Friday Flashback: “Give thanks that you bit the bullet”

I was just reminiscing with a friend about our old pal Elizabeth Rhodes, the Seattle Times’ former real estate reporter, when I came across this gem from July 2006, one year before Seattle homes hit their price peak, and the same month the Case-Shiller 20-city composite hit its peak: Local homes: Investments that just keep getting hotter

Forget your home being your castle. Thanks to surging local home prices, your home is now your portfolio.

How so?

Elizabeth RhodesAfter giving thanks that you bit the bullet and bought, consider this:

The median prices of King County’s detached homes and condominiums have climbed 16 percent since the first of this year — despite a growing number of homes listed for sale — leaving both the S&P 500 and the Nasdaq in the dust.

The S&P has grown a paltry 0.1 percent since January, while the Nasdaq has declined 3 percent.

Note that by this time, some cities (notably Boston and San Diego) were 9+ months into their decline, and most of the country was hitting peak pricing. Of course, that didn’t phase our buddy Ms. Rhodes or her all-too-willing cohorts in the local real estate industry:

That puts Puget Sound-area sellers firmly in control — a situation that’s increasingly more memory than reality for sellers in other parts of the country, where the housing market is cooling.

Because the Puget Sound area’s economy is strong, we’re adding buyers who can absorb higher interest rates, said O.B. Jacobi, owner and broker of Windermere Real Estate’s Wedgwood office.

Ahh, remember those days? When agents and reporters insisted that Seattle’s housing market was invincible? Good times, good times. That is of course unless you were one of the suckers that believed their tripe about “investments” and “portfolios,” destroying your financial future by purchasing a massively overpriced home at the height of the biggest real estate bubble in history.

Here’s what I had to say about this article at the time:

It’s not often that I actually laugh out loud at a news headline, but congratulations to Elizabeth Rhodes, who actually achieved that with the gem “Local homes: Investments that just keep getting hotter.”

It’s not that I don’t believe that home prices are going up—that’s an obvious fact. I just find it quite amusing that Mrs. Rhodes’ home cheerleading rhetoric seems to be getting more extreme every month. No mention of a (highly likely) stagnation or decline in housing’s near future. No mention of the insane measures that must be taken to actually pay for these “portfolios.” Barely a passing mention of the steadily increasing supply vs. decreasing demand, and only lip service to the ever-increasing difficulty that buyers are having getting into a home.

Sometimes I miss Ms. Rhodes’ reporting, just for the sheer amusement factor. I wonder what she is up to these days?

The purpose of our Friday Flashback series is to remind people why it’s never a good idea to base your home purchase decisions on the word of someone with a vested financial interest in selling as many homes as possible for as much as possible, no matter what. If you’ve got a good example of local home salespeople or other industry shills on record making fools of themselves in the years before the bubble burst, shoot me an email.
  

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.

55 comments:

  1. 1

    My favorite Rhodes story was where she was reporting on someone who was having trouble selling a condo. No mention was made that they’d only purchased a few months earlier for something like 9% less than what they were trying to sell if for. If I remember right, that was after the peak.

    I’m sure that seller was the only person in King County having trouble selling an overpriced listing. /sarc

    Rate this comment: Thumb up 0

  2. 2

    Where Was Rhoads Stands in Late 2008, After the Bubble Exploded?

    She was referencing a BECU mortgage professional on getting zero down loans by taking out one loan for 90% of the principle and another [probably at a much higher percentage rate too, IMO] for the 10% down payment….IOWs, she was laying out a plan for double mortgage payments [double nooses] to get out of a down payment. Even at that absurdity, the FICO score of the buyer had to be in the 720-800 realm in Oct 2008, as the banks were on the brink of Great Depression then, they alleged.

    http://blog.seattletimes.nwsource.com/elizabethrhodes/2008/10/23/homeowner_lacks_big_down_payme.html#more

    She never gives up does she….

    Rate this comment: Thumb up 0

  3. 3

    RE: softwarengineer @ 2 – I think her problem there was just going to someone at BECU for the answer. Probably an independent mortgage broker would be better.

    I’m not even sure 0%was gone in October 2008. It did die sometime in 2008, but later than most people think (many people thought it was gone in 2007).

    Not sure about the 90-10 comment. Usually it’s an 80/20 because that way you avoid PMI on the first. I’m not sure why anyone would do an 90/10, but first and second mortgages were common back then (something I complained about).

    Rate this comment: Thumb up 0

  4. 4
    ray pepper says:

    again I point to this as an error Tim:

    “destroying your financial future by purchasing a massively overpriced home at the height of the biggest real estate bubble in history.”

    Educated clients who bought at the height of the Bubble, that I know, are doing quite well POST BUBBLE but adjusted their “financial future” to the new playing field we have been giving.

    Do you know people Tim who have been DESTROYED? I don’t know of any. I know builders that went under and I know of many people who filed Chp 11 and Chp 7 and they are living quite well now post bubble and ALL are Home Owners or living quite well with the Cash they saved or are saving by not making their Mortgage payments…

    As posted by Jonness you WILL see ALOT more of this in coming years because the banks do NOT have a prayer :http://www.npr.org/2012/01/02/143601604/in-mortgage-crisis-some-banks-agree-to-cut-losses

    Appears to me the ONLY Losers are people who PUT down ALOT of money on their home, paid it off, or simply didn’t buy during the Bubble and saved ZERO!….

    Rate this comment: Thumb up 0

  5. 5

    RE: ray pepper @ 4

    The NPR Article You Referenced

    Gave a possible way for distressed owners to go from bank advice, but [am I missing something Ray?] I couldn’t find a single actual success story in the NPR article, just a where to go and then stopped? This always makes me suspicious of the media reference.

    Folks that walked away with credit wounds may be able to rent and save, but buy soon? My guess is probably not, and that may not be a big issue and can agree with you in this case, but to some older want-a-be buyers….let’s put it this way, when the biological clock ticks too far in the future, the baby you planned may not be possible anymore.

    Rate this comment: Thumb up 0

  6. 6
    ARDELL says:

    1st and 2nds are not always bad. Locking in a first at the conforming loan limit of $417,000 at 3.875%, and the difference as a 2nd, as example. The rate usually pops to 4.25% if you don’t do that…on the whole loan amount for 30 years. In that case a small 2nd you can pay off quickly is the better way to go, even though the rate on the smaller portion is 4.75%. Locking the 3.875% in on the bulk of the loan at $417,000 is likely better. This is true even if you are putting 20% or more down. Then you can have one 3.875% loan for the long term vs 4.25% if you don’t split the total into two loans from the getgo.

    Rate this comment: Thumb up 0

  7. 7
    ray pepper says:

    RE: softwarengineer @ 5

    I offer this to you my friend..There are MANY MANY ways to buy real estate and in the absence of GOOD CREDIT then CASH is essential…..Please do NOT let anyone tell you that they cannot buy. Homeowners SAVE like you never have before and if YOU choose to buy again the homes will be waiting when you are ready to pull the trigger….

    Rate this comment: Thumb up 0

  8. 8

    By ARDELL @ 6:

    1st and 2nds are not always bad. Locking in a first at the conforming loan limit of $417,000 at 3.875%, and the difference as a 2nd, as example. The rate usually pops to 4.25% if you don’t do that…on the whole loan amount for 30 years. In that case a small 2nd you can pay off quickly is the better way to go, even though the rate on the smaller portion is 4.75%.

    It depends on how risk adverse you are. If you want to risk being liable for 20% of the purchase price of the house after the first forecloses, then it’s not bad at all. I consider that risk totally unacceptable.

    Locking the 3.875% in on the bulk of the loan at $417,000 is likely better

    Adjusting the purchase price down so that a $417,000 loan will cover it is even better. It’s called living within your means. But between going non-conforming or getting an 80/20, non-conforming is clearly the way to go, IMHO.

    Rate this comment: Thumb up 0

  9. 9

    RE: ray pepper @ 7RE: softwarengineer @ 5 – I’m in between the two of you. Currently you can get some types of loans fairly quickly after a foreclosure or short sale. I do not recall hearing of any distinguishing between a normal foreclosure and a strategic default.

    The problem is, you don’t know what the standards will be two years from now.

    Rate this comment: Thumb up 0

  10. 10
    ray pepper says:

    RE: Kary L. Krismer @ 8

    Kary, just so you know 2nds are settling for an avg of 15% of defaulted amount. Deals on 2nds driven by consumers to WFC and Chase prior to Foreclosure have been commonplace for 18 months now.

    Gotta go ..Its BBall Tourney time!

    Rate this comment: Thumb up 0

  11. 11

    RE: ray pepper @ 10 – 15% sounds high for an average, but I’m sure they do some sort of financial review. If you’re earning a good income (e.g. doctor, dentist) or have other assets, don’t expect to get by on 15%.

    I would guess more people are filing bankruptcy than paying 15% or less. But it’s probably the same for 15% or more.

    Rate this comment: Thumb up 0

  12. 12
    ARDELL says:

    RE: Kary L. Krismer @ 8

    Kary…read that again. I think you missed something.

    The person is putting 20% down and has a loan amount left of $450,000. They take a $417,000 first at 3.875% vs a $450,000 first at 4.25%.

    Then they take the difference between the low rate conforming loan limit of $417,000 and the after 20% down full loan amount of $450,000, or $33,000 as a 2nd 4.75%. This 2nd is usually a HELOC at Prime+? so you do need to make a plan of paying off that $33,000 and not plan on carrying that small difference for 30 years. Not a huge deal if you don’t…but the best plan is to keep the $417,000 at 3.875% and get rid of the 2nd ASAP. Pay extra on the 2nd and not the first, until the 2nd is gone.

    Rate this comment: Thumb up 0

  13. 13

    RE: ARDELL @ 12 – I didn’t see those numbers discussed, but a $33,000 liability is still pretty significant. So it’s just a matter of amount, the possibility of liability is still the same.

    Of course it would depend on their current income.

    Rate this comment: Thumb up 0

  14. 14
    MichaelB says:

    By ARDELL @ 12:

    RE: Kary L. Krismer @ 8

    Kary…read that again. I think you missed something.

    The person is putting 20% down and has a loan amount left of $450,000. They take a $417,000 first at 3.875% vs a $450,000 first at 4.25%.

    Then they take the difference between the low rate conforming loan limit of $417,000 and the after 20% down full loan amount of $450,000, or $33,000 as a 2nd 4.75%. This 2nd is usually a HELOC at Prime+? so you do need to make a plan of paying off that $33,000 and not plan on carrying that small difference for 30 years. Not a huge deal if you don’t…but the best plan is to keep the $417,000 at 3.875% and get rid of the 2nd ASAP. Pay extra on the 2nd and not the first, until the 2nd is gone.

    First of all, don’t understand why anyone would be taking on that much debt in the current economy as the leverage is going to be a killer when prices drop at least 20% more, meaning the person has lost 100% of their investment. Secondly, a person buying a $450,000 home should have a (very stable) income of at least $150k and plan to pay it off within 15 years. With an income of $150k, they shouldn’t they be able to save at least 20% down? Otherwise, you seem to be recommending that they make a poor financial decision. There are plenty of homes at $350k and there will be many, many more in the future…

    Did you know that mortgage debt is actually the cause of the current economic crisis and we are now in a period of debt deflation? Yet you are recommending someone take on a huge amount of debt? Why?

    Rate this comment: Thumb up 0

  15. 15
    ARDELL says:

    RE: MichaelB @ 14

    Not sure why you and Kary aren’t getting this. Maybe because I didn’t put the Purchase Price, but I clearly said they DO have 20% down.

    The Price is $562,500. The loan is $450,000 AFTER the downpayment. One $450,000 loan = 4.25%. One $417,000 loan is 3.875%. The conforming loan limit is $417,000 and to get the best rate, the loan can’t be over that amount. Why take a higher rate on the whole $450,000?

    As to not understand why people buy homes at that price…what can I say. The median price where I work is $500,000. There aren’t any $100,000 houses where I work. given the “median” price is $500,000, there would be a lot of $417,000 loans, even with 20% or more down. Median in that half sell for more and half sell for less. That’s a whole lot of houses selling for more than $500,000.

    Rate this comment: Thumb up 0

  16. 16
    Feedback says:

    Congratulations on outsmarting Elizabeth Rhodes of the Seattle Times, Tim!

    Rate this comment: Thumb up 0

  17. 17
    ARDELL says:

    Disclosure: I gave Kary a thumbs up by accident. Please disregard.

    Rate this comment: Thumb up 0

  18. 18
    Joem says:

    By Feedback @ 16:

    Congratulations on outsmarting Elizabeth Rhodes of the Seattle Times, Tim!

    Congratulations on outsmarting Tim, Feedback!

    Your type of comment seemed amusing the first couple of times but if Tim enjoys collecting vintage hustle what’s the harm, really? I have to admit the optimistic bull of Rhodes seems quaint and a little warming on a cold January night, two oh one two.

    Rate this comment: Thumb up 0

  19. 19
    MichaelB says:

    RE: ARDELL @ 15

    Hi Ardell,

    For some reason I wasn’t able to edit the post once I realised that they actually did have the 20% down….

    Still, that is a lot of debt to take on during very uncertain times. And a second mortgage right out of the box to save a few dollars? That seems like a bad start. Kind of like getting married in Las Vegas by Elvis.

    Rate this comment: Thumb up 0

  20. 20
    Jonness says:

    By ray pepper @ 7:

    Please do NOT let anyone tell you that they cannot buy. Homeowners SAVE like you never have before and if YOU choose to buy again the homes will be waiting when you are ready to pull the trigger….

    As far as I know, the waiting period to qualify for a Fannie mortgage is 2 years after a short sale. There’s nothing quite like withdrawing massive equity after having put $0 down, getting a year’s free rent, agreeing to short sale the home, renting for a couple of years, and then starting the process all over again. It’s accidental genius at the expense of the responsible, and it’s working out great for these folks. :)

    Rate this comment: Thumb up 0

  21. 21
    MichaelB says:

    By ARDELL @ 17:

    Disclosure: I gave Kary a thumbs up by accident. Please disregard.

    No wonder Kary has that funny look on his face!

    Rate this comment: Thumb up 0

  22. 22
    Jonness says:

    By ARDELL @ 15:

    As to not understand why people buy homes at that price…what can I say. The median price where I work is $500,000. There aren’t any $100,000 houses where I work. given the “median” price is $500,000, there would be a lot of $417,000 loans, even with 20% or more down. Median in that half sell for more and half sell for less. That’s a whole lot of houses selling for more than $500,000.

    Ardell. I get what you are saying, and it seems a good tactic if you can afford it and are determined to buy. Out of curiosity, could you estimate the median income of people who buy these $500,000 homes and how much they put down? I’d like to know what the typical debt load most people are taking on in your area is.

    28% of a $150K income is $3500/mo, which buys a lot of house if you have $100K or so to put down. But how many people are actually doing this? At $150K income, $2500/mo seems like the upper limit of safety to me. Since I don’t tend to represent the majority opinion on anything I do, I’m not a good judge of the median comfort zone.

    Rate this comment: Thumb up 0

  23. 23
    ARDELL says:

    RE: Jonness @ 22

    $200,000 with 20% or 25% down as the norm. Usually 20%, and they have other money. They just use enough of their money to get rid of the PMI. Plenty left in reserves usually. Also many keep their former condos and townhomes as rental properties, having paid the mortgage down or off completely before buying a home. So they have that extra income too.

    Sometimes one income at $150,000, but more often two incomes totaling $200,000 split fairly evenly. $95,000 plus $105,000 as example. When it is one income, usually the other spouse is only not working temporarily for one reason or another, but plans to work during the life of the loan. Sometimes after the kids are all in school.

    Many if not most buying for less than the lender would allow in qualifying them.

    This for a $650,000 home give or take. At a million or more sold price, I don’t usually know the client’s income, because I don’t need to help them with financing issues.

    P.S. This has not changed in recent times and was the protype even during the bubble years. That is why those areas do not have a deluge of short sales and foreclosures. People weren’t buying zero down back when they could. They didn’t change recently to this pattern.

    Also why home prices have not dropped as much in these areas. The backing was more financially stable and with fewer short sales and foreclosures…the prices haven’t dropped nearly as much as in areas with a larger % of foreclosures.

    Rate this comment: Thumb up 0

  24. 24
    ARDELL says:

    RE: MichaelB @ 19 – –

    Why would you view one $450,000 mortgage as “better than” two, one being $417,000 and the other $33,000. It’s the same debt load.

    Who knows how long 3.875% is going to be around. Why not lock the bulk of it in at $417,000? By the way, I only recommend this when the person has enough extra income to pay off the 2nd within three years. Sometimes within 12 months.

    I’d rather see them keep sufficient reserves after closing than drop it all on the house. Most can pay the extra $33,000 now, but it would leave them short in other types of savings and investments, like their children’s college funds. They could borrow it from the kids college funds…but usually that is not recommended for tax reasons.

    They could wait to buy a house…but the fear of higher interest rates often makes this the better plan IF the right house is available now…which is often not the case.

    Rate this comment: Thumb up 0

  25. 25

    By MichaelB @ 14:

    By ARDELL @ 12:
    RE: Kary L. Krismer @ 8

    Kary…read that again. I think you missed something.

    The person is putting 20% down and has a loan amount left of $450,000. They take a $417,000 first at 3.875% vs a $450,000 first at 4.25%.

    Then they take the difference between the low rate conforming loan limit of $417,000 and the after 20% down full loan amount of $450,000, or $33,000 as a 2nd 4.75%. This 2nd is usually a HELOC at Prime+? so you do need to make a plan of paying off that $33,000 and not plan on carrying that small difference for 30 years. Not a huge deal if you don’t…but the best plan is to keep the $417,000 at 3.875% and get rid of the 2nd ASAP. Pay extra on the 2nd and not the first, until the 2nd is gone.

    First of all, don’t understand why anyone would be taking on that much debt in the current economy as the leverage is going to be a killer when prices drop at least 20% more, meaning the person has lost 100% of their investment. Secondly, a person buying a $450,000 home should have a (very stable) income of at least $150k and plan to pay it off within 15 years. With an income of $150k, they shouldn’t they be able to save at least 20% down?

    First of all, the 20% down from here is merely your opinion, and many people don’t share your opinion. In addition though, they simply may not care. If you have no plans of selling for 10 years, you really don’t care what short term prices might do.

    Second, I agree with the concept of your second point, although perhaps not the numbers. I could even agree with Ardell’s point at lower dollar amounts. If someone was only $1,000 short I could almost see them taking a credit card advance to stay at 80%. The only thing is if they were only that short, I would wonder how close they were cutting their cash flow needs.

    Rate this comment: Thumb up 0

  26. 26

    By ARDELL @ 15:

    RE: MichaelB @ 14 – Not sure why you and Kary aren’t getting this. Maybe because I didn’t put the Purchase Price, but I clearly said they DO have 20% down.

    As to not understand why people buy homes at that price…what can I say. The median price where I work is $500,000.

    It’s not the percent down I have a problem with. It’s the second mortgage. As you very well know, that creates additional liability. If it were me, I’d pay more per month to have a single mortgage or buy a cheaper house. Note that when I did my survey several years ago of people buying over $1M, many of them kept their loans below the conventional limit. I’m not sure any of them used a first and a second.

    This does remind me though of back when they made PMI deductible again, back in 2008, or whenever. I asked a loan officer if that would lead people away from 80/20 loans, which were still very popular at the time. He gave me a blank look. He couldn’t understand why someone would opt for higher payments.

    Rate this comment: Thumb up 0

  27. 27

    By ARDELL @ 24:

    RE: MichaelB @ 19 – – Why would you view one $450,000 mortgage as “better than” two, one being $417,000 and the other $33,000. It’s the same debt load.

    I really can’t believe you are saying that.

    In the past we’ve argued about the liability on a second mortgage after a first forecloses. You simply wanted there to be no remaining liability after a first foreclosed, but then the state Supreme Court shut you down on that, so you reverted to the position that the situation might be different if the first and the second are with the same lender.

    It’s not the same exposure, and you are well aware of that based on our prior arguments and your familiarity with the Supreme Court decision.

    Rate this comment: Thumb up 0

  28. 28
    Jonness says:

    By ray pepper @ 4:

    As posted by Jonness you WILL see ALOT more of this in coming years because the banks do NOT have a prayer :http://www.npr.org/2012/01/02/143601604/in-mortgage-crisis-some-banks-agree-to-cut-losses

    And don’t worry if you lose your job, because it automatically qualifies you for a one-year free ride (at the expense of the responsible). :)

    http://www.latimes.com/business/la-fi-0107-freddie-loans-20120107,0,3769966.story

    Rate this comment: Thumb up 0

  29. 29
    MichaelB says:

    RE: Kary L. Krismer @ 25

    “First of all, the 20% down from here is merely your opinion, and many people don’t share your opinion.” Kary, that is merely your opinion!

    “In addition though, they simply may not care. If you have no plans of selling for 10 years, you really don’t care what short term prices might do.” Kary, this is merely your opinion and it is a lot of nonsense! People are going into debt for 30 years to buy a house and they don’t care if it drops in value by 20% over the next 5 years -making them debt slaves? Right…

    Rate this comment: Thumb up 0

  30. 30
    Pegasus says:

    RE: Jonness @ 28 – Wow! Was unaware of that.

    “And don’t worry if you lose your job, because it automatically qualifies you for a one-year free ride (at the expense of the responsible). :)”

    Er….losing your job does not make you any less responsible. Do you think if someone gets a debilitating illness through no fault of their own that they are irresponsible too?

    Rate this comment: Thumb up 0

  31. 31

    By MichaelB @ 29:

    RE: Kary L. Krismer @ 25

    “First of all, the 20% down from here is merely your opinion, and many people donâ��t share your opinion.” Kary, that is merely your opinion!

    No, that is fact. Google the definitions of opinion and fact if you don’t understand the difference.

    “In addition though, they simply may not care. If you have no plans of selling for 10 years, you really donâ��t care what short term prices might do.” Kary, this is merely your opinion and it is a lot of nonsense! People are going into debt for 30 years to buy a house and they don’t care if it drops in value by 20% over the next 5 years -making them debt slaves? Right…

    Again, if they’re not planning on selling for 10 years, it’s pretty irrelevant what it’s worth in 5 years.

    The flip side of that are the people who bought in 2000 and are trying to sell in 2012. It’s pretty irrelevant what the gain on their house was in 2007.

    Rate this comment: Thumb up 0

  32. 32

    By Pegasus @ 30:

    Er….losing your job does not make you any less responsible. Do you think if someone gets a debilitating illness through no fault of their own that they are irresponsible too?

    You don’t even need to get that extreme. You could have someone lose their job because of a change in boss, where the boss doesn’t like them for some reason totally unrelated to job performance. Washington is an at will state for employment.

    Rate this comment: Thumb up 0

  33. 33
    MichaelB says:

    RE: Kary L. Krismer @ 31

    Google “arrogant” – I believe you’ll see your picture. Thats an opinion too!

    And prices ARE going to drop by 20% from here. That’s a fact!

    Rate this comment: Thumb up 0

  34. 34
    ARDELL says:

    RE: Kary L. Krismer @ 25

    “If someone was only $1,000 short I could almost see them taking a credit card advance to stay at 80%.”

    Kary…that is against “the rules” of underwriting. You are not allowed to use borrowed funds to buy a house as part of the Downpayment or monies toward closing costs.

    What may seem practical to you from a legal and common sense standpoint, does not necessarily work in Real Estate Transactions. Borrowing part of the money needed to close has been against the rules since I was a little girl…which was a VERY long time ago. :)

    Rate this comment: Thumb up 0

  35. 35
    whatsmyname says:

    By Kary L. Krismer @ 32:

    By Pegasus @ 30:
    Er….losing your job does not make you any less responsible. Do you think if someone gets a debilitating illness through no fault of their own that they are irresponsible too?

    You don’t even need to get that extreme. You could have someone lose their job because of a change in boss, where the boss doesn’t like them for some reason totally unrelated to job performance. Washington is an at will state for employment.

    Many thousands of productive people have lost their jobs because a six times removed executive who doesn’t have any opinion on them at all realized he could pad his bonus by millions before the damage is ever noticed. Pointing this out will only make you unpopular with libertarian fundamentalists who believe these people should have been more selective in choosing their employer. Blame always runs one way with the kiss-up, kick-down set.

    Rate this comment: Thumb up 0

  36. 36

    By MichaelB @ 33:

    RE: Kary L. Krismer @ 31

    Google “arrogant” – I believe you’ll see your picture. Thats an opinion too!

    And prices ARE going to drop by 20% from here. That’s a fact!

    Why don’t you tell us who will be President in 2013, and what the price of Microsoft stock will be.

    Maybe you should also look up the word delusional.

    Rate this comment: Thumb up 0

  37. 37

    RE: ARDELL @ 34 – Sorry. I was just addressing borrowing a small amount of money. When I wrote that I was thinking that doing that with a HELOC would be cost-prohibitive, so I changed it to a credit card loan. But I was just thinking about the cost of setting up the loan. Maybe it would be worth getting a HELOC and borrowing only $1,000 it to save the PMI. You could always keep the HELOC afterward too, so it’s not like the setup cost would be totally wasted.

    The point I was trying to make is that for a second to make any sense it has to be a relatively nominal amount. It has to be an amount that if the house does end up being foreclosed, the buyer’s only real option is to declare bankruptcy.

    Rate this comment: Thumb up 0

  38. 38

    RE: whatsmyname @ 35 – I would agree. I would also note that employers change over time (mergers, new management, etc.), so the whole concept of being good at choosing your employer is only sometimes relevant for a short period of time.

    Rate this comment: Thumb up 0

  39. 39
    MichaelB says:

    RE: Kary L. Krismer @ 36

    1. Obama
    2. Less than it’s worth today

    Will be interesting to see where the Seattle housing market is in 12 months….

    Rate this comment: Thumb up 0

  40. 40
    MichaelB says:

    RE: Kary L. Krismer @ 36

    Kary, I believe you are referring to a condition you are suffering from “Delusions of Grandeur”

    Rate this comment: Thumb up 0

  41. 41
    whatsmyname says:

    By Kary L. Krismer @ 38:

    RE: whatsmyname @ 35 – …. I would also note that employers change over time (mergers, new management, etc.), so the whole concept of being good at choosing your employer is only sometimes relevant for a short period of time.

    Quite so, but not something considered by the eedjits in question.

    Rate this comment: Thumb up 0

  42. 42
    Jonness says:

    By Pegasus @ 30:

    Do you think if someone gets a debilitating illness through no fault of their own that they are irresponsible too?

    No. But why can’t you separate the sick and dying from the other 99% of the recently unemployed? I suspect the bailout program would be about 99% cheaper that way.

    Interestingly, when I spent a decade of my life on my death bed unable to work, I don’t recall you being there to bail me out. Then again, neither was anyone else. Any chance you could spare a little scratch now in order to make up from your oversight? :)

    Rate this comment: Thumb up 0

  43. 43
    Jonness says:

    By Kary L. Krismer @ 31:

    flip side of that are the people who bought in 2000 and are trying to sell in 2012. It’s pretty irrelevant what the gain on their house was in 2007.

    The better question is, will people who bought in 2000 lose money when selling in 2015 after adjusting for inflation and adding in the 10% it costs to sell? 15 years of wishful thinking, only to take a loss. What a drag.

    The historical symmetry of bubbles is fascinating. Check out the nearly perfect right and left symmetry centered at the peak of the yellow line in the here and now (price to income). This doesn’t bode well for the future.

    http://housingcorrection.com/images/seattlepricestudy.jpg

    Rate this comment: Thumb up 0

  44. 44

    By MichaelB @ 39:

    RE: Kary L. Krismer @ 36

    1. Obama

    Well now I understand your pessimistic 20% down prediction. I assume you don’t like Obamacare and President Obama’s bi-polar economic policies either! :-D

    2. Less than it’s worth today

    I haven’t been following the price movement of the stock, so perhaps this is already built in, but I think MSFT has two things going for it right now. 1. Large entities are finally abandoning XP for Win7. 2. Consumers and smaller entities will be interested in Win8, both on the desktop, but also perhaps on tablets.

    Rate this comment: Thumb up 0

  45. 45

    RE: Kary L. Krismer @ 37
    Hold on a minute. In post 17, Ardell gives Kary a thumbs up. In post 37, Kary apologizes to Ardell. Next thing you know, American sailors will rescue Iranian fisherman. Palestinians and Israelis will go square dancing together. Mitt Romney will be thought of as a guy who sticks firmly to his convictions.

    Rate this comment: Thumb up 0

  46. 46
    Pegasus says:

    RE: Jonness @ 42 – Ah you are twisting my point. My point was you were implying that those that lost their jobs in a global economic collapse were not responsible people and I used the illness example to see if there was anything unfortunate that happened to people that did not make them automatically irresponsible citizens in your eyes.

    “And don’t worry if you lose your job, because it automatically qualifies you for a one-year free ride (at the expense of the responsible). :)”

    Rate this comment: Thumb up 0

  47. 47

    RE: Ira Sacharoff @ 45 – In that vein, I just read a story about how the lull in American drone attacks is hurting Pakistan, with more terrorist attacks. Pretty soon, Pakistan will come begging us to attack them!

    Rate this comment: Thumb up 0

  48. 48

    RE: Pegasus @ 46RE: Ira Sacharoff @ 45 – And I agree with Pegasus! Dam you Jonness! ;-)

    [Edit: The sensor mechanism makes that look much worse if I spell the word right.]

    Rate this comment: Thumb up 0

  49. 49
    ARDELL says:

    Kary @37 said: “It has to be an amount that if the house does end up being foreclosed, the buyer’s only real option is to declare bankruptcy.”

    Can you explain that? Why would you want “the buyer’s only real option” to be to declare bankruptcy? How is that a good thing?

    Rate this comment: Thumb up 0

  50. 50
    whatsmyname says:

    RE: Jonness @ 42
    You spent a decade on your death bed?
    And that is in the past?
    Where exactly are you writing from?

    Rate this comment: Thumb up 0

  51. 51
    Jonness says:

    By Pegasus @ 46:

    RE: Jonness @ 42 – Ah you are twisting my point. My point was you were implying that those that lost their jobs in a global economic collapse were not responsible people and I used the illness example to see if there was anything unfortunate that happened to people that did not make them automatically irresponsible citizens in your eyes. “

    Actually, you are twisting my point. I said that responsible people will have to pay for the nation’s unemployed. Nowhere did I say that unemployed people are necessarily irresponsible. I only indicated that responsible people are always expected to pick up the government debt tab whether they want to or not. As an IT manager, I’ve interviewed both types during this economic downturn. Either way, I don’t want to make your house payment for you if you lose your job. In return, I don’t want you to have to make mine either. I’d much rather see the country balance it’s budget and return to economic prosperity.

    Rate this comment: Thumb up 0

  52. 52
    Jonness says:

    By whatsmyname @ 50:

    RE: Jonness @ 42
    You spent a decade on your death bed?
    And that is in the past?
    Where exactly are you writing from?

    I fell ill, and doctors could not figure out what was wrong with me or how to treat my illness. In hindsight, they were an extreme hindrance to uncovering the truth.

    Through heII, highwater, and an intense amount of study, I managed to figure out my own treatment protocol.

    Once healthy, I returned to school, got a CS degree, and started a new career. It’s been a wild ride.

    I’ve been working since late 2005 and saving a down payment for a new house most of that time due to having the good fortune of feeling strongly that prices would decline in the future. I almost pulled the trigger a few times along the way, and I could do so at any moment. For me, it’s not about completely maximizing profit. I just didn’t want to lever in right out of school and lose hundreds of thousands right off the bat. But I must admit, it’s difficult to pull the trigger knowing that house prices have not finished unwinding. Also, since I nailed together a small house while attending college that is now completely paid for, I don’t absolutely need to move.

    Rate this comment: Thumb up 0

  53. 53
    Jonness says:

    By Kary L. Krismer @ 48:

    RE: Pegasus @ 46RE: Ira Sacharoff @ 45 – And I agree with Pegasus! Dam you Jonness! ;-)

    Since taking my first statistics course and seeing a curve of intelligence, I’ve been of the opinion democracy rewards the mainstream at the expense of the deeper thinking. And once the mainstream votes in failed policies, due to retaining majority control, it takes many generations of idea die-off before the problems can be resolved.

    http://www.iqcomparisonsite.com/Images/NormalCurveSmall.gif

    Thus, one must seriously question his beliefs whenever they align with the majority opinion. Otherwise, you can easily wind up unknowingly supporting the witch burnings of your generation, and future generations loath to look back upon your decisions. IMO, it’s not always wrong to believe as others do, but in no circumstance should you ever feel comfortable and complacent while doing so.

    Rate this comment: Thumb up 0

  54. 54
    Scotsman says:

    RE: Kary L. Krismer @ 44

    Here’s the 5 year chart for MSFT. I think we call that kind of performance “flat to down,” and that’s before inflation adjustments. MSFT is dead, waiting to be rolled into the hole. They lost their identity and drive years ago when BG stepped down. Apple will follow this same path. Lots of money and lots of talent are a poor substitute for drive and vision.

    http://finance.yahoo.com/echarts?s=MSFT+Interactive#symbol=msft;range=5y;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=;

    Rate this comment: Thumb up 0

  55. 55
    MichaelB says:

    By Scotsman @ 53:

    RE: Kary L. Krismer @ 44

    Here’s the 5 year chart for MSFT. I think we call that kind of performance “flat to down,” and that’s before inflation adjustments. MSFT is dead, waiting to be rolled into the hole. They lost their identity and drive years ago when BG stepped down. Apple will follow this same path. Lots of money and lots of talent are a poor substitute for drive and vision.

    http://finance.yahoo.com/echarts?s=MSFT+Interactive#symbol=msft;range=5y;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=;

    Kary, please take note. One down and two to go.

    Rate this comment: Thumb up 0

Leave a Reply

Use your email address to sign up with Gravatar for a custom avatar.
Your email address will not be published.

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Please read the rules before posting a comment.