Weekly Open Thread (2014-02-24)

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Here is your open thread for the week of February 24th, 2014. 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.

Note: The comment limit in open threads is 25 comments per person.

Be sure to also check out the forums, and get your word in the user-driven discussions there!

NOTICE: If you have comments to make about politics or economics that do not somehow directly relate to Seattle-area real estate, they may be posted in the current Politics & Economics Open Thread.  If you post such comments here, they will be moved there.


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.

42 comments:

  1. 1
    mike says:

    Since our conversation lately has been around timing the market, here’s an interesting piece from Mark Kiesel, who correctly sold in 2006 and rented for 6 years before re-buying in Q2 2012.

    I have lived in Southern California for over 17 years, renting for almost half of them. In the second quarter of 2006, I sold my home after owning for eight years, and then rented for six years until I bought my current home in the second quarter of 2012. Throughout my career at PIMCO, I have learned a great deal from many of our firm’s housing experts in credit research and portfolio management. This has helped shape my real estate views, outlook and home address (whether I own or rent).

    http://www.pimco.com/en/insights/pages/settling-in.aspx

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  2. 2
    Blurtman says:

    Market timing a home sale. Why I never!

    The IT guy at a biotech I worked at in 2002 had sold his home in anticipation of the meltdown. Isn’t it comforting to know that so many people had a clue, when the Fed did not? Dim bulb Yellen included.

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  3. 3

    RE: Blurtman @ 2 – 2002 doesn’t seem like a good example of good timing. I wonder if his property ever dropped below that 2002 level?

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  4. 4

    RE: Kary L. Krismer @ 3

    My SE King County Tax Assessment

    Is still below what I paid in 1999….and it went up about 20% from last year….LOL

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  5. 5

    RE: softwarengineer @ 4 – Tax assessments are not accurate (usually low, but sometimes high) and in any case I believe you’re out in the Covington/Maple Valley area right? That area went down more than most around here. But from Blurtman’s post it’s not even clear we’re talking about Washington state.

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  6. 6
    mike says:

    RE: Blurtman @ 2 – Given that the early part of the last decade *should* have seen the boomer sell-off picking up speed – leading edge boomers became empty-nesters in the mid 1990’s – it was not unreasonable to expect the housing appreciation to slow down at that point.

    It never happened, but demographics were favoring it.

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  7. 7
    Blurtman says:

    Just thinking you could market time a home sale or purchase is crazy talk.

    Rate this comment: Thumb up 0

  8. 8

    RE: mike @ 6

    The Boomers Have Two Forces Keeping Them in Their McMansions

    Even though they don’t need upkeep. property taxes and [for unfortunately for a lot of ‘em] mortgage nooses from 2nd mortgages. At 60-70 YO these folks need to take the retirement slide now or very soon, and tend to their probable longterm disability costs too [if they aren’t lucky and die quick…lol]:

    1. Low retirement savings or no retirement savings….
    2. Millenials packed in their homes that can’t afford Seattle rents/mortgages on underemployed wages [even 50%+ of those with degrees] or they can’t find jobs period.

    My lower cost “power base” in Seattle still isn’t enough to plan retirement; I need a million dollars and full Social Security to live on 75% of my old gross pay [and pay taxes on my retirements too]…..its hopeless.

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  9. 9

    RE: Blurtman @ 7

    Yes Blurtman

    Even timing the stock market is a fool’s game. I’ve made predictions about stocks and housing in the future and my batting average isn’t good, but I should cheer up….no ones’ batting average is very good in those areas.

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  10. 10

    RE: softwarengineer @ 9 – There’s Cramer! ;-)

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  11. 11
    Blurtman says:

    RE: softwarengineer @ 9 – “It’s hard to make predictions, especially about the future.”

    Rate this comment: Thumb up 0

  12. 12
    pfft says:

    By softwarengineer @ 9:

    RE: Blurtman @ 7

    Yes Blurtman

    Even timing the stock market is a fool’s game. I’ve made predictions about stocks and housing in the future and my batting average isn’t good, but I should cheer up….no ones’ batting average is very good in those areas.

    almost nobody can make correct predictions on markets or even stocks. Most mutual fund managers with are their education and resources still can’t beat the market. The only ones who can are a very select group of hedge fund managers. like george soros. they make billions…

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  13. 13
    calvin mccomfrey says:

    RE folks should take a look at this, and keep in mind industry ethics owed to all:

    http://www.windermerewatch.com/Windermere_SoCal_Charged_with_Financial_Elder_Abuse_and_Fraud.html#WindermereSoCalElderAbuse

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  14. 14

    RE: calvin mccomfrey @ 13 – Wow, there was a crime there–the crime of using too small of font!

    It’s hard to comment on that without knowing California law or their standard forms, but I find it a bit hard to believe that their standard listing agreement doesn’t have a consent to dual agency and that their standard purchase and sale doesn’t have a disclosure of the agency relationships. It’s not even clear that there was dual agency involved (locally agents often don’t understand when they are in a dual agency relationship).

    What seems somewhat clear is that there may be malpractice drawing up the contract with the various counteroffers. What’s somewhat amazing is that the seller’s attorney, despite seeing the problems, apparently just proceeded to draft a note and deed of trust based on what he/she thought the contract said, realizing it wasn’t clear.

    But keep in mind this is a complaint. Complaints can allege anything, regardless of merit (like the case reported today of parents suing Petsmart because the pet rat had a disease).. Complaints can even allege things which conflict. I’m pretty sure the intentional infliction of emotional distress cause of action probably lacks any merit, but from a complaint alone I wouldn’t want to express an opinion on any of the other theories.

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  15. 15
    Blurtman says:

    RE: pfft @ 12 – I’ve been making snide remarks on ads that my Alma Mater has placed on LinkedIn. I’ve brought up their disastrous portfolio insurance travesty, and pooh poohed their financial engineering program. Am I going to hell?

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  16. 16
    pfft says:

    By Blurtman @ 15:

    RE: pfft @ 12 – I’ve been making snide remarks on ads that my Alma Mater has placed on LinkedIn. I’ve brought up their disastrous portfolio insurance travesty, and pooh poohed their financial engineering program. Am I going to hell?

    probably not for that.

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  17. 17
    Blurtman says:

    A bit off topic (what is the topic, anyway) but there is a revolution going on in cancer immunotherapy. Google checkpoint inhibitors. This is where the next billion dollar blockbuster antibodies are coming from, while we can still pay for them. The immunologists strike back!

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  18. 18

    RE: pfft @ 12

    Yes Pfft

    But isn’t that likely insider trading? The big boys, unless they’re Martha Stewart, get away with just about any crime. Even that rich bad boy Bieber smokes pot on jet aircraft [where its illegal] and doesn’t get arrested.

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  19. 19

    Our Economy Total Labor Force is Stagnant

    Looks like the NYC area is worse than stagnant, its apparently deteriorating…

    http://www.my9nj.com/Story/24829330/1000-turn-out-for-50-casino-jobs-in-atlantic-city

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  20. 20

    RE: pfft @ 12

    Smaller Housing Bubble Pop by 2015 Predicts Shiller?

    “… “There really is a worry we might see falling prices by 2015,” says Shiller.

    Another bursting housing bubble — characterized by huge price declines — seems unlikely, because prices haven’t gotten nearly as out of whack as they did in 2006, when the last bust began. What seems more plausible is a long period of tepid demand for housing, as potential buyers increasingly decide to rent instead of buy and forego the hassle of owning a home. At the moment, economic forces are still discouraging potential buyers, since unemployment remains elevated, raises are scarce and consumer confidence is balky. But there are also signs of longer-term changes that suggest owning a home is simply less desirable than it once was. Here are 4 signs Americans are losing interest in home ownership…”

    http://finance.yahoo.com/news/americans-lose-interest-in-owning-a-home-210647970.html

    Nope, its not winter weather…its an American paradigm shift [likely Millenial lead] against housing as a sound investment.

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  21. 21

    RE: calvin mccomfrey @ 13 – I just noticed that the download of the complaint on that site has the listing agreement and first page of the P&S agreement attached. The listing agreement does address dual agency possibilities, and the purchase and sale agreement indicates that the same firm represents the buyer and seller. What’s odd is the form seeming requires filling in the name of the firm and not also the agent.

    http://www.windermerewatch.com/GlanczComplaint.pdf

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  22. 22
    pfft says:

    By Blurtman @ 15:

    RE: pfft @ 12 – I’ve been making snide remarks on ads that my Alma Mater has placed on LinkedIn. I’ve brought up their disastrous portfolio insurance travesty

    oh details please?

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  23. 23
    Blurtman says:

    RE: pfft @ 22 – “A 1979 creation of two UC Berkeley professors, Hayne Leland and Mark Rubinstein, portfolio insurance was supposed to ensure that the user could limit losses in a down market to a prescribed amount, usually around 5%.”

    http://articles.latimes.com/1992-07-27/business/fi-4413_1_portfolio-insurance

    Look no farther than the recent meltdown to see the abject failure of securitization, or “financial engineering.”

    When the sterilized artificial world within which these theories are developed and reside meets the real world, disaster frequently results.

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  24. 24
    pfft says:

    By Blurtman @ 23:

    RE: pfft @ 22 – “A 1979 creation of two UC Berkeley professors, Hayne Leland and Mark Rubinstein, portfolio insurance was supposed to ensure that the user could limit losses in a down market to a prescribed amount, usually around 5%.”

    ha ha. that works if a few do it. works really bad when all do it…

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  25. 25
  26. 26

    I have a new website idea for Tim–Bitbubble. Hurry before it’s too late!

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  27. 27
    Blurtman says:

    RE: ChrisM @ 25 – Suicide bombers, please take note.

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  28. 28
    Matt the Engineer says:

    Follow up from previous advice here. A few weeks back I asked for advice about pre-inspections. I decided they were too dangerous a game for me, and recently bid for a house that had two pre-inspections while keeping my inspection contingency. I lost the bid (it went too far over asking for me), but looked into something that bugged me.

    Long story short, I found out this house was built and sold without passing inspections or getting a final building permit. The pre-inspection buyer will have a bad surprise if they ever try to get a permit for the house, and for all I know it might fall down on them in the next earthquake (structural was one of the permits not passed). Who knows what kind of work will be required to get it to pass permit inspections, and it’s likely whatever failed originally is covered in drywall now.

    Now here’s the thing that bugs me. Keeping the inspection contingency in place gives you a bit more time to discover this, but is searching permit history even part of the selling process? It looks like your X (default 10, realtor pushing for 3) number of days for an inspection, you waive all claims anyway. I don’t see any point in buying a house where anyone (but me) would look into this.

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  29. 29

    RE: Matt the Engineer @ 28 – First–good for you not caving on the inspection issue.

    I don’t think a typical inspector would find that situation, but you’re right having the inspection contingency would give you more time to discover it yourself. Technically though what you found would be more of a Form 17 issue rather than an inspection issue. In practice though, that probably doesn’t matter, particularly given your description of the property.

    If there is no occupancy permit (seemingly what you’re describing), the property would probably be hard to finance, so the financing contingency could also come into play.

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  30. 30
    Matt the Engineer says:

    RE: Kary L. Krismer @ 29 – Form 17 seems to only talk about permits for renovations, not on building the home itself. Seems like a flaw in the form language, and the overall sales process. Good idea with the finance clause – I suppose if you found out before the end of the financing window you could tell your lender about it. It would also be hard to insure, though I’m not sure there’s a clause about that.

    Oh, and Seattle says they don’t issue certificates of occupancy to residences, though “no C of O” was listed in the permit record, so at least the inspector thought Seattle issues them. But they tell me a final permit is required, and I know they’re usually not terribly lenient if they find out. A neighbor of mine had to tear his garage down when another neighbor complained about a code violation.

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  31. 31

    RE: Matt the Engineer @ 30 – The form 17 is hardly a work of art. It’s drafted by politicians as part of the political process. ;-)

    As to the certificate of occupancy, odd. About 5 years ago I ran across four Seattle Townhomes (condo form of ownership) which somehow sold without final permits, and all four quickly foreclosed. Maybe they did call it a final permit, but my recollection was certificate of occupancy. Anyway, it was sort of a chicken and egg situation because at that point it was the condo association which apparently needed to apply for the permit, but there was no one to run the association, and the bank showed no interest in helping start the process. Further complicating matters, three of the units were owned by one bank, but the bank used three different agents to list them. I never did follow up on what happened–my client didn’t make an offer.

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  32. 32
    ChrisM says:

    Related to the current Matt/Kary discussion, Redfin just offered a survey to homebuyers about what they found of interest in a listing. They were all concerned about the listing photos & text, but honestly when I see a listing the first thing I do is look at the tax/permit records…

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  33. 33
    ChrisM says:

    What does it say about the real estate business when the first thing I think when seeing:
    https://www.craigslist.org/about/best/lns/4298409548.html
    is that the poster probably photographs home listings for a living?

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  34. 34
    ChrisM says:

    I attended Clark County’s planning development commission meeting tonight, and it was fun. The gov’t bureaucracy pretended to listen to the 99%’s objections to crappy development, while Business Continued As Usual.

    Yeah, 110+ 4000-5500 sq foot lots in an area that was previously zoned agricultural fits in with the Growth Management Act, and doesn’t affect surrounding 1-acre min. properties.

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  35. 35
    Blurtman says:

    Who influences policy? It seems easier for developers to organize than individuals. And the bogie man is made out to be SPRAWL and the solution is made out to be high density housing, which also seems to be popular with developers, oddly enough. Sammamish has an efficient customer service window for the developers. Step right up, hand over the moolah, and commence knocking down those pesky trees. We’re all Bellevue now.

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  36. 36
    Blurtman says:

    Who influences policy? It seems easier for developers to organize than individuals. And the bogie man is made out to be SPRAWL and the solution is made out to be high density housing, which also seems to be popular with developers, oddly enough. Sammamish has an efficient customer service window for the developers. Step right up, hand over the moolah, and commence knocking down those pesky trees. We’re all Bellevue now.

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  37. 37

    RE: ChrisM @ 32 – It might be that the GMA actually requires that type of a result! GMA makes my head spin, so I’ve never really studied it and I’m not saying what it does, but part of managing growth is making certain areas more dense to prevent sprawl.

    Ignoring legislation and zoning, I had hoped that one impact of the real estate crisis would be the end to small lots. I guess that didn’t happen.

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  38. 38

    Last night the NBC Nightly News had a report on the 28 hours of just released 911 tapes from during the NJ bridge scandal, which literally did nothing more than report that there was traffic on the bridge.

    I’m glad our press is giving that event so much more coverage than President Obama’s contemplating the intentional killing of Americans without so much as a court order, because the abuse of political power to create traffic is so much more important than the abuse of political power to kill.

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  39. 39
    pfft says:

    By Kary L. Krismer @ 38:

    Last night the NBC Nightly News had a report on the 28 hours of just released 911 tapes from during the NJ bridge scandal, which literally did nothing more than report that there was traffic on the bridge.

    I’m glad our press is giving that event so much more coverage than President Obama’s contemplating the intentional killing of Americans without so much as a court order, because the abuse of political power to create traffic is so much more important than the abuse of political power to kill.

    is it? I am half-joking but instead of just ranting why not provide some evidence? explain the situation. who are you talking about? what is the law on this? what do legal experts saw? you’ve ranted about this for days but you’ve not provided anything at all except more rants.

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  40. 40

    RE: pfft @ 39 – Don’t you follow the news? That’s what you always say to me.

    I’m actually surprised this story is less than 24 hours old. It talks about the citizen Obama is planning on killing and the one he’s already killed.

    http://www.nytimes.com/2014/02/28/world/asia/us-militant-hidden-spurs-drone-debate.html

    Gets very little press that Obama is going all Henry VIII on our collective asses. And the law is something you might have heard of–the Bill of Rights, which Obama has been trampling left and right on his power trip.

    And I know your memory sucks, but did your really forget about Paul Rand’s filibuster, where the purpose was to get a commitment that Obama wouldn’t do this to a citizen within the United States?

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  41. 41
    pfft says:

    By Kary L. Krismer @ 40:

    RE: pfft @ 39 – Don’t you follow the news? That’s what you always say to me.

    no I do. finally you’ve added a little background, albeit about 1/5th of what I wanted. progress I guess?

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  42. 42

    RE: pfft @ 41 – I realize that your memory sucks and that you never really did hang out in the political thread, but more details have been provided in the past. I switched to making the comments in the open threads because only Blurtman and I seem to be reading the political thread.

    But if you want more meat I’d suggest reading posts 121, 171 and 254 of the political thread. I didn’t review page 1 of that thread, but page 2 has a lot of discussion of drones in general, with Losh taking the position that Obama can blow up whatever he wants because Obama is the greatest President of all time and forever, Blurtman not seeming to want any of it, and me in the middle but firmly opposed to being able to deliberately kill American citizens regardless of whether or not they are on US Soil.

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