http://i251.photobucket.com/albums/gg317/bubbleblog/deflation.gif

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Amarjit Sandhu
http://www.500realty.net

For example, the deceleration for the 20-city composite CSI started out at about double the current rate from Jan-06 to Oct-06 compared with Nov-06 to Oct-07. I wouldn’t be surprised if the deceleration for Seattle and Portland slowed at some point. That’s why I think that earliest we will hit bottom is early 2010 and maybe it is more likely that it will be some time after that.

One thing that suggests that the current rate of deceleration in Seattle/Portland could continue until the YOY is deeply negative is that the current slope for Seattle and Portland is similar to the 20-city composite, which has decelerated at this rate all the way to the current -6.1% YOY change, and right now it looks like the deceleration is increasing. At the current rate the Seattle CSI will be about -6% YOY in about a year.

For Johnnybigspenda – the seattle data for C-S only goes back to 1991. OFHEO tracks it prettly closely but only goes back to 1975. Compared to both of those, this is one of the biggest downturns Seattle MSA has ever seen – already.

http://i251.photobucket.com/albums/gg317/bubbleblog/csi_yoy_oct07.gif

A chart showing the predicted CSI through Feb-2010 using the YOY regression is at this link

http://i108.photobucket.com/albums/n11/gpel461/csi_oct07.gif

Admittedly, Viewridge is one of the more desirable Seattle neighborhoods, but… really?

There is no need for name calling. I resent being called a Republican, as I am a libertarian.

Your use of the other names, I assume, is simply your admission that I am correct and that you have no rebuttal. I am used to that. It’s a left-wing thing, I wouldn’t understand, and if I did, I’d have to commit karioki,, I mean, hari-krisna, kari, whatever.

Mr. Buceli’s one minute-hate is now completed – back to real estate. Like I said, 40-50% decline in prices people. Wait for the price to get “real” before you buy your “estate” ha, ha, I crack myself up ….

To commit crimes you stay in Mexico, where for a few pesos the police looks the other way and take you in and out of the crime scene!!!
Please, do you think Mexicans are in the Northwest because they love the weather???
The moment the jobs are gone they move someplace else; these hard working people need to send money back home.
In construction?? those moved a couple of years ago to Louisiana, and here to the Southeast. These people are always moving.
Let’s stick to Real Estate folks.

“Don’t you think that illegal immigrants have a lot more to lose if they get caught?”

Wrongo Keebler. It’s absolutely the opposite. An American citizen could get an arrest record, jail time, possessions confiscated, etc. for doing some minor illegal act (like bringing a butter knife in his lunchbox to school or work or running through a stop sign with one joint in the glove box).

An illegal alien who kills a family while he is driving with 0.30 % alchohol in his bloodstream will get let off by el Presidente Jorge Bush if he has not already been deported to Mexico so that he come back across the Rio Grand next year.

Get out a sheet of notebook paper, children. Compare and contrast.

Yeah, I think the Mexican illegal alien has much less to lose, and there is no doubt that crime would go up in the situation surmised by Mr. Goin 4 It. However, I think many illegal aliens would go (or I should say, “are going”) home as construction work dries up, anyway.

Back to the topic at hand. Heck no, don’t buy a house right now. Prices will go down another 40 – 50 % or so over 5 years

I don’t want any illegal aliens deported. As far as I’m concerned you should just hand out US passports to anyone that wants them. I think the US passport office should simply do a back ground check and hand out citizenship and I didn’t say that all illegals commit crime. I’m only repeating a story that is 100% true. The lawyer in the office next door that defended illegal aliens bragged about his ability to get them deported all the time. So before you hand yourself another Noble Peace Prize – you should read all the posts.

Are you guys scared all the time? Capital crimes? Capital crimes, if I’m not mistaken, are aggravated first degree murder and…oh, that’s right, that’s the only actual capital crime in this state. There were, what, 250 murders in the state last year? I’d bet $100 the vast majority of them were white bread dudes like you and I, not this “vast” illegal population you’re knotting your noose about.

You’ve got to be kidding. None of you people have ever lived in a country with 20% or even 15% unemployment. I have. Seattle looks nothing like that. You can still walk into a fast food joint or video store and get a job on the spot. In an environment with 10+% unemployment they ask to see your college transcripts before they let you behind the counter.

What is your problem? Do you wish for 20% unemployment so bad that you have to pretend it’s happening?

yes. that’s my sense of it. YOY maybe even less than 10% decline, but i don’t think it will end for at least several years. things tend to take longer than we expect though. i’d guess 2011 as the bottom, but given the tendency for markets to drag things out, I would not be surprised if we saw stagnation and declines for even several years after that, maybe until 2015. it took a LONG time to make these enormous bad investments and it is going to take a LONG time for this to get worked out.

Recently on another posting someone called for predictions so I figured now was a good time to make mine. Feel free to point out to me a year from now if I totally blew it, was spot on, or was too big a bear. I hope for the latter, expect the second, and will admit I was wrong if the first comes to pass. Someone ought to compile everybody’s prediction for posterity’s sake.
Not it.

I don’t see the point of using yourself as an example of what a migrant, illegal, construction worker with no other marketable skills or savings does when unemployed. How about a more apples to apples comparison?

Also, illegals have LESS to lose by committing a crime here in the states. “Oh gee golly whiz, your going to send me home now? Shucks!”

As for them going to healthier economies…..what healthier economies? If the US is in the "chocolate"s, so is everyone else.

And as for deporting them? Holy christ!! Do you have any idea of how many of them there are around here? Deportation could be a whole new industry around here.

I like you and your posts Ira, but, if your going to counterpoint me….

I wouldn’t be exceptionally surprised to see 20% decline in some niches (say townhomes and condos) by the end of 2008, but the declines will continue for years before reaches the trough.

20% off peak for a quality SFH will probably get me to start looking in 2009-10.

So something listing now for 750K drops to 600K where I’m willing to buy, and eventually bottoms out at around 500K.

I could probably live with that.

Note the facts, we’re buying less foreign landfill fodder than anticipated, driving our stocks down the tube….new home construction is at severe recession levels, like we’ve never hardly ever seen before. But we’ll continue to buy junk and fill our houses and landfills with it?

Maybe we should push our cars off cliffs so we need new ones?

http://enews.earthlink.net/article/bus?guid=20071228/477482d0_3421_1334520071228-1242026848

I don’t recall anyone predicting a YOY decline of 30-40%.

Now I understand a little better: you’ve already discussed the issue with your neighbor and reached agreement in principal. I hoped that was the case. Also, you’re absolutely correct that the comments on the Case-Schiller posting have gone way off subject; in fact, I think there’s about 4 separate conversations going on.

As for the C-S numbers, I think the majority on this blog is correct that Seattle’s C-S trend will continue downward through the rest of this year. However, I diverge in my thinking for next year. My gut feeling is that the U.S. will skate dangerously close to recession but won’t fall in. The American consumer, so routinely described as being at the end of his/her ability to continue buying more crap, will once again prove to the economic forecasters that we have not yet seen the limit of America’s willingness to buy boatloads of the developing world’s finest, lead-painted knick-knacks. And more importantly, American companies will have sold overseas an all time record amount of the stuff we’re still able to produce stateside. The current account deficit will decrease just enough to allow us to borrow en masse for another year.

Accordingly, I predict Seattle will not experience substantial price declines in nominal dollars (substantial being the 30%-40% often predicted by certain folks on this blog). I expect a more modest change in the 2008 C-S Seattle data: a YOY decline of less than 10%, and probably around 5%. I also think it will make for an excellent buying opportunity for people like Ray Pepper, i.e., those who are in no hurry and are willing to do lots of research and make lots of low ball offers. There are and there will be plenty of diamonds in the rough if you’re willing to look hard enough. Note that my prediction is for Seattle which includes the East Side and not much else. I have little optimism for Pierce County but I will be looking for investment bargains their later in ’08 as well as Kitsap County when I see how things shake out.

Two points. First, you’ll probably get a slightly better response if you post direct questions like this one to the forum instead of the blog. To do that, click “Forum” at the top of the page. You’ll need to create an account, but it’s quite simple.

Second, it sounds like these fence laws do not apply to your friend at all. Your description made it sound like they wanted to run a fence from the back of their property part of the way up to the front of the property. This would be neither an enclosure nor a partition, and the law quite clearly only applies to fences of such a nature.

Finally, to the people picking on Sandy’s friend, come on! Nobody in likes to be told what to do, and nobody likes taking money out of their pocket if it’s not a priority. If I came to you and said “I’m building a park 1/4 mile from your house. It’ll give your children a place to play, and may increase your property values. Now pay for 1/X of it (X houses in the area).” How much are you going to want to pay for that? Further, what kind of attitude is it if these neighbors have already researched laws that might force Sandy’s friend to pay up.

My 2 cents.

So all you bubble blog slackers get out there and BUY, BUY, BUY!

IT’S NEVER BEEN A BETTER TIME TO BUY!!!!!

The door was smashed open, we replaced it with a metal guard door. Was it hungry unemployed construction workers?

They just denied Medicaid to non-citizens and that adds to the imported poverty and crime too, Jack.

Who in this blog thinks like me and guesses the real Seattle area unemployment rate is like 20% right now?

They’re tightening up on employers too for 2008, a shorter list of papers are needed to get a job, the SSN Match requirement is coming soon to a neighborhood near you too.

I’ve joined the Pink Pony Club and just know Seattle will weather this minor anomaly. Seattle home prices just gotta keep going up, its Newton’s Law in reverse around here after all.

We don’t need money or a good income to buy homes in Seattle, haven’t you Bloggers tried good old balloon payment plans,then ya just wait for the wefare bailouts a comin’ soon in your neighborhood too. Meanwhile, just relax, you can easily refinance your Seattle castle with all your delicious YOY equity.

Go out and buy yourself a $5 latte and celebrate, us Seattle homeowners are all gonna get rich….it goes on forever too….

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Hi everyone, I had a bit of a lightbulb go off yesterday, inspired of course by the always insightfull comments from this forum. Please follow me on this one. This is sort of an excerpt from an email conversation I stared with a friend.

So I had a very interesting thought just hit me. Someone on bubble was talking about how jobless claims so far are not reflecting construction workers and realtors because they’re contract workers and don’t file for unemployment.

So I got to thinking about construction workers that are getting laid off. Then I got to thinking about whom the majority of construction workers are composed of, especially here in the Northwest…….migrant workers.

So then I started thinking, “what happens to these people when the building industry goes completely tits up?” Do they somehow migrate into other industries? All of the fruit picking jobs in eastern washington are already locked up by the migrant workers over there. Do they just…..go home? Do they hang around and become a huge unemployed group of people? That one really scares me because this would lead to a HUGE increase in crime.
Interesting thought, no?

Any ideas?

I was wondering about Ron’s post also. ;)

Shiller considered the long-term when he came up with his estimate that there should be a 30% drop in prices. According to Shiller, a 30% drop would bring us back to the long-term mean where the fundamentals support the prices.

The regression analysis that I did is just the steep linear beginning of the falling limb of our current bubble that is also suggested by the red and blue lines on the patrick.net extrapolation of the CSI (http://patrick.net/housing/contrib/housing_projection.html).

Here is the last 12 months of CSI data for Seattle, Portland, and the Composite:

Nov-06 183.88 181.34 223.94
Dec-06 183.97 180.27 222.39
Jan-07 183.92 179.79 221.32
Feb-07 184.85 179.90 220.47
Mar-07 186.44 181.72 219.68
Apr-07 188.89 183.55 218.93
May-07 190.68 185.21 218.32
Jun-07 191.92 185.76 217.33
Jul-07 192.30 186.51 216.28
Aug-07 192.14 186.00 214.58
Sep-07 191.66 185.67 212.70
Oct-07 189.86 185.10 209.68

Here is what the linear regression of the last 12 months of year-over-year changes would predict the next 12 months to be for the CSI for Seattle, Portland, and the Composite:

Nov-07 189.87 182.08 207.79
Dec-07 188.45 179.48 204.87
Jan-08 186.85 177.43 202.35
Feb-08 186.23 175.96 200.05
Mar-08 186.35 176.25 197.91
Apr-08 187.21 176.41 195.72
May-08 187.42 176.44 193.72
Jun-08 187.02 175.33 191.34
Jul-08 185.81 174.46 188.96
Aug-08 184.03 172.35 186.00
Sep-08 181.95 170.42 182.90
Oct-08 178.64 168.27 178.85

i have never claimed to be reasonable.

i do wonder what inspired your response, though?

initial jobless claims are only at the borderline recession level of around 350,000 (http://calculatedrisk.blogspot.com/2007/12/weekly-unemployment-insurance-claims.html). things seem worse than that to me. the difference between my sense of things and the statistics bothered me. realizing that most of the jobs directly impacted by a RE bust wouldn’t be included in those stats cleared it up for me.

whats so crazy about that?

Marc

Ok, then forgive me for not using the proper type of language. What he told me is that it’s a simple document that simply states that my neighbors understand that I am not giving them the property that they built on and that I am also not asking them to tear the fence down. It is not a lawsuit. Would you consider closing on a house a lawsuit simply because it involves an attorney? It’s just paperwork. I have already had the discussion with my neighbor and he said “give me the papers when you’ve got em so I can sign it”. No problems whatsoever.

This whole discussion came about just because I was curious and it was related to Sandy’s question. I still call B.S. on the fact that someone should have to pay for half of a partition fence especially if one party does not want the fence.

On the other side of my property there is a partition fence with an easement owned by the plat (HOA). Should I then petition to get the HOA to reimburse me for half then? And by back fence butts up against property owned by the county. Should I petition the King County Council to reimburse me for half? It’s only fair right?

I’m thinking about taking this discussion into the forums where it belongs because I think we’re veering away from the point of the original post (Case-Schiller) and the great and powerful “The Tim” will get angry.

Be careful what you ask for:

http://patrick.net/housing/contrib/housing_projection.html

If you look at the last 12 months of year-over-year change in the Case-Shiller Index there is a fairly linear downward trend. I used linear regression to predict what the next 12 months would be from the regression of the past 12 months.

Based on the regression I predict that a year from now the prices in Seattle will be about 6% lower than they are today and in Portland about 9% lower than today. The trend for the composite index suggests that it would be about 15% lower than today a year from now.

These predictions are well within the estimates of Shiller and others of a 30% decrease in prices before we see the bottom. Don’t be surprised if year-over-year changes in the northwest are increasingly negative starting in early 2008 and continuing for at least a couple of years.

Here are the data:

Last 12 months of year-over-year changes in the CSI (Seattle, Portland, Composite):

Nov-06 13.00% 11.60% 1.42%
Dec-06 12.04% 9.92% 0.22%
Jan-07 11.14% 8.75% -0.51%
Feb-07 10.63% 7.71% -1.30%
Mar-07 10.02% 6.98% -1.82%
Apr-07 9.64% 6.35% -2.69%
May-07 9.06% 5.71% -3.40%
Jun-07 7.94% 4.52% -3.96%
Jul-07 6.86% 3.81% -4.37%
Aug-07 5.66% 2.75% -4.86%
Sep-07 4.69% 2.18% -5.50%
Oct-07 3.30% 1.92% -6.70%

Here are the projected next 12 months from regression of the past 12 months of year-over-year-changes (Seattle, Portland, Composite):

Nov-07 3.26% 0.41% -7.21%
Dec-07 2.44% -0.44% -7.88%
Jan-08 1.59% -1.32% -8.57%
Feb-08 0.75% -2.19% -9.26%
Mar-08 -0.05% -3.01% -9.91%
Apr-08 -0.89% -3.89% -10.60%
May-08 -1.71% -4.74% -11.27%
Jun-08 -2.56% -5.61% -11.96%
Jul-08 -3.37% -6.46% -12.63%
Aug-08 -4.22% -7.34% -13.32%
Sep-08 -5.07% -8.22% -14.01%
Oct-08 -5.91% -9.09% -14.70%

If your attorney is filing a “motion” that would mean you already sued your neighbor or he sued you. My advice to clients is to avoid litigation whenever possible. A friendly conversation is often a good preemptive move before sending a nasty demand letter which is, in turn, a good last step before filing suit. S-Crow’s approach was superb. However, only you know your neighbor and the dynamic you share with him or her, therefore only you are in position to choose an appropriate course of action. Best of luck.

Marc

i would be interested to see the case shiller data for the past 10, 20, 50 years (even if its just the average of a bunch of cities). The trend is your friend folks. (well maybe not the owner’s friends… but none the less).

I also don’t like comparing this year to last year or even 3 years ago. Supply was historically the lowest it had been and there were bidding wars over my dog’s doghouse in the backyard.

Lets see if we can look at the long term averages (longer than 10 years) and predict the reversion to the mean. (and I don’t mean the past 3 years’ averages… b/c they just weren’t normal)

Things will likely swing a bit below the mean and then swing back up… if you’re looking for ‘the deal’, that would be the time to buy.

Well the Fed doesn’t borrow, it creates money out of nothing, but that’s beside the point.

The US has current account deficit of 6% of GDP. That’s how much the US has to borrow from foreigners every year because it spends more than it earns. There is simply no way foreigners will loan money to the US in a declining currency for 0%. That’s totally nonsensical.

In fact, Americans won’t loan at 0% either. They will just put their money in gold or some other currency.

What you are talking about is the destruction of the USD, Zimbabwe-style. That means the end of major power status for the US, and I don’t think any of the PTB want to see that any time soon.

Are you f’n serious? You are sick and need to see a psychiatrist! Enough said!

And now back to Case Shiller…..

At the present rate of change, Seattle and Portland will probably show negative year-over-year changes in the CSI starting around Mar-08 and Dec-07 respectively.

Marc

Marc,

As I said in my post, my ATTORNEY will be filing such motion in 2008, well under the statutory 7 years.

-DM

Regardless if the law, that sounds borderline like “if it is important for you then go ahead now and I’ll pay half like we previously agreed.”

It could turn into a he said she said thing about a verbal agreement.

When my friend decides to fence her property if she uses the common fence to enclose her property fully ie. build gates etc, she will pay half of it to her neighbor. The question is one of timing/circumstances of when the payment is due – i.e. does it have to be paid for when one of them wants the fence versus can be paid for when used by the other.

The way the law reads above, she wouldn’t need to pay until she encloses her property.

Makor, IMHO I would refrain from commenting on necessary/unnecessary improvements that my friend may be undertaking. People have their own view of their priorities and they entirely entilted to have a different opinion.

RG interpreted the law above. I think it makes common sense and it’s fair. Peoples’ priorities are moot in the face of the law. Does your friend already have a fence around her property, except for this new section of fence in question? If not then it seems she’s off the hook, legally speaking, and should could explain the fairness of that to her neighbor.