Theory: Seattle is special, and thanks to our strong local economy anchored by such heavyweights as Boeing and Microsoft, any economic or housing pain will affect us far less than other parts of the country.
Reality:
Conclusion: Er… Um… Jobs! Population Growth! Mountains! Lakes! Pretty Pretty Pink Ponies!
We now return you to your regularly scheduled programming.
At an all-hands meeting yesterday for the 30-40 people in our building, the building manager (my boss’ boss) was talking about the company’s business prospects with respect to the current economy, and actually said “If we all don’t participate in the recession, and we tell all our neighbors not to participate, maybe there won’t be a recession.”
I have to admire his optimism.
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Tim:
This is exactly the same logic current operative in Seattle’s real estate market – see A.’s latest posts on RCG that basically say that if we all refuse to cut the price of RE below the comps, the prices won’t fall. “When no one is buying anything…you wait.”
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We have become so afraid of the normal economic cycle that attempting to prevent a recession (which is actually healthy for the economy) is going to bankrupt this country.
75 bps cuts and 150 billion economic stimulus packages and we aren’t even officially in a recession? WTF is this world coming to???? Either figureheads in the G know that this is 10 times worse than they are letting on or this is the biggest overreaction in the history of this country.
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Time to take a breather Tim. We’re now 2 hours into trading and MSFT, BA, the Dow and S&P have all recovered most of their losses.
Be sure and check out CFC, BAC and WFC for some more pandemonium in the markets…
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Is this about jobs again? What’s the fascination with jobs? As far as jobs go we also have other big corporations head quartered here; what about them?
By now you all know that what I believe is that trade with Asia will drive our economy for years to come. What I know from experience is that people come here from other countries to set up businesses, buy land, or houses, because they can. You never get the fact that in some countries it’s impossible to move out of your economic situation.
Let’s take all of you, put together an investment trust and buy an apartment building. You all love renting places; why not rent from each other, or own the place together. See how simple that is?
Right here in this little internet community you have investment capital, great economic minds, the will to invest, and you’re talking about jobs.
This is what makes America great. We have the ability and oportunity to do things other people can only dream about.
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Ruh roh shaggy…
Link: CNN 25 Markets Poised to Fall
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Recovered most of their losses? Really? You do realize that the chart in the post is a one-month chart, right?
Anyway, I don’t really care what the markets do. I’m just pointing out that local companies follow the markets (both up and down) just like everyone else. When recession hits, we’ll take it just as hard here. That’s all I’m sayin’.
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considering that air travel, software, and overpriced caffeine drinks are all luxury items, you could claim that boeing, msft, and charbucks could have a tougher time than most during a recession.
i’m actually surprised boeing hasn’t announced order cancellations yet. maybe next month.
my heart goes out to anybody who loses their job and then their house, though. that is tough stuff i hope to never face.
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I’m reminded of old Looney Toons cartoons, where Wile E. Coyote chases Roadrunner off a cliff, suspended in mid-air for a brief moment, before he realizes he’s toast and drops. The economy, and housing in particular, ran off the cliff long ago, but most people didn’t take a look around to notice…
Where’s that ACME parachute when you need it?
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Note that Yahoo is announcing layoffs as well. Wasn’t Yahoo moving into Seattle supposed to be proof that there are jobs outside of the Big 2?
Anyways, I’m pessimistic overall on most of the Seattle Original businesses. MS and Starbucks will lose revenue, and likely market share. Boeing will have orders canceled, but should at least maintain its market share. Amazon.com and Costco will suffer in the short term as consumption falls, but should recover in the longer term. Nordstroms will probably do fine, as high net-worth buyers continue to consume.
But look on the bright side. Apple will also lose revenue. Of course, Linux won’t lose any revenue, and it may get more code updates from out of work developers…
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Is Seattle special or a toxic place to live? Are we being Yertle the Turtle sitting high on our throne or the bully who has all the marbles on the playground? When was the last time you had dinner with your neighbor, do you know who your neighbor is? Is Seattle special?
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this should inspire the kind of fear that will make your stomach hurt:
“people that have otherwise had the capacity to pay, but have basically just decided not to because they feel like they’ve lost equity, value in their properties, and so in a way, we may have — it’s hard to know right now, but we may have seen somewhat of an acceleration problem loans as people have reached that conclusion” – Wachovia conference call.
increasing numbers of underwater but unstressed owners are deciding to walk away from properties.
http://calculatedrisk.blogspot.com/2008/01/wachovia-homeowners-just-walking-away.html
obviously this is mostly in California, not Seattle.
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“If we all don’t participate in the recession, and we tell all our neighbors not to participate, maybe there won’t be a recession.”
That’s just awesome.
“Note: People typically won’t spend more in monthly costs to own a home than they would to rent. While prices soar from time to time, sending the ratio to exceptional heights, the relationship eventually should return to its historical average.”
Love the note on the bottom of the Fortune/CNN feature. Where have I heard that before??
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The Tim, I thought of you this weekend when I read this Seattle Time’s article about Seattle’s limited time to be rosy: Seattle, take heed: Rosy times won’t last
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Here’s more fun… According to the motley fool website
the worst stocks of 2008 (yes, it is a prediction ) includes Starbucks and Washington Mutual..
http://www.fool.com/investing/general/2008/01/18/the-worst-stock-for-2008-is.aspx?source=ihptclhpd0000001
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“Either figureheads in the G know that this is 10 times worse than they are letting on”
ding ding ding
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Oh oh, looks like San Fran isn’t special anymore… Good thing Seattle still has Pink Pony’s ;)
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/01/22/BUTEUJN7I.DTL&tsp=1
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““Either figureheads in the G know that this is 10 times worse than they are letting on”
ding ding ding”
Amen. We have a winner!
The next two months will open a lot of eyes.
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Second to jimmythev (beat me to it)
From the SFChron story: “In the Bay Area, foreclosures rose an equally stunning 482.5 percent to 4,573 in the fourth quarter, compared with 785 a year ago.”
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Oh, those silly counties aren’t the REAL Bay Area. Things are just fine here in the City!
What? La la la la la! Can’t hear you!
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The stages of real estate denial:
1. Real estate never goes down.
2. Real estate in California never goes down.
3. Real estate in the Bay Area never goes down.
4. Real estate in the West Bay never goes down.
5. Real estate in San Francisco never goes down.
6. Real estate in good neighborhoods of San Francisco never goes down.
7. Real estate in Pacific Heights never goes down.
8. The real estate market has bottomed out…
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i’m sort of amazed at the obliviousness of the talking heads.
though i did sort of think of buying a new ipod today.
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Buddy of mine said he was on a plane w/ a lender manager last month who handled solely foreclosures, and he told him the # of actual foreclosures being reported is the tip of the iceberg.. They are handling more in a month now than they did the entire year 2006.. Gonna get fugly.
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Seattle WTFPWNS San Francisco, didn’t you know?
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What is this graph demonstrating? That stocks move with the market? Is this supposed to surprise us??
The funny part is that MSFT was still above the S&P and Dow when this post was made.
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The question is not whether or not we will have a recession. It’s whether it will be exacerbated by Fed manipulation into becoming a serious and long-lasting depression.
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What about the many Eastside houses renting for less than the 15-year historical price/rent ratio? Negative bubble?
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How exactly do you not participate in a recession?
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“Note: People typically won’t spend more in monthly costs to own a home than they would to rent. ”
Really? This is an interesting made up fact. Except for this decade, (and with the help of ARM’s) I don’t recall a time when it was possible to own for the price of renting – at least for comparable property.
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AMERICA’S PUBLIC ENEMY #1: Warning, the suspect is ARM’ed and dangerous and should be avoided at all costs.
ALIASES: HOUSING, HOUSE, HOME, PAD, HOUSING BUBBLE, HOUSING ATM, EASY MONEY, BEATS WORKING, DEBT TRAP, BIGGEST MISTAKE I EVER MADE, SOURCE OF FUNDS FOR THAT BEST BUY SHOPPING SPREE AND WILD WEEKEND IN CABO
DATE OF BIRTH: 2002
PLACE OF BIRTH: PHOENIX, MIAMI, SAN DIEGO, LAS VEGAS, TAMPA, NAPLES, D.C., BOSTON, SACRAMENTO, OC
KNOWN ACCOMPLICES: NATIONAL ASSOCIATION OF REALTORS, NATIONAL ASSOCIATION OF MORTGAGE BROKERS, NATIONAL ASSOCIATION OF HOME BUILDERS, FANNIE MAE, FREDDIE MAC, HOME DEPOT, BEST BUY, GEORGE BUSH, CHUCK SCHUMER, ANGELO MOZILO, GREG SWANN, KENDRA TODD, NICHOLAS RETSINAS, MIKE NORMAN
ACCUSED OF: ARSON, FRAUD, TAX EVASION, BAD TASTE, MURDER, BANK ROBBERY, WIRE FRAUD, CRUSHED HOPES AND DREAMS
REMARKS: SUSPECT IS RESPONSIBLE FOR THE CRASH OF THE WORLDWIDE FINANCIAL SYSTEM AND HAS DESTROYED MILLIONS OF FAMILIES IN THE UNITED STATES. DESTRUCTION IS NOW SPREADING AROUND THE WORLD. ONLY A FOOL WOULD APPROACH SUSPECT TODAY.
Oh yeah, you’re SPECIAL Seattle…. Like those SPECIAL downtown condos and the SPECIAL traffic and the SPECIAL weather and the SPECIAL drivers and your GENIUS SPEIAL politicians and, and…
Welcome to the New Depression. Turn out the lights FB’s…. Welcome to Hell.
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I gotta tell y’all, after months of reading this and other blogs and putting myself into a panic about the sale of our home (forced, due to relocation to be near family), I was flabbergasted to list the house on Friday and be holding an above-asking offer in my hands on Monday.
We worked hard to get it ready and be all shiny for the listing, and we worked closely with our agent to develop what we thought a good price in the current market.
Having read everything in the news and watched other houses sitting around, we still expected it to sit a few months until we found the right buyer. But, assuming everything goes fine with inspection, we are sitting on an altogether pleasant 29.25% increase in 3.5 years.
I don’t know if that’s a pink pony or not. But, it sure makes me smile like one! Everyone keep their fingers crossed that the deal is smooth moving from here (yes, we triple-checked their financing and it seems to be solid).
Maybe we should just be happy to be getting out before the bottom falls out.
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Tentative congrats Gary. Looks like you priced it right.
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Yep, sounds like an example of pricing the house at (or slightly below) current market, and maybe a bit of an uneducated buyer. ;)
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