NWMLS: Closed Sales Drop Through the Floor

Is it time for November NWMLS market statistics already? Yes, it is.

Here’s the NWMLS press release: November’s Housing Activity in Western Washington Reflects "Microclimates"

“Real estate microclimates can behave very differently,” according to one industry leader in commenting on the latest report from Northwest Multiple Listing Service. On first glimpse, the statistics for much of Western Washington indicate a market slowdown persists, but a closer look illustrates the “microclimate” theory…

Here’s your King County SFH summary:

November 2008
Active Listings: up 2% YOY
Pending Sales: down 21% YOY
Median Closed Price*: $395,000 – down 9.2% YOY

Like last month, the biggest news isn’t part of the usual set of statistics we summarize here. What immediately jumped out to me was Closed Sales, which were down a whopping 43% YOY, coming in at just 869 SFH sales county-wide.

For comparison, that is lower than any month on record (post-2000). Before the market around here started to deteriorate late last year, the fewest closed sales in any month was 1,235 in February 2001. Last month’s number was 30% lower than that.

For a little more context, from 2000 to 2007 closed SFH sales for November ranged from a low of 1,427 in 2001 to a high of 2,441 in 2004, with an average of 1,947. This November came in at less than half that many closed sales. YIKES.

Here is the updated Seattle Bubble Spreadsheet, and here’s a copy in Excel 2003 format. Click below for the graphs and the rest of the post.

Here’s the graph of inventory with each year overlaid on the same chart.

King County SFH Inventory

Inventory is still holding levels just barely above last year’s record highs, declining at an almost identical rate, in the standard manner for this time of year. No surprise there.

King County SFH Pending Sales

The huge dive (25% in a single month) we saw from September to October translated into an even bigger drop in closed sales, which plummetted over 34% from October to November. Ouch.

Here’s the supply/demand YOY graph.

King County Supply vs Demand % Change YOY

Looks like it’s back to the usual negative twentysomethings for the year-over-year sales stats.

Here’s the chart of supply and demand raw numbers:

King County Supply vs Demand

Note that Months of Supply shot even higher, reaching yet another all-time-high of 8.75. Maybe next week’s poll question should be something about the maximum MOS we’ll see in King County SFH.

Here’s the median home price YOY change graph:

King County SFH YOY Price Change

With a record-low number of closed sales making up the sample set for this statistic, it is not surprising to see the data getting somewhat more noisy.

And lastly, here is the chart comparing King County SFH prices each month for every year back to 1994.

King County SFH Prices

November 2008 King County median SFH price: $395,000.
November 2005 King County median SFH price: $389,000.

Here are the news blurbs from the Times and P-I. Check back tomorrow for the full reporting roundup.

Seattle Times: King County home prices fall 9.2% in November
Seattle P-I: November house prices dip from year earlier

I notice that neither of the articles makes any mention of the astounding plummet in closed sales. Shocking.

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

77 comments:

  1. 1
    EconE says:

    Tim…are you able to throw together a historical (2000-2008) graph for closed sales that is similar to the inventory and pending sales graphs?

  2. 2

    WE PREDICTED THIS CLOSED SALES ANOMALY TOO, ABOUT A MONTH AGO

    Gawd, we’re good….lol

  3. 3
    The Tim says:

    EconE,

    You mean like this?

    It’s actually already in the spreadsheet. Just added it before making the post. :^)

  4. 4
    Joel says:

    Is MOS using closed sales a valid metric?

    Edit: Whoah, closed sales graph is pretty stunning. Thanks.

  5. 5
    The Tim says:

    Joel @ 4,

    The standard method of calculating MOS uses pending sales, so that’s what I use. If we use closed sales the number becomes much higher, having been in excess of 7.0 for all of 2008 and reaching nearly 12 for November.

  6. 6
    The Tim says:

    Just for kicks, here’s another chart of closed sales by month. Same data as above @ 3, but in bar chart format.

  7. 7
    Matthew says:

    Wow, talk about falling off a cliff. No chance for a rebound anytime soon.

  8. 8
    Joel says:

    Yeah, I know MOS uses pendings, but I wonder if there is any reason using closed sales could be misleading. If not, it seems like it might be a more accurate measure of relative activity if many pendings aren’t closing.

  9. 9
    The Tim says:

    I agree Joel. It’s probably a more accurate way to gauge true supply and demand. I may start including MOS (Closed) or something like that in future graphs.

  10. 10
    deejayoh says:

    what I have noticed in other markets is that sales pick up when prices really start falling – or vice versa. Given that M2M pricing was pretty much flat, I am not surprised there are no sales. Especially given the time of year.

    I guess with so little business, it was easy to get the report out early this month!

  11. 11
    patient says:

    So perhaps that prediction of number of notice of defaults meeting closed sales isn’t so far in the future after all…

  12. 12
    Roy says:

    By my estimates, the market is now back in line with where it should be if one assumes real estate doubles every 10.5 years. This was the level of growth pre-bubble in Seattle and Portland (1990-2003….I’d go back further but that’s as far as the Case-Shiller index published data for :) ). That would put real estate growth at 6.5%/year, much more in line with wage growth than housing price growth we had seen these past 5 years. Right now, the average YoY growth from 1993-present is right at 6.3% (Compounded, of course).

    Is this estimate accurate? If it is, it would seem to reason that we’ve let most of the air out of the bubble at this point in time, and any further deflation is due to panic. I’m not saying prices aren’t going lower…just saying as just as the double digit growth from the past 5 years was out of touch with reality and due to reasons beyond fundamentals, any further deflation would be due to reasons beyond fundamentals.

  13. 13
    waitingforseattletocool says:

    It is pretty clear the government does not like the price of housing, bonds, stocks, american cars, etc. and will do everything it can via bailouts, creating markets for mortgage backed securities, subsidies, etc. etc. to try to turn this around.

    My general question to the Bubble is: How will the recent proposal by the Fed and the soon to be proposal by the Treasury imact the housing market in Seattle area? I am assuming conforming loans will probably be in the 4.5%+/- range in the very near term.

  14. 14
    jon says:

    If they wanted to drive sales to zero, short of outlawing them, the best way they could do that would be to announce that there is soon going to be a very low rate that is available to purchasers only.

  15. 15
    Greg says:

    The rate adjustment for conforming loans will have to continue to drop to that level to jump start any forward movement in our market and across the nation.

    The feds will try to manipulate us out of this mess they have created, but it is going to be a while before we see any real gains in appreciation in housing.

    Housing and price drops will be around for another year to 18 months. There are commercial loan problems with retailers, store closings, job loss, all of which will feed into fear and low consumer confidence.

    In Seattle the down town core is something to watch over the next 12 months. There are numerous condo hi rises, that are now going to turn towards rentals. This influx of new luxury rentals will flood the market, causing lease prices to lower. Many developers simply are not going to be able to handle the debt load and feed the project as a rental. It is going to be interesting to see what happens. We will see if lenders will work with these developers to renegoiate their underlying loans. Some will make it work, others wont. My thoughts are we will see a couple condo projects in the core, eventually go back to the bank and be auctioned off. Which in an area like ours that is relatively small, will devalue condominiums across the board. It is all ready underway and is happening in outlining areas. It will work its way into the core of Seattle.

    Tim,
    Nice job on the graphs. That clearly shows that we had unchecked appreciation for years, driven in part due to speculaters and investors that were allowed to buy in early and flip units. Fortunately for all, that is over for the next few years.

  16. 16
    Ray Pepper says:

    Good Lord!! No wonder we have been so slow. Might have to cut back on the Comcast Commercials and make more U Tube Real Estate videos. Either way its permitting me more time to watch my favorite show.

    http://www.youtube.com/watch?v=DXHaCEhOiWU

    See its not all bad. Life is good!

  17. 17
    Greg says:

    November’s Housing Activity in Western Washington Reflects “Microclimates”

    This is such hype and garbage and I am in the business. I just went and read this article and it doesn’t suprise me in the least. If realtors want to be trusted, then tell people the truth. You can always manipulate the data, especially the data the NWMLS has, because most of it is not accurate and is only as good as the realtors reporting it. Most developers who were big on in house early pre-sale events never posted their sales. With the fall out of the Moda and others, we dont know how many lost sales there are as well. Nor do we really know how many sales went unreported either. The city records of closing were running 12 months behind so it has always been a struggle to get real information that one could substantiate on a consistently and timely fashion.

    Our Seattle marketplace with regards to new construction has been nothing more than a shell game for the past five years. You can’t spin your way out of that one. Sorry for the venting.

  18. 18
    Civil Servant says:

    I liked this part of the press release:

    “If inventory continues to shrink, if lower interest rates are maintained, if homebuyers are stimulated through proposals like the $7500 tax credit plan the National Association of Realtors® proposes for every buyer (not just first time buyers), if GSEs (government sponsored enterprise) set their loan limits at the highest levels, and if the banks are required to work with existing troubled homeowners by reducing their payments or arranging repayments at lower interest rates (but not focusing on debt forgiveness), we could all breathe a bit easier for 2009,” [Windermere’s] Beeson suggests.”

    Wow, all it’s going to take is the confluence of these five uncertain factors to make the market slightly less dicey. Not exactly a ringing endorsement.

  19. 19
    S-Crow says:

    Snohomish Co with YOY sales drop of 53% is placing tremendous pressure on those in the business that are leveraged. There are not many businesses in any industry that can take that kind of a hit and put lipstick on it.

    That being said, I believe that the psychological impact of rates below 5% will move a lot of people toward buying. Refinancing is already underway.

  20. 20
    EconE says:

    Thanks Tim :o)

    I tried the spreadsheet but my computer is pretty much devoid of anything to open it.

    I think.

    I know…I shouldn’t admit what a technical knuckledragger I am with all of you uber-techs around.

  21. 21
    Joel says:

    but not focusing on debt forgiveness

    The only that could really help underwater homeowners is the very help they want to prevent. Oh yeah, realtors really care about their clients.

  22. 22
    Demersus says:

    Tim, or anyone, did you see the front page story in either the Times or the PI yesterday talking about how we’ve got a long way to go before the bottom? I saw it in the stand, but only read the short blurb and headline. I’ve been trying to find it on their web sites, but for the life of me I cannot figure out how to find archive of prior front pages. General searching, even w/ advanced features and date narrowing isn’t yielding what I’m searching for.

    Anyway, it was a shockingly realistic piece were they said it could take a decade or more to fully recover.

  23. 23
    voight-kampff says:

    to greg @ 15&17,
    there are only a few “highrise” condo units under development in the “core”, you say numerous condos will convert to apartments? 1521, olive8 and escala are the only condos in the “core” , just curious are you including slu, capitol hill, and belltown in the core? 1521 and olive8 were both over 80% sold ( 5% deposit required ). I believe seeing how many reservations at 1521 actually close will be a good litmus test for confidence, being that almost every unit is over 1million. I am following these downtown condos very closely as i reserved a unit at olive8 ~3 years ago. I am aware many people will not qualify for the loan to purchase anymore, or will just be nervous ( I know I am )and possibly walk from their deposit. I am pretty sure most advice on this site would be run for the hills, 5% be golly’d. But I am curious what others think.

  24. 24
    magnolia44 says:

    bring on the sub 5% an extra 3 to 400 bucks a month will be nice. Tough numbers for those needing to sell list prices way too high on most homes.

  25. 25
    DavidB says:

    I heard on CNN this morning that the sub 5% interest rate is being discussed for home purchasers only, not refinancings. The low interest rates will move some buyers off the fence but probably not enough buyers to prop up home prices.

  26. 26
    Scotsman says:

    What these numbers say to me is that buyers have come to accept a certain set of facts that sellers still deny. For buyers, it costs nothing to wait and see what happens next- the chance of prices suddenly taking off is close to zero, and there’s a good chance they’ll fall even further. For sellers, the future lies somewhere between disappointment and real pain. They know it, but don’t want to accept either right now, so they “pretend” everything is going to work out. The result is a dead market.

    As for the new lower rates for purchases, they won’t have much impact. See my comments above- buyers will wait, sellers will wish.

    I do think rates for everything will continue to fall for some time, whether the government intervenes or not. There’s still money out there, but demand is down, so rates are down. This will help those who can refi, but won’t have much impact on new sales, as the average consumer is still over extended, doesn’t have any savings, and may not have a job soon.

  27. 27
    magnolia44 says:

    Bill Gross told people to hold off on refi’s that high 4’s or 4.5 was coming, we know his predicition on the fnm and fre debt and how that worked out. As for low rates and what it does i think stabilization of the economy and a 4.5 rate for buyers will help, either way the only issue i care about is jobs not whether I am in or out of the money on my house. I have no where to go, last i checked my 401k was down in the 20% range, do i expect it to be that by the time i retire…. i sure hope not same goes for my home.

  28. 28
    b says:

    With the new Fed pissing into the wind plan, the people who were going to buy still will and might save some money (although they will be screwed when they sell it in 5 years at much higher rates).

    Risk is getting priced back into real estate in Seattle and $200/month off your interest payment is not going to solve that anytime soon. Even if homes magically stopped depreciating, unless you are in a business that thrives during recession you’d be nuts to lever up into anything right now.

  29. 29
    Greg says:

    To: voight-kampff

    The downtown core has grown I suppose. I guess I would include First Hill, Vulcans projects, etc. The downtown core 10 years ago meant the business core. Which is more of what you were thinking. From all of the out of state developers we have had flood into our market since then, they seem to look at our core area being much broader and I guess I now feel the same way. It would encompass parts of Cap Hill, First Hill, Pioneer Square north to Denny Way?

    Im not saying you should worry or run away from your deposit, but that is what I am watching as well. I have heard only rumors on 1521 and am curious as well on Olive and the Four Seasons. It will all depend I believe on how motivated the seller is to keep sales in place. If there appears to be some fall out and or clients that are not able to perform or obtain a loan, the seller and sales team should be making contact with all buyers now and work with them ahead of time to make sure they are still able to close. You have to be pro-active as a seller in this market. So I dont know if it is a price concession, buying the rates down, or paying for closing costs, but I would do what ever it took to ensure the buyers I had were still able and motivated to close.

    The Moda (obviously a different product type) was at a point where if they engaged the right people could have closed the buyers they had by working with them. With the unit sizes and price points there, they could have offered FHA terms due to their condo doc’s had seasoned for a one year period. There were other ways to get around rising pre-sales requirements by FNMA by phasing the project, and they didnt take them? It just baffles me.

    So in closing, I didnt mean to make it sound as bad as I did, but I do feel we have a long way to go to get thru this. I guess my advice would be if you sense a large fall out at Olive, and the seller will not work with you, I guess I would walk away. My gut feel is that 1521, Olive, etc will take a hit of at least 25% of the pre-sale buyers leaving at ocupancy?

  30. 30
    Teacher_Greg says:

    Any thoughts on whether the promise of lower interest rates in the future not only effects demand, but supply as well? I wonder if sellers on the fence view the “increased demand” due to lower interest rates as a reason to put their house on the market. Thoughts?

  31. 31
    Sniglet says:

    I believe that the psychological impact of rates below 5% will move a lot of people toward buying. Refinancing is already underway.

    Low rates might encourage SOME people to buy, but this is overwhelmingly negative. Rates are low because everyone is rushing to de-lever and put their wealth into US government backed securities. This is VERY bad, and is a sure sign of impending deflation.

    Again, I point to Japan which has had very low rates for almost 20 years, yet that hasn’t done a thing to bring it’s real-estate market out of the dolldrums.

    Take a look at my blog, where I have some articles on why all the stimulus in the world can’t stop deflation. http://www.surkan.com

  32. 32
    Yesler Hill says:

    First; more excellent graphs, I always enjoy studying them.

    If people are already heavily burdened with debt, that can no no longer be serviced with more debt, and US household incomes have been stagnant for the last few decades, I just don’t see there being enough people with the cash or credit to “reinvigorate” the Puget Sound areas RE markets. Even with 4% rates. That may bring out a brief surge, but I really can’t see how housing prices can avoid continue to decline, for some time to come?

    A couple months

  33. 33
    Scotsman says:

    I think a lot of the sellers on the fence are probably under water financially, or at least at surface level, having bought in 2004-2006 during the run-up. I know a couple of folks in that situation. They’d like to sell, but closing would require them to put cash on the table, cash they don’t have. So they sit tight, and tough it out, hoping for things to change.

    This market won’t pick up in terms of closed sales until the sellers decide that bailing out now will be less painful than doing so in the future, or just throw in the towel and walk away. A huge percentage, indeed a majority, of the sales in CA, AZ, etc. are foreclosures and short sales. Our market hasn’t gotten to that point yet, but when it does the closed sales number will head back up.

  34. 34
    Sniglet says:

    Any thoughts on whether the promise of lower interest rates in the future not only effects demand, but supply as well?

    There may be a short-term blip in both sales and supply due to low interest rates, but these very low rates are actually a screaming signal that house prices are going to crash. What good are low rates when real-estate prices are declining 5% or 10% every year, for many years?

    I have a podcast explaining why low rates are something to fear at http://msurkan.podbean.com.

  35. 35
    S-Crow says:

    Sniglet,

    I understand your point and your recent emphasis on price drops, but it will probably be meaningless to those with existing mortgages that are 1.5+ pts higher than rates at 5% or lower. Don’t forget, FHA is a prime vehicle for people to refinance into at around 96-97% LTV. People are consolidating debt as well. Homeowners will refinance and they are. I have about 80 files idle and several have just been revived.

    The news regarding rates dropping into the mid 4’s being solely for purchases is not going to be the case in my view. I don’t know how specific rates could only be reserved for purchases, unless is was some sort of legislative action. But the political firestorm would probably squash that idea. If rates drop that low we will have a refinancing push. While quite a few borrowers may be upside-down, a lot have enough equity to refinance going conventional. If low LTV then they’ll be a candidate for FHA, which is what is occurring right now.

  36. 36
    Sniglet says:

    S-Crow,

    I agree that low rates are good for people who already have mortgages since it can lower their costs, but they are very bad for real-estate, in general. It’s so worrisome that those who are actually able to refinance (i.e. because they do have equity) might want to consider just cashing out to avoid the devastating price declines that are coming. When prices fall another 60% I am sure there will be many home-owners who wished they had sold.

    As far as the future of rates go, I wouldn’t be surprised if they go even lower than 4.5%. Heck, 3% rates sound much more likely to me than 6% ones in the next 3 years. 2% for a 30-year fixed loan isn’t even beyond the realm of possibility.

  37. 37
    greenthum says:

    Demersus:

    There was an article in The Seattle Times on 12-03-08 entitled “Real-estate rebound? We haven’t hit bottom” by James R. Hagerty / The Wall Street Journal. Maybe you’d have better luck searching the WSJ website.

  38. 38
    johnnybigspenda says:

    Believe it or not, there are a number of folks who are quite content to live right where they are. The % of owners who bought between 2004 and 2006/7 as a % of the entire market is a bit exagerated… yes, they are the ones who are really in trouble since many overbought thinking that realestate was a guaranteed investment… but there are many who will be just fine staying where they were planning on staying anyways.

    I agree we overshot on the upside and we will also overshoot on the downside, but there will be a certain point where folks who *thought* they were worth $1MM will go back to being regular people… just like the dotcom boom. (everyone thought our financial system was kaputz that time too).

    There*are* people out there who are willing to be “underwater” for some period of time…these same people actually care about their credit score, they don’t want to hand in the keys… if they are on the edge right now and a rate drop from 6.5% to 4.5% will save them $300/month… you can bet they will take it. This represents more than just a handful of homeowners and will affect the supply side to some extent.

  39. 39
    johnnybigspenda says:

    I also wonder: the advice here is “sell your house now, rent for the forseeable future”. What is Seattle’s rental vacancy rate right now? Like 5%? How many people could sell before there are no more rentals? What would rental prices look like? I’m going to stereotype here but lets guess that the main demographic of this site is 25-35 years old, males, single/dating or just married, no kids (probably 80% of the people here)…. so ya, maybe renting might work great for you… what about the family with 3 kids in elementary school who have friends, a dog and the boat in the driveway… not quite so simple to find a rental.. especially when we are at 5% vacancy already (and most of those are 1 or 2 br apartments).

    Best suggestion i have heard so far is: “run for the exits if you are a homeowner”… nice in theory.

  40. 40
    deejayoh says:

    Best suggestion i have heard so far is: “run for the exits if you are a homeowner”… nice in theory.

    that was so two years ago. telling people to sell now is like telling them to get out of the stock market next week.

  41. 41
    Sniglet says:

    telling people to sell now is like telling them to get out of the stock market next week

    And just what would be so terrible about that advice? If stocks are going to drop another 50% or so (I am the guy calling for sub-2000 in the Dow, remember), then selling now is the smart thing to do. I am sure there are lots of Japanese who wish they’d sold stocks when the Nikkei was down only 50% from it’s peak (20 years ago)…

  42. 42
    what goes up must come down says:

    S-crow I agree with you people will refi for sure and as you said the real push will be debt consolidation. I believe people will roll in the credit card debt, car debt, etc… now in the short term this will help but debt is debt and by rolling it in even at the lower rates I don’t think overall payments will go down that much so a few months later people will be back to square one and the next time when they can’t refi people will start walking.

  43. 43
    Sniglet says:

    people will refi for sure

    Let’s not get too carried away here with predications of mass waves of refis. Let’s not forget that vast numbers of home-owners will be unable to qualify for any refi at all (i.e. they are under water, have poor credit, etc). In fact, the people who are in the most stress and could really use payment relief are going to be the least able to take advantage of the low rates.

    The foreclosure machine just rolls on…

  44. 44
    what goes up must come down says:

    johnnybigspenda — when people realize they are not worth $1MM will your name change to johnnyaveragespenda?

    I do agree with some of what you said, alot of people will just stay where they are and ride it out. The only thing that I think is the wild card is — JOBS. If unemployment really gets going than all bets are off and things get nasty very fast.

  45. 45
    what goes up must come down says:

    good point sniglet

  46. 46
    mukoh says:

    To me owning my home is about control. I don’t have a lease, I have a fixed payment for 30 years that I control by putting more money into it to pay it off in 12 years. I don’t have a landlord pushing my rent up, or moving every 6 months. That is just me though.

    I do like my control over renters being a landlord, and pushing other peoples rents up though.

    A lot of people look at it the same way.

    This stats drop is great though. I am glad to be on the sidelines with more money to buy more rentals when I see fit down the road.

  47. 47
    Sniglet says:

    alot of people will just stay where they are and ride it out

    I know this is sounding repetitive, but I can’t resist: this is exactly what happened in Japan. Most people have just toughed it out and sat on their property even though they might be deeply under-water. But that hasn’t prevented prices from falling for some 20 years. I am sure we will see lots of people in the US hang on as prices crash.

  48. 48
    Angie says:

    Mukoh, your comment reminds me to ask if y’all heard the program on Weekday today about landlord/tenant law? The program started out focused on the issue of foreclosures on rental properties and the effect on a tenant in that situation (which can be pretty serious–20 days to vacate before eviction proceedings start, etc.) but then ranged fairly broadly around other landlord/tenant law.

    Main upshot of it seemed to be that tenants really do get the fuzzy end of the lollipop, in lots of ways. It was really pretty informative, and I’ll bet it’s online; y’all might want to check it out.

  49. 49
    Joel says:

    Being able to do what you want with your property is nice, but owning a home doesn’t guarantee you’ll be in control. It really depends on your situation. A lot of people who bought in the last few years are stuck in their homes and mortgages. They can’t sell, they can’t move, they can’t refinance. I have a friend, same age, same family situation (married, one kid) that tried to dump their condo this summer so they could move into a house, but nobody would buy it for more than their mortgage. I, on the other hand, could move any time I wanted. Got a huge paycut? I’ll move into an apartment. Got a huge raise? I can buy a house and move in if I want. Got laid off and have to move out of state? No problem.

    My friend? Not so much. He’s in total control as long as he never wants to leave his condo. Plus I pay almost half as much as him for a much bigger place. He may get to control his small condo, but I get to control an extra $1,600/ month.

  50. 50
    what goes up must come down says:

    Angie, wouldn’t it be worse to be the owner in the case you just cited? I mean the renter has the pain to move, etc… but the owner was foreclosed on and lost the asset? So I guess I don’t understand your point. Moving is a pain no doubt especially in 20 days but losing the asset would be worse.

  51. 51
    mikal says:

    Sniglet, you are the new RAY 500.

  52. 52
    Buceri says:

    Following on Sniglet’s comment –

    Some very important differences with Japan that can make our situation worse are:

    1) Japanese are savers.

    2) Japanese stay in their Tokyo hole in the wall for the rest of their lives. No pressure to move. In the rare case of job loss; they’ll find something else in Tokyo.

    Our citizens are in debt and in the case of job loss, we generally relocate.

    With regards to interest rates – jobs, jobs, jobs. An $1800 mortgage payment, even at 1% interest, is huge when you don’t have income.

    And newsflash: People have been out of work for much more than the 6 months unemployment covers. And now they are reporting people out for over a year.

    November job loss numbers out today.

  53. 53
    Sniglet says:

    you are the new RAY 500

    With one wee exception: I am not trying to hawk some commercial enterprise (not that that would be a bad thing, I just don’t happen to have one to push).

    Also, I think I tend to be much more long-winded than Ray in many of my posts….

  54. 54
    Buceri says:

    533,000 jobs gone.

  55. 55
    johnnybigspenda says:

    Hey Sniglet,

    Just wondering what you think of Nouriel Roubini’s predictions?

  56. 56
    Demersus says:

    Greenthumb, thanks for the information. I found the article. My favorite line so far, “As boomers relocate to retirement homes and cemeteries, there will be a lot more sellers than buyers in parts of the country, he says.”

    Relocate to cemetaries; that’s just rich.

  57. 57
    dailyt says:

    Ouch:

    Buceri, did you read the Bloomberg article on the job loss #’s? Here’s one clip from the article that makes me cringe:
    “We don’t get the job losses stopping until 2010,” Kurt Karl, chief U.S. economist at Swiss Re in New York, said in a Bloomberg Television interview.

    If Seattle is behind the curve relative to other parts of the nation, then does it follow that job losses & economic woes will continue to batter the state well into 2011 and 2012?

  58. 58
    deejayoh says:

    Layoff ledger at the Seattle Times

    Might be a good one to link off the home page

  59. 59
    Luis says:

    Sniglet,

    There is a lot of talk of deflation on this site and you are probably its most extreme forecaster. I understand the basis of your argument, essentially that all debts have to be paid eventually and debt will cause a deflationary stranglehold.

    Its definitely a possibility.

    What I want to ask you and other bubbler’s is what if the government injects money into infrastructure and job creation instead of handing it out through the fed? If money is spent on infrastructure and building a green collar economy there will be a return on investment when the bill comes due, potentially staving off or limiting deflation.

    So tell me why thats wrong?

  60. 60
    patient says:

    Going forward I think for every fence sitter that gets lured by say a 4% interest rate to buy two will get off the fence on the other side due to the realisation of the economic woes. Thus the fence sitters will shrink to almost nothing until buying becomes a real bargain.

  61. 61

    BAIL OUR WAY OUT OF THIS MESS?

    LOL. Who do we bail out first? Loan Foreclosures/bankruptcies [homes, college, credit cards, etc]? New purchases [homes, credit, etc]? Detroit? Japan? Retirements? Homelessness? Medical shortfalls?, etc, etc…..

    I suppose we can keep picking and choosing which elite to give a bailout too, adding this debt to our children’s children; but this route is a road to ruin, i.e., what we’ve already tried and failed at miserably too. Ask Paulson.

    So bloggers, don’t expect a 4.5% interest bailout in your Christmas Stocking, with a simultaneous approximate 20% “real unemployment rate” in America per today’s NYT’s article:

    http://finance.yahoo.com/career-work/article/106262/Workers-Give-Up

    Hades, the approximate “real 20% unemployed [or uneremployed, same thing]” need decent jobs, not a bankrupt federal government pouring out the last of its tax money to home rich developers at 4.5%. A grade school kid could figure that one out.

    Here’s an excerpt from a good website I stumbled on and its my opinion in a nut shell:

    “….After all, every dollar they waste, oops, I mean invest, in U.S. bonds and mortgages (debt) is a dollar not invested in their own nations’ well-being. Eventually their own people will demand that the surplus be invested in their own nation rather than propping up The Empire of Debt, a.k.a. the U.S.

    At the local and state level, bankruptcy will become inevitable as soon as revenues are dwarfed by expenditures and pension/benefit promises. The city of Vallejo has offered us the template which will be followed hundreds of times in the coming decade: recalcitrant public unions demand more taxes to cover the structural budget shortfalls and complain “the money’s gotta be here somewhere,” and after cutting services to the bone the city finally declares bankruptcy….”

    The rest of the URL:

    http://www.oftwominds.com/blogjuly08/bankruptcy7-08.html

  62. 62
    patient says:

    What makes the problem bigger than neccessary for sellers are the high listing prices. We here a lot about “always be looking”, “make and offer” etc. However I think most fence sitters gauge the market from internet listings. It doesn’t matter if the $500k type of homes they been eyeing can be had for $400k after lowball offers if they are listed at $500k. The potential buyer will glance at the price of the homes that matches his search and shake his head and not even bother moving ahead with pre-approval etc. In summary listings must come way down in price before there will be any uptick in buyer interest.

  63. 63
    Sniglet says:

    what if the government injects money into infrastructure and job creation instead of handing it out through the fed?

    Spending money on infrastructure rather than bail-outs might result in less of an absolute loss for the tax-payer (i.e. there is actually an asset when all is said and done). However, it won’t help one bit in arresting the collapse in asset prices we are going to see over the next 5 to 10 years. I know I am sounding like a broken record, but Japan is again an excellent case in point. Most of their stimulus spending over the last 20 years was spent on infrastructure, but it did NOT stop deflation (they are just now experiencing even DEEPER deflation, after 20 years!!!!).

    There is NOTHING the policy makers can do to stop this, now that it has occurred. The only thing they will achieve by throwing money around is to 1) prolong the pain and 2) put the nation in a worse fiscal situation for future generations.

  64. 64
    Interloper says:

    Patient wrote: “It doesn’t matter if the $500k type of homes they been eyeing can be had for $400k after lowball offers if they are listed at $500k. The potential buyer will glance at the price of the homes that matches his search and shake his head and not even bother moving ahead with pre-approval etc.”

    Very true. People need to cut their listings. 2004-2006 is over with, and not likely to be repeated in our lifetimes.

  65. 65
    rent for now says:

    3 kids. renting for the past 3 years, no worries.

  66. 66
    deejayoh says:

    Here’s why the government can’t spend it’s way out of deflation
    – Losses to NYSE Market cap = $8.3 trillion
    – Losses to NASDAQ market cap = ?? trillion (off 50%)
    Change in value in residential real estate value = $6.0 trillion
    Losses in debt markets = ?? Trillion

    I can’t find all the supporting data, but I expect that the total losses to date in what people perceived as their “assets” easily exceed $30 trillion.

    Even if you believe the most aggressive estimates of what the government has pumped into the market it doesn’t but a dent in that loss. The biggest number I have seen is $7 trillion – and I don’t believe that number given that over the history of the US we have only run up a $10 trillion tab for public debt.

  67. 67

    Greenthum, demersus, I was confused as hell by the same thing — Seattle Times cover article nowhere on their site? Thanks, greenthum, for noticing the WSJ connection. Even the WSJ is pulling no punches now.

  68. 68
    The Tim says:

    Btw, you can find a pdf of the current day’s Seattle Times front page here: http://seattletimes.nwsource.com/PDF/frontpage.pdf but they do not appear to provide an archive of previous front pages.

    The P-I, however, does provide such an archive here: http://seattlepi.nwsource.com/frontpage/

  69. 69
    Demersus says:

    Hi Tim,

    Yeah, I found the current front page, but I know in years past I could pull up front pages by date in the archives. They probably want one to have an account to do that now, especially since their RE advertising $’s are likely drying up, etc.

    Being a dirty renter has never been quite so satisfying.

  70. 70
    what goes up must come down says:

    dam are things gloomy or what?

  71. 71
    Alan says:

    It just occurred to me that with only 869 closings last month, Seattle Bubble might be making a significant impact on sales in the area.

  72. 72
    jon says:

    – Losses to NYSE Market cap = $8.3 trillion
    – Losses to NASDAQ market cap = ?? trillion (off 50%)
    – Change in value in residential real estate value = $6.0 trillion
    Losses in debt markets = ?? Trillion

    It’s not quite that bad. If they paid off the bad debt, then lending would resume, the real estate values would go back up, and that would push back up the NYSE and NASDAQ. In other words, they would only have to print enough to where the multiplier effect supplies the rest.

  73. 73
    EconE says:

    Real Estate values drive the prices of stocks?

    I always thought it was a companies earnings/potential earnings. I also assume that “bad debt” (people borrowing more than they could afford) contributed to some of those earnings (and anticipated future earnings).

    Are the banks going to write more bad debt?

  74. 74
    deejayoh says:

    It’s not quite that bad. If they paid off the bad debt, then lending would resume, the real estate values would go back up, and that would push back up the NYSE and NASDAQ. In other words, they would only have to print enough to where the multiplier effect supplies the rest.

    or, you could be Japan

  75. 75
    Herman says:

    You know what’s sort of awesome is the impact this is having on REaltors. Closings down by 2/3, and prices down by 10%. That means they have taken a 70% pay cut.

    Well deserved.

    I still don’t understand why they put all their energy into pumping up buyers. Since they get paid on sales, they should be beating on sellers to reset expectations and lower their prices. It’s the only way to get volumes up right now.

  76. 76

    […] King County’s SFH median price has fallen 18% from the July 2007 peak of $481,000 to $395,000 in November.  So much for “positive job growth” and “low interest rates” saving […]

  77. 77

    […] I did my stats for King County for the month of November, my numbers were actually worse than those reported on Seattle Bubble.  I have come to rely on Seattle Bubble as being the place where I can find the worst possible […]

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