tag:blogger.com,1999:blog-15223784.post1706704948876687852..comments2023-10-08T06:24:07.089-07:00Comments on Seattle Bubble: Seattle Buyers Not Immune to Credit CrunchThe Timhttp://www.blogger.com/profile/14832570891451659976noreply@blogger.comBlogger52125tag:blogger.com,1999:blog-15223784.post-17089530686945136622007-03-17T20:36:00.000-07:002007-03-17T20:36:00.000-07:00But, I thought that Seattle was special? What wit...But, I thought that Seattle was special? What with Pearl Jam here and all?Jazon123https://www.blogger.com/profile/04045518850738917353noreply@blogger.comtag:blogger.com,1999:blog-15223784.post-16718318916781300002007-03-13T11:53:00.000-07:002007-03-13T11:53:00.000-07:00Mydquin,the answer is based on what REALLY drives ...Mydquin,<BR/>the answer is based on what REALLY drives housing market prices. Real Estate theory tells us that all homes will be sold...eventually. (Does it sound Like I am repeating myself? I am. I will state again for you.) What really drives up prices is liquidity of money. so the influx of foreign money does play a part in this, but how long do you think foreign money will come into a dying market? You can have job growth, and everything else you have listed, but without liquidity, housing will stay at a stable price with-in median income level affordability prices. We here, as almost everywhere else, are well beyond that. <BR/>Liquidity is drying up. Period. Many here and elsewhere predicted it would, at the risk of being chided by the over exuberant. <BR/>There has been way too much speculation in this and every market, too many flippers. Just look at the number of homes on the market currently were purchased recently.<BR/>Myquin. If you think the microsfties can afford to buy the 600k homes, who do you think is gonna buy their home? And who will buy the home of that person? Is this gonna be just a Microsoft pyramid scheme, each selling their own homes to each other until the last ones are left holding the debt? Or maybe you think they can hold two mortgages for an indefinite period of time?The Klondikehttps://www.blogger.com/profile/07641020238476061731noreply@blogger.comtag:blogger.com,1999:blog-15223784.post-82922355184678236732007-03-13T10:46:00.000-07:002007-03-13T10:46:00.000-07:00I posted my answers on today's open thread. I tho...I posted my answers on today's open thread. I thought I would bump it up and see what others would respond with.Chrishttps://www.blogger.com/profile/11477367298896747778noreply@blogger.comtag:blogger.com,1999:blog-15223784.post-69054344323461293152007-03-13T10:27:00.000-07:002007-03-13T10:27:00.000-07:00mydquin,Others have been going point-by-point over...mydquin,<BR/><BR/>Others have been going point-by-point over your arguments, and I'll leave that to them. I wanted to say that I find your focus on the $600K+ market a bit odd. According to <A HREF="http://www.housingtracker.net/old_housingtracker/location/Washington/Seattle/?state=Washington&city=Seattle" REL="nofollow">HousingTracker</A>, $600K is about the 75th percentile for asking prices in Seattle. So you seem to be suggesting that 75% of the market might have problems, but 25% won't. Not only is that implausible, one wonders why the majority of people would care that things are going OK for an economic bracket that they don't belong to.<BR/><BR/>In any case, the housing market is not divided into discrete classes. I agree that people seeking $600K+ homes are not likely to suddenly switch to sub-$400K homes instead. That would suggest a drop of more than 33%. Even if such a drop happened, it would be over the course of years due to the "stickiness" of home prices during a downturn. More likely is that the $600K buyers would start looking at homes around, say, $570K. That isn't a huge drop -- just 5% -- but it is still a drop. Then the next year, the $570K bracket becomes the $550K bracket. And so on for 3-5 years until the market stabilizes.RottedOakhttps://www.blogger.com/profile/15104780876912327961noreply@blogger.comtag:blogger.com,1999:blog-15223784.post-60374174390168186312007-03-13T09:43:00.000-07:002007-03-13T09:43:00.000-07:00I don't know that AB is a troll, but I am curious ...<I>I don't know that AB is a troll, but I am curious how you can get a non-primary residence financed at 5.5% without a buy-down?</I><BR/><BR/>Well, I'm hedging the Troll bet on AB, but 5.5% on a 30yr fixed seems dubiousMatt Rivetthttps://www.blogger.com/profile/06410253453923145045noreply@blogger.comtag:blogger.com,1999:blog-15223784.post-32900266827811479292007-03-13T09:40:00.000-07:002007-03-13T09:40:00.000-07:00to mydquin:1. Whether you want to believe it or no...to mydquin:<BR/><BR/>1. Whether you want to believe it or not, sfw's and condos are both part of the same market. If one drops 50%, the other is not going to stay static.<BR/><BR/>2. Um, right. And I'm sure there are plenty of people holding the down payments necessary to get in on those primes. No, you can not count on them having equity, especially once a correction gets underway. Even people who bought in the 90's are largely maxed out from taking HELOC's.<BR/><BR/>3. This is an unstable relationship that can not persist indefinitely, not with our debt the way it is.<BR/><BR/>4. The scarcity of sfw's in Seattle might allow them to maintain a little more of an edge over condos but they are still overpriced by a lot. Stop trying to think intuitively about what people want in a house and recognize the credit bubble. Prices got where they are all over the country because bums could walk in from the street and get mortgages. I'm not <A HREF="http://pqasb.pqarchiver.com/sptimes/access/1018227861.html?dids=1018227861:1018227861&FMT=FT&FMTS=ABS:FT&date=Apr+9%2C+2006&author=JEFF+TESTERMAN&pub=St.+Petersburg+Times&edition=&startpage=1.B&desc=Investor%2C+or+pauper+or+merely+a+front+man%3F" REL="nofollow">kidding</A>. Recognize the insanity.<BR/><BR/>5. Irrelevant. The job market here does not make Seattle special. If the job market stays strong, it just means the collapse will be slower.<BR/><BR/>6. Well, those who can genuinely afford to be in the $600k market will either buy the same house for less money or get something that is currently in the $1,000k range. Those who can not genuinely afford this will go bankrupt and get out of the way.<BR/><BR/>7. If 33% of the market is using non-traditional, I would estimate that the percentage of $600k+ people using non-traditional was also 33%. There are still many, many speculators in that range.refractedthoughthttps://www.blogger.com/profile/03103011487719993293noreply@blogger.comtag:blogger.com,1999:blog-15223784.post-72132985478844205552007-03-13T09:26:00.000-07:002007-03-13T09:26:00.000-07:00mydquin--I apologize if my comments seem snide or ...mydquin--<BR/><BR/>I apologize if my comments seem snide or snippy. I'm not intending to be a jerk, but have a tendency to lean towards snideness.<BR/><BR/>1. I don't think anyone here has said that housing starts are up. The fact that housing starts are down is a sign that the game is over. The fact that developers are scrambling to complete construction before its too late suggests a climate of desparation about the market.<BR/><BR/>2. The liquidity leftover from the subprime blowup will be used to cover the 1.5 million foreclosures next year. The prime market is hardly the picture of health, since there are still trillions of dollars in ARMS due to reset. <BR/><BR/>3. The wealth of foreigners is dependent on US Consumers buying foreign goods, and the speculative mania of their own nations (or did you miss the 9% crash in China a couple of weeks ago?). Many are suggesting that the Chinese market may continue to correct. Additionally, who is losing all that money in subprime? Foreigners.<BR/><BR/>4. I agree. There is likely to be a premium on SFHs in the future. But this is a gradual global trend, and will take decades to amount to anything significant.<BR/><BR/>5. MS is turning into a dinosaur (unless you think Vista was worth it, or that Zune is a winner). Boeing isn't hiring. In fact I've heard rumors of a contraction once 787 starts hitting the lines. Also, WaMu (a major subprime lender) is a big employer the area, too. When the recession officially hits how will Starbucks fare? Or T-Mobile? Or Nordstrom? Or Eddie Bauer? Or REI? How many construction jobs are there here? How many RE agents? How many retirees are living off the stock market (which also stands to do poorly during the bust) and bonds (interest rates are still pretty low and likely to remain that way due to the liquidity trap).<BR/><BR/>6. I see hordes of people in the $600k market getting into the $400k market because their homes will lose at least 30% of their value since lending standards are likely to return to the 30-year fixed, 20% down, lender requires a body cavity search, and wages aren't rising.<BR/><BR/>7. I would guess that most of the $600k market have been bought up by speculators from California, people who cashed out their equity for Hummers, gas, vacations, and inflation, and new hires at Microsoft pulling in 80-160k household income (which cannot support a $600k mortgage). In short, I don't see much reason to believe that the top of the market would be any less kinky than the bottom. What about all those $600k condos that you see collapsing in price? Do you think that foreclosures and giveaways on those as 20-30 somethings relocate might impact the prime market buyers?<BR/><BR/>In short, I appreciate your arguments, but I disagree with your conclusions. Personally, I think the "30-minute drive to downtown" homes will suffer the most. Neither MS or Boeing are located downtown, and while I don't think either of these behemoths are set to grow much, they are the largest employers in the area. When the S&Ls implode, downtown will become a ghost-town like Dallas in the late 80's.<BR/><BR/>Chris, I'm looking forward to your take on mydquin's arguments as well.plymsterhttps://www.blogger.com/profile/06736724521774848093noreply@blogger.comtag:blogger.com,1999:blog-15223784.post-18609708392680648202007-03-13T09:22:00.000-07:002007-03-13T09:22:00.000-07:00Mydquin, I loved your post. I think it really bri...Mydquin, I loved your post. I think it really brings us back to what Tim's orginal point of this blog was. And inspired me to really think about these points. I started writing a response, but it's getting really long. I'm working on it over the course of work today and will try and post it tonight. In the meantime, I'm looking forward to what some of the more prolific posters on this blog say.Chrishttps://www.blogger.com/profile/11477367298896747778noreply@blogger.comtag:blogger.com,1999:blog-15223784.post-58378352084148134052007-03-13T08:45:00.000-07:002007-03-13T08:45:00.000-07:00I don't know that AB is a troll, but I am curious ...I don't know that AB is a troll, but I am curious how you can get a non-primary residence financed at 5.5% without a buy-down? If so, I'd like to pass on the news to the public that Wash. Federal has some really good financing programs (for those with good credit).Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-15223784.post-63860998889225370342007-03-13T08:36:00.000-07:002007-03-13T08:36:00.000-07:00Folks - AB is a classic troll. Ignore.Folks - AB is a classic troll. Ignore.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-15223784.post-48818765382993689822007-03-13T08:31:00.000-07:002007-03-13T08:31:00.000-07:00NYSE is seeking to delist New Century this morning...NYSE is seeking to delist New Century this morning, and they appear headed for bankruptcy <BR/><BR/>WSJ is reporting that Accredited Home Lenders is seeking ways to increase liquidity, announcing layoffs, and they have "...paid about $190 million in margin calls" since the begninning of the year, of which "...about two thirds of those calls have been received and paid since Feb. 15"<BR/><BR/>Accredited's stock is down over 50% this morning.MikeyKhttps://www.blogger.com/profile/00001011725364022470noreply@blogger.comtag:blogger.com,1999:blog-15223784.post-54041119934049380182007-03-13T08:27:00.000-07:002007-03-13T08:27:00.000-07:00Ab,Congats. I think it's great to see when people...Ab,<BR/><BR/>Congats. I think it's great to see when people have worked hard enough and have been fortunate enough to be able to purchase a second home as a retreat. Clearly you are making an informed decision that you feel is in your best interest. I seems clear that you're purchase is more personal than investment.<BR/><BR/>Contrary to what some have said to you (and I think they are a little jealous as am I) I think your place will be more insulated than others. A home on the water is much more rare than a home in the middle of the city or in the 'burbs. I was fortunate enough to grow up living on a lake and I had so many great times there. Good luck.Chrishttps://www.blogger.com/profile/11477367298896747778noreply@blogger.comtag:blogger.com,1999:blog-15223784.post-33729248647331384572007-03-12T23:59:00.000-07:002007-03-12T23:59:00.000-07:00"Well while Im out on my dock this summer,waterski...<I>"Well while Im out on my dock this summer,waterskiing with my kids, and drinking beers you can sit at your computer waiting to make your next purchase."</I><BR/><BR/>Brag. Brag. Brag. <BR/><BR/>(yawn.)<BR/><BR/><I>"I am only getting older I am not going to worry about the things that are out of my control."</I><BR/><BR/>Then we have something in common: I'm not worrying about you, either.MisterBubblehttps://www.blogger.com/profile/01317437260649857132noreply@blogger.comtag:blogger.com,1999:blog-15223784.post-20526925653896124032007-03-12T23:57:00.000-07:002007-03-12T23:57:00.000-07:00My guess is the amount of foreclosures will feed u...My guess is the amount of foreclosures will feed upon themselves and accelerate as the year progresses.<BR/><BR/>I must admit that I was pretty bearish on all this stuff, but this is really surprising to me just how little resiliance the market and economy have shown in the face of just the leading edge of trouble. <BR/><BR/>This thing is <A HREF="http://anon688.googlepages.com/breakingup.wav" REL="nofollow">coming apart.</A>Eleuahttps://www.blogger.com/profile/08248482892459370601noreply@blogger.comtag:blogger.com,1999:blog-15223784.post-47196585488854457012007-03-12T23:09:00.000-07:002007-03-12T23:09:00.000-07:00Eleua...this was my favorite part..``What we're se...Eleua...<BR/><BR/>this was my favorite part..<BR/><BR/>``What we're seeing in this narrow segment is the beginning of the wave,'' Bies said. ``This is not the end, this is the beginning.''<BR/><BR/>All the predictions IMHO are just as nearsighted as those that were made for Katrina...We'll take far more than a 250B hit.EconEhttps://www.blogger.com/profile/03366126036963024056noreply@blogger.comtag:blogger.com,1999:blog-15223784.post-88311323360885181232007-03-12T22:54:00.000-07:002007-03-12T22:54:00.000-07:00E-I read that article earlier. Over on Mish's blo...E-<BR/><BR/>I read that article earlier. Over on Mish's blog he reported that RealtyTrac has logged defaults at 130,000+ for January 2007 ALONE (up 19 percent YOY). 1.5 million could be on the low end.<BR/><BR/>Brace yourself!Matthewhttps://www.blogger.com/profile/12639743614054159740noreply@blogger.comtag:blogger.com,1999:blog-15223784.post-88036535657140017722007-03-12T22:50:00.000-07:002007-03-12T22:50:00.000-07:00AB,I too remember history. The rise in interest r...AB,<BR/><BR/>I too remember history. The rise in interest rates in the early 1980's was due to OPEC doubling the price of oil. If the housing market deteriorates like some predict, it will take more than the doubling of oil for the FED to raise.<BR/><BR/>The rest of your post makes little sense to me. Can you explain? Thanks.Matthewhttps://www.blogger.com/profile/12639743614054159740noreply@blogger.comtag:blogger.com,1999:blog-15223784.post-85665726931238612602007-03-12T22:42:00.000-07:002007-03-12T22:42:00.000-07:00AB-WOW.5.5% 30yr fixed at Washington Federal (a lo...AB-<BR/><BR/>WOW.<BR/><BR/>5.5% 30yr fixed at Washington Federal (a long term very conservative bank) ....that is a superb rate. Please inform me if you paid to buy down that rate.<BR/><BR/>If you didn't buy that rate, I'll be contacting Wash. Federal tomorrow to refinance. Contact me via e-mail if you wish.<BR/><BR/>Thanks,<BR/>S-CrowAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-15223784.post-81766775434092755602007-03-12T22:00:00.000-07:002007-03-12T22:00:00.000-07:00matthew;the home i purchased rents out for 2700 a ...matthew;<BR/><BR/>the home i purchased rents out for 2700 a week for 12 weeks of the year. <BR/><BR/>I could have paid cash but having my money tied up in a house doesnt make any sense. I get a much higher return then 5.5%. And I remember 1980 - 1985 recession = 13% to 18% interest.Anonymoushttps://www.blogger.com/profile/00605558893697852456noreply@blogger.comtag:blogger.com,1999:blog-15223784.post-35550709995149879892007-03-12T21:24:00.000-07:002007-03-12T21:24:00.000-07:00Here is a little light reading for the evening.Rep...<A HREF="http://www.bloomberg.com/apps/news?pid=20601109&sid=ac7VCasUdPqM&refer=home" REL="nofollow">Here</A> is a little light reading for the evening.<BR/><BR/>Report back to me tomorrow. There will be a quiz.Eleuahttps://www.blogger.com/profile/08248482892459370601noreply@blogger.comtag:blogger.com,1999:blog-15223784.post-49275770800824304512007-03-12T20:59:00.000-07:002007-03-12T20:59:00.000-07:00One more thing, if you bought a house now, with al...One more thing, if you bought a house now, with all the lending implosion, the MSM covering all the troubles in the market, AND you come to www.Seattlebubble.com and you STILL bought a house.... well the sympathy meter will be ZERO when you are underwater without an oxygen tank!Matthewhttps://www.blogger.com/profile/12639743614054159740noreply@blogger.comtag:blogger.com,1999:blog-15223784.post-70846948043790184042007-03-12T20:26:00.000-07:002007-03-12T20:26:00.000-07:00AB,traditionally when the FED feels a recession co...AB,<BR/><BR/>traditionally when the FED feels a recession coming on they tend to cut rates to spur economic growth, not raise them. This scenario may be different due to the plunging dollar, but I do not think that a rate increase is in the near future.Matthewhttps://www.blogger.com/profile/12639743614054159740noreply@blogger.comtag:blogger.com,1999:blog-15223784.post-87358016908678798042007-03-12T19:41:00.000-07:002007-03-12T19:41:00.000-07:00Misterbubble says:”The only way that your argument...Misterbubble says:<BR/><BR/><I>”The only way that your argument works is if you believe that home prices will not drop, and that interest rates will continue to rise. Under any other scenario, it just makes sense to wait.”</I><BR/><BR/>Well while Im out on my dock this summer,waterskiing with my kids, and drinking beers you can sit at your computer waiting to make your next purchase. I am only getting older I am not going to worry about the things that are out of my control. I am however going to enjoy what I do control. Now I have to start monitoring the boating bubble blogs .Anonymoushttps://www.blogger.com/profile/00605558893697852456noreply@blogger.comtag:blogger.com,1999:blog-15223784.post-50276498275048800722007-03-12T19:40:00.000-07:002007-03-12T19:40:00.000-07:00Let's not confuse ARM with subprime and Alt-A. Str...Let's not confuse ARM with subprime and Alt-A. <BR/><BR/>Strong borrower in ARM is not in the same category as subprime or zero down alt-a borrowers. <BR/><BR/>30 year fixed is not the best mortgage scenario in most borrowers' cases.Anonymoushttps://www.blogger.com/profile/00367942847529038943noreply@blogger.comtag:blogger.com,1999:blog-15223784.post-65571238410866381422007-03-12T19:34:00.000-07:002007-03-12T19:34:00.000-07:00Grivetti :Washington Federal Savings locked in las...Grivetti :<BR/><BR/>Washington Federal Savings locked in last Wednesday. 30 year fixed.<BR/><BR/><BR/>matthew:<BR/><BR/>The fed continues to talk recession in my experience that means drastically higher rates. <BR/><BR/>Misterbubble: <BR/>I feel housing prices will go down but I feel the lower interest rate will be the best long term security against that. Whatever value the house takes a dip I feel I will get it back over time. This is a lifestyle decision not an investment. The funny thing is I am far ahead on my lifestyle investments. If I could have purchased at 4.5% I would be feeling even better about my decision.Anonymoushttps://www.blogger.com/profile/00605558893697852456noreply@blogger.com