Seattle Bubble

News & discussion about real estate & the housing bubble in the Seattle area.

Seattle Bubble - News & discussion about real estate & the housing bubble in the Seattle area.

Entries Tagged as 'NPR'

NPR: Searching for the "New Normal" in the NW Housing Market

By The Tim on August 19th, 2009 at 6:15 AM · 44 Comments

I did a phone interview a few weeks ago with Austin Jenkins, an NPR correspondent down in Olympia, about where the local housing market and economy are heading. Here is the resulting story: The New Normal: What Will The NW Housing Market Look Like?

The Northwest economy is on the verge of recovery and with it — transformation.

Economists expect the recession to end in the next year, but not without some long-term changes.

This week we’re looking at lasting alterations to the region’s economic landscape. Nowhere is that more apparent than in the real estate market.

That used to be the one investment middle income families in the Northwest could rely on. So what does the future hold for real estate?

Olympia Correspondent Austin Jenkins looks for answers in the first part of our series “The New Normal.”
…
Will we ever see home prices inflate at a double-digit pace year-over-year?

Real estate blogger Tim Ellis, for one, hopes the answer is no.

Tim Ellis: “To me it’s sad that so much of our local economy was based on people selling other people houses for twenty percent more than they sold last year.”

Ellis is the man behind the popular blog SeattleBubble.com . He hopes this recession serves as a course correction for the Northwest economy. He yearns for back-to-basics economic engines like Boeing airplanes and Microsoft software.

Tim Ellis: “As opposed to people whipping themselves into a frenzy over how they’re going to get rich on their house.”

Ellis need not worry about a return of the frenzy says Tom Potiowsky, economist for the state of Oregon.

Tom Potiowsky: “It just naturally is going to be a much slower growing market.”

Reset: How This Crisis Can Restore Our Values and Renew AmericaI like the forward-looking angle he took in this piece, but I don’t necessarily agree with Austin’s conclusion that “buying a home will still be a good investment.” Buy a home because you want a place to live to call your own, not as some sort of vehicle to build wealth. The only way a house is an investment is when you purchase a cash-flow-positive rental. But I digress.

I think Austin definitely touched on some interesting topics in his piece. In the time since I spoke with Austin, I picked up a little book called Reset: How This Crisis Can Restore Our Values and Renew America, which touches on some of the same topics, and as an added bonus turns the stars and stripes into a bar chart on the cover.

Despite it being only 70-some pages long, I haven’t made the time to sit down and finish reading Reset yet, but so far I’m appreciating the outlook presented within. It feels similar to the topic we touched on back in February when we discussed the “great reset.”

Looking toward the future with an optimistic perspective on how we can make our way back to a productive society that is not addicted to debt is a subject I hope to visit more frequently in the coming months.

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Two Recent KUOW Pieces of Note

By The Tim on June 22nd, 2009 at 1:02 PM · 32 Comments

Thanks to everyone who responded to the call earlier this month from KUOW for help on their story about the soft market.

Here’s the resulting piece: It’s a Tenants Market for Downtown Seattle Office Space

There may be signs of recovery in the region’s housing market, but not so for the region’s office market. A recent survey from Price Waterhouse Coopers says commercial property values in Seattle are expected to decline up to 15 percent this year, that’s more than the national average. The survey predicts the market will remain in recession for two more years.
…
[Large downtown Seattle landlord UNICO's Chief Financial Officer John] Lamb says it’s going to be a while before the market begins to stabilize. He says vacancy rates will continue to rise, and don’t be surprised if some commercial office buildings in Seattle end up facing foreclosure.

Also, last Friday’s “weekday” discussed the residential market, with : Short Sales, Foreclosures and First Time Home Buyers

Friday’s program had the same guests that were on the program in early May that we mentioned here: real estate agent / appraiser Richard Hagar, Urban League housing director Linda Taylor, as well as new guest certified financial counselor Andrea Misiano.

They discuss foreclosure / refinancing rescue scams, including some good advice for first-time buyers—take the emotion out of the home-buying process. I haven’t been able to listen to the entire program, but apparently there was also some questionable advice mixed in this time, including the claim that (according to a Seattle Bubble reader) “it’s better to get the low interest rate than the “one-time” lower house price.” In any case it’s overall worth a listen when you can make the time.

Kudos to KUOW for continuing to give the local real estate market some decent, thoughtful coverage that goes beyond the usual “ra-ra” pro-industry pieces that have been all-too-common in most news sources.

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KUOW Discusses Seattle’s Real Estate Mess

By The Tim on May 8th, 2009 at 5:00 AM · 83 Comments

Seattle’s local NPR station KUOW ran an interesting segment yesterday morning called Navigating the Current Housing Market.

KUOW host Steve Scher has real estate agent / appraiser Richard Hagar and Urban League housing director Linda Taylor in-studio to discuss how we got where we are, and what’s going on right now with real estate in and around Seattle.

Here are some interesting excerpts.

On how people got underwater:

[10:00]
Hagar: “So what we ended up with is a lot of home owners, particularly new construction, that would end up with a loan for far more than the house was worth. The moment they got into it, the loan may have been worth $50,000 more than the value of the house, because there was a car, or kickback, or something else thrown in with it. …They started off underwater.”

[11:55]
Hagar: “Sometimes within a complete subdivision, every house would be one of these strange little deals. We saw it up in Silver Lake in Everett. Every single home in the plat sold with a car, or money back to the buyer, or something. Again, so the loan was already for more than the house was worth, the day they bought it.”

Scher: “Did people think they were getting a free car?”

Hagar: “Yeah.”

On who is at fault / who is responsible for the fraud:

[14:26]
Scher: “How much of this problem—of people facing foreclosures, of being underwater—part of it is the crash in the economy, how much of it though is because of fraud?”

Hagar: “A large percentage… there’s a combination. Banks were doing loans that they shouldn’t have done. Borrowers were buying for more houses than they should have… there’s a lot of contributing factors. However, when you go in and pull off the homes that are in foreclosure right now, 80% involve some level of fraud.”
[15:30]
Hagar: “Everybody’s saying ‘the buyer’s lying.’ It’s a combination. Sometimes it was the appraiser, not appraising it right, and doing it fraudulently. Sometimes it was the borrower lying about their income, their occupancy. It could have been that the loan originator was showing them how to do this, was ‘helping’ them with their down payment, cash under the table just before… So there’s a wide variety.”

On “predatory lending”:

[17:11]
Taylor: “I don’t know if it’s predatory lending. Because predatory lending, you have to clearly be deceived. And clearly you know that you have an adjustable rate, that it’s going to change, and your income isn’t.”

Scher: “So people were being blind, polyannas.”

Taylor: “Just misled, I believe. And always told: ‘Don’t worry. You can refinance that later.’ …And then when the economy changed and turned, they couldn’t do it.”

Scher: “So was it predatory, or did people just have the bubble mentality, all the way up and down the line?”

Taylor: “I’ll go with the bubble mentality.”

Even I was told the “don’t worry, you can refinance later” line when my wife and I were shopping for a pre-approval in 2005, just before I started this site. Huge warning klaxons went off in our heads, and we walked away.

One thing that surprised me was how frank the real estate agent Mr. Hagar was. Kudos to him for not sugar-coating the situation like so many other agents attempt to do. You can download the full show from KUOW. It’s definitely worth putting on for a listen while you count the work hours until the weekend today.

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Friday Link Roundup: Slow Sales, Foreclosures, Deceptive Stats

By The Tim on February 13th, 2009 at 10:42 AM · 95 Comments

Got a bunch of things to share with everybody that have built up over the past week, so let’s just get right into it.

First up, a couple of stories that take a look at the big picture local numbers…

Aubrey Cohen, Seattle P-I: Washington sees nation’s largest drop in sales
Patricia Murphy, KUOW: Bad Real Estate Numbers

Next, a somewhat extreme anecdote to go along with the recent foreclosure stats:

Rolf Boone, The Olympian: 57 single-family lots in foreclosure in Lacey subdivision

I’m sure this piece will be interesting to regular readers here, as well. Aubrey takes a closer look at the north Seattle neighborhoods that seem to be the most resilient when we run the monthly neighborhood months of supply updates. The conclusion seems to be that despite the apparent strength, north Seattle isn’t much of a party for sellers.

Aubrey Cohen, Seattle P-I: The stats say North Seattle is still a seller’s market, even if nobody agrees

Lastly, here’s a couple of national pieces that have been brought up recently by a lot of people, including an NPR segment featuring Jill Keto, who you may recall from a January Seattle Times article.

Warren Olney, NPR: Homeownership and the American Dream
James Jacoby and Jill Landes, CNBC: CNBC Special Report: House of Cards

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WaMu Exec Warned Board of Pending Collapse Years Ago

By The Tim on October 6th, 2008 at 10:14 AM · 9 Comments

Interesting story from NPR: Washington Mutual Executive Predicted Collapse

For casual observers, bank collapses like this one [WaMu] may seem to have appeared out of the blue. But for executives like William Longbrake, who worked at Washington Mutual for 26 years before September’s tumult, the collapse looked more like a slow unraveling.

Longbrake served as the savings and loan’s chief financial officer from 1982 until 2002 and as a senior executive until a few weeks ago. He says he’s free to talk now about the trouble he saw coming, because no one is left at the thrift to sue him for breaking nondisclosure agreements.

“There was something that disturbed me deeply, and it actually was a long time ago. It was probably about 2003,” he says. “And that’s when home prices began to rise at a rate that was much faster than people’s incomes were rising. Housing prices felt good when they were going up. Everyone was giddy with all the wealth they were accumulating, and a lot of them spent it. The problem was that, all the time, as housing prices were getting higher and higher and higher, the affordability was declining. Eventually, the ability of a lot of people to buy homes just disappeared, and we had too many houses.”

Unfortunately, nobody wanted to hear that kind of sentiment during the boom. Anyone that tried to warn people that home prices were rising too quickly and all the perceived wealth was an illusion was derided as a “doom and gloomer” or outright mocked as a lunatic.

Sometimes it sucks to be right.

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Seattle Bubble Speaks out Against Bailouts on NPR

By The Tim on April 9th, 2008 at 9:21 AM · 79 Comments

Stop the Mortgage Bailout, Patrick.net, and Seattle Bubble were featured this morning in a segment called Opposition to Proposed Homeowner Bailout Growing on NPR about the various government bailout plans.

You can listen to the full three-minute segment on NPR’s website. Here’s a little clip of my appearance:

The house Mr. Kaste and I were standing in front of, which he says “may be the last gasp of Seattle’s bubble” is 145 NW 76th St, 98117, which I mentioned on the Audacious Flips and Renovations thread in the forums. Bought for $315k in 2005, now asking $800k.

The last gasp of Seattle's housing bubble

At the end of the segment he used a quote where I talked about housing braggarts getting what’s coming to them. He was definitely fishing for a comment like that during the entire interview, so I’m not surprised that it ended up on the air. However, taken alone, it sounds like I’m cheering for people’s financial destruction, which is not the case.

Yes, I admit that I’ve got some schadenfreude with respect to one specific set of people: blowhards that simply would not shut up about their home’s ever-rising “value” during the bubble years (such as…). But do I take pleasure in seeing anyone foreclosed on or losing their job due to recession? Of course not.

All in all, I think it was a good segment. The UW professor quoted in the piece does make a good point that more people than just bubble-buyers are going to suffer as this unwinds. However, I agree with Sniglet’s comment in the forums that a bailout “will prevent the economy from properly re-balancing itself and clearing out mal-investments.” Recessions suck, but sometimes they are necessary to get the economy back to a solid foundation. I made this point in my interview with Mr. Caste, but obviously that clip didn’t make the final cut.

The UW professor said that “people depend on their home equity,” which is certainly true, but should they? This needs to be allowed to play out naturally so we can get back to a rational, sound economy.

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