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Sunday, December 27, 1981

Wednesday Open Thread

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

22 comments:

Tim,Vic and Mr.B said...

How does one find out the coresponding numbers on the MLS sheet, ie area 300, 310 etc....and what neighborhood that is?
thanks for your help.

FinanceGuru said...

http://online.wsj.com/article/SB116718612051760179-1kOYtVpI9bkIeTZGVYOq0CroXiY_20071227.html?mod=crnews

WSJ - Prices Perk Up
As Jobs Return
By MAURA WEBBER SADOVI
December 27, 2006; Page B4

This article on the Seattle Market is extremely positive and is showing that the market in this region is still strong! This indicates that outside investors are just starting to plow money into this region. Good for those that own property.

BTW: That also means that renting will become more expensive as demand continues to outstrip supply.

Also for those of you that support the CAO (restrictive land management) and complain about high housing prices have no right to, as the less land there is availabe to develope the higher the price will be. If people in Seattle truely wanted housing prices to decline they should have voted for I-933 in the past election, which would have allowed 10% more land in the region to be developed. Its an oxymoron, liberals in Seattle cant have it both ways by complaining about high prices and restrict growth at the same time,lol.

MisterBubble said...

tvlc&mb:

The Prudential NW Real Estate web site has a table of NWMLS listing areas in their search page.

Isn't it odd how the NWMLS seems to hide this information from users? Don't look behind the green curtain, friends. The Great and Powerful Oz will be displeased....

Tim,Vic and Mr.B said...

thank you Mr. Bubble. Very very helpful. It is funny how the Wizard attempts to hide behind the curtain. Thank God for the little totos of the world.
those numbers sure mean a lot more now and to see some of the drops in prices and rises in inventory in some of the key areas is very enlightening.

Eleua said...

financeguru,

If investors are plowing more money into the PNW, they are creating more non-owner occupied housing.

If that is the case, how do rents go up in the face of increasing supply?

FinanceGuru said...

Eleua,
That is a very good question and there are several parts to it. First of all outside investors are just starting to come to the Seattle market (read the well done WSJ article), as the Cali, Florida, and North East markets are slowing. However, most of the investment is in commercial (not residential), which is actually better for the region since it doesnt tend to initially impact individuals as directly. Second, by commercial rents increasing it causes the equilibrium of real estate investment in commercial to residential to widen. As commercial investments become profitable and increased capacity creates demand for jobs in the city. Then those residential condos become increasingly profitable the higher the city density becomes (has happened in all large and growing cities). Overall Im saying that by creating more commercial demand it increases the demand for workers to be close to work...which is why I bought a condo right behind the convention center this summer. As the city of Seattle allows taller commercial buildings downtown more workers will demand to be closer to the city and reduce their commute. I actually walk to work downtown and to school (SeattleU MBA program).

Also there has been positive job growth in this region (as shown in the WSJ article), thus increased demand by workers is almost matching the increase in residential supply.

Eleua said...

financeguru,

I hope your investment goes well. There is a well written article which tends to rebut your idea.

The title is "Debating the Flat Earth Society." The premise is that commercial real estate investment is more hope than reality, and there is no reason to expand when residential is declining.

Let me know what you think.

E

FinanceGuru said...

Eleua - The article you reference is very interesting and has some relavence, however both sides made good arguments. If rental rates rise, then the prices of the buildings are more profitable and can be sold at higher prices.

This article in the Seattle PI this morning backs up the WSJ article yesterday. Overall this region is so strong due to the increase in jobs that the buildings in Seattle and Bellevue are practically full. The new supply coming on over the next few years is still not enough to bring the market back into equibrium. This is also true for the residental market, as the rate of new condos being sold is slowing it is still a solid market…just not an overheated market like the past few years.

http://seattlepi.nwsource.com/business/297480_realestate28.html

FinanceGuru said...

http://seattlepi.nwsource.com/
business/297480_realestate28.html

MisterBubble said...

Financeguru...allow me to augment your MBA education with a short course on logic and argument:

Despite your repeated appeals to authority (a logical fallacy, no matter how much you happen to like the Wall Street Journal), your current arguments are nothing more than re-hashes of media sound-bites that have been repeatedly and carefully considered in this forum:

Strong jobs? uh, not quite strong enough.

Inventory? Not as tight as you think it is.

Demand exceeding supply? Bzzt. Try again.

I could go on.

Before you post again, please go to the front page of this blog, and read through every selected post in the right-hand column (you know..the ones that Tim has helpfully labeled with "READ TEHSE POSTS".)

While reading these arguments, note that they make use of data (factual information), instead of the "expert opinion" of reporters and people with vested interests in real estate.

Now, look to the articles that you have cited. Try to separate the "facts" from the "opinions". Meditate on the differences between the two. For bonus points, try to discern sources of opinion that may be biased -- does an opinion from a Realtor, for example, deserve the same level of consideration as that of an independent economist?

Once you have done these things, and you understand why arguments based on facts are better than those based on opinions, I believe you will find many benefits: you will get better grades, you will dress better, your skin will be clearer, and girls will like you. You'll also win the lottery, and find eternal happiness.

(See? Opinions are great, but they're not the same thing as facts.)

meshugy said...

Hi Bubbles,

Actually, those articles that Tim wrote are all pretty old now. The jobs article is from May...and since then jobs have exploded to the point that there isn't enough office space to house them all. Hence the latest reports on the booming commercial real estate market in Seattle.

The inventory article was from October...and since then inventory has plummeted and sales actually picked up. So Tim was wrong on that one as well. If you look at the current situation, you can see the Seattle market has been incredibly resilient. Tim's predictions in those articles were at best wishful thinking.

FinanceGuru said...

MiserBubble - Dont belittle me with your sarcastic tone. I have read the majority of The Tim's posts. However, you have to look at the whole picture. The articles I have posted show facts, and Meshugy actually posted the same article on the post above this one, lol.

Strong jobs? The Seattle market has had consistently stronger job growth than the rest of the country, 2007 job growth estimates from the govt for the Seattle region is 3.5%. “Growth states: Arizona overtakes Nevada Washington ranks 12th highest % change: 1.65% and 7th highest in actual growth (state's population rose by 103,899 in 1 year ).” About 60k of those in the greater Seattle area.

Inventory? (From PI article on Friday) “But homes in the Seattle-Bellevue-Everett area increased 17.2 percent from a year ago -- ranking 22nd among metro areas nationwide -- and 3.7 percent from the second quarter of 2006. On Tuesday, analysis and forecasting firm Global Insight reported that the number of overvalued home markets fell from 66 in the second quarter of 2006 to 63 in the third quarter, and the percent of homes deemed overvalued fell from 21 percent to 17 percent during the same period.”

The articles that I referenced over the past several days have been fact based articles. The WSJ article mentions that rents have been rising significantly for commercial real estate in Seattle & Bellevue (with a 4.4% vacancy rate, historically over double that). Also mentions that outside investors are just starting to shift money into the Seattle market, thus the market has not been as tainted my outside money as most parts of the country. This means that prices have a few more years of strong growth until money starts to flow out of the region.

More Facts “The indices themselves are published monthly here: http://tinyurl.com/tbjfq
Since there's real money riding on both sides of this, there's incentive for this to be accurate. Here's the month-over-month change for the past year (through October) for Seattle:
1.04%
0.90%
0.79%
0.97%
1.42%
1.66%
1.49%
1.70%
1.21%
1.04%
0.68%
0.39%
Hey Meshugy, was actually using you as a reference when responding to Mr. Bubbles and see you beat me to posting and was about to mention that those were old articles, lol.

wreckingbull said...

Hi Meshugy....

Actually, those articles that Tim wrote are all pretty old now. The jobs article is from May...and since then jobs have exploded to the point that there isn't enough office space to house them all. Hence the latest reports on the booming commercial real estate market in Seattle.

Companies don't buy residential real estate. Their employees do. Do you have any data that shows this reported stampede of new Seattle workers can actually afford to buy residential real estate in Seattle?

So far, Tim's affordability article is the best thing I have seen on this topic. No one else seems to address this issue. All I hear is 'strong job growth'. Can you show me some 'strong wage growth'? When that wage growth catches up to real estate, I will listen.

By the way, I hope these new Seattle workers have good credit and a good chunk of change stashed, as the future of sub-prime lending is not looking good. Based on our negative savings rate, I doubt it.

plymster said...

All, I apologize in advance for this extensive post.

Thanks for the link to the S&P Home Price History, financerugu. It's interesting to graph out that data and compare Seattle to other areas (especially those ahead of the Pacific Northwest in population growth) and see how badly they're all collapsing.

It's also interesting to see monthly data going back to 1987. You can see the trendline behaving normally until around 1997 (the tech bubble), and then take a huge jump in 2004 (when interest rates went up, but ludicrous exotic mortgages really took off).

You can also see the other markets all clearly taking a marked and unprecedented dive in the past year. You can even see how Portland, Oregon (not exactly a hotbed of jobs activity) has been comparatively tracking Seattle's housing prices, showing that Seattle's not all that "special", and suggesting a regional cause for the sustained housing frenzy.

I do have a problem with some of your post, however: "Inventory? (From PI article on Friday) “But homes in the Seattle-Bellevue-Everett area increased 17.2 percent from a year ago..." -- Odd. The Seattle PI article is purely about price and never mentions inventory. That's pretty disingenuous of you. It did say, "Odds are high that national house prices will decline in 2007; the first decline in nominal national house prices since the Great Depression". Somehow, Moody's doesn't seem to think a national financial catastrophe like the Great Depression will have a national effect (which seems a bit short-sighted to me).

Inventory from the NWMLS is available on Tim's blog, and currently stands up 27.72% from last year. Sales are down 14.22% from last year.

Then you launch into a spiel about commercial real estate being strong for a few more years. I don't see the connection to residential RE, since these are zoned, built, and financed differently. It's interesting to note that in the PI article you referenced earlier, all of the data is sourced from Grubb & Ellis, a commercial RE broker (biased data?). It also states that "Lincoln Square in Bellevue... is already 100 percent leased to Microsoft and Eddie Bauer...".

The only reason these guys rent is to house temporary staff, or to expand, and neither seems bent on expansion. If MS and Eddie Bauer are looking to expand, why aren't they breaking new ground? Here's a piece on Eddie Bauer. Boeing clearly isn't looking to expand (factual, on-topic article from the NYT).

So we have:

*Prices falling nationwide at levels not seen since the Great Depression.

*Seattle Inventory up and sales down YoY.

*Financeguru points to recent articles, but lies in his post about what they say.

*Employers in Seattle/Bellevue/Tacoma hesitant to commit to expansion.

*Commercial RE expansion is being based on large companies who are renting through what they expect to be tough times instead of building.

MisterBubble said...
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MisterBubble said...
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MisterBubble said...

shugy sez:

"The jobs article is from May...and since then jobs have exploded to the point that there isn't enough office space to house them all. Hence the latest reports on the booming commercial real estate market in Seattle."

Prove it. So far, you and the "guru" have linked to a single article on commercial real estate (which is a puff-piece focused on class-A vacancy rates in Bellevue, BTW), and you've extrapolated this single point into a convoluted, expansive thesis on the strength of the Seattle job market.

What you conveniently neglect to mention, however, is that vacancy rates for said office space are hovering around 2001-2002 levels (take a good hard look at the infographic in the PI article to see what I mean). In other words, if office-space vacancy is any indication, we haven't even recovered from the dot-com crash. And yet, you want to use this as some sort of one-off evidence for the Strong Job Market. Yeesh.


"The inventory article was from October...and since then inventory has plummeted and sales actually picked up. So Tim was wrong on that one as well."

So...wait...you think you can just make up facts now? This is a new low for you, shug.

Inventory has not "plummeted", nor have sales "picked up." In fact, the most recent data we have (11/2006), shows that listings are up nearly 28% and that sales are down more than 14% year-over-year. But if you insist on using month-over-month numbers, you'll find that while inventory has fallen about 7% from October to November, a fact which can be largely explained by the observation that new listings have fallen by 29% during the same period (which is consistent with the traditional seasonal slowdown seen in the area).

In any case, your assertion that sales have "picked up" since October is a blatant lie. In fact, pending sales were down by 19% from October to November, and closed sales were down by 12% during the same period.

FinanceGuru said...
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FinanceGuru said...

plymster - Sorry for confusing Inventory and Price in the article, accidently posted before moving it to another section...not intential.

As for the PI & WSJ article they mainly reference Commercial Real Estate (and yes they are financed differently from Residental), however mortgage rates are actually lower than a year ago, which is keeping the overall real estate market going. Only once mortgage rates increase dramatically will there be a housing crunch in Seattle...and not until then.

As for some Facts, real rental rates for Commercial and Residentail Real Esate are rising very quickly in this region. This means that the ever widening margin between renting and owning will start to narrow somewhat...every little bit helps us owners,lol.

Lake Hills Renter said...

If MS and Eddie Bauer are looking to expand, why aren't they breaking new ground?

I can't speak for Eddie Bauer, but Microsoft actally is breaking new ground. In addition to buying/leasing additional buildings in the area, Microsoft has started construction of at least one new building on campus and I believe more are in the works. You can see the new construction of what will be Building 7 on Bel-Red Road east of 156th Ave.

That said, I don't see an increase in jobs supporting the increase in housing prices in the last few years. I am living proof of a decent Microsoft salary and good finances not being able to afford a house without commuting distance without an exotic loan.

seattlechix said...
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seattlechix said...

Tim, can you just delete Meshug's posts? I want to vomit each time I read them.

Thank you Mr. Bubbles and Plymster for taking the time to sort through the crap for us and call it out properly.

P.S. If the Seattle market is so great why is Seattle Eric now upside down and losing money each month? http://seattlerei.blogspot.com/