Here is your open thread for the mid-week on June 10th, 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!
Trigger » Jun 10, 2009 at 5:07 am
I am trying to decipher what is a reasonable asking price for an apartment in Kirkland. I used to live in this community: http://www.avaloncommunities.com/avaloncore/nfloor.asp?commname=Avalon-Juanita-Village
New apartments, nicely maintained. Right next to the lake.
A 2 br apartment goes for $1450. I know this looks high for now – but they probably have move in specials and reduce this amount to say $1300. But those are not shacks – there are plenty of shacks in Kirkland, Redmond and Bellevue and it is hard to live in them without getting depressed.
The key is that people do pay this $1300 for a 2 br apartment. So it does not matter if there are other better options available – the key is that you can rent an apartment for $1300 per month right now and have people move in. It is secondary whether this is the best deal out there.
Now looking from the rent/price perspective – how much is the 2 br apartment worth?
This is what I came up with:
House Dues in such an apartment are probably around $400. In shabby communities the house dues are $250.
Tax on this shack is say another $50/month
Maintainance is probably $50/month
So costs are: $500 per month every month. So a total of $6000 per year.
The apartment will not be rented out 12 months out of the year but rather maybe 10 months out of the year. This is beacuse some people will default on payments and generally might be hard to rent out when sb moves out immediately.
So the apartment will bring in a total of $13,000 / year.
So your profit from the apartment is $7,000 per year.
In 2006 the apartment was worth about $400,000. Shacks were selling in this neighborhood for $270,000.
So if the apartment was worth $400,000 then the renter was able to pay off the principal in 57 years – so generally right before you pass away. And you were making an interest on the principal equal to 1.7% and you were risking at all times that the apartment maybe wrecked or sthg.
So now if you demand that your principal be returned in 10 years time the apartment that rents out for $1450 is worth ONLY $70,000. If you assume less money for rent – the price could go down even further.
So the depreciation of this apartment should be:
83%.
So apartments should go down 83% from peak to make sense to but them. At 83% from peak they would be a decent buy.
Please tell me if there is a flaw in the logic here.
Kary L. Krismer » Jun 10, 2009 at 6:13 am
RE: Trigger @ 1 – What are “house dues?”
Trigger » Jun 10, 2009 at 6:50 am
RE: Kary L. Krismer @ 2 – Sorry condo fees. They are sometimes pretty big. The shabby shacks have condo fees like $250 but nicer ones probably have higher condo fees as the property needs to look nice at all times and be well maintained.
Hugh Dominic » Jun 10, 2009 at 7:45 am
My wife and I are getting ready to make an offer on a house in North Seattle.
Thought I would share a few thoughts on how a couple of true “bubble heads” could come to this:
Reasons not to buy:
•Prices will almost certainly keep going down for some time
•There is a risk of a deeper “double dip” recession
•Even after prices bottom out, they will be flat for many years
Why we are considering buying
•Mortgage payment will be less than I am paying in rent now, but we will have more space and a nicer house
•After 20% down, the mortgage debt will be less than 2X my income
•House is on a large sub-dividable lot which is great for my kids short term and gives us additional value in land down the road
•We love the house and property and think we will be very happy there for many years
•Location will allow me to keep sending my kids to the same schools
•My landlord has been talking about selling and I would like to choose how and when we leave as opposed to having to look for a rental/house to buy in a rushed timeframe
So there you have it – we have gone from being full fledged, card carrying “bubble heads” who couldn’t imagine buying before 2010 at the earliest, to seriously considering buying house.
It is not a done deal by any means – the seller needs to come down from their current asking price, and if interest rates go up any more then we will hold fire.
But, I am amazed that we are even this close.
Flame away
Ira Sacharoff » Jun 10, 2009 at 7:53 am
Swallowed the Kool-Aid, have you, Hugh?
You’re probably getting pushed into this by a slimy, manipulative real estate agent.
David Losh » Jun 10, 2009 at 8:06 am
RE: Hugh Dominic @ 4 –
Why now, why not in August and September?
Hugh Dominic » Jun 10, 2009 at 8:13 am
RE: Ira Sacharoff @ 5 –
Funnily enough, my agent has been counseling caution pointing out that house prices will be lower next year.
Strange I know, but then again we are working with him in part because he is a contrarian – a bit like you Ira!
monkey » Jun 10, 2009 at 8:23 am
I am wondering if I should pay off my existing house first and use the equity line of credit of this house to purchase my dream home and then rent out the one that I will own out right. Or should I refinance my existing home and take out some money for a down payment on my dream home? Which way is better? Is it true that if I want to refinance, I need to do it first and then make an offer on the new house to avoid rental rate? I ask this question because the new house that I am purchasing is brand new and haven’t built yet. It won’t complete till end of October. If I make an offer now I can make a few changes on the floorplan.
Hugh Dominic » Jun 10, 2009 at 8:35 am
RE: David Losh @ 6 –
Our lease expires in the Fall and we would like to have a bit of time to do work on the house.
patient » Jun 10, 2009 at 10:07 am
RE: Hugh Dominic @ 4 – Hugh, just be sure that you put correct weight on your pros and cons, I kind of get the feeling that you are in the state of a person who was just “looking” and then thought, why not just go for a “test drive” in that shiny new car and now have the new leather smell in the nose while driving home in your old unwashed all to familiar car. Slow down and make sure you are not blinded by weak arguments by a sudden rush of “want”. Good luck with whatever decision you make.
patient » Jun 10, 2009 at 10:11 am
Oups, 10y yields a nose away from 4% (3.99%). Seems like mortgage rates will continue to rise.
The Tim » Jun 10, 2009 at 10:16 am
I know I have been quite tempted to jump into the market myself lately. There are a lot of homes getting down into a price range that seems reasonable, but I know that I only think they’re reasonable because I’m comparing them to the bubble peak. Actually that’s the whole motivation for this week’s poll. I am looking for the best way to try to be objective about it.
After nearly 4 years of waiting, I’m starting to get impatient! :^)
softwarengineer » Jun 10, 2009 at 10:45 am
RE: The Tim @ 12 –
BE CAREFUL TIM
Here’s some treasury news out today, that’s scaring everyone to death on the Roubini blog:
“…The 10-year note’s yield, which is closely tied to interest rates on mortgages and other consumer loans, jumped to 3.99 percent, a new high for the year….”
the rest of the URL:
http://finance.yahoo.com/news/Stocks-fall-after-weak-apf-15491093.html?sec=topStories&pos=main&asset=&ccode=
Apparently, there’s currently inadequate investors out there wanting to buy the new American stimulus debt paper, and bear in mind, the opposite to this “witches brew” isn’t good either. If interest rates go up to 5-6% 10 year notes to attract more stimulus money investors, where will all the stock market money go for safe haven? If Stocks crash because of investment shifts, then unemployment goes up [I think it will anyway, but it will be even worse].
This inflation/deflation recession/depression we’re in is a convoluted mess, with no good exit door out. You might just want to wait it out some more and see what happens.
Scotsman warned us of this added federal debt anomaly and so did I, months ago. I did see BECU slid to 5.9% from 6% a few days ago on a 30 year mortgage fixed today, so what….how about next month or 5 months from now when the banks are done mulling over your possible foreclosed offer.
Now, if you have cash or at least 50% down, there may be a terrible investment risk; but at least you can sell your house without the possible/likely short sale fine print [like you still owe the bank $50K] or a straight default.
Today, being in debt is a cobra waiting to strike.
Kary L. Krismer » Jun 10, 2009 at 10:51 am
RE: The Tim @ 12 – $2.79 gasoline seems pretty reasonable right now too, after pressing $4.00 last year.
Trigger » Jun 10, 2009 at 10:52 am
Okay. But I think there is a different argument. Why do you buy a house? You buy it because you are there, it makes sense, you have the will to spend. It is not about making profit on renting.
If somebody came to you and asked – do you want to buy a rusted nail? Would you buy it or not? Well it seems easy that the rusted nail is worth less than $100. So you should not buy. But what if you thought that your neighbor will buy the rusted nail for $120 because he likes speculation and he just likes buying and selling in general. Well if you do not buy then you loose $20. At the end of the chain sb will buy this rusted nail for $200 and will have to sell for 1 cent. Still this was worth it to all market participants. And the guy with the rusted nail for $200 can say to himself – BAM – I really bought an expensive nail. And the person can put it in a drawer, look at it from time to time etc.
So how much is a house worth? Even if renting makes much more sense – you may buy it because BAM – it is your house. And that’s all that counts.
Same is with stocks. Should you have bought all the internet stocks during dot com bubble? Ofcourse – YES. People made money on them. Were they worth the price? It all depends on your perception. Is a company that makes no profit worth 1 billion dollars? Well if you are expecting to invest and the company to bring you dividends as a shareholder – then NO. But if the company has a nice web site, your neighbor likes it, you think the domain looks great – then based on this it maybe worth it for you. Sure you may loose all the money when people sniff this is the wrong opportunity – but you might think to yourself – I lost money but I invested in a company that had a CEO that smiles and had a nice domain and I liked them.
So it is not all about money. I think lots of folks look at it differently. They just like to see their money be moved around even if it means loosing a big portion.
I think in Seattle Bubble people try to rationalize. When I was at MSFT during dot com bubble people used to laugh at all the dot coms and their valuations. But they were rationalizing. People who invested and lost money were true to the principal – that I invest so money moves around and I do not expect any dividend from this.
So while an apartment maybe worth $70K – owners of this apartment are looking – Cool. We just want this apartment for 400K because we kind of have this money and want to move it around.
I used to talk to my friend from Biz Dev team and he asked me is 20,000 USD okay to advertise Joe Pizza in Kansas for a specific phrase on a big national web site. Well – you get say 100 clicks from all around the US and you pay 20,000$. Was that worth it? From customer standpoint – NO. You blow the 20K and you get nothing in return. But there are intagibles. You go to you mum and say. MUM – I am going places. I am on a national web site. BAM. Daddy people in New York are seeing my ad for my pizza joing in Kansas. So now the picture looks different. It makes sense to advertise because mummy and daddy can be proud of their son that is going places.
I think Obama seriously should start a hype campaign based on let’s get money moving. People should place their bets and move their money.
deejayoh » Jun 10, 2009 at 10:53 am
By softwarengineer @ 13:
If one believes, as your post seems to suggest – that fed policies are going to lead to increased inflation and interest rates – then how is debt a cobra? Seems like getting a loan at 6% fixed heading into inflationary times is a pretty good idea if you believe that to be the case.
Personally I think the inflation argument offers an all too convenient explanation of how we are going to get out of the mess we’ve created. A few years of inflation and everything is back to normal. I don’t think the solution will be that neat or easy. And nothing the fed has done in the last 3 years has worked as planned anyway. I don’t expect the track record to change.
The Tim » Jun 10, 2009 at 10:56 am
RE: Kary L. Krismer @ 14 – Exactly. Although I’m still excited about the Aptera. It’s been a goal of mine for a while now (well before $4/gal. gas) to eliminate my need for gasoline. Cars powered by internal combustion engines are so 120 years ago.
Trigger » Jun 10, 2009 at 10:58 am
RE: softwarengineer @ 13 –
I think that choosing a president or buying a house is the same thing. Many people choose a president because the person is fun to be around, smiles etc. Nobody understands anything what those candidates are talking about so you choose a person that is more fun. A person you think you can go out to get a couple of beers. Or the person who says – look vote for me or otherwise terrorists will blow up sthg. So you feel good about the choice you are making.
With the house it should be the same. You like it. You have money or your real estate agent says you have the money and so you buy. You don’t think about fundamentals. When real estate stops tanking – you will get people coming in with adrenaline rush. and a motivation to buy.
Hugh Dominic » Jun 10, 2009 at 11:37 am
RE: patient @ 10 –
Patient, there is something in what you say – we were very casual lookers and seemed to have found someplace we like. Trying hard to make the most informed decision though…
deejayoh » Jun 10, 2009 at 11:41 am
By The Tim @ 17:
All you have to do is move to California in order to get one :^)
The Tim » Jun 10, 2009 at 11:45 am
RE: deejayoh @ 20 – What are they going to verify my residency or something? What’s to stop me from going down there, buying one, and towing it back to WA?
Sniglet » Jun 10, 2009 at 12:05 pm
On a seperate subject, I continue to be baffled at the marketing strategies of many rentals. I am constantly noticing rental properties that sit vacant for many months before they find new tenants. I’ve been seeing many fo the same single family Bellevue homes offered on Craigslist since December! Even in my bike-rides around Bellevue I will notice that “For Rent” signs stay in front of quite a few homes for many many months.
There were two homes, not more than 2 blocks from us, that were vacant for almost a year before they finally found tenants.
Is there some reason these landlords keep fishing for the absolute top dollar, and find it preferable to keep their places vacant for long stretches of time just to get a few hundred extra a month?
It could take YEARS to make up the lost revenue from just 4 months of vacancy even with a $200 a month higher rent.
But then, I am not a landlord so maybe I don’t understand all the considerations that go into marketing a property.
b » Jun 10, 2009 at 3:46 pm
Interesting news from the Fed Beige Book:
Looks like the demand pick-up in the low end around here is a relatively broad phenomena. Not sure what that means however.
Hugh Dominic » Jun 10, 2009 at 5:50 pm
RE: The Tim @ 12 –
Tim, good to know you are tempted as well! I agree house prices are only starting to look good on a relative basis, but some of the house specific factors (lot, proximity to schools, layout etc) make it even more attractive ot us. Offer well under asking went in today – well see how they react….
shane » Jun 10, 2009 at 6:01 pm
Now they want to offer a 15K tax credit.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aI3l8W6tflrg
Decreasing house prices and increasing tax credits…just another reason to wait this out a bit longer.
Roger » Jun 10, 2009 at 6:40 pm
So, out here on Whidbey very, very, very little is moving over 450K, and yet there is a ton of inventory above that point. I’m interested in a house which is priced at 650, but wouldn’t want to pay more than about 525 for it. It last sold for 550 in 2005. I’m curious, agents–am I wasting people’s time by making an offer of 525 on a place like that? I think the people owe about 350 on it, so they have room to move, if they want/need to without bringing cash to the table.
deejayoh » Jun 10, 2009 at 7:19 pm
By The Tim @ 21:
they’ll hook it to the internets and shut it down remotely!
The Tim » Jun 10, 2009 at 7:21 pm
RE: deejayoh @ 27 – The Aptera, by Amazon™.
Scotsman » Jun 10, 2009 at 7:26 pm
RE: shane @ 25 –
When the government starts giving away the homes they’ve taken as collateral for the TARP funds given to soon to be failed banks, I’ll take one. It won’t be long now before the feds have so many homes they don’t know what to do. I’m pretty sure Obama will want to give them to their rightful owners, the working man.
Line forms to the left, kids! Those with verifiable donations to the democratic party get first choice!
Kary L. Krismer » Jun 10, 2009 at 7:39 pm
By The Tim @ 17:
I want to go part way there: An internal combustion engine powered by compressed natural gas. They have filling stations you can put in your garage. Fairly reliable because only the intake system is different, and no lines in times of shortage.
Kary L. Krismer » Jun 10, 2009 at 7:41 pm
By b @ 23:
It means the $8,000 tax credit is more widely known than the $7,500 tax credit, and also a much better deal.
Scotsman » Jun 10, 2009 at 7:42 pm
Wow, California’s revenues are getting hammered as the economy continues to contract:
“The state’s revenues from personal income taxes tumbled by 39.3 percent in May from a year earlier while revenues from corporate taxes fell by 52.1 percent and revenues from sales taxes sagged by 7.6 percent, according to a report released by Chiang’s office”
http://www.reuters.com/article/topNews/idUSTRE55974820090610?feedType=RSS&feedName=topNews
I’m watching this closely as an indicator of where the rest of the country may go economically as well as politically.
David Losh » Jun 10, 2009 at 7:42 pm
RE: The Tim @ 21 –
Think of the safety of your children!!! If an SUV hit that thing it will crumble like a beer can.
Why not just build one yourself, here in your garage?
The reason is the State has safety requirements. We have mandatory helmet and seat bealt laws. We also have a whole list of kit car laws to protect you.
Otherwise you would be building a better version of the car for half the cost. The oil and auto industry have a whole set of laws protecting them. Innovation from the private sector would be bad for business.
David Losh » Jun 10, 2009 at 7:59 pm
RE: Scotsman @ 29 – RE: Scotsman @ 32 –
What’s to watch? You have a couple of things in here that may be apocalyptic, but we have been here before.
The government houses will be liquidated. All of that is free money. Long story short is the Notes have been discounted to nothing and you, the stock holders, already paid the freight.
California is having another revenue flight across it’s borders. Nevada on one side, Mexico on the other. I’ve heard there are bargains in both and Nevada especially has generous tax laws.
Obama is turning a corner. He seems to have fallen into the hands of the politically savvy. If you look at his stimulus package today, and compare it to the reduction in deficit spending he’s calling pay as you go, you’ll see we are a long ways from a welfare state.
What The Heck » Jun 10, 2009 at 9:32 pm
RE: shane @ 25 –
Wow!. I’ve got to believe that would have a significant impact for the short-term. This is getting crazier than car rebates.
In the meantime, everyone thinking about buying a house because of the current credit will put the brakes on until this measure is decided.
Kary L. Krismer » Jun 10, 2009 at 10:04 pm
RE: Scotsman @ 32 – I always thought sales tax revenues got hammered in a recession, but that number on the income tax is staggering.
Scotsman » Jun 10, 2009 at 11:17 pm
RE: Kary L. Krismer @ 36 –
I haven’t looked at the revenue breakdown, i.e. how much from sales tax, how much from income tax, etc. but the percentage drops are indeed staggering. I don’t see how the state can continue to operate as it has in the past.
There have to be some major changes coming.
Will “Arnould” be terminated?
Scotsman » Jun 10, 2009 at 11:47 pm
Update on otion arm resets:
“The option ARM recasts will drive up the foreclosure supply, undermining the recovery in the housing market,” Wachter said in an interview. “The option ARMs will be part of the reason that the path to recovery will be long and slow.”
http://www.bloomberg.com/apps/news?pid=20601110&sid=aQ_ZgC75Zfyw
David Losh » Jun 11, 2009 at 7:45 am
RE: Scotsman @ 38 –
Warcher is a professor of real estate finance at the University of Pennsylvania’s Wharton School in Philadelphia.
There are 30yr and 15 yr fixed rate mortgages. Conventional, FHA, and VA.
There are exotic loans used by investors to contol property for short periods of time.
It has bothered me for many years that mortgage brokers have insinuated themselves into the residential Real Estate market. I now see that the point was to create worthless Notes to sell as mortgage backed securities, but I don’t see why anyone should pay those Notes unless they want to.
As a professor, or having college courses in Real Estate finance just shows how ingrained this swindle by device is.
David Losh » Jun 11, 2009 at 7:49 am
RE: Kary L. Krismer @ 36 –
A corporation can form in Nevada to do business in California. Now that Nevada is cheap, or houses are cheaper in Nevada, it must be easier to establish residence there.
David Losh » Jun 11, 2009 at 8:01 am
RE: shane @ 25 –
The Business Roundtable represents more than 100 chief executive officers including General Electric Co.’s Jeffrey Immelt and Exxon Mobil Corp.’s Rex Tillerson. The group and the National Association of Realtors are pushing to expand the tax credit and to lower mortgage rates to revive the housing market.
For All Borrowers
“One of the biggest problems facing the American people today is an illiquid housing market, a decline in their equity, a decline in their net worth and a depression in the housing market that we are obligated to correct if we possibly can,” Isakson said in a statement. Isakson said his legislation would spur demand in the housing market by giving homeowners the incentive to trade up to a more expensive home.
This came out of the Bloomberg article above. The article goes no to say
The Business Roundtable and Realtors group also recommended the Federal Reserve continue to purchase mortgage securities guaranteed by Fannie Mae, Freddie Mac and government mortgage bond insurer Ginnie Mae to drive down mortgage rates to less than 5 percent.
The Fed is about a third of the way through its $1.25 trillion commitment, holding $427.6 billion of mortgage debt backed by the government-sponsored enterprises as of June 3, according to the New York Federal Reserve.
It doesn’t get more clear that there is a manipulation of the residential Real Estate market. In turn these mortgages are used to create artificial profits for corporations. The borrower pays for all of it.
The borrower pays the taxes, buys the stocks, and pays the mortgage.
patient » Jun 11, 2009 at 8:31 am
RE: David Losh @ 41 – What a load of crock, the problem is the debt level and according to this bunch of jokers stimulating more people to take on more debt ( first time home buyers, moving up to more expensive home ) will solve it? Refi’s to lower rates can slowly reduce debt but there is a much more efficient and faster way, foreclosure. But that would hurt the poor bankers and threaten their $100m bonues and we can’t have that, can we people?
softwarengineer » Jun 11, 2009 at 9:00 am
RE: patient @ 42 –
RIGHT ON PATIENT
The live today, die tomorrow morals in America got us into this mess. When the feds purchase their own bonds to fund the debt, where does it come from….how about America’s Social Security and Medicare/Medicaid payments [most of your retirements bloggers].
It comes from us and our childrens’ life blood. I’d say it was coming from our income tax, but LOL, those revenues are down 44% for 2008. I expect 2009’s income tax revenue to be far worse.
I totally agree with China on this issue. See their stand:
http://www.telegraph.co.uk/finance/financetopics/financialcrisis/5379285/China-warns-Federal-Reserve-over-printing-money.html
Its like trying to train the kid not to wet his pants with no toilet training. Its hopeless and will not work.
johnnybigspenda » Jun 11, 2009 at 10:16 am
Foreclosures Slow Down, But No Sign of Stopping 2 comments
by: Tyler Durden June 11, 2009
Stop FollowingYou are no longer following Tyler Durden
About this author:
Tyler Durden’s articles on Seeking Alpha
After hitting a record high in April, RealtyTrac has announced that the pace of foreclosures has slowed down, and in May dropped by 6%. Nonetheless, “May foreclosure activity was the third-highest month on record, and marked the third straight month where the total number of properties with foreclosure filings exceeded 300,000 — a first in the history of our report,” said James J. Saccacio, chief executive officer of RealtyTrac. “While defaults and scheduled foreclosure auctions were both down from the previous month, bank repossessions, or REOs, were up 2 percent thanks largely to substantial increases in several states, including Michigan, Arizona, Washington, Nevada, Oregon and New York. We expect REO activity to spike in the coming months as foreclosure delays and moratoria implemented by various state laws come to an end.” Ah yes, the dreaded moratorium: interesting how long the Wells Fargo lobby will keep postponing the inevitable collapse.
May foreclosure rates presented below:
Other points of interest from the RealtyTrac report:
Nevada, California, Florida post top state foreclosure rates
Nevada continued to document the nation’s highest foreclosure rate, with one in every 64 housing units receiving a foreclosure filing during the month — more than six times the national average.
With one in every 144 housing units receiving a foreclosure filing during the month, California posted the nation’s second-highest state foreclosure rate despite a 4 percent decrease in foreclosure activity from the previous month.
Florida posted the third-highest state foreclosure rate in May, with one in every 148 housing units receiving a foreclosure filing during the month.
Arizona posted the fourth-highest state foreclosure rate in May, with one in every 158 housing units receiving a foreclosure filing, and Utah posted the fifth-highest state foreclosure rate, with one in every 316 housing units receiving a foreclosure filing.
Other states with foreclosure rates ranking among the nation’s 10 highest were Michigan, Georgia, Colorado, Idaho and Ohio.
Top 10 states account for nearly 77 percent of total U.S. foreclosure activity
California reported 92,249 properties with foreclosure filings in May, the highest total of any state and up nearly 23 percent from May 2008. Bank repossessions in California were down 1 percent from the previous month and defaults were down 18 percent, but scheduled auctions were up 18 percent.
Default notices, scheduled auctions and bank repossessions in Florida were all down from the previous month, but the state still posted the nation’s second-highest number of properties with foreclosure filings: 58,931, up 50 percent from May 2008.
Nevada documented 17,157 properties with foreclosure filings in May, the third-highest total of any state and up nearly 83 percent from May 2008. A 23 percent increase in bank repossessions helped push Nevada foreclosure activity up 5 percent from the previous month.
Other states with totals among the 10 highest in the country were Arizona (16,865), Michigan (13,891), Ohio (11,360), Illinois (10,942), Georgia (10,516), Texas (9,813) and Virginia (5,385). The top 10 states accounted for nearly 77 percent of total properties with foreclosure filings nationwide.
Scotsman » Jun 11, 2009 at 11:32 am
Well shoot- we’ll just have to go borrow some more to make up the difference. Debt is wealth.
WASHINGTON (AP) – American households lost $1.33 trillion of their wealth in the first three months of the year as the recession took a bite out of stock portfolios and dragged down home prices.
The Federal Reserve reported Thursday that household net worth fell to $50.38 trillion in the January-March quarter, the lowest level since the third quarter of 2004. The first-quarter figure marked a decline of 2.6 percent, or $1.33 trillion, from the final quarter of 2008.
As an aside, let’s see- wealth down $1.3 trillion in the first quarter, money supply up half as much. What does this mean for inflation?
It means deflation.
Scotsman » Jun 11, 2009 at 2:02 pm
2010 corvette is out!
https://login.wwdb.org/mcall/1956058883314568/image001.jpg
Costco Mike » Jun 11, 2009 at 2:05 pm
RE: Scotsman @ 46 – A large improvement on the door stop shape of previous models.
softwarengineer » Jun 11, 2009 at 2:34 pm
RE: Scotsman @ 46 –
THEY’LL BE SNATCHING THOSE UP LIKE CRAZY
Looks like a Smartcar with the Jetsons’ car style.
softwarengineer » Jun 11, 2009 at 2:49 pm
RE: Scotsman @ 46 –
And look, the ice cream wagon look is in today, and it isn’t even Government Motors:
http://en.wikipedia.org/wiki/Nissan_Cube
Notice how the 4th generation looks so much better than the 1st try…..LOL….do they have music that plays to attract the kids for their frozen treats?
Scotsman » Jun 11, 2009 at 6:00 pm
“WASHINGTON (AP) – The Senate struck a historic blow against smoking in America Thursday, voting overwhelmingly to give regulators new power to limit nicotine in the cigarettes that kill nearly a half-million people a year, to drastically curtail ads that glorify tobacco and to ban flavored products aimed at spreading the habit to young people.
President Barack Obama, who has spoken of his own struggle to quit smoking, said he was eager to sign the legislation…”
Crap. Ummmm, ahh, well, you see, ummmm. Ohhell.
David Losh » Jun 11, 2009 at 6:10 pm
You might need to change the avatar. It could unduly influence the children.
Kary L. Krismer » Jun 11, 2009 at 6:35 pm
For all of you who thought those tiny condos proposed in Westlake were expensive, I give you this!
http://seattletimes.nwsource.com/html/nationworld/2009326774_ap300000parkingspace.html
(Topic obvious from name of link.)
I remember I paid $10,000 for covered parking in Seattle back in 1978.
nutterbutter » Jun 11, 2009 at 7:27 pm
Hello agents—how have things been going in the last week? Our house is for sale and suddenly everything stopped, no showings, no calls, big fat zip. My agent said it’s because interest rates went up. I’m just wondering what other agents/buyers/sellers are experiencing…
thanks
David Losh » Jun 11, 2009 at 8:25 pm
RE: nutterbutter @ 53 –
Funny you asked because that was exactly what i was thinking. There are plenty of buyers still looking, but the chatter seems to be way down.
As we get closer to the end of school less people are in the market, but I agree that the interest rate move was bad for business in general.
Kary L. Krismer » Jun 11, 2009 at 8:35 pm
RE: nutterbutter @ 53 – You can never really get a feel for things by just asking a few agents. Some will always be busy while most are slow, and visa versa.
Roughly 100 SFR properties have gone Pending Inspection in the past two days (6/10 and 6/11) in King County, so someone is doing something. It’s not totally dead.
Whiteonrice » Jun 11, 2009 at 8:37 pm
Hello all – as a recent transplant from the east coast, I have been watching this site for over a year. Next to CR, it’s my most visited site. I look forward to joining the dialogue. To sum up my position, it’s amazing to see 99% of the populations heads buried in the sand as to what is really going on in the economy. I have been counseling anyone I know who is not going to retire in their current homes to sell and knock the price down to late 90’s early 00 prices. Not in our lifetimes will we see a credit bubble we just had over the last 8 years. Apocalypse is not upon us, but the worst is yet to come
jon » Jun 11, 2009 at 8:58 pm
RE: Scotsman @ 45 -” American households lost $1.33 trillion of their wealth in the first three months of the year as the recession took a bite out of stock portfolios and dragged down home prices.
The stock market is up 20% since the end of the 1st quarter.
The other interesting thing is that both the FHA HPI and Radar Logic show much slower decline than the CSI.
The FHA HPI 1Q09 is 0.5% lower than 4Q08. (http://www.fhfa.gov/webfiles/2400/1q09hpi.pdf) Radar Logic show pricing as flat also.
The CSI heavily weights sales pairs that are of a couple years duration. Those are the ones that are foreclosures right now. Longer sales pairs right now are the ones that are the sales that are not under duress, or have the inconvenience factor of being a short sale or REO. The recent RadarLogic report showed graphs for the large different in prices between the distress sales and the normal sales. So it may be that CSI is artificially depressed by a couple points or more. That’s not huge, but it is something to consider.
Ira Sacharoff » Jun 11, 2009 at 9:00 pm
RE: nutterbutter @ 53 –
For me, things haven’t died or slowed down, but my clients are much less reluctant to offer on properties what they would have offered a couple of weeks ago, since their monthly payments would be quite a bit higher. Or they’ve eliminated a bunch of houses from consideration because the monthly payments would be that much higher, and are focusing on less expensive properties.
If you can afford it, maybe consider lowering your price?
Scotsman » Jun 11, 2009 at 11:29 pm
RE: jon @ 57 -
Not my numbers Jon, AP’s. Last I checked, they were generally supportive of the current administration, so I don’t think there’s any effort to make it look worse than it is. In fairness, however, the complete article goes on to mention that additional credit card debt and other factors are included in the calculation, not just stocks and houses. So the number is probably legit as presented.
I’d be sure to read all the fine print on anything FHA, etc. generates. Like many other government statistics- unemployment, inflation, etc. the devil is certainly in the details. As is the bias or slant. Radar logic is better, or so I hear, but I’m not personally familiar with their methods.
nutterbutter » Jun 12, 2009 at 6:13 am
RE: Ira Sacharoff @ 58 – aye, there’s the rub. I wish we could lower it $75,000 just to get out of here, but that ain’t possible.
nutterbutter » Jun 12, 2009 at 6:15 am
RE: Kary L. Krismer @ 55 – Well, that gives me something to go on, so thanks.
Where’s Greg Perry with the weekly numbers update?
nutterbutter » Jun 12, 2009 at 6:17 am
RE: David Losh @ 54 – It really seemed like somebody just flipped a switch, that’s why I was curious.
David Losh » Jun 12, 2009 at 7:27 am
RE: jon @ 57 –
The article laid out a whole bunch of factors, but it is a big thing. Please remember Wells Fargo posted a profit in the first quarter. Warren Buffet went on the talk show circuit and told us things were coming around and that he was going to buy more bank stock.
In the first quarter we also had the epiphany of Obama who started saying things maybe were not so bad. Look at the number of sales in Real Estate as proof there is consumer confidence.
The article is in stark contrast to perception. We all want the recession to be over, but the reality is we are being bogged down by bad business.
The stock market being up from 8000 looks like a good thing for those who want to get out. Now is the time to sell. The same with Real Estate, now is the time to sell.
In my opinion we are in a time of transition. The Investor dollars will need to be in tangible results rather than how the “markets” look.
Kary L. Krismer » Jun 12, 2009 at 3:37 pm
By David Losh @ 63:
I’m not sure I would trust bank quarterly results as being a sign of how well they’re operating, especially when refinancing is probably paying off a lot of their existing loans, and they’re probably making money processing new loans. Buffet putting his money some place–I’ve never followed his announcements of that type–but I could see if he’s really doing that it might mean something.