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Saturday, December 05, 1981

Tuesday Open Thread

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

20 comments:

Grivetti said...

The median home price barometer is...

for shi'ite

As the ratio of expensive homes to lower-priced houses sold increases, median prices over the entirety of the housing stock will rise even if prices on all individual houses are falling.

it is misleading to talk about "the housing market" as if $2M homes were in the same market (interchangeable with) $200K homes, because they are not. The bottom-line is that misleading metrics should be avoided, and it is wrong to use median house sale prices to reach any conclusion about price trends in housing values

Kinda like taking the temperature of a terminally ill cancer patient to judge his/her health...

MisterBubble said...

...what's more, you can't rely on per-square-foot prices to correct for this phenomenon, because on average, bigger homes sell for less per square foot!

The way that statisticians deal with this conundrum is by examinining multiple statistics -- median, mean, standard deviation, etc. Ideally, of course, you don't rely completely on summary statistics -- you look at the overall distribution of sales themselves.

Of course, the NWMLS doesn't want you to have this information....why is that, do you think?

JimmyH said...

Absolutely. Also, it seems like there should also metrics that seperate out land price from home price (as in price = home + lot). Something tells me that prices in Seattle are way out of whack. I've seen $400k or more disparities between homes sold in the same area on similar sized lots on the same street. Sure maybe the $800k home+lot is 'nicer' than the $400k home+lot. But how can it be $400k nicer?

Anonymous said...

I've been lurking and reading this blog for a few months, but I have a question for you...

What effects do you expect to see on the housing market when the fed decides to drop or hold interest rates in a few days?

LoneLibertarian said...

If the fed drops interest rates watch out for massive inflation.

If they hold interest rates watch out for inflation.

FURTHER, the FED discount rate is not tied to mortgage rates. The 10 year T-Bill is more closely related to mortgage rates.

The fed can only do so much, personally I don't have THAT much faith in the government controlling anything.

Regardless of what the fed does there are still between 1-2 trillion dollars in subprime ARM's set to readjust between now and q4 of 2007. The Fed cannot control that.

deeplennon said...

What effects do you expect to see on the housing market when the fed decides to drop or hold interest rates in a few days?

Probably another hold coming. So more of the same..

I suspect we'll see holds through at least the first half of 07. There will likely be serious pressure for rate relief outweighing inflation risks by then. Should be interesting and ugly. If this was Greenspan it'd be at 0% right now.

Matthew said...

The Fed will not drop rates. The dollar is at an all-time low vs. the Euro. BB will keep rates steady for some time.

Terry said...

grivetti,

The article that you posted a link to is excellent. It's one of the few I've seen where an explanation with details / examples are provided on how median sales price statistics can be misleading.

Anonymous said...

http://streetlightblog.blogspot.com/2006/12/house-price-changes-in-us.html

quote: "Instead of focusing on the national average, however, I much prefer looking at the house price data city-by-city; real estate markets are quintessentially local, and the national average obscures most of the interesting bits of information about the US housing market."

Look how they all move in similar directions. Bubblicious!

Oh, do check out the second chart in the article - the home price graphs for several major interior cities. Late to the party, but they might suffer awfully in the case of a contracting economy.

Peter Taylor said...

What effects do you expect to see on the housing market when the fed decides to drop or hold interest rates in a few days?

I agree - no way the Fed will reduce. Hold steady most likely because, wait for it, high energy and housing prices are having the same effect as raising interest rates on cooling the economy! Makes perfect sense, doesn't it? Keep interest rates low, but reduce the buying power of the middle class by holding wages steady. Big oil doesn't mind though - the middle class still has to drive and heat their homes.

There was a front page article in the WSJ last night on the falling dollar, so there's lots of hand-wringing going on. Bernanke's trying to softly land this 747 with four engines on fire and no landing gear on a residential street with a retirement home on one side and a preschool on the other. We'll see how that works out for him in 2007.

WaitinginMarysville said...

Even if the Fed did lower interest rates, which I doubt they will do at this point, it is unlikely to have much effect on mortgage rates. The yield inversion shows that the market expects the Fed to lower interest rates, not necessarily right away, but in the not too distant future, and the market has already lowered long term rates in anticipation of the event.

plymster said...

What effects do you expect to see on the housing market when the fed decides to drop or hold interest rates in a few days?

Holding will result in a very bad recession. Dropping rates will result in very high (perhaps hyper-) inflation and a very bad recession.

The Fed is claiming that they're concerned about inflation and nobody's buying it anymore. If they can't use rhetoric to keep people invested in the dollar (see recent loss of confidence in the dollar), they'll have to use action.

I don't see the Fed dropping interest rates. In fact, as soon as the dollar slips a bit more, I'd expect to see them thinking about raising interest rates, not lowering them.

Matthew said...

I don't think that BB will drop rates even in the near future. Oil is only going to rise from here, wages are stagnant, manufacturing is down, and the dollar is getting massacred. BB is supposedly an inflation hound, his last few statements he has warned he is watching the inflation numbers closely. My guess is that we will see a hold on rates for some time.

Matthew said...

plymster, I think you were reading my mind!

Matthew said...

I also think that Wall Street is very frothy right now. They seem to be overracting to every bit of good news and ignoring the bad.... Seems very 99 esque.

Fasten your seatbelts!

Matthew said...

Late payments on high risk loans jump

This year is on track to be one of the worst ever for subprime loans, with 80,000 borrowers behind on payments, newspaper report says.

Matthew said...

I think I may live in the same building as Trackbike and I think he may be a 80 year old woman!

The other day I was riding up the elevator of my condo in Belltown (yes Trackbike I am renting a condo in Belltown despite your thoughts that everyone there OWNS). 3 of us are in the elevator and some old lady asks the guy next to me "Do you own or rent?" he replies that he owns. She says "GOOD!" Then she looks at me and asks the same question. I ask her why she wants to know. She says she is doing a "survey". I tell her I am renting. She gives me a scowl. I get off the elevator and she tells the guy that she has been living there for 9 years and most of the people in the unit are owners not renters and thats a good thing.

i've spoken to quite a few people since I have moved in and I think she would be suprised to find out that more people are renting there than she thinks.

Trackbike, are you really the 80 year woman????? Are you taking a survey?

Grivetti said...

3 of us are in the elevator and some old lady asks the guy next to me "Do you own or rent?" he replies that he owns. She says "GOOD!" Then she looks at me and asks the same question.

Hahaha... besides telling her it was none of her damn business. I would have told her, "My 18 yo. girlfriend and my band's roadie are renting our studio from some guy in Florida"

Anonymous said...

gene8073 posted a comment to the article containing:

"I'd be interested if you have any good way to measure the actually drop in existing housing prices."

I just started watching the housing market (want to buy, but afraid to do it), so I'm not very adept at analyzing / reading the statistics yet.

Anyone out there have the answer to gene8073s question?

Anyone have access to data that is more meaningful?

rentalbliss said...

has anybody seen this yet pretty funny.

http://www.flippernation.com/