Today I was shopping for a large capital expense item for the office and met with a software vendor and the owner of a hardware dealer up in the Everett area. The software vendor was showing his wares in a presentation and his accent was thick. Obviously the gentleman was from Britain. He asked what line of work I was in. I said, “escrow business.” Anyway, that broke the ice big time and we all must have talked for about 30 minutes straight about the real estate market GLOBALLY. This gentleman from England can’t sell his place, can’t refinance because of lender tightening there as well and…..drum roll please…..guess who his lender is?
Yep, Northern Rock.
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6 responses so far ↓
1
S-Crow
// Sep 26, 2007 at 5:24 pm
In addition to Bear Stearns, maybe Berkshire Hathaway should also add Northern Rock to it’s possible investments.
2
notabull
// Sep 27, 2007 at 7:51 am
S-Crow,
Given your line of work, could you perhaps comment on the reported >40% reduction in sales volume for the first few weeks of September YOY? Have you seen this in your business? It would be interesting to get your feelings on the trends in the business. I hope you’re business will be OK - I know I’ll be using you guys when I get back into the market.
Also wondering about the financing you’re seeing. How much down-payment are people putting up these days? What kinds of loan programs are out there, and have you noticed a significant change?
Apologies if you’ve addressed this elsewhere and I missed it.
Thanks!
3
Dan C.
// Sep 27, 2007 at 8:21 am
I just returned from Scotland (watching the rugby world cup!). Same story all across Edinburgh and Glasgow. Prices have skyrocketed in the past 2 years (bubble has been shorter, but steeper), in some places almost 100%. A two bedroom single family home in the outskirts of Edinburgh, built in 1850 (new by their standards), will run you somewhere around $600,000 U.S.
I was there during the Northern Rock bank run, quite interesting to see the lines…can it happen here?
4
on topic
// Sep 27, 2007 at 8:40 am
Australia and NZ magazines have been complaining about housing affordability for the last two years as well.
The differences there are that they never got quite as bad about lending standards and crazy loans, and _nobody_ there uses fixed rate mortgages. These loans just don’t exist. The normal loan is 30 yr, fixed for the first 3 years, floats after that, so _everybody_ will feel it if/when interest rates go up.
China is in the middle of the biggest boom or bubble as well. It is harder to tell which they are looking at, since it is a transitioning country. But good to keep in mind since they buy a lot of our money.
Point being, what we are talking about is an international credit bubble. All of the modern (ie credit using (so, theoretically not Muslims since credit is against their religion)) world is being affected.
The only question here is how Seattle specifically will respond to these international forces.
5
S-Crow
// Sep 27, 2007 at 9:40 am
Notabull-
yes, business is down yoy for us, particularly refinance work, but that should be no surprise given the market and August’s festivities.
The quality of loans has really improved: the borrower pool whether buying or refinancing is of higher quality imo. There are still a good variety of ARM loans out there that are being used, but again, the qualified pool using these are probably in the upper tier of borrowers.
As far as our small business is concerned, at this point the reality is that I’m in a PAC MAN mode (yes, the game Pac Man). Where there is turmoil, there is opportunity. Check in with me as the year unfolds and into 1st quarter next year and perhaps my tune will change.
6
curioser
// Sep 28, 2007 at 6:11 pm
I work for an Environmental Consulting company doing what basically amounts to environmental appraisals. For us, work has definitely slowed down in the last month, with this year in general having been relatively slow compared to the last couple. Our work flow is directly related to the amount of transacation occurring.
We also had a couple of weird weeks before the fed lowered the rates but after some of the financial "chocolate" started hitting the fan; that interval was real slow with those lenders biting on seeming to go for increased levels of due diligence. Fed lowered the rates, and now our reduced staff is figthing to keep up.
…and all the while gold climbs and the dollar sinks.
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