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Monday, February 01, 1982

02.01.2007 - Thursday Open Thread

This is your open thread for Thursday, February 1, 2007. Please post random links and off-topic discussions here.

11 comments:

Grivetti said...

From the 'Times: Fewer can afford to buy a house in King County, report says

Median incomes
2003: $59,200
2004: $60,400
2005: $60,700

Median K.County Home prices
2003: $265,000
2004: $289,950
2005: $332,000

Yeah... so much for 'strong job growth' saving the bubble...

Where's the difference made up? Well purchasing power seems to still be strong, retails still humming along around the Puget Sound.

The difference? Exotic financing, pure and simple, dicey loans, cash-out refi's, HELOC'd to the hilt.

I still haven't a clue why the 'jobs' arguement still has legs, some one please clue me in?

Eleua said...

This might not be what you are looking for, but here is why we keep hearing about 'jobs.'

The Lamestream Media know that it is the only argument that sounds good, and the sheeple won't bother to ask any hard questions.

How anyone can not notice how the cash-out refi money is floating the economy, and how real estate IS the economy, is beyond me.

My guess it has to do with what someone wants to see, rather than what they see.

Just another unsustainable, bubblistic way of life that will end in tears, recriminations and a big lesson that doesn't get learned.

btw, I wonder just what it will take for the US to quit referring to itself as the smartest nation on earth?

Kaleetan said...

"I still haven't a clue why the 'jobs' arguement still has legs, some one please clue me in?"

Just look at it from another perspective to answer your question.

Could you think of a scenerio where a strong job market would be bad for the housing market?

If people move here from other states to work, would that harm real estate?

Do areas with horrible job markets ever have rising housing markets?

Grivetti said...

Could you think of a scenerio where a strong job market would be bad for the housing market?

I'm not looking at the touchy-feely Fox News-esque talking points reasons here, I'm looking at the quantitative affect and rational.

Consumer A is purchasing Product B. This is the basic UNIT of transaction. If Product B changes value then inorder to insure the basic UNIT is maintained, Consumer A must change with it. Ergo, if Product B spikes in price, Consumer A must change to accomodate that change. If the basic UNIT is maintained year over year (continued strong sales), than Consumer A is modifying themselves to insure the transaction... enter creative/exotic/suicidal financing.

And this, kaleentan, is unsustainable. Something's got to give.

disgruntledengineer said...

"Could you think of a scenerio where a strong job market would be bad for the housing market?"

If the "largest" local housing market consisted of homes in the $350,000-$500,000 range, and the "strongest" local job market consisted of labor-oriented, service jobs, then the local employees would not be able to afford their local residences. I think that would be bad for the local housing market.

"If people move here from other states to work, would that harm real estate?"

If a large influx of realtors, migrant workers, and large amounts of people that move here that can't afford to buy the local real estate, will harm real estate. Or, using the local current situation as an example, if a large influx of people move here that actually can afford to buy the local real estate, and if these people, along with the people who sold them their houses, if this combined group of people is not enough to support ALL of the new local real estate (since the local residents surely can't support or will simply move themselves), then real estate will be harmed.

"Do areas with horrible job markets ever have rising housing markets?"

Compton, CA (last 5 years), Detroit?, Boise?, Ballard?

Matthew said...

Front page of section B in todays PI:

Housing takes a bigger bite out of people's budgets

Cohen with back to back days! I'm a fan!

Alan said...

Could you think of a scenerio where a strong job market would be bad for the housing market?

How about a paper factory moving into a vacation resort area?

officeboy said...

If you had the opportunity to buy something brand new today at an 22-27% discount from very recent comparables (depending on which comps you pick). Would that be good enough?

Assuming you could make the payments with no problem, and it would be built to your specs.

disgruntledengineer said...

"If you had the opportunity to buy something brand new today at an 22-27% discount from very recent comparables (depending on which comps you pick). Would that be good enough?

Assuming you could make the payments with no problem, and it would be built to your specs."

Absolutely. According to Tim's chart for his other post today, appreciation since 2000 has been ~50%. Thus, a ~30% reduction from 2005 prices would bring us back down to 2000 prices, which IMHO is what prices should be at right now, considering the rental data from the same chart.

Eleua said...

disgruntled,

Your example assumes that no other negative economic fallout occurs with a 30% reduction.

I would submit that if RE moved backwards by any significant amount, the economic fallout would accelerate and deepen the pain. Depending on your priorities, buying at 30% could be catching a falling knife.

MisterBubble said...

"Could you think of a scenerio where a strong job market would be bad for the housing market?"

Logic never dies: it only gets tortured.

Proving that a strong job market implies a strong housing market (which you can't do with an appeal to ignorance, BTW) does not prove that this housing market is caused by a strong job market. AKA: "Affirming the Consequent". Logical fallacies 101.