Not very many short sales listed in comparison as to how everyone is talking on this site.

Can another agent verify my findings?

Any way you could do a keyword search on the MLS and tell us what the percentage is of short sales v. non-short sales in the city of Seattle?

I taught a class two weeks ago in Puyallup and the agents told me that 50% of the listings in their area are tagged as short sales.

I’ve been telling my students for over a year now that it’s going to get worse and they just stare at me like I’m some sort of freak for saying that.

http://www.pmi-us.com/media/pdf/products_services/eret/pmi_eret08v3s.pdf

(From http://blog.seattlepi.nwsource.com/realestatenews/archives/142623.asp#extended)

I’ve been all around the country, and Seattle’s PC/ passive aggressiveness is so obnoxious. It’s worse than the confrontations said PC/ PA behaviors seek to avoid.

Anyone notice more foreclosures/ pre-foreclosures in the area?? My neighborhood has them popping up with much more frequency.

especially before making personally insulting comments

Bubble buyer, I’m sorry if you took anything I said as personally insulting. I try to steer very wide of that line. I said the comment was crap. not the commenter.

PNW passive aggressiveness.

That "chocolate" runs rampant up here.

I completely agree, but that’s pretty funny coming from you, particularly since you said this 12 minutes later in another thread:

“What a bunch of whiners.”

I have no problems with differening opinions unless it is presented with insults and namecalling. Unfortunately that seems to be the norm these days. I consider it a waste of my time, but some respond in kind. If you are unhappy with the response your opinions receive, perhaps you should adjust your tack.

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The dirty secret of Real Estate is being exposed day in and day out. Your statement says it all. ” I don’t mind giving up some of my commissions”. Real professionals such as Doctors would NOT give up their pay. Why would you?

This system of Real Estate, as it currently stands, will be transformed in the next decade. The consumers will WIN BIG. Consolidation in the industry and the end of the MLS will result. Never forget the Big Gorilla is in the room and they have made it perfectly clear nearly 7 years ago as to their intentions for the transformation of home buying in America.

Just keep laughing. We are just a micrscopic “blip” in the slow change of a multi-billion dollar industry. Embrace change. It will be great for us all. The gorilla described the model will resemble this:

Nationwide G database—-buyer/seller facilitator——-attorney/escrow——–close

Notice who’s missing in this?

Ray Pepper
Broker
http://www.500Realty.net

That said, look for reform in your industry. Your job really isn’t that difficult. Its time consuming, but not difficult, yet you guys make an insane amount of money for what you do. Luckily, you have lobbyists who have created a monopoly with the MLS system.

Nonsense. There is not one property in Phoenix and SD that can be sold today for more than what it would have sold for 2 years ago.

When you decide to buy anything real estate related. Find out if it is listed on the MLS. If it is…*******************************PAYDAY ALERT************************ PAYDAY ALERT ****************************$$$$$$$$$$$$$$$$

Find an Agent who will give YOU the MOST money to write it up and OPEN THE DOORS FOR YOU………………… Its just that easy. If that Agent will NOT give you at least 1/2 the commission Move Along my friend. MOVE ALONG!

Now go find your GEMS in the coming YEARS!

Ray Pepper
http://www.500Realty.net

I always include all cash flows when computing the ROI of an investment as does pretty much the entire financial community. I think this sentence in my original post is extremely clear….”The compound average annual nominal rate of return (including inflation) for common stocks was 10.7 percent over the period 1926-2001.” the fact I include SP500 index in parenthesis was to indicate the family of stocks the number was based on.

Now I am off to enjoy my long weekend.

“I stand by my figure. According to Jon’s link, the ~10% is correct if you include dividend reinvestment, which is not what you said, bubblebuyer. Your statement that ”

deejayoh, you must be the only investor in the world that does not include dividends when determining stock market returns. Hey, why not just forward dividends your investments pay out to me since you don’t value them. Give me a break.

Figure 4 shows the year-end dividend payout ratio from 1926 to 2000. On average, the dollar amount of dividends grew 1.23% after inflation per year, while the dividend payout ratio decreased 0.51% per year. The dividend payout ratio was 46.68% at the beginning of 1926. It decreases to 31.78% at the end of 2000. The highest dividend payout ratio (929.12%) was recorded in 1932, while the lowest was recorded in 2000.

So the dividend yield was basically front loaded in that it was much greater as a % of the total investment in the earlier years than in later years. Without that early bump, the overall return would have been much lower. Assuming that trend continues, it is highly unlikely the spread between index and index + dividend reinvestment will be as great for the next 75 years as it was for the last 75 years. TVOM is a "female dog".

but I digress.

The compound average annual nominal rate of return (including inflation) for common stocks was 10.7 percent over the period 1926-2001.” – (returns for S&P 500 Index in nominal terms).

is incorrect. Again using Jon’s link, the index at the end of the beginning of the period referenced was 12.65. At the end of the period it was 1144.93.

Return on S&P 500 Index = 1144.93/12.65^(1/76 years) = 6.2%. (Slightly higher than what I said before because it ends in 2001, not 2007)

A return on an index is just that, the return on the index. If you meant, “the return on S&P with all dividends reinvested” you should have said that. Or perhaps you might have included a link. But it appears you used a number that you thought proved your point and called it something it wasn’t.

Many of those wealthy foreigners already bought in the past few years. Now if they tried to sell, a 10% decline in our housing is more like a 40% decline to that foreigner when you factor in the dollar weakening over the last few years.

Foreigners owners of U.S. property are getting burned worse in our housing meltdown than Americans. Why would they want to “double down”?

http://www.ofm.wa.gov/economy/hhinc/medinc.xls

That site has some interesting state data including cross county commutes and a profile of home purchasers.

Now we need to take a look at demographics. I would hazard to say that a high percentage of home owners are retired people (who make little to no income)… so even though they don’t make the median income they also most likely own a home that is well over the median home price. (this will severely skew the numbers).

Then we have to look at people who have owned a home for more than 7 years. Likely that represents a large % of the market… these people most likely CAN afford their homes at median income.

What do we have left over, maybe 25% of the market? Lets say that most of the houses that are above being ‘affordable to median incomes’ fall into retired people / people who have owned a home for longer than 7 years… this means the 25% left over will for the most part fall into the bottom quartile (or the most affordable homes).

So now there are 61% of homes that own a house. The lower quartile (or 25% of 61% would make approximately 15% of Seattle residents that are in the zone of having a home that is in the lowest quartile of home values.) Can the median income afford a home in the lowest quartile?

A lot of people on the bubble are looking at homes in Queen Anne and saying “i make $150K and I can’t afford that… so no one else must be able to either”… yet they forget that most people started somewhere in the bottom quartile for their first home purchase.

This isn’t an argument against why home prices will fall. I’m just saying that the upper 50% of homes (or even 75% of homes) don’t have to be affordable to first time home buyers for the market to stabilize.

Not exactly. There are generally two schools of analyzing stocks…fundamental analysis and technical analysis…Technical analysis pays less attention to sales and earnings and more attention to the pattern of the stock price..I’ve never studied technical analysis in depth but people have made money using it. I’m more of a fundamentals kinda guy. Technical folk chase stocks on their way up, where I look for stocks with consistent and growing earnings that are near 52 week lows.

Again, I wouldn’t consider buying again until inventory is deminished. Until then, you’re catching a falling knife. You’d be better off buying stock in Solar companies. (ie. ELSR, SOLF, TSL…are all fairly cheap right now as the general market has buoyed them down ignoring fantastic growth and recent revenue).

Remember this on the 4th of July:

“We must be the greatest nation on earth, or why else would people risk death trying to sneak in on our American deserts, hoping to claim even a small portion of the American pie?”

If you buy individual stocks, I am advocating buying based on economic fundamentals and financial fundamentals of the company whose stock you are buying and evaluating whether to continue to hold or to sell based on changes in those fundamentals. I would argue that this is not market timing although some would say identifying these changes is difficult and my approach is akin to market timing.

This is market timing, what are you arguing here? That buying when fundamentals suggest it makes sense and selling when fundamentals say it makes sense is not market timing? What is that strategy other than timing the market? I am now confused.

How does this same strategy not apply to the housing bubble? The fundementals since around 2003 have not made any sense for housing prices. The fundementals say that prices will likely drop 30%+ to get back in line with what does make sense. How is holding off buying until prices correct to fundemental levels not market timing and not the best strategy?

I am on the faculty of an academic medical center. Many colleges and universities offer some kind of homebuyer benefit to faculty, although it’s often reserved for the tenured and for high demand programs where faculty could make more money in the private sector (like medicine, accounting, and business, not English or anthropology). E.g. a colleague at Stanford bought a house on campus for something like 25% of the usual Palo Alto price; because only faculty can buy houses on campus that constrains the market (Stanford also offers a reduced interest rate). But no one gets an MD or PhD or both, then suffers through the academic job market, just to make it easier to buy a house. The housing benefit is a side effect of the fact that academics operate on a national market; if a surgical attending can’t buy a house in SF, she’ll move to Boston or Chicago or wherever. Salaries are somewhat constrained (the reasons for this are complex), and as a result universities in high cost-of-living areas keep pumping up their subsidies until faculty attrition stops. The homebuyer benefit is just one of them.

“If your strategy is to just continually buy stock at any price and “cost average”, then you should hope and pray that when the time comes to sell the market is doing great. Bear markets and sector slumps occur all of the time…”

I am not advocating buying and holding over 80 years. By the way, the returns are a random walk and the analysis determines average annual returns so even though the sample interval is around 80 years, the average annual return should apply over a statistically relevant time interval shorter than 80 years. Of course this assumes no significant change in the underlying data point statistics.

I am stating that market timing has been shown not to work. There is considerable empirical evidence for this. If you buy individual stocks, I am advocating buying based on economic fundamentals and financial fundamentals of the company whose stock you are buying and evaluating whether to continue to hold or to sell based on changes in those fundamentals. I would argue that this is not market timing although some would say identifying these changes is difficult and my approach is akin to market timing.

It is interesting to note that the vast majority of investment professionals fail to beat the market on anything approaching a consistent basis and so buying a market index or index fund is the best way to achieve good returns. I don’t consider myself to be smarter or better informed than the professionals and my track record is mixed. Sometimes I beat the market and sometimes I don’t. On average, I would guess my returns match the market over a period of time.

America is the engine to the car and the rest of the world is the wheels and frame. When we stop buying stuff the engine’s dead and so is the rest of the world.

I don’t think I would go that far. I don’t think it is so much that the US is the “engine” of the global economy, but rather that globalization has locked us all in the same economic cycle. The credit bubble made money easy almost everywhere. Likewise, the bursting of this bubble will lead to fall-out almost everywhere.

http://politicalcalculations.blogspot.com/2006/12/sp-500-at-your-fingertips.html

http://icf.som.yale.edu/pdf/Supply(v5).pdf

And if you bought in 1999 and sold in 2001, you lost probably 30-50% of your money. If you bought a house from 2004-2007 and have to sell in the next 5 years, you are probably going to lose money. Especially if the spread is narrow. I am pretty sure you could buy a house in 1926 and sell it today for quite a bit of profit, it makes no difference. Citing average returns over an 80 year period to say that “market timing” does not work is not a valid argument. Most people do not buy stocks and then sell them 80 years later and most companies are not even around that long. If you could pull out 10% returns during the good times and the bad times and can cash out whenever you want to with those profits, you are beating the market. If your strategy is to just continually buy stock at any price and “cost average”, then you should hope and pray that when the time comes to sell the market is doing great. Bear markets and sector slumps occur all of the time.

America is the engine to the car and the rest of the world is the wheels and frame. When we stop buying stuff the engine’s dead and so is the rest of the world.