A few more articles from this week about how dramatically the local real estate market has slowed.
Puget Sound Business Journal: Construction defaults rise in Seattle area
The latest data on local new-home sales and construction-loan delinquencies illustrate the market forces underlying the growth in mechanics’ lien filings.
Delinquencies of single-family construction loans in the Seattle/Bellevue/Everett marketplace have risen to 11.4 percent of outstanding loan balances during the second quarter, according to data from Oakland, Calif.-based consultant Foresight Analytics.
That’s only slightly better than the median delinquency rate of 11.6 percent among the nation’s 100 largest metro areas. The Tacoma market is even more distressed, with 15.6 percent of single-family construction loans delinquent.
With respect to commercial and condominium construction loan delinquencies, both the Seattle/Bellevue/Everett (5.6 percent) and Tacoma (8.7 percent) vicinities fared worse during the second quarter than the top 100 markets combined (4.9 percent).
Falling new-home sales and values underlie much of the construction loan foreclosure activity.
Over 1 in 10 residential construction loans have gone delinquent? Yikes. So much for Seattle-area builders learning from the lessons of Florida, where they went through this same mess two years ago.
Tacoma News Tribune: Downtown condo sales at a crawl
How’s the market for condominiums in downtown Tacoma?
“What market?” says Judy Mayfield, head of sales for The Esplanade, the 162-unit project on the Foss Waterway, now nearing completion.
After two years of extolling the virtues of the nine-story luxury project, Mayfield and her staff have yet to close a deal on a single unit.
Tacoma’s condo market has suffered even more in the mortgage meltdown than other sectors of real estate.
…
Condominium developers and brokers remain convinced the condos are a good deal – in fact, they say, what with low interest rates and high inventory, they are a better deal than ever.The problem, they say, is getting people to commit in such uncertain times.
“The timing couldn’t have been worse,” Mayfield said. “Had the market not turned in the past year and a half, we would definitely have sold out by now.”
Translation: “We were really counting on suckering 162 flippers into buying luxury condos in Tacoma on the false hopes that they could sell them for a profit in the perma-hot housing market. Now that the market has cooled and everyone realizes that nobody wants to actually live in luxury condos in Tacoma, we’re screwed!”
Seriously. Who sat down at the drawing board and said “one hundred and sixty-two luxury condos in Tacoma—sounds like a great plan!” Perhaps it was the same sage that decided a good plan would be to build an 86-unit townhome complex in Kenmore, then market it with pictures of sandy beaches and palm trees.
Does anyone out there still think the rental market will be tight as a growing number of these completed condo and townhome projects switch to rentals after attracting no buyers for months on end?
(Brad Berton, Puget Sound Business Journal, 10.03.2008)
(Rob Carson, Tacoma News Tribune, 10.10.2008)
Jump to the bottom to add your comment. ↓
63 responses so far ↓
1
Tyler
// Oct 10, 2008 at 9:02 am
I have had a relative saying how nice Tacoma is/is becoming for the past 5 years. I personally never bought the argument and believe that the downtown “boom” may be another failed urban renewal project in 10 more years.
2
Mike2
// Oct 10, 2008 at 9:36 am
Falling new-home sales and values underlie much of the construction loan foreclosure activity.
I suspect this is highly regional. Every project that has broken ground in my neck of the woods in the last year has either stopped before foundations were laid, or built out to completion. Most have continued building.
In Seattle (north end specifically) I saw quite a few projects that appear to have stopped after the foundations were laid - presumably due to lack of financing.
How it’s possible for builders in Fairfax to avoid foreclosure when YOY prices are down 25% is a mystery.
3
Interloper
// Oct 10, 2008 at 9:37 am
It’s too bad that the confluence of events (stock market & credit crises) will make Northwesterners misinterpret what’s happening.
A year from now when Seattle homes have fallen another 10%+ in value, people will say “the economy” or “the stock market” or “the credit freeze” is to blame. Instead of blaming the speculative housing bubble which *had* to burst, both locally and nationwide.
So I repeat: the speculative housing bubble is the root cause of all of these:
- Seattle’s ongoing house price decline
- the credit freeze
- the stock market decline
Okay, I’m preaching to the choir, here.
4
masaba
// Oct 10, 2008 at 9:51 am
There are two huge condo projects that I know of in the north end still going on. One is near Green Lake where an old Albertson’s use to be. The other is near the Northgate Mall where it looks like you can live above a new movie theater. Wonder how long it will be before those rentals come onto the market.
5
Jonny
// Oct 10, 2008 at 10:09 am
While you’re headed in the right direction, Interloper, I think the true causation is:
Unreasonable monetary policies (deregulation of banking, printing lots of money and giving it away at recklessly low interest rates) under Alan Greenspan (and directly because of him) have caused:
- The “New Economy” (tech bubble and crash)
- The “Real Estate Boom” (housing bubble and crash)
- The “Roaring 90’s” (credit bubble and crash)
- The “Productivity Miracle” (equity market bubble and crash)
Our financial system is essentially corrupt.
6
Tom
// Oct 10, 2008 at 10:13 am
The old Albertson’s project on Green Lake is the Alexian, which was always scheduled to be apartments.
http://www.cbre.com/USA/US/WA/Seattle+Downtown/Property/agl.htm
OTOH, there’s always the entire block nearby which is now a huge hole in the ground that once was the Vitamilk Dairy. On hold for over a year now.
7
Jonny
// Oct 10, 2008 at 10:16 am
Oh yeah, and another huge cause:
- “Financial Innovation” (shuffling risk with opaque instruments, aka “lack of transparency”, aka “lying, cheating and hiding stuff”)
Although I suppose this comes under my original post under “deregulation of banking” and reasonably expected consequences therein…
8
bidingmytime
// Oct 10, 2008 at 10:18 am
It seems clear that housing, all housing (including luxury condos in Tacoma), was overpriced and therefore overvalued. I keep hearing in the MSM, politicians, economists ect that we need to do something to stabilize housing prices. The way they try to do this is to infuse cash into the banks. Now, I understand this cash is supposed to loosen up all the credit markets- not just the mortgages, but I am trying to understand the RE piece of it for the moment. Is it just PR for them to say that this will help more people get mortgages or do they believe it? I don’t understand how this will help.
For example, if I give my 3 year old a bone to feed to the nice doggie in the park and he bites her, it doesn’t matter how many bones I give her, she isn’t giving any of them to the dog. She knows what can happen when she does that. The problem isn’t a supply of bones; it is a fear of dogs. So, if we give the banks tons of cash, what makes us think that they will then pass it out for homes that everyone seems to know are overvalued and to people who can’t afford the house in the first place? Sure, there are some people out there who can afford it but they can probably get a mortgage right now anyway. However, the unwashed masses simply don’t qualify. They don’t qualify now because they should have never qualified in the first place. The banks have learned their lesson.
I get that if prices fall further, more of the people who bought recently are screwed. What I don’t get is how we expect for people to start buying houses again without first allowing the houses to return to more realistic pricing levels. . . is there any chance that the bailout will actually work in terms of real estate? Am I missing something or are the goals of propping up the housing market and freeing up the credit market actually at odds with each other?
9
CostcoMike
// Oct 10, 2008 at 11:17 am
Is it possible that the “culture” of the greater Seattle area will cause a cyclical pattern?
When prices fall to normal levels will the assumption that we are “special” hit again and cause another bubble?
10
Tyler
// Oct 10, 2008 at 11:21 am
@ CostcoMike
Even though people may hope that the prices will run up again, no banks will lend in the same manner.
11
Interloper
// Oct 10, 2008 at 11:29 am
“When prices fall to normal levels will the assumption that we are ’special’ hit again and cause another bubble?”
It’s possible, if we can’t learn the lessons from the current bubble.
12
Erik
// Oct 10, 2008 at 11:33 am
All the economist websites etc. that I read, and your daughter and dog and bone analogy does it best, bidingmytime. You deserve the Nobel in economics for a nice succinct explanation. ;)
I read the bailout as at best briefly delaying the inevitable — and really, delaying it just makes it worse so that isn’t even ‘best’ — best is probably for it just to be a pure waste of taxpayer dollars with no other effect! Once people wake up to the bubble, the prices start to adjust. While we are adjusting wondering where it will end up, it is all fear uncertainty and doubt. Once things settle back out — even if it is dow 4000 and one third price houses .. well, then we’ll know where we are and can figure out where to go from there, it’ll be calmer.
Might be a while though, eh?
As long as political ’solutions’ keep being tried, the waters will be being stirred up and re-muddied and we’ll still be in uncertainty and doubt.
13
WestSideBilly
// Oct 10, 2008 at 11:35 am
I want whatever she’s smoking. Luxury condos in Tacoma wouldn’t have sold out 3 years ago, much less now.
I’m glad we’ll end up bailing these geniuses out too.
14
David McManus
// Oct 10, 2008 at 11:40 am
Maybe another round of stimulus checks are in order, lol.
15
EconE
// Oct 10, 2008 at 11:43 am
Good thing all’s well with downtown condos.
http://community.seattletimes.nwsource.com/reader_feedback/public/display.php?id=874
16
Yesler Hill
// Oct 10, 2008 at 12:29 pm
I have to agree with Jonny. This mess isn’t the result of a a housing bubble; the housing bubble is just a symptom of the financial system that’s been developed over the last 28 years. Accelerated deregulation has led to unrestrained greed (which is what capitalism is all abt - maximizing short term profits), and with out social regulations on capitalism, its all gone to heck in a handbasket. There is no bailing out, no refloating the system with massive cash direct to banks, etc. That’s just bogus, more trasnfer of wealth tot he already super rich and the multinationals.
It’s time for the political leadership in this country to step up and lay out the real problems and some real solutions. And other than Ralph Nader, none of the main candidates for president are even close to approaching what needs to be said and done.
On the other hand; yay! My rent will finally start to drop again! Wheee!
I like Tacoma, it’s an honestly working class and middle class city. With none of Seattle’s pretenses to being “world class” and special. I think Tacoma will coem out of this “better” than Seattle, simply because Seattle has dug it’s so very deeply into the various bubbles; personal debit, housing prices, commercial short term loans for worthless projects and expansions, endless corpraote acquisitions, oil prices, etc.
My concern is all these big holes elft all over Seattle will become breeding grounds for West Nile carrying mosquitos next summer.
17
Softwarengineer
// Oct 10, 2008 at 1:22 pm
THERE WAS AN OLD JOKE DURING THE 1990 HOUSING BUBBLE ABOUT SEATTLE AREA CONDOS
Getting rid of Herpes was easier than selling a Seattle area Condo.
18
Demersus
// Oct 10, 2008 at 1:28 pm
EconE @ 15
I feel the cynicism in post. This guy purports to recognize the current problems, but fails to see the larger picture. We bubble-heads have been pretty consistent in our predictions/opinions. But, anyone even remotely involved in the RE business will try to shine a turd no matter how it flies in the face of pragmatic common sense. Seriously, they just feel the splatter at some point, ehh?
All this yap about MS; does anyone realize that they too are being effected by world economics and greater competition?
19
Jake
// Oct 10, 2008 at 1:43 pm
You have to remember that a luxury condo in Tacoma starts in the high $200’s. The condos mentioned in the TNT story are on the Foss Waterway. So a waterfront condo (ok not like being on the open Sound but still waterfront) with steel and concrete construction for $275k is not bad. That was the original starting prices when they a started pre-selling years ago for the 750 sqft unit. I am sure now they would take less. How much would that cost in Seattle? $500k? Many condo buyers who buy in Tacoma come from Seattle.
20
Scotsman
// Oct 10, 2008 at 1:44 pm
Meanwhile, up north:
“Brunswick Corp. will permanently shut its Arlington yacht factory by year’s end, idling most of the facility’s 790 employees, the recreational equipment company said today.”
21
uptown
// Oct 10, 2008 at 1:55 pm
“Luxury Condos” - they throw in a huge fancy kitchen (who cooks anymore?) and oversized bathrooms (yea, just where I want to spend my time) and demand an outragous price. The fact they haven’t had to turn them into apartments yet, says something about their profit margins.
22
Demersus
// Oct 10, 2008 at 2:32 pm
West Water Seattle condos in West Seattle are not only putting unsold units on the rental market, they are also offering 6 months of mortgage payments free with a purchase; smacks of desperation.
http://www.westwaterrentals.com
23
Interloper
// Oct 10, 2008 at 2:45 pm
Jonny, I don’t argue that the speculative housing bubble may have its own casues.
I’m just making the point that when Seattle house prices continue to fall, it’s not going to be because of the credit freeze or the stock market plunge, it’ll be directly caused by the fact that house values are inflated and unsustainable — something many Seattleites doesn’t seem to grasp.
24
Demersus
// Oct 10, 2008 at 3:02 pm
Interloper, you’re so on-target with your statements. Many people look at the symptom as being the cause.
By the way, I thought Tort reform was supposed to address skyrocketing health care costs. Again, I believe they treated a symptom without understanding the underlying fundemental cause of the problem. People suing insurance companies was not the problem, insurance companies not living up to their obligations to policy holders was the problem. So, the solution? Don’t let the policy holders get any legal relief. Yeah, sounds logical.
We’ve thrown away nearly a trillion tax-payer dollars in addition to the losses in the market which was not sustainable. Yet, the markets continue to drop as they should. There is a difference between value and price; people don’t get it.
25
anony
// Oct 10, 2008 at 3:07 pm
Remember the downtown condos that decided to raise prices while the market started to tank to “send a message to fence sitting buyers”? Anyone know how they are doing? Did they scare enough people with the threat?
26
deejayoh
// Oct 10, 2008 at 3:07 pm
The Llink that EconE had at #15 answers the “pocket listing” question for downtown condos.
In the Q&A, Dean Jones of Realogic says:
Head over to Redfin and check the number of MLS condo listings in the same area… about* 350. So the “real” number is 2.5 - 3x the listing number.
In the same area, about* 450 units sold in the last year. So there is an over 2 year supply on the market.
*I say about on these numbers because I am eyeballing the ones east of I-5, which are included in a search for “downtown” in redfin but appear to be excluded from Dean’s definition of the area covered.
not bad at all, if you’re a RENTER
27
EconE
// Oct 10, 2008 at 3:18 pm
Even Realtors are dumping their downtown condos at a loss currently….you know…selling them for less than they paid.
That should tell you something.
28
The Tim
// Oct 10, 2008 at 3:21 pm
Jake @ 19,
You sound suspiciously like someone with something to sell.
29
b
// Oct 10, 2008 at 3:27 pm
That Dean Jones article was pretty eye opening as to how many rubes there are out there with too much money or house. Don’t these people read the news?
30
HomeLoser
// Oct 10, 2008 at 3:48 pm
This is an interesting presentation that Sequoia Capital apparently presented to their portfolio of companies describing the changing economic fortune of our newly socialist and bankrupt country. Click on the full screen view if some of the slides are tough to read. It does a good job describing the elements of our perfect storm.
http://www.slideshare.net/eldon/sequoia-capital-on-startups-and-the-economic-downturn-presentation?type=powerpoint
31
TheHulk
// Oct 10, 2008 at 4:02 pm
Ha ha ha Looks like Tim@28 caught “Jake”@19 with his hand in the cookie jar.
32
Jillayne
// Oct 10, 2008 at 4:21 pm
Mechanics liens will hit local title insurance companies in a bad way. They have already went through several rounds of layoffs, some title companies have all their staff on reduced salary/hours, and almost all outerlying branches have been closed.
Anyone notice that there are now several small banks advertising on the radio heavily….just like what WaMu was doing a few months ago?
First it’s a plea for small business owners to move their accounts. Next they’ll be offering high yield CDs.
Two banks have already failed today in other parts of the U.S.
http://www.fdic.gov/news/news/press/2008/index.html
33
Everett_Tom
// Oct 10, 2008 at 5:09 pm
It’s up to three now….
34
Everett_Tom
// Oct 10, 2008 at 5:13 pm
Oops, never mind.. that last one was is just a press release… not a bank failure.. I need to learn to read..
35
Demersus
// Oct 10, 2008 at 5:38 pm
Banks? Who needs banks? We’ve got Paulson with his hands on the printing press. Lost your stash? No problem, we’ll print more…
36
WestSideBilly
// Oct 10, 2008 at 5:53 pm
Demerus @ 22:
WasteWater Condos were overpriced crap from the beginning. The rents they were asking after giving up on sales were 25-50% higher than comparable units within a few blocks. So yeah, they’re desperate.
37
Demersus
// Oct 10, 2008 at 5:56 pm
Reality should start to set in about 12 months ago….
38
Ron
// Oct 10, 2008 at 6:45 pm
Everyone TAKE NOTICE: Mortgage Interest Rates have REALLY JUMPED Last 24-48 Hours..
YAHOO FINANCE: 6.16%
It was only couple of Days ago roughly 5.8% - THATS FOR 30 YEAR FIXED….
There some real big problems behind the Scenes… I haven’t remembered interest rates “Quittt, Jumping like this… ESPECIALLY AFTER .50% Interest RATE DROP, BY THE FED…
39
Ron
// Oct 10, 2008 at 6:52 pm
.25 Point in Roughly 24 hours MOVE UP.. On fixed rate 30 year mortgages.
Whats also Interesting is that the Price of Gold and Silver also, moving Irratic.
The way I See it… Gold and Silver paper trading is NOT REALLY BASED ON THE ACTUAL METAL.. Its been built kind of like the Banking System where the Actual Trading price is Fictionous… Those paper trades if you actually asked for REAL STUFF.. There just wouldn’t be enough to cover MUCH..
They have really screwed up, just about every marketplace… With Massive Leverage and Paper Created out of Thin air.
40
david losh
// Oct 10, 2008 at 8:49 pm
I just noticed last night three projects west of the university, one the shell is finished with siding and roof, the second is framed and sheathed, the third is a bare foundation.
Today while driving around Seattle and West Seattle I’ve notice many projects just sitting idle.
In the 1980s I had a company that finished out codo projects to make them bank financable. Developers usually paid at first then the banks started protecting the investments they had by at least getting the roof and siding in place.
Today is much different than anything I’ve seen.
Unfinished projects are one thing for the homeless, but what about the properties that are vacant and haven’t been torn down for redevelopment. I think this winter will be ripe for random fires, homeless hurt in abandoned buildings, and neighborhoods facing problems with homeless moving into nicer neighborhoods.
41
Ray Pepper
// Oct 11, 2008 at 12:17 am
Friday at the Tacoma Home Show was slow . No intelligent conversation. I handed 0 shirts out for nobody deserved any. I ate a horrible pineapple burger and have been suffering for 6 hours. Someone obviously didn’t wash their hands. God help me…………………………………………. the Kaopecate kid!
42
buyStocks
// Oct 11, 2008 at 12:27 am
What the hell, I just saw a commercial saying how great it was to buy a home, and advertised below site:
http://housingmarketfacts.com/
Check out the equity calculator
Nausea inducing crap
43
masaba
// Oct 11, 2008 at 9:30 am
Ha ha, that equity calculator is great. Clearly, home equity nationwide is a strong linear function of your 10% down payment.
44
david losh
// Oct 11, 2008 at 10:06 am
If this is post that will be here for the day it seems a good opportunity to suggest a donation to the Seattle Bubble.
My experiment is simple. The stock market crashed or corrected as the spin goes. Comparisons are made to 1929, 1987, and 1999, or 2000.
I believe the internet is a wild card in the business world. Banks, hedge funds, even commodities are an old way of thinking. Real Estate has new business models, as does ETrading, shopping, insurance, mortgages, and the list goes on. It seems to me that as individuals we have the ability to handle our own finances.
To prove the point it’s my goal to have the Tim make money from this blog, lots of it, a million dollars.
I honestly believe the internet is the new face of commerce. Anything is possible. With a million dollars we could see where the Tim would invest it.
If you made a million dollars from an internet venture would you turn those dollars over to a Mutual Fund, Municipal Bonds, Gold, Oil, or the billions of other “smart” investments in the world today?
45
anony
// Oct 11, 2008 at 11:41 am
I don’t think I understand your experiment. If you want to look into the effects of internet economy, I would look more at google, amazon, yahoo, ect. I am not sure that a blog accepting donations is the premier example of internet money making. If you are thinking of how increased availability of information affects the greater economy, this blog is informative but I am not sure how the Tim’s net worth tells you much.
46
david losh
// Oct 11, 2008 at 12:06 pm
Everybody looks at google. My interest is in small business.
There is an economic theory about the Internet business model.
In China there are a billion people. Apple, along with other companies, have tried to open the market of small portable computers to be in the hands of more people.
A statement made at a computer expo has stuck with me. If everyone in China in one week, or month, or year, purchases one product, from one web site, for a dollar, that’s a billion dollars in sales.
There are six billion people in the world. Let’s say 10% buy a single product from a single web site for a dollar that’s six hundred million, 1% six million.
For the Tim if 100,000 people contribute $10 that’s a million dollars.
Is it possible? Yes. Probable? Yes. The question is the time factor.
The second question is when he gets the money what will he do with it.
Will he build more sites, or invest the money in the stock market?
47
mukoh
// Oct 11, 2008 at 12:21 pm
Jill, Will hit? You are detached imho, Do you know who is the #1 in WA construction and lost Title insurance with the two biggest title companies in WA?
Regards
48
Ira Sacharoff
// Oct 11, 2008 at 2:12 pm
“The second question is when he gets the money what will he do with it.
Will he build more sites, or invest the money in the stock market?”
I’m just guessing, but I’m assuming that if The Tim quickly got a million dollars in donations he probably would not be investing in Seattle real estate.
49
buyStocks
// Oct 11, 2008 at 2:40 pm
He’d be crazy not to invest it in real estate. According to the housing equity calculator at http://housingmarketfacts.com/ if he put his million down as a 10% downpayment on a 10 million dollar home, he’d get a 600% return in 10 years…
50
jonness
// Oct 11, 2008 at 7:03 pm
I’m not exactly thrilled with trickle-down economics. Steal from the poor and give to the rich, who invest the money in worthless leveraged paper. Then when it’s time to pay the piper, steal more from the poor in order to amend the losses.
I could be mistaken, but I think that’s what David Losh is fascinated about. We don’t need gigantic companies to take our money and treat us like indentured slaves. The little guy can figure out a way to turn an honest buck and live free from the military/industrial-complex. If that’s his point, then I say, let it crash baby! Bring on the crash! (not to say that David agrees with me on allowing the crash)
People are getting hurt in this, and I mean really hurt. The Dow is down 41%. In thinking about that, it’s important to keep in mind that nobody bought in at $0. Thus, the losses are much greater than 41%. In many cases people are losing everything.
But that’s the price one pays for surrendering freedom and paying someone else to make life’s most important decisions in order to live temporarily free from worry and responsibility. Any good con artist knows his victims get what they pay for. They get the delusion they are being fed. If it weren’t worth the price, they would never buy it in the first place.
If people realize they’ve been conned, and it turns out they don’t like what they bought as much as they thought they would, then it’s not too late to stop making payments and invest in a different product.
51
JillayneNotJill
// Oct 11, 2008 at 7:12 pm
Hi mukoh, I’m not in touch with any inside information pertaining to title companies. Not sure who has the biggest market share in the state, but it’s really no secret who has the highest builder title ins. market share in King and Snohomish Counties.
So, don’t keep us in the dark, what’s going on? Thanks.
52
Crusader
// Oct 11, 2008 at 7:47 pm
Ok, here’s the 50K question: what’s the crime like in Tacoma? What is the % of minority population there?
53
david losh
// Oct 11, 2008 at 9:01 pm
Some times we make comments without thinking. Minority % is different from the crime rate.
No, the military/ industrial complex is a thing of the past. This is why I blame Bush and Cheney. They bombed infrastructure. That is a bad military tactic if you intend to invade, capture the legally elected head of states, kill his sons, put them on display, then hang the head of state and broadcast it on YouTube. It was just stupid militarily, economically it did establish the United States as a tough negotiator.
The infrastructure was the key, the give away, Bush and Cheney wanted us in there for a very long time. Cheney said he can clean it up and Bush believed him. The idea was to establish a second economic presence in the Middle East. It was oil, and Africa. Europe needs Africa to survive. Africa has resources, Europe builds fine automobiles and watches.
In my opinion the economies of the world got way too big. I mean the economies. I think even businesses and corporations never saw how grand things became. I think CEOs sat and looked at numbers they had no reference for. It grew beyond any one’s expectations. I think if you were to ask Warren Buffet or Bill Gates or even Schultz the Starbucks guy they’d tell you they had no idea they would make multi billions of dollars in one life time.
There is no crash. There is no burning and there is no going back. It’s only money and it’s still out there. The panic for government is that nothing has stopped, business is still business, dollars are dollars.
You can not militarially contain six billion people on the planet. You can nuke ‘em but that might upset them. Governments made promises. The world would collapse without them in control. Is that really what we are seeing or will corporations start making more demands?
In the 1970s there was another obscure economic theory that future wars would be fought economically. I think that’s what Reagan did. I think Reagan won an economic war. I think China is trying right now to win an economic war and it’s going sideways on them.
I do think the internet has changed the playing field. I think that any one with an idea and computer can make money. The idea of making a million dollars used to be a grand idea, today it would take a billion to impress any body.
So, once again let’s tip the Tim a million dollars and see where that leads, at least we would be doing something for some body, and maybe ourselves. Who knows what he would do with the money.
54
Ray Pepper
// Oct 12, 2008 at 10:20 am
# 19
Jake you were busted by the TIm… Watch out….The Bubble knows all…
BTW The Tacoma Home Show was actually busy yesterday. I got into at least 5 meaningful conversations, 2 people mentioned a blog (sorry not Bubble Tim), and I believe the Show was easily worth the 1500 it costs to get in. We still have Sunday to boot. Our “Lead Generation” jar for refinance and purchase has about 50-60 entries and the usual 4-5 will turn into transactions. Not to bad.
I avoided all food at the Dome and look forward to the Seattle Home Show this week. About 50 shirts left going into Seattle.
As for condos in Tacoma …please….They will continue to drop like a rock. What about the 500-800k project overlooking Ruston? GOOD LORD! That development looks about 6 months away from completion surrounded by 180-250k homes up and down the street for sale.
55
david losh
// Oct 12, 2008 at 10:49 am
And on queue is Ray, a consumate internet business model supporter.
56
cheapseats
// Oct 12, 2008 at 10:50 am
jonness, hmm so much to comment on here…
“I’m not exactly thrilled with trickle-down economics. Steal from the poor and give to the rich”
My understanding of the trickle down theory is that you tax the rich less, which I guess around here is the equivalent of stealing from the poor.
“The Dow is down 41%. In thinking about that, it’s important to keep in mind that nobody bought in at $0. Thus, the losses are much greater than 41%.”
Actually, if you really think about that, people would be up some% if they bought in at $0.
57
TJ_98370
// Oct 12, 2008 at 12:12 pm
.
From Calculated Risk
.
Charlie Rose: A Discussion with Paul Volker
.
“….We need fewer financial engineers and more electrical engineers, chemical engineers, and civil engineers to take care of our infrastructure. We put too much talent into false castles in the financial world….”
.
This Paul Volker guy must be some radical.
.
58
deejayoh
// Oct 12, 2008 at 12:21 pm
no happy news for the local economy in today’s Seattle Times
Sunday Buzz: Real estate in play as WaMu and others shrink
The Great Disruption hits Puget Sound hard
59
anony
// Oct 12, 2008 at 12:40 pm
Ghost in the machine - I am able to post “Anony” and edit his prior post.
60
jonness
// Oct 12, 2008 at 1:05 pm
“My understanding of the trickle down theory is that you tax the rich less, which I guess around here is the equivalent of stealing from the poor.”
IMO, it starts with the rich corporations paying for politicians to get elected. Once they’re in, they become servicers for the wealthy and begin to provide special favors and breaks for those that sign their paychecks (corporations and special interest groups). The theory is, by stroking the hand of the rich corporations, they will invest in infrastructure, which will create jobs. Thus, the favors granted the rich trickle down and also help the poor. Obviously, it is the poor who pay the greatest share of taxes in the country. Yet they can least afford to do so. But without the wealthy, the poor don’t have jobs or means to pay for food, so it’s a fair exchange.
Thus, trickle-down seems like a good idea. Unfortunately, it doesn’t actually operate as stated. Much of the breaks to the wealthy are invested in leveraged paper or shipped out of the country to service contract wars or cheap labor, so little new actual infrastructure gets built. And as we’ve recently witnessed, when the leveraged paper turns to pigeon dung, the poor end up footing the bill in order to cover the losses of the wealthy investors (i.e stealing from the poor).
It’s a shame, because the republican party used to be very fiscally conservative. Unfortunately, when Reagan and Bush Sr. got in, they could not get Reagan’s new trickle-down economic theory to work, so they ballooned the debt by 4 times. This is a well-known way of artificially stimulating the economy in the short term. But it causes mass chaos down the road, such as we’re experiencing today.
Debt Chart
The debt pyramid scheme (bubble) is reaching a critical mass, and it is resulting in the unraveling of our countries great financial system and threatens to destroy America’s status as the number 1 economic superpower. Each additional $1 trillion we borrow amounts to another direct taxpayer loan of $6667.00 for every working American. But in truth it amounts to a much higher loan than this because we borrow the money to service the debt and tack it onto the loan. In the housing industry, such loans are better known as Alt-A mortgages. Such loans are thought to be the next wave of defaults that will further cripple the financial sector.
At some point, Americans will have to face the facts and become fiscally conservative again or go into bankruptcy as a nation. But no one wants to do that because there is so much money available for rich corporations and special interest groups. Since the beneficiaries of the hand-outs aren’t responsible for the repayment of the debt, they would be crazy to stop taking the money. It’s a mess.
“Actually, if you really think about that, people would be up some% if they bought in at $0.”
The typical way of obtaining stock is to pay fair-market value. For instance, GM cost $42 per share one year ago. Let’s say you picked up a bunch an put it into your 401K. Now fast forward to today, and the price is now $4.69 per share. So you lost 88% of your money. OTOH, if you were one of the few people on the planet who inherited the stock (bought in at $0), then you still have a profit. Such examples are probably 1 in a million though, and I’ll bet those people are just as panicked as if they had actually had to pay for the stock.
61
jonness
// Oct 12, 2008 at 2:21 pm
“My understanding of the trickle down theory is that you tax the rich less, which I guess around here is the equivalent of stealing from the poor.”
To be more succinct, tax breaks are good. But phony tax breaks, which are really massive loans taken out on the behalf of the American worker, are really, really bad.
62
bigdollordog
// Oct 12, 2008 at 4:55 pm
Yikes
look at Alan Greenspans plan to push down wages for Engineers to be on par with the 3rd world Miro-softies take note. call it In-sourcing
http://www.youtube.com/watch?v=62DtPMskSk4&feature=related
63
Jake
// Oct 16, 2008 at 6:46 pm
Sorry didn’t know the website was required when posting.. Thanks for the shout out and the hits ;) .. Also I don’t have any condos for sale and if you know me I am more of a Tacoma booster than I am a real estate booster. Just saying that many buyers I have worked with have moved down from King County because of the affordability.
Also the TNT did do an update on the story. There are 21 units pending. Still not great but i guess better than nothing
Jump to the top of the comments. ↑
Leave a Comment