Case-Shiller: Seattle’s Spring Bounce Picks Up Steam

Let’s have a look at the latest data from the Case-Shiller Home Price Index. According to April data,

Up 1.6% March to April.
Down 6.9% YOY.
Down 29.7% from the July 2007 peak

Last year prices rose 1.0% from March to April and year-over-year prices were down 2.8%.

Interesting that here in Seattle this year we’re getting a bigger spring bounce than last year, when the tax credit was juicing sales and everyone was making one last mad dash for the free government money.

[Update]
FYI, Tim was on the Ross and Burbank show on 97.3 KIRO this morning. Here’s a brief excerpt from their story write-up:

Tim Ellis, with the Seattle Bubble, tells 97.3 KIRO FM’s Ross and Burbank that the increases are pretty standard for the spring.

“Every spring prices tend to go up. It’s pretty seasonal and predictable.”

Ellis says the only times in recent history when prices didn’t see a spring increase was in the thick of the crash.

“In 2009, even through the spring, prices were falling pretty steadily,” says Ellis. He says against those numbers, there is reason to celebrate today. “It’s definitely optimistic in that we’re not crashing anymore, but it’s not like ‘Oh wow, let’s break out the champagne glasses and toast our equity all of a sudden.'”

Ellis says these seasonal increases are to be expected, and doesn’t necessarily speak to a larger upward trend.

And here’s the audio (~10 minutes):

[End of Update]

Here’s an interactive graph of all twenty Case-Shiller-tracked cities, courtesy of Tableau Software (check and un-check the boxes on the right):

Washington DC is still the only city still in positive YOY territory, but this month 13 cities managed to squeak out month-over-month growth.

Hit the jump for the rest of our monthly Case-Shiller charts, including interactive charts of all 20 cities.

In April, thirteen of the twenty Case-Shiller-tracked cities experienced smaller year-over-year drops than Seattle (or saw year-over-year increases):

  • Washington, DC at +4.0%
  • Los Angeles at -2.1%
  • New York at -2.8%
  • Atlanta at -3.5%
  • Dallas at -4.0%
  • Denver at -4.1%
  • Boston at -4.2%
  • San Diego at -4.3%
  • San Francisco at -5.5%
  • Miami at -5.6%
  • Las Vegas at -6.2%
  • Charlotte at -6.6%
  • Cleveland at -6.8%

Falling faster than Seattle as of April: Detroit, Tampa, Chicago, Phoenix, Portland, and Minneapolis.

Here’s the interactive chart of the raw HPI for all twenty cities through April.

Here’s an update to the peak-decline graph, inspired by a graph created by reader CrystalBall. This chart takes the twelve cities whose peak index was greater than 175, and tracks how far they have fallen so far from their peak. The horizontal axis shows the total number of months since each individual city peaked.

Case-Shiller HPI: Decline From Peak

In the forty-five months since the price peak in Seattle prices have declined 29.7%, slightly less than last month, up off the low.

Here’s the “rewind” chart, to show you how much was gained, and then given back up over the last six-plus years:

Case-Shiller HPI: Seattle Rewind

The blue line on August 2005 represents the month that this site launched. As of April 2011, there have effectively been zero price gains since September 2004.

For posterity, here’s our offset graph—the same graph we post every month—with L.A. & San Diego time-shifted from Seattle & Portland by 17 months. Everyone but Seattle continued to get worse on this chart. Year-over-year, Portland came in at -9.2%, Los Angeles at -2.1%, and San Diego at -4.3%.

I think this graph is still worth posting if only to display how the government’s massive intervention in the market screwed with the natural flow, causing all the markets to rise simultaneously, and once the artificial support was removed, to come crashing back down to reality simultaneously.

Case-Shiller HPI: West Coast

Note: This graph is not intended to be predictive. It is for entertainment purposes only.

Check back tomorrow for a post on the Case-Shiller data for Seattle’s price tiers.

(Home Price Indices, Standard & Poor’s, 06.28.2010)

  

About 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.

131 comments:

  1. 1

    Not to be nit picky or anything, but the post starts out with ” according to September data”…That can’t be right, can it?

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  2. 2
    The Tim says:

    RE: Ira Sacharoff @ 1 – Doh. Fixed.

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  3. 3
    Chris says:

    I think Seattle/Portland price change has “caught up” with San Diego / LA, so the “offset” graph isn’t as predictive … er, I mean, entertaining …. as it was near the peak.

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  4. 4
    Scotsman says:

    OK, now even I am convinced- The Tim has joined the real estate fraternity. With head lines like this:

    “Seattle’s Spring Bounce Picks Up Steam”

    Backed up by data like this:

    “Last year prices rose 1.0% from March to April and year-over-year prices were down 2.8%.”

    When this year:

    “up 1.6% March to April, DOWN 6.9% YEAR OVER YEAR.

    I view this as the equivilent of getting an extra high last bounce before flying off the diving board into an empty pool. It’s a great time to buy a house!!

    Rate this comment: Thumb up 0

  5. 5
    Blurtman says:

    Green shoots! Green shoots!

    Rate this comment: Thumb up 0

  6. 6
    HappyRenter says:

    “Interesting that here in Seattle this year we’re getting a bigger spring bounce than last year …”

    Who knows. Maybe last year’s spring bounce in prices might have happened even without the tax credit?

    Rate this comment: Thumb up 0

  7. 7
  8. 8
    The Tim says:

    By Scotsman @ 4:

    OK, now even I am convinced- The Tim has joined the real estate fraternity. With head lines like this:

    “Seattle’s Spring Bounce Picks Up Steam”

    Not sure how that counts as “joining the fraternity.” A spring bounce is by definition a seasonal effect. And that effect picked up from last month’s data. It’s a simple factual statement.

    Rate this comment: Thumb up 0

  9. 9
    ray pepper says:

    ” Seattle’s Spring Bounce Picks Up Steam”

    This will make all you strategic defaulters and walk away homeowners rethink your IRRATIONAL decision of letting your home go in this NON RECOURSE State and make you ALL wish you kept on paying. Shadow Inventory is pure nonsense. Produce The Note meetings and movements are a complete Sham. Loan Modifications is the answer for the troubled.

    Soon you will be able to sell your home with very hefty profits and all will be good again!

    Bring on the BIG BOUNCE BABY !!

    Rate this comment: Thumb up 0

  10. 10
    toad37 says:

    RE: The Tim @ 8 – Why even respond to that Bozo? If everyone ignored him maybe he would crawl back under his doom and gloom rock.

    Rate this comment: Thumb up 0

  11. 11
    Chris says:

    at least Scotsman gets a response. I’ve never actually posted here and had anyone respond. I guess my posts just aren’t interesting.

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  12. 12
    hello says:

    Wow, Tim, I am listening to you on KIRO radio right now.
    Pleasant surpirise.

    Rate this comment: Thumb up 0

  13. 13

    Nothing too surprising in this data based on the current lop-sided supply and demand situation.

    Rate this comment: Thumb up 0

  14. 14
    patient says:

    Scotsman, the once upon a time rebel is now working for a real estate firm and has bought a home, really what do you expect? Come here for the data, it’s no longer the same site that was trying to rally people to pay for a billboard to counter act the cheerleading. Things have permanently changed here, time to accept and adapt the way you use and view the info from this site.

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  15. 15

    By Chris @ 11:

    at least Scotsman gets a response. I’ve never actually posted here and had anyone respond. I guess my posts just aren’t interesting.

    Okay, now you owe me one. ;-)

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  16. 16
    The Tim says:

    RE: patient @ 14 – You’re funny. So my “Spring Bounce Picks Up Steam” headline is evidence that “things have permanently changed here” and I’m no longer interested in countering the cheerleading because I work for a real estate firm. Interesting.

    For reference, here’s my June 2008 Case-Shiller headline: “Case-Shiller: Thrilling Spring Bounce in the NW

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  17. 17
    NewHomeOwnerInFremont says:

    Just like the perma-bulls who said housing prices had no where to go but up at the peak of the market, the perma-bears are now beating the same drums stating that housing prices have no where to go but down. The perma-bears will be just as wrong as the perma-bulls a half decade ago. This type of pessimism does not provide anything constructive. And so what if Tim has bought a house or works at Redfin. Big deal. I respect Tim looking at the data and putting his thoughts which are backed by data and not hype out there for everyone with an internet connection and an interest in real estate. He has done more for a lot of people—saved his audience serious amounts of cash—by informing them. So all you perma-bears on this blog, show some respect.

    Also, by the time it feels good to own real estate again, you will have missed the best deals of a lifetime.

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  18. 18
    patient says:

    RE: The Tim @ 16 – It’s not the headline it’s an ongoing transformation, sometimes it’s subtle signals and sometimes bullhorns. I don’t blame you Tim and don’t even miss the old rebel that much since I’m no longer in need of support from this site, ( if I ever was it was likely more the community with sharp insightful minds as eleua and sniglet that I miss anyway ), I’m thankful for and do highly value the breakdown of data like C/S and the nwmls that you still process and post for free here and I will keep coming back to check it out.

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  19. 19

    By Conor MacEvilly @ 13:

    Nothing too surprising in this data based on the current lop-sided supply and demand situation.

    Ding, ding, ding, ding!

    Remember, this data is for the stuff that actually sold, and as repeatedly reported here, there isn’t that much good stuff. And again, C-S data doesn’t really know the condition of the property, so they’re effectively doing numbers mainly on the better properties out there (and throwing out the very worst).

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  20. 20

    By NewHomeOwnerInFremont @ 17:

    Just like the perma-bulls who said housing prices had no where to go but up at the peak of the market, the perma-bears are now beating the same drums stating that housing prices have no where to go but down. The perma-bears will be just as wrong as the perma-bulls a half decade ago.

    I had the exact same thought yesterday. In addition to the perma types, there are also those who think that the future will be the same as recent history. An extreme example of that would be someone who thinks this single C-S number means we’ve reached the bottom, but you could say the same thing about someone with a 3 year look-back. And don’t think those types are rare. Those with a 12 month look-back are what caused markets like Phoenix in 2004-2006.

    Rate this comment: Thumb up 0

  21. 21
    patient says:

    RE: Kary L. Krismer @ 20 – This is mostly due to people staring at narrow housing stats without putting it into macro and micro economic perspective. And it’s not only to find the underlying drivers once and then leave it with that, the drivers and their impact change. You need to be open to adjust your “models” if not you will be caught in the scenarios you mention and will likely be burnt and/or miss opportunities even with a slow moving market as housing.

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  22. 22
    ARDELL says:

    RE: Kary L. Krismer @ 19

    That is particularly true of the condo markets, where the story is in what is NOT selling, vs what is.

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  23. 23
    Lo Ball Jones says:

    If things are going this way, then watch out…trap door below!

    http://heraldnet.re.adicio.com/realestate/detail?qAdid=4dd56c41833d#fullDetail

    Current List Price: $189,950
    Bedrooms: 4
    Full Baths: 2
    Square Feet: 2,300
    Lot Size (Sq. Ft.): 6,098
    Address … Everett, Washington …

    Rate this comment: Thumb up 0

  24. 24
    Scotsman says:

    RE: The Tim @ 8

    “It’s a simple factual statement.”

    True. But it doesn’t mean we can’t tease you and poke you with a stick while still loving you. It’s the Seattle passive/aggressive way. ;-)

    Rate this comment: Thumb up 0

  25. 25

    RE: Lo Ball Jones @ 23 – Short sale.

    Rate this comment: Thumb up 0

  26. 26
    toad37 says:

    RE: NewHomeOwnerInFremont @ 17 – Exactly! Not to say that we bottomed by any means, but there are some very interesting deals finally.

    Rate this comment: Thumb up 0

  27. 27
    Scotsman says:

    RE: NewHomeOwnerInFremont @ 17

    Um, no. By the way- love your name.

    I’m completely ready to switch gears and become the biggest bull here as soon as I see evidence of a real turn-around. Until then, I’ll hold onto my down payment and then some while you watch yours slowly vanish.

    Rate this comment: Thumb up 0

  28. 28
    Scotsman says:

    RE: The Tim @ 16

    So, is spring your favorite season? (this is kind of a trick question)

    Rate this comment: Thumb up 0

  29. 29
    JoeBlow says:

    Buy! Buy! Buy!

    I’m going to go put an offer on a $1M house right now. I can only afford $600k, but the market is going to skyrocket!!!!!!!!!!

    Eh, I think I’ll wait till next year. If I am behind the increase a by a few percent, it is better than being 10-20% down due to the potential economic collapse if congress can’t pass some sort of debt fix.

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  30. 30
    No Name Guy says:

    RE: ARDELL @ 22

    Ardell (or others in the know)

    Can you elaborate on what “types” of condos (for lack of a better description) are and are not selling (other than the obvious over priced versus market / below market priced).

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  31. 31

    RE: No Name Guy @ 30 – Lots of condos have deferred exterior maintenance, and from what I’ve seen a lot have greatly increased their dues. Both those things can make for a tougher sale. I wrote a blog piece on the former over two years ago, and IMHO it’s worse now than then.

    http://blog.seattlepi.com/realestate/2008/10/28/dont-let-your-condo-complex-turn-into-a-dump/

    Then there’s also the fact that a lot of condos are short sales, because a lot were converted within a short time of the peak.

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  32. 32

    RE: Kary L. Krismer @ 19 – Precisely; lack of supply of decent homes resulting in full asking price offers or above in the first time buyer range. And since first time buyers are the largest buying group………

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  33. 33
    Teacher_Greg says:

    As a long time reader (I bookmarked this site in late-2006) I find it interesting that when this site was bearish on housing (which was unpopular with the “experts”) that it has now reached a point where even reasonable statements of fact with a hint of bullishness are pilloried by the bubblerati.

    I personally still expect nothing but surprisingly less bad news out of the housing marking for another few years, but a comment from Tim about how the C-S data shows a surprising seasonal uptick doesn’t really warrant the accusations of sell-out hysteria in my view.

    I credit this site and the Tim with saving me personally about $200,000 so it is going to take a little more than an objective statement of fact to think he has joined forces with Lawrence Yun.

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  34. 34
    toad37 says:

    RE: Teacher_Greg @ 33 – Well said. People like Scotsman feed on negative energy, see that a lot on blogs. Perma-bears always lose in the long run.

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  35. 35

    At least Tim’s headline wasn’t as bad as MSNBC’s: Upward Blip in Home Prices–But Don’t Relax Just Yet. :-D

    Rate this comment: Thumb up 0

  36. 36
    Scotsman says:

    RE: toad37 @ 34

    You need to lighten up. If you have indeed been following this site you’ll know that ever since Tim joined Redfin, and especially since he bought his house, there have been questions/comments about his “going over to the dark side.” Obviously different people, with varying priorities, will come to a wide range of determinations about the appropriateness of buying verses renting. But that doesn’t mean one can’t stir the pot once in a while with a good troll. It helps keep things more interesting while we all wait out the long slog ahead, looking for a real sign that the economy has found new and sustainable footing. That’s all it is.

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  37. 37
    LeftOverpricedSeattle says:

    The comment intentionally left blank!

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  38. 38
    Scotsman says:

    Our consumer based economy is largely driven by expectations. That’s a fact. Large purchase decisions, investment strategies, major expansions/contractions in lifestyle are all tied to future expectations about employment stability, wages, and inflation.

    This post highlights the possibility of a turn-around in housing prices, a situation that would incite many here to become home owners. Everybody likes data. Here’s some easy to read summary data on the other side of the coin- a coming double-dip recession or worse:

    http://hotair.com/archives/2011/06/28/economic-confidence-drops-below-2010-levels/

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  39. 39
    toad37 says:

    Thanks for making my point Scotsman. I didn’t read you post, but I’m sure it’s full of toxic perma-bear stuff as usual. Pretty classic actually, standard for the blogs.

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  40. 40

    thanks Tim for great longitudinal analysis of the market. Don’t worry about the hecklers – haters gonna hate.

    2011:
    Case-Shiller: Seattle’s Spring Bounce Picks Up Steam
    Up 1.6% March to April.
    Down 6.9% YOY.

    2010:
    Case-Shiller: Seattle Finally Sees a Tax Credit Price Boost
    Up 1.0% March to April.
    Down 2.8% YOY.

    2009:
    Case-Shiller: Anemic Spring Bounce in April
    Up 0.2% March to April.
    Down 16.8% YOY.

    2008:
    Case-Shiller: Thrilling Spring Bounce in the NW
    Up 0.7% March to April.
    Down 4.9% YOY.

    Rate this comment: Thumb up 0

  41. 41
    Blurtman says:

    RE: Scotsman @ 38 – If you are a homeless person and expect to be a billionaire, what happens?

    Rate this comment: Thumb up 0

  42. 42
    Ben says:

    The rewind chart looks very much like 2010. What will happen in the fall? Is being realistic = doomer? QE2 just days away from ending, a budget impasse, increasingly bad news out of Europe…..where does this all lead in the coming months for the home market?

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  43. 43
    Michaelb says:

    RE: Scotsman @ 38

    Great link. Thanks! Dead Cat Bounce…

    Rate this comment: Thumb up 0

  44. 44
    Blurtman says:

    RE: Ben @ 42 – Volatility is good. The wall of fear and all that.

    Rate this comment: Thumb up 0

  45. 45
    MichaelB says:

    Shiller Says U.S. Home-Price Declines of 10% to 25% ‘Wouldn’t Surprise Me’, that’s correct , the guy who invented the Case Schiller Index.

    RE: Lo Ball Jones @ 23

    Say it Aint So Lo Ball! Love Kary’s quote, “short sale” ….because, as you know those don’t count…Why in the world would anyone pay $189K to live in Everett? That home will be worth under $150k soon.

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  46. 46
    MichaelB says:

    RE: NewHomeOwnerInFremont @ 17

    Real
    Estate
    Semi
    Permanently
    Entering
    Crash
    Territory

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  47. 47
    Scotsman says:

    “Haters”- the new racists. I love the left. If you can’t win the argument, go for the personal.

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  48. 48
    Blurtman says:

    RE: Scotsman @ 47 – I first heard the term used by Bristol Palin.

    ‘Haters Are Fueling My Fire’ on Dancing with the Stars

    Continue reading on Examiner.com Bristol Palin: ‘Haters Are Fueling My Fire’ on Dancing with the Stars (video) – National Dancing With the Stars | Examiner.com http://www.examiner.com/dancing-with-the-stars-in-national/bristol-palin-haters-are-fueling-my-fire-on-dancing-with-the-stars-video#ixzz1Qc6jTigt

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  49. 49
  50. 50
    The Tim says:

    Note the update to the post, in which I highlight my appearance this morning on the Ross & Burbank show. Not sure how, but I assume that my comments on there will also be construed by some as selling out and/or cheerleading.

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  51. 51
    Scotsman says:

    RE: The Tim @ 50

    “Every spring prices tend to go up. It’s pretty seasonal and predictable.”

    Yup, didn’t take long to walk that headline back. ;-)

    You think this site is rough, you should see what’s happening in Greece. The place is burning down, riots everywhere, austerity is hate, on and on. Nothing like a little economic pressure to put citizens over the edge. A preview of what’s to come, or just more bearish doom and gloom?

    NIMBY soon to be relaced by don’t touch my cheese. Fun times.

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  52. 52
    Markus says:

    [enjoy this thread without my snark]

    Rate this comment: Thumb up 0

  53. 53
    S-Crow says:

    Tim, you are clearly a sell out. Bearish commentary, then moves to join Redfin, then buys house. Turn-coat. Reminds me of the people in the industry tossing me hate mail and making prank calls to our office a few years ago. For escrow, being on the receiving end of that was kind of like blaming the lady at the Department of Licensing getting your car tabs for the overpriced boat, car or mobile home you bought. It’s kinda too late when you get to escrow.

    By the way I really enjoyed the commentary lately about your house being in a high crime rate area. There was not a week that went by at our old office (a few blocks north of Mariner H.S.) where cops were not racing down 4th Ave West south of the Mall, several miles south of where you live in Everett. That’s an area that I understand is one of the highest crime rate areas in all Snohomish Co.

    ;)

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  54. 54
    Toad37 says:

    RE: Markus @ 52 – Right again. The Scotsmans are the new Hate bubblers. They must be a blast at parties.

    Rate this comment: Thumb up 0

  55. 55
    Jonness says:

    Seattle is experiencing a fairly strong Spring season considering the horrible economic outlook for our country and the whopping unemployment rate.

    There are a lot of extreme bulls and bears out there. Either buy now to avoid missing the bottom, or welcome to Great Depression 2.0. I’m more in the Japanese muddle through long term structural problem camp. I expect GDP will pick up in the second half of 2011, but it won’t be enough to put much of a dent in the unemployment rate.

    There is no hurry to buy a house prior to a strong decrease in the unemployment rate and Bernanke signaling he’ll raise interest rates by 1/4 of a point. The other possible buy signal is if the Fed starts charging the banks interest on the $1.5 trillion they hold in excess reserves. But this must occur in conjunction with the banks starting to move the money out onto main street along with adequate consumer loan demand that accepts the money and begins to bid up asset prices. This in conjunction with the cheap money, could finally breath some fire into the consumer (perhaps temporarily). But most likely, we will follow Japan’s example, and this will never occur.

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  56. 56

    By MichaelB @ 45:

    Say it Aint So Lo Ball! Love Kary’s quote, “short sale” ….because, as you know those don’t count…Why in the world would anyone pay $189K to live in Everett? That home will be worth under $150k soon.

    There’s a limit to what I can say about active listings, but I can say the type of sale.

    What you don’t seem to understand is that an active listing is not evidence of value. On a regular listing it’s not evidence that the property is worth as much as it’s listed for–the seller many never get an offer for the list price. On a short sale it’s not evidence that the property is worth as little as it’s listed for–the bank may not approve the sale at the list price.

    Rate this comment: Thumb up 0

  57. 57

    RE: Blurtman @ 48 – Didn’t GWB coin the term haters? Sounds like something he would say.

    Rate this comment: Thumb up 0

  58. 58

    RE: Scotsman @ 51 – Depending on how widespread the fallout is on the Greece situation, it could actually be bullish for US stocks and bonds.

    Rate this comment: Thumb up 0

  59. 59
    Jonness says:

    By Toad37 @ 54:

    RE: Markus @ 52 – Right again. The Scotsmans are the new Hate bubblers. They must be a blast at parties.

    Toad, please buy a house. I can barely stand this any longer. Just believe in your opinion that we’ve reached the bottom, and jump in feet first. It makes no sense for you to go through years of blaming me and scotsman for you not being able to be happy because we will not let you buy a house. You have our permission. Just because we’ve been correct about the future direction of house prices for the last 5 years runnning doesn’t mean we will be correct for the next 5. Believe in your own opinion and happily test the waters.

    Tim’s in. He’s a smart and informed person. What are you waiting for? We all have our own beliefs about where we are heading, and we are all acting in our own best interests. Don’t let our opinion interfere with what you want to do in your life.

    I bought a boat last weekend. This weekend I will buy a gas guzzling pickup to tow it around. These are not exactly smart financial decisions. But on an emotional plane, they make sense due to the fact that I have saved so much money by not buying a house yet, that I can afford to piss some money away and still have a great down payment sitting in the bank should I decide to buy a nice waterfront home. Most likely, I’ll hold off, and get a bunch more free money. But only time will tell. I could be wrong. :)

    So far, time has been kind to me. Five years ago, I was your average uninformed chump without a down payment who was hoping to buy a shack to live out the rest of my life. I began to play with the spread between mortgage rates and asset appreciation, and today I’m sitting in a whole new ball park. But just because I won the game so far is no guarantee I will continue to win in the future. By the end of this crazy ride, I might be lucky to find the cheap shack I was originally looking for in order to live out the remainder of my life. If it occurs, oh well. I’ll still be happy with where I have been and what I managed to accomplish. Nobody knows for certain where we are headed in the future, but so far, some of us have been more right than others. Hopefully, I will continue my 5-year streak of betting on the best horse. If I misstep and bet on a loser, then everybody can start having fun at parties again. But for now, I’m still alive and well. :)

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  60. 60
    Scotsman says:

    RE: Kary L. Krismer @ 58

    OK, I’m all ears- tell me how.

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  61. 61
    Ajax says:

    Wow…mirco upswing. BFD. I’m surprised how many comments are here about such a silly new number. I’m not surprised at the acrimony, though. Real estate is like a religion to far too many. There are some of us who still think this market is due for more downward correction, especially in Seattle.

    The next big drop will be due to the states coming of stimulus support and the need to furlow or layoff workers.

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  62. 62
    Jonness says:

    The blue line on August 2005 represents the month that this site launched. As of April 2011, there have effectively been zero price gains since September 2004.

    Nice play Tim. Even if prices continue to go down some, you still saved yourself a fortune!

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  63. 63
    Jonness says:

    By Kary L. Krismer @ 58:

    RE: Scotsman @ 51 – Depending on how widespread the fallout is on the Greece situation, it could actually be bullish for US stocks and bonds.

    If Greece fails, it will rock the financial systems throughout the world. The ensuing panic and fear will be off the charts. I can foresee how this could buoy a flight to the safety of U.S. bonds (despite our default risk), but I’m not so sure I would want to be long the stock market if this situation occurs. It seems to be a very risky strategy to me at the moment.

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  64. 64
    Jonness says:

    By Scotsman @ 4:

    I view this as the equivilent of getting an extra high last bounce before flying off the diving board into an empty pool. It’s a great time to buy a house!!

    You are a comic genius!

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  65. 65
    CCG says:

    By Scotsman @ 60:

    RE: Kary L. Krismer @ 58

    OK, I’m all ears- tell me how.

    I’m not Kary, but I agree that U.S. trashuries and other dollar-denominated stuff are perceived as a flight-to-safety play. I don’t think that perception is right, but plenty of people with plenty of money disagreed with me in 2008.

    As many problems as the U.S. has, I do think Greece is worse off, at least right now. The belief in “something for nothing” seems to have taken deeper root there than it has here. Of course, the comparison is muddied by the fact that Greece actually has to face that it’s broke – which isn’t going to happen here as long as the printing press has anything to say about it. As Greenspan once said, we can guarantee everyone will get the dollars they’ve been promised, we just can’t guarantee those dollars will buy anything. No doubt the resulting poverty – which will happen just the same whether it’s a soft default or a hard one – will be blamed on “speculators” or other “evildoers”.

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  66. 66
    Jonness says:

    By hello @ 12:

    Wow, Tim, I am listening to you on KIRO radio right now.
    Pleasant surpirise.

    How is this a surpise? Several months ago, I predicted Seattle would see a Spring bounce prior to a new low this winter. What’s more surprising, the Spring bounce, or that I was right for the umpteenth millionth time in a row. Either way, it was highly predictable.

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  67. 67
    One Eyed Man says:

    RE: Lo Ball Jones @ 23

    http://heraldnet.re.adicio.com/realestate/detail?qAdid=4dd56c41833d#fullDetail

    Nice wallpaper and 4 bedrooms. If I ever decide to become a pimp and open an Everett whore house maybe I’ll buy it. It might pencil if I rent rooms by the hour. And if Scotsman’s right and we get enough deflation, I can bring back an old saying for the homeport regulars. Two dolla saila boy. I can use that big tax cut extension I got last winter to create 4 job openings if anybody is looking for work. Does Bristol have a job? I hear she has the work experience I’ll be looking for.

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  68. 68
    Scotsman says:

    RE: CCG @ 65

    Agreed- that is the conventional wisdom. But I wonder if most of the blg/smart money that evidenced reasonable liquidity hasn’t already left for the U.S.? When Greece folds the losses will be significant for many, mostly abroad, but here too.

    The trick in all of this is to be the first guy out of the burning theatre, so to speak. I think most of those who could leave already have. Only the bag holders remain, and they’re about to get burned.

    On the other hand, maybe BB and TG are hoping Greece falls with the happy consequence that a flight to safety takes pressure off t-bill rates.

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  69. 69

    RE: Scotsman @ 68
    How to make money in the stock market as a result of the turmoil in Greece?
    Easy. Buy stock in USA domestically produced feta companies. Or corner the Kalamata market.

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  70. 70
    CCG says:

    By Scotsman @ 68:

    RE: CCG @ 65

    Agreed- that is the conventional wisdom. But I wonder if most of the blg/smart money that evidenced reasonable liquidity hasn’t already left for the U.S.? When Greece folds the losses will be significant for many, mostly abroad, but here too.

    The trick in all of this is to be the first guy out of the burning theatre, so to speak. I think most of those who could leave already have. Only the bag holders remain, and they’re about to get burned.

    On the other hand, maybe BB and TG are hoping Greece falls with the happy consequence that a flight to safety takes pressure off t-bill rates.

    I read some article recently saying that TBTF banks have loads of exposure to Greek debt and other garbage. Might as well stay in the burning theater and collect that 17% when you can send the taxpayers to the hospital (and the morgue) in your stead…

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  71. 71
    Scotsman says:

    RE: Ira Sacharoff @ 69

    Hmmmmm- he’s off to the fridge. Goat cheese- check. Feta- check. Kalamata olives- nope.

    Ack! Now I’ll be . . . priced out forever!!! ;-)

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  72. 72
    David Losh says:

    RE: CCG @ 70RE: Scotsman @ 68

    Hardly. Greece is doing what it does. The problem is with the currency; the Euro. It’s late, and the debate about currency is long, but the bottom line is that the New World Order fell apart with the price of property.

    They just aren’t making any more property, but they are utilizing it much better.

    Greece, had rapid expansion in housing units. OK, they over built, by a whole bunch. I mean really, a whole ton of housing units. What are you going to do now? Give them away? Is that going to be considered a “redistribution” of the wealth? Next is where the mortgage money is going to go, or lack of mortgage money when people don’t pay.

    People have to pay debt. The money is owed, and there is no easy way to bankruptcy. So the mortgage debt is a direct drain on the economy.

    Next up is that there “smart” money. That “smart” money might take flight, or stay where it is, but it is another drain on the economy.

    Gross Domestic Product actually means production. If a person is working to pay debt there is no incentive to work. People who don’t work never understand that. We have too many people in the world who don’t work.

    We fell behind with people who thought trading currency was actual production. The computer allowed way too many people way too much time to do financial modeling without ever seeing the consequences. We see this in food production, building housing units, trading oil, and manufacturing cars.

    All the things that our fathers saw as a status symbol, or a goal, are now more than abundant. Way too many people have way to much stuff, and yet the burden of the debt that created this abundance is now due, and payable.

    So Greece should default, get out of the Euro, take the spoils, and say good bye to the European Union, Italy, and Spain should do the same. All of Northern Africa will have to find a new system of government far removed from Europe. It’s time France, Germany, and England admit they are parasites, and form an economic system that can produce something, which they can.

    I have no idea what any of that has to do with the United States, but hey, whatever brings volitility is good for stock prices.

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  73. 73
    LocalYokel says:

    A bit beyond just the bounce, but if you want to more local urban/geographical economics:

    Wanna know why Seattle is oh, soooo special and at the same time, drives one
    with all crazy, zaniness of Seattle? And why, Bellevue is kicking Seattle’s ass?

    Read Harvard prof Ed Glaeser’s new book: “Triumph of the City”.
    New book, a bit jumpy in topics, but good solid book about urban economics and
    center city theme.

    Joel Kotkin is another fellow to read. Check out New Geography website and
    his book: “The Next Hundred Million..”
    Hated by TOD and new urbanists. Suburbia forever and center cities are not so important.

    Of course, my favorite guy, UW prof Richard Morrill and his wonderful book
    Seattle Geography. Understand political, economics, etc from a local pov.

    “Haters” need not apply or reply. :) Something that my neighbor’s “emo” kids would
    say.

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  74. 74
    MichaelB says:

    RE: Kary L. Krismer @ 56

    So, what you are saying is that sometimes people list homes at less than they are worth, because…? Is it possible that the homes would not have any buyers at a higher price?

    The fact that the banks won’t accept the price doesn’t mean it isn’t the right price /market price / real value. Did it occur to you that banks would rather hold shadow inventory so they can keep inflated assets on their books? No, I guess it didn’t…

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  75. 75
    MichaelB says:

    RE: Kary L. Krismer @ 58

    Kary, that is absolutely the most ridiculous thing I have ever heard. The global economy is so interdependent that pain in Europe will be felt around the globe and stock markets everywhere will suffer immensly! After Greece comes the rest of the Portugal, Italy, Spain, etc… USD or Treasuries maybe a different story…You must be the only person in the US that believe the collapse of Greece will be good for US stocks.

    Rate this comment: Thumb up 0

  76. 76
    Peter Witting says:

    RE: One Eyed Man @ 67 – Must provide wine coolers for Bristol, however.

    Rate this comment: Thumb up 0

  77. 77

    RE: MichaelB @ 74
    I can’t speak for Kary, but some real estate agents are known for pricing short sales at a price low enough that they know the lender will not approve a deal at that price, and that the intention is to get offers over list price. Definitely not cool, and I think that’s one of the things Hellickson got in trouble for.

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  78. 78
    expatom says:

    Tim, The seasonally adjusted index is also up. While we all know there are problems with seasonal adjustment in the CS index, it would suggest that this is more than just a seasonal bounce.

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  79. 79

    RE: Scotsman @ 68RE: CCG @ 65RE: Scotsman @ 60 – In my post I said something to the effect that depending on the scope of the fallout, it could be bullish for US stocks and bonds. My thinking was the flight to safety. They type of capital that invests in stocks and bonds has to go somewhere. If they’re invested in European stocks, they can’t just pull out of the Euro, they have to go somewhere. Here is somewhere.

    Obviously though, if the fallout is so extreme that it collapses the economy of every country in the world, then that would not be bullish for US stocks and bonds.

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  80. 80

    By MichaelB @ 74:

    RE: Kary L. Krismer @ 56

    So, what you are saying is that sometimes people list homes at less than they are worth, because…? Is it possible that the homes would not have any buyers at a higher price?

    The fact that the banks won’t accept the price doesn’t mean it isn’t the right price /market price / real value. Did it occur to you that banks would rather hold shadow inventory so they can keep inflated assets on their books? No, I guess it didn’t…

    I’ve written at least two blog pieces on the topic, and you can start at the latest one, which has links to the other earlier one (called the “second” in that piece.)

    http://www.trulia.com/blog/kary_l_krismer/2011/05/yes_agents_can_lose_their_license_by_pricing_a_short_sale_too_low

    But basically what some agents do is periodically reduce the price by significant amounts every X weeks until they get to an absurd price that there’s no way a bank would ever accept. It’s based on this theory that if a property doesn’t sell in X weeks that it’s over-priced. That’s somewhat nonsense in any case, but with short sales it’s total nonsense because of the limited market.

    Why do some agents do this? Largely I think it’s because it’s what a lot of them have been taught in clock hour courses. When I wrote the first piece I had a lot of email from a clock hour teacher supporting the system of periodic price reductions, and disputing any problem with doing that. Of course, now that the DOL has spoken, it’s pretty clear agents cannot do that, and it’s also clear that this other blog piece I wrote further back was correct too!

    http://blog.seattlepi.com/realestate/2008/10/11/beware-the-clock-hour-course/

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  81. 81

    By MichaelB @ 75:

    RE: Kary L. Krismer @ 58

    Kary, that is absolutely the most ridiculous thing I have ever heard. The global economy is so interdependent that pain in Europe will be felt around the globe and stock markets everywhere will suffer immensly! After Greece comes the rest of the Portugal, Italy, Spain, etc… USD or Treasuries maybe a different story…You must be the only person in the US that believe the collapse of Greece will be good for US stocks.

    So tell me oh wise one, if you’re holding European financial assets, just where are you going to put your wealth?

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  82. 82

    RE: Ira Sacharoff @ 77 – Exactly. My more lengthy response is awaiting moderation because it contains two links.

    Rate this comment: Thumb up 0

  83. 83
    Dirty_Renter says:

    By Chris @ 11:

    at least Scotsman gets a response. I’ve never actually posted here and had anyone respond. I guess my posts just aren’t interesting.

    Welcome to my world.

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  84. 84
    David S says:

    So let me get this straight:

    Real estate fraternity joining, Tim’s house again, non-recourse state living, respond to me please, cheerleading, headline critiquing, transformational website, negative energy exuding, to the dark side going, haters and racists, Bristol Palin’s virginity and wine coolers, Greece, us stocks and bonds, us trashuries, European economy, with a little touch of C-S stats thrown in. Seriously off topic.
    Sheriff, arrest these men.

    Rate this comment: Thumb up 0

  85. 85

    By MichaelB @ 74:

    The fact that the banks won’t accept the price doesn’t mean it isn’t the right price /market price / real value. Did it occur to you that banks would rather hold shadow inventory so they can keep inflated assets on their books? No, I guess it didn’t…

    BTW, this comment is rather naive. In any case, agents can typically recognize the properties that are under-priced, and quickly verify their suspicions by looking at the price history of the property for the tell-tale pattern. Because it is so common (as also evidenced by the feedback I received from the blog pieces), I make it a point of warning buyer clients that they cannot rely on the list price for short sales.

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  86. 86
    ARDELL says:

    “Is it possible that the homes would not have any buyers at a higher price?”

    There was a practice of reducing price every 2 weeks on short sales. Technically to “prove” that it could not be sold at a higher price. But is no buyer in 2 week’s time really realistic? The norm would be at least 30 days testing before a price reduction, and in some cases 60 days, not 14 days.

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  87. 87

    RE: ARDELL @ 86 – I would agree with a 60 day period on short sales, but more to the point, I’d price the golly thing closer to being right in the first place. If you start something at $220,000 and get to $140,000, something is wrong at one end or the other (or both), absent some new sales data.

    One of the allegations against Hellicksons though was that they were making the price changes without doing any CMAs. So the reductions they were doing allegedly weren’t based on changes in market conditions.

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  88. 88
    ARDELL says:

    RE: Kary L. Krismer @ 87

    That goes back to MichaelB’s question as to “short sale discount”. Since the median price for a short sale is about $100,000 less than that of a non-short sale…I don’t think “the standard” is AT market value. Perhaps “the comps” used for short sales…should be other short sales, to reach an “apples to apples” price expectation.

    Your opinion? Should a buyer pay the same price for a bank-owned or short sale as they would if the house were not such?

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  89. 89
    CCG says:

    By David Losh @ 72:

    RE: CCG @ 70RE: Scotsman @ 68

    So Greece should default, get out of the Euro, take the spoils, and say good bye to the European Union, Italy, and Spain should do the same.

    100% agree. More suckers and taxpayer-backed banks will be lined up to lend them money again in no time anyway.

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  90. 90
    CCG says:

    By Scotsman @ 71:

    RE: Ira Sacharoff @ 69

    Hmmmmm- he’s off to the fridge. Goat cheese- check. Feta- check. Kalamata olives- nope.

    Ack! Now I’ll be . . . priced out forever!!! ;-)

    Forget all that crap, the real question is, what’s the haggis situation? :-)

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  91. 91
    ARDELL says:

    I know this post is about April…but today’s post from Glenn on the Redfin blog is a notable addendum. Love the Title: Home Prices Stabilize And the Entire Market Grinds to a Halt

    http://blog.redfin.com/blog/2011/06/home_prices_stabilize_and_the_whole_market_grinds_to_a_halt.html

    Talk about a “short season”. I agree with Glenn BTW.

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  92. 92
    patient says:

    RE: ARDELL @ 91 -You can thank the local cheer leaders for the coming svelte pay checks. Sellers have bought the bottom is near and prices are going up propaganda and are now waiting for 2005 to return. The buyers that can be fooled have nothing to buy. This can only be resolved by sellers realizing that prices are in fact not going to sky rocket.

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  93. 93
    MichaelB says:

    RE: Kary L. Krismer @ 81

    Kary, I don’t pretend to have all of the answers and there a a lot of people smarter than me out there (who have made a lot more money than me) but I would recommend the following

    1. Buy 30-year Treasury bonds
    2. Buy the U.S. Dollar

    Buying stocks is even more risky than buying houses. “Cash is King” in a deflationary environment, which is where we are. QE1 and QE2 couldn’t even change that! Nor would QE3 or dropping money from helicopters. The debt must be paid, either through deflation or devaluation of the USD. Still the USD is the best of the worst and it is the world currency with no viable replacement.

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  94. 94
    MichaelB says:

    By ARDELL @ 88:

    RE: Kary L. Krismer @ 87

    That goes back to MichaelB’s question as to “short sale discount”. Since the median price for a short sale is about $100,000 less than that of a non-short sale…I don’t think “the standard” is AT market value. Perhaps “the comps” used for short sales…should be other short sales, to reach an “apples to apples” price expectation.

    Your opinion? Should a buyer pay the same price for a bank-owned or short sale as they would if the house were not such?

    Yes Kary, Ardell is right – You can’t have it both ways. Show us your short sale comps Kary!

    Personally, I would expect at least a 25% discount for a short sale. And another 10-15% high crime and poor schools discount. Plus another 10-15% “I must be crazy to buy in this economy” discount. The bank won’t accept it? – fine, then they can add it to their shadow inventory and I will patiently wait for the current shadow inventory real estate bubble to burst.

    When the bank accepts the first offer after a short sale is 5 days on the market, you did not get the best possible deal. Guaranteed they were high fiving each other at the bank when that one closed.

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  95. 95
    MichaelB says:

    RE: ARDELL @ 91

    Man, that guy is a perma-bear compared to Tim!

    Rate this comment: Thumb up 0

  96. 96

    By ARDELL @ 88:

    RE: Kary L. Krismer @ 87

    That goes back to MichaelB’s question as to “short sale discount”. Since the median price for a short sale is about $100,000 less than that of a non-short sale…I don’t think “the standard” is AT market value. Perhaps “the comps” used for short sales…should be other short sales, to reach an “apples to apples” price expectation.

    Your opinion? Should a buyer pay the same price for a bank-owned or short sale as they would if the house were not such?

    I’m not saying that at all. Typically it would need to be priced at a discount to what it would be if a normal sale. But at some point it is clearly too low and everyone knows it but the listing agent, because they took a clock hour course and were told to do that.

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  97. 97

    By MichaelB @ 93:

    RE: Kary L. Krismer @ 81

    Kary, I don’t pretend to have all of the answers and there a a lot of people smarter than me out there (who have made a lot more money than me) but I would recommend the following

    1. Buy 30-year Treasury bonds
    2. Buy the U.S. Dollar

    Buying stocks is even more risky than buying houses.

    Buying long term bonds in a low interest rate environment is risky, unless maybe you buy bonds of varying due dates and are willing to hold the longer term ones if necessary.

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  98. 98

    By MichaelB @ 94:

    By ARDELL @ 88:
    RE: Kary L. Krismer @ 87

    That goes back to MichaelB’s question as to “short sale discount”. Since the median price for a short sale is about $100,000 less than that of a non-short sale…I don’t think “the standard” is AT market value. Perhaps “the comps” used for short sales…should be other short sales, to reach an “apples to apples” price expectation.

    Your opinion? Should a buyer pay the same price for a bank-owned or short sale as they would if the house were not such?

    Yes Kary, Ardell is right – You can’t have it both ways. Show us your short sale comps Kary!

    Personally, I would expect at least a 25% discount for a short sale.

    In some areas that’s very realistic. The problem is when the agent gets it down to a 40% or 50% discount.

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  99. 99
    patient says:

    By MichaelB @ 95:

    RE: ARDELL @ 91

    Man, that guy is a perma-bear compared to Tim!

    Yep, definately a hater.

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  100. 100
    David Losh says:

    RE: CCG @ 89

    My point is that in forming the Economic Union there was a lot of exhuberance about a booming economy. China over shadowed what was happening in Italy, Greece, and Spain.

    The “investors” from Northern countries came into what is the vacation spots, and began building, and buying. Prices of property went up, taxes went up, tax revenue went up, and the whole thing fed off of a dream of white sand, and wine.

    Those mortgages, and the unsecured debt that came with the credit of having equity, a good job, and promises that the internet would make any location a tech center economy, became the basis for financial securities before it all happened in the United States.

    Well, all that’s left is a pile of debt.

    Italy, Greece, and Spain can self sustain. They don’t need investor dollars. You can see what is going on is South America to get a pretty good idea that these countries can self govern, and become economically independent. They just need to get rid of the Europeans.

    We can all benefit by getting rid of the Europeans. France, Germany, and England should make fair trade agreements and become viable economies without the usual something for nothing nonsense.

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  101. 101
    David S says:

    RE: David Losh @ 100 – oh good grief!

    Rate this comment: Thumb up 0

  102. 102
    David Losh says:

    RE: David S @ 1

    Been there? Seen it?

    Good Grief!

    We’re still fighting WWII.

    Rate this comment: Thumb up 0

  103. 103
    ARDELL says:

    RE: Kary L. Krismer @ 98

    LOL! Someone tell Kary that the rap singers use “hater”…not GWB. Lil’ Wayne, Jay-Z and Rihanna if you google it. Though personally I know it from Souja Boy. I recommend the Hilary Duff version for Kary. It ‘splains the Hater without any truly foul language mixed in.

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  104. 104
    David Losh says:

    RE: ARDELL @ 91

    Agree with what? He didn’t say anything. He’s looking at numbers, but he has no analysis, or opinion about the numbers.

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  105. 105
    ARDELL says:

    RE: David Losh @ 104

    You must have skimmed it…lots of opinion about the numbers, David. Most notably this:

    “If you dig into the numbers, what you see is a market grinding to a near standstill, with supply and demand both falling.”

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  106. 106
    David Losh says:

    RE: ARDELL @ 105

    I read it.

    I also know the same as anybody who is actually in the Real Estate business, and you know it too, that we are at the end of the school year when people have other things to do, like moving, or preparing for summer.

    There’s no digging into the numbers. It’s the business.

    He also goes on to make other ridiculous statements not pertaining to anything.

    The guy should find a buyer who can do something with the platform of redfin.

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  107. 107
    ARDELL says:

    RE: David Losh @ 106

    …just like we know summer comes on July 5th…but we still live in the hope that one year it might actually come…on the first day of summer. :)

    Rate this comment: Thumb up 0

  108. 108
    MichaelB says:

    RE: patient @ 99

    Yep! Hater.

    Rate this comment: Thumb up 0

  109. 109
    MichaelB says:

    By ARDELL @ 3:

    RE: Kary L. Krismer @ 98

    LOL! Someone tell Kary that the rap singers use “hater”…not GWB. Lil’ Wayne, Jay-Z and Rihanna if you google it. Though personally I know it from Souja Boy. I recommend the Hilary Duff version for Kary. It ‘splains the Hater without any truly foul language mixed in.

    Ardell, you are hilarious!

    Kary, where are those comps??? I asked you for them several hours ago.

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  110. 110

    By ARDELL @ 3:

    RE: Kary L. Krismer @ 98 – LOL! Someone tell Kary that the rap singers use “hater”…not GWB.

    Is there no limit to the scope of things you are wrong about? ;-)

    “I am not a hater. I don’t hate Kanye West,’ he [GWB] told ‘Today’ host Matt Lauer.”

    http://www.mtv.com/news/articles/1651917/george-w-bush-doesnt-hate-kanye-west.jhtml

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  111. 111

    RE: MichaelB @ 9 – What comps? I’ve agreed there’s a discount for short sales. Everyone agrees to that and I’m not even sure why you ever thought I held a different opinion. What’s the point of giving comps to prove that? That doesn’t go at all to the issue of whether some listings are grossly under-priced, and I’m not about to publicly post comps to any active or expired listing showing that because there’s an agent behind such listings.

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  112. 112
    Jonness says:

    By Kary L. Krismer @ 81:

    So tell me oh wise one, if you’re holding European financial assets, just where are you going to put your wealth?

    A default by Greece will be at least as bad as the collapse of Lehman. Did you put your money into the TBTF bank stocks when Lehman collapsed just because you needed to put your money somewhere? If so, you suffered monumental losses during the subsequent freefall of the U.S. financial system.

    Ask yourself this: everytime Greece has looked like it’s in trouble and might default, what direction have stock prices rapidly traveled? So far, it’s always been sharply down. If a true failure occurs, U.S. stocks won’t just correct sharply down; they will fall like a rock. The smart money will find a place to park, but, at least initially, it won’t be in U.S. stocks.

    And interestingly, about 99% of economists currently believe it’s not a matter of if Greece defaults, it’s when.

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  113. 113
    Jonness says:

    By ARDELL @ 91:

    Talk about a “short season”. I agree with Glenn BTW.

    Gotta love this comment to the article:

    “As always, a good read. Thanks Glenn.
    Anecdotally, 5 houses down it looks like folks are moving out, and it is shown as a June 11 foreclosure on Redfin.
    We bought an REO June 2009, spent a lot remodeling, and a recent appraisal was exactly equal to what we paid. eh. “

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  114. 114
    MichaelB says:

    By Jonness @ 112:

    By Kary L. Krismer @ 81:
    So tell me oh wise one, if you’re holding European financial assets, just where are you going to put your wealth?

    A default by Greece will be at least as bad as the collapse of Lehman. Did you put your money into the TBTF bank stocks when Lehman collapsed just because you needed to put your money somewhere? If so, you suffered monumental losses during the subsequent freefall of the U.S. financial system.

    Ask yourself this: everytime Greece has looked like it’s in trouble and might default, what direction have stock prices rapidly traveled? So far, it’s always been sharply down. If a true failure occurs, U.S. stocks won’t just correct sharply down; they will fall like a rock. The smart money will find a place to park, but, at least initially, it won’t be in U.S. stocks.

    And interestingly, about 99% of economists currently believe it’s not a matter of if Greece defaults, it’s when.

    Doh! (The smart money is buying property in Everett. ) Joness, how long does it normally take Kary to admit he’s wrong?

    …And some believe the “when” of Greece is August…So soon? Greece, we barely knew ye…

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  115. 115
    Jonness says:

    By Kary L. Krismer @ 97:

    Buying long term bonds in a low interest rate environment is risky, unless maybe you buy bonds of varying due dates and are willing to hold the longer term ones if necessary.

    Investors trade bonds on the secondary market and don’t need to hold the trade for 30 years.

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  116. 116
    ARDELL says:

    RE: Jonness @ 113

    Have you ever seen an appraisal? There is very little room to add value for a “remodel” that is about finishes like new carpet. In the grand scheme of a 30 year mortgage, carpet needs to be replaced 3 or 4 times. Finishes become out of date, usually every 8 years or less, except the builders haven’t figured out what comes after Stainless Appliances and Granite Counters. When they do…the remodel will be “outdated”.

    The Standard Appraisal form values the real estate, so if you don’t add heated, living square feet in that “remodel”…it counts very little if at all on an appraisal.

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  117. 117
    Jonness says:

    By ARDELL @ 16:

    …it counts very little if at all on an appraisal.

    Yes, but you are forgetting about the new cabinet knobs. They have to be worth at least $30K!

    As far as the granite being dated, I hear you 100%. :)

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  118. 118

    By Jonness @ 12:

    By Kary L. Krismer @ 81:
    So tell me oh wise one, if you’re holding European financial assets, just where are you going to put your wealth?

    A default by Greece will be at least as bad as the collapse of Lehman.

    Tell me, how many hours have you spent determining that? Which US entities are heavily invested in Greek assets or heavily invested in other entities which have Greek assets?

    I agree that potentially it could be just as bad or even worse than Lehman, but it could also be fairly insignificant here. My comment about the effect on the stock and bond market was expressly limited to the latter situation, and this is now the third time I’ve said that.

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  119. 119

    By Jonness @ 15:

    By Kary L. Krismer @ 97:
    Buying long term bonds in a low interest rate environment is risky, unless maybe you buy bonds of varying due dates and are willing to hold the longer term ones if necessary.

    Investors trade bonds on the secondary market and don’t need to hold the trade for 30 years.

    This is from the person who just said that a default by Greece will be the same or worse as the default by Lehman? LOL. I’m now sure that opinion is worth a lot. /sarcasm.

    WTF do you think I was talking about? If they sell a low interest rate bond at a time after interest rates have risen relative to their purchase, they will sell the bond for a much lower price. My comment was implicitly assuming that they would sell and take a loss, and expressly mentioned the option of having laddered maturities to avoid the need to sell and thereby the need to take a loss.

    The fact remains that buying bonds at this point is not a clear route to safety, unless you assume that interest rates will not rise from their historic lows. I can see how some would make that assumption, but that is an assumption you would have to make and be correct on.

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  120. 120

    RE: ARDELL @ 16 – It sounds like there are three things going on. First, some (most?) remodels will not return dollar for dollar benefit. Second, since the remodel was done, the market could have declined in that area. Third, the appraiser might not be taking condition sufficiently into account–that’s been one of my complaints both directions. Sometimes a house is really run down and it gets little adjustment down and sometimes it’s extremely nice and gets little adjustment up.

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  121. 121
    David Losh says:

    RE: Jonness @ 112

    It’s hard to sort out this mess you have going on here.

    Number one is the stock market; you are correct that volitility is good for stock investors. Stock investors have become a profit center that does nothing. We’re not really trading on the value, or worth of the compnay, we are trading on the equity, and investments of the company.

    So yes, a default by Greece would be volitile. A lot of bets would be won, and lost on both sides of the investment in stocks.

    Greece could however choose to say that the Euro was a bad idea, it is bad for the people of Greece, and go back to the Drachma . Now that would be some volitility, but it would be a prudent move. Spain, and Italy should follow. It would be the same as the end of the USSR.

    Oh, yeah, I forgot, it would negatively impact our very good Allies the French, Germans, and English.

    Well, it’s 2011, and about time the global economy stood on the merits of production rather than plunder. All of the people who orchestrated these grand financial schemes of profits before fair, and equitable, trade need to realize we are at the end of the road.

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  122. 122
    ARDELL says:

    RE: Kary L. Krismer @ 120

    “…the appraiser might not be taking condition sufficiently into account–that’s been one of my complaints…”

    How can that be “one of your complaints” Kary? There is not even a real place to value “condition” in an appraisal. Never has been in the 40ish years I’ve been reviewing appraisals. (21 in real estate and 20 in banking)

    In the grand scheme of a 30 year loan:

    1) That new roof needs to be replaced. No value given.
    2) That newly painted house needs to be repainted. No value given.
    3) Just about anything you put in will become outdated, no value given.

    Why would an appraiser, the determinant of “sufficient collateral” for the lender on a 30 year loan, add any value at all for anything that is “newer”, but won’t retain that value for the life of the loan?

    If you didn’t add square footage or a 3rd vs 5th bedroom or a 2nd vs 4th bathroom, you didn’t add “value”
    .
    A buyer may knock off ten grand because a house is dirty. That becomes “the comp”. The appraiser is not going to add any of that back in when he uses that comp for a clean home’s valuation.

    The value of “extras”, on a combined basis, should never exceed more than 10% of the value of the home without them. Upgrades are supposed to be paid for by the buyer outside of the home’s valuation process, the same as they are when a home is being built.

    The bank is not supposed to finance those “improvements” when someone buys the “improved” house. They “buckled” to the “complaints” of agents during the hot market, not because they all of a sudden “valued” the upgrades. They did it because they added an appreciation factor that they deemed would cover the “error” of adding value for condition.

    They won’t do that again…and don’t complain about it, because they are correct not to value “condition”.

    Just like “should they count a short sale or bank owned?”. Had a call a couple of years back from a client who was refinancing telling me the appraiser bypassed one of the comps to stretch out and bring in a “distressed” property as one of the comps, even though the closest comps were not. The person refinancing was furious…I thought he was a pretty smart appraiser.

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  123. 123

    By ARDELL @ 122:

    RE: Kary L. Krismer @ 120

    “…the appraiser might not be taking condition sufficiently into accountâ��thatâ��s been one of my complaints…”

    How can that be “one of your complaints” Kary? There is not even a real place to value “condition” in an appraisal. Never has been in the 40ish years I’ve been reviewing appraisals. (21 in real estate and 20 in banking)

    I’m going to have to ask if you’ve ever seen an appraisal. In the uniform appraisal reports I’ve seen “condition” follows “actual age” which follows “quality of construction.” I just looked at two and on one I saw a 15k adjustment for one comp and a 20k adjustment on one comp in the other appraisal.

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  124. 124

    By ARDELL @ 22:

    In the grand scheme of a 30 year loan:

    1) That new roof needs to be replaced. No value given.
    2) That newly painted house needs to be repainted. No value given.
    3) Just about anything you put in will become outdated, no value given.

    Why would an appraiser, the determinant of “sufficient collateral” for the lender on a 30 year loan, add any value at all for anything that is “newer”, but won’t retain that value for the life of the loan?

    You do realize that the appraiser is determining the value of the property on the date of the appraisal (or some other date specified if it’s for expert witness use), right? They aren’t determining the value of the house in five, ten or thirty years.

    A house with a roof that will last 30 years is more valuable today than a somehow identical house which has a roof which will fail in 5 years.

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  125. 125
    ARDELL says:

    RE: Kary L. Krismer @ 123

    Really? I just looked at several and the only one that adjusted for condition was the one where the stove and dishwasher were ripped out, along with anything else the foreclosed-on owner could rip out of the wall. In other words, if something is failed or missing, yes, there is an adjustment for “that” condition. “condition” doesn’t mean what you think it does. If the roof needs to be replaced right now, there will be an adjustment for condition, or more likely an outright refusal to lend at all until that is corrected. If one has a 5 year old roof and another a 12 year old roof…no adjustment for the 7 year difference.

    Again, from my comment above:

    “The value of “extras”, on a combined basis, should never exceed more than 10% of the value of the home without them.”

    That includes bigger lot, a swimming pool, a tennis court. awesome landscaping, remodeled kitchen and baths.

    While it may appear that the appraiser is valuing “condition” up or down, it is an area to “fudge in”…or not, and there are very narrow parameters on a combined basis. So adding and subtracting for individual improvements is not the norm.

    “You do realize that the appraiser is determining the value of the property on the date of the appraisal (or some other date specified if it’s for expert witness use), right?”

    NO, that is what YOU think they are doing. What they are doing is verifying sufficient collateral for a 30 year loan for the person who hired them, the lender.

    When a buyer has 50% down the job is not as difficult as when the buyer has 10% down. The appraiser’s job is not to value it as a buyer would value it TODAY. Their job is to confirm that it represents sufficient value as collateral for the lender on the loan. What % of the value the lender is forking over is of consequence, as is the term of the loan. Always has been; always will or should be, whether you see that “in writing” or not.

    Never forget WHY the appraiser, is there and who hired him. If an appraiser is hired by an Executor for Estate Tax purposes the process and valuation will not be the same as when they are hired by a lender to insure sufficient collateral for the amount being borrowed. If the buyer is putting 80% down…the appraiser can do a drive by. :)

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  126. 126

    By ARDELL @ 125:

    RE: Kary L. Krismer @ 123

    Really? I just looked at several and the only one that adjusted for condition was the one where the stove and dishwasher were ripped out, along with anything else the foreclosed-on owner could rip out of the wall. In other words, if something is failed or missing, yes, there is an adjustment for “that” condition. “condition” doesn’t mean what you think it does. If the roof needs to be replaced right now, there will be an adjustment for condition, or more likely an outright refusal to lend at all until that is corrected. If one has a 5 year old roof and another a 12 year old roof…no adjustment for the 7 year difference.

    I’m not sure I would adjust much for a 7 year difference in a 30 year roof, but that is the sort of thing I’m talking about. To the extent it’s something a buyer would adjust for (e.g. really a really nice kitchen or a shake roof in marginal condition), the appraiser should adjust for it too, because it does affect value.

    http://blog.seattlepi.com/realestate/2007/10/30/determining-value-realtor-vs-appraiser/

    This is a piece I did about 4 years ago. The subject house had a horrible kitchen, as described, which included mis-matched cabinets and at least one door made out of plywood cut with a skil-saw. One of the appraisers comps was a much older house with exposed wood similar to Tim’s house. Only a minimal adjustment for condition by that appraiser.

    BTW, to the extent you’re not seeing adjustments for condition it’s possible that the appraiser is finding sufficient comps in similar condition. There doesn’t have to be an adjustment for condition, but if you’re looking at a subject property built in 1970 with an original kitchen and another built in 1971 with a recently remodeled kitchen, there should be a significant adjustment, or better yet perhaps that comp should be thrown out entirely.

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  127. 127
    ARDELL says:

    RE: Kary L. Krismer @ 126

    This is the part where you get to say I’m “wrong” because I don’t agree with you, even though I am “right” as proven by the evidence in front of you.

    There is only one thing the appraiser needs to consider…does the house represent sufficient collateral for the amount being borrowed. The numbers are “backed in” to that equation.

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  128. 128

    By ARDELL @ 127:

    RE: Kary L. Krismer @ 126

    This is the part where you get to say I’m “wrong” because I don’t agree with you, even though I am “right” as proven by the evidence in front of you..

    Huh, what evidence are you talking about? The evidence in front of me is of standard appraisal reports having a line item for an adjustment for condition and of $15k and $20k adjustments due to condition.

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  129. 129
    ARDELL says:

    RE: Kary L. Krismer @ 26

    “BTW, to the extent you’re not seeing adjustments for condition it’s possible that the appraiser is finding sufficient comps in similar condition.”

    LOL…yeah…that must be “it”.

    Put your common sense hat on, Kary. When an underwriter calls out the appraisal at the last minute, even though “it appraised” on day 10, do you really think it’s because of “value” and “adjustments”? NO! It’s because the file is “on the fence” based on other issues like ratios and credit score and low downpayment.

    The appraisal is about collateral for the loan, not the “today buyer’s willingness to pay” value of the house.

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  130. 130
    ARDELL says:

    RE: Kary L. Krismer @ 28

    THIS “evidence”…in your own words even:

    “…that is the sort of thing I’m talking about. To the extent it’s something a buyer would adjust for (e.g. really a really nice kitchen or a shake roof in marginal condition), the appraiser should adjust for it too, because it does affect value…The subject house had a horrible kitchen, as described, which included mis-matched cabinets and at least one door made out of plywood cut with a skil-saw. One of the appraisers comps was a much older house with exposed wood similar to Tim’s house. Only a minimal adjustment for condition by that appraiser.”

    You are agreeing with me that the appraiser is not doing what you want them to do, or what you think they should be doing.

    You are agreeing with me that what they ARE doing is more in line with what I am saying they are hired to do.

    So…maybe time to reset your expectations…no?

    Ever see a 1950’s built house with brand new kitchen cabinets appraised next to a comp where they only slapped new doors on cabinets from 1950 and then attached the same granite counters on top of the old cabinets? Usually…no adjustment for “condition” by the appraiser.

    It’s about collateral…the devil is not in the details…it is in the underlying collateral support for the loan…or not.

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  131. 131

    By Jonness @ 63:

    By Kary L. Krismer @ 58:
    RE: – Depending on how widespread the fallout is on the Greece situation, it could actually be bullish for US stocks and bonds.

    If Greece fails, it will rock the financial systems throughout the world. The ensuing panic and fear will be off the charts. I can foresee how this could buoy a flight to the safety of U.S. bonds (despite our default risk), but I’m not so sure I would want to be long the stock market if this situation occurs. It seems to be a very risky strategy to me at the moment.

    To bump an idea:

    http://www.msnbc.msn.com/id/43823659/ns/business-real_estate/

    This article attributes the current low mortgage rates to money flowing out of Europe.

    To update though, I have a hard time finding another explanation for the relative strength of the stock market in light of our pending default.

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