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Monday, March 01, 1982

03.01.2007 - Thursday Open Thread

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

Be sure to also check out the forums, and get your word in the user-driven discussions there!


FinanceGuru said...

Mr. B, TVB, & Eleua - By sharing a little about your investments it shows that you are putting you money where your mouth's are. Very intersting to see that you all have different methods in doing so as well.

Mr. Bubble - I read over my comments the other day about investments and need to clarify one thing. I meant to say for YTD 2007 I was slightly negative before my extremely profitable XMSR transaction. In 2006 my personal portfolio was up ~21% and 401-k was up ~24% (mainly due to Boeing stock).

Kaleetan said...

has anyone noticed any signs of the financially strapped homeowners in their neighborhoods?

I have seen some signs of trouble in my area. When you pull into the neighborhood the sign that welcomes you says "Pay your yearly dues. Water will be shut off by March 1st" . This is the first year i have seen this.

Also, my wife pointed out that our subprime neighbors have begun to fill up there propane tank every 2 weeks. The truck shows up and leaves after 10 minutes.. Kind of like putting $10 in your car untill payday. This is a sure sign that they are living paycheck to paycheck.

I have also seen about 4 new "for sale" signs the last 2 weeks - all with asking prices that are need of a serious haircut.

This is going to be an interesting spring for sure.

FinanceGuru said...

What is the impact on the Seattle Region of increasing enrollment at UW over the past 10 years? So I went back through the fall data from 1996 - 2006 and found that there are 5,340 more students (a 14% increase). Also there has been a surge of students at SU, SPU, and the vast number of community colleges.

Do these students make a big impact on the rental market? Although they are a small segment of the population, the State of Washington pumps ~$10,000 per student each year for education (overall for all cumulative resources). This also increases the number of highly paid Professors (~$100k at UW, its public information).

The most I paid for rent at WSU was $225/month...anything in Pullman above $350/month is a great place (at least for college students).

I know this is a weak argument and not stating that this is a cause for increasing housing prices, yet mainly wondering how this impacts the renal market around a college campus.

Anonymous said...

that DEPENDS on how much beer they've had to drink.

Slinky said...

Kaleetan, there is a block of condos (converted, of course) about a ten minute walk from my apartment. A year ago, nothing; 6 months ago, there were 3 signs, now there are three signs and two for rent signs in front of this 6-unit building. One of the rental units had a flyer describing the unit...nice, but not spectacular. They were asking $1600/month, which is about $600 too high for that street and more than double what I'm paying for a unit of similar size. I remember a for-sale flyer for that same unit in 2005 for $225,000.

That building is on a corner. On the main street, there are two more buildings that are sprouting sale/rent signs like weeds. Catty corner across the main street is a 30-unit condo conversion that just finished and is sitting empty. No takers. On the side street, there are two more condo complexes each with two or more signs. One complex has about 10 units, the other probably four. The signs read "new price" or "must see inside!" Meanwhile, the lawns and landscaping are unkempt and the buildings have no lights at night.

And then there's the newspapers, with advertisements for leasing a foreclosed house for $300/month.

greenthum said...


Great comeback! I'm still laughing.

FinanceGuru said...

I have a great idea for the "they aren't building more land" argument. How about people start building vertically, as in more than one story at a time...what your telling me this has already been thought of, darn. I thought I had an original idea.

On the Eastside they should abolish the 3 story limit in Redmond (with MSFT building a crapload of short buildings). What they really need in Redmond is "THE GATES TOWERS". Just build two skyscrapers 50 stories tall, one called BILL and the other one GATES. Then we could build down tall condo towers for the workers there. Turn Redmond into Bellevue 2.0. This would allow Redmond to extend 520 all the way around the campus and through in a viaduct along Lake Sammamish to handle the additional traffic and call it a day.

Fact of the day: Bellevue currently has 12 construction cranes making Bellevue the fastest growing commercial market in the Seattle area. Thank God for Kemper Freeman and his innovation of planning for the future!

Caution: Sarcasm may be intended for some of the above statements.

Mike said...

Article today in the WSJ about how "alt-A" mortgages (those mortgages between subprime and prime) are seeing increasing default rates, and how lenders are increasing the requirements to qualify for alt-A. Some interesting stats (data cited from UBS AG):

- alt-A default rates have doubled over the last 14 months
- 2.4% of alt-A loans are 60-days past due
- alt-A loans comprised 16% of all loans made in 2006

deeplennon said...

Yep alt-a is going kaput. You'll find all your non-traditional loans to prime borrowers there. It's the start of the ARM collapse essentially.

The first step on the ladder from the subprime to prime credit crunch is being taken, and it didn't take long.

MisterBubble said...

Anyone notice that the markets dropped again today?

Wanna have some fun? Use the words "structual bear market" in front of your finance guru friends....

Richard said...

I found this interesting - Driving to work through Maple Leaf I noticed the house just north of 85th on the east side of 5th had both a for sale and for rent sign out front.

This house has sold 3 times in the past 3 years. Looking on craigslist, the same contact number was listed for 5 other properties, 3 in Maple Leaf, all purchased in the last 9 months - There were 2 others - one in Bellevue and another in Georgetown.

According to the county records, 4 of these homes were trustee sales prior to the recent purchase. The most recent purchase prices were all WELL below the previous purchase price in 2005 and happened to be almost exactly the amount listed for the primary mortgage on the Notice of Trustee Sale.

Someone has some serious "buying under market" skills! The rentals are all very low yield (cap rates under 4%!), but not sure it matters when the purchase prices were so low.

One of the Maple Leaf homes was bought from an investor that had 7 properties go into foreclosure in 2005 (how the heck does that happen in this market?)

Apparently there are deals out there, the question is how to find them. With all the recent investment activity in negative cash flow properties I wouldn't be surprised (and hope) we see more bargains like these pop up as people run out of cash.

FlipFlop said...

Why don't they tell me the real reason?

So, the homeless guy that has the sign that says, "I won't lie. It's for beer." always gets a buck from me. Why? Because he's telling the truth.

Every real estate agent I talk to tells me the "first step" for me to take before I shop for a home is to get pre-qualified because "I may lose the house I want in this 'fast' market." My usual reply is that I have bought two (one locally) homes in my lifetime - both in hot markets. And I wasn't pre-approved. This still doesn't change their "advice".

Dude. Do they really expect me to believe that they are concerned that I may lose the house I want?! I'm a perfect stranger!

So, I've decided that I will not work with an agent that hands me this line of BS. The first one that tells me that the reason for me to get pre-approved is to protect THEMSELVES from wasting their time with me gets my business.

In my mind, being told the TRUTH is the "first step".

If anyone on this blog thinks I'm being unreasonable, please let me know.

Eleua said...

When the subprime contagion first broke out, it was almost unanimous on Bubblevision that it would be contained. Justification of not hitting the panic button came from the (false) idea that all would be contained in subprime.

Now, alt-A...

Am I just a paranoid, trigger-happy freak, or can anyone else start to see a pattern developing?

How much longer until A paper starts to get hit?

In order to stop the bleeding, housing prices NATIONWIDE need to keep rising (they are not), and interest rates need to keep falling.

See you at the WaMu BK hearings...

Eleua said...

Oops. I forgot a few things...

In addition to rising housing prices and falling mortgages, currency markets need to remain stable, and ARMs need to reset at roughly the same monthly payment.

It would also help if J6P got a wage hike that would help him keep up with inflation and his mortgage.

T,V & Mr.B said...

Finance, "yet mainly wondering how this impacts the renal market around a college campus."

I don't know how it affects the Rental Market, but I'm sure it is doing some good for the Renal Market.