A couple weeks ago we mentioned a recent Bill Virgin column in which he sorta kinda called a bottom for housing (and the economy) in 2009. Well, a lot has changed in Bill’s world in the last few weeks, and his tune has changed slightly.
Forecast of short recession looks shaky
It is a sobering reminder of one’s insignificant place in the universe when news that one’s employer and one’s job are likely to evaporate in 60 days counts as no better than the third most significant local economic story of the day.
…
On the evening that news was breaking about the Seattle P-I’s demise, your business columnist was out on a speaking engagement at a meeting of a local business group, blithely propounding the view expressed two weeks ago in this space that 2009’s economic outlook is not hopeless, and that there are some reasons (lower energy costs, the eventual bottom to the housing market and bad assets in the banking system) to believe that the recession, as nasty as it is proving to be, may also be short-lived.Of the three panelists discussing the economy, that was the most optimistic outlook. Asked when there might be signs of a turnaround, said columnist predicted they could appear as soon as late in the second quarter.
Given the events of the last few days, Mr. Business Columnist, care to revise or extend your remarks?
There’s always the temptation to succumb to the notion that a recession isn’t all that bad, as long as it’s not happening to you, but once the floodwaters of the economy hit one’s own doorstep, it graduates to status of depression.
Other news would certainly tend to suggest a rethinking of the optimistic forecast.
As usual, Bill’s column is a thoughtful and engaging summary of the current economic issues facing our region. Read the whole thing.
Three writers I’ll miss the most with the end of the P-I: Bill Virgin, Mark Trahant, and Aubrey Cohen. Why does the paper with all the good economic/real estate writers have to be the one going under?
(Bill Virgin, Seattle P-I, 01.12.2009)
The Tim » Jan 13, 2009 at 9:46 am
P.S. – 71% of Seattle Bubble voters in the October 5th poll question Poll: How long before Congress is asked to pass another bailout? said “Less than 6 months.”
Today’s headline: Bernanke: No ‘lasting’ recovery without more bank aid
Slumlord » Jan 13, 2009 at 11:06 am
I too will miss the writing of the PI’s able staff. I hope that many of them will be able to find ways to continue contributing to the community.
Joel » Jan 13, 2009 at 12:08 pm
The writers at the PI are smart maybe because the owners are smart and hired smart people. And the reason they’re dumping the newspaper is, again, because they are smart. News printed on tree pulp is a dying medium. Better to get out now than later.
vermillionsky » Jan 13, 2009 at 12:14 pm
Hi The Tim,
I’ve been reading your boards for a while now and appreciate the information you provide. Good job!
I’m de-lurking because that headline gave me a chuckle. Maybe it was intentional, or maybe my mind is simply in the gutter today (it wouldn’t be the first time).
That’s all. Thanks again for all the info and lively discussions!
Scotsman » Jan 13, 2009 at 12:29 pm
Too bad about the P.I. Although a bit liberal for my taste, there were some things they did better, and with a bit more candor.
In other news: Hey, the viaduct replacement tunnel has been “approved.” Christine says it will provide 10,000 jobs for 10 years. WAMU executives will now be pouring concrete and driving loaders. Seattle is saved!
Buy now or be priced out forever!
softwarengineer » Jan 13, 2009 at 1:49 pm
I’ll BET MONEY HONDA AIRCRAFT, PER TIM’S PI ARTICLE, ISN’T LOOKING FOR ENGINEERS
No, those are all in Japan, with almost all the other college educated opennings for Honda corporation. The PI editorialist may get a non-union job assembling parts, Hades it may pay $20/hr with no benefits for now…..until, Boeing is replaced like the Big Three….then the insourced American assembly plants will probably just disappear, like Mississippi’s Toyota plant.
vermillionsky » Jan 13, 2009 at 2:31 pm
Ok, I’m de-lurking again to respond to softwarengineer. I’d like to see your data to back up those comments about Honda. I have friends who work at a Honda plant in Ohio (where the Accords are made). One friend without a college degree who worked on the assembly line (she quit a few years ago when she got married and had kids) was very happy with her pay and had good benefits. I don’t know how much she made, but I’m sure it was good for somebody with neither a degree nor any formal trade skills. Another friend with a business degree who works in the HR department made over $80k/year several years ago (he may make more now) and also has great benefits.
I don’t know if there is a big difference between Honda Aircraft and Honda Automotive, but it really makes me mad when people claim Honda doesn’t treat their employees well or offer benefits (I’m assuming because they aren’t unionized). If that were the case, their plants would have unionized by now. A friend of these friends who is a mechanic at the plant told me he was approached several times by union organizers, but always turned them down because he used to work for a unionized plant up in Detroit and didn’t want to go back. No, my friends are not a statistically significant sample, but if my impression is wrong then please show me the data that refutes it.
Marc » Jan 13, 2009 at 3:16 pm
For what its worth, Honda Aircraft recently ran a full page ad in the Seattle Times advertising for all sorts of positions including (as I recall) engineers. It wasn’t clear where the jobs would be located and I wouldn’t fathom a guess as I know next to nothing about the aerospace industry. I think it’s run at least twice.
CCG » Jan 13, 2009 at 4:11 pm
Oh no. What’ll we do without stories like this at the top of an asset bubble to lure in more suckers?
One real estate tout sheet down, one to go.
Ray Pepper » Jan 13, 2009 at 4:27 pm
Does anyone still get the paper? CraigsList and AutoTrader was the final daggers to advertising. Craigslist itself is putting a dagger to Autotrader. With Real Estate advertising continuing on the decline I suggest the Old Print is going the way of the dinosaur.
DavidB » Jan 13, 2009 at 4:40 pm
I heard the PI is ending in “printed” form but I thought it was going to continue as an on-line publication. If so, maybe everyone there won’t lose their jobs.
The Tim » Jan 13, 2009 at 4:43 pm
CCG @ 9,
I just would like to point out that the article you linked to was not written by any of the three reporters I mentioned. Also, the home mentioned in the article that was unloaded by Mack for $700k is now Zillow-ing for $550k. Ouch.
Ray Pepper @ 10,
Well, I picked up a copy of the P-I yesterday. But then again that’s just because I was quoted on the front page.
Ray Pepper » Jan 13, 2009 at 4:49 pm
I gave up the Sunday paper many years back due to a lousy delivery driver who just didnt get it. I wanted the paper on the doorstep yet the driver (who used a car) just kept leaving the bundle way out on the Seahurst driveway. I complained 3x and finally said forget it. I never looked back and don’t miss it at all. My parents who are now in their 80’s always had their paper delivered properly when I was growing up. The garbage men were also nice and got tipped every XMAS with wine. Now I don’t know the mailman or garbageman. Life is change. Some for the good—others not.
Ray Pepper » Jan 13, 2009 at 4:59 pm
Tim, I started to look for your quote on the front page (hoping you talked about 500 Realty ) and was side tracked by Shane Company filing for Bankruptcy. That commercial jingle drove me nutts. I’m not surprised. Overpriced diamond retailers will never make it through the next few years. I believe we already lost many others. Now I go look for the quote.
Ira Sacharoff » Jan 13, 2009 at 5:07 pm
While I read the papers online, there’s just something very satisfying about holding the dead tree newspaper in my hand….And it’s not as much fun to do the crossword online.
deejayoh » Jan 13, 2009 at 5:10 pm
More evidence of the Freakonomics assertion that Realtors get more money when selling their own houses than those of clients, perhaps?
Eastside RealEstate Agent » Jan 13, 2009 at 5:48 pm
This site is really preposterous. The real estate market has already reached its “bottom”. Winter time always brings a real-estate hiccup no matter what the weather is outside. As soon as it warms up, then the Californians will be in the mood to travel and buy housing here as they start to do every Spring.
There’s nothing new about this, just the same thing that happens every year for the past 25.
And for all of you rooting for the big “Microsoft layoff”, well that isnt going to happen on the 15th or any other day in the foreseeable future.
David Losh » Jan 13, 2009 at 6:05 pm
The United States Census is the largest mobilization of man power outside of war time. In the next year thousands of people will be hired to do the Census across the country. Seattle is a regional head quarters.
The Census itself is one thing, but the data is another. In the next few years so much data, new data, will enter the market place it will take legions of workers to compile and disseminate it.
Other industries will take the data and use it to make “educated” allocations of resources. That’s one of the reasons we have a ten year cycle for Real Estate Investing.
mikal » Jan 13, 2009 at 6:09 pm
Eastside Real Estate Agent you are nuts in your way as Softwareengineer is in his. What data shows we have bottomed? There is nothing that shows this. There are quite a few here that seem to think they will be able to buy a large craftsmen on Queen Anne for $100,000 when this is over. They are also clearly out of their minds. I agree that right now it seems unlikely that MSFT is laying people off.
TheHulk » Jan 13, 2009 at 7:11 pm
Yeah, thats what we need. Thousands of Minimum wage census takers are going to buy the 400K houses all around the Puget sound.
Sure, the census might provide a much needed relief in employment numbers but finally, its just a temp job and no, it wont pay enough to lift the housing market out of the canyon that it is plunging into.
Groundhogday » Jan 13, 2009 at 7:37 pm
Is Eastside Real Estate Agent a parody?
The Tim » Jan 13, 2009 at 7:40 pm
RE: Groundhogday @ 21,
I think so, but I can’t be sure. If it is, it’s a good one that I’ve been quite enjoying.
rose-colored-coolaid » Jan 13, 2009 at 7:55 pm
Eastside RealEstate Agent, my new friend, you seem a tad bitter. Mayhaps you found it difficult to sell properties this winter and would like to blame The Tim? Fortunately, we can disregard your California Equity Locust hypothesis. It has already been discussed in detail and found to be dubious at best. But that was during the good times, when owners from California actually had equity.
I’m not sure what the latest numbers are, but using set theory ownership in California looks something like this : TOC = EWE U URWE U FBWNE
*TOC : Total Ownership in California
*EWE : Elderly People with Equity
*URWE : Uber-Rich With Equity
*FBBWNE : Flat Broke With No Equity
In English, only the uber-rich and the uber-old have equity. Everyone else in CA has an upside down mortgage. The elderly and wealthy strongly prefer warm weather, so they aren’t moving. Good luck selling houses to California Equity Locusts this spring.
Herman » Jan 13, 2009 at 10:49 pm
Eastside REA is the best! That is truly magnificent trolling.
isotope66 » Jan 13, 2009 at 11:13 pm
Microsoft has definitely started shrinking. They aren’t laying off employees, but have been closing contractor positions aggressively. I hear from a friend that in the month of December alone, 12k contractor positions have been closed. Every friend who works at MS in an engineering team has stories about how the contractors have been booted out and they are having to take on more mundane day to day work.
Microsoft’s style of lay off is quite different. They identify divisions/groups that are not profitable or have no potential business impact and disband the entire division. Every one 4 – 8 weeks to find another position within MS, otherwise they are free to leave.
The Tim » Jan 13, 2009 at 11:17 pm
Funny true story: A friend of mine (and reader/commenter on this blog) is actually just about to start a contract position at Microsoft. So they’re not closing all of the positions…
Jill » Jan 14, 2009 at 7:46 am
The big question about the bottom really pertains to unemployment locally. People need jobs to pay their mortgages. Without jobs, people will be dumping their homes, decreasing home prices. Will the global demand for Microsoft and Boeing products save our local real estate values?
DavidB » Jan 14, 2009 at 9:04 am
Microsoft, Boeing, Amazon, and other large local companies get the media attention when they layoff employees but I’m the controller for a company with just under 800 employees and we’re cutting staff. My company’s sales have fallen off a cliff in the past couple months! We’ve been laying off employees at the rate of 50 or so a month! Our latest forecast is to have 500 employees by the end of spring!
How many other small to medium sized companies are doing the same thing in the Seattle area? All of these layoffs will start adding up to a sizable number and it WILL impact our local economy!
CostcoMike » Jan 14, 2009 at 9:40 am
Eastside Real Estate Agent @ 17
We have a right to speculate what will or will not happen just as you have made the prediction that there will not be lay off’s.
Furthermore I need to know where you are getting your information from. As an educator I ask students to always reference where thy get their source of information. The Tim clearly references his sources so I can check and make sure what he says is accurate and formulate my own opinion. Your comments however do not reference any material or sources. Please reference your sources for your information so we can understand your argument. I don’t think we can trust a “because I know” at this point. You would not by a house because a real estate agent promised you its a good deal no need to inspect it, or even go see it… or would you?
mukoh » Jan 14, 2009 at 9:44 am
Wooops, I just bought a big item at Shane. Might take it back since the lifetime warranty won’t be honored if they go banco.
deejayoh » Jan 14, 2009 at 9:57 am
anyone see a secular trend here in terms of California immigration?
http://www.ofm.wa.gov/news/release/2008/080702c.gif
facts suck
jon » Jan 14, 2009 at 10:11 am
That graph says it is a 12 month moving total. Maybe they did that because there is a seasonal component.
WestSideBilly » Jan 14, 2009 at 10:36 am
You’re wrong.
Honda Aircraft is based in Greensboro, SC. The top executives are most likely Japanese but the bulk of the engineers, designers, technicians, and testers are not. There is no aspect of Honda Aircraft that is in Japan.
As for Toyota’s Mississippi plant, what are you going on about? It’s not even finished. It’s getting pre-retrofitted to make Priuses because their Japanese Prius factory can’t keep up.
You’re right, and you’re friends are not abnormal. HAM has consistently voted against unionizing by wide margins. Honda’s factory workers receive similar wages as their Detroit brethren without the persistent BS (and union dues) of the UAW. The benefits are similar, medical isn’t quite as good, PTO is a little more restrictive. For the most part, the same is true of Nissan’s plants in Smyrna and San Antonio and Toyota in Alabama, Kentucky, Indiana, etc.
b » Jan 14, 2009 at 10:36 am
Its cheaper to live in California now, why the hell would they move here more than any other place? I guess they never taught people in Realtor classes that when prices in San Diego are less than Bellevue, Californian’s aren’t very interested in braving the rain anymore.
deejayoh » Jan 14, 2009 at 11:25 am
Probably the case. But given that the trend has been down for over a year, it must be the case that the volume is dropping on a monthly basis – as the 12 month rolling number keeps getting lower
patient » Jan 14, 2009 at 11:44 am
A bit off-topic but I listened to AM 1000 yesterday when driving home from work and heard something that made me quesy. Apparently the state budget for 2009 is calculated to be short about 20% or ~$7b. There’s a debate in Olympia wether tax increases are needed to cover for the gap. Now here’s the juicy part: A couple of “respected” economists in the state together with the Washington association of realtors have drafted a proposal that according to them will generate a lot of revenue through increased consumption without any need for raised taxes. The proposal is a down payment assistance program for first time home buyers… According to the “study” it will stimulate the economy when home buyers go to home imporvment shops after buying the home and they are very likely to buy new cars when they “have their mortgage in order”.
So the solution is to help people getting into huge debt and then take on more debt through a heloc I suppose since if they don’t have money for a downpayment I don’t see how they will otherwise have money for a new car, new furniture, kitchen, bathroom etc. To me it’s a shameful proposal which only purpose is to line the pockets of the realtors and bankers. If any lawmaker in Olympia supports this they should be ousted.
Scotsman » Jan 14, 2009 at 12:07 pm
Patient, are you serious?!? That’s depressing. I’ve said for some time this whole mindset on the part of government and consumers won’t stop until the checks bounce. It seems more true with every passing day. Nobody ever talks about cutting back and putting their finances in order by restoring a healthy balance.
Party ’till you drop, for tomorrow we die.
patient » Jan 14, 2009 at 12:12 pm
Scotsman I wish it was a joke but unfortunately it’s what they said. I don’t have the time to search for a reference but it was about 5:30PM on AM 1000 yesterday. The creators of the proposal was not interviewed so the radio guys must have gotten it from some kind of document or similar.
Slumlord » Jan 14, 2009 at 12:28 pm
I think there needs to be a term to separate real economists who do analysis (sometimes flawed) and advocates who claim to be economists (always flawed).
deejayoh » Jan 14, 2009 at 2:26 pm
Surprised no one has posted this
mukoh » Jan 14, 2009 at 6:15 pm
I know one of top contractors and vendors for MS starts with “a” they have a boost in orders over the last few months. No cuts. Now Isotope you are either hyping or just a troll.
deejayoh » Jan 14, 2009 at 7:47 pm
From today’s WSJ:
In Rare Move, Microsoft Is Exploring Job Cuts
FWIW I am not cheering for MSFT layoffs.
Elsewhere – Google is laying off 100 recruiters. 100! That’s probably 1000+ fewer new hires a year.
The Tim » Jan 14, 2009 at 9:37 pm
I’d hope not.
Hector » Jan 14, 2009 at 9:42 pm
Mukoh, that’s a result of the hiring freeze. Instead of hiring FTE’s and taking the capex hit, they are bring in contractors that will go on the opex books. Gotta love Wall Street…
MarkM » Jan 14, 2009 at 11:11 pm
Saw this interesting article link via Yahoo:
http://finance.yahoo.com/real-estate/article/106439/Where-U.S.-Home-Sales-Are-Rising;_ylt=AtxYxt7h4kB59YehXxA3WuW7YWsA
So it seems there might finally start to be some recovery in the housing market but Seattle is not on the short list. Seems the median price of places experiencing rebounds is noticeably less than the median price for Seattle right now.