Mid-Week Open Thread (2009-05-06)

Here is your open thread for the mid-week on May 6th, 2009. You may post random links and off-topic discussions here. Also, if you have an idea or a topic you’d like to see covered in an article, please make it known.

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

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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.


  1. 1
    CJM says:

    I notice everyone getting excited that Pending sales and closed sales are on the increase compared to this time last year. But If I’m not mistaking, wasn’t everyone already talking about the oversupply in the housing Market, Homebuilders were reporting losses, etc. So we are comparing a slight increase this year to numbers that were in decline last year??


    Also, I’ve been checking out rents in my area (northgate/greenwood) and I’ve noticed a mass flood of rental units being put on the market in just the last 3 weeks. Some with reduced rents and I’m sure some that will soon reduce rent once the owners realized the inventory glut.

    Does anyone have a correlation between falling rents and falling home prices? I do…disaster for owners.

  2. 2
    Kary L. Krismer says:

    Closed sales are not on the increase over last year. They’re off by about 33% in King County (SFR). But they are up about 50% from the worst month. So it’s really just a sign that the free fall in volume isn’t continuing.

    Pending sales are only about 10-15% over last year, so again it’s not the YOY change that’s being focused on. It’s more the month to month increase. 1,683 in March to 2114 in April.

  3. 3
    Joel says:

    RE: CJM @ 1 – Closed sales are way down.

    Edit: Beaten by KLK.

  4. 4
    Acerun says:

    I was reading a listing and saw this at the end of the description.
    Does anyone know what an ARCH home is?

    “Available to move into in April 2009. BEST PRICE and NOT an ARCH home! ”


  5. 5
    fwiw says:

    Take a look here Acerun

  6. 6
    Romwo says:

    Should this signal imminent bottom? I wonder what Sniglet and all the people forecasting doom and gloom have to say about this now? About how we can never inflate ourselves and how we cannot service the debt etc,. Good times and good stuff.

    I wonder if we can post how the dow is doing compared to 1929 crash. I think the difference will be quite significant.

  7. 7
    The Tim says:

    By Romwo @ 6:

    I wonder if we can post how the dow is doing compared to 1929 crash. I think the difference will be quite significant.

    They’re not as different as you might think: http://dshort.com/charts/bear-markets.html?four-bears

    Oh, also… I don’t have the time to look for a link, but I’m certain Sniglet is on record here predicting a strong bear market rally early to mid this year, so the current movement actually falls in line with his calls.

  8. 8

    RE: Acerun @ 4
    It’s illegal for real estate agents to “steer” clients to or away from certain neighborhoods. I wonder if this is a subtle way of doing that. They’re not saying ” Not a Quadrant Home”, or ” not a Buchan Home.”

  9. 9
  10. 10
    acerun says:

    RE: Scotsman @ 9

    One of my favorite internet blogging crackpots!
    Good post.

  11. 11
    acerun says:

    RE: Ira Sacharoff @ 8

    There is a low income apartment complex a 1/4 mile up the hill.
    These condos look very similar to the section 8 housing.
    That may be why they are clarifying.

  12. 12

    RE: acerun @ 11
    Exactly! Low income folks are not a protected class. I can’t have a listing that says” No Jews here!”, or ” You DON”T need to live near retards!” or ” “Straight White Christians Only need apply”, but I guess it’s not a violation of the fair housing act to steer people away from the poor.

  13. 13
    David Losh says:

    This seems a better place for my comment about pending sales.

    In my area there are several homes that have gone pending more than once.

    The $300K and below range has some well priced properties. Between $300 and $400 things go a little crazy. Many town homes and two bedroom houses are selling in the $350K range. Once over $400K things are back to 2006 pricing.

    I’m beginning to believe in the Doctor Schiller group think theory of Real Estate pricing. On the NWMLS site it looks like a feeding frenzy. Tons of pendings seems spooky to me.

    No economic data or conditions warrant this type of exuberance.

  14. 14
    Joel says:

    By acerun @ 11:

    RE: Ira Sacharoff @ 8

    low income apartment

    That’s redundant. Like saying “drugged-up pro athlete” or “dishonest politician”.

  15. 15

    By Joel @ 14:

    By acerun @ 11:

    RE: Ira Sacharoff @ 8

    low income apartment

    That’s redundant. Like saying “drugged-up pro athlete” or “dishonest politician”.

    Dude! What about these 3000 dollar a month apartments in Belltown or downtown Bellevue?
    Who lives there? Welfare moms and crackheads?

  16. 16
    Racket says:

    “Dude! What about these 3000 dollar a month apartments in Belltown or downtown Bellevue?
    Who lives there? Welfare moms and crackheads?”

    Its all relative I suppose.

  17. 17
    Tim says:

    For a good example of why CNBC is a joke, check out the article below. Her theory is more starry-eyed than the most outrageous of Yun’s claims.


  18. 18
    patient says:

    RE: Tim @ 17

    I like this part:

    ” I did, however, get a call today from a real estate investor who claims the housing crisis in California is over. He says a house listed under $200,000 got 20 (!) offers and wound up selling for over $200,000. ”

    There you go, just price your homes at $200k on the West Coast and the crisis will be over, seriously it’s probably true.

  19. 19
    Joel says:

    By Ira Sacharoff @ 15:

    By Joel @ 14:

    By acerun @ 11:

    RE: Ira Sacharoff @ 8

    low income apartment

    That’s redundant. Like saying “drugged-up pro athlete” or “dishonest politician”.

    Dude! What about these 3000 dollar a month apartments in Belltown or downtown Bellevue?
    Who lives there? Welfare moms and crackheads?

    Those apartments obviously don’t exist as anyone able to afford $3000/month wouldn’t stoop so low as to rent instead of buying.

  20. 20
    fwiw says:

    This can’t be good …
    Boeing Loses Deal for 25 787s, Has Net Order Deficit for Year

    By Susanna Ray and Andrea Rothman

    May 7 (Bloomberg) — Boeing Co. suffered the biggest order cancellation yet for its delayed 787 Dreamliner plane and has now lost one more contract this year than it’s won.

    The scrapped deal for 25 787s takes Boeing’s cancellations in the first four months to 59, versus 58 purchases, according to data published today on the Chicago- based company’s Web site. Airbus SAS said earlier it has 11 net orders after signing 30 agreements and losing 19.


  21. 21
    Tyler says:

    I had posted a question on an open thread a few weeks ago about a friend in Florida trying to sell and underwater. I just wanted to follow up on the story here b/c I think no nobody reads the old open threads.

    Original situation was purchase in 2004 with 10% down on and an interest only 5/1 ARM. They are under contract on an offer now that they will have to bring $35k to the table to close. In 5 years, they paid no principal down on the house, but have managed to lose over $100k between 10% down, $35k in repairs, and another $35k to pay off the underwater second and help with the closing costs of the buyer.

    I am not sure if this story is very typical, but the reversal in fortunes is mind boggling to me. A 35 year old couple went from thinking they had $250k in equity, to completely losing their $100k in life savings. I can image a wave of people coming into retirement in a few decades with only a fraction of the retirement income due to a huge one time hit like this.

  22. 22
    Kary L. Krismer says:

    RE: Tyler @ 21 – Or those already retired. Two of the hardest hit states were AZ and FL. I guess it would matter less if they’d already moved there, but it still could affect them. Perhaps they were planning on getting a reverse mortgage, or want to move to an assisted living place, etc.

  23. 23
    jon says:

    There are a lot of graphs here about how much wealth people have.


    The bulk of the elderly and non-elderly population has very small savings, and that was from 2005 data.

    A huge number of people are already scraping by, and with boomers approaching retirement, there will be even fewer younger people per older person to support them. Even if taxes and money printing go up, the retirement age will have to go up also.

  24. 24
    Kary L. Krismer says:

    RE: jon @ 23 – I remember reading somewhere that most people thought that their best chance of retiring was by winning the lottery, and sadly that’s probably true.

    I didn’t go through your data source, but that information would probably look very good compared to the outlook for people today. Many older people held stocks far too late in life, and probably a lot of them held bank stocks because of the dividends paid. Earlier than 2005 a lot of elders lost a ton when California forced the bankruptcies of at least a couple major utilities. Unfortunately, not enough people took that as a warning.

  25. 25
    patient says:

    So the banks needs a combined amount of $75b to survive an “adverse” economic development. Puiihh…good to know that the gov. has more than enough TARP left ~$100b to cover if needed and there should be virtually zero risk that they need to ask for more, so why don’t I feel convinced?

  26. 26
    Kary L. Krismer says:

    I didn’t read today’s news on that, but as to one bank during the rumor stage they said it could meet it’s needs by converting the preferred stock to voting. My comment before on that was that sucks. I was against the preferred stock and really against voting stock being given to government.

  27. 27
    patient says:

    RE: Kary L. Krismer @ 26 – They will be able to raise the $75b or the gov will supply it, my concern is that it will not be nearly enough when commerical real estate starts to really crumble. I met a commercial real estate agent at a dinner two weeks ago and he said that the siutation for many, many small business owners (restaurants etc ) in strip malls etc in this area is dire. They are hanging on by their toes and he’s sure it will come crashing down very soon with massive amounts of empty commercial space which will crush the market and ultimately be another hard blow for lenders.

  28. 28
    The Other Ben says:

    So…random question: does anyone know why zillow stopped posting foreclosure stats on their quarterly reports?

  29. 29
    Kary L. Krismer says:

    The situation for commercial lending has been dire for months. The government has done relatively little to support that specifically, like they’ve done with housing.

  30. 30
    David Losh says:

    RE: patient @ 27

    Absolutely correct.

    There is a dominoe effect if a renter closes, goes bankrupt, and the owner is stuck.

    In the past ten years several people have entered the world of Real Estate Investing. Some of those people are today faced with the real prospect of losing everything.

    People think Real Estate is so glamorous. Dollars signs dance to the promises that you will be rich, and it’s true. Everything you have ever seen or heard on late night TV can happen for you. You just have to work for it.

    The number one rule of Real Estate Investing is you will do anything to pay the mortgage. You will live in a card board box, eat beans, beg on the freeway off ramp, or sell everything you own, but you will constinue to pay and never give up.

    The point is that Real Estate Investing is great while to going is good. Right now we will see what the new wave of Investors are made of.

  31. 31
    David Losh says:

    RE: Kary L. Krismer @ 29

    Commercial paper is a complicated business. I started to make a comment about it but got bogged down. It’s best to say that commercial paper is an investment instrument of private funds.

    Mom, dad, and the kids are a mortgage issue that directly relates to the government.

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