Cramer vs. Shiller: Is Seattle Immune?

By now most of you have probably already seen the Today Show video from last week in which financial entertainer Jim Cramer stated the following:

Don’t you dare buy a home now. You will lose money.

Of course, real estate salespeople across the country were outraged by this, and pretty much immediately flew into frenzied attack mode. In a follow-up interview on the Today Show a few days later, Jim clarified:

Matt Lauer: “The overwhelming majority of the responses we got through email said that you’re ignoring the fact that real estate is regional, and there are some places where it is a good time to buy. How do you respond?”

Jim Cramer: “Seattle, and 10005 are the only two. Maybe Montgomery County in Maryland. Three. That’s it.”

Nice. Gotta love that. I am wondering though, does Jim know something I don’t know? Because the recent trends in the Seattle numbers don’t seem to indicate that a buyer today will be any less likely to lose money than anywhere else across the country. All that the numbers show is that last year’s buyers haven’t lost money—yet, which is certainly a step above the rest of the country.

But I’m just some know-nothing blogger with too much time on my hands. So don’t take my word for it. Listen instead to what Robert Shiller (Yale professor and economist—of Irrational Exuberance and Case-Shiller HPI fame) had to say on the matter in a Marketwatch interview last week:

John Wordock: “And what about the Pacific Northwest? Still sort of immune from everything else that’s going on?”

Robert Shiller: “I don’t say they’re immune… Nobody is immune… Generally cities have been weakening, even though their price has been going up, these cities have shown weakening price increases, and if you extrapolate that, it might not be too long before they show price decreases too.”

I suppose we only have to wait 12 months before we find out which of these two men is correctly interpreting the evidence before us. I think you know who I’m betting on.

(Today Show, 09.27.2007)
(Today Show, 09.30.2007)
(Marketwatch, 09.25.2007)

0.00 avg. rating (0% score) - 0 votes

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. Tim also hosts the weekly improv comedy sci-fi podcast Dispatches from the Multiverse.

73 comments:

  1. 1
    Joel says:

    The thing is, Cramer isn’t interpreting. If you were to ask him why Seattle is still good I’m sure he’d just say that it’s because we haven’t gone negative year over year. No analysis, no interpretation. Just past data. Not even looking at a trend.

    I like how the NAR Pres. is saying at first that buying a home is for shelter, not for investment purposes (backpedaling from their message during the bubble), but later on in the interview he talks about how if you put x down and then prices increase at 5% YOY you’ll get a 98% return in a couple of years. I thought it wasn’t an investment. Sounds like he’s having trouble switching messages.

  2. 2
    Buceri says:

    Did inventory go down 200 units over the weekend, or I missed something?

  3. 3
    redmondjp says:

    Buceri,

    The reported inventory did drop, and it’s probably due to listings that expired at the end of the month.

  4. 4
    Leo says:

    Hi Guys, did you notice intentory on SFH in KC dropped this morning by 200 items. Any ideas? :)

  5. 5
    The Tim says:

    The inventory drop is a standard end-of-the month thing. It happened each of the last two months as well, as you can see by looking at the logs. Look at the early-morning one-hour drops on August and September 1st:

    08.01: 10,207 -> 10,069
    09.01: 10,578 ->10,431

    Given the consistency of the time, and how early in the morning it occurs, JP is probably correct in that it is due to automatically expired listings. No biggie.

  6. 6
    patient says:

    Give it a couple of months and I wouldn’t be surprised if Cramer turns it all around with the more conventional startegy of buying low and selling high. I.e do not buy into a market that has not yet corrected. Seattle will be the least attractive on that list.

  7. 7
    Prices Will Go Down says:

    House prices WILL go down. Just wait.
    Average Seattle family cannot afford a house unless both family members have good salaries or have more then one job. Just wait, you’ll see.
    I’m renting a nice $450000-500000 house in Lynnwood (close to Seattle and 1 minute from I-5) for $1300/month (water, garbage, cable TV are included). Why should I borrow this house from a bank for over $3000/mo if I can borrow it from a homedebtor for $1300/mo and save the difference?
    Seattle is not immune, it’s coming guys.

  8. 8
    Q says:

    I find it slightly more interesting to note that the number on in the log is roughly 10% increase by my ‘back of the envelope calculation’ after glancing at the reading of 9/1 to 10/1 for the first hour.
    08.01.2007 00:00 10206 11195 10209
    09.01.2007 00:00 10574 11611 10550
    10.01.2007 00:00 11540 12564 11409

    While I could conjure up some fancy mathematic analysis, I’ll just stick with the simple and say that’s a pretty big jump.

  9. 9
    officeboy says:

    It’s end of month inventory dropping but it’s also that time of the year for listings to start heading downward.

  10. 10
    officeboy says:

    Oh, that link/img is for homes listed for sale in the state of WA via the Windermere website. And then for homes and vacant land in 98230 (my local area of interest).

  11. 11
    wreckingbull says:

    Cramer’s statement shows he is not the brightest bulb in the chandelier.

    I would think he is familiar with the concept of ‘buy-low, sell high’, but he appears to be saying that it is better to buy at the absolute peak of a market as opposed to some markets which have actually seen some substantial price drops.

    I wonder if he uses that same logic for his stock picks. Personally, I doubt I could sit through five minutes of his slobbering rants.

  12. 12
    nitsuj says:

    Do a little research on the performance of Cramer’s stock picks when evaluating his real estate statements…

  13. 13
    nitsuj says:

    (oh, that above message is to all, not directed at the tim)

  14. 14
    Madrona says:

    I personally predict that prices will slow, as they have been, and remaining stagnant for a period. I don’t see much of a price correction on the Seattle area market (Seattle proper, and the eastside). Any price correction greater than 5-10% across the board would simply lead to another buying spree from buyers sitting on the sideline waiting because they can’t afford what is offered currently. Any ideas?

  15. 15

    Geez … Seattle where I live now and Montgomery County, Maryland where I grew up …

    Cramer’s a smart guy. He threw those out as a bone. But this guy was renting years ago, before any one was talking about a housing bubble …

  16. 16
    on topic says:

    say Seattle is the last refuge of the speculative buyer, pumped up as the one place that real estate investment money is safe.

    what does that mean for our market?

    will it soften our decline by supporting prices or hold our prices up while everyone else falls and then we fall faster to catch up because the safety nets have been used up (FHA and interest rate drops) and psychology will be at an all time low?

  17. 17
    Chris says:

    I’ve been tracking Seattle (proper) condo listings on the MLS since June. The total number for sale is up from 1100 (6/20) to 1450 today. Condos under 300k, my “cheap” condo search, is up from 300 to 440 in the same time frame. Obviously some were listsed above 300k and dropped below the threshold, but still. Another area of interest to me is 700 – Queen Anne. Something like 30% of the units on the market have dropped in listing price at some point since listed and average days on market is north of 70. Pretty incredible

  18. 18
    deejayoh says:

    w/r/t the drop in inventory…

    You can look at the hourly pulls. On the first day of each month, all 3 sources that Tim uses for his feeds show drops in KingCo SFH inventory between 3 and 8 AM – probably as the update job is run for the data to be used as the month-end figures. Agents have to get their deals in to get paid, I’d be willing to bet. That drop is typically on the order of ~140 houses.

    August
    08.01.2007 03:00 10206 11199 10212
    08.01.2007 04:00 10207 11199 9932
    08.01.2007 05:00 10207 11199 9932
    08.01.2007 06:00 10069 11199 9932
    08.01.2007 07:00 10071 11199 9934
    08.01.2007 08:00 10074 11050 9943

    September
    09.01.2007 03:00 10578 11615 10556
    09.01.2007 04:00 10578 11615 10282
    09.01.2007 05:00 10431 11615 10282
    09.01.2007 06:00 10432 11616 10283
    09.01.2007 07:00 10433 10285
    09.01.2007 08:00 10438 11464 10289

    October
    10.01.2007 03:00 11542 12563 11409
    10.01.2007 04:00 11544 12563 11135
    10.01.2007 05:00 11301 12563 11137
    10.01.2007 06:00 11302 12563 11139
    10.01.2007 07:00 11303 12563 11141
    10.01.2007 08:00 11308 12311 11148

  19. 19
    rose-colored-coolaid says:

    Madrona,

    You mean it will play out just like in where prices dropped? Vultures began swooping in. Prices dropped some more. More vultures. Lower prices. More vultures. Etc. Then vulture stew for dinner…

    Does that sound about right?

  20. 20
    TJ_98370 says:

    A relatively new factor influencing recent sales is tightened lending standards. September on forward sales stats should reflect the effect of these new standards. Reduced sales due to difficulties in obtaining financing will result in declining prices, even in Seattle.

    Cramer says things sometimes for effect more than substance because he is, in fact, an entertainer.

  21. 21
    on topic says:

    yeah, condos are gonna get ugly fast.

    a much bigger oversupply and less sticky prices because there are probably more investor-owned properties

  22. 22
    patient says:

    Madrona, to get a decent SFH you need to come up with ~$600k or more in most of KC. A 10% drop gets you to $540k. I think that will make close to zero difference. At 20% you are at $480k and here I think you might see a slow return of buyers to keep the market balanced for a slow and steady appreciation that can be sustained. No buying spree in sight. Just my guess.

  23. 23
    laxtosnoco says:

    Why is everyone so surprised Cramer is giving out sub par financial advice regarding real estate? Anybody read the Barron’s article showing that his stock picks underperform the market? See: http://tinyurl.com/23gysf . At least he tells a nice story for each stock about why it should go up or down: “I love this CEO and EPS growth is up!!!!!.” As far as I can tell, his justification for purchasing Seattle RE is essentially that “It is a good buy because it hasn’t dropped yet.”

    Why are people still watching this buffoon?

  24. 24
    Madrona says:

    patient, I strongly disagree with $600k being the mean price of decent SFH in King County. Even in Seattle proper that is a tad high by $150k? It seems like some people on here need to be realistic about price / vicinity to job concentrations (downtown Seattle, Redmond, etc). If you want to live *really* close to downtown Seattle, say, in Madrona, you’ll need to pony up the big bucks. But, there are still many undervalued neighborhoods comparitively such as Wedgwood, Beacon Hill, Crown Hill, and large areas of West Seattle (although I personally would not want to live behind the bottleneck of the West Seattle Bridge).

  25. 25
    b says:

    Madrona –

    Nobody wants to catch the falling knife. Just like how people bought to avoid being “priced out forever” a nominal drop in price will be met by most buyers who are not stupid with “lets wait until it drops more”. Unlike sellers, most buyers do not need to buy a home immediately. It is usually just a lifestyle upgrade, and therefore can be put off indefinitely in the face of falling prices, especially if making the wrong decision means you may lose the down payment you saved up for years. Since a few weeks ago you actually need one of those now, hence Seattle sales dropping 50% this month.

  26. 26
    Lumpeninvestor says:

    Just came across this via King5’s condo tracker page:
    http://seattlecondosandlofts.com/2007/10/max-no-more

    planned Condo conversion goes back to Apartments.

  27. 27
    magnolia44 says:

    I took what he said about Seattle and the NY area zip was they are places that have not gone down. He was talking bout declines then said except for. No where did he say those are places to buy, he never said its ok to buy in Seattle.

  28. 28
    patient says:

    Madrona, you are probably right that it’s the more close in areas that has the price level I indicated. I don’t think it matters though since price and income has a tendency to balance out over areas so I still think we will see at least a 20% drop to a slowly recovering sales volume and appreciation.

  29. 29
    BellinghamBoy says:

    A while back I was impressed with the “Flippers in Trouble” site, and started doing something similar for Bellingham. The really hard part is the manual intervention needed to coax data out of the Whatcom County Assessor, but it’s getting better each time I work on it and maybe I can eventually automate that. Anyway, many people consider Bellingham to be pretty immune, but over the last two months I’ve noticed a steady rise in inventory and an ever increasing number of “reduced price” listings. Some people try to cheat by deleting the old listing and adding a new one — but I catch many of them. Fully 36% of the houses listed have now posted a price reduction. Inventory on my search criteria is up 12% since July 30.

    Sadly, my search doesn’t catch everything in the county, e.g., I see signs for places that aren’t in my results, but I’m hoping it is somewhat representative if not spot on accurate. If I change it, new data won’t relate to old so I’m sticking to it.

    Already, there are some Whatcom Flippers in Trouble. Examples:

    Bought for 357k on 8-26-2006, now for sale at $7000 less than that:
    http://homes.realtor.com/search/listingdetail.aspx?lid=1084314875

    Bank owned?
    Trustee sale to Novastar Financial for $294,660 last spring, currently for sale for $224,900:
    http://homes.realtor.com/search/listingdetail.aspx?lid=1086101409
    Loss = $69,760

    Sold 8-8-2005 for 674k, currently listed for $649k representing a 25k loss:
    http://homes.realtor.com/search/listingdetail.aspx?lid=1084595698

    And there are lots of people with houses just on the cusp of a loss — surely these will also result ing a loss once all costs of selling are included.

  30. 30
    Alan says:

    Cue every real estate investor dumping their money into the Seattle market.

  31. 31
    Chris says:

    The first of many houses selling for what it’s really worth:

    http://www.zillow.com/Charts.htm?chartDuration=5years&testAds=false&zpid=49116497

    Repo’ed at $565,000, for sale: $551,000

    it’ll sell, lender repo’s are priced to sell. But lender’s aren’t stupid. They sell for what they can get.

  32. 32
    JohnnyBigSpenda says:

    2 comments:
    1. why would you sell now? … most people that own today don’t ‘have to’ sell… obviously there are some that do, but its not like a year or two ago where it was basically a game of musical chairs and people were moving mostly just because they could

    2. which leads me to my second point, the music has stopped and where lots of people are today is where they will remain. They don’t want to take a loss and they have no reason to. There are many who will not make it through the winter (since they were depending on rising house prices to refi), so maybe those houses will get knocked back to 2005 or 2004 prices. In the mean time, a few on the sidelines will scoop those up and be happy that they finally got their house. I wouldn’t expect them to be selling anytime soon after that either.

    3. why buy now? maybe because you just moved here or you have 3 kids and you want those kids to go to a nice school and renting a 4BR house in the burbs just doesn’t cut it when your wife is used to her granite counters and you like your workshop in the garage…(ie. you like having a ‘home’.) So maybe you sold your other place and you have a downpayment that is made of money that came from increased realestate value (most people that bought a house more than 7 years ago have a good amount of equity by now)…. so maybe you think to yourself, what the heck… renting isn’t an option at this point and the with the money I made on my last place, i’m ok with taking a 10% bath.

  33. 33
    JohnnyBigSpenda says:

    RE: properties getting listed as ‘reduced price’ and offers getting accepted below the asking price. This is a normal tactic in a down market… would you buy a house today if you didn’t get it for ‘below asking’? Everyone wants to feel like they got a deal… its the exact opposite as 3 years ago, where realtors priced things low just to get extra offers and to create bidding wars. Its a tactic… start high, accept somewhere below, knowing that is what you’re going to end up with anyways.

  34. 34
    Mama says:

    JohnnyBigSpenda,
    “you have 3 kids and you want those kids to go to a nice school” — nice schools tend to be very tied to expensive neighbourhoods. We chose to rent exactly because we can’t afford to buy in an area with a good school. Honestly, having three kids is a reason NOT to buy. When school lines get redrawn next year, we can give 20 days notice and move if we don’t like our reference school

  35. 35
    JohnnyBigSpenda says:

    looks like i posted 3 comments and then another one for good measure…

  36. 36
    Joel says:

    maybe because you just moved here or you have 3 kids and you want those kids to go to a nice school and renting a 4BR house in the burbs just doesn’t cut it when your wife is used to her granite counters and you like your workshop in the garage…(ie. you like having a ‘home’.)

    [sarcasm]Yeah, because if you’re not renting it from the bank it’s not a home. And you totally can’t rent nice homes.[/sarcasm]
    I was just in the market for a rental home and found just as many if not more “nice” houses for rent. We had a hard time finding lower end homes for rent.

    The stereotype of rentals (and renters) being crappy is old and tired. That kind of stuff isn’t seen as truth anymore except on realtors’ blogs.

  37. 37
    Madrona says:

    Has anyone seen this site before? http://www.housemath.us/ I ran some numbers, and it seemed to wave a magic wand to determine a “true monthly cost” of buying a house or condo. Just curious if anyone has looked into it at all.

  38. 38

    Seattle is not immune. It won’t take 12 months for the data to start turning.

    Title companies are laying off or going on mandatory 32 hour work weeks to save jobs. This hasn’t happened at this time of year since the early 1990s.

  39. 39
    deejayoh says:

    Jillayne, you rock. I appreciate how willing you are to share your insights!

    I am hearing the same thing anectodally, but I don’t have the experience to put it in context.

    D

  40. 40
    Jay says:

    Regarding condo speculation, I swear downtown bellevue and seattle are looking like downtown miami. I hadn’t been downtown in a while and was shocked to count over a dozen cranes in downtown bellevue. Seattle is just as bad but I couldn’t count them since I was on the freeway at the time. I bet most of those condos are going for big bucks. There will be blood in the streets before this ends.

  41. 41
    wageslave says:

    “The stereotype of rentals (and renters) being crappy is old and tired. That kind of stuff isn’t seen as truth anymore except on realtors’ blogs.”

    Ditto for the stereotype of all home owners you see on this and other bubble blogs. We wouldn’t want to be hypocritical, now, would we, and ask not to be stereotyped while still stereotyping others, right?

  42. 42
    rose-colored-coolaid says:

    wageslave,

    What stereotype is that exactly? I think if you ask anyone on this blog, they will list a number of types of homeowners they know of. Retirees who are free and clear, empty-nesters who are nearly paid off, families making reasonable payments and living in nice neighborhoods, flippers, baby bombers who have pulled out money and will not be ready for retirement, yuppies in affordable condos, yuppies who over-leveraged because they were told it is the only way to get ahead, etc.

    If you feel like people on this board are stereotyping, it is because that’s how you expect to be treated, not because it is actually happening.

    The reason that only the over-leveraged owners are mentioned is because we already know the people who aren’t will be fine. Rather, we attempt to keep attention focused on the 30% of people who are at the most risk and who influence the market.

  43. 43
    Alan says:

    What stereotypes of owners do you see here?

  44. 44
    Buceri says:

    Jay;

    I was up there in July. I counted 10 construction cranes in downtown Bellevue. It reminded me of Shanghai in the 90s.

  45. 45
    rose-colored-coolaid says:

    Madrona,

    I tried your calculator, but it didn’t let me put in negative appreciation, so I couldn’t get a true monthly cost for our market!

  46. 46
    TJ_98370 says:

    Off topic – Maybe this is old news, but I wanted to share this clever web-toy I just found. Valuation means percent over or under NationalCity’s estimated value. Be sure to click on the “View Historical Data”:

    House Prices in America by Median Price and Valuation

  47. 47
    Joel says:

    We wouldn’t want to be hypocritical, now, would we, and ask not to be stereotyped while still stereotyping others, right?

    Now when have I ever done that? And why would I unfairly stereotype house owners when I intend to become one someday? I think you are just wishing I was hypocritical so you could have something to attack.

  48. 48
    CCG says:

    Ladies, gentlemen, and trolls, I give you Cramer and Kudlow on housing in summer 2005, the peak of the bubble.

    “Bubbleheads, Admit Defeat by Housing

    By Jim Cramer
    RealMoney.com Columnist
    6/16/2005 10:11 AM EDT

    As Toll Brothers (TOL – commentary – Cramer’s Take) cruises through $100, it’s time to hold the bubbleheads accountable. Who are the bubbleheads, in my book? Those are the people who have told you to bet against housing and to be worried about the speculative boom in homes.

    Here’s where I am coming from. All day, I listen to and read people who say that housing’s got to roll over, that these companies can’t work, that it is just a matter of time. Then I look to see what’s been outperforming these stocks. Is it drugs? I don’t think so. Financials? Nah. Techs? Nope, not at all. Now I want to know when those who have warned us incessantly or told us it can’t last will get their comeuppance.

    One thing we know about being a bear: It’s a loved sport. You always sound so professorial, so logical. The cynics in journalism — a cynical profession by nature — love to interview the cynics. But at what point are the cynics wrong and not just early? When Toll is at $200? Is that when they are defeated? $300? It’s an interesting question. [CCG: How about $22.35, where it is now?]

    I think that if you are going to prognosticate, you have to be willing, at a certain point, to say, “Well, I was wrong about that one.” If you can’t do it, you aren’t prognosticating; you are a doctrinal prisoner of a dogma that’s not working.

    That’s where we are now, with Toll at $100. We must be willing to hold these people accountable for being wrong.

    Or we should just stop caring and keeping score at all.”

    http://www.nationalreview.com/kudlow/kudlow200506201040.asp

    “Larry Kudlow
    NRO Economics Editor
    June 20, 2005, 10:40 a.m.
    The Housing Bears Are Wrong Again
    This tax-advantaged sector is writing how-to guide on wealth creation.

    Homebuilders led the stock parade this week with a fantastic 11 percent gain. This is a group that hedge funds and bubbleheads love to hate. All the bond bears have been dead wrong in predicting sky-high mortgage rates. So have all the bubbleheads who expect housing-price crashes in Las Vegas or Naples, Florida, to bring down the consumer, the rest of the economy, and the entire stock market.

    None of this has happened. The Federal Reserve has effectively mopped up excess cash and calmed inflation expectations [CCG: This must be why gold has tripled]. That’s why bond rates are hovering around 4 percent, with most mortgage rates about a point higher.

    Meanwhile, the homebuilders index has increased 76 percent over the past year, with particularly well-run companies like Toll Brothers up about twice as much. The bubbleheads missed all this because they haven’t done their homework. If they had put a little elbow grease into their analysis, they would have learned that new-housing starts for private homes and apartments haven’t changed much during the past three and a half decades.”

    Actually, no elbow grease was required. One drop of common sense was all it took. Of course, when you’re a paid troll like Kudlow, it’s more fun to pretend that the people who predict the collapse of a structure built on a rotten foundation are somehow “wrong” by being early.

    I wonder who they think should be “held responsible” for the bagholders who listened to their cheerleading of effortless credit bubble wealth?

  49. 49
    Ouch says:

    Thanks CCG! Your follow up to the “experts” Cramer and Kudlow made my day. I anticipate that a year from now similar quotes from Seattle-area realtors, circa 2006-2007, will look just as foolish.

  50. 50
    The Tim says:

    CCG, that’s a riot, thanks.

    Although it should be noted that today’s price on TOL is after a 2:1 split which occurred on July 8th, 2005, just after the Cramer article. So the comparable price of TOL is really $44.70.

    Still proves the point though. Like I said, the guy is a financial entertainer. And that article you posted was flat-out entertaining.

  51. 51
    Mark L says:

    Chris –

    Does your Queen Anne condo tracking account for listings that were canceled, then immediately relisted under a different MLS# with a price drop? I don’t think this is an ethical practice, but it does happen (and did for one condo a friend-of-a-friend is trying to sell on Queen Anne). Is there a simple way to catch this?

  52. 52
    Ed Hamilton says:

    Hello The Tim,
    Just saw your blog, I’m using this way to bring something to your attention, maybe it’s new …
    Asset price histories sure are best seen inflation-adjusted. My effort:
    “Real Dow & Real Homes & Personal Saving” at
    http://homepage.mac.com/ttsmyf/RD_RJShomes_PSav.html
    (please see last chart)
    To the cited last chart, I just now added the S&P/C-S available data for Seattle, made real and scaled the same way, in pink. See it here:
    http://homepage.mac.com/ttsmyf/plusSEATTLEnewestHousData.gif
    The final two months are 100, then 99.94. I leave reckoning to the reader, except for noting the Seattle trace was: 6+ years relatively constant at ca. 52, ended early 1997.
    Future-estimating using the past is just a maybe, BUT the used past should be soundly shown, which I have sought to do above.

  53. 53
    TJ_98370 says:

    CCG said:

    ….it’s more fun to pretend that the people who predict the collapse of a structure built on a rotten foundation are somehow “wrong” by being early.

    They will also justify their position by saying that they were “right” for x number more months, implying that they are experts at timing the market.

  54. 54
    JohnnyBigSpenda says:

    I can’t wait for the first report that shows the median price in Seattle went down by 3%… how many ways will we read, “I told you so”? (unfortunately, as they sat on the sidelines for the past 4 years, they failed to capitalize on the 30% gain that many owners enjoyed…. I’m thinking they will leave that part out)

    The only way the bubbleheads are ‘right’ about predicting a collapse is if we see a drop that wipes out all the gains the market made for the past 4-5 years. Otherwise, you weren’t ‘early’ you were ‘wrong’.

  55. 55
    TJ_98370 says:

    JBS proves my point?

  56. 56
    rose-colored-coolaid says:

    JohnnyBigSpenda, I also can’t wait to see a 3% drop in price. Followed by another 20% drop.

    For the record, you will see prices revert back to the norm. The only real questions right now are how long, and in what form it will take. Will they drop 80% and we have a depression? How about 20% coupled with massive inflation? Or maybe 5% inflation a year an prices are stagnant until 2020?

    Pick your poison.

  57. 57
    patient says:

    Absolutely proves it TJ and I’m pretty sure that financially strecthed owners (by purchase or re-fi) who betted the “bubble-heads” were wrong wished they had listened if they so much as loose an ounce of equity.

  58. 58
    TJ_98370 says:

    .JBS said:

    …..unfortunately, as they sat on the sidelines for the past 4 years, they failed to capitalize on the 30% gain that many owners enjoyed….

    Judging by current market conditions, I would recommend that you put your house on the market RIGHT NOW to realize that 30% gain. Unfortunately, it appears that you will be competing with all of the other speculators for those buyers that can still qualify for a loan.

  59. 59
    JohnnyBigSpenda says:

    why move? I like where I am and my mortgage is cheap. I guess I could time the market and sell now, and get back in hopefully within a year or two when it bottoms out. But I’d have to rent a place for just slightly less than what I’m paying now for a mortgage and after you look at tax write offs and realty fees… hmmm… why sell?

  60. 60
    deejayoh says:

    I thought trolls lived under bridges. who knew they had mortgages?

  61. 61
    NotaBull says:

    “But I’d have to rent a place for just slightly less than what I’m paying now for a mortgage and after you look at tax write offs and realty fees… hmmm… why sell?”

    So you can realize the gains. If you don’t move, downsize, or take on more debt (HELOC) then you’re not realizing any gain. So go and get a HELOC and realize those yummy gains.

    Alternatively, try and picture how other people’s situations may differ from your own. Close your eyes and just imagine for a second. That’s right… Other people…

    Imagine you’re someone that is not in the housing market. Perhaps a first time buyer, or someone who moved from another state (like me!). Would you buy right now?

    It’s not a question of “shall I sell, rent, and then buy”. Sometimes, other people have other situations, and the question is more like “given that I’m a buyer, should I buy now, or in the future?”

  62. 62
    TJ_98370 says:

    JBS

    Sounds like you are happy with the situation with your house / home. If that’s the case, I agree that it wouldn’t make sense to sell right now, unless, as you mention, you are attempting to play the market (sell high / buy low). My point being, simply, is that a homeowner doesn’t really realize any gain until he sells. Paper gains based on increased evaluations are worthless until converted, right?
    You’re not one of those who believe home equity loans are like free cash are you?

  63. 63
    TheDexter says:

    I don’t see an average two year gain of 150k in Seattle going away anytime soon. But if you want to sell a house in town this month, prepare to take 30k off. Still, this is not a Sky Is Falling scenario by any means. As for listings dropping off, don’t forget the cancellations. Many of us simply do not have to sell and are going to ride it out. Plenty of my clients are anyway.

  64. 64
    wreckingbull says:

    When I was a home owner, I had a reasonable mortgage payment and was quite happy. I did not care about things like trolling bubble blogs.

    Now that I have sold my place to a greater fool, this blog is more interesting to me. But for the life of me, I don’t understand why people like Big Spenda waste their time here if they are in fact comfortable with their finincial decision of home ownership.

    Why the incessant need to defend your decision to buy? Is something nagging at you from the inside?

  65. 65
    JohnnyBigSpenda says:

    DJ: If everyone on this board agreed on everything, it sure wouldn’t be as thought provoking. Calling someone names who doesn’t share your belief, or maybe shares it, but not to the same extreme… I appreciate the schoolyard namecalling and look forward to more of it… it sure adds to the conversation.

    TJ: All I’m saying is, I agree with you. I’m fine with the equity cushion that I built based on the crazy market around me. Did I put money in to gain that 30% (on paper)? No. Therefore, if it drops a little (on paper) oh well. I’m here for a while and if it gets really bad, maybe I’ll see a 10% loss off what I paid for the place… consider that the cost of enjoying living in my own home.

    WreckingBull: thanks for the freudian analysis. I’ll look into that and get back to you. I’m always up for a deal… that’s why I’m here… trying to get a pulse on the market. However, everyone here needs to do a little research outside this board once in a while too so they can formulate an opinion of their own. Its easy to get bogged down with the ‘facts’ that are being presented. Watch many michael moore movies lately?… better watch with an educated eye, or just drink his koolaid… your choice.

    I’m thinking the ‘truth’ is somewhere in between.

  66. 66
    rose-colored-coolaid says:

    I’m thinking the ‘truth’ is somewhere in between

    Is Brittney Spears actually a man? Or is she a block of wood? The truth is somewhere in between.

    Is Bob Dillon the greatest president of the world? Or is he a mechanized gorilla? The truth is somewhere in between.

    Will all homeowners tap miraculously equity from their homes for all time? Or will they all be paying 120% of their income towards property taxes? The truth is somewhere in between.

    My point; that’s a worthless comment that people make when they don’t have a clue and they don’t want to actually do any research.

  67. 67

    […] Thanks to Lumpeninvestor for pointing that one out in the comments. […]

  68. 68
    stephen says:

    “My point; that’s a worthless comment that people make when they don’t have a clue and they don’t want to actually do any research.”

    What a load of crap. What exactly have you researched?

  69. 69
    Matt says:

    I agree with Stephen, Coolaid, you came off sounding very weak while Johnny’s post came off as very moderate and well-reasoned.

    I enjoy this site, but I’m beginning to think that there’s a growing contingent that has as much ostrich syndrome as the real estate agents do.

  70. 70
    deejayoh says:

    DJ: If everyone on this board agreed on everything, it sure wouldn’t be as thought provoking. Calling someone names who doesn’t share your belief, or maybe shares it, but not to the same extreme… I appreciate the schoolyard namecalling and look forward to more of it… it sure adds to the conversation.

    spare me the holier than thou act…

  71. 71
    Mack McCoy says:

    Jim Cramer knows something you don’t know. Jim Cramer knows something I don’t know. When we have Jim Cramer kind of money, we don’t care about fluctuations in the housing market.

  72. 72

    Matt Lauer: “The overwhelming majority of the responses we got through email said that you’re ignoring the fact that real estate is regional, and there are some places where it is a good time to buy. How do you respond?”

    Jim Cramer: “Seattle, and 10005 are the only two. Maybe Montgomery County in Maryland. Three. That’s it.”

    Got to love Cramer, although he’s a little much to take sometimes. I don’t necessarily agree with him all the time and in this case, I don’t at all.

  73. 73

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=""> <s> <strike> <strong>

Please read the rules before posting a comment.