By The Tim on March 25, 2009
Here is your open thread for the mid-week on March 25th, 2009. You may post random links and off-topic discussions here. Also, if you have an idea or a topic you’d like to see covered in an article, please make it known.
Be sure to also check out the forums, and get your word in the user-driven discussions there!
Posted in Open Thread | Tagged open_thread
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.
Can someone point me to some data, an index, or something that would tend to show how good or bad the credit markets are regarding availability of funds? I remember seeing something like that back in September, but I can’t find them again.
I’m not talking about housing credit markets, but more commercial or overall.
You missed the bottom, you dirty renters!!!
http://seattletimes.nwsource.com/html/businesstechnology/2008920855_apnewhomesales.html
Just kidding, by the way. ;)
BTW – How far do we have still to the bottom that is the point where affordibility in SEA will be similar to say 1999? We should probably be more affordable because now the economy is kind of weak with layoffs everywhere and in 1999 – SEA was riding out the good times.
Unfortunately, there is no easy way to get an all-up, comprehensive, view of the credit markets. There are many different credit markets, and you just have to look at each one individually.
What can be said is that the credit spreads (i.e. the difference between treasuries and whatever other credit instrument) have been narrowing in recent months for most credit markets. However, even these credit spreads don’t give a full picture. In many cases, lenders (be they banks, institutions, or otherwise) are tightening their lending criteria, demanding greater collateral, etc. Thus, even though the spreads might be getting better that doesn’t mean that a lot more lending is taking place.
Things get even more confusing when you look at the loans that banks are underwriting. By some measures, banks are actually lending more today than they were 2 years ago. Banks are putting as much, or more, loans on their books today than they have in recent years. However, the TOTAL volume of bank lending is down considerably since banks are no longer able to spin off loans to third parties with securitization. In recent years, a huge portion of bank loans were actually just re-sold to third parties. This secondary market for debt has shrivelled to a trickle, meaning that ALL the loans banks make must be with their own capital.
This leads to a lot of mis-informed pontificating from politicians, and the like, who lambaste the banks for cutting back on lending when banks actually are doing quite a bit.
I’m going to go there.
The Rain City Guide bothers me. My first few comments were shouted down by Ardell who kept making fun of my blogging ability. OK it’s not blogging it’s commenting.
After some reading it seems that Dustin Luther was building a blog for Realtor.com, I don’t know for sure nor do I care. Then the attorney started saying he could write up a Real Estate contract for less money than a commission. Ardell kept saying the commission was negotiable, the educator started having short sale classes, the estaely search site guy is a contributor/pal. and the mortgage rep is talking about the virtue of rates.
All in all the site is a mass of bad information for a consumer.
They have the makings of a discount brokerage site, but are talking about being the leading source of Real Estate information.
These are sales people hawking stuff about Real Estate. in my opinion it’s dangerous for people to think they are getting information there.
I like this site. There is a lot of negativity, but also there is positive, usable information.
How can we get this site to over take the other sites for Real Estate information?
Wow, if you think housing in the U.S. inflated, check out Austrailia!
http://www.tickerforum.org/cgi-ticker/akcs-www?getimagenr=23646
For anyone who cares and doubts that deflation will occur…
Before you mouth off with impunity, you might want to check out the epic fail in the UK bond auction and see how our auction went. Even with B52 Ben buying, or threatening to buy, our auction didn’t go as well as one would have thought. It would seem that QE isn’t the panacea we all thought it would be.
TPTB bought the market at the end to keep the panic down to a dull roar. We can’t have the market sell off a huge, very media driven rally right before quarterly statements hit the USPS.
My advice to you: Keep drinking.
RE: Eleua @ 7 – Eleua, can you answer the question I asked in position #1 above?
RE: Eleua @ 7 – Finally some advice I would like to follow.
Eleua,
I’ll have to say first that I don’t know the first thing about how the bond market works, but according to WSJ:
http://online.wsj.com/article/SB123800913277240685.html
Are you aware of this piece of info (“2049 bond”)?
More interesting than the British bond issue is the fact that the U.S. 30 year has moved from 2.6 to 2.78% in just a couple of days despite the Fed’s intervention and the expenditure of billions of dollars of targeted money. We should have a pretty good idea in a couple of weeks what’s going on here and whether or not the market is really under stress.
RE: Kary L. Krismer @ 8 –
Kary, there are two factors typically used to measure credit quality and availability. The first is the spread between treasuries and the specific type of loan- commercial real estate, consumer, etc. The premium one pays over treasuries is thought to be a measure of the willingness of financiers to lend. If there’s very little difference or premium then those who have money to lend are cutting rates to increase demand. Conversely, high spreads indicate caution with regard to the borrowers credit worthiness or an unwillingness to lend.
The second indicator is the cost to insure such loans. Yes, banks and other can purchase insurance for the loans they’ve made. When the cost to insure goes up for a specific group of potential borrowers then the number of potential lenders, for a given rate, goes down. As you can see, it’s a very fluid situation where one needs to look at a group of factors, not just a simple index. From time to time you may run across a reference to a specific factor that is tracked somewhat like an index, but it isn’t always a reliable indicator of the whole situation by its self. Hope that helps.
RE: Scotsman @ 11 –
Argh! Should be 10 year, not 30. Sorry, the edit function seems to have disappeared on my computer…
RE: Eleua @ 7-
What is the return on bonds? Why would anyone buy bonds today, any kind? What would be the reasoning? What would be the return?
When you have good, honest, hard working, responsible citizens lined up to give you a down payment of cash and pay 5%. Did I mention salt of the earth, money in the bank, don’t need the money but want to pay 5% would wet themselves to pay you 3.75%, and they do not even need the money. People who have the money they are borrowing in a bank paying them 2% would wet themselves to get 3% on a savings account are borrowing at a rate of 3.75%.
Follow that thought. They have money in the bank being paid 3% yet are borrowing the same money at 3.75%.
When you are talking risk free look at the sucker pool that we have today. They are grateful to get a loan and you have money. Why would you bury your money in bonds?
RE: Eleua @ 7 – I don’t get the connection. BoE tried doing the old school, sterilized QE. That’s the way Bush would have done it. These days the cool kids are all printing money, so they don’t have to waste time finding buyers. That’s the beauty of it, you see.
RE: Scotsman @ 12 – Yes, thank you. It’s that first paragraph that seems familiar. If I have more questions I’ll ask later.
Oh, BTW, the distressed property law amendment was signed yesterday. The bill is still poorly written, but now real estate agents are largely exempt, and more importantly the 20 day rule is gone if the seller has an agent or an attorney. That should make it easier for people in foreclosure and for short sales to sell. The old rule cast far too broad of a net, only really intending to pick up those who show up at a door within 20 days and offer a small amount of money to buy the house knowing it was in foreclosure.
There has been much less forum activity lately. I blame these open threads.