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Wednesday, December 23, 1981

Weekend Open Thread

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

I'm heading out of town for Christmas this morning. Since my parents are still on dial-up (shudder), there will not likely be any new posts of substance until Wednesday at the earliest.

Happy last-minute shopping!

24 comments:

christiangustafson said...

A few things to look forward to in teh 2007:

* The Spring selling season begins April^wMarch^wFebruary 1.

* The first big wave of 2005 ARM resets arrive here, along with teary articles in the PI about doomed FBs and trapped flippers.

* What will be the first big South Lake Union condo project that is cancelled?

* When will the last craftsman SFH in Ballard fall to make way for a set of 8 particle-board townhouses?

* Will the particle-board townhouse warrens on 85th Street N become Jacob Riis tenements, with all the attendant horrors?

* We witness the complete economic apocalypse that is Modern California. It only starts in 2007 and goes downhill from there. How will this affect us?

* Microsoft. Vista, 360, Zune. Nothing terribly compelling in this line-up. When does the cost-cutting commence? Good luck, Eastsiders.

* At least Boeing offers a heartwarming story, at least until the recession gets going. What great fun we will have watching the ridiculous Airbus die.

* The 6-12 month lag is up, and Seattleites start to get it about the housing bubble.

Merry Christmas, Happy New Year. Keep living below your means, and saving your pennies.

matthew said...

The things I am most interesting in seeing in 2007:

1.What will happen with interest rates? With the economy slowing but yet inflation staying uncomfortably high and the dollar weak, what will BB do?

2.ARMs resetting

3.inventory in April

4.RECESSION in the US

seattle long term owner said...

there will be no recession until after the elections... you can bet on that...

unless the republicans smell an obvious defeat, the feds will do all they can to keep the credit bubble for another 2 years or at least let the air out slowly...

after the elections, all bets are off... by that time even the 5 year ARMS from 2003 will reset...

Interest will not go more than a point from where it maxes out this year... we will continue to go into deficit and then we have to start borrowing from china some more...

I doubt any condo projects that are halfway done will be cancelled... with a slow down in the housing, the cost of materials will drop and even if they break even, that's better than losing millions they have already spent...

At worse, condo conversions (to apartments) will happen and stay that way until the next RE cycle...

I saw all these happen through my crystal ball... I don't need proof coz I don't care... I'm staying put in my house for the next 10 years...

Merry Christmas!

BTW, Tim I hope God blesses you and your family, as much as this blog has helped keep my family blessed instead of debtor's prison...

matthew said...

Seattle long term,

I disagree. I smell recession. I don't think the FED will be able to do anything about it. Even if they decide to cut rates, I think we are going to have a full blown recession by 3Q 2007, maybe even sooner.

seattle long term owner said...

I thinks it's anybody's guess when the recession will come... but it's not an if it's a when... 2007, 2008, 2009?

I believe we will see zero growth in the next 12 months and actual negative growth (recession) in 2008 ... although zero growth is just as bad a negative growth when compared to the excesses of the last few years...

Mainstream America does not understand what the US-China trade deficit means... and the FED is facing a tough choice...

they could decide to save the economy buy allowing a recession next week, raising rates and biting the bullet... then plan to get out of the recession and make us understand we can't spend money we don't have...

America has become so used to consuming products (including housing) even when they know they will never be able to afford it (credit bubble)... only a real recession will wake people up and make us start saving again...

but you really think GWBush will let the FEDS do that?

Kimsie said...

Everything points to a recession in 07. For instance the yield curve inversion and the drop in housing starts, which usually happens before or at the start of a recession. Probably a major recession. The Fed already played every card they had to stop the last recession instead of letting the recession do its job and rebalance the economy and they have nothing left in their bag of tricks.

Lowering interest rates worked when housing was already in an upward trend and was not nearly so over priced as it is now, but now that the downward momentum has begun, the Fed won't be able to reverse it any more than they could stop a tidal wave from crashing down.

seattle long term owner said...

On a different note, I figure that as the market turns, more people will sell FSBO than pay realtor commissions and possibly get out even than thousands under...

It won't be a result of desire but rather necessity... people who just don't have the cash to cover the difference or realtor commission but need to sell their home without wrecking their lives...

If I had the time or inclination, I'd buy stock in FSBO facilitating sites and companies...

S Crow said...

Seattle Long Term Owner-

I don't know what rates will do, but I can tell you that there is currently a higher degree of stress within those that work directly in the real estate industy, including myself to an extent. I think recession may arrive soon, if not already here in desguise.

Other observations:

Walking into Home Depot this early evening (Saturday around 6pm)I found 1/2" CDX plywood dropped again in price to $13 and change. Wow. About a 40% haircut from last year this time. (I replaced my roof sheathing last December)

I've never seen SO MUCH holiday stuff STILL ON THE SHELVES: trees, lights, trinkets, etc..and the fresh cut Christmas trees were PLENTY.

I thought that Costco and other stores would be absolutely slammed today. Nope. I've seen lines go back all the way to the products and beyond, but not today (around 1pm. There were only about 4-5 patrons deep all down the cashier lines. In and out of Costco today in Everett in good time. Busy, but not slammed. Noticed a lot of food items in everyones baskets.

The Home Depot clerk checking me out said sales were very slow (Everett store). Initially, I thought ok, fine, they probably restocked Holiday products on the shelves. But his comment affirmed my gut feeling. I also went to Home Depot last week up in Marysville to buy a door and have never seen it so dead.

Alan said...

Relocating to Seattle from Phoenix (Gilbert), and the sale of our home should close on the 15th. We took less FSBO, but found a good buyer and cut out realtors - something the last poster alluded to. This may be the only way a lot of people up there buy or sell without losing too much money. Worked for us here where inventory is the highest nationally. Anyway, we plan on renting up there. We (young single-income family of 5) plan on taking our current, modest (by current standards in the west) equity gain (~$50k), paying off our cars and debt, and enjoying life in Kirkland (or surrounding area - work in Bothell) while we watch the bubble explode/burst/deflate around us. Have really enjoyed the opinions shared in this round table the past few weeks - keep it up!

seattle long term owner said...

I agree with the malls being less crowded... but you should see the line at WALMART... (Yup I shop there, if it's good enough for my neighbors, it's good enough for me...)

I know personally 5 people who are employable and just can't find a steady job at this time... and the unemployment rate is supposed to be low... well flipping burgers isn't exactly much better than an unemployement check...

Seriously I think Boeing's sudden revitalization will make things better for a small segment of the Puget Sound, but for everyone else, the recession is probably already in their minds...

Another observation is how few of my neighbors bothered to put up christmas lights... not sure what this means...

There was a mention somewhere about the car sales index indicating declining sales across the board... and how that precedes a recession...

But it's the holidays and I don't want to talk about the recession as it will come when it does... and my healthcare profession is somehow the last to decline as people will continue to get sick recession or not...

Happy Holidays...

meshugy said...

I think the market in Seattle will slow down in 07, but remain relatively strong. We'll probably see YOY appreciation around 3-6%.

Happy Holidays!

Geon said...

"Another observation is how few of my neighbors bothered to put up christmas lights... not sure what this means..."

I noticed the lack of lights in my neighborhood too--three or four houses near me skipped it this year. Nice to know they are still in the box.;)

meshugy said...

A few predictions from the PI:

There's no place like home, which is good news for us

"This is not a buyer's market," said Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University. "This is really approaching a balanced market."

The year-to-year number of listings increased every month since April, while the number of closed sales decreased in every month since June.

But the numbers from the past few months appear to be more the rule for sales and selection, with the frenzied past two years as the exception.

This November, there were 20 percent more sales and just 4 percent more homes on the market than November 2003. Compared with November 2002, there were 28 percent more sales and 16 percent fewer homes on the market.

"I think very easily by spring this could be an extremely strong real estate market," said Bill Riss, chief executive of Coldwell Banker Bain, in Seattle. He said he was planning on home prices going up an average of about 10 percent in the coming year and about the same number of homes to be sold next year as in 2006.

Analysts say strong job growth will continue to drive demand in the area.

"Really, the driver of the housing costs is demand, which is fueled by jobs," said Randy Bannecker, a consultant housing specialist for the Seattle-King County Association of Realtors. He predicted year-over-year price increases would be 6 percent to 10 percent in 2007.

Crellin predicted slight declines in activity in 2007 and year-over-year price increases that would be down around 3 percent to 5 percent by the end of next year.

Matthew Gardner, a local land-use economist, predicted activity would slow from recent highs and price increases would settle to 7 percent to 9 percent in Seattle and 5 percent to 7 percent in rural areas farther from jobs.
Growth management's limits on developable land prevent oversupply and the kind of construction-industry layoffs that have started elsewhere, Gardner said. "We have not seen that buildup of speculative inventory in the marketplace."

synthetik said...

The US will experience a recession in 2007, it's most likely currently in one already.

The local economy is only as good as Microsoft's ability to maintain their market share (unlikely). Boeing could see problems in a recession for the airline industry -- as oil and energy prices spiral out of control, less people will take vacations and cargo will become prohibitive to ship.

Newly affluent Chinese tourists might make up for this imbalance, but just a few years ago they went from a big exporter of oil to the worlds 2nd largest importer of oil.

So with Microsoft and Boeing struggling in 07-??, what will make up the difference?

I'm buying energy companies and companies that service energy companies - mostly non US ones. Precious metals should do nicely in 07-201? and I'm expecting the bull market in commodities to last until at least 2015.

The stuff we NEED will get more and more expensive (food, gas) and the stuff we want will become much cheaper (flat panels, HOUSING, automobiles, cheap crap from China, etc).

Happy Holidays!

synthetik said...

Mining stocks and other service oriented companies from countries that PRODUCE, mine and supply important natural resources (wheat, soybeans, metals, cotton, etc) will be big producers over the next 7-10 years.

I think the countries that export needed raw materials will do well while "service" countries such as Europe, UK, and US will flounder.

Austrialia, Canada, Mexico, etc, should be good countries to buy currencies or commodity indexes or companies in.

Good luck!

cosmos said...

I am on a similar page as synthetik.

First, people need to understand that inflation is money & credit expansion - and the result can create bubbles -in stocks, in RE, etc. Interest rate hikes are the other side of the Fed's tool bag, but raising interest rates wee amounts while dumping huge amounts of liquidity into the markets serves only as a public-affairs diversion. The money & credit expansion has been rampant and will continue. Not just in the US, but in many countries. The countries that expand their money & credit the least will have currencies that hold value against the ones that expand the most (the US). So the dollar will likely continue to drop, which means one should be holding equities and bonds of foreign companies, or large cap US corps that do global business. Precious metals are also a good hedge, as eventually the world is likely to return to a gold standard (10-15 years away?)

Second, prices of goods can go up or down because of supply & demand, production costs, inflation, or, most typically, a combination of these factors. That is why looking at prices alone does not reveal the true picture of the economy. Energy costs are rising primarily because supply can't keep up with demand. Prices for many imported goods have dropped because supplies are more plentiful than demand, and the goods are being produced in countries where labor is cheaper. As for housing, prices zoomed out of site primarily because of cheap credit (which exists because of the expanded money & credit), as well as the RE industry's fear propaganda (buy now, before prices go up). The fact is that there isn't a supply shortage of homes. check this out

Most people in the US are tapped out, and living paycheck to paycheck, or borrowing to keep up their lifestyle. I even know of a RE agent who spends at least $30K more than he earns - borrowing against his home.

The unemployment figures and the CPI figuers are all smoke-and-mirrors. Unemployment is closer to 12% than 5%, and core inflation is closer to 8% than 2%. shadow government statistics

There will be a end to the charade. I personally think we are in for a depression, not a recession. It will create a brake on the global economy, but other parts of the world will continue on, albeit at a slower growth rate until their citizens get on the insatiable-consumption bandwagon.

Iris said...

synthetik,

Everything would be fine if Europe were a country. It is geographically a continent and politically it is struggling to become an union.

MisterBubble said...

Inventory will continue to skyrocket in 2007, and by spring, the mainstream media will become so sensitive to reader criticism that they will start ignoring paid mouthpieces of the real estate industry (such as the "Washington Center for Real Estate Research at WSU"). By this time next year, articles about panicky sellers will be de rigeur.

Still, there will be no significant price declines in 2007, as everyone will be following the conventional wisdom that the end to the slowdown is "just around the corner."

Meanwhile, Meshugy will continue to post irrelevant point comparisons to prior years ("inventory is only at 1974 levels!"), while ignoring greater trends. He will resort to WOW (week-over-week) numbers when the monthly data looks unfavorable.

SeattleMoose said...

On one of the news boards there was an article about some RE agent in Houston who offered a "free gun" (worth about $500) to anyone buying a home.

One wonders if the gun was just an FB alternative to burning down the house...creepy.

Richard said...

sales were very slow (Everett store

Yeah, as I was shopping online for electronics I noticed that the Everett stores were the only ones that still had the items in stock.

0x029A said...

Drawing conclusions about the national economy based on a weak local holiday shopping season is a mistake IMHO.

We're just recovering from a major storm. I live in one of the hardest hit areas and between hotel nights, generator & gas, meals out, and various supplies I must've blown a $2000 hole in my budget.

Fortunately this isn't a major issue for me. it made a dent in my emergency fund but I'll be OK and I'm still able to buy the gifts I had planned to buy (now if I could find a place with a Wii in stock...)

However I am quite certain this put a lid on a lot of people's plans. I personnally witnessed several people carrying wads of cash and paying cash only which I had never seen in previous years. I am wondering how much of that is in an attempt to strictly limit their spending. Also in a few cases I was wondering if those people might've made the trip straight from the payday loan place to the Toys 'R Us.

Bradley said...

Seattle Times Hints at Reality:

Area's solid economy vulnerable to cracks

Job growth here should stay strong, but the national real-estate slump could change everything.

Grivetti said...

That times article is definitely worth a post all its own...

especially for this oft repeated mantra, stated without one shred of statistical evidence to back it up...

Relative to places such as Vegas, this area's boom has been less due to speculation, economists say, and more due to fundamental growth: people moving in to take good jobs. That will stand the local economy in good stead in 2007.

really? fundementals? ...

Grivetti said...

Ah yeah.... our big bubble savior Boeing to the rescue...mmhhh yeah.

The region's primary supplier of well-paying jobs remains Boeing. Flush with new orders and with competitor Airbus reeling from self-inflicted wounds, Boeing has added 5,900 Washington jobs so far this year, bringing its in-state work force to its highest level since early 2002.

Well, I work at Boeing, am a well paid research and development engineer and guess what? too rich for my blood folks, I'm renting. I've also been working there for 7 years.... so unless the new Boeing hires sign up for some good ole' fashioned suicide financing, that well spring of home inflation is dried up...

also, this article fails to mention, Boeing had shed most of its 2001 jobs by 2002 and we're still a good 10,000 in the whole job wise at the B'