Posted by: Timothy Ellis (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.

52 responses to “Poll: The biggest home price drops around Seattle…”

  1. Aaron

    I don’t know if nominal prices are going to fall that much further, but I don’t think they’re going to increase again for quite some time… is the “price” we’re talking about inflation adjusted?

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  2. Kary L. Krismer

    I don’t know the answer to this one, but I think it will most likely depend on what happens to the banks, and that in turn may depend on what happens in the commercial real estate area.

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  3. Scott Weitz

    Lower end properties: the ‘worst’ probably behind us…continual trickle down for several years
    High End: not even close

    Where is Sniglet? Is he still worried about deflation, or has he moved into the ‘inflation’ camp?

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  4. DrShort

    RE: Kary L. Krismer @ 2

    I think it depends a lot of what happens with FHA. It’s been propping up the market with the 3.5% down programs. Take that away and the market will suffer.

    In the private market, I think you’re going to start seeing much bigger spreads between what prime borrows pay and those with less stellar credit and smaller down payments. Look for private mortgage insurance to put big price hits on those with more default right. Until recently, it hasn’t factored into rates.

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  5. Kary L. Krismer

    RE: DrShort @ 4 – I don’t understand the last two sentences regarding PMI.

    Clearly if FHA and/or F&F dry up that would be devastating to prices, and probably banks too.

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  6. Softwarengineer

    THE DR DOOMS CONTROL SEATTLE BUBBLE…LOL

    I noticed the RE investment trolls don’t blog here anymore, although its human nature, when you’re proven wrong by the bubble brains you go into hiding and denial.

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  7. Sniglet

    No surprise, I come firmly down on the bearish side of this debate. I am still looking to see an 80% (minimum) decline in average Puget Sound prices from peak, which would mean that the biggest price declines are ahead.

    My reasons are that:

    1) The global credit markets are still largely disfunctional, and there is only a semblance of order after massive governmental stimulus. However, all this government spending really can’t be sustained for very long, and is itself creating even bigger problems (e.g. new FHA insured loans are now defaulting at the highest rate ever seen).

    2) There is a HUGE amount of non-performing global private debt that still hasn’t been written down and cleared from the system. The scale of mal-investments in placed like China (e.g. with the biggest mall in the world still lying vacant) just staggers the mind. Just in the US alone there are whole new waves of home-debters that will be defaulting as mortgages rates are re-cast in 2010 through 2013.

    3) Policy won’t be able to inflate us out of this downturn, since rising interest rates will force their hands (i.e. make it impossible for them to “print” freely. There has actually be VERY little money “printing” occuring thus far, as policy makers have largely been funding their stimulus through the issuance of debt, which is actually deflationary (i.e. by sucking money out of the private markets).

    4) There is no sign on the horizon for an improvement in wage levels. Wages are actually falling. Just ask anyone who has been laid off in the last year what salaries are being offered for jobs in the same field. Further, the drop in demand is leading to further cuts in the work-force which further put pressure on the economy.

    5) Real-estate price still have a long ways to fall just to meet historical affordability ratios. It is still ridiculously expensive to buy Puget Sound real-estate, based on rent/ownership and income ratios. With only a handful of exceptions, it is virtually impossible to buy any home in the broader Puget Sound today that can be rented profitably.

    Notice how none of my reasoning has much to do with the Seattle area specifically. The reality is that I think the broader global economic realities are going to have a larger bearing on our local market that ANYTHING else. Boeing is going to continue to see a decline in aircraft orders, and tech firms like Microsoft will continue to see demand for their products shrivel throughout the world in the coming years. The firms that have had lay-offs in the last year will almost certainly announce even deeper job cuts in 2010 and 2011.

    In the very short term, I expect to see an economic bounce throughout the globe (and in the Puget Sound area too) that will last till the end of 2009 and maybe early 2010. The Dow could even rise to the 10,000 level again, and the volume of home sales might increase for 7 to 10 months.

    But then all the rot which in the financial system, which is still unaddressed, will pull everything down once again, and the global economy will search for new depths. This pattern may well play itself out for another 5 to 8 years (i.e. severe shocks, and systemic failures, and lay-offs, that occur over a few months, followed by much lengthier periods of sideways economic growth (and massive stock rebounds), which are then completely undone with more massive shocks).

    As always, I refer people to my extensive podcast outlining the case for deflation:
    http://surkanstance.blogspot.com/2009/01/deflation-101-podcast.html

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  8. jon

    The key is which comes first, the exhaustion of the current oversupply of SFH or the increase in Alt-A resets. It looks like they will happen at about the same time. So just when people need to start selling their houses, the supply of those houses will be low. So I don’t expect there to be too great a problem. That will mean that there will not be a construction boom as soon as without Alt-A resets. It also means there will be a large demand at the lower end as those people have to downsize to what they can afford long term, and that is why investors are buying up properties now at the low end.

    As for the salaries being offered to unemployed people being low, that happens in every recession and is not an indicator of deflation. Just another price adjusting to short term supply and demand. Once inventories are used up and the rate of fall of the economy has slowed down to indicate a bottom, people will shift from saving back into consumption and the economy will pick up again.

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  9. Sniglet

    The key is which comes first, the exhaustion of the current oversupply of SFH or the increase in Alt-A resets. It looks like they will happen at about the same time. So just when people need to start selling their houses, the supply of those houses will be low.

    Unfortunately, I don’t see any reason that the “oversupply” of homes is going to decrease substantially anytime in the near future. As increasing numbers of people lose their jobs in the next few years, we will see demand for homes continue to shrink (and the supply increase due to foreclosures and defaults). Further, many people are re-assessing their housing needs, now willing to accept considerably smaller spaces (e.g. having kids double-up in rooms, doing without family rooms, etc). As increasing numbers of home-owners start to rent out rooms in their McMansions to make ends meet, this will continue to provide an abundant supply of new housing on the market.

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  10. EconE

    Alt-A shmalt-A

    4 words.

    Prime Jumbo Negative Amortization.

    Enjoy!

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  11. deejayoh

    By jon @ 9:

    The key is which comes first, the exhaustion of the current oversupply of SFH or the increase in Alt-A resets. It looks like they will happen at about the same time. So just when people need to start selling their houses, the supply of those houses will be low. So I don’t expect there to be too great a problem. That will mean that there will not be a construction boom as soon as without Alt-A resets. It also means there will be a large demand at the lower end as those people have to downsize to what they can afford long term, and that is why investors are buying up properties now at the low end.

    Jon, I don’t know what data you are looking at – but we are a long way from anything that would be called “low” housing supply. KC Housing supply has grown faster than population for the last decade, home ownership as a % of population was at historical highs (and is now dropping rapidly) and the occupancy rate is at historical lows. As the economy forces occupancy rates and home ownership percentages back to their historical norms, we’ll have plenty of housing to go around. Being a builder is going to be a bad business for quite some time.

    Won’t even take any of Sniglet’s doubling up or living in a cardboard box down by the river.

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  12. Herman

    CNN reports that although America’s net home values and GDP have dropped recently, America’s mortgage debt has not. It’s basically still on the books at the 2007 levels. The gap to bring America into a “normal” ratio of mortgage debt to GDP is $4T. Seattle and America have a long way to go.

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  13. jon

    RE: deejayoh @ 12 From 2000 to 2007, the median age in King County has increased from 34.9 to 37.2. That age range pretty significant for moving from a townhouse or apartment to a house, either rented or owned. So that needs to be factored in to the comparison of population vs housing. The Tim’s last post on that compared two indexes to each other, so it was pretty much impossible to draw a real conclusion from it.

    Home ownership as a % of population doesn’t affect the supply or demand, It is just who is taking the risk/reward/tax benefits of ownership.

    The only thing that would reduce housing demand would be a large drop in immigration or doubling up. That certainly could happen, but the current low MOS inventory of low priced homes indicates that it is not happening. Inventory at the high end is more plentiful, but those people are not in a position to walk away from a mortgage, especially the ones that have refinanced.

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  14. deejayoh

    RE: jon @ 14
    I thought we were talking about sales of owner occupied units here – your contention is that Home Ownership as a % of Population doesn’t matter (even though we are at a historical high, and there is clear evidence people are giving up on home ownership in droves) yet median age does matter.

    I’m not buying it.

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  15. jon

    Whether someone owns or rents has only a small effect on the SFH market. Whether they live in an apartment or a house has large effect.

    Looking to the graph here http://www.calculatedriskblog.com/2009/04/us-homeownership-by-age-group.html,
    I estimate should have been roughly a 5 percent increase in SFH occupancy to accompany the rise in the King County median age from 2000 to 2007 that I mentioned above. I am attributing that to an age related shift in desire to live in a house vs. an condo/apartment rather than a desire to own vs. rent. It would be interesting to see how much of the extra housing that was built in KC during that time can be attributed to that age shift. There are 420,000 SFH in KC, 5% of that is 20,000. How does that compare to the number of houses were built in excess of population growth during that time?

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  16. pegasus

    jon…

    “Home ownership as a % of population doesn’t affect the supply or demand, It is just who is taking the risk/reward/tax benefits of ownership.”

    Earth to jon…..halloooooooo.

    Are you on crack? Since when does the amount of people buying not affect the price of anything in the long run? NEVER!

    Average age of buyers moving up means less people are qualified to buy. Incomes and assets rise with age until close to retirement. Less demand.

    One out of eight US mortgage holders is behind in their payments and it is going to get worse as unemployment rises.

    Here lies the future of real estate for at least the next few years as these loans reset with higher payments. Check out the chart.

    http://news.goldseek.com/GoldSeek/1243533344.php

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  17. jon

    Perhaps I have not been clear. Every one has a home. Some own and some rent. If they rent, then someone else owns the building. When someone rents a house, that income stream allows the owner/investor to go out and buy another house and put it up for rent. So when someone rents a house, it has the same effect on the market as someone who owns their home. However, if a person decides to rent an apartment, that means there is one less demand for a house, which causes a small drop in the market for houses.

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  18. deejayoh

    Whether someone owns or rents has only a small effect on the SFH market. Whether they live in an apartment or a house has large effect.

    on the contrary. it matters a great deal.
    Census for KC

    KC home ownership in 2000 = 59.8%
    KC home ownership in 2007 = 67.3%

    so 7.5% point increase over a 59.8% ownership base is a 12.5% increase in home ownership this decade

    12.5% of 466k “owner” occuppied housing units in KC is ~58k units that have to go somewhere as we revert to the long run trend of ~60% home ownership in King County. All those new “owners” got there with sub-prime, Alt-A and zero down programs. They are selling and not coming back. Our population growth is about 1% a year. What’s going to swallow them up?

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  19. deejayoh

    By jon @ 18:

    Perhaps I have not been clear. Every one has a home. Some own and some rent. If they rent, then someone else owns the building. When someone rents a house, that income stream allows the owner/investor to go out and buy another house and put it up for rent. So when someone rents a house, it has the same effect on the market as someone who owns their home. However, if a person decides to rent an apartment, that means there is one less demand for a house, which causes a small drop in the market for houses.

    except that, in the same period that home ownership took off – the number of housing units in KC increased by 8.4%, while population only increased by 5.5% – and household size was unchanged. So housing supply has grown faster than population. Oh, and the vacancy rate went from 4.2% up to 6.3% – a 50% increase that translates into another ~15k units of untapped inventory. Lots of condo conversions, flippers, and investors waiting for the right buyer I guess.

    We’ve been over this one so many times I can’t believe it’s back.

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  20. jon

    OK, so home ownership went up by 7.5 percentage points. How much of that was because those people shifted from renting a house versus those that previous lived in an apartment, a condo, a townhouse, or their parents’ basement? The first group did not affect the market, because those units were previously investor owned and now are owned by the resident. The second group reflects a shift. Most and perhaps all of that second group is a result of a 2.3 year shift in KC median age. According to the graph on CR, KC has shifted its median age bracket from a 55% homeownership to 65% percent. Unless there is an argument that the median KC age is going to get younger, I see no reason to suppose that the ownership rate is going to revert to a previous era.

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  21. deejayoh

    By jon @ 21:

    Unless there is an argument that the median KC age is going to get younger, I see no reason to suppose that the ownership rate is going to revert to a previous era.

    no reason? How about “it’s happening everywhere” as a reason? It has nothing to do with age and everything to do with financing.

    Q1 2009: Homeownership Rate at 2000 Levels
    http://4.bp.blogspot.com/_pMscxxELHEg/SfXjyRS35fI/AAAAAAAAFH4/BgbZkTvnROQ/s1600/HomeownershipQ12009.jpg

    I’ll tell you what, perhaps you could provide some actual evidence showing that a two year increase in median age has any measurable impact on home ownership? Then we can waste pixels on arguing whether people are getting older or younger.

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  22. Jonness

    I’m seeing a lot of higher end homes in my neighborhood start to blow up. One neighbor’s home goes to auction in June, and another is set to be auctioned in August. Interestingly, both of these parties pulled a large amount of equity out of the houses during the bubble ($300k and $200K respectively). I’m starting to think a lot of the people with nicer homes who pulled equity are going to lose their homes during the upcoming alt/option-arm nightmare of 2010-2011. What I mean by nightmare is banks have already been thrashed by the subprime crisis, but now they have to deal with the loans above $417K not covered by Fannie/Freddie. Unfortunately, the dollar amount of the upcoming wave of resets is greater than the subprime mess. Add in the commercial RE mess that’s starting to unfold, and I’m losing faith in the green shoots theory. For about the last month, i’ve been leaning toward a W-shaped recession.

    It seems to me we’re in a pickle. Treasury investors are extremely concerned govt. money printing is going to weaken the dollar, but the govt. needs to continue to print in order to bail everything out. The more I observe this crisis, the less confidence I have that the govt. can handle it. I find myself in an odd position, because so many people I talk to believe we are out of the woods and are coming out of the recession. But I believet we’re seeing the affect of borrowing a bunch of money that needs to be paid back in the future, and that future looks really ugly. I have a feeling even a measly 1% rise in mortgage rates will temper many people’s enthusiasm about these green shoots, but I’ll have to wait and see.

    My prediction is for house prices to continue down rather rapidly after having recieved some support from discounted prices, Spring selling season, tax rebate, and record low mortgage rates.

    I do find it interesting that the latest unemployment figures held steady in WA. I’m doubting that will continue, but it was an interesting development.

    From my perspective, approximately 40% of claimants with unemployment claims in WA are recieving extended benefits. What’s going to happen when these claims run out of money?

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  23. jon

    RE: deejayoh @ 22 – “I’ll tell you what, perhaps you could provide some actual evidence showing that a two year increase in median age has any measurable impact on home ownership?”

    As I said before, the question is not who owns the property, but the effect of increasing age on type of preferred residence.

    The data for Washington state is on page 50 of this:

    http://www.census.gov/prod/2005pubs/h170-04-60.pdf

    For example, in the 25-29 group, 50% more live in multi-unit than SFH. For the 45-54 group, 3 times as many live in SFH than multi-unit.

    The median age for people who live in detached houses is 48, for attached houses is 42 and multi-unit is 40.

    Elsewhere you can see the correlation with rent vs. own, it is also very strong.

    So there are two effects that will cause an age related increase in homeownership.

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  24. Softwarengineer

    RE: Sniglet @ 8

    Hi SNIGET

    You and Dr. Roubini sound alike, he too is predicting a “W” recession; albeit a lot of the economists’ short term optimism is current affair politics mitigating the horrifying unemployment/underemployment to date as relatively unimportant [in my opinion]….we’ve spent trillions down the rathole for bank stock support and government job re-creation mostly, but replacement job creation in the private sector [where it really matters, after all, it pays for government debt and jobs] is a pipe dream to date….I’d agree with you and Roubini more on the “W” effect, I just think it isn’t going to happen in 2009. GM goes bankrupt tomorrow, Toyota/VW next year?

    Most economists [Roubini included] don’t talk resource shortage with concurrent, God forbid, “overpopulation in America”,…I will. Until they get it, their predictions don’t have the proper root cause math variables incorporated. You can have good GDP growth numbers with half your workers homeless on the streets, as the economic numbers mask the cruel reality of overpopulation. In America, we haven’t thrown them all on the streets, yet; but we have put political smoke and mirrors on the root cause of the economic mess….and blaming the bankster bailouts is like identifying the lobbyist pressures on our politicians as ludicrous and wasteful….God forbid we do that…..that identifies blame and it might be likely someone we voted for.

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  25. deejayoh

    RE: jon @ 24 – but still, in spite of the fact that the population is aging across the country – home ownership rates are still falling. So yes, older people are statistically more likely to own homes than younger people – but the problem is that rates of ownership are falling for every age cohort. The impact of the age phenomenon has been swamped by the housing crash. Given that there are more houses than condos in Seattle, I strongly suspect the impact of this will be more surplus houses than condos.

    and there are surplus housing units. 50,000 of them as of the last count, probably more today

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  26. jon

    RE: deejayoh @ 26 – “Given that there are more houses than condos in Seattle, I strongly suspect the impact of this will be more surplus houses than condos.”

    But as the population ages, it will move from condos to SFH. And that is exactly what the reports indicate, that low end SFH inventory is going down while condo and rental vacancies go up.

    I don’t recall where you got the 50K surplus units. Did that account for the units torn down?

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  27. deejayoh

    By jon @ 27:

    RE: deejayoh @ 26 -But as the population ages, it will move from condos to SFH. And that is exactly what the reports indicate, that low end SFH inventory is going down while condo and rental vacancies go up.

    LOL – somebody better tell all those developers building condos for the empty-nester baby boomers!

    the 50k was based on 6.3% of 804k housing units in king county as of 2007 ACS

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  28. jon

    RE: deejayoh @ 28 – The aging is because the group older than the baby boomers is becoming a smaller percentage of the overall population.

    http://www.newgeography.com/content/00193-us-population-distribution-age-2007-baby-boomer-generation

    The number of boomers that move into houses from multi-units is going to be pretty small at this point, but with their assets way down, boomers probably are going to stay put longer than the condo builders would like. The boomers who were going to retire to a SFH were probably going to do so in the retirement areas of the sand states, which is why those markets have been hit so hard. For now, a good number of them will be staying here and working until their retirement assets have build back up.

    So with the boomers staying in their current houses, and the younger generations wanting to move into houses, the demand for houses is going to be greater than the demand for condos.

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  29. Jonness

    RE: Softwarengineer @ 25

    “You and Dr. Roubini sound alike, he too is predicting a “W” recession;”

    As far as I know, Roubini is predicting a U with a long bottom. He doesn’t discount the possibility of a W though. I could be wrong though.

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  30. mrfinviz

    RE: Jonness @ 30 – Okkk.. so what’s the point then???

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  31. Just bought a house

    No surprise, I come firmly down on the bearish side of this debate. I am still looking to see an 80% (minimum) decline in average Puget Sound prices from peak, which would mean that the biggest price declines are ahead.

    Good luck with 80%

    The price might go down, but the interest rate will go up.
    A $350K house with 20% down at 4.75% will have same monthly payments as a $290K house with 20% down at 6.5%.

    According to this post a average price to rent ratio in Seattle is 320.
    If you take a $350K house that means the rent payment should be $1094. Can you rent a median house for $1094? Nope, most likely you’ll have to pay at least $1500 (I take Lynnwood as an example). That takes price to rent ration to 234 which is way below the historic average.

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  32. Jonness

    RE: pegasus @ 17

    Just to clarify a few things from the article:

    “These loans [subprime] were resetting en masse in 2007 and the first eight months of ’08. Now they’re pretty much done.”

    WA is lagging the rest of the nation in subprimes, and 25% of all subprimes in WA will reset this year. Also, the upcoming ARM loan crisis has been pushed further back than shown in the chart. Here is the most recent version of the chart.

    http://mortgage.freedomblogging.com/files/2009/05/reset-chart-for-blog-april.jpg

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  33. Jonness

    By deejayoh @ 19:

    KC home ownership in 2000 = 59.8%
    KC home ownership in 2007 = 67.3%

    so 7.5% point increase over a 59.8% ownership base is a 12.5% increase in home ownership this decade

    Wait a minute! I recall some months back I was off on a big row about homeownership percentages having ballooned up due to the massive increase in loan availability. I was going on about how house prices had to come down because of the tightened lending standards.

    I had supplied national data that supported what I was saying, but you piped in and supplied KC data that totally proved homeownership % would not affect us locally. I thought about that for a while and finally concluded I did not believe the data.

    Now you post data that shows the homeownership percentage did indeed spike way up in KC? Hmmm, at any rate, thanks for posting this, because it helps put my mind at ease. This data in conjunction with the recast chart I linked above is only a small part of a very ugly picture that clearly spells further price declines ahead.

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  34. Jonness

    By mrfinviz @ 31:

    RE: Jonness @ 30 – Okkk.. so what’s the point then???

    http://news.alibaba.com/article/detail/markets/100110052-1-interview-roubini-says-u.s.-economy-may.html

    May 28th, 2009

    “The U.S. recession is going to be U-shaped, lasting roughly 24 months,”

    The point is, I’ve read at least 15 recent articles where Roubini is predicting a U. Maybe someone else has conflicting information, or Roubini change his mind yesterday.

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  35. softwarengineer

    RE: Jonness @ 35

    ROUBINI’S “W” RECESSION

    Roubini’s own words [notice he doesn't mention lack of jobs, overpopulation making jobs worse, but does touch on resource shortages]:

    “…The risks of a double-dip W-shaped contraction

    Finally, we have so far discussed why yellow weeds – rather than green shoot – will cause the global economy to bottom out and get out of its recession later than the optimistic consensus; and why structural weaknesses may led to lower actual and potential growth over the medium term once we are out of this severe economic downturn. But there is a third risk that has to be kept in mind. Once the global economy bottoms out there may be a couple of quarters of faster GDP growth as production is increased to rebuild inventories and as the effects of the policy stimulus reach their peak. But that recovery will be constrained by two factors: first, the medium term vulnerabilities and constraints to robust growth discussed before. Second, the risk of a double dip W-shaped recession as the wings of a tentative recovery of growth in 2010 could be clipped towards the end of that year or in 2011 by a perfect storm of rising oil prices, rising taxes and rising nominal and real interest rates on the public debt of many advanced economies.

    First, oil and energy and commodity prices could spike as soon as there are tentative signs of a global recovery if the elasticity of supply of such commodities is inelastic to the price because of limited excess capacity of commodities after years of underinvestment in commodities and especially oil and energy. The resulting spike in commodity prices would be first inflationary but, more importantly, a sharp negative terms of trade effect on commodity importers that will reduce their real income and lead to further demand slowdown.

    Second, by the end of 2010 many US tax cuts (on incomes, capital gains, dividends, estates) will expire and will be partially reversed; and the likely introduction of cap & trade will represent an additional tax increase (however necessary to control greenhouse emissions). This incipient tax increase may lead to a slowdown of consumption and investment spending….”

    The rest of the URL:

    http://www.rgemonitor.com/roubini-monitor/256907/when_the_public_debt_rubber_meets_the_investors_anxiety_asphalt

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  36. what goes up must come down

    Just bought a house — man you are late to the party the whole of idea of paying less later at a higher rate — that you have a chance to refi — and being stuck with a higher initial cost has been beat to death.

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  37. Magnolia44

    Yawn!
    Do you guys ever get tired? Same info rehashed over and over again, what a tired arguement. Life goes on, you may be right one day but how many times do you guys go over the same info over and over again.

    I am not sure why I even pop by, ust habit I guess but jeez. How much is your life going to really change that you waited 3+ years to see if you could get 50% off but meanwhile for those 3 years you talked and analyzed over it daily, weekly whatever. Its tiring huh folks, multiply that time by a $ amount and you may not even come out ahead by the time you buy.

    Ok insert the bitterness comments and how I am depressed on my house purchase.

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  38. deejayoh

    RE: Jonness @ 34 – hmmm. you sure that was me? or that it was the same topic? I’ve had the same view on ownership percentages for quite a while.

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  39. patient

    RE: Magnolia44 @ 38 – It can be tiring to be wrong but to be right is more like charging the batteries.

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  40. what goes up must come down

    Mag44 I doubt it is just habit that you stop by I am sure you do a quick look at the data.

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  41. Jonness

    By deejayoh @ 39:

    RE: Jonness @ 34 – hmmm. you sure that was me? or that it was the same topic? I’ve had the same view on ownership percentages for quite a while.

    Hmmm, it’s probably my memory playing tricks on me. Someone else must have posted the info, or I misunderstood the post. Sorry to have put you on the spot.

    At any rate, thanks for posting the link. It cleared up a big piece of the picture that just wan’t fitting together right for me.

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  42. Just bought a house

    Just bought a house — man you are late to the party the whole of idea of paying less later at a higher rate — that you have a chance to refi — and being stuck with a higher initial cost has been beat to death.

    I don’t care. I don’t want to refi. All I want is my own place to enjoy life with my wife and kids.
    I bought a house because I CAN AFFORD IT.

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  43. b

    RE: Just bought a house @ 43

    Enjoy it then, why are you on this site? For most people, they sell their homes within 5-7 years on average generally to move up or move away, which is why purchase price and interest rates matter to them. If they don’t matter for your situation, why are you here and why do you care that other people are interested? I don’t understand why so many “happy” buyers come around this site to let us all know how “happy” they are, it makes no sense.

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  44. what goes up must come down

    b, I guess between yard work and usual home maintenance these guys just have spare time to use up and posting here about how everything is so great is the only way they can use it :-)

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  45. Teach89

    RE: b @ 44
    b@44
    It may not make sense to you why he comes around to this site. If he is happy all the power to him. Why does it matter to you if he comes here? He can express his thoughts just as you do.

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  46. Just bought a house

    b,

    Enjoy it then, why are you on this site?

    I’ve been reading Seattle Bubble, Housing Panic, Soot and Ashes, Housing Doom, Patrick and Mish for years. :)
    I was a renter for years but a few weeks ago I decided to “change my orientation” an become a mortgage slave. :)
    Why am I here? Because I like the site.
    Did I jump in too early? We’ll see.

    For most people, they sell their homes within 5-7 years on average generally to move up or move away

    I agree and it’s possible I will move to a new house too, but I’ll keep this one as a rental property. It’s a really nice custom built house on a unique lot.

    which is why purchase price and interest rates matter to them

    I’m getting 4.75% and less than $160 per square foot for a custom built 2002 house. I think it’s not too bad.

    If they don’t matter for your situation, why are you here and why do you care that other people are interested?

    Because I was one of those “other people” for years. :) and now I’m a mortgage slave! LOL.

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  47. Just bought a house

    I guess between yard work and usual home maintenance these guys just have spare time to use up and posting here about how everything is so great is the only way they can use it :-)

    I don’t like yard work either, that’s why I’m buying a house with low maintenance yard.

    You are right, everything is great!!! Life is going on!

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  48. deejayoh

    By jon @ 29:

    RE: deejayoh @ 28 – The aging is because the group older than the baby boomers is becoming a smaller percentage of the overall population..

    Jon – here’s a piece of research from the St Louis Fed I think you will find interesting. They attempted to isolate the factors driving the increase in home ownership. they looked at age, ethnicity, financing, etc.
    The author’s conclusion:

    We examine a number of explanations of this change that have been offered, including demographics, low mortgage rates, changes in housing policy, and innovations in the mortgage financial market. Of all these explanations, we find that the most plausible explanation is that innovations in the financial markets increased access to mortgage finance, mainly by reducing downpayment constraints and allowing younger people to buy homes.

    So basically, they contend it was purchases by younger people that was the primary factor that drove the increase in home ownership, not the aging of the population.

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  49. jon

    RE: deejayoh @ 49 – I didn’t see that article provide any justification for their conclusion. Their graph that attempted to show that the aging of the population was not the cause has also has a different interpretation. Their figure 2 shows that the homeowner ship rate did not increase until after 1995, but then it quickly went back the level it would have been according to the aging hypothesis. They then look at a number of possible reasons for that, and do not find any. They then simply make the conclusion it was some unspecified financial innovation, which considering this was written for the Fed at a time when the high homeownership rate was considered at good thing, is not surprising.

    Here is another explanation for why the homeownership rate for a few years lagging behind the baby boom:

    http://www.cdc.gov/nchs/data/nvsr/nvsr54/nvsr54_02.pdf

    The age of the mother at the time of the birth of her first child increased. That shift would delay the desire for a house, and would make the homeownership rate lag behind what was predicted by the cohorts only.

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  50. deejayoh

    RE: jon @ 50 – OK, I am pretty sure at this point that you are just yanking my chain.

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  51. jon

    RE: deejayoh @ 51 – Why? You pointed to a study that had a vague conclusion with no supporting data, but had a graph that very matched closely what I claimed about the effect of the baby boom. Only problem was a slight lag, so I explained that for you. It wasn’t hard to figure out, since I am from the peak of the baby boom, I just had to remember what I did in in the year the curve picked up, which was 1995. I had my first child in 1995. A quick check turns up the fact that a lot of baby boomers had delayed their first child also.

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