By The Tim on March 12, 2012
Here is your open thread for Monday March 12th, 2012. You may post random links and off-topic discussions here. Also, if you have an idea or a topic you’d like to see covered in an article, please make it known.
Be sure to also check out the forums, and get your word in the user-driven discussions there!
Posted in Open Thread | Tagged open_thread
Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.
Even My 292 Hp 31.5 MPG [Hwy] Vehicle
Burns $8 every time I drive it about 60 miles.
And this high fuel cost doesn’t impact the rest of the Seattle economy, real estate sales included? If Americans weren’t living from paycheck to paycheck before gas went up, the impact could be mitigated, but that isn’t reality in Seattle.
http://seattletimes.nwsource.com/html/localnews/2017730436_apwagasprices.html?syndication=rss
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Feb 2012 Investment Report
Most of the cash made in the last couple months was in stock equities.
G F C S I
Feb 0.12% 0.05% 4.34% 3.99% 5.14%
YTD 0.25% 0.93% 9.03% 11.88% 10.77%
Last 12 mo 2.24% 8.48% 5.16% 2.16% (7.68%)
G= Long-term CD
F= Long-term Bond
C= American Stocks
I and S= Foreign Stocks
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Anyone else seeing the market frenzy like it was before or during the boom?
It seems like a lot of friends and coworkers are all of a sudden making offers or buying houses. It has been quiet for the last three or so years, up until now that is.
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RE: softwarengineer @ 1 -
Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2012/03/09/BU5P1NIK3K.DTL#ixzz1ouxRN3yZ
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2011 Prius purchased in new in November 2011 for $22,000 plus tax. .9% financing. I needed a new vehcile as 1994 Toyota had 315,000 miles on it.
Went to Cabela’s in Lacey yesterday with the kids just to check it out. 53mpg round trip.
The Prius “only” gets 37mpg on my wife’s 5 mile each commute. I attribute this to warm up/short trip. I walk.
I am so glad we didn’t fall into the new parent/SUV/Van trap.
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http://online.wsj.com/article/SB10001424052970203918304577243733524891636.html
“Are Real Estate Agents Dinosaurs?”
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RE: SeattleJo @ 3 – I have heard this more often in the past 6 weeks than I have in the past 2 years… people are looking, not so much buying but they would if they found something reasonable.
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http://www.nytimes.com/2012/03/09/business/mbia-and-an-industrys-failure-to-trust-but-verify.html?_r=2&ref=business
“MBIA asked the New York Insurance Department, now part of New York’s Department of Financial Services, for permission to split into two units. One would have just the dubious business — known as structured finance — including securities backed by home mortgages and the even riskier C.D.O.’s that are backed by securities that in turn are backed by mortgages.
[snip]
Eric R. Dinallo, the state insurance commissioner at the time, approved the transaction on Feb. 17, 2009, without having held any hearings or even notifying the public that the idea was under consideration. The beneficiaries of those insurance policies — largely banks and hedge funds that owned the structured finance securities — promptly sued in both state and federal court to overturn the approval.
More than three years later, it appears that one of those cases will go to trial in May in New York Supreme Court in Manhattan. If it does, it will be the first major civil case from the financial crisis to go to trial.”
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RE: ChrisM @ 6 – That’s actually a good example of something I’m discussing with Doug in an old thread.
There they claim that the reduction of NAR members from 2006 to today is due to technology making it easier for people to do it themselves. Of course, nothing else has happened between 2006 and today which would have caused such a decline. ;-)
I do find it ironic that a newspaper reporter would refer to another profession as being a dinosaur. Also a bit funny that the opinion of one person becomes a newspaper article. That’s not even worth a blog piece.
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As a decades long-time WSJ subscriber, I let my subscription lapse a couple of years after Murdoch took over. The quality of WSJ articles has since plummeted. A true pity.
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RE: ChrisM @ 10 – Wow, it’s gone down? I haven’t followed them for probably 5 years but before then I found them to be the least credible of the financial news entities.
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(Reuters) – Bank of America NA prevented homeowners from receiving mortgage-loan modifications under a federal program in order to avoid millions of dollars in losses while benefitting from financial incentives for participating in the program, according to a complaint unsealed in federal court Wednesday
http://market-ticker.org/cgi-ticker/akcs-www?post=203252
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RE: ChrisM @ 10 – Absolutely agree. Did the exact same for the exact same reasons.
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RE: Blurtman @ 13 – RE: Kary L. Krismer @ 11 – RE: ChrisM @ 10 – The Wall Street Journal. Bringing People Together.
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What recovery looks like: NOT!
http://www.zerohedge.com/sites/default/files/images/user20289/imageroot/2012/02/GPC%203-12-2.png
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RE: Scotsman @ 15 –
What’s Interesting Scotsman
The labor force reduction occurred during the Bush/Obama terms; neither Dem or Rep can be entirely blamed, albeit the escalating downward trend in employment participation came when Obama went on board.
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RE: Kary L. Krismer @ 4 –
Its Like the Foreclosure Data
We use this small percent of foreclosed homes and and compare it to the majority homes not for sale and it looks benign, if we compare it to the equally small percent of homes listed for sale and its horrifying then [about 50% the size].
5% for gasoline consumption? Let’s see we drive an avg 15K miles per year per car, divide 20 mpg (avg hwy and city combined)= approx $3000 worth of gasoline per year ($250/mo)per avg car in use now. Figure $18/hr avg Wash St per capita wage,….I get closer to 10% of avg per capita net pay and I’m showing how I calculated it. Then I include food cost increases, which is related to gas cost increases. Gee, now its more like 30% Kary, the two together….not in our CPI calculation though…..that makes it unimportant.
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RE: softwarengineer @ 17 – The article I linked to is a bit sloppy in what it’s referring to, but I suspect it’s not per capita data. It’s probably family income and family expenses.
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The readers’ comments are priceless. And when did Yahoo lay off their editors?
Underwater and locked in
Jose, 47, hoped to build a life with his wife Maria, 43, and three children in Phoenix, Arizona where he took a new job at a plastic bag factory in 2007.
Unfortunately, he was unable to sell a home he and his wife bought in 2002 in La Puente, California, six hours away by car. After five years of frustration, Jose moved back there in September to take a lower-paying job at a factory he had previously worked at.
Like many of their neighbors in La Puente, a community of about 40,000 located 15 miles from downtown Los Angeles, they are “underwater,” which means they owe more than their home is worth.
The couple bought the home for $415,000 and later took out a $65,000 second mortgage. Today, Maria and Jose owe $245,000 more than their home is worth (which is $235,000) and have a loan to value ratio of 204%.
http://finance.yahoo.com/news/underwater-locked-130036830.html
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RE: Blurtman @ 19 –
And How Much of This is Type of Buyer is the Massive Current “Shadow Inventory” of FC Stock?
I’d guess, a lion’s share….I’d also add, if a neighbor is paying no mortgage payment [basically squatting in the home] for years, do you think they’d admit it to the other neighbors?
Do you also think the banks will give us a clear picture of this type of shadow inventory impact in Seattle, lest it cause massive price plummetting in 2012?
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RE: SeattleJo @ 3 –
Agree it seems like there is more interest lately. The two best homes in the area we’re looking at to have come on in the last month both went in a matter of days, one went pending within 2 days after getting listed on a Wednesday. Then again there are a lot of things that have also come on and not gone anywhere so I think it is still right that there are a lot of people looking but not necessarily enough of them to get into a situation where people are chasing after garbage yet.
I do wonder when that type of activity, where houses come on and are gone before you can even go see them at an open on the weekend after they get listed, will start to impact more buyers. When you only look at the speed at which reasonably priced homes in good condition sell things feel very crazy and its hard to step back and remember all the overpriced garbage that isn’t going anywhere.
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RE: softwarengineer @ 20 – Don’t know. But I think it is a slippery slope to define want to sell but can’t as “shadow inventory.” If that is the case, than everyone who would sell if a certain price were offered would be shadow inventory. I would sell for $20 million but no one would offer that price. Is my home shadow inventory?
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Justice at last – hmm, but doesn’t a judge have to approve this first?
http://nationalmortgagesettlement.com/
And of course, no laws were broken: “WHEREAS, Defendant, by entering into this Consent Judgment, does not admit the allegations of the Complaint” (from the Wells settlement; I’m sure the others have the same language)
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http://www.subprimeshakeout.com/2012/03/servicers-behaving-badly-an-insiders-perspective-on-the-root-cause-of-this-recurring-problem.html
“These experiences with servicers have led me to believe that the current mortgage market meltdown, documentation deficiencies, robosigning and related foreclosure problems all stem from the same cause: the complete collapse of any regime of internal controls at mortgage originators, sellers and servicers resulting from a misalignment of incentives. Once the loan underwriter sells all of its originations, and expects to do so in the future, it concludes that it can do without the internal control provided by things like underwriting guidelines. In fact, it finds that it can dispense with all of its former internal controls, which only cost it money.
Once all internal controls are dispensed with, management and employees pursue the incentives given them by the owners, and you get the fiasco in the mortgage markets we are living with today.”
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RE: Kary L. Krismer @ 14 – I’ll pile on too. I switched out for the Financial Times two years ago myself. The WSJ has turned into a joke, not unlike Forbes.
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RE: ChrisM @ 23 – Kill the bankers.
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A reader’s response to: Principal Reductions Averaging $100,000?
Though clearly in the minority, some us were stupid enough to be responsible and only buy a home we could afford and actually pay down our mortgage principal by making extra payments when we could afford it. We never took out HELOC’s to buy plasma TV’s, Hummers, or take expensive vacations.
When we bought, we were punished with higher home prices due to artificial demand caused by Greenspan’s cheap money, rampant speculation, NINJA’s, home ‘flippers’ and profligate lenders.
When the bubble burst, we paid to bail-out the bankers; we paid to bail-out the unemployed with extended benefits; we lost equity in our homes when housing prices collapsed; but we kept on making our monthly payments and acted responsibly; choosing to honor our contractual commitments rather than walking away or staying ‘free’ until the foreclosure process evicted us.
Though we have substantially paid down our mortgages, we have little equity due to dropping home prices. But because we aren’t ‘upside down’ the powers that be don’t even give us a second thought.
Where’s our bailout?
http://timiacono.com/index.php/2012/03/09/principal-reductions-averaging-100000/#comments
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By Blurtman @ 22:
No, guys. That’s not shadow inventory. You are describing pent up supply.
Shadow inventory is bank owned and kept off the market, plus in default and bank won’t foreclose.
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By Blurtman @ 26:
You should sell that tee shirt.
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RE: Macro Investor @ 28 – RE: Blurtman @ 22 –
No need to worry whether your house is shadow inventory or pent up supply. Once you sell it, you offset by becoming either shadow demand, or pent up demand (if you prefer).
Whether one buys or rents, virtually everyone is a consumer of housing- if they have anything to say about it.
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By Scotsman @ 15:
have you heard of the baby boomers retiring?
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some honesty on the employment-population ratio.
Comments on the Employment-Population Ratio
http://www.calculatedriskblog.com/2011/12/comments-on-employment-population-ratio.html
Is the Labor Market Actually Improving?
http://krugman.blogs.nytimes.com/2012/02/10/is-the-labor-market-actually-improving/
http://data.bls.gov/timeseries/LNS12300060
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RE: pfft @ 31 –
“have you heard of the baby boomers retiring? ”
Yup. Have you heard about the 1,000,000+ who turn 18 every year?
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I knew it- gotta love the left:
” A new survey from Pew confirms that liberals are the least tolerant of differing opinions, at least on line”
http://hotair.com/archives/2012/03/13/pew-liberals-most-intolerant-on-line/
I’m feeling that Seattle love now . . . .
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RE: pfft @ 32 -
Recovery 2020!
http://www.hamiltonproject.org/images/uploads/thp_image_uploads/charts/030912_jobs_gap.png
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By Macro Investor @ 28:
by that measure, both the number of homes in foreclosure and expected to enter foreclosure are down significantly in the past year in Washington state. Most of the issue with shadow inventory is in judicial foreclosure states, which we are not
http://economistsoutlook.blogs.realtor.org/2012/02/03/the-looming-shadow-state-estimates-of-shadow-inventory/
shadow inventory is like the boogeyman, but the factual data I have seen indicates the problem is getting better, not worse.
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What would Bill W. say…..Securities regulators charged two Ameriprise Financial advisers and three others with insider-trading, saying they made $1.8 million in illicit profits based on confidential merger information one of the advisers learned through an Alcoholics Anonymous relationship.
The Securities and Exchange Commission said Timothy McGee, one of the advisers, was tipped about a pending merger of insurer Philadelphia Consolidated Holding Corp and Tokio Marine Holdings.
The SEC said he learned of the deal from a Philadelphia Consolidated senior executive who was confiding in him through their relationship at Alcoholics Anonymous about pressures he was confronting at work.
http://finance.yahoo.com/news/sec-charges-five-insider-trading-211538137.html
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RE: deejayoh @ 36 – I’m a little uncomfortable with the term shadow inventory.
First, it’s sort of like a McMansion–it means different things to different people.
Second, that more houses would come on the market with higher prices, that clearly is not shadow inventory. That’s just the supply curve.
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RE: deejayoh @ 36 – Deejay the Pied Piper once again offers not so free rides on the Pink Pony. Ride that pony, ride, ride! Yee Hah!
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RE: Pegasus @ 37 – Where business really gets done. Subtance abuse programs, and gentlemen’s clubs are hot beds for conducting insider trading. Just don’t disrespect the Bing.
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RE: Scotsman @ 34 –
It’s probably easier to be more tolerant of other people’s opinions when deep down you already know that yours is wrong.
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RE: deejayoh @ 36 – What is the projected impact of the robosigning financial fraud agreement? A significant number of homeowners will receive principal reductions of $100,000 from the state owned banking system, which is absoutely guanteed to urge the deabeats and sureshot RE investors to buy wide screen TV’s. new cars, liposuction surgery, and trips to Cabo. /rimshot/
But seriously, folks, having real qualified humans actually review the docs may slow down foreclosures, as the banks now agree to comply with the law. /Lowd shouts of “Boochocolatete.”
Of course, all shall continue to ignore the lack of compliance with REMIC regulations, as the rich are different than you and me, and all shall praise Tim Geithner’s incredible contributions to restoring the world’s financial systems and supporting the undeserved wealth transfers to Goldman Sachs and the other WW TBTF’s and thereby to the 1%, when he moves on after the 2012 election. /spirited raspberries/
Can’t wait for the commercials and infomercials of how you, too, can monetize this principal reduction, for three easy payments of $599.99. /polite applause/
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