By The Tim on May 25, 2009
Here is your open thread for Monday May 25th, 2009 (Memorial Day!). 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.
OK, I’ll start off. The Japanese have done it again, setting new standards for innovation. Yes, finally- books printed on toilet paper. What could be better?
http://www.telegraph.co.uk/news/newstopics/howaboutthat/5381234/Japanese-publisher-prints-horror-novel-on-toilet-roll.html
“The nine-chapter tale is appropriately titled “Drop,” and is the alarming story of an evil spirit that inhabits a toilet bowl, according to Takaki Hayashi, vice president of Hayashi Paper Corp.”
RE: Scotsman @ 1 –
That’s nothing, I hear Amazon is coming out with a water proof Kindle covered in soft absorbant material so you can reuse it to protect the environment. Well maybe it’s just a rumor, but I’m sure they’re working on it.
I have good news! My wife passed her Washington State real estate agent test on Saturday. It took her 2 months and 10 days to complete her 60 hours and take the exam. They don’t tell you your score unless you fail. But now she has to find a broker to take her under their wings. Any clues on where to start? Now she wants me to go though it, but I don’t know. (I have a MBA so she thinks I should have no problem. She has a masters in journalism.)
Searching Redfin I found an interesting listing:
http://www.redfin.com/WA/Seattle/2600-Fairview-Ave-E-98102/unit-8/home/2087688
This is a floating home which sounds interesting. But look at the tax records? A 1.3 million property and the taxes are over 9 million? What gives? Any clues?
Thanks,
RE: calvis @ 3 –
As to the houseboat listing, it would be possible to check my guess, below, through the assessors records for the other houseboats next door, but I assume it’s a value for the whole shoreline land holdings and moorage rights in which each boat owner only has a proportionate undivided interest similar to a condo.
As to you’re spouse, what area of town are you in? It might make a difference as to how reasonable any specific recommendation is. If you and your wife want to talk about the industry at some point, I’d be willing to do it on the phone or in person. I’ve got a real estate license and I practiced real estate law for 25 years primarily doing transactional work.. I represented brokerages on occassion. I know a lot, but there are others on this site that know as much or more at least as to certain areas of the brokerage business. A friend of mine with a Phd in education recently went to work with Windermere. She has good credentials but its been slow. She works hard but clients are hard to come by. I think you’re spouse can probably get a spot at a full service brokerage like Windermere of JLS that will provide some training and perhaps a few leads and that’s probably the best idea to get her feet wet. Any of the full service firms is going to urge that her business plan be to market to everyone she knows both personally and professionally by sending out mailers or emails to solicit their business and referrals because she is someone they trust. Beyond that, anything I have to say is probably beyond the scope of what’s reasonable to present on this site. Let me know if you want my two cents worth and we’ll arrange to get in touch.
RE: One Eyed Man @ 2 –
You are one sick, sick puppy, One Eye. Go to your room.
RE: calvis @ 3 – On the firm issue, I’m not really sure it matters a great deal, other than the expense. All of the major firms provide some sort of training and mentoring. But what they charge can vary a lot. When just starting out I’d go with one that only charges a nominal monthly fee of maybe $50 with the rest being commission split.
I’d also suggest a place relatively close to home. After we moved from Skyway to Renton, or old North Seattle office was very inconvenient.
Finally, this would be tough without some help without an agent, but I’d suggest finding an office where the other agents are productive. That was our major criteria when we switched offices. That and an office where they have their limited broker feeds set up to automatically download to Realtor.com.
RE: One Eyed Man @ 4 –
We drove by boat house and had a chance to talk to someone familiar with the area. From my understanding they are setup under a co-op using some kind of non-profit company. The taxes and expenses are spilt up between the members holding shares in the company. Each owner is given one share.
We are located in Redmond. She will start calling companies in the morning. She definitely wants to setup her base on the Eastside. She has a target market that she wants to focus on. Thanks for the offer about sharing your knowledge. I will let her know.
RE: Kary L. Krismer @ 6 -
Yeah, I think working close to home is fundamentally a good idea. And working in an office that is productive is a plus as well. In this case you hope success will breed success. I will share your post with her.
Thanks,
RE: calvis @ 7 – And that you can see what results in success.
Case-Shiller is out today, showing Seattle approximately 22.5% off the peak. That’s down significantly from last month, but still above the King County median, which was 24.5% off the peak for March, and the mean which was 29% off the peak. In fact, the NWMLS numbers dropped more from February to March than C-S. The gap widened.
RE: Kary L. Krismer @ 9 – As mentioned before, any difference between c-s and median is of no surprise. The measure different things. Median measure sales mix while c-s measure home values. The press is sorely misinformed about this and references median as a home value measure. It’s not.
RE: patient @ 10 – Neither measures home values if by that you mean either will give you any idea what your house is worth. You can’t take the C-S number from when you bought your house and process it through to the C-S number today to find the current likely value of your house.
Both the median and C-S are measures of the strength or weakness of the market.
RE: Kary L. Krismer @ 11 – Both are area indicators not individual homes but c-s does measure home values and median does not. it’s by definition. Try to twist it anyway you want but the definitions remains the same.
RE: patient @ 12 – If C-S does values and NWMS does not, then it’s rather ironic then that C-S uses an index number while the NWMLS uses dollars. ;-)
KLK @ 13 -
I am not sure that word means what you think it means.
http://www.nytimes.com/2009/05/25/business/economy/25foreclose.html?_r=1&em
Nothing new. Again; we grew accustomed to needing 2 salaries to be able to survive, so now the stories are shocking. Who TF needs 3500 sq.ft?
Really frustrating.
RE: Kary L. Krismer @ 13 – I don’t know if I’d call it ironic, rather logical. Median is logical to measure in dollars since it’s the mid price point of all homes sold. C-S measures the value change for each home sold, if one homes changes from $3m to $2m you have a change in $1m and another changes from $100k to $50k you have a chnage of $50k, Which is the larger change? If you average the $ amount it does not properly represent the value change for each home. You need an index that can be more like a percentage change. So , no it’s not ironinc, it’s logical.
RE: b @ 14 – Which word? Ironic? Ironic isn’t a synonym for coincidental, which is how a lot of people use the term.
RE: patient @ 16 – I really think people use these things for too much. IMHO all they are is an indicator of current market trends–strength or weakness. They don’t even show overall strength or weakness, just strength or weakness compared to the very recent past.
The current C-S number is close to July, 2005 for Seattle. But that doesn’t mean that the market in March was as strong as it was in July, 2005. It was undoubtedly much weaker.
I’m not sure what month the March NWMLS median would be similar too, but there again, it doesn’t mean that your house would be the same value as whatever month that was.
BTW, going back to your original point, median doesn’t measure sales mix, but it is affected by it. C-S is affected by what houses they include and exclude.
RE: Kary L. Krismer @ 18 – I disagree, I think the level, direction, trend and velocity of c-s is very useful to plan your home purchase as a buyer and your home sales plan as a seller.
RE: patient @ 19 – And I completely disagree that looking out the rear view mirror with a telescope tells you where you’re heading.
But whatever, I’ll bite. Assuming the C-S number for April will be above March, which is likely, what in the past data told you that?
RE: Kary L. Krismer @ 20 – That would be April c-s last year. A little blip up on the long slide down. Seasonality. Though I’m not so sure as you that it will happen this year.
RE: patient @ 21 – The main reason it might not happen would be the 3 month average C-S uses. The further we get from the September 2007 Paulson announcement the stronger the market has been getting, because people have short memories and DNA that allows them to receive news of low interest rates without ever checking the news.
I’m sure The Tim will post the c-s data very soon but I think the decline accelerated from last months report, from a monthly pace of -1.5% Jan-Feb to -2% Feb-March.
Kary may I ask why you think people look at the 50 day MA and the 200 day MA when it comes to stocks?
RE: what goes up must come down @ 24 – I actually believe in charting for stocks, but obviously I recognize that isn’t an absolute science. I wouldn’t use moving average, but to each his own.
But IMHO the real estate market moves at too slow of a pace for the charts to be any real use. Also, it’s sort of hard to put in an open sell order on a house. ;-)
Interesting article on cnn money discussing the merits of renting vs. owning. The article compares the Price/Rent ratios for several cities, Seattle takes the #1 spot.
http://money.cnn.com/2009/05/22/real_estate/renting_buying.moneymag/index.htm
By Kary L. Krismer @ 25:
So if it moves so slowly, what is the problem with looking at trend data that is 60 days old? Especially given that is more representative (as to mix) and far less noisy?
seems to me a contradictory viewpoint with “looking out the rear view mirror with a telescope tells you where you’re heading”
I just don’t think support and resistance have the same effects in housing. About the only similarity I see is where the market is overheated, both then to react to that. But a large price drop in housing is not going to get a lot of people to want to sell, the way a large price drop in stocks would. And if you had an increase followed by a decrease, there’s not going to be people wanting to get out because they’re even, like you sometimes see with stocks.
Stated differently, the markets for liquid and illiquid assets will not move in similar ways.
Asking price per sq. ft vs sold per sq. foot.
http://www.redfin.com/search#search_location=98029
http://www.redfin.com/search#search_location=98038
http://www.redfin.com/search#search_location=98290
http://www.redfin.com/search#search_location=98116
http://www.redfin.com/search#search_location=98119
I’d be curious to know care if anyone has taken a stab at how smaller geographic areas are responding to the implosion related to the cs rather than the medians of the tri-county? Is anyone looking into the possibility that we may experience deflation and inflation at work simultaneously as areas respond to many variables that fall outside our previously understood projections.
It’s a little jumbled in my head, but if the previous model crashed and exploded over the hill, what does the new model start looking like to avoid the crashing over the hill next time we let it fly? All we seem to have right now is an estimate of the size and threat of the fire it the crash started.
Cheers -b
By Kary L. Krismer @ 28:
People who sell stocks when the price drops are the same type of people who bought real estate during the bubble simply because prices were going up. These people don’t know what they are doing and are the ones who end up losing all of their money in the stock/real estate market. The only reason these people don’t sell real estate when real estate prices drop is because they took out a loan to buy it so they literally can’t sell. If they weren’t over-leveraged they probably would give up on the idea that you can make money in real estate, sell and take their losses, and throw their money somewhere else; just like they do in the stock market.
Smart investors don’t sell stocks when prices drop. Assuming nothing else about the company changes (i.e. management change, earnings different than expected, etc) a smart investor would buy more or do nothing when the price drops. Buying and selling stocks or real estate (for investment purposes) involves the same line of thinking.
RE: ben @ 26 – We’re number 1! Wow, that’s quite the little bomb you snuck in there Ben. I bet this means we’re going to see some more price drops. Look out below!
Kary I guess my point was that there is something behind the trend — human emotion.
People sitting on the sidelines thinking about selling or thinking about buying well when they see these trends it makes them act a lot of the time — I am not saying logically but act just the same. That is how markets can change very quickly upside or downside the human factor.
Now for the people who were thinking of selling in say two years from now because of retirement, future job relocation, etc… well they start seeing the trend and because people start talking saying things such as, “man if I would have sold just a year ago I would have easily gotten $xyz for my house, there was a house down the street that I remember that sold for — blah, blah, blah” you get the just, well now these people list and try to sell because they start feel panic – and low and behold things start feeding on themselves.
I will agree with you that this type of scenario can take more time to develop in housing but I will also point out that the vast majority of Americans have their “wealth” tied up in housing so once the herd starts running watch out below — see in the Market they will just halt trading ( not saying it is right ) I don’t see that same mechanism built into RE. So I guess looking backwards at the trend line CS in this case and the historical trend line in general makes me believe that going forward things will not be real great.
Anybody lose their John L. Scott property tracker / favorites list? Around noon today, I noticed my list is no longer there, wondering if I deleted it by mistake or a website malfunction. After having it for 4 years, I tend to believe they caused it.
The falling money supply, M3, looks pretty deflationary to me. I still maintain we won’t see inflation for a long time, if ever.
http://i17.photobucket.com/albums/b84/bonddad/sgs-m3-2.gif
The numbers in that article @26 are rather mystifying. Average rent in Seattle is $1000? Median house price is $356K? Those have to be numbers for the county or the metro area or something, because they sure aren’t accurate for, you know, the actual city of Seattle.
By Angie @ 35:
Sounds about right to me…
HUD Two-bedroom rent for Seattle MSA for 2009 = 987
May median price for King Co (all units) = $350k
I don’t know what exact sources they used but those are not unbelievable. Most probably they refer to the Seattle MSA, not the actual city – but I bet the ratios are still applicable to the city
RE: geon @ 33 –
Looks like they got it fixed.
RE: Angie @ 35 –
“Those have to be numbers for the county or the metro area or something, because they sure aren’t accurate for, you know, the actual city of Seattle. ”
2 Words “Lake City”
It looks like massive price drops are indeed possible, without the collapse of civilization as we know it. Class A office space in Manhattan is now going for 66% off of early 2008 prices. That’s not too far from my prediction of an 80% drop in prices from peak.
It’s hard to see how the actual sale prices of these buildings can be maintained when potential revenue is falling like a rock.
http://www.calculatedriskblog.com/2009/05/two-thirds-off-on-manhattan-office.html
RE: Sniglet @ 39 – We know for certain you can get a hedge fund manager or other financial analyst for more than 80% off peak pricing. In some cases they may even pay you to let them come in out of the rain… ;-)
wow sniglet way to let rumors, on one instance dictate the market.
I find it interesting that people can easily dismiss every example of massive price drops I offer. Japan isn’t a good case study, I am told, and neither is Manhattan commercial real-estate.
I guess I will just have to keep finding more examples of big price declines until such time as it’s no longer possible to claim that it isn’t possible in America.
RE: Sniglet @ 42 –
No, you don’t, but you posted a blog post about someone who “heard” about a sublet deal.
If Greg posted a deal that he heard someone was in a 100 way bidding war for a house that went $20k over market, does that mean our market is back?
I wont doubt thats its possible I knew a guy who bought a $120k mercedes for $45k that was 1 year old doesn’t mean that everyone’s is now worth $45k.