Ask the Industry Insiders: Dan Klusman of RightTimetoBuy.org

For the first interview in our “ask the industry insiders” series, we turn to Dan Klusman, Director of Communications for the Master Builders Association of King and Snohomish Counties, the group behind the website Right Time to Buy.

Rather than pick and choose what portions of the interview to share, I’m just going to include the full thing, in order to give Dan a completely fair shake. So without further ado, Dan Klusman answers our questions about the Seattle area real estate market.

1) Median home prices have been falling in the Seattle area since late summer 2007, and are down 10-20% from their peak values (source: NWMLS). Given the drop so far, how much further do you expect prices to fall?

Let me start by putting my cards on the table. Some of your data-specific questions are better answered by other experts who are drenched in data every day.

1a) If you believe that home prices are at or near the bottom, what specific evidence can you cite to support this view?

I predict we are at or near bottom for drop in home prices. We may bump along the bottom until mid-2009. I don’t have a specific data source for my predictions. I’m basing my opinion on a number of factors including the fact that several city-specific areas have remained strong during this downturn; values of remodeled, resale homes have been strong throughout 2007; and some types of homes (such as those that are Built Green or otherwise environmentally certified) have continued to sell faster and hold their value. We haven’t seen precipitous price or value declines across the board in all types of housing in all areas.

Some may think I’m being optimistic but I’d put out that I’ve been right more times than those who’ve predicted that our Puget Sound market would follow Detroit and Southern California’s off the cliff.

However, the single biggest threat to the housing market is the limited supply of credit and home loans. A thaw in the mortgage market would help, whereas additional, significant blows to the economy or reducing mortgage availability further would make things worse.

1b) If you believe that home prices will drop further, what makes it a smart decision for potential home buyers to buy a highly leveraged asset in a declining market?

We’re experiencing a short term decline in what is a healthy market over the long term. Now is a good time to buy if you have a steady job, good credit, have money for the down payment and can make the mortgage. Plenty of choice in inventory available. Sellers and builders may be willing to deal. Also, FHA loans have become a great opportunity for first time buyers. The current FHA loan limit is about to go down from $567,500 to $506,000 in our area and the required down payment is about to go up from 3% to 10%. [Editor’s note: while the FHA limit and the conforming loan limit through Fannie and Freddie are both being lowered to $506,000, the FHA minimum down payment is only increasing to 3.5% (thanks for the clarification, Rhonda).] For many people that makes it a good time to buy. May not be the right time for everyone but we’re not saying it is.

2) Housing and population data from the Census Bureau shows that from 2000 through 2007, construction of new housing units in King, Snohomish, and Pierce County exceeded household growth by 60% (see this post for further details and citations). During this same time, incomes increased less than 30%, but home prices increased over 85%.

How do you explain this rapid increase in Seattle-area home prices that has been so disconnected from the fundamentals that traditionally drive the housing market?

An excellent question and one that I think has several answers. I’m going to be brief in my response but I know people who can talk your ear off about this stuff. In general, we believe there is a lack of affordable housing in our region and that homes prices have increased substantially over the last decade for a variety of reasons. Looking at the big picture, central Puget Sound is a growing region with a strong and diverse job base. As residents look for housing, they run up against multiple roadblocks limiting the supply of housing near employment centers, including:

GMA. The Growth Management Act has been a double edged sword in this area. While it has prevented the overbuilding that now plagues some areas like Arizona, where partially-built inexpensive spec homes now lie abandoned, there is no doubt it has artificially increased home prices over the years.

Increased regulations. An ever-increasing number of local regulations (including impact fees) have driven up the price of homes. Research by UW Economics Professor Theo Eicher pegged the price of regulations at $200,000 for a Seattle-area single family home.

Lack of density. Local jurisdictions across the board have resisted attempts and, at times, outright ignored their responsibility to meet housing targets under GMA. Low supply + strong demand = higher prices. Increased density (whether it’s small lot sizes or allowing more multi-family development) will bring more affordable housing choices.

Traffic concurrency. While it sounds good, traffic concurrency requirements can create leapfrog developments, moving congestion from one community to the next.

Reductions in land supply. Local regulations have also removed buildable lands from the market (i.e. critical areas ordinances that increase the size of no-build buffers in urban areas, stormwater rules requiring larger detention vaults, etc)A no-net loss of buildable lands policy that requires increased density within the urban growth boundary any time buildable lands or housing supply is reduced would allow capacity to expand and help prevent sudden increases in price.

Attractive region/quality of life. Never underestimate the fact that our region has attracted people for all kinds of reasons. I moved here in 1990. I met my wife, had two kids, owned two dogs, and have owned two homes. The second one more expensive than the first. Does that make me part of the problem? Some would say yes, but I don’t think so.

3) What do you predict will happen (on average) with local home prices in 2009?
3a) Specifically, what data do you base this prediction on?

See my answer to question 1a.

3b) Same questions, for 2010-2015.

I would expect an improved overall economy and housing market, but other experts have a clearer crystal ball that far out.

4) Given the loss/sale of WaMu and Safeco, Boeing’s troubles with strikes and customer financing of new plane purchases, Starbucks’ massive drop in profits, and Microsoft’s “re-evaluation” of its hiring plans, how do you think the Seattle-area economy will fare in a prolonged recession, compared to the rest of the nation?

I’m confident in our long term economic health partly because of your question. You mentioned five companies in five industries that are all regrouping in the face of hard times. I grew up in the Midwest and clearly remember how hard the auto industry (and economy in general) was hit in the late 1970s and early 1980s. We’re fortunate that we don’t live in a one company/one industry region. I think we will fare better than many areas of the country in part because of our diverse economy, access to a thriving port, and a region that grows businesses from entrepreneurs rather than relying on businesses relocating to the Puget Sound area. You have to have some perspective with all of this. The Seattle-area market is nowhere close to the experience of Southern California, Florida, Nevada, or Detroit. If you think we are in the same situation in terms of building starts, price drops, employment or economic outlook you are very wrong.

5) In retrospect, what do you think could or should have done differently that would have helped avoid the current rate of real estate value depreciation?

Initially the slowdown in the market in 2006 and 2007 was fueled by consumer perception and not necessarily market reality. I wish we had been faster and more proactive to educate consumers about the market.

5a) Put differently, what are the top 3 lessons we need to learn from recent real estate events?

  1. Fortune favors the bold but devours the reckless. Those that are able to accurately asses their own financial resources and tolerance for risk will fair better than those that foolishly buy more than they can afford.
  2. Real estate, despite short term fluctuations, can be an excellent investment.
  3. That said, a house is a home and not an ATM. You should buy a home because it has a great floorplan, is near good schools, because it has the perfect spot for a Christmas Tree, or any of the other reasons that reflect your lifestyle, hopes, and dreams.

6) What changes do you see happening in the real estate industry as a result of this?

I think the next group of professionals involved in the residential real estate to be hurt by this market are remodelers. The new housing market and the remodeling market statistically are positively and not inversely related. Common sense would say when one is up the other is down but historically it hasn’t played out like that. The remodel market’s peaks and valleys are about 1-2 years behind the new home market.

Most people who remodel in our region finance the project themselves through one of several ways: home equity line of credit (or other loan), proceeds from the sale of an asset (such as stock), or spending saved cash. The first two on my list are drying up and stocks drop and credit is harder to get.

I’m sure there will be (and there should be) systemic changes to the lending industry as a result of this downturn. I’m sure I could give you my opinion but it would be just that. Others will have a better eye for this than I do.

The one thing that I don’t expect to change is the role of the housing and real estate industry as a primary driver of the economy.

7) Is there anything else you would like to say about the Seattle-area housing market to the readers of Seattle Bubble?

Yes, I have read some of the posts on SeattleBubble and other websites about the real estate market. I have agreed and disagreed with many of the posts and positions of their authors. The only thing I am offended by is the notion that somehow our association (or the other industry professionals that you’ve sent questions to) are “the other side.”

I have talked to local business owners who feel as though they have personally failed their employees, customers, and community because their company won’t survive this economic downturn; their out-of-work employees who feel scared and alone; and homeowners who feel helpless as forces beyond their control.

Our association has been a champion for affordable housing. We do not advocate that families buy more house than they can afford. We are not any more or less excited about the current market than you are. And for 99 years we have provided a basic human need: shelter. We are all in this soup together.

I’d like to thank Dan for being willing to share his thoughts on this forum. While I definitely don’t agree with all aspects of his assessment, I do appreciate his openness and enthusiasm.

Here are my biggest issues with Dan’s responses. First, Dan’s answer to 1a) seemed to be a bit of misdirection, talking about “several city-specific areas” and specific types of homes that have supposedly held their value. That’s fine, but most areas have had falling prices, and the question was whether those price drops are finished or not.

Second, Dan’s answers to 2) seem to totally ignore the reality that building has exceeded household growth in the Puget Sound, in spite of whatever restrictive effects the GMA may have had.

Also, in his response to 4), Dan seems to be putting a lot of faith in the area’s diverse economy. That’s fine, but right now, as the national/international recession is just getting started, nearly every aspect of our local economy is experiencing stress. Even just this week, our major local retailers have also announced that they are under significant stress.

Finally, I really can’t let Dan’s response to 5) just slide. I’m sorry, but there is zero evidence to support the view that the initial market slowdown was merely due to poor “consumer perception and not necessarily market reality.” Better “education” is not going to magically give people the ability to purchase an overpriced home. Sorry.

On the other hand, I agree with Dan’s comment that the Seattle housing market will likely not get as bad as Southern California, Florida, Nevada, or Detroit. That being said, if home prices in those areas fall 70% and Seattle only falls 50%, that condition will be met.

I also would like to say that in the initial interview post when I mentioned “the other side,” the reason I put it in quotes is because that is not how I personally feel, but rather how I feel many folks in the real estate industry view Seattle Bubble. I agree with Dan that we’re all in this together. It is a benefit to everyone that we work to improve the quality and quantity of market information that is available to potential home buyers and sellers.

  

About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

145 comments:

  1. 1
    singliac says:

    Thanks for your comments, Dan. It takes guts to voice your opinions like that. That said, I think your analysis is more based on opinion than fact

    #5 stuck out to me as well. I think the RE industry did a little too much “education” about the market over the past few years. I’ve got some friends who bought at the peak who probably wish they remained uneducated.

    What about the comment about housing continuing to be the main driver of the economy? That doesn’t seem very sustainable long-term. Does anybody else have an opinion on the subject?

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  2. 2
    Joel says:

    I’ve been right more times than those who’ve predicted that our Puget Sound market would follow Detroit and Southern California’s off the cliff.

    Congratulations on being right more often than a bunch of people that don’t exist. In a similar vein I would like to point out that I have been right more often than people that predicted that fairies would descend from the sky and prop house prices up with their magic wands.

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  3. 3
    Ray Pepper says:

    I’m sorry I don’t think Dan brings anything to the table and has no clue how much more we will drop or where we as a country are headed. Dealing with the short sales and foreclosures now on a daily basis, travelling the west coast, talking with lenders and builders daily and an avid trader for 2+decades I suggest the following based on personal FACTS:

    Rental rates will remain quite strong as evidenced by my portfolio and the other 100+ residential homes in our investor network . The homes are in Tacoma, Olympia, Renton, Federal Way, Burien, Albany, Salem, Reno, and Fallon Nevada.

    There will be no stopping the surge in foreclosure activity short-term because homeowners will NOT stay in their home when they are upside down triple digits.

    ***My biggest concern and not discussed too often*** People are ever increasingly happy to rent. Not having to pay taxes, insurance, and up-keep in depreciating assets have made it increasingly popular to rent. The “dream” of homeownership has changed and now the mantra is like a lead weight around a Buyers neck. *** This mantra can go on for many many years and continue to drive prices down. Relief from property taxes is not insight here either.

    Consumer Credit-Has been and will continue to be crushed. Watch for a tremendous amount of owner contract deals for those choosing to buy.

    The next 5 years will see great changes in Real Estate that will help me educate my children and the grand kids someday because I never forget.

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  4. 4

    Congrats to Tim for getting this interview and for Dan to be bold enough to participate. I might suggest that in upcoming interviews, Tim allows the interview to stand on its own and then add his comments below like the rest of us.

    Maybe Hilary Marsh of NAR would be willing to take her turn in the hot seat?

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  5. 5
    EconE says:

    He really must think that the SB crew is a stupid one.

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  6. 6
    CostcoMike says:

    My question is will he read this thread and post replies? I would like to know who he turns to for data and info. Does he do his own research or have someone do it for him?

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  7. 7
    jon says:

    Asking forecasting questions of someone who builds houses is like hiring an economist to paint your walls.

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  8. 8

    GOOD TAKE SINGLIAC #1

    In my opinion [and many other of the SB bloggers], the service industry with globalization replacing our manufacturing jobs, and simultaneously keeping it afloat with massive American debt is beyond absurd. Continuing down the path of being the world’s bankers and paper shufflers has failed miserably; its simply a path to ruin.

    The uncontrolled growth housing industry does not replace a need for good jobs in manufacturing [which by the way, are disappearing like the ample salmon we used to have in our streams], as it clearly proves my point. A Seattle industrial base, based almost all on housing, is like building a house on sand, sooner or later it collapses bad [it did].

    I like Obama’s Car Czar and bailout of the domestic auto industry, because it produces a real tax base and future home buyers. You lazy “paper shufflers” that just want foreign assembly plants in America [with no college degrees needed, they’re all in foreign countries] with non-union automobile assembly workers getting $10/hr…..how you gonna sell them a house? Even rent ‘em an apartment? LOL

    I really love Obama’s choice of Rep. Rahm Emanuel as his chief of staff, this guy killed the Kennedy/McCain overpopulation bill this year and Obama apparently really likes him. I imagine the left of centrex are up in arms over this “Lou Dobbs” type being Obama’s choice; but you know, our new President wants a real tax base again, so we can afford our teachers and nurses without pay cuts.

    Perhaps Obama is like Gorbechev was; he said he was hard line Communist to get elected, then after he took power, he tore down the Communist Soviet Union. Like the clown with the selzer bottle….lol

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  9. 9
    Guy Noir says:

    In 1b, he says:

    “The current FHA loan limit is about to go down from $567,500 to $506,000 in our area and the required down payment is about to go up from 3% to 10%.”

    Where can we find this information? I have searched the FHA website to no avail.

    Thanks.

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  10. 10
    The Tim says:

    Guy @ 9,

    I believe he was probably referring to the conforming loan limit through Fannie and Freddie, which we posted about earlier this week.

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  11. 11
    Greg says:

    Again, kudos to The Tim for the interview. My take on this is that this is one man’s opinion, not based on facts and figures. We’re all entitled to our opinions but I think the statistics (thanks again to SB et al) show that the near future is not so rosy and bright. But I do agree with Klusman’s summary that a home is not an ATM and that one should decide to purchase a home based on personal lifestyle issues.

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  12. 12
    Ken says:

    I don’t think Dan really knows whats going on. Just another person being hopeful and ignoring the fundamentals in the market. Just like the NAR.

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  13. 13
    Buceri says:

    Singliac – right on. Too much education.

    People were scared into believing they were going to be priced out forever (by members of the “association”). That is what made them, not the enemy, but a very unreliable source of information. And obviously, that remains true today.

    RE a good investment? at 3-4% historical return? Really?

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  14. 14
    Guy Noir says:

    Thanks, Tim.

    Tightening standards to 10% will certainly reduce demand and ratchet prices down as a result. It would be smart for anyone considering a purchase to hold off until this takes effect for maximum negotiation leverage.

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  15. 15
    The Tim says:

    Speaking of “education,” check out this upcoming gem from NAR (hat tip: Aubrey Cohen)

    The National Association of Realtors is about to launch a $40-million advertising campaign with an ad literally showing a family on a fence looking at their dream home and urging them (and other potential buyers) to “get off the fence,” Scott said.

    Aubrey’s blog post has a number of other great gems as well from Lennox Scott, who refused to be interviewed by Seattle Bubble.

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  16. 16
    obelus says:

    The NAR should use the $40 mil to help folks with the high down payments, free of charge. Not that would get many off the fence (including me!).

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  17. 17
    rent for now says:

    Thanks Dan for the opinions.
    Real estate is going to be one of the worst investments in the next 20 years, and it has been a marginal investment over the long term if you can call it that.
    I still sense way too much denial. We’re about halfway to the bottom.

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  18. 18
    Dan from MBA says:

    Thanks to Tim for posting my all of my answers and comments. To answer CostCo Mike, I will continue to read the thread and post responses to specific questions for the next couple of days. Some of the posts have said I don’t know what I’m talking about or that I am wrong. I’m not going to use this forum to debate the validity of my answers or yours. I’ll answer questions if I can and you can decide if I’m a credible source of information.

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  19. 19
    EconE says:

    Tim @15

    That’s a pretty funny image.

    Too bad bubbleblogs don’t have a $40MM ad campaign budget. We could have that same family sitting on the fence, but with megaphones in their hands yelling at the homeowner to LOWER THEIR PRICE.

    Or…they could just picture them standing on the other side of the fence, in the yard of their rental, saying to the homeowner “Your monthly nut is how much?” ending with quiet snickering.

    Am I the only one who notices that the majority of the sellers are still asking for 2007+ prices?

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  20. 20
    Another Tim says:

    I’m so glad I don’t have to rely real estate shills for information.
    My thanks to The Tim and the Seattle Bubble contributors for providing (mostly) unbiased and (mostly) factual information about the local real estate market.

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  21. 21
    The Tim says:

    You’re (mostly) welcome. ;^)

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  22. 22
    Sniglet says:

    Does anyone know what the percentage of the Puget Sound economy is based on the real-estate industrial complex (e.g. agents, escrow, construction, appraisers, etc)? All this talk about how our region has “diversified”, and strong employers makes me wonder just how much of an impact real-estate itself (both residential and commercial) has.

    As a bonus, it would be fascinating to see how the percentage of the local economy real-estate contributes has changed over the years.

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  23. 23
    buyStocks says:

    Dan from MBA,
    Thanks for answering our questions. I also agree we’re all in this together. I was hoping you would respond to Tim’s issues in the post to your answers of questions 1a, 2, 4, and 5.
    thanks

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  24. 24

    Dan, where are you getting 10% down payment required for FHA? Effective January 1, 2009, the required down payment for FHA is 3.5% (per HUD).

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  25. 25

    Here’s a copy of the most recent letter from HUD regarding FHA minimum required investment (min. down): http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/08-23ml.pdf

    (sorry I wasn’t quick enough to just edit my comment).

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  26. 26
    deejayoh says:

    Sniglet – I bet BLS has it. I don’t feel like digging around but that is the most likely source.

    http://stats.bls.gov

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  27. 27
    Sniglet says:

    the single biggest threat to the housing market is the limited supply of credit and home loans. A thaw in the mortgage market would help

    Is this really true? Is the mortgage market “frozen”? My understanding was that it was actually pretty easy to get a mortgage these days. All you have to have is good credit, a verifiable job, and a big down-payment. In fact, from what I’ve heard it seems as if mortgage lending requirements aren’t any worse than what they were in the mid ’80s, which was not a period of crashing house prices.

    I wonder if the people who are calling for “unthawing” the mortgage market are, in actuallity, asking for lending to return to the go-go years when people with poor credit could get loans with no money down.

    But maybe I am off base and mortgages really ARE hard to get for people with good credit, jobs, and down-payments.

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  28. 28
    David Losh says:

    Thank you Dan.

    I have a question about falling home prices.

    If we are in a global economic crisis with Florida, Arizona, and California all having massive price drops at about the same time, why, or how did we avoid it?

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  29. 29
    Garth says:

    Sniglet,

    Historically it has been about 6% of the gsp and 10% or so of the jobs in the state. Numbers include new construction and repair, home depot etc.

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  30. 30
    anony says:

    Rhonda and Guy, per post 10 it is conforming, not FHA, requiring 10%. That isn’t quite as big a deal.

    Sniglet in 27 is right on. It is still laughably easy to get a loan up to 506K with only 610 credit, 3.5% down. And not much harder to get conforming loans for more money. You don’t have to pay all your bills on time, just most of them. You only need to have avoided bankruptcy for 2 years and not been foreclosed on for 3.

    Some in the real estate/building business want to go back to the days when your kid’s imaginary friend “Oogie” qualifies for a $800K negative amortizing mortgage loan with zero down. They don’t seem to understand that those practices can eventually cause some problems for the general economy.

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  31. 31
    Lake Hills Renter says:

    Dan, just wanted to say thanks, from a regualr reader here, for openly answering Tim’s questions, and for stopping by to followup.

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  32. 32

    anony,

    Thanks–the post doesn’t read very clear on down payment. I had somene visit me at RCG asking if 10% down for FHA was true stating they had “seen it here”…so I had to check it out.

    610 credit is going to have a higher rate than 620 and higher for FHA–but I know we’re just throwing digits around.

    You DO have to have clean credit (no lates) for the last 12 months regardless of credit score.

    You’re right about conforming loans though–many of mine seem to be going FHA instead due to having less than 10% down–some with excellent credit.

    I think what’s been far more damaging to our economy than FHA is stated income loans which allowed anybody to buy anything. It was a double whammo–first inflating home prices since it brought to many buyers into the market and then somehow, when they realized they couldn’t afford their payments (I guess stated-paychecks don’t come w/the mortgage) the homes are going back, or worse.

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  33. 33

    Sniglet, mortgages are harder to get if you’re not willing to go “full doc”, if you can’t document your income over the past 2 years or if your down payment is hard to verify.

    FHA guidelines have not changed nearly as much as conventional. We’ll have another tightening of conventional guidelines when Fannie Mae DU 7.1 goes into effect December 13.

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  34. 34
    anony says:

    Thanks, Rhonda.

    I checked some guidelines that said you could have 2 negative records of 30 days late, but they may be old or inaccurate. http://www.fha-home-loans.com/loan_qualifying_fha_loans.htm

    I’m not blaming FHA for anything and I agree about stated income. I just can’t bear to hear people blaming the price drop on it being so tough to get a mortgage.
    It’s not even remotely tough to get a mortgage, if you are at all likely to pay it back.

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  35. 35
    Sniglet says:

    mortgages are harder to get if you’re not willing to go “full doc”, if you can’t document your income over the past 2 years or if your down payment is hard to verify.

    But isn’t this just a return to “normal”? It’s not as if no-doc loans were easy to get a decade ago were they? If this is the only real change that has happened to the mortgage market (i.e. that no-doc loans have vanished) then I find it hard to see how we could call mortgage lending “frozen”.

    I still don’t understand what the people who claim that mortgage lending needs “unthaw” really mean. Do they want no-doc loans to return? Do they want seller financed down-payments to be allowed again? Do they want more 80/20 or negative amortization products to be available?

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  36. 36
    Yesler Hill says:

    Rents holding steady?!

    I know it’s not scientific, but I’ve been following rentals in the $900 range on capitol Hill, Seattle; on Craigslist, apartments.com and nwapartments.com, and there are more and more rentals avb in that price range everyweek. I can not see how a glut of aprtments, condos and SFHs can do anything but bring rents back down?

    I’m a life long renter, I’ve always preferred renting, and I’m getting ready in January to ask for a rent reduction! LOL! We’ll see how that goes!

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  37. 37

    anony, that’s not a HUD site that you’re referring too. If there was a late, there would need to be a solid reason for it, such as medical.

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  38. 38

    Sniglet, I don’t know who “they” are. :)

    I see things returning to normal too. What’s tougher though is the combo of lower LTVs with declining values–especially with refinances.

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  39. 39
    anony says:

    “anony, that’s not a HUD site that you’re referring to”

    Does that mean I shouldn’t have given them my social security and credit card numbers? I’ve gotta go, um, take care of something.

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  40. 40
    Ray Pepper says:

    The entire “Right Time to Buy.org” website is very interesting and then you begin to dig. It appears its non profit and is set up to educate the masses. Its supposed to be non biased and yet it lists John L Scott, Windermere, Century 21. It also lists Bank of America, Wells Fargo etc.

    If the site truly was to educate the consumer then one must educate the potential clients that if they enjoy looking for a home on their own (with out having a realtor following or in the car) at the very least they will get paid 1.5% to assist their Agent. How can you not educate this fact? At the very least Red Fin should appear since its stated companies were chosen based on being in business for awhile. Correct?

    How can you educate anyone without telling the FULL story. As an RN its like me treating an illness without knowing the history of the patient. I believe I saw the wonderful display set up at the Seattle Home Show of Right Time To Buy.org.

    Like so many other Real Estate education websites, they bring nothing new to the table. Can I contact the two people you have on the Home Page and ask if they were educated by Right Time to Buy.org? Where they given the option/education to earn any of the commission? Were they even aware of Red Fin? Red Fin has been around long enough to qualify to be right next to Century 21 or Windermere.

    If you are truly out to educate and empower the consumer then DO IT!

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  41. 41
    anony says:

    Maybe these are the “they” sniglet is referring to.
    http://www.realtor.org/press_room/news_releases/2008/ehs_tight_mortgage_slide

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  42. 42
    Ray Pepper says:

    Even worse I see you state on the website……………”Information is Power..GO GET IT”

    Yet you don’t even provide it? Simply amazing! Not even a mention of MLS4Owners!! Over 400 Listings and you do not mention the True pioneers.

    I mean seriously……….If you are going to educate then Truly Educate!

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  43. 43
    Eleua says:

    Tim,

    Thanks for doing this interview. I’m not familiar with Klusman’s body of work, but from what I just read, he really has no clue as to what drove the bubble, what caused it to pop, and what stage we are experiencing in the unwinding. He hinted at it when he talked about deteriorating credit possibly making things worse.

    The summary would be: he has no clue, but his life’s experience tells him that we have experienced the worst, so it must get better from here. He has no specifics to offer for the macro market. He cites some small, insignificant trends to support his otherwise unsupported thesis, but fails to see the avalanche of credit destruction that will drive this market into the ground.

    It’s like saying that the Seahawks are going to the playoffs because they got a few First Downs last Sunday. Nevermind that the entire team blows and thank goodness that SF is on the schedule 2x/year.

    Remember, it’s always darkest just before it goes pitch black.

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  44. 44
    Angie says:

    Another thanks to Dan for braving the wilds of Seattle Bubble. Time will tell how your predictions pan out.

    I saw evidence today that *someone* out there thinks it’s the “Right Time To Buy”. Our house is a SFH on a lot in Seattle zoned L3…today we got a mass-mailed letter from someone purporting representing a developer who wanted to buy it for cash, sight unseen. Eighteen months ago we were getting maybe five or six letters like that every week, but we haven’t gotten any in the past six months, maybe a year. I’m guessing it’s just a bargain hunter nosing around (judging from the spelling and grammar errors in the letter, they didn’t spring for an editor, or even spellcheck on the word processor–you’d think Prudential in W. Seattle would be a bit more professional than that) but if nothing else it’s interesting anecdata.

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  45. 45
    Interloper says:

    Dan lost me here:

    “Initially the slowdown in the market in 2006 and 2007 was fueled by consumer perception and not necessarily market reality. ”

    Sorry, a legitimate lack of affordability of housing, and the desire to avoid negative-or-low-return investments are not “perception” issues.

    I nearly bought at the peak of the market 18 months ago, so far I would have lost about $50,000. That’s not a perception issue either, that’s a market reality.

    I do agree though with Geordie Romer that we should allow these guest interviews to be posted without a refutation from the interviewer in the same breath.

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  46. 46
    Mike2 says:

    obelus // Nov 14, 2008 at 2:02 pm

    The NAR should use the $40 mil to help folks with the high down payments, free of charge. Not that would get many off the fence (including me!).

    I’d be more impressed (sickened?) if they used the money to fully pay for a handful of homes purchased in a given month – you know, to get the gamblers and lottery players back in the market.

    “Buy now, and your house COULD be free!” There’s never been a better time to buy!

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  47. 47

    The Tim, I think that this should be corrected in the body of the post somehow:

    “Also, FHA loans have become a great opportunity for first time buyers. The current FHA loan limit is about to go down from $567,500 to $506,000 in our area and the required down payment is about to go up from 3% to 10%.”

    No where does this state that he means conventional and FHA is going from 3 to 3.5%. I know you’ve addressed it at #10 but for readers coming late to this post, they may miss your comment. I’ve had an SB reader pop by RCG for clarification on FHA guidelines.

    Just a thought.

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  48. 48
    EconE says:

    Here’s a great idea for the builders.

    Can’t sell those condos?

    Well…it appears that you may not be getting your potential buyers drunk enough.

    http://www.nytimes.com/2008/11/14/nyregion/14crawl.html

    What time is happy hour?

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  49. 49
    Dan from MBA says:

    Oh come on. It is the easiest thing in the world to post snarky comments in response to someone trying to seriously answer your questions.

    EconE, there is no “happy hour” and your post is an insult to anyone in the real estate and homebuilding industries and anyone buying a home.

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  50. 50
    Dan from MBA says:

    I’m going to try and circle back and answer some of the many questions and comments.

    Tim, thanks for the initial response to my answers. I’ll start with yours. My answer to #2 focused on affordability rather than sheer number. Again, you’ve got better data people on your list (Gardner, Britsch, Conway, etc.) who can better answer that question about units vs. HH growth.

    My answer was about affordability, something our association cares deeply about. I’ve put some of our approaches to this problem in my answer. If those didn’t do it for you, I’d love to see some suggestions from your readers. How would you encourage affordable housing.

    And if you are deeply concerned about housing affordability, then I’d be delighted to include them in our efforts. There are threats to housing affordability that regularly occur across cities and other jurisdictions in King and Snohomish counties. If you want lower housing prices, then help us lobby those that raise them. Send me your e-mail if you’re interested. You can reach me directly at dklusman@mbaks.com.

    We are trying. Help us.

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  51. 51
    jonness says:

    “I still don’t understand what the people who claim that mortgage lending needs “unthaw” really mean. Do they want no-doc loans to return? Do they want seller financed down-payments to be allowed again? Do they want more 80/20 or negative amortization products to be available?”

    Maybe they want banks to lend at rates more in line with the short-term rate?

    BTW, a big thanks to Dan for taking the time to do the interview. :)

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  52. 52
    Sniglet says:

    Dan,

    Could you explain what you mean when you say the mortgage market needs to “unthaw”? Are there examples of borrowers that are being turned down today that you feel should be getting loans?

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  53. 53
    voight-kampff says:

    I would like to thank “the tim” for this blog which has literally saved and made me money. When I first found it( ~2yrs ago), I thought “what bunch of crazies”, obviously I was assimilated.

    I would like to thank Dan for doing the interview, I do think people could be a little more respectful of him, as I think it would be very informative to have more like him come back

    for those that think his predictions are wrong ( not that I think they are right ), sometime look at the archives on this site, many predictions by many posters have been wrong. Many posters here back in 06 and 07 wouldn’t even commit to being certain of a bubble, now many act as if they saw the whole thing coming miles away… how very astute. Making Predictions is a very difficult game, just ask miss cleo.

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  54. 54
    cheapseats says:

    Dan,

    Thank you for posting here. I would encourage the “regulars” here to focus on constructive evalutation of the comments made. I for one would like to see more people here who have differing points of view that don’t devolve into mudslinging. We can all make our own evaluation of the statements made.

    Thanks Tim for reaching out to people who would not traditionally contribute here.

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  55. 55
    Eleua says:

    I still don’t think we are anywhere near capitulation in the markets, and therefore are nowhere near the bottom.

    For any intelligent discussion of “are we near a bottom,” we first need to have full price discovery in all asset classes. Stocks, bonds, real estate, and even commodities (to some degree) have not even approached price discovery. Government manipulation is still trying to prevent it, and it will fail.

    As long as asset values are not marked to market, real estate prices will be inflated with relation to their values.

    The bottom is not knowable at this time. It is nowhere in sight.

    We are only in the 3rd inning of discovering what the problem is. As far as price depreciation, we are still waiting for the President to throw out the first ball.

    I know what all of you are thinking…”There goes Eleua again. Doom and gloom…doom and gloom. Even a broken clock is right twice a day. Nothing new to see here.”

    No, what I am saying is that as long as we are suffering under the delusion that “they” can ameliorate the problem with “stimulus” and suspension of banking regulations, we have not even completed the “denial” stage. Once we get past this and allow the market to seek its own level, THEN we can start to discuss what the bottom will look like.

    We still have the nasty little problem of the US government debt that is a brainwave away from total annihilation, and the “bailouts” are only making that worse. The problem is progressing geometrically. China no longer has the ability to cycle money back into the US, so Uncle Sugar still has that little problem to solve. If his debt gets more expensive, you can bet your bottom dollar that our debt will ratchet up even more.

    R-I-S-K has not been priced in bonds. People are hiding in government bonds and quasi-government debt instruments because they are scared. When that trade ends, I hope you are happy with what you have, because interest rates will blow out in a fashion that will earn 2008/9 an entire chapter in tomorrow’s history books. Kids will be reading about these few months for centuries, and they will marvel at our abject stupidity.

    People were hiding in commodities until July. Look at that trade. This is the biggest crack in commodities in recorded history (I think). When the bond “flight to safety” cracks, they will blow even faster.

    Until we get true price discovery in debt and equity asset classes, real estate is overvalued and I mean WAY overvalued.

    I now conclude my daily dose of sunshine.

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  56. 56
    buystocks says:

    It’s great to get Dan’s full rationale of the market and not just the usual out of context newspaper quotes. Although I don’t agree with some of his opinions or his future real estate market predictions, he did agree to answers these tough questions to a tough crowd, which is worthy of my respect. We both win here, we learn stuff from Dan, and he learns stuff from us. These interviews are a great idea and really add a great dimension to this board for future homebuyers, which is what I thought this blog was about. I wish the mudslinging would stop, or we won’t be getting any more of these insightful interviews.

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  57. 57
    buystocks says:

    “There goes Eleua again. Doom and gloom…doom and gloom. Even a broken clock is right twice a day. Nothing new to see here”
    (sorry, couldn’t help myself)

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  58. 58
    Jamie in QA says:

    Realtors need to stop giving financial advice. In one breath they state your home should not be an ATM and in another they state real estate is an “excellent investment”. Take the voodoo economics out and they might be respected once again. Buyers of real estate today should simply assume they are purchasing a depreciating asset and agents should not attempt to hide this fact. Just look at how other depreciating assets like cars and boats are perceived and sold, you don’t see bubbles in those markets at all because the conventional wisdom is reality. Once the conventional wisdom of real estate comes back to earth we’ll start to see affordable prices and stability.

    (I own a boat and I just bought a new car. I’m losing thousands a year. But I expected to and can afford to. Once prices for homes allow me to afford the losses I’ll be coming off the fence.)

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  59. 59
    what goes up must come down says:

    Give me a break, people actually think this is “insightful”, what did people think Dan was going to say, oh the bottom well that will be 2 to 3 years out. NO WAY of course not he did and predictably so said well it is now.

    There was no insight here at all. He is in the business emphasize business to get people to buy period. This isn’t like going to the doctor and the doctor saying well really you don’t need an operation, if the medical community operated like the real estate community you would have a bypass a week. See the RE people have no liability. If someone follows Dan’s advice a buys now and then gets screwed by having a house which is worth 50% less a year from now well that person can’t come back to Dan and sue.

    There was no insight here at all I think most people here could have filled in the answers for Dan because getting RE to sale is how Dan makes money — he is part of that community.

    See that is the tragedy behind this whole thing you have people who listen to the people who have a vested interest in getting them to buy.

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  60. 60
    buystocks says:

    The interview was insightful, because I learned much more about his opinion of the market than one of his out of context newspaper article quotes. Whether I agree or not with his opinions is irrelevant regarding to your issue with the word insightful.

    “he is part of that community”, sheesh, the point of these interviews was not to be personally insulting. Most of these post contain good civil critical questions, it’s these few inflammatory ones that will stop people from giving interviews.

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  61. 61
    what goes up must come down says:

    so reality is inflammatory? I am not trying to slam anyone, but come on this is the same old thing, what really saddens me is that it is continuing to go on. There are people out there that actually listened to the RE community last year and now are deep under water. Before the bubble popped okay I can cut some slack on that because you could argue ( I think weakly) that “who knew” this would happen.

    But it has happened and to continue to tow this line of buy now is in my mind almost criminal it definitely is not morally right. I think everyone needs to be held accountable not just the people who fall for this tripe.

    I refer you to post 55 and 58 to point out two of many posts — now there are some insights.

    If Dan believes what he is saying I would think as you look around the world and see more and more countries entering recession and more and more people losing jobs you would have to seriously question his judgement. How can people spout stuff like we are at the bottom when we have no clue of how much bad paper is out there to begin with. JP Morgan and Freddie are arguing today over WAMU paper.

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  62. 62
    BOY says:

    I Agree with Dan
    – Seattle is a great economy compared to most of the other states
    – We have Microsoft,Boeing and other well respected compines

    But dude, how is going to lend the money? Are there any Banks left which have money to lend?

    The only way a person can still afford to buy a home in Seattle is to save money (by avoiding restaurants,starbucks,avoiding clubs & shopping). If they do all this starbucks and a lot of others have to go bankrupt?

    I think the real estate market needs a correction and we should be ok with it, though people might see a loss of value in HomePrices.

    Reality is Reality. Deal with it and lets fix the problem. Lets stop this bubble from expanding further.

    Disclaimer: I already have a home (since 1998) and not doing this post to bring down real estate prices.

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  63. 63
    mikal says:

    At times this site is as civil and similar as FOX news. No bias at all. Look at the attacks. If he has spent much time here he would have been expecting them. Agree with me, or I’m going to lump you with everyone else I don’t agree with.

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  64. 64
    David Losh says:

    It’s saturday morning and we really do need to get Tim a million dollars. Please give a donation to this site to keep it going and make it profitable.

    You asked and Dan answered. That’s a great testimonial for the power of this site. Dan could have given the site a pass, as so many people will.

    The rightimetobuy site is a builder’s site, as far as I can tell. The world of new construction is a seperate market from Real Estate. New construction, to me, is housing units, town homes, condos, McMansions. It’s a different buyer mentality.

    Builders are hurting right now. Builders have a higher equity position, more flexibility, and an ability to finance. Lenders want to keep builders afloat.

    In the Arizona, California, and Florida markets, I think, it was the builders who were in high foreclosure, short sale, and discount selling after the hugh run up in prices.

    Maybe, just maybe, from a builders point of view, it is time for you to buy from them. From that perspective I give Dan a lot of credit for coming here to make the pitch.

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  65. 65

    I’ve been sickened by the lack of trust we can have in our mortgage brokers, realtors, and investment advisors who blindly claim whatever will line their pockets. What happened to fiduciary duties?

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  66. 66
    mikal says:

    Who could blame the people that pass on an interview. You can agree to disagree without being an a$$ about it. Anyone else will think twice. BTW, I guess everyone overlooked the horrible job Gregoire has done with the budget. That was an a$$ whopping. Poor Dino will have to get a job.

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  67. 67
    Russ says:

    This video pretty much sums it up…

    http://www.youtube.com/watch?v=bNmcf4Y3lGM

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  68. 68
    softwarengineer says:

    GREAT QUESTION SNIGLET #22

    What percentage of Seattle’s economy is home building and selling?

    That’s hard to answer pragmatically, because so much of home construction and RE employees are contract and even undocumented workers (no SSN); so aren’t tracked on our State’s unemployment %. Our government has had recent congresional testimony on the soaring unemployment rate [currently 6.5% nationally] actually being a complete joke [it omits giveups, unemployed college/HS grads and underemployed/part-time desparate workers]…its estimated we could actually double the 6.5% if we calculated it honestly.

    My advice is drive around Kent valley’s industrial area valley [that used to have many manufacturing subcontract plants for Boeing] and you’ll see furniture stores, housing supply stores, and hardly any manufacturers anymore. You’ll also see a 30-50% vacancy rate with for lease signs in abundant quantities. Hades, the stock market’s health is measured by how much the $8/hr workers at Walmart are selling us Chinese stuff….or how HomeDepot is doing.

    If I was to take a wild educated guess, I’d say as high as 80%, but not less than 40-50%; based on businesses in existance in Seattle today and stock market drivers. In other words, when home purchases collapse, so does our State’s revenue. I believe we’re operating on an approximate current $0.5Billion State deficit….reminds me of California today, population/size adjusted. That sums it up.

    But not to worry, the Chinese 70% drop in their stock market and the fact that the lion’s share of them make like $2/hr [if they aren’t unemployed right now] will totally fill future 747/7X7 seats; even if Americans stop buying computers and riding planes.

    Our local economy is immune from a world recession and always pink pony you know.

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  69. 69
    EconE says:

    Dan…

    You can state all you want that what I said in comment 48 is insulting to the industry in general.

    Did you even read the NYTimes article?

    THE ARTICLE IS ABOUT PEOPLE IN THE REAL ESTATE INDUSTRY LOOSENING PEOPLE UP WITH ALCOHOL IN HOPES THAT THEY WILL BUY.

    Now THAT’s insulting.

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  70. 70
    rent for now says:

    There is a giant bubble in the bond market……

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  71. 71
    bi renter says:

    Clearcut, you mentioned,

    R-I-S-K has not been priced in bonds. People are hiding in government bonds and quasi-government debt instruments because they are scared. When that trade ends..

    Is this the US losing its Triple A rating…how would this happen?

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  72. 72
    Eleua says:

    bi renter,

    I doubt the US will be formally downgraded until well after the damage has been done. I would downgrade them right here and right now, but the “IER rating” doesn’t carry the same weight as Moody, Fitch, and Egan Jones.

    We will get “downgraded” when the Treasury Sec goes to market and his dreck comes back “no bid.” You had better be wearing a cup when that happens.

    This is why these bailouts are ultimately deflationary and only serve to make the problem worse than if we just let everything seek its own level.

    IOW, the market will downgrade US debt long before the ratings agencies do. I’m not normally predisposed to conspiracies, but if word ever leaked that one of the major rating agencies was seriously considering an imminent downgrade in US debt, I would imagine that the full force of the US government would be brought to bear to prevent such an occurrance, both lawful and unlawful.

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  73. 73
    Joel says:

    Yeah guys, stop disagreeing industry pundits. The truth isn’t worth hurting someone’s feelings.

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  74. 74
    David Losh says:

    If you take things to thier now natural conclusion the United States should come out ahead.

    The bail outs are a cash infusion of dollars. My thinking is that the United States has excess dollars to get rid of so they were flushed into the system.

    Our debt has been another way to take in foriegn investment. It seems to me that China in particular has been more than willing to buy in.

    China is a communist country. There is no stock market or unemployment, it’s not Russia, it’s dollars in that just stayed there. It’s a communist country.

    The government in turn invested those dollars back to buy debt in the United States.

    My big concern is that the stock market has been in a bubble for 10 years now. As it settles into the 6000 to 8000 range every one is in a panic. 6000 to 8000 is where it should be.

    Housing is in a bubble, the bubble burst, and now there are all types of mechanisms to prop it up.

    A round about infusion of dollars into the system, real dollars, tax dollars was a pretty sharp move rather than letting inflation take it’s course.

    I think we are in for years of settling down rather than crashing.

    Real Estate is all numbers to me. The numbers are the numbers. The numbers don’t change because Johny and Judy want to own a picket fence.

    Let me share this with you:

    THE BULK REO MARKET HAS CLOSED:

    The 700 billion dollar bail out package changed the REO market forever. The banks that have accepted the governments offer have agreed not to release any of their bulk inventory. Why is the question?

    Why let the banks liquidate their inventory for pennies on the dollar when the government can resell the Homes at retail value with low interest loans. To find the proof visit the FDIC’S website and sign up for one of their inventory liquidation auctions and look at the prices. What they are selling for is not close to a wholesale deal like 55 cents on the dollar but it is more like 75 cents or retail. The FDIC is responsible for liquidating the inventory of the government ceased banks. The Government just took over Fanny Mae and Freddy Mack ceasing of half the country’s REO”S. Are they selling in bulk? No. Go to their website and see for yourself at http://www.fdic.gov/buying/index.html

    This from from a Real Estate Investors newsletter. I don’t subscribe because it’s not what I do, but the government moves are brilliant for propping up prices.

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  75. 75
    mikal says:

    David, what excess money. If they are printing it we are still paying for it by the decrease in the value of the dollar. Our country isn’t just broke at home, but also at the government level. Please tell me who holds all this money(depreciating asset).

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  76. 76
    deejayoh says:

    China is a communist country. There is no stock market or unemployment,

    That’s right. China has no stock market. All those Shanghai stock market quotes you see on Bloomberg? Made up.

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  77. 77
    Eleua says:

    Mikal and David,

    We are not “printing.” That is a huge myth that is perpetuated by the gold bugs. There is no excess money as the velocity is rapidly approaching zero.

    The US Treasury has to go to the private capital markets to get money for all these bailouts, and since the fear factor is at record levels, people are fleeing into the “security” of government debt. When the capital markets can no longer sustain that level of borrowing, not to mention crowding out American commerce and industry, the bond market will shatter into a bazillion pieces and the game will stop.

    DEFLATION.

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  78. 78
    Andy says:

    Interesting,

    I went house hunting in Gig Harbor today. Average markdown of a $1.2MM home. People are trying to dump them for $700K. No one can qualify and no one can even get togther $50K for a down payment. Million dollar homes are everywhere and are not selling. Perhaps b/c seelers need to drop prices by 50%!

    My real estate agent told me to wait. She said that the entire area (Gig Harbor) is for sale and that there is a 5 year supply of homes.

    More interesting than this, I am pulling up prices of what people paid for their depreciating assets about 2 years back. Most have marked up their property by 40-60% more than they paid (2 years ago). 400K house for 550K. Nuts!!!

    Even more interesting is that only 1 (one) home over $600k sold in Gig Harbor last two months. 4Bed, 3Bath, 4500 sq feet and brand new for $625k. Marked down from $1.1 Million!!!!!

    The broker told me that NO ONE IS BUYING AND (ANY POSSIBLE) SALES ARE FALLING THROUGH!!!

    Lets tear this market down. I’m hoping that that same house (4000+SQ FT) will go for $300K like it did in 2001 – a 50% drop from current levels.

    Drive down these inflated prices!

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  79. 79
    Ray Pepper says:

    I have a hard time buying the deflationary story just yet. The game is hardly in the second inning and I still see illiquid assets (GEMS) being readily scooped up when the prices are down 20-50% . Yes, people are hoarding cash (fear), wages are not increasing, unemploymnt at under 7%, interest rates are low, consumers are not paying less for goods…I can go on and on.

    In two more years lets recheck this deflationary call..

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  80. 80
    Ray Pepper says:

    Andy, I was also in Gig Harbor all day as well with 3 sets of Buyers on the Foreclosure hunt. Too bad your not on my email list and you would have heard the big news on Quadrant. They pulled out. They sold a mere 7 homes off Borgen and are leaving. My buyer has the choice to bail out. His house is done and he is the 1st to close Wednesday. They are gonna blow-out the models and my Buyer is waiting to see if his discount(incentive to stay) is 10-20%. Hes in at 305k on 2000 sq foot home. He is very happy that he will not have neighbors to speak of for years but he doesn’t want to maintain the sign and the community playground. Were awaiting details. All the other new homes behind Target are sitting with NONE sold from BENNETT in almost 3 years!!. They are and have been truly clueless ! I told them 1.5 years ago the homes will sell for 300-350k. They are still at 420k from 500…….The blood has not even yet began to spill. My offer will hit them in about April of next year. My usual owner contract and I’ll rent my Brick Tudor in North Tacoma. Too tough to sell now….EVEN IN PROCTOR!!

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  81. 81
    greenthum says:

    Eleua:

    Look on the bright side. Obama and Gregoire are gonna fix everything!

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  82. 82
    Markor says:

    In 2003, Seattle area house prices were far lower than they are today, and the economy was far better. Which makes the prediction for the future direction of house prices easy.

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  83. 83
    Markor says:

    greenthum: Look on the bright side. Obama and Gregoire are gonna fix everything!

    I’ll settle for them not making it worse. Another 8 years of Republicans in the White House would have left us looking like Zimbabwe, or worse if Palin got in there.

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  84. 84
    softwarengineer says:

    GREAT TAKE ELEUA #77

    I read in a recent Forbes article that its us tax payers [increased income tax on the interest for the bailout money] that pay for the bailouts…..the article assured us all that the campaign promises for tax cuts were all lies. Baton up the hatches folks; your 1040s ain’t gonna look pretty and that 3 year delay on your property tax payments [even if you rent, you’ll likely get it passed on] means even County Executive Sims has a likely property tax increase [my home’s King County property tax evaulation went up about 8%] in your Christmas stocking.

    This means far less net pay, if you’re luck enough to keep your job. Deflation of gold, oil, and even food is not short term, its depression style long term.

    Ohhhh….the gold buyers preach that the bailouts to the banks were suppose to lower lending rates on homes to, i.e., like 4-5% levels [thus raising commodities prices], lol, the banks raised the rates and you need to walk on water to even qualify for the higher rates. I just bought gas at Fred Meyers for $1.99/gal yesterday.

    Some of the ones that bought gold [like Glenn Beck] could only wish. They preach free market and the virtues of $10/hr global employment being a far better alternative than paying the domestic industrial base union wage rates of like $25-40/hr with pensions. Imagine 80,000,000 Baby Boomers never retiring until they die and young college graduates waiting for them to retire, under employed or unemployed. Imagine 80,000,000 Baby Boomers finally retiring when their health fails and they have no decent retirement to buy plane seats, computers, homes and new cars. That’s our deflationary future folks. Glenn Beck and the other union haters would be furious with my blog this morning….lol

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  85. 85
    Sniglet says:

    No one can qualify and no one can even get togther $50K for a down payment.

    Are you saying that the banks are being tighter with lending than they have ever been, or is it simply that few people have good credit and a down-payment? It’s a VERY different thing If the banks are simply being stingy, and refusing to lend to people with good credit and large downpayments, than having a situation where there are no buyers with good credit or savings.

    It’s far easier to re-capitalize banks than the average consumer.

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  86. 86
    David Losh says:

    These are real dollars. They are your tax dollars. They are foriegn investment dollars. The government doesn’t need to print dollars at this point.

    I can have a stock market in my basement. The fact is commerce in China is government owned. Factories are government owned. If you believe our government is manipilating the market place then China is for sure.

    We had a huge boom market. When that boom ended worker’s, savers, and small investors “lost” money. That money is gone, that’s for sure. The governments collected the tax dollars,

    China collected income dollar from foriegn trade, and all of those dollars have been kept in extremely safe investments.

    Those dollars, in my opinion, are now being flushed into the global economic system.

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  87. 87
    S-Crow says:

    Sniglet,

    Only speaking for our office, the pool of borrowers buying today is completely different in terms of money down and credit worthiness. On the other hand those refinancing is a mixed bag, both good credit and so-so. Most I’m seeing are going FHA, because if they don’t, they don’t get financing.

    We must have at least 75 files just idle, waiting for interest rates to lower or credit to improve or pre-payment penalty to expire etc….

    Also, the high end is still snooping around, but being exceptionally choosy and why wouldn’t they? Good for them. Just had one at 1.6 million cash in my neck of the woods.

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  88. 88
    richie says:

    David Losh message 74:

    China’s political system is definitely a Cuban style of communism, but its economic system has evolved to a crony style of capitalism. However, unlike us, China has only two classes: have and have-not. It must continuously sell cheap stuffs to us to contain the hungry have-nots. China cannot take its money back at a reasonable exchange-rate unless it buys American products but we have very few to sell. Therefore the money its earned is stuck in the US. The safest place to park its money is US Treasury Department not Citibank or JP Morgan Chase.

    BTW, Shanghai’s stock index shot up to 6092 on October 16, 2007 and has crashed to 1986 on November 14, 2008 a 67% discount from its all time high. http://finance.yahoo.com/intlindices?e=asia China cannot power its economy without the help of US consumers. Up to 50% of its shoe, clothing and toy factories in southern China have collapsed in the last 12 months and caused many unemployed have-nots roaming in the streets. Unemployment rate in China is probably over 20%. Shanghai’s real-estate, has taken a 50% hair-cut in 2008.

    The world today is inter-connected. No one can be immune from the financial tsunami.

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  89. 89
    patient says:

    I agree with “what goes up must come down”. No new insight at all and a waste of time other than yet another chance to dissect and expose unsupported propaganda claims. These guys have megaphones to the public and do not need SeattleBubble as another fourm for their marketing pitches. I don’t see why we should need to thank Dan for giving him that opportunity, it should be Dan who thanks The Tim.

    I suspect and hope that when we now enter the recession with force that the governments efforts shifts from saving homeowners who overspent to saving peoples jobs combined with shoring up unemployment reserves. To rent for a while is not a big sacrifice but to loose your job is tough, especially if you had nothing to do with the whole lending and housing scam.

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  90. 90
    Sarge says:

    “Initially the slowdown in the market in 2006 and 2007 was fueled by consumer perception and not necessarily market reality. I wish we had been faster and more proactive to educate consumers about the market.”

    I dount I need to say anything about this comment. How about “Ludicrous!”. Although, maybe not, it is amazing how people will listen to and follow the media like sheep.

    I’m having a little trouble the perception side of this (mayby the perception that prices would continue to go up indefinetly?) but here are are a few of the realities in 2006 as I saw them:

    1) Demand driven by Investors buying from investors. Once prices stopped rising the demand dropped.

    2) Demand supported by Ultra-low mortgage rates. The Fed’s increases put pressure on demand to drop.

    3) Demand supported by easy access to exotic loans (e.g. reverse mortgages). Once access to exotic loans stopped the demand dropped.

    4) Demand supported by no documentation loans (liar loans). Once loans returned to traditional oversight the demand dropped.

    5) Mortgages were three times or more than rental rates (including taxes, insurance, maintenance, etc it was up to 9x in some areas). People were willing to pay extortion rates for mortgages while prices were going up. They were even willing to take a “short term” loss on renting the property. Once prices stopped rising the demand dropped.

    6) Incomes increased less than 30%, but home prices increased over 85% (I know, already stated in the interview, but it was a well known reality in 2006).

    Ok, Ok, I’m restating the obvious… Now what where the perceptions again?

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  91. 91
    David Losh says:

    China has always been about business. You will find Chinese business people everywhere in the world.

    My point was about Government dollars. Neither the United States nor China are “printing” dollars that they are now floating. They have dollars to “invest.”

    Governments did very well during the boom years, maybe even better than large multi national corporations.

    The money is out there and the price of Real Estate may remain above value by this constant infusion of dollars, but as Ray points out, there does seem to be opportunity in buying new construction.

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  92. 92
    Markor says:

    softwareengineer: I read in a recent Forbes article that its us tax payers [increased income tax on the interest for the bailout money] that pay for the bailouts…..the article assured us all that the campaign promises for tax cuts were all lies.

    Forbes is trying to scare you into voting Republican, that’s all. Taxes should certainly be increased. In the last few decades both Democrats & Republicans have voted for a lot more than they’ve been paying for, so a gigantic tax increase would be fair. But the rich can afford to bear the brunt of the tax increases, just like Obama plans. After all, they got the lion’s share of tax cuts they didn’t deserve, so now they need to pay that money back plus interest and penalties, and also start paying their fair share of taxes. Things like the Iraq war, which benefited them almost exclusively (to the detriment of the rest of us), should be paid almost entirely by them.

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  93. 93
    Eleua says:

    Markor,

    If you can’t tell the difference between inflation and deflation or if you can see a significant difference between a statist Republican and a statist Democrat, your opinion probably isn’t worth sharing. Come outside your bubble and join the rest of us in reality.

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  94. 94
    Markor says:

    Eleua, that has no relation to what I wrote.

    Rate this comment: Thumb up 0

  95. 95
    mikal says:

    Eleu is in his own bubble… Makes the occasional good point, and then state something like softwareengineer where you wonder HMM they are CRAZY.

    Rate this comment: Thumb up 0

  96. 96
    Eleua says:

    Markor,

    Post #83. Your concept of what the Pubbies did and how we are headed for Zimbabwe style inflation could not be more delusional. What Palin has to do with anything is beyond me.

    A statist is a statist. The only difference is when the Lefties do it, you get a tingle up your leg.

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  97. 97
    David Losh says:

    Spending cuts under Reagan, budget surplus under Clinton, tax cuts by Bush, all indicate there is money coming in.

    During the economic boom years I never saw an increase in spending.

    People are focused on the war in Iraqi, but war brings jobs, durable goods, and more tax dollars. War is an economic stimulus package.

    Then we had the taxes paid to the government from construction, with developers paying for infrastructure.

    No, I think our government has a ton of money that they keep giving to business so that business can pay for social services.

    Believing the government needs more tax dollars is kind of like believing Communist China has a for profit economy that will pay returns on investment.

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  98. 98
    Eleua says:

    Markor,

    Thank goodness you are a good representative of what Obamunists think.

    When BarryX raises taxes going into a doozy of a recession, he then owns it. He will no longer be able to blame his predecessor.

    I couldn’t have scripted this any better. You guys are a Godsend.

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  99. 99
    anony says:

    RE 97 “During the economic boom years I never saw an increase in spending. ”

    I believe that may be a new record of delusion that we have heard from David Losh. Where do these guys come from?

    David, spending skyrocketed, and the money coming in was from borrowing, via treasury bills and bonds, mostly from China. And if you think China lends us the money because they are stupid, or because they don’t want to see us take second to them in the near future, you can break your own record for self delusion.

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  100. 100
    mukoh says:

    Ray,
    I have some bad news for you. All the pep on rental rates that my friends who are holders of large properties and have 10k+ units out there on the west coast have seen a slide, and increased softening in traffic, signed apps, and etc. They are bucking down. Rental rates in their opinion now, which differs from their opinion of 6 months ago are going to go down as well.

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  101. 101
    Markor says:

    Eleua: Post #83. Your concept of what the Pubbies did and how we are headed for Zimbabwe style inflation could not be more delusional. What Palin has to do with anything is beyond me.

    Oh, by saying we’d be looking like Zimbabwe if McCain/Palin got elected, I just mean we’d be f**ked, not necessarily experience hyperinflation. I think it’s obvious that we’d be f**ked if we had a president who is lacking even a grade-school education (she may have graduated, but she did not learn).

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  102. 102
    Markor says:

    Eleua: When BarryX raises taxes going into a doozy of a recession, he then owns it. He will no longer be able to blame his predecessor.

    I don’t know what Obama will do; I voted for him only because he was the best viable choice. But I’m confident that putting the country on a massive austerity plan and jacking up taxes (esp. for the rich) is the right thing to do for future generations. We bought stuff, we should pay for it, even if we have to become poor in the process. Those who do not support raising taxes while we have a towering national debt and no national emergency except of our own making are traitors in my book.

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  103. 103
    what goes up must come down says:

    Eleua I actually read most of what you write because it seems well thought out but this: “When BarryX raises taxes going into a doozy of a recession, he then owns it. He will no longer be able to blame his predecessor” Makes me think you went off your meds. So Bush is in the white house for the last 8 years and the Repubs control congress for six of those eight and now the Pile of Crap you tie to Obama — give me a break.

    Have you been asleep for the last 8 years?

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  104. 104
    jonness says:

    “Those who do not support raising taxes while we have a towering national debt and no national emergency except of our own making are traitors in my book.”

    Let’s face it, in 95% of American’s minds, the national debt never has to be paid back. “How much we have to spend equals how much we can borrow. Besides, we’re geniuses because we’ve managed to push all that debt off on our grandchildren. Stop worrying, and start borrowing and spending your way to prosperity. If you don’t, then you’re not a true American, and you should leave the country.”

    You know, what really burns me is after 12 years of trickle-down economics (balloon the debt by 4 times in order to create temporary economic stimulus), we finally start paying down the debt, and then the next guy gets in and realizes, “oh boy, because the previous guy was fiscally conservative, I get to spend more.”

    We live in a crazy country where borrowing beyond your means is the solution to all life’s troubles. And when you think like that, the last thing you ever want to do is come out of denial and pay back the loans. What you want to do instead is borrow more money to give back as a tax break and then borrow even more money to pay for interest on the money you borrowed for the tax break.

    It’s called short-term greed. It’s a virus, and most American’s minds have been infected. For those who want a true tax break, click your heels, go back in time, and shave 12 trillion off the national debt. There’s a free half trillion dollars per year tax break for you and a balanced budget without any necessary spending cutbacks. It’s not rocket science but it does take a little bit of willpower, which apparently is quite rare in this country.

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  105. 105
    Eleua says:

    Markor,

    If you actually took the time to learn about what went wrong with Zimbabwe/Rhodesia, then you would realize how inappropriate your analogy is. You also don’t seem to understand anything about Gov. Palin, outside what you see in the MSM. She is a graduate of U of Idaho. Now, I’m sure you will ’tisk, tisk” that school, but she is also the governor in the US that has the highest approval rating. How are you doing? How did the Georgetown and Yalees do as presidents of the USA? The most successful president of our lifetime went to Eureka College.

    I think I know what your objections are to Palin, but I will need to scratch a little more to confirm it. 90%+ of Lefties essentially object to SP on one issue, and it isn’t her college choice.

    Do you have any idea what percentage of the income taxes are paid by the “rich?” Do you have any idea what percentage of the income taxes are paid by each decile of the population? If you did, you could not make your statement (#102) unless you were maniacally insane or unfathomably stupid. BarryX can’t raise taxes high enough to close the deficit, even if he ends the GWOT and cuts the DoD 75%. It is a mathematical certainty. Perhaps you can work with some -X^2 graphs and see how this works.

    You essentially have closed the circle of Biden’s “paying taxes is patriotic” mindlessness with your “Those who do not support raising taxes while we have a towering national debt and no national emergency except of our own making are traitors in my book” nonsense. How are you going to react to your taxes going up until you lose your job?

    WGUMCD,

    BarryX has the ability to use the lapdog MSM to pin this financial disaster on GWB in perpetuity. However, once he raises taxes and the economy tanks harder, he will own the situation. It was also the Neo-Marxist Lefties in this country that started this entire mess. They are not alone, but the democratization of lending is at the core of this problem. They are the ones that bear the brunt of the burden of allowing FNM/FRE getting to the state they now find themselves.

    Remember, as of January 20th, there won’t be any Republicans to kick around. The MSM will start to look to BarryX for their daily dose of blood. Expectations are stratospheric, and empty rhetoric may dazzle Seattle Lefties, but it won’t cut it as far as the rest of America is concerned.

    “Trickle Down” is a pejorative given to Reagan’s plan by the MSM/Lefties. Go back and correct for ballooning social spending (and these stupid bailouts), and we more than covered our DoD expenditures with plenty of cash left over. It is Congressional pork that is the problem, not the legitimate Constitutional expenditures that are causing all the deficits.

    BTW, if timing is sufficient to assign blame, then IIRC, everything was “fine” until Madame Speaker got the gavel. What fiscal leadership has she shown? She is the one that rammed these bailouts through the HoR. Harry Reid did so in the Senate.

    Bush was a horrible POTUS, as were his two predecessors and I am confident his successor will also leave office with an approval rating lower than GWB’s. Americans don’t like statists, but they love the idea that their government can do everything for them. This explains why they keep voting in presidents and Congresses that they end up hating. Pelosi’s Congress would kill to have GWB’s approval rating.

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  106. 106
    Markor says:

    Eleua: You also don’t seem to understand anything about Gov. Palin, outside what you see in the MSM. She is a graduate of U of Idaho. Now, I’m sure you will ’tisk, tisk” that school, but she is also the governor in the US that has the highest approval rating. How are you doing?

    U of I is a decent school, but it hardly matters when she thinks Africa’s a country, and can’t name a serious magazine she reads (but says she reads them all). She’s a good-looking governor in a heavily Republican state whose citizens pay no state/local income taxes and get an annual check from oil. That is, she doesn’t need much intelligence to attain or run that particular office.

    Do you have any idea what percentage of the income taxes are paid by the “rich?” Do you have any idea what percentage of the income taxes are paid by each decile of the population?

    Doesn’t matter. All I need to know is that the rich are buying yachts when they haven’t yet paid a dime for the Iraq war and other budget-busting stuff they encouraged their representatives to buy. They need a massive tax increase to pay for the stuff they bought, plus the interest incurred.

    BarryX can’t raise taxes high enough to close the deficit, even if he ends the GWOT and cuts the DoD 75%. It is a mathematical certainty.

    It’s a mathematical certainty that Obama can’t do what Clinton did? In what universe?

    How are you going to react to your taxes going up until you lose your job?

    The same. (I wouldn’t kill for money either.) Yes, tax rates can be raised to only a point, beyond which tax revenues decline. But that point has obviously not been reached yet, because the rich are still buying yachts. I’m confident the yacht makers and associated employees can find work elsewhere.

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  107. 107
    gortnerp says:

    jonness,

    Your post #104 is right on the money.

    If the US Govt keeps spending more money than it brings in (with taxes), and keeps on borrowing more than it can re-pay, then The Tim will have to start a new website called: “United States of America Bubble”

    I don’t want to be around when that Bubble bursts (if it hasn’t started to already).

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  108. 108
    Markor says:

    Good post, jonness. I agree the mindset is like a virus. I remember when Clinton created a budget surplus and wanted to apply it to the national debt, how furious the Republicans in Congress were that the “excess” money would not be spent. I don’t believe they were that stupid, but I do believe they were furious because their constituency is stupid, or at least greedy.

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  109. 109
    what goes up must come down says:

    Eleua,

    Maybe you just don’t remember the last eight years: “BarryX has the ability to use the lapdog MSM to pin this financial disaster on GWB in perpetuity.”

    BUT BUSH WAS PRES AND REPUKES CONTROLLED CONGRESS FOR SIX OF THE EIGHT

    Come on, who needs a “lapdog” don’t let the facts get in your way of your right wing blather — BUSH ended his time with a record disapproval rating get it record disapproval.

    Oh that is right you can’t blame poor Georgie for anything he was only the president for the last eight years but that doesn’t matter does it.

    It is funny no one ever wants to pay taxes but they sure want good roads, good schools, and to replace Saddam and rebuild IRAQ, etc….. Yes it is all free.

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  110. 110
    Another Tim says:

    Too many people believe what they’ve been told by the government schools and main stream media. Why doesn’t anyone question the basic economic precepts that have been adopted since the beginning of the 20th century? Do all of you actually believe that Keynes was right? That allowing the government to control all the money is the best option we have? Do you truly believe that we need the government to solve all our problems? That they can solve those problems by spending more money?
    I think it would be best if you would use a big dose of healthy skepticism and begin to question the basic tenets of an all powerful central government and central banking system. Deficit spending and Keynesian economics is, at best, a flawed system and it’s being proven once again.

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  111. 111
    deejayoh says:

    but it hardly matters when she thinks Africa’s a country

    I’m no Palin fan – but I think this particular bit has been exposed as fraud

    http://www.huffingtonpost.com/2008/11/10/martin-eisenstadt-non-exi_n_142785.html?page=5

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  112. 112
    David Losh says:

    David, spending skyrocketed, and the money coming in was from borrowing, via treasury bills and bonds,

    If the US Govt keeps spending more money than it brings in (with taxes), and keeps on borrowing more than it can re-pay

    I remember when Clinton created a budget surplus and wanted to apply it to the national debt,

    You can’t have it any way you want to make an argument.

    I know that we are told we spend more money and we need to pay more taxes. I just don’t see it.

    Clinton did create a budget surplus and Reagan cut spending while increasing spending.

    Help me out with that. How is all of the number magic possible? A good example is the 150,000 ground troops in Iraq. You tell me how many billions a week it costs for 150,000 troops to be in a Third World country. We didn’t even give them body armor.

    No we spent money on Bell Helicopters, Humvees, and Colts. All American Corporations.

    We have money for the auto industry, Wall Street, and Pharmaceutical research, but we don’t have Health Care, social services, or infrastructure improvements.

    I don’t see the spending. Do you? Please explain to me why we should give our government more tax dollars? Will that change anything?

    Talk about delusional.

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  113. 113
    what goes up must come down says:

    dj,

    funny thing with Palin is most people could actually believe that she didn’t know africa was a continent, she went around talking how you could see Russia from Alaska and how that proximity gave her some kind of foreign relations experience so alot of people could figure out pretty quickly she is an idiot.

    one can only hope she runs for Prez in 2012

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  114. 114
    CostcoMike says:

    Well I see this thread has gone quite a bit off topic!

    If Dan is still reading I would like to know his opinion on my situation and everyone elses input so I might see the different positions.

    I have a masters in Education (music) but its harder to find full time teaching positions in this area as generally when cut backs are made music and the arts are not a priority (economy). I work for costco and make less than the median income. I have 20k saved towards a house and am 26 years old. With your predictions [Dan] you say our market will rebound and continue to rise how will someone like myself who is paying for education (in fields I am truley passionate about and am willing to be paid less and have less to be happy) be able to afford the average house in king county. How will future generations be able to afford housing if it continues to rise?

    Just curious at how people think about home values 100-150 years from now and how society will pay for those houses if they all appreciate?

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  115. 115
    Angie says:

    I remember when Clinton created a budget surplus and wanted to apply it to the national debt, how furious the Republicans in Congress were that the “excess” money would not be spent. I don’t believe they were that stupid, but I do believe they were furious because their constituency is stupid, or at least greedy.

    Not just that the surplus wouldn’t be spent–that the “investor class” couldn’t make money on the country’s debt. For a while during the Clinton years the Treasury didn’t issue 30 year bonds because the money wasn’ t needed. Rich people squealed like piggies because they wanted to get a return on those bonds (i.e., make money on everyone else’s collective debt).

    NO surprise to me that Republicans practice credit-card financing–their base requires it.

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  116. 116
    Eleua says:

    2DJO #111,

    Thanks. It is amazing what PDS does to people.

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  117. 117
    Eleua says:

    Angie,

    The 30Y was suspended because they wanted to force money into the short end of the curve to help foment the bubble.

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  118. 118
    mikal says:

    I worked for someone from the Neatherlands. He loved it here because only the truly wealthy could afford a 5 acre lot. This was out near Carnation. Do people there worry about affordability? He worked at Microsoft and could have done the same from his home country, but enjoyed being able to afford something here. I’m going off of what he said and what I have read, but is that normal in Europe? Eleua, Obama wants to roll back taxes to what they were in the 90’s under Clinton. Didn’t the economy boom then? You are a far right wing nut, aren’t you. I find it hard to believe that you and Softwareengineer, who both seem somewhat intelligent, can square what has happened over the last eight years with Bush as being good for the country.

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  119. 119
    mikal says:

    Eleau, if the government is running a surplus it should still borrow money?

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  120. 120
    Eleua says:

    mikal,

    You will search with futility to find a glowing endorsement of GWB by me. I have hated GWB since April 2001 and have thought him to be a disaster of a POTUS.

    I am not suffering from the delusion that Obamessiah is going to be anything but a complete failure.

    Obama is the most strident statist that has been elected since 1932. My opinions from that observation. Both Bushes were statists, as was The UNIBANGER. His tax policies didn’t do anything. It was the stock bubble that made him look like he was a fiscal genius. Look at what happened to the bond market in 93-94 when he tried to nationalize Hillary Care.

    GWB has been a disaster, as was The UNIBANGER, and Bush 1.0.

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  121. 121
    Eleua says:

    mikal #119,

    I don’t understand the basis of your question. We have been borrowing money every year of my life and the debt has grown, provided you include entitlement payments and promises of those payments.

    If you are asking about the suspension of the 30Y…

    The bond market has two parts: borrowers and lenders, both of which need each other. The available funds that seek .gov debt will buy and drive up the price (yield down). If the 30Y is not available, that money will float down the curve and buy that debt, thus reducing the yield. This was critical as the Treasury started to finance .gov debt with short term funding, which saved money on the interest that would be paid. Since the 10Y bond is beyond what any POTUS can serve, they don’t care if it blows down the road, as it would blow on someone else’s watch, thus making you look like a genius in comparison.

    The secondary effect is to lower the retail interest rate for average consumers and businesses, thus expanding stock markets, consumption, and all the other attendant bubble spin-offs.

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  122. 122
    Scotsman says:

    Eleua- your patience when faced with BDS and economic ignorance is inspiring. Personally, I have given up.

    Your comments and analysis are, of course, spot on. But now is not a “teachable moment.” Only when the economy has entered it’s death throes, and the entirety of leftist/socialist/statist ideals proven an impossibility will will people seek to understand, not just propagandize.

    When the student babbles on, the teacher can’t be heard.

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  123. 123
    Markor says:

    deejayoh: I’m no Palin fan – but I think this particular bit has been exposed as fraud

    If a journalist asks you if you really did kick that toddler in the face, is your reaction going to be an angry “Who told you that!?” That was essentially Palin’s reaction when asked if she had really said that Africa’s a country. She didn’t deny it. I saw the video, so I will not believe subsequent expected GOP spin.

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  124. 124

    I VOTED FOR NADER AND HATED BUSH TOO

    But since I saw Obama put in a decent anti-overpopulation chief of staff that the minority of the Democratic Party hated [they even wouldn’t even let him speak, he’s too honest like me]….I wish I’d voted Obama. Maybe you wished you’d voted McCain now….lol

    I see McCain as middle left and out of touch with the post election Zogby Poll results too: 2/3s of Obama supporters hate amnesty, but you far left call me a Bush supporter (he supported amnesty like you and McCain).

    Americans are mostly like me….moderate [actually moderate right, but I’m not that far right].

    I know, now call me a NEOCON hater for this blog….lol

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  125. 125
    Markor says:

    Scotsman: Your comments and analysis are, of course, spot on. But now is not a “teachable moment.” Only when the economy has entered it’s death throes, and the entirety of leftist/socialist/statist ideals proven an impossibility will will people seek to understand, not just propagandize.

    The economy is already in death throes, Obama’s not in office yet, but he’s already being blamed. Surely, having risen from the bottom of the rung all the way to the top on his own merits, he’ll now plunge this country (further) into oblivion. Because paying for the stuff we bought is always a horrible idea. It’s socialist, by golly!

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  126. 126
    Euro says:

    Funny that some people seem to think that Boeing will be ruined by a couple of weeks of strikes. And that the fact that Starbucks is rethinking it’s strategy is a disaster for Seattle. I agree with Klusman that Seattle has good economic foundations and is an attractive city to settle because of it’s surroundings etc.

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  127. 127
    Euro says:

    “I worked for someone from the Neatherlands. He loved it here because only the truly wealthy could afford a 5 acre lot.”

    Well duh, look at the size of the country and population density. I do think that housing in the US, even in Seattle is much more affordable than in Holland if you look what you get for a similar share of your income, but that probably has more to do with the fact that the US is a huge country than with political organization.

    An interesting fact for all the socialism haters is that Holland had a slightly higher BNP per capita in 2007 compared to the US, and achieved that in spite of all the evils of long vacations (5-6 weeks on avg), universal health care, 36 hour working weeks, progressive taxes, etc. That’s not to say that I think things are better in the Netherlands (though I do miss my long vacations), but it puts right-wing FUD spreading in perspective as far as I am concerned.

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  128. 128
    Euro says:

    Ugh, I meant GDP (BNP is the Dutch acronym)

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  129. 129
    Matthew says:

    I don’t think Boeing is a disaster, I just don’t think they are going to manufacture planes in Seattle much longer.

    The writing is on the wall if you look at recent comments by management. Why should the continue to manufacture planes in the Seattle area at a premium when they can move the base of operations to the South and be much more competitive with EADS?

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  130. 130
    Euro says:

    And lose the infrastructure and worker base they have here just like that? The only things I’ve read is the south actively lobbying to get a piece of the pie, particularly of new business, so that they can build some long-term infrastructure over there.

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  131. 131
    Eleua says:

    Scotsman,

    You are correct. The truly teachable moment is coming down the pipe. When the bond market finally capitulates under the groan of all our social spending, that moment will be upon us.

    Doctrinaire Lefties seek to suspend the laws of math to justify their tax hikes, yet all the shrieking over deficits seem to fall eerily silent when the Neo-marxists lick their chops at the prospects of national health care, and wild social spending.

    It is the spending that is the problem. This is what caused the GOP to lose their majority. It’s tough to remain in the majority when you campaign as fiscal conservatives and operate like a drunken statist. When we hear of the GOP being the party of fiscal restraint, it’s tough not to laugh.

    If they have an ounce of brains among them, they will use this time in the wilderness to hone a genuine message of spending cuts and tax parity, while the Neo-marxists drive the ship of state into the ditch.

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  132. 132
    mikal says:

    Eleu and Scotsmen, if you are teaching anyone it is the blind leading whomever. What arrogance. You both come off as incredibly unhappy. What will you wake up and complain about tomorrow?

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  133. 133
    The Tim says:

    Obviously I’m way late in this, but please keep comments on the blog posts mostly on-topic. We have a place for off-topic political arguments: the “Everything Else” section of the forums.

    Please direct future unrelated political arguments there. Besides, it’s been quiet and lonely there since the election, anyway.

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  134. 134
    Angie says:

    Darn, Tim, you sure know how to spoil the fun. You’re welcome to exercise your rights as moderator and transfer this comment to the forum but I have no interest in wading in to the site that far!

    Eleua’s invocation of “neo-Marxists” is too well-timed…I can’t resist sneaking in this link to Bill Kristol’s column today where he accuses Bush and the congressional Republicans of “letting free markets degenerate into something close to Karl Marx’s vision of an atomizing, irresponsible and self-devouring capitalism.” That guy, he’s such a crazy liberal statist!!!

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  135. 135
    Matthew says:

    Euro,

    What base and infrastructure? They’ve already outsourced a tremendous amount of manufacturing overseas, corporate HQ is in Chicago, what’s left, a few hangers and some plants?

    Small price to pay for the cheap labor the south provides.

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  136. 136
    David Losh says:

    Funny!

    Making claims of the government “borrowing” money is denying the budgetary process. If I work for the government with a budget I need to exceed that budget amount so I can get more money the next budgetary cycle.

    In good times I would need to spend more so I will have more of a budget in the bad times.

    In bad times my project might still have a budget, it may even go down, it may be terminated, but the dollars allocated to me are still coming in.

    That there is your government spending.

    The dollars come in every day from a variety of sources. People just love giving the government money so they can get it back in make work projects.

    This is very much on topic in regards to the building of housing units.

    In my opinion construction has been a government inspired welfare to work program. I hate to make the comparison but it is like the tech bubble of the 1990s without the college degrees.

    By my twisted logic new construction is now selling off surplus properties.

    Everybody has already wrung out the dollars and now the builders want to get rid of the remainders.

    Again, for new construction, from the builders point of view, this may be the right time to buy.

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  137. 137
    Scotsman says:

    Point taken, Tim. But remember to leave a little wiggle room and let the conversation wander, as housing trends are to a large extent a function of the economic and political climate. It was political pressures and directives that started this bubble, and it’s political considerations that will decide how it deflates, and who will pay for the losses. If you want to grasp the entirety of the issue, politics has to be included in the discussion.

    On a broader scale, and in the context of this specific post topic, we could look at Dan’s responses to your interview and how they are similar to the political posturing that’s going on. I’m sure Dan’s a nice person and a very effective spokesman for his industry. But he’s clearly not an economist, or even by his own admission a numbers guy. He’s a promoter for the building industry, and his perspective reflects that. Unfortunately, our current politicians are little more than promoters for the special interests that bought them. The idea of true statesmanship is dead, and leadership has been replaced by the raw quest for power. The importance of truth, understanding, accuracy, and comprehensiveness have been overwhelmed by the sound-bite of the moment. Dan’s comments are a case in point. I’d be more impressed if he sought to broaden his understanding of all the factors in the market, and shared some of the strategies and concerns of the builder’s group. As it is, i could have written his answers for him.

    And mikal- I’m generally very happy, healthy, and successful. But unlike many here, I feel have a pretty comprehensive understanding of the current economic situation, and a very clear picture of the future. I can “do the math”, and it shows that while we may have some choices now, there will be fewer and fewer as we go forward. Soon enough, necessity and survival will overwhelm today’s wants and desires, placing significant limits on what life has to offer- for me, my children, and those I care about. And that makes me sad, because until recently it didn’t have to be that way. Like a chess game, bad choices up front limit your plays at the end, until one is boxed in. Good luck to all.

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  138. 138
    jonness says:

    “I think I know what your objections are to Palin, but I will need to scratch a little more to confirm it. 90%+ of Lefties essentially object to SP on one issue, and it isn’t her college choice.”

    Her low IQ?

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  139. 139
    Eleua says:

    Jonness,

    Since you have a superior IQ to the governor of Alaska, can you demonstrate your towering intellectual prowess by reading and comprehending what “The Tim” posted in #133?

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  140. 140
    what goes up must come down says:

    Eleua, give me a break maybe you can look at how much you posted that was off topic and compare it to others how about a little honesty.

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  141. 141
    Matthew says:

    Ideologue:

    1 : an impractical idealist : theorist
    2 : an often blindly partisan advocate or adherent of a particular ideology

    There are half a dozen people in this thread that need to take a step back, read what Tim wrote in 133, and have a coke and a smile. No one in this thread is changing anyone’s mind.

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  142. 142
    jonness says:

    “Since you have a superior IQ to the governor of Alaska, can you demonstrate your towering intellectual prowess by reading and comprehending what “The Tim” posted in #133?”

    Eleua:

    It’s true my IQ is far superior to Palin’s. But here on SeattleBubble, my IQ is only about average. Thus, I don’t believe you will appreciate my interpretation of post #133, but I will do my best. I believe The Tim is saying your 15 off-topic politically-charged posts, which are based more upon your passion and emotion than your typical flair for logic, are not relevant to a conversation about Dan’s interview.

    The Tim believes you are a very insightful person who brings a great deal of value to the economic-related discussions at this site. However, when the mud-slinging gets as bad as it has in this thread, particularly with the inclusion of stereo-types, labeling, and name calling, it’s probably a good idea to move this aspect of the discussion to a far corner of the site where fewer people care to venture. This will ensure the site will maintain a palatable reputation to viewers who don’t share your intense passion for political subject matter.

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  143. 143
    Amy M says:

    Apparently it’s not the right time to buy in Vancouver either. Bloomberg just posted a story here.http://www.bloomberg.com/apps/news?pid=20601213&sid=aUaxzBW8q_OU&refer=home

    To recap it, the slump has hit there too.

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  144. 144
    Eleua says:

    jonness,

    The difference that I am highlighting was that you kept on going after Tim asked you to stop.

    If you want to chuck knuckles in the forum, I’m willing to give it a go. It’s OPEX week, and I’m stuck at the computer until 1pm on Friday, and I need some easy amusement.

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  145. 145
    jonness says:

    Eleua:

    I appreciate the offer, but I don’t extract much joy from discussing politics. One or two posts per week on the matter pretty much fills up my appetite.

    On another note, the recent DOW plunge appears to be a surprise to many, but I doubt too many people on this site are finding it to be an incredulous week. :)

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