Mid-Week Open Thread (2009-06-17)

Here is your open thread for the mid-week on June 17th, 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.

51 comments:

  1. 1
    DavidB says:

    I noticed this new listing on Redfin yesterday

    http://www.redfin.com/WA/Seattle/313-NW-81st-St-98117/home/498160

    The listing says this home closed in April 2009 for over $900k and now it’s listed at $710K!

    Is this a short sale? Also, there are so many spelling errors in the description. Don’t realtors use spell check? If this was my realtor I’d fire them! It’s crazy that there are only 2 photos of this house too.

    Can one of the realtors (Kary, IRA) provide the story on this house on why it’s selling for so much less in such a short period of time?

  2. 2
    Kary L. Krismer says:

    RE: DavidB @ 1 – Maybe later, if I can. There are situations where we can’t comment on other listings.

    What I came to this thread for was an issue in one of the hijacked threads while Tim was away. I said there that the Dems would become hawks and the Reps doves. Once again, I was right! ;-)

    http://blog.seattlepi.com/seattlepolitics/archives/171408.asp

  3. 3

    DavidbB,
    It’s a bank owned property,already been foreclosed, not a short sale. That “over 900” thousand sale in April ’09 was essentially the amount owed on the property, where the ownership changed from the trustee to the lender, so it wasn’t a “real sale”.
    The last real sale it had was one that closed in October 2006 for 885 thousand..
    Prices are quite a bit lower now than they were in October 2006. The price it is currently listed at might be under current market value, but perhaps less so than it appears.. Also, some folks don’t put a lot of energy and money into maintaining a home knowing they’re going to lose it in foreclosure, since they can’t pay their mortgage anyway.

  4. 4
    Scott Weitz says:

    Kary-

    As a Realtor, what is your take on interest rates? My opinion is that deflation is still more likely than rampid inflation. Commodities are rising purely because of weakness in the dollar (rather than recovery prospects), and raising interest rates at this point would be premature as it would make a potential recovery/ landing for real estate less probable.

  5. 5
    Kary L. Krismer says:

    RE: Scott Weitz @ 4 – My take is my opinion on where interest rates are headed doesn’t matter. Having access to the NWMLS doesn’t give me any greater insight into what will happen in that regard. So all I can say on that is they’ll go up, down or stay the same.

    In the past I’ve said I’m even split between deflation and hyper-inflation. I think clearly the economy is still very fragile, so extreme moves and unusual events are not that unlikely.

    As to your commodities comment, I’ve suspected the same thing, but haven’t bothered to try to determine if that’s the case. Also, just looking at gas, we are heading into the Summer driving season when you’d expect increases, and perhaps the price cuts were over-shot, combining to result in some rather extreme upward moves (on a percentage basis). So I don’t find those terribly alarming just yet.

  6. 6
    DavidB says:

    Ira, thanks for the info!

  7. 7
    Scotsman says:

    Have your cake and eat it too!

    I mentioned several days ago that there were new conflicting trends in the long bond markets, and sure enough Bloomberg comes out today with an article that reports buyers are setting up for significant long term deflation:

    http://www.bloomberg.com/apps/news?pid=20602007&sid=aYq_CZTAtgvQ

    “We are looking to buy in the neighborhood of 10-year bonds,” said Akira Takei, Tokyo-based general manager of the international fixed-income investment department of Mizuho Asset Management Co., a unit of Japan’s second-largest banking group. “All of a sudden, market participants will have to realize that there is no inflation risk, but instead deflation risk.”

    Ten-year yields will probably drop to as low as 1.5 percent over the next two years, Mizuho Asset’s Takei said.”

    Others are more focused on the 30 year bond that offers a greater return (bond values go up, the inverse of interest rates) as rates fall.

    What this means is that as the deflationary collapse into depression occurs both interest rates and home values will fall, the best of all worlds for buyers. We could see mortgage rates in the 3.5% range.

    It’s interesting to see how quickly the tide has begun to turn among those players with significant money, despite all the rosey reports in the mainstream media. I really thought this rally would last until late fall, but it may not.

  8. 8
    Scotsman says:

    2000 sales in June?

    It looks like mortgage apps did take a real hit- apps were down 16%

    http://www.bloomberg.com/apps/news?pid=20601087&sid=ahlrsW8VZvzA

    “June 17 (Bloomberg) — Mortgage applications in the U.S. fell last week to the lowest level since November as a jump in borrowing costs discouraged refinancing and threatened to deepen the housing slump.

    The Mortgage Bankers Association’s index of applications to purchase a home or refinance a loan dropped 16 percent to 514.4 in the week ended June 12, from 611 the prior week. The group’s refinancing gauge declined 23 percent, while the purchase index fell 3.5 percent.”

  9. 9

    RE: Scotsman @ 7

    WHERE’S SNIGLET TO ARGUE WITH YOU SCOTSMAN?

    I’m sort of on Sniglet’s side though too; this witches brew economic mess [we both call it a depression now] had almost all of the lapdog media eating crow too.

    We have all these economic “statistics” that are complete historical nonsense and sometimes good old “gut feel” is the most reliable.

    Stocks are up a bit today after an early week bear ate last week’s gains. If you had stock funds and sold at the DOW 6300 level; you were wrong. If you’ve been continuously investing in stock funds since the 2000 collapse, even with the recent losses, you did no worse than dinky money market or CD investments over the last 10 years. Kind of a washout minus inflation or should I now say deflation….LOL

  10. 10
    Kary L. Krismer says:

    RE: Scotsman @ 8 – Well of course with rates spiking up, applications to refinance will drop.

    Rates have apparently been dropping the last couple of days.

  11. 11
    Scotsman says:

    Yup, the article references November’s application rate. What were sales in November of last year?

  12. 12
    Kary L. Krismer says:

    RE: Scotsman @ 11 – But that’s the combined refinance/sale rate, isn’t it?

    Also, it’s national rates. I’m not sure how national sales did in November compared to our pathetic numbers (under 900 King County SFR).

    Also, unless rates continue down, refinancing would tend to decline because people would have already done it. There aren’t that many people that could refinance to pull money out of a property, and those that can probably largely don’t need to (they’re probably more responsible).

  13. 13
    jon says:

    Some pretty direct words from Boeing about how the Machinist’s strike affected plans for the location of a second 787 production facility:

    “There are opportunities that we need to assess and I’ve worked there for 24 years, I like the people in Seattle, I grew up in Seattle, It’s a great community, but when you have the customer telling you you’re making it really hard to choose your product because when we buy it you can’t give it to us,” said Shanahan.

    http://www.flightglobal.com/blogs/flightblogger/2009/06/boeing-hints-at-nearing-decisi.html

  14. 14
    Scotsman says:

    Admittedly a pretty loose correlation, just curious. And you’re right, the refinancing has got to be pretty much over. I know my landlord is trying to refi, but doesn’t stand a chance unless some new government program forces banks or GSEs to suck up a huge loss. And even then, it really is over for him, everything except the inevitable default. On January 1, 2011 his payment triples.

    We had the new neighbors over for dinner the other night- they are in the same situation, renting a $750K (?) home that needs a take-out loan to close the construction financing. Fun times ahead!

  15. 15
    David McManus says:

    Guys, what does this mean on a property?

    “Pending BU Requested”

    Never seen that before.

    EDIT:

    Oops, Google is my friend —> http://forums.redfin.com/rf/board/message?board.id=Seattle&message.id=2814#message-tags-2808

    So is this status decided upon in the listing agreement, or do the sellers take this on a case by case basis?

  16. 16
    The Tim says:

    RE: David McManus @ 15 – It stands for “Sale pending – back-up offer requested.” In other words, the seller has found a buyer, but for some reason the deal is in a state of limbo, during which they are still accepting additional offers on the property.

    FWIW, properties with this status are counted as a “pending sale” rather than an “active listing” in the month-end stats.

  17. 17

    RE: David McManus @ 15

    Most recently, I’m seeing that status a lot on short sales. Sometimes the seller and buyer have reached mutual agreement, but the lender wants to see other offers, or the lender has not yet approved the deal.

  18. 18
    Kary L. Krismer says:

    RE: The Tim @ 16 – Technically it just means that they’d like a backup offer. The existing offer could be 100% fine, but it never hurts to have a backup offer. I never understood why every pending wasn’t pending BU. Why wouldn’t a seller want a backup offer?

    I used to list all my pendings that way, but now with it tending to signify short sale I’m reluctant to do it. If the sale did flip, I don’t want some agent thinking it’s a short sale because it was Pending BU. It is the client’s choice, however, at the time the place goes pending.

  19. 19
    deejayoh says:

    Explanation for the Global Crisis – forwarded to me by a friend…

    Linda is the proprietor of a bar in Cork . In order to increase sales, she decides to allow her loyal customers – most of whom are unemployed alcoholics – to drink now but pay later. She keeps track of the drinks consumed on a ledger (thereby granting the customers loans). Word gets around and as a result increasing numbers of customers flood into Linda’s bar.
    Taking advantage of her customers’ freedom from immediate payment constraints, Linda increases her prices for wine and beer, the most-consumed beverages. Her sales volume increases massively. A young and dynamic customer service consultant at the local bank recognizes these customer debts as valuable future assets and increases Linda’s borrowing limit. He sees no reason for undue concern since he has the debts of the alcoholics as collateral. At the bank’s corporate headquarters, expert bankers transform these customer assets into DRINKBONDS, ALKBONDS and PUKEBONDS. These securities are then traded on markets worldwide. No one really understands what these abbreviations mean and how the securities are guaranteed. Nevertheless, as their prices continuously climb, the securities become top-selling items.

    One day, although the prices are still climbing, a risk manager (subsequently of course fired due to his negativity) of the bank decides that slowly the time has come to demand payment of the debts incurred by the drinkers at Linda’s bar. However they cannot pay back the debts. Linda cannot fulfill her loan obligations and claims bankruptcy. DRINKBOND and ALKBOND drop in price by 95 %. PUKEBOND performs better, stabilizing in price after dropping by 80 %.

    The suppliers of Linda’s bar, having granted her generous payment due dates and having invested in the securities are faced with a new situation. Her wine supplier claims bankruptcy, her beer supplier is taken over by a competitor. The bank is saved by the Government following dramatic round-the-clock consultations by leaders from the governing political parties (and vested interests). The funds required for this purpose are obtained by a tax levied on the non-drinkers.

  20. 20
    Scotsman says:

    RE: deejayoh @ 19

    Perfect. Joe6P will finally understand!

  21. 21
    D. says:

    It’s not a really PC example, is it? Drunks in Ireland that is.

  22. 22
    David Losh says:

    RE: Kary L. Krismer @ 2

    How do you mean high jacked?

    OK, so what? Yes Mc Dermot should have sat out the vote, but it means very little to the legislation. The Republicans don’t like the tag ons. I forget what they are, but it is pork. Democrats don’t want to be seen funding the war effort they were against so they added the pork. So what?

    Even Republicans are saying this is the last time Obama will pull this back door funding carp. In the Bush years it was standard operating practice.

    I think the word here is transparency. Like today’s speech about regulating large financial institutions the way the FDIC can unwind banks.

    Here’s what I know for a fact; for the first time since Reagan an American President has stood up and taken a stand for all to see. Reagan pointed a spot light on government. Reagan gave us the Grace Commission.

    In my opinion Obama has shined the spot light on the war in Iraq, Guantanamo, Banks, Executive pay, Financial Institutions such as insurance, health care, the Auto Industry, and we have yet to get to energy and education.

    If this continues, and if along the way he pushes for pay as you go, we might end up with a strong economy.

  23. 23
    Kary L. Krismer says:

    RE: David Losh @ 22 – I don’t think it has anything to do with any of that. It’s just that when a Democrat is in power, Democrats in Congress support the executive’s powers, including war powers. When it’s a Republican President, it’s the Republicans providing the support.

  24. 24
    David Losh says:

    RE: Kary L. Krismer @ 23

    I was referring to the high jacking.

  25. 25
    The Tim says:

    There was an amusing spam in the comment spam bucket this morning:

    So you can make $300 a day online by leaving comments like “nice post, really well written” on open threads? Fascinating! Your ideas are intriguing to me and I wish to subscribe to your newsletter.

  26. 26
    David Losh says:

    RE: The Tim @ 25

    I belong to the social network called bizniks. It is a great group with local functions.

    There is a guy who has an on line marketing plan that he sells for $250 to $500 depending on the level of involvement. In one of his articles he talks about the importance of giving away free stuff, on line, like advice, or information.

    Like you have your quarterly report for sale he has his marketing plan.

    I haven’t bought the plan but I suspect it is like the spam suggests. You post comments with a link back to your site of free information to sell a complete package.

    As an example I used to connect my avatar and name back to my Real Estate site. It has tracker on it. Comments to here my hits were a little low, but to a RCG they could jump up. If I went on a spree across the country I could boost my hits to big numbers.

  27. 27
    Acerun says:

    http://www.seattlepi.com/local/407329_foreclosure18.html

    The best part of this is when they refer to the foreclosures as an epidemic in Washington state. They better get ready for Black Plague!!!!!!

  28. 28
    deejayoh says:

    RE: The Tim @ 25 – wait, are people getting paid by the post here?

  29. 29
    Civil Servant says:

    That would explain a lot.

  30. 30

    RE: Civil Servant @ 29

    Geesh, I thought I was getting paid by the word.

  31. 31
    Sniglet says:

    It looks as if another bubble is being teed up, this time in Federal Housing Administration (FHA) insured loans. The government’s eagerness to pick up the slack in mortgage lending will almost certainly saddle tax-payers with massive losses in the not too-distant future.

    http://surkanstance.blogspot.com/2009/06/another-bubble-in-making-fha-backed.html

  32. 32
    Scotsman says:

    From John Stossel’s 2007 health care report: a lottery to see the doctor?

    “The reality of “free” health care is that people wait. In the United Kingdom, one in eight patients waits more than a year for hospital treatment and the British government recently set its goal to keep wait times to less than 18 weeks  that’s more than four months! In Canada, almost a million citizens are waiting for necessary surgery and more than a million Canadians can’t find a regular doctor. In the small town of Norwood, Ontario, a weekly drawing is held in which a townsperson wins the right to access the town’s one family doctor.

    Governments ratchet down health-care costs in different ways. Doctors went on strike last year in Germany because their government’s system pays them less than they thought they deserved and forces them to work thousands of hours of unpaid overtime. In the United Kingdom, one hospital was inspired to save money money by not changing sheets daily. British papers report that instead of washing the linens, nurses were told to just turn the bedsheets over.

    Government is less the answer to our health-care crisis than the problem. It was our government that helped to create the absurd system in which two out of three Americans get health insurance through their employer. In a country where four in 10 Americans change their job every year, this system makes little sense; it leaves people like Readling without coverage when they need it most.

    The government also makes insurance expensive by mandating the medical services that policies must cover. Required services vary state by state and include massage therapy, pastoral counseling, acupuncture, hair prosthesis and dentures. Such mandates are a reason why an individual policy in New Jersey costs around $4,000 a year while a policy in Iowa costs only a third of that. Yet insurance regulations make it illegal for someone in New Jersey to buy a policy from out of state…

    …The more people control the money they spend on their own health care, the more people shop around and the more providers compete to attract patients by lowering prices while improving quality. It’s putting individuals in control that could turn our health-care sector into the vibrant, competitive marketplace that we see in nearly every other area of our economy.”

  33. 33
    Sniglet says:

    RE: deejayoh @ 19

    The next step in this (excellent) scenario would be the government’s decision to step in as the bar-tab provider of last resort, to ensure that over-all consumption of spirits doesn’t decline, wrecking havoc on the broader economy through lay-offs at brewers, etc. Almost overnight 90% of all drinks are being purchased on the government tab.

    The new government bar-tab agency also helps prevent further detioration of prices for the existing securities market by keeping prices for alcohol at artifically inflated prices. Drinkers don’t mind paying high prices (or consuming premium spirits) since it’s all on the government tab.

  34. 34
    jon says:

    RE: Sniglet @ 33 – Don’t forget all the people going hungry because so much agricultural land is being used for ethanol production to meet the artificial demand that the government created.

  35. 35

    RE: Kary L. Krismer @ 10

    IF YOU’RE TALKING A WEEK OR TWO AGO, YOU’RE RIGHT

    But mortgage rates on BECU, i.e., have flat tabled this week. Its all a bit of moot point though, especially on short sales with a five month wait for bank approval closure…..Hades, the interest rates could be anything by the time they get around to approving it.

  36. 36

    LOCATION, LOCATION, LOCATION

    Hey Bloggers; Check this out, I bet this loan is upside down if it was recent [LOL!!!]

    http://www.nytimes.com/2009/06/18/garden/18houses.html?no_interstitial

  37. 37
    Scotsman says:

    RE: softwarengineer @ 35

    $164 billion in new treasuries hitting the markets in the next 7 days. Annualized, that’s almost $9 trillion. Compare it to the current holdings of some of our largest existing bond holders:

    http://www.tickerforum.org/cgi-ticker/akcs-www?getimagenr=34024

    I’ll wager even Kary can predict what’s going to happen with interest rates over the next couple of weeks. But something else will probably crash- after all, that money has to come out of something to go into treasuries.

  38. 38
    Kary L. Krismer says:

    RE: Scotsman @ 37 – What is “Fake Bond?”

  39. 39
    One Eyed Man says:

    A middle aged Canadian man’s parents had been ill. When asked about the Canadian health care system he said that if his parents had lived in the United States they would have lost their life savings paying medical bills, but under the Canadian system he inherited it.;-)

  40. 40
  41. 41
    Mikal says:

    RE: Scotsman @ 32 – Or we could have our system where you pay alot for the return of nothing.

  42. 42
    David Losh says:

    RE: Scotsman @ 32

    You have got to be kidding.

    John Stossel, the greed is good guy, has the inside scoop on quality health care.

    He’s an entertainer.

    How about including the Hannity Limbaugh unAmerican hour as a news source?

    These entertainers spew this anti American fear mongering as a way to sell products. It’s commercial adverising at it’s worst.

    I’m very certain that the deep pockets of health care advertising are attrative.

    Consider the source. It’s tired, old, and deceptive assertions.

  43. 43
    Scotsman says:

    RE: David Losh @ 42

    David, don’t let any facts get in the way of a good rant. Have some Kool-Aid, the Obama special.

    Here’s some polling comparisons on health care issues:

    http://hotair.com/archives/2009/06/18/wow-support-for-health-care-reform-much-softer-now-than-in-1993/

  44. 44
    deejayoh says:

    By Scotsman @ 43:

    RE: David Losh @ 42

    David, don’t let any facts get in the way of a good rant. Have some Kool-Aid, the Obama special.

    Here’s some polling comparisons on health care issues:

    http://hotair.com/archives/2009/06/18/wow-support-for-health-care-reform-much-softer-now-than-in-1993/

    Title of blog posting you referenced:
    Wow: Support for health-care reform much softer now than in 1993

    title of the actual Pew Trust article from which the blogger’s data was sourced

    Health Care Views Similar to ’93, But Fewer Favor Rebuilding System

    facts, or interpretation?

  45. 45
    deejayoh says:

    oops. wrong link for the pew article and that comment editor sucks. keeps scrolling back to top of post.

    http://people-press.org/report/522/

  46. 46
    Scotsman says:

    RE: deejayoh @ 45

    Glad to hear I’m not the only guy who has that problem with the comment editor. I thought it was on my end.

    Who cares about the title when you have the data to look at- draw your own conclusions. ;-)

  47. 47
    Eastside Westside its all Good says:

    Good evening to all. Been working too many hours to have time to post. Just found a new listing I was thinking of looking at and was shocked to find that the square footage is much lower than what is being claimed by the listing agent.

    Would appreciate an independent confirmation of what I found and suggestions on next steps.

    Here is one view of the listing (Redfin sent me the first notice of this listing):

    http://www.redfin.com/WA/Bellevue/4739-149th-Ave-SE-98006/home/237448

    Here is the King County data on it:

    http://www5.kingcounty.gov/kcgisreports/property_report.aspx?PIN=8562800180

    Much obliged to all!

  48. 48
  49. 49
    The Tim says:

    RE: Eastside Westside its all Good @ 47 – Simple. The seller is counting the “basement garage” in the total square footage.

    From the KC records:

    1st floor sq. ft. 1,440
    Finished basement sq. ft. 760 (sub-total: 2,200)
    Basement garage sq. ft. 620

    Total: 2,820 –> the square footage claimed on the listing.

  50. 50
    Joel says:

    So I guess we’re arguing about health care.
    Hawaii Ending Universal Child Health Care – CBS News
    The money quote:

    “People who were already able to afford health care began to stop paying for it so they could get it for free,” said Dr. Kenny Fink, the administrator for Med-QUEST at the Department of Human Services. “I don’t believe that was the intent of the program.”

    Whocoodanode?

  51. 51

    RE: The Tim @ 49

    Commonly done but right not according to the NWMLS…( And I think it’s wrong to count unfinished basement space, but the NWMLS views it differently than I.
    From the 6/8/2009 NWMLS Bulletin:
    “Can I Count Basement Square Footage in my Listing?
    ASF, or approximate square footage, should include finished or unfinished heated living space within the home. This should never include the garage, even if it is in the basement. Non-contiguous space, such as breeze ways, covered patios or storage sheds should not be included, even if they are covered by a roof. Instead, add verbiage into the “Remarks” section, such as “plus 400 square foot cottage.” Many county assessors have extensive data and information; however, it is best to verify the assessor’s data. “

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