Time to clear out my inbox. Following is a handful of short excerpts from things I’ve been emailed in the last few weeks. Enjoy.
First up, a delightful “Home Economics Wall Chart” that is designed to “focus the consumer on the benefits of owning.” It’s Estate of Mind, Inc.’s Visual Guide to the Housing Market. Here’s an excerpt from their marketing email:
Now is the time. Although Washington state has been spared any major downturn so far, consumer confidence in the housing market has waned. Not a day goes by that your clients and prospects aren’t barraged with doom & gloom from the national media. Yet real estate is not day trading. Month to month variations in value are largely unimportant and ultimately inconsequential; nonetheless this reporting dominates the news and the public’s mindset.
…
Estate of Mind’s Chart provides a visual depiction and captioned explanation of not only the historical performance of real estate across the whole country, by region and by state; it also provides visual evidence of the factors like simple population growth and income trends that have traditionally fueled the market.
There’s nothing like a little bit of delicious propaganda. Don’t get me wrong, home ownership is great, but I love how their email includes lines such as “factors like simple population growth and income trends that have traditionally fueled the market,” while conveniently ignoring how incredibly detached prices have become from these “traditional factors” in recent years.
Moving on, another reader makes the following comment about Seattle’s market:
I don’t think the bubble has burst in Seattle at all. Anything in Green Lake (and I do mean anything–shacks, huts, etc.) priced around $550K is gone in a flash… same for Capitol Hill and Queen Anne. Anything in Ballard for around $500K is gone in a week. So, lot’s of buying going on and the buyers are shelling out big bucks, so looks like we’re going to have to go way north or way south to afford anything. I don’t get it really, but it’s what’s happening out there.
As we have been demonstrating with the neighborhood breakdown posts, it is indeed true that the neighborhoods in North Seattle are much softer than last year, but still not nearly as soft as the rest of King County. Personally I think they will get a real slowdown, it will just reach those areas last.
Here’s a related comment from another reader:
It was your site that I had looked at and at first (as a know-little fool), scoffed at, but the truth is, I think we’re (Seattle) like the last few floors of the Titanic.
A Washington Post publicist emailed me a link to a cartoon that illustrates how the behind-the-scenes trading of mortgage securities turned into a big mess for everyone.
And lastly, here’s a bit about foreclosures from yesterday’s P-I:
Foreclosures have increased in King County, but they have not yet peaked locally or nationally, according to a new report.
The number of properties facing foreclosure in February was up 37 percent in Washington and 60 percent nationwide from a year earlier, according to RealtyTrac, an Irvine, Calif., company that tracks foreclosures.
Foreclosures dropped 4 percent nationally in February, but that’s less than last year’s January-to-February drop.
Meanwhile, foreclosures were up 0.9 percent in Washington from January, and King County foreclosures rose 7.6 percent from January.
RealtyTrac could not provide a reliable figure for King County’s year-to-year change because of a problem with its data collection last year.
But notices of trustee sale, which are the first step in the foreclosure process, were up 104 percent in February from a year earlier, according to county records.
The state’s rate of one filing per 1,194 households put it 28th among states and was less than half the national rate of one per 557 households.
The Seattle area, which RealtyTrac considers King and Snohomish counties, had one filing per 1,450 households in February, putting it 166 out of 229 metropolitan areas. That was up from 173rd place in January.
I still don’t really understand how anyone can be facing foreclosure in the Seattle area if the market is still as strong as the real estate agents would have us believe. You don’t end up in foreclosure if you can just sell your house for 10% more than you bought it for last year, right?
(Estate of Mind, Inc., 2008)
(Laura Stanton, Washington Post, 03.14.2008)
(Aubrey Cohen, Seattle P-I, 03.12.2008)
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52 responses so far ↓
1
rose-colored-coolaid
// Mar 14, 2008 at 10:57 am
That has to be the least humorous cartoon I’ve seen in a while. Of course, it was dead on accurate.
Here’s a sign of the times. The cartoons are uncannily accurate but not funny, and the Fed are uncannily delusional and everything they say is a joke.
2
newbie
// Mar 14, 2008 at 11:10 am
Well stated RCC =).
3
david losh
// Mar 14, 2008 at 11:27 am
I’m going to come a little further out of the closet about my work in Real Estate; I deal with problem property. I’m going to share with you a perfect foreclosure storm.
A woman, her fiance, and her sister live in a house up the street from a fixer, flipper. They walk by it every day while it’s for sale. They have a friend who works in Real Estate part time. They ask, the house is $425K and he knows a lender who can get them into the house for $2500 per month.
The three of them go into meet the lender, everything seems fine, the fiance will be the primary, my client, the bride to be, will be secondary and the sister will also be on the note.
Problem; the fiance pays cash for everything and has no credit score. The sister can’t be on the note because she has some problem, and the bride to be is the only one left. She happens to work as a bus person in a restaurant at night and cleans houses during the day.
You guessed it, January 1st, 2008 is the first adjustment of the ARM. The payment is now, get this, over $4000 per month and she makes $2000. OMG, the bank is going to lose money, but wait, there’s more.
The woman, my client, is asking me how she ended up with the loan. No, no, no, she doesn’t understand, and the fiance doesn’t understand, why the loan is only in her name. He did fill out the credit apps, and at closing was told he could move in after the bride to be signed the paper work. I don’t know, but I suspect her credit application was in the paper work she signed.
In any case the payment is not what they were told, or agreed to, nor were the terms of the Purchase and Sale clear to them. It’s a very neat pile of paper work on the kitchen table that this couple has been worried about for months.
They have no idea what happened, they liked the house, but never imagined they would be moving in. They went along.
Is this kind of what you guys are talking about?
This is one of three I’m working on since January. Attorney you say? Court? The Law? Give me a break.
4
John
// Mar 14, 2008 at 11:29 am
Bear Stearns, the 5th largest investment bank, is in big trouble. Who else is dying? The hit just keeps coming and people want to buy a home?
5
softwarengineer
// Mar 14, 2008 at 11:57 am
EVEN DURING GOOD TIMES THERE’S LOTS OF FORECLOSURES
I suppose the term “good times” should be defined. “Good Times” are when two incomes in Seattle mostly keep their jobs and one of them doesn’t get sick or laid off. This rule’s been around since 1978, it hasn’t changed.
The problem is we do eventually all get sick and in housing, all it takes is like one cancer victim sucking the family’s income dry. Its sad, buts its a fact of life.
6
vboring
// Mar 14, 2008 at 12:31 pm
this stuff is starting to get me down.
our baby boomers are watching their largest retirement investments (houses, stocks, and treasuries) disappear or devalue themselves through inflation. gov’t supports (social security, medicare, medicaid) are bankrupt.
so, what is left? if you’re approaching retirement and your nest egg is going rotten, what do you do?
my parents are approaching retirement age and i plan to support them. they have a fair bit of GE stock and have chosen a frugal lifestyle, but i doubt that they will be able to cover expenses for the next 20+ (hopefully 30+) years.
honestly, these are things that people need to consider at some point. there is a lot of retirement money in the stock market and houses and a lot of it is disappearing just as a large number of people are planning to retire.
7
Sniglet
// Mar 14, 2008 at 12:33 pm
As Tim points out, it is surprising that we have foreclosures at all in the Seattle area, since we haven’t had any substantial price declines to speak of. Anyone getting into trouble with their home should just be able to sell.
Now, should we get actual price declines, look out. Even Bernanke admits that there is a strong correlation between house depreciation and foreclosure rates.
http://calculatedrisk.blogspot.com/2008/03/bernanke-on-fostering-sustainable-home.html
8
Ira Sacharoff
// Mar 14, 2008 at 12:46 pm
There’s also been a fair amount of fraud or near fraud in recent years, so even if prices haven’t really declined, there have been too many instances where lenders put pressure on appraisers to have a value come out at a certain amount, and if they didn’t their livelihoods would be threatened, so there were a number of houses that sold for higher than they were worth. With a softening market, lot bidding wars don’t happen much, and for some people who owe much more than the house could sell for, foreclosure or jingle mail seems to be the only solution. Short sales only work if the lender is willing to accept less than what the seller owes, and some agents list the properties without the full co-operation of the lender, and a signed purchase and sale agreement doesn’t trump a a lender who won’t agree to that price.
9
Lake Hills Renter
// Mar 14, 2008 at 12:52 pm
Speaking only for what I’ve seen in my neighborhood — I’ve seen prices completely stagnant and/or declining slightly from last year for the houses that are selling. Anything priced even slightly higher sits for a very long time. Of the houses that sold in the last year, I still don’t understand how they could afford it (i.e. Comcast lineman buying a $490k house, etc). Combine those two — flatlining prices and overtended buyers — and you have high risk of foreclosure even without serious declines.
10
S-Crow
// Mar 14, 2008 at 1:26 pm
I don’t have numbers, but the amount of existing mortgage holders that owe more than what they purchased only two or three yrs ago is probably astounding.
Nothing to bring more humility to a market than what is unfolding. The Bear Stearns & Carlyle problem is truly epic. If only in future textbooks could we read excerpts of the back channel meetings/dialogue between central banks across the globe and Wall Street financial houses with our own Fed, it would probably blow our minds.
I would be interesting to see where our Senators and Congressmen are moving money. You know the old saying, “it’s not what they say, watch what they do.”
11
Marc
// Mar 14, 2008 at 2:22 pm
“I still don’t really understand how anyone can be facing foreclosure in the Seattle area if the market is still as strong as the real estate agents would have us believe. You don’t end up in foreclosure if you can just sell your house for 10% more than you bought it for last year, right?”
I sure do. In my pro bono work I’ve represented people facing eviction and it showed me the extent of denial some people are willing to live with. Many people simply ignore the collection letters, foreclosure notices, etc., until they’ve finally got a sheriff at their door telling them it’s time to go. I just met with a new client on the other side of that problem. He simply can’t fathom the lifestyle they’ve been leading, e.g., the woman’s hoarding habit filled a 2,00 square foot home floor to ceiling in every room. Yikes!
12
patient
// Mar 14, 2008 at 2:26 pm
Considering where we were only last July things are happening/deteriorating very fast with the economy as a whole and with the housing related areas more than anywhere else. As many others I truly can’t understand why anyone would look at buying a home in this environment. You don’t even need to be very patient to see that your strategy is working since new disasters are reported and observed more or less every week. A “wait and see what happens” strategy has seldom had better odds for being rewarding.
My own strategy is now to wait until a comparable area to Seattle which I think San Diego is experiences a sustained Case-Shiller index stability or growth for at least six months in a row. I will then calculate the total price fall from the top in percentage and not buy in Seattle until we seen the same fall +10%. I.e if San Diego stabilizes at -40% I will not think of buying in Seattle until we have had a 30% C/S drop.
13
rose-colored
// Mar 14, 2008 at 2:54 pm
Not that they are starving, but the majority of congress are not all that much better off than most citizens with good jobs.
http://www.presstv.ir/detail.aspx?id=47492§ionid=3510203
According to that article, Senators have a median net worth of $1.7 million, and members of the house have a median net worth of $675,000.
By contrast, an estimated 3 million households in America have a net worth in excess of $1 million.
http://en.wikipedia.org/wiki/Millionaire#United_States
I’m not arguing that some congress members are ridiculously wealthy and that some are no doubt participating in insider trading. But considering their salaries, the median congressman/woman is not shockingly wealthy.
14
B&W Nikes
// Mar 14, 2008 at 3:27 pm
Estate of Mind is awesome especially paired with today’s news from the LATimes:
15
John
// Mar 14, 2008 at 4:46 pm
Lehman Brothers is in trouble too judging from today’s trading. Just how many of these banks can the Fed tries to save? If this crisis really spreads, it is all over for this country. Seattle bubble will be the least of the concerns.
16
Scotsman
// Mar 14, 2008 at 5:12 pm
All the way back to David at #3: I’d ask, “are you serious?”, but know from my own experience that you are. Such people are out there, living among us, as clueless as can be. Why? How? Is this the result of 40 years of color T.V? Is it the last manifestation of the entitlement mentality?
I’m depressed. This whole country is about to get slammed into a brick wall at 60 mph. When the citizens come to, half will want to know what’s going on with Britney Spears, and the other half will feel wronged and start looking for someone to fix their problems.
Get the popcorn started and pull up a chair.
17
Markor
// Mar 14, 2008 at 6:02 pm
Sell the house at a discount now (whatever it takes, but not less), move everything else to cash, and rent.
There’s been a stock market bubble since 1980. It’s now popping along with the housing bubble. The country has been ruined by hundreds and thousands of bad decisions by the current administration. Bad for the common people that is, but great for the wealthy. How many $millions has Cheney added to his own pension through no-bid contracts for Haliburton? Oh it’s all a blind trust of course.
18
Markor
// Mar 14, 2008 at 6:05 pm
Yet the half who stays focused on Spears will still vote the same way. They still will not fathom that voting wrong can actually hurt them.
19
Expat
// Mar 14, 2008 at 6:24 pm
That wall chart is on display front and center at some Capitol Hill townhomes for sale-25 on the park or something…by cal anderson park.
20
Scotsman
// Mar 14, 2008 at 6:28 pm
They vote? OMG, I thought they were the half that didn’t. Now I’m REALLY depressed!
21
b
// Mar 14, 2008 at 7:25 pm
“I’ve said it before and I’ll say it again: Democracy simply doesn’t work.”
– Kent Brockman
22
mike2
// Mar 14, 2008 at 7:50 pm
it is indeed true that the neighborhoods in North Seattle are much softer than last year, but still not nearly as soft as the rest of King County. Personally I think they will get a real slowdown, it will just reach those areas last.
It may take a while. In DC metro, some areas are holding up very well, while anything outlying has cratered, and pockets of close in homes/condos have cratered. This is nearly 2 years after the local market peak.
23
Sniglet
// Mar 14, 2008 at 9:23 pm
24
Jeff
// Mar 15, 2008 at 2:09 am
“That wall chart is on display front and center at some Capitol Hill townhomes for sale-25 on the park or something…by cal anderson park.”
Yep, and they’ve been working on those suckers (starting at 500K!) for over a year now. They don’t seem to be in any hurry to get them finished.
25
Angie
// Mar 15, 2008 at 7:16 am
Sell the house at a discount now (whatever it takes, but not less), move everything else to cash, and rent.
Well, as it happens, that’s not a particularly safe strategy either. Check out this story that ran on NPR yesterday.
Six months ago I was telling all the folks who were cheering for the bubble to burst that they should be careful what they wish for, ’cause they just might get it. Well, here we are, and yes, it’s ugly. Probably going to get uglier.
On the other hand, I’ve recently read The Worst Hard Time, about the people who stayed and lived in the Plains during the Dust Bowl. It was sobering and heartbreaking and provided a new baseline for comparison for contemporary housing woes. As in, if you’re not living with your 5 children in a 300 square foot hole dug out of the ground, listening to the centipedes chewing behind your wallpaper, and using dried cattle poop as a fuel for heating and cooking: quit your "dog"ing.
It’s a great read. Check it out. Definitely puts our current situation in perspective.
Tim, you’ve been doing a great job with the numbers/data analysis lately. Thanks.
26
Ira Sacharoff
// Mar 15, 2008 at 7:50 am
A 300 square foot hole dug out of the ground, using dried cattle poop for heating and cooling would be listed as an “earth friendly home” and list for 600,000 dollars if it were in Wallingford.
27
deejayoh
// Mar 15, 2008 at 8:47 am
I LOVE the concept of this chart from “Estate of Mind”. The best part is how the new and improved version for 2007/08 only shows returns for 1963-2006. That’s very convenient - especially since the national downturn started in 2007! I’m wondering exactly what it was that they updated?.
28
David McManus
// Mar 15, 2008 at 8:50 am
Post of the week at #25!
29
Peckhammer
// Mar 15, 2008 at 10:20 am
“By contrast, an estimated 3 million households in America have a net worth in excess of $1 million.”
I find this astounding. I am one of those 3 million housholds, and I didn’t do anything special to get there. Maybe I’ve just spent less than the average American. What on earth are people spending their money on?
30
David McManus
// Mar 15, 2008 at 12:15 pm
#28, Some of the items they’re spending their money on:
- granite countertops
- flashy cars
- Nordstroms shopping trips
- extravagant vacations
- mochas (designer coffee)
- landscaping for their McMansion
- plasma tvs
- ipods
- powerful desktop or laptop computers for checking email and getting on the internet
- bling
- plastic surgery
- whatever britney, paris, or lindsay is buying
All that adds up quick.
31
economist
// Mar 15, 2008 at 12:31 pm
Six months ago I was telling all the folks who were cheering for the bubble to burst that they should be careful what they wish for, ’cause they just might get it
One of the great all-time non-sequitors.
First, what happens has nothing to do with what people wish for. So people don’t have to be careful about what they wish for. People have to be careful about what they do. Like, you know, buying a ridiculously overpriced house.
Second, the bubble burst is not a bad thing. It’s a good thing. It’s the bubble that was a bad thing. It caused an enormous waste of resources and got people into situations that will ruin them financially. If the bubble had persisted for longer the ill effects would be even worse.
Third, it was inevitable that the bubble would burst, so that to pretend that the perpetuation of the bubble was a plausible outcome is pure BS.
32
Markor
// Mar 15, 2008 at 12:47 pm
Yeah, being foreclosed upon as a renter is a risk. It can be mitigated by renting in an apartment complex. I think the main risk now of selling everything and holding cash is bank failures.
Yeah I’ve read Grapes of Wrath, so I’m familiar with how bad it can get. Half of people today don’t realize how important it is to vote for the little guy. They think voting for the ultra rich will benefit them somehow, or is otherwise better, despite all the evidence to the contrary. They should learn about the Dust Bowl days to see the extent to which the little guy can be exploited. A lot of our laws and services that protect and benefit workers came from that era. Laws & services that have been eroded and circumvented; e.g. gov’t spends Social Security funds on war, leaving IOUs that will likely never be repaid.
33
Ira Sacharoff
// Mar 15, 2008 at 12:58 pm
Markor,
Franklin Roosevelt did okay for the little guy, and he was super rich. But I know where you’re coming from on this. Politicians talk about tax cuts, and the voters think somehow they’re going to benefit, even if the tax cuts are for the very rich. Trickle down, trickle down..
34
Markor
// Mar 15, 2008 at 12:59 pm
With compound interest! When I was a homedebtor I was well aware that I paid a 4.8% premium on every cappuccino, in the form of mortgage interest after the mortgage interest tax deduction. That gave me the incentive to be frugal.
35
Ardell DellaLoggia
// Mar 15, 2008 at 1:00 pm
Some of the short sales/pre-foreclosures I have seen were flip projects. One guy qualifies for the mortgage (often a “straw buyer”) and the other one is going to do the work. The worker partner starts fixing by pulling things out and never gets around to putting things in. Runs off with the money that was supposed to be for the improvement phase. Now the house is worse off than when it was purchased. Often the home was over-financed by a bogus inflated appraisal to provide the funds for the improvements, so the value of the house didn’t go down, it never was worth the loan and appraisal amount in the first place.
Also major remodel and new construction projects by small operations that were able to get money hand over fist to start the project, Money dried up halfway through and the shortsale or foreclosure is for a 3/4s finished house.
36
Alan
// Mar 15, 2008 at 1:15 pm
Ardell,
When you are pricing a house based on comps, how do you distinguish between comp prices based on this sort of remodelling scam and house prices from legitimate purchases? Don’t these scams artifcially inflate prices?
37
Angie
// Mar 15, 2008 at 2:02 pm
I find this astounding. I am one of those 3 million housholds, and I didn’t do anything special to get there. Maybe I’ve just spent less than the average American. What on earth are people spending their money on?
This mystifies me too (thought we’re nowhere near being one of those 3 million.) But I know an awful lot of households that have much higher incomes than ours, who also have a difficult time making ends meet and staying out of consumer debt. I think there’s a mindset of, “If I make (large number of dollars), I should be able to afford….” Do that too often and $100k, $150k, $200k a year can blow right through your hands, it seems. Having kids seems to exaggerate that inclination, too.
38
EconE
// Mar 15, 2008 at 2:18 pm
Angie…you are dead right with your statement (#37)…as scary as it is. People with higher incomes seem to take on a commensurate amount of debt sometimes. I had a friend that was working for an MD once (painting)…and the check bounced.
39
Lake Hills Renter
// Mar 15, 2008 at 4:31 pm
I believe it is called the Wealth Effect.
40
mike2
// Mar 15, 2008 at 5:01 pm
Ardell: Often the home was over-financed by a bogus inflated appraisal to provide the funds for the improvements, so the value of the house didn’t go down, it never was worth the loan and appraisal amount in the first place.
As well as the dozens, if not hundreds of other houses that were valued based on this and other inflated appraisals over the past several years.
It isn’t just a handful of recent failed flips that were overvalued.
41
Angie
// Mar 15, 2008 at 5:24 pm
My best friend is an MD, too. She and her family moved away from Seattle several years ago because it was too expensive, in the city, to live the lifestyle to which they would like to become accustomed. She got a well-paying job (>$100K/year) in another city on the I-5 corridor. They bought a 5 acre farmette with a 4000 sf house on the outskirts of town for ~$250K. Well, it costs a fortune to keep their huge house heated, and she’s got all that med school debt, and a bunch of consumer debt from her school years that only now just got paid off. Of course it’s at least five miles to the nearest (fill in the blank: grocery store, library, department store, hardware store…) so they’re in the car all the time, at $3.50/gallon. They’re still driving 15 year old cars, still feeling pinched, going through careful financial gymnastics to pay for relatively minor home repairs.
Other friends have two quite handsomely paid corporate jobs in the family right now, but after two job-related cross-country moves and occasional spells where one is unemployed, they’re backed up against their credit limit and sweating about what happens next. They are paying through the nose for childcare.
A third friend has been surfing through the corporate world as a well-paid consultant for the last decade. She’s pushing 50 but couldn’t scrape together cash for a meaningful down payment on the Eastside condo she bought last year. You should see her spectacular wardrobe, though–she needs every last inch of that closet space.
42
Angie
// Mar 15, 2008 at 5:29 pm
Often the home was over-financed by a bogus inflated appraisal to provide the funds for the improvements, so the value of the house didn’t go down, it never was worth the loan and appraisal amount in the first place.
and
When you are pricing a house based on comps, how do you distinguish between comp prices based on this sort of remodelling scam and house prices from legitimate purchases? Don’t these scams artifcially inflate prices?
We bought our first house with a rehab loan (borrowed for home purchase plus improvements). The appraisal was based on what the place would be worth after the work was completed, which is was.
We needed to get three bids for each job and sent documentation to have the repair money released…good times, good times.
Of course if someone takes the money and runs, it’s a scam–but not all arrangements like this are dishonest.
43
Garth
// Mar 15, 2008 at 9:49 pm
Those whose plans involve the rosiest projections often don’t leave much room for anything going wrong. If you are a flipper, or a small real estate investor chances are you are pretty highly leveraged, and as a result a lot of your financing is probably “exotic”. When you have loans that adjust or balloon, if that hits you at the wrong time, like when banks are only financing conventional loans you have a real problem even in Seattle.
I would be more interested in seeing foreclosure stats for primary residences, as it is often advantageous financially for distressed real estate investors to move into their most expensive property and let the source of their problems go back to the bank.
Sometimes you do have to remember that real estate is not the stock market, there is no SEC and no rules to ensure prices are comparable and based on prescribed data. Real estate data exists to record the purchase and sale of properties and allow municipalities to collect property taxes. It has always been and always will be tainted for analysis by taxes, inheritances, real estate sales people, business transactions, charitable giving etc.
44
Ira Sacharoff
// Mar 15, 2008 at 9:57 pm
I dunno Garth, having been a stock market investor for a lot of years,it seems as though the SEC turns a blind eye a fair amount, and a lot of the analysis is tainted, and the industry is full of hucksters and shysters ( just like real estate).
45
Jeff
// Mar 15, 2008 at 10:00 pm
Ardell said: “…..so the value of the house didn’t go down, it never was worth the loan and appraisal amount in the first place.”
Ardell, you’re kidding right? Did you really say that or is someone masquerading as you?
Because, you see “never was worth ..in the first place” is kinda what it’s all about, isn’t it.
Seriously, Isn’t it?
46
bitterowner
// Mar 15, 2008 at 10:26 pm
“I had a friend that was working for an MD once (painting)…and the check bounced.”
To be fair, this isn’t necessarily a sign of financial distress. Maybe wife writes check not knowing hubby just moved a large am’t of cash into their brokerage acct or into a CD or savings or whatever. He didn’t know the painter was getting paid that day and knew their paychecks would be direct deposited into their checking acct in a couple of days so didn’t think twice about moving out the cash,. Then the check happens to go through the day after said transfer takes place but the day before their paychecks gets direct-deposited to fill the hole.
Did your friend the painter get paid immediately after letting Dr. Bounce know the check was bad or did he see them rush to the basement to look for things to sell on Ebay?
Angie, re your MD friend, there must be a happy medium between living in an overpriced rat-trap in one of the country’s most overpriced cities and buying a castle in the middle of nowhere ruralia. I guess some people are simply committed to making life as hard as possible.
47
EconE
// Mar 15, 2008 at 11:00 pm
“Did your friend the painter get paid immediately after letting Dr. Bounce know the check was bad”
No.
That was my point. I chose not to go into details.
48
Stranger
// Mar 15, 2008 at 11:14 pm
Guys,
You cannot imagine how badly we are f@cked.
Go to http://www.redfin.com and search for all houses posted for sale for the last 7 days.
This is some scary "chocolate". There are tons of houses and even more condos.
The sellers are still in denial and asking $200-300 for a square feet.
Just wait for a while. They will be very glad to get $100 for a square feet, just wait.
You’ll be able to buy a good house for 100Oz of gold.
49
Stranger
// Mar 15, 2008 at 11:44 pm
Hey Tim,
Just saw a K5 clip about your blog on YouTube, that’s cool.
Here’s the link: http://www.youtube.com/watch?v=8FyMCo8FCZc
Sure, It’s a great time to buy, it’s always is. They are nuts. They have no idea. Idiots.
Great work Tim.
Median house price=Family income *3-4, depends on the location.
Median family income in Lynnwood not higher then $70000 (Sorry, I’m too optimistic). The median house should be $210000-280000 but not $400000-450000. Nuts!
I’m telling you, I’ll buy it for 100 Oz of gold when it is $2000 for 1Oz.
50
Garth
// Mar 16, 2008 at 12:47 am
Any time the commissions are high there are hucksters and shysters. Wall street if full of them, and it is regulated and violations can be prosecuted.
The rehab loan that Angie got and the and the scheme Ardell talks about are pretty different. The rehab loan exposes what you are doing to the lender and I am sure forces you to carefully document you plan and progress the other way you are totally unsupervised and can buy a land rover if you want.
Even if the appraisal is just rosy financing the entire value of a property leaves you with little cushion if there are bumps in the road. Ardell’s story is clearly those whose houses would be sold first if they were affected by the changes in available financing starting in July / August. The “straw buyer” is letting the investment gone bad go into foreclosure to avoid foreclosure on their primary residence.
In a forclosure it basically goes:
*First Mortgage on primary residence - don’t pay and they can take your house and sell it, pay it and nothing else and they can’t take your house.
*Home equity loan / 2nd Mortgage - they can take the proceeds of your house when you sell
*Investment properties, other property - they can take the property but not your primary residence.
So the first houses to come up as foreclosures or shorts sales are going to be houses that are not primary residences as the time frame is much shorter.
I do think that some less nefarious derivative of what Ardell talks about was very prevalent in Seattle and probably elsewhere. With most medianish houses here being older and needing some work to be exactly what many buyers want, It seems like a perfect close for a broker / realtor team. Buy it and take the 20-50 grand extra the house is worth and make the house perfect.
The sales message is pretty powerful, you got a great deal, and here is the proof in cash. Closing costs come out of the difference as well, so everybody gets paid and the buyer has zero costs and actually comes out of the transaction with tens of thousands of dollars in cash.
51
Olaf
// Mar 16, 2008 at 6:18 pm
A big reason Americans can’t save is that most are taught from childhood on that it’s normal and okay to carry a balance on your credit card. It’s astonishing, the number of supposedly educated people who do this, never bothering to do the math, thinking it’s all the same whether they pay off the whole balance or just the minimum.
The credit card bubble maxed out in the early ’00’s, but was quickly replaced by the mortgage credit bubble. It’s really the same thing, packaged differently.
Here’s a great article about the American economy’s historical dependence on bubbles, in Harper’s:
http://www.harpers.org/archive/2008/02/0081908
52
Kelly
// Mar 21, 2008 at 10:09 am
This is to the guy who said that houses/condos are selling ‘fast’ on Queen Anne and Capitol Hill.
I don’t know about Queen Anne, but I humbly suggest he take a drive up to Cap Hill, say Federal Avenue E for example. On Federal, just south of Republican, there’s a condo that was built just over a year and a half ago, moved into last year, and is now on the market for $619,000. It’s been on the market for at least a month.
Around the corner, on Republican is a dump, I mean a house that is listed for $6-something, and has been on the market for at least 3 weeks.
This kind of thing has been going on for at least 9 months if not longer. Some houses have taken 6 months or longer to sell. The guy must be a closested real estate broker…
Kelly
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