounds to me like you're talking about covering spreads and margins and manipulating ratios between holding costs and projected gains. Either way, it still seems to depend on planning for the house to be an investment. BTW, the wife and I finally went out to be social this weekend and went to the local spot with some friends. At least 3 people I talked to (whom I haven't seen in quite some time) without seeing them for but 5 minutes, talked about how many houses they "owned." There are at least 3 GF's out there that should NOT be investing that are, and I think many other debt people will be trying to "TU" within the next couple of years.
Also, I just want to spread a bit of appreciation to the contributors on this blog. All of the commentors (yes, even the bulls!) have helped to save my wife and I from at least 5-6 years of financial hardship and lifestyle sacrifices. Because of you all, I have been able to spend money on some new (but necessary :) toys over the past year, as well as a season's pass. I fully expect to spend lots of gas money and sick time going up to the mountains this year. Anyone else just dying, waiting for the season to begin? We were so spoiled last year!

And believe me, raking leaves is NOT EVEN on my mind! (Many childhood days growing up here, and endless bags of leaves...)