Here is your open thread for Monday June 1st, 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!
Kary L. Krismer » Jun 1, 2009 at 6:27 am
I was just doing some checking on current stats, and also playing around with excluding short sales and bank owned properties. A lot has been said here about how the new pending rule makes the historical data less useful. I think that’s being a bit overblown, but the new rule requiring agents to disclose SS/REO property is definately useful.
One thing I commented on recently is that the median pendings from March did not drag down the median solds in April. Using the new field the reason for that is now obvious.
While the number of SS/REOs in the pendings probably exceeds 20% (it’s not yet clear), the number of solds for May is only probably about 5%. On the pendings they drag the median down about 25k, but on the solds only about 5k. That’s significant because without the SS/REO properties, the median pendings are about 15k over the median solds.
When you have so few SS/REOs closing, their effect on the median sold is relatively small, but their effect on the median pending is fairly significant. That makes the published number on median pending rather useless at this point.
Information from NWMLS sources, but not verified or guaranteed accurate
Trigger » Jun 1, 2009 at 8:10 am
Wow. Look at today liftoff. Dow is just sizzling like crazy! At some point this will start taking off! People are making fortunes now. The issue whether the sizzle will at some point turn into a fizzle.
And when should we buy shacks in Seattle before they will slowly start appreciating. The listings are going down slowly. So if inventory starts becoming squeezed – then prices will start going up? Do you think that in 2010 there will be any price gains for King County?
David Losh » Jun 1, 2009 at 8:11 am
RE: Kary L. Krismer @ 1 –
The larger picture is that the bank owned properties are selling for close to fair market value.
What the bank is owed makes no difference, or shouldn’t, to a buyer. Agents have to play this game of what the bank will except. You can play the game well, but by the time you get the property the market place has gone down across the board. Prices are declining.
People who want to or need to sell now are competing with the short sale game. We can say it shouldn’t matter, but if you have the equity and want to sell you need to compete.
In my opinion the NWMLS and all listing services are doing a disservice to the consumers by opening up an investor purchase procedure to the general public.
Just like the price increases we saw in the past, that the Real Estate community did nothing to curb, this short sale REO mess should having big warnings associated with it.
You are a consumer. The bank has years of experience in exploiting your emotional buying practices. You are not an investor and your agent has absolutely no clue about what goes on inside the bank.
The next wave of foreclosures will be the people who bought those “hot” screaming deals of a short sale when the houses around them start selling for less.
Kary L. Krismer » Jun 1, 2009 at 8:17 am
By David Losh @ 3:
I’d like to see the NWMLS take a strong position on short sales, such that they couldn’t be listed if the bank hadn’t already approved the price and commission. I don’t see that ever happening, absent legislation forcing the bank’s hand.
The Governor had proposed legislation that would limit the bank’s foreclosure rights if they didn’t cooperate sufficiently. I thought that was incredibly inspired, but it didn’t go anywhere.
deejayoh » Jun 1, 2009 at 8:39 am
Latest figures from BEA show that savings rates continue to rise rapidly in April – via Calculated Risk
http://4.bp.blogspot.com/_pMscxxELHEg/SiPPsGKO61I/AAAAAAAAFag/xE5FqnOZcvs/s1600-h/SavingApril09.jpg
Kary L. Krismer » Jun 1, 2009 at 9:53 am
RE: Trigger @ 2 – Does anyone have any idea how much of the fall in the Dow was due to GM? It is a part of the Dow, I believe.
patient » Jun 1, 2009 at 10:04 am
RE: Kary L. Krismer @ 6 –
GM was about 3% of the Dow’s total weight in 2004 according to the article below. So it’s not as big of a contributor to the fall as one might expect. GM’s Dow spot will soon be replaced by Cisco.
http://www.streetauthority.com/terms/index/dowjones.asp
jon » Jun 1, 2009 at 2:38 pm
“Taxpayers are on the hook for an extra $55,000 a household to cover rising federal commitments made just in the past year for retirement benefits, the national debt and other government promises, a USA TODAY analysis shows.”
“Bottom line: The government took on $6.8 trillion in new obligations in 2008, pushing the total owed to a record $63.8 trillion.”
http://www.usatoday.com/news/washington/2009-05-28-debt_N.htm
patient » Jun 1, 2009 at 2:46 pm
RE: jon @ 8 – No worries, we now own the cash cows GM, Citibank and AIG which will easily cover that $50k per household with interest, or is that a bit optimistic? I think the gov. need to hire a NAR spokesman to put some spin on this.
deejayoh » Jun 1, 2009 at 3:22 pm
Dow up 220 points on the day it is announced that GM and C will be replaced by Travelers and CSCO.
load of rubbish
Scotsman » Jun 1, 2009 at 3:29 pm
RE: deejayoh @ 10 –
Somebody spent a lot of money on the close Friday to push the index up over the 200 day moving average, a big short squeeze at the end of the month. My guess is that triggered a lot of program trading at the open today. Nearly all of the gain was in the first hour, then it went flat. These markets are so manipulated right now, it’s crazy.
Kary L. Krismer » Jun 1, 2009 at 5:12 pm
I saw a strange house today. It was maybe 10-20 years old.
The half bathroom downstairs had the toilet against the front wall, with a window below waist level, so any time you took a leak, you’d be showing off to the neighbors across the street and anyone driving by.
The upstairs main bathroom had a window just out from the front of the toilet, going down to about knee level, so while sitting you’d have a nice view of the neighbor’s property. Sort of a poor woman’s Columbia Tower Club bathroom.
I can’t imagine what the architect or builder was thinking.
Snigliastic » Jun 1, 2009 at 5:39 pm
RE: Kary L. Krismer @ 12 – maybe he was gay and liked seeing guys take a leak.
Kary L. Krismer » Jun 1, 2009 at 6:00 pm
A lot of agents apparently waited until a working day to report the last sales of May. Volume should be up well over 15% from April, and over 75% of May, 2008 (not that either April, 2009 or May, 2008 were that great of months). Anyway, quite a month end surge. It amazes me how many agents do month end closes.
Information from NWMLS sources, but not verified or guaranteed.
The Tim » Jun 1, 2009 at 7:41 pm
By Kary L. Krismer @ 14:
Does not compute.
King Co. SFH
April 2009 closed sales: 1,004
15% higher: 1,155
May 2008 closed sales: 1,533
75% higher: 2,683
Or did you mean that it would be 25% lower than May 2008? I guess that would make sense, and also be pretty much in line with what I was expecting. Anyway, your wording is a little confusing to me.
What The Heck » Jun 1, 2009 at 7:48 pm
RE: The Tim @ 15 –
Maybe it’s 75% from April and 15% from May 2008 ?
1750+ sales in May 2009?
b » Jun 1, 2009 at 8:02 pm
75% of May 08 = ~1150
What The Heck » Jun 1, 2009 at 8:23 pm
RE: b @ 17 –
I think you’re correct – txs
Racket » Jun 1, 2009 at 8:48 pm
By Snigliastic @ 13:
I’m sure gay people would agree with me, that’s not, gay that’s weird.
Racket » Jun 1, 2009 at 9:05 pm
“In my opinion the NWMLS and all listing services are doing a disservice to the consumers by opening up an investor purchase procedure to the general public.”
Many, and I don’t think I am going out on a limb, when I say most investors are broke right now. So if not them, then who is going to pick up all these distressed properties?
“You are a consumer. The bank has years of experience in exploiting your emotional buying practices. You are not an investor and your agent has absolutely no clue about what goes on inside the bank. ”
That is the craziest thing I have ever heard, the banks are overwhelmed and incompetent. Its not someone who makes $250k a year that is managing these REO properties, it a $35-45k a year position. They aren’t up to some dubious practices pertaining to the sale of this house, they want to dump them for as much as possible,
Scotsman » Jun 1, 2009 at 9:37 pm
Salvation in bankruptcy?
http://hotair.com/archives/2009/06/01/current-federal-government-debt-per-household-546688/
mukoh » Jun 1, 2009 at 10:06 pm
RE: Kary L. Krismer @ 4 – Kary thats one of the best points in this thread. Lots of agents are utilizing the clauses and listing properties for unrealistically low prices that they know the bank will not accept.
Racket » Jun 1, 2009 at 10:10 pm
RE: mukoh @ 22 –
Besides the obvious putting out a low price to get people to bid it up, why would a listing agent want to waste their time?
Kary L. Krismer » Jun 2, 2009 at 7:27 am
RE: The Tim @ 15 – “75% of May” meant .75 x May. So if May 2008 had been 1600, then May 2009 would be 1200.
Kary L. Krismer » Jun 2, 2009 at 7:30 am
By Racket @ 20:
IMHO it’s merely a staffing problem. I’ve said they could hire attorneys at $200 an hour and save money. That they are not hiring more people at $35-45k is crazy.
Part of it might be this is done by loan servicers rather than the banks, but the banks should demand better performance. If a servicer takes 3 months to make a decision, they should be liable for 3 months of interest to whoever holds the debt.
Kary L. Krismer » Jun 2, 2009 at 7:33 am
By Racket @ 23:
I think they’re literally shooting in the dark. The bank won’t tell them what they will accept, so the agent tries to put something through and see if it sticks. If it doesn’t, they’ll at least get some idea of what will fly.
Kary L. Krismer » Jun 2, 2009 at 8:18 am
On the 75% comment, here’s why I think that’s important. The bad news last year hit in last September, and the year before in August. Both times volume dropped significantly afterward, so last year it started dropping in October, and really dropped after that. These are the comparisons of the latest particular month to the year before (e.g. Sept 2008 to Sept 2007)
Sept 83% of prior year
Oct 80% of prior year
Nov 57% of prior year
Dec 69% of prior year
Jan 65% of prior year
Feb 58% of prior year
Mar 64% of prior year
Apr 65% of prior year
So anyway, if we do come in at 75% for May, that would be the best percentage since November.
Numbers from NWMLS sources but not verified or guaranteed.
David Losh » Jun 2, 2009 at 8:42 am
RE: Kary L. Krismer @ 26 –
The bank has a file of the property that goes through steps. About a year ago the bank began asking for a property listing history. They may also ask for previous history. They want to see a good faith effort to sell the property at fair market value. You can do structured price reductions to generate interest. The low ball, let’s get offers, approach is frowned upon and may delay anything from happening.
This is where the keeping the property on the market makes a difference. Our NWMLS with it’s new rule may be delaying closings of files.
Those $30K negotiators may also be getting a spiff for a good closed file. That would be a file as close to fair market value as possible. The Broker’s Price Opinion is a second CMA oredered by the bank and they want to selling price to be very close to the Broker’s Price Opinion. This also goes back to what the bank is owed, but that makes no difference to what a property will sell for.
Banks have policies and procedures for short sales. There is a list of things they want to see to sign off on a file. Each file may be different and fall into different policies.
Any way they are doing what they are trained to do and in many cases doing it extemely well. Assuming they are fighting a blind battle is making an ……….
The Tim » Jun 2, 2009 at 9:08 am
Here’s a sneak preview of approximately where the closed sales for May are likely to come in:
Down approximately 24% YOY.
April to May will show an increase, but not one that is particularly out of the ordinary.
patient » Jun 2, 2009 at 9:17 am
RE: The Tim @ 29 – If that number is close, the only out of the ordinary thing is still the extraordinary low volume.
The Tim » Jun 2, 2009 at 9:25 am
Oh, and just for kicks, here’s what the graphs would look like for June, should Greg Perry’s “we’ll easily see 2000+ closing in June” prediction come true (charts show 2,000 exactly):
Note that in 5 of the last 9 years, June has been the high point of the year for closed sales.
Kary L. Krismer » Jun 2, 2009 at 9:36 am
I don’t think we’ll hit 2000, but from that chart it appears 1400 would be a historical increase for % increase for June over May, right?
And Patient, I’d agree, the low volume is the issue.
The Tim » Jun 2, 2009 at 9:41 am
By Kary L. Krismer @ 32:
If we hit 1,400 in June that will probably be about a 20% increase over May, which would set a record. I’d say that it’s possible, but pretty close to the line (as in, I’d have a hard time believing we’ll see more than that).
patient » Jun 2, 2009 at 9:54 am
It kind of makes you wonder if the pickup in sales reported in some other markets are real or to a large percentage based on the kind of fragile pendings we seem to experience here?
The Tim » Jun 2, 2009 at 9:57 am
RE: patient @ 34 – Hmm, true. I hadn’t thought of that. My knowledge of what’s going on in other markets is largely from newspaper reports, which we all know are not exactly the most thorough / reliable source for real estate data. You could be right.
Of course, it could also be that due to macro-economic factors, we may not see the same ramp-up in sales that other regions did see. Who knows, really. Either way, it’s fun to (be totally debt-free and) watch it all unfold.
patient » Jun 2, 2009 at 10:29 am
RE: The Tim @ 35 – Yes, it’s obvious that macro economics plays a leading role but it’s also obvious that the real estate industry with it’s hired outlet of MSM takes every opportunity to overstate the state of affairs to paint an as rosy picture as possible. I think you need to franchise the bubble to the other main bubble cities to ensure accessability to a network of reliable reporting and data :-)
The Tim » Jun 2, 2009 at 10:33 am
RE: patient @ 36 – Hah! Well, the reason I started Seattle Bubble in the first place was because I was finding similar national and various regional sites, but not one for Seattle. I don’t think I’d have the time to manage more than one site that goes into this level of detail on the local real estate market. Also, many other markets are still well-served by other sites, such as Rich Toscano’s http://piggington.com/ in San Diego, which has always been the standard of analytical excellence that I try to hold Seattle Bubble up to.
patient » Jun 2, 2009 at 10:37 am
RE: The Tim @ 37 – Ok, cool, though franchising should just mean collecting a franchising fee and supply a framework to ensure consistency to the brand. Perhaps when you find the angle to make it a profit machine you can find takers in other cities.
The Tim » Jun 2, 2009 at 10:42 am
RE: patient @ 38 – If only I had a business degree instead of this useless BSEE. :^)
One Eyed Man » Jun 2, 2009 at 11:49 am
RE: The Tim @ 37 –
The Tim, Just some follow up on patient’s comments, and sticking my nose in where it probably doesn’t belong. I don’t normally give compliments but I’ve been impressed by the quality of what you’ve done over the last several years. Like everyone else, I thought deejayoh’s piece yesterday was excellent too. I know it’s not easy to do all the work you do on the site and that the demands of taking on additional local markets would be prohibitive. I also know you have the deal with the Business Journal (which may or may not limit pursuit of other ventures) and you know a lot of the people in online journalism. I’m sure you’ve explored various ideas as to how to generate cash flow from your ventures and probably have already considered most if not all of what I have to say below, but I’ll say it anyway.
You probably have previously approached the papers in Seattle, Tacoma and Everett to see if it might be possible to do a piece suitable for their Sunday real estate sections on a monthly or a weekly basis (whether for pay or just self promotion) with the right to use it on the Bubble to generate comment later on Sunday afternoon or Monday. It wouldn’t require much extra work for you, but it would potentially generate some cash flow and get your work in front of a broader audience. Ironically, probably your largest natural market, realtors, have to some degree a vested interest in ignoring the Bubble and much of your commentary. The general public reading the real estate section might be a more receptive audience. You obiously have a huge portfolio of work you could show them.
A second possible way to expand on the Bubble might be to devote one day per week to the national real estate scene and build a portfolio of national pieces over several months. The goal by doing so would be to put together a portfolio of pieces to take to the syndication groups like the old King Features Syndicate or the New York Times News Service with the idea of getting a national piece in a number of print publications on a weekly or monthly basis. Because the local real estate markets are so closely related to national real estate and economic issues, I know I wouldn’t mind a weekly post dealing with national issues related to real estate, or to the SoCal markets or to Case Shiller or other similar matters. I don’t have any direct contacts but I do have an indirect contact with the New York Times and some other syndication groups. You’ve got my email address if you’d like to get information on the contacts.
The Tim » Jun 2, 2009 at 12:06 pm
RE: One Eyed Man @ 40 – Great feedback, thanks. I’m not sure what you’re thinking of though with respect to the Business Journal. No deals going on there.
On an unrelated topic, thanks to a comment by GroundhogDay over on Calculated Risk, Seattle Bubble gets a mention today on the Salon.com blog “How the World Works.”
One Eyed Man » Jun 2, 2009 at 1:12 pm
RE: The Tim @ 41 – Maybe I just have problems differentiating between what’s in my imagination and what’s real. I guess I envisioned opening the Puget Sound Business Journal in July and finding Sound Housing Quarterly as an insert section. I don’t know if there is any money in a relationship with the Business Journal but from a content standpoint, it just seemed like a natural fit.
TJ_98370 » Jun 2, 2009 at 1:23 pm
.
First the “good†news –
.
Pending home sales rise 6.7 percent in April
Pending US home sales rise more than expected in April, biggest monthly jump in nearly 8 years……
Here is a rebuttal –
Pending Home Sales: Watch The Birdie!
.
deejayoh » Jun 2, 2009 at 1:29 pm
RE: The Tim @ 29 – Hockey stick!
mukoh » Jun 2, 2009 at 1:45 pm
RE: Racket @ 23 – IMO the agents are throwing darts at the board. The house my friends are trying to get basically was denied by the bank to another buyer at $30k higher. The LA still had sellers accept my friends offer.
jon » Jun 2, 2009 at 1:49 pm
RE: TJ_98370 @ 43 –
” A median-income family, earning $60,900, could afford a home costing $296,800 in April
No. A median-income family can afford a home costing $180,000; the 3:1 ratio is not off the financed amount, it is off the purchase price.”
Sigh.
Kary L. Krismer » Jun 2, 2009 at 2:25 pm
RE: patient @ 34 – Hard to say. In California the banks are not in as good of position relative to the owners if the loan is the purchase money loan, so more of those might be going through.
DrShort » Jun 2, 2009 at 5:58 pm
By jon @ 46:
The bottom 1/3 isn’t in the real estate market. So to be fair you should probably throw out the bottom 1/3 of incomes then take the median income from the remaining. You should also factor in some level of equity since the 3:1 ratio is for the mortgage amount not the purchase price.
I’m not sure why you think the 3:1 is just the purchase price. If someone has 300,000 to put down, they certainly can afford a more expensive house than someone with only 25,000 to put down.
tomtom » Jun 2, 2009 at 6:09 pm
RE: The Tim @ 31 – Hey Tim,
Can we get plots of Open House Traffic as well? Those should prove to Bubble Bloggers everywhere that we have Reached The Bottom.
TJ_98370 » Jun 2, 2009 at 9:57 pm
A response to DrShort @ # 48
.
Pending Home Sales Up for Three Months in a Row
.
A direct quote -
…..A median-income family, earning $60,900, could afford a home costing $296,800 in April with a 20 percent downpayment, assuming 25 percent of gross income is devoted to mortgage principal and interest. Affordability conditions for first-time buyers with the same income and small downpayments are roughly 80 percent of that amount. The affordable price was well above the median existing single-family home price in April, which was $169,800…..
.
FWIW, a 20% down payment on a home costing $296,800 ($59,400) would result in a mortgage of $237,400 which calculates out to be 3.9 times annual income of exampled family. Monthly payments for principle and interest at 5% would amount to $1275 per month, which would be about 25% of gross income.
.