Mid-Week Open Thread (2013-01-23)

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Here is your open thread for the mid-week on January 23rd, 2013. 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.

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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.

22 comments:

  1. 1

    Coming Soon to Seattle, at A Theater Near You?

    “…A micro-apartment is typically defined as a studio with less than 400 square feet, not much bigger than a typical college dorm room. These apartments, at 250 to 370 square feet, will be exempt from city rules that require new units to be at least 400 square feet….”

    http://homes.yahoo.com/blogs/spaces/york-micro-apartment-design-winner-announced-214258808.html

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  2. 2

    RE: softwarengineer @ 1 – I think we may already have those, but I’ve never seen one so I don’t know for sure. I do remember some very tiny condos that were planned around the peak, but I don’t know if any of those were ever built.

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  3. 3
    Dave0 says:

    Check out this load of crap I saw this morning:
    http://www.fremontuniverse.com/2013/01/22/big-turnaround-in-2012-for-northwest-seattle-housing-market-sponsored-story/

    At least they were clear enough to say it was sponsored in the headline…

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  4. 4
    Marc says:

    Not to defend that article but after yesterday when I had a client lose a bidding war to someone who went 9% over list price (list price was already pretty optimistic and despite going well over list we were only the 4th best offer) I was just thinking about the difference between the King County single family median price in February 2012 and December 2012. Per Tim’s regular posts on the NWMLS monthly stats they were $308,000 and $380,000 respectively. That’s more than a 23% increase in 10 months.

    Maybe I’m biased by recently seeing numerous multiple offer scenarios bidding prices way above list, but sure seems to me we’ve got a pretty vigorous upward pricing trend happening in the desirable areas of Seattle and the eastside.

    It is extremely frustrating for my clients when they’re competing against what seems to be desperate buyers out there while trying to make prudent decisions.

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  5. 5
    Howard says:

    By Marc @ 4:

    Not to defend that article but after yesterday when I had a client lose a bidding war to someone who went 9% over list price (list price was already pretty optimistic and despite going well over list we were only the 4th best offer) I was just thinking about the difference between the King County single family median price in February 2012 and December 2012. Per Tim�s regular posts on the NWMLS monthly stats they were $308,000 and $380,000 respectively. That�s more than a 23% increase in 10 months.

    Maybe I�m biased by recently seeing numerous multiple offer scenarios bidding prices way above list, but sure seems to me we�ve got a pretty vigorous upward pricing trend happening in the desirable areas of Seattle and the eastside.

    It is extremely frustrating for my clients when they�re competing against what seems to be desperate buyers out there while trying to make prudent decisions.

    While I hope to mind my own advice…

    Why would a buyer be desperate? There are plenty of rentals…

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  6. 6

    By Howard @ 5:

    While I hope to mind my own advice…

    Why would a buyer be desperate? There are plenty of rentals…

    I don’t know why, but I’ve often said one of the biggest problems I face is sometimes holding a client back. They get desperate.

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  7. 7
    Marc says:

    RE: Howard @ 5 – A combination of factors is causing some buyers to feel extreme urgency with regard to buying a home. These factors include ridiculously few desirable homes to choose from, [some] homes selling very shortly after hitting the market, [some] multiple offer situations bidding home prices up, and wanting to lock in a low interest.

    Basically, people want a good deal and, rightly or wrongly, they perceive that the opportunity to do so may be fleeting.

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  8. 8

    RE: Marc @ 7
    Another Wrench Caught in the Seattle Economy Machine for 2013?

    The potential for a SPEEA strike isn’t getting too much news, but its big IMO….the Boeing Company is pulling a slower motion Enron….they want pensions elimated for new employees. This means in about 8 years there will be more money paid out for Boeing retirees than is coming in.

    Yes, I expect a strike and no, its not negotiable. Think about it.

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  9. 9
    Howard says:

    Low inventory

    I just searched Redfin for Redmond houses between $400-600k, should be a good range for Microsofties…

    10 houses for sale

    That is slim pickings

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  10. 10

    RE: Howard @ 9

    Howard, I’ve Also heard Many People Suggest I Buy a $30K Electric Car from Japan That Has a 62 Mile Charge Life

    Then I ask the $10,000 question to these “opinionated” know-it-alls: what kind of car do you drive? They all drive gasoline powered cars.

    I’ll ask you the same question: Would you buy one of those 10 units on the eastside for a half a million? Do you even qualify for the loan?

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  11. 11
    Howard says:

    RE: softwarengineer @ 10

    Answer, no. I would not buy any of them as they do not appeal to me or my wife, and yes thank you for asking we are preapproved from multiple sources that would allow us to purchase one them.

    Yes we are actively shopping. We have just set an impossible wish list that might cause us to think outside of our parameters.

    And as for the electric car thing, we own one of those too, A Nissan Leaf (and a non plug in Prius as well).

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  12. 12
    Eleua says:

    I’ve been asking around at some lenders and they are reporting that there has been a very sudden uptick in activity, which seems to correlate with what people are saying and (apparently) doing in terms of buying.

    Nothing happens without a reason. The economy isn’t that robust, although it seems to be showing signs of improvement, but you have to look for it.

    Why the sudden uptick?

    The easy answer is that Dear Leader’s reelection was supported by a short-term sugar infustion from the banking cartel, but they are not the picture of health. They are being supported by massive deficit spending and the Fed buying bonds. There still isn’t organic buying for that debt and the Fed’s spending suggests they must keep buying to keep the price going higher and higher, lest someone important become insolvent.

    When I talk of a lack of demand, I am looking at the sources of lending, not the buyers and retail level lenders.

    If consumer demand for mortgage debt was driving the situation, we would see rising rates, but the opposite is happening. Any relief from $4.50 gasoline (nicely timed for November) wouldn’t ‘splain it.

    People are bidding and buying and even I can’t deny that anymore, but the mystery is “why?” There seems to be excess money put toward this and that is preventing demand driven raising of rates, as supply is meeting the demand, at the very least.

    One wise person once told me that cross currents and conflicting data occur at inflection points. That’s the best I can come up with. We may be at a strange confluence of a perceived fleeting opportunity (panic buying), artificial stimulus, and no pressure to bring further destressed homes onto the market.

    The Westsound market seems to continue to be bifurcated with the $400+ market doing fine and the sub $400 market lingering. I am thinking that we are seeing the markings of a bad situation with the housing/lending industry doing everything they can to get buyers to sustain the pyramid. As in all financial markets, changes on low volume are often counter-intuitive.

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  13. 13
    Eleua says:

    BTW,
    If the above seems like the meandering ramblings of a confused individual, it is because they are.

    I suspect an election year stimulus and banks withholding inventory to support Dear Leader.

    All financial technical analysis shows that volume is a very reliable indicator and turns on low volume are almost always head-fakes. It’s hard to fake volume for EOQ window dressing, which is what I suspect is going on here.

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  14. 14
    Marc says:

    RE: Eleua @ 12 – One thing that has impressed me is how many highly capable buyers there are right now. Cash buyers and big down payment buyers (20% and above) are out in force. And not just at the low end. It seems they sat through the recession and kept stacking their chips. Now they’ve hopped the cheap SW flight to Vegas and are ready to place their bet.

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  15. 15

    RE: Eleua @ 13
    Those aren’t confused ramblings. You make perfect sense.

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  16. 16
    ChrisM says:

    RE: Eleua @ 13 – My mindset has certainly changed in the past five years. I’m in the market for a multi-unit property, but if I were in the market for (what is to me) a high-end home I might jump in assuming:

    1. Interest rates cannot go lower and in fact can only go up
    2. Fed QE & govt handouts will continue to maintain status quo (as opposed to Doomist meltdown)
    3. If we have (hyper)inflation I’m a winner by putting down as little as possible
    4. if things go sideways I just stop paying the mortgage and wait 2+ years payment free until the bank claws me out of my (MY!!!) house. No one else seems to be suffering from walking away, so why shouldn’t I get in on the act?
    5. if interest rates *do* go up, and I’ve set myself up with an assumable loan, then I’m really sitting pretty

    or

    6. Completely different line of thinking – I act emotionally, rather than rationally, and I want a house NOW. Either just moved here (and am used to buying regardless) or got sick & tired of waiting

    That isn’t my thinking, but it is a rational & defensible position IMO.

    Thoughts?

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  17. 17
    Scotsman says:

    RE: Eleua @ 12

    I think you’re onto something with your bifurcation theory. I deal with discretionary goods, boats and cars as toys, and those markets are experiencing the same “confusion” as the one for homes. In short, those with lots of money are doing well and spending it. The bottom half of the market is dead and rotting. There doesn’t seem to be much middle. Looking at averages or medians for income doesn’t do a very good job of capturing the dichotomy. If your job is secure and you havdiscretionaryry or above average income it’s a great time to buy everything. Rates are low, some sellers are desperate, and our natural optimism bias lets us believe that things- especially the economy- will eventually get better. I don’t believe it will. I still think we’re doing yeoman’sns job of kicking that damm can, nothing more. But I’ve finally decided to get on with some of life and watch the show as it continues to unfold.

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  18. 18
    Scotsman says:

    RE: ChrisM @ 16

    I’d agree with your points 2-5. I bought on that basis.

    I doubt interest rates will ever go up significantly. To do so would be the straw that broke the camel’s back in terms of federal budgets and deficits, both directly and through the economy at large. And looking at Japan and every other country trapped in this same pattern confirms it doesn’t happen. They will stay low until a major reset happens. But that may a decade away and there is life to live until then. I doubt it will be sudden- there will be plenty of warning signs, and we’ll get to watch Japan, Spain, France, etc. go first and learn the pattern.

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  19. 19
    ChrisM says:

    RE: Scotsman @ 18 – “I doubt interest rates will ever go up significantly”

    My interpretation is that interest rate increases won’t happen until it does, and then it will be significant. Long long ago in a university far far away I studied http://en.wikipedia.org/wiki/Catastrophe_theory and it seems like we’re there again.

    I agree that we’ll get to watch Japan & Europe first, which is why I think we’re seeing home buying activity here.

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  20. 20
    ricklind says:

    By Ira Sacharoff @ 15:

    RE: Eleua @ 13
    Those aren’t confused ramblings. You make perfect sense.

    What he said. And artificially low interest rates fuel higher and higher bids. This is how inflation works at this point in the cycle.

    “Dear Leader.” I like it.

    Fel Temp Reparatio.

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  21. 21
    ricklind says:

    RE: ChrisM @ 19
    Curious. Interesting stuff, CM. Thanks.
    FWIW, I studied compound probability, chaos theory and Black Swans. The practical application is in risk-benefit analysis.

    Not if, but when.

    Fel Temp Reparatio.

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  22. 22
    ChrisM says:

    RE: ricklind @ 21 – Are we all bound by NDA’s? :-) The math is pretty self-evident….

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