By The Tim on June 26, 2009
Here is your open thread for the weekend beginning Friday June 26th, 2009. You may post random links and off-topic discussions here. Also, if you have an idea or a topic you’d like to see covered in an article, please make it known.
Be sure to also check out the forums, and get your word in the user-driven discussions there!
Posted in Open Thread | Tagged open_thread
Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.
Realtors to hold ‘Statewide Open House’
Somebody didn’t do their research.
RE: Joel @ 1 – That might be right for pending numbers. I don’t really follow the four counties, but pendings are way up presumably due to the short sale issue.
RE: Kary L. Krismer @ 2 – yep, mathematically it is probably correct. But Pendings in 2008 had a different definition than Pendings in 2009 so it is not really a fair comparison
Looking at Tim’s county summary, Pending Sales for the 8 counties he tracks were up 28% YoY and for the same period Closed Sales were down 15%. Which number is more reflective of reality? And I don’t think it is a “timing issue” when there is a 43% difference between the two rates of change!
RE: Joel @ 1 – Yeah, that’s an accurate, but completely useless piece of information.
SFH + Condo sales for King+Snohomish+Pierce+Kitsap
Pending May 2008: 4,526
Pending May 2009: 5,498
Difference: +21.5%
Closed May 2008: 3,840
Closed May 2009: 3,146
Difference: -18.1%
If Joel meant they didn’t do their research because they didn’t know the definition changed and didn’t know about the short sale issue, maybe we all agree. I was assuming his issue was with the number.
From KOMO news:
SEATTLE — Qantas Airways has reached an agreement with Boeing Co. to defer the delivery of 15 Boeing 787 Dreamliners by four years and to cancel orders for 15 additional 787s planned for delivery in 2014.
In its announcement on Thursday, the Australian airline said the moves are the result of the recession and not related to the latest delays in the Dreamliner’s first flight.
“Qantas announced its original B787 order in December 2005, and the operating environment for the world’s airlines has clearly changed dramatically since then,” said Qantas CEO Alan Joyce in a statement.
This just makes me sick: http://www.komonews.com/news/local/49153227.html
Ignoring the obvious issue of legality and ethics, don’t they realize that each time they go in a property it’s recorded? It’s like robbing a bank using a note on the back of a personalized deposit slip.
I checked and neither one is apparently still a member of the NWMLS.
RE: Kary L. Krismer @ 5 – Personally I would take issue with the context of the statement, if you look at the statement right before the numbers, it is misleading vs. the closed sales numbers. Probably a naive misinterpretation but I think we have the right to expect better reporting:
This.
RE: deejayoh @ 8 – I hadn’t clicked the link, and had assumed it was a press release. You’re right–poor reporting.
RE: Joel @ 9 –
Good call Joel, but I think the MLS deserves a little credit too for their up front, forth right dedication to transparency in the presentation of statistics. Nothing says clarity like computing a number in two different ways in different years and then using it in YOY comparisons in publicly released data with no reference to the change. Geeze, even baseball put an asterisk next to Roger Maris’ record when they changed the number of games in a season. But I guess expecting the MLS to hold themselves to the same high standards as the steroid leagues is asking too much. Maybe someone should report the MLS to the NAR. Don’t they pride themselves on their code of ethics? Isn’t that what makes them “Realtors”?
. . . . Naaaah
RE: Kary L. Krismer @ 7 –
Yeah, that 30 hr class and the license exam weeds out everybody but the rocket scientists. The term “low barriers to entry” comes to mind.
And hey, I have standards. I mean I might use the master bedroom and shower, but that’s where I draw the line. I’m a Realtor©.;-)
RE: One Eyed Man @ 12 – Well attorneys each year rip off much more in monetary value. That’s just as stupid and it shows it’s not just a barrier to entry or testing issue. But at least the WSBA has a fund to help compensate people ripped off by attorneys. I don’t think there’s anything similar in the real estate arena.
Oh this Dilbert is just perfect.
http://www.ritholtz.com/blog/wp-content/uploads/2009/06/dilbert-own-rent.gif
it should be posted as a sticky!
RE: Kary L. Krismer @ 13 –
No disagreement on that from me. I can’t believe some of the things I heard about that attorney’s have done.
RE: deejayoh @ 14 –
Perfect! That just about covers everything we’ve analyzed in the last 5400 posts…
We made Dilbert, so to speak:
http://dilbert.com/strips/comic/2009-06-26/
(Eli)
Moral and Social Constraints to Strategic Default on Mortgages
Luigi Guiso, Paola Sapienza, Luigi Zingales
Survey data suggests that currently 25% of foreclosures are due to “strategic defaults,” when someone can afford to pay the mortgage, but still walks away. The % underwater, moral attitudes of the borrower and social stigma play a big part in the decision… and these factors are all changing for the worse from a lender’s perspective.
University of Chicago Working Paper
http://www.financialtrustindex.org/workingpapers.htm
Reviews:
http://www.economist.com/businessfinance/displaystory.cfm?story_id=13905502
http://www.calculatedriskblog.com/2009/06/new-research-on-walking-away.html=
http://blogs.wsj.com/economics/2009/06/26/when-is-it-cheaper-to-ditch-a-home-than-pay/
RE: Groundhogday @ 18 –
NICE OBSERVATION
It lends credence to today’s listing supply statistics being totally misleading, since many are planning on just handing their unlisted upside down mortgage keys to the bank anyway, whether or not they can afford the payments.
RE: Groundhogday @ 18 – This is a survey of what people say they would do in a hypothetical situation, not a forensic analysis of the financial situation of people who are actually in foreclosure.
Guess what? If you did a survey of people, well over 50% would say they’d choose Chapter 13 (repayment plan) over Chapter 7 if they had $20,000 of credit card debt they couldn’t deal with outside of bankruptcy. In actual practice, that would be less than 5%.
True, that’s the easier way out, which would suggest that perhaps the mortgage situation would be higher too, but my point is more you can’t tell what people will do based on what they say they would do when presented with a hypothetical situation.
RE: Kary L. Krismer @ 20 –
“but my point is more you can’t tell what people will do based on what they say they would do when presented with a hypothetical situation.”
Wanna bet? Cripes, Kary, I’m an old Eagle Scout too, and value character, but we’ve got to be realistic. Self interest and the need for self preservation, whatever form that may take in our modern world, will win out over the interests of the state, the community, and especially some distant corporate entity.
But putting all that aside, the key part of the study isn’t the current percentage break down, but the trend. Given the trend, even if the current numbers are a bit biased toward the negative, the reality will match the reported figures soon enough. As negative equity holders and defaulters grow as a percentage of the population they will by definition shift the perceived norm. It wouldn’t surprise me to see defaulters heralded as the new intellectual pragmatists and those who continue to pay as fools, ranked on the same level as renters were three years ago. I know you’re not big on predictions, but as someone who has had pretty good success in that area might I suggest that following the data, not your own biases or values, is key.
This will get much, much worse before it gets better.
RE: One Eyed Man @ 12 –
” It’s a great time to steal.”
Re: 20 and 21
It’s more about “point of least resistance”. Not making your payments is a lot easier than filing for bankruptcy. Not making your payments is a lot easier than just about anything. So Scotsman will win “the argument”.
As to “handing over keys”, to do that in the easiest fashion is a Deed in Lieu. Most lienholders require the home be actively marketed for 90 days prior to approving a Deed in Lieu, so you don’t see them very often.
RE: ARDELL @ 23 – Not making your payments and going into foreclosure is a lot more embarrassing than filing bankruptcy (assuming that would fix it). When you file bankruptcy, they don’t post a notice on your door. When you file a bankruptcy, you don’t suddenly have someone move into your house and tell all your neighbors that they bought it at foreclosure.
But in any case, my “argument” here (which you might not have been around for) is regarding people walking away who can make their payments. I’ve been saying people won’t be that likely to just walk away just because of negative equity, that you need something more like an inability to make the payments.
There are a number of reasons a bank won’t take a deed in lieu, including the existence of subsequent liens. Where such liens exist, the only route for the bank is foreclosure (or the owner managing a short sale that the junior lienholders agree to).
I submitted an offer for a pretty nice house for $450k The house was on the market for about 4 months starting at $775k, then $625k.
The seller accepted the offer, and the listing agent says the bank will respond in 2 weeks (not holding my breath).
I’ll keep you updated.
“In the midst of a sour economy marked by falling market values, rising unemployment, and the specter of rampant inflation, the House passes an economy-killing cap-and-trade bill, which will cost each American household thousands of dollars per year and plunge the American economy into an essentially permanent recession… all to address a hoax promoted with junk science, while ignoring foreign industry that will go on pumping out the “greenhouse gases” the bill purports to control. A supposedly impartial news network hands its air time over to the dominant political party, to promote a massive health-care scheme that will shove another trillion-dollar knife into the economy Congress voted to eviscerate today… and already we hear about special exemptions written into the deadly socialized medicine plan, for the benefit of powerful union allies of the Democrat Party. A confused president dithers for days as peaceful demonstrators are murdered on the streets of Iran, before finally coughing up the stern condemnation he should have offered weeks ago. Fourth of July invitations to the ambassadors of the murderous Tehran regime are finally rescinded, after days of leaving them on the table as festering insults to every American citizen who truly embraces the spirit of that noble holiday.”
http://hotair.com/greenroom/archives/2009/06/26/how-do-we-fix-this/
Ah, so what, summer’s here! Honey, get me another beer…
How does current spending compare to The New Deal, WW2, etc?
http://www.youtube.com/watch?v=yREOUxo6Qdc
I am moving. This week we’ll sign the lease on a three-bedroom house on a double lot with fruit trees, with a garage and loads of storage space and new appliances, for less than we now pay per month for a street-facing two-bedroom apartment with almost zero storage and a despair-inducing kitchen. (Granted, we relocated in August of 2007, when the market was a lot tighter.) And no crabby, nosy neighbors, and finally a dining room so I can have dinner parties. This is also great because we’ll get to test-drive life in one of the areas we may one day want to buy in. There will probably be some inconveniences, but in that context I welcome them.
In other news: the chief quant jock at work, who for the past year or so has consistently been telling me that house prices can’t get much lower and interest rates can’t possibly influence pricing, is now shopping for a house. He tells me I’ll be sorry if I don’t, too. But I will take that bet.
By Civil Servant @ 28:
That’s the type of advice that’s best to ignore. Back when we bought near the end of 2007 I was getting advice to keep our old house. I ignored it for two reasons, one of which was I didn’t believe anything only goes up, and the other being I didn’t want to have that much of my asset base tied up in real estate. But it was mainly the former.
RE: Scotsman @ 6 –
RECESSION/DEPRESSION STALLING ALL SALES WORLDWIDE
How in the Hades is M/S going to sell a bunch of computers with new O/S globally when Japan’s exports are down 50% recently YOY; couple with China’s -25% drop? We already know America isn’t expanding business sales either.
I hear M/S is offerreing the new Windows O/S upgrade free, if you buy a new computer with the obsolete VISTA. Although this seems like a good plan short-term to get a few units sold, that would normally lay dormant on the shelves…..it sure puts a wrench in the gears for decent profits on the new O/S, especially with current VISTA laptops going new for recession/depression bargain prices, deflated at $399 up.
Personally, the feds agree with me too, I’m sticking with XP on refurbed units for the next year or two, until the XP windows updates stop or the new O/S is proven to work over the years [see to believe] on existing anti-virus S/W, etc., without its own convoluted “VISTA-like” version [that doesn't work a lot of the time anyway]. I’m not going to be M/S’s test department for failures.
Same with the outsourced 787, if that carbon fiber monster ever flies, I’m waiting a few years for track record safety reports, before I test ride it.
By Civil Servant @ 28:
Yeah well I happen to know that you’re already “regretting your decision to delay buying a home,” because our former County Executive declared it to be so last September.
;^)
RE: Softwarengineer @ 30 – I’m pretty sure they offered Vista free if you bought a computer with XP past a certain date. I’m not sure how far back that sort of thing goes, but they don’t want to freeze sales with people waiting.
The Snohomish County Assessor has some big reductions in assessed values for next year. The numbers bellow are for parcel number 00846300000200, as an example:
Tax Year 2009 Market Land $260,000 Market Improvement $276,400 Market Total $536,400
Pending Property Values for Tax Year 2010
Market Land $220,000 Market Improvement $216,900 Market Total $436,900
How is this fact going to influence appraisals in 2010?
RE: Ex_Boat_Tester @ 33 – Assessments don’t influence appraisals at all.
A year or two ago I was an expert witness and neither the other side’s appraiser or I thought the property located in Snohomish County was worth anywhere near the assessed value, and it was going up the next year.
RE: Civil Servant @ 28 –
Double lot with fruit trees= ” yipee!”
By
How is this fact going to influence appraisals in 2010?
It won’t. All it means is more speed traps in snohomish county to pay for the lower property taxes
RE: Racket @ 36 – For the 10,000th time, assessments don’t affect total tax collections. Although if prices fall far enough, we might see a the 1% constitutional limit kick into effect. I’m not sure whether that’s ever been in issue before–I suspect it has been.
RE: Kary L. Krismer @ 37 – Relative value *does* affect taxes, so you can either race your neighbor down and save in the year or 2 that you beat him down or find some reason (and convince the assessor) your home should be worth less than neighbors on a relative basis.
RE: Ross Jordan @ 38 – It’s not exactly clear what you’re saying, but yes your personal assessment does affect what you pay relative to everyone else. But the comment I was responding to was indicating that the county would need to issue more tickets to make up revenue from falling home values. The county doesn’t care. Except for the 1% limit mentioned, the total of assessments does not affect total revenue.