Visualizing the Tax Credit Sales Boost

I’ve been trying to come up with the best way of visualizing just how effective the inefficient, expensive, and economically stupid $8,000 tax credit has been at boosting home sales in the Seattle area, and I think I’ve finally come up with something really good.

To generate the chart below, I took all the single-family closed sales data that I have for King County (back through 2000) and seasonally adjusted the data to remove the predictable yearly swings. Next, I indexed each year to January = 100, and plotted them all on top of each other. Based on the trend in warranty deeds, I estimated November sales of 1,565.

Monthly King Co. SFH Closed Sales by Year

The $8,000 free money giveaway for mortgage buyers became effective in mid-February. Given a reasonable period of time (~60 days) for buyers to jump into the market, find a home, and close on it, the earliest that the tax credit would have likely had much of an effect closed sales would be around May. What do you know, May just happens to be when the 2009 series begins to diverge significantly from the other years. Huh.

In yesterday’s conversation in the comments, Kary postulated that perhaps the tax credit doesn’t deserve the credit for pushing up sales, because after all, consumer confidence has been rising through this year as well. In order to test the theory that home sales are rising primarily as a result of positive sentiment rather than government meddling, I have plotted the Consumer Confidence Index and the seasonally-adjusted closed sales series, each indexed to January 2006 = 100, which is around the time that the bubble began to slowly unwind.

King Co. SFH Closed Sales & Consumer Confidence

Kary’s theory that “fear” has been a large factor in the sales decline over the last few years seems to be fairly solid. However, ever since about June this year, the closed sales have been on a fairly strong upward trend, while the Consumer Confidence Index has remained more or less flat.

When the $8,000 tax credit was initially passed, I doubted that the effect would be that strong, especially here in Seattle where $8,000 represented a mere 2% of the median home price. I stupidly assumed that most people would be smart enough to realize that 2% is essentially a worthless incentive when home prices are falling at a rate of over 10% a year.

The lesson I have learned here is to never underestimate the power of free money to get people to do stupid things.

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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.

109 comments:

  1. 1
    The Tim says:

    Because I know somebody will ask for it, here’s the first chart without the seasonal-adjustment:

    Monthly King Co. SFH Closed Sales by Year

  2. 2
    Ray Pepper says:

    “The lesson I have learned here is to never underestimate the power of free money to get people to do stupid things.”

    I wouldn’t be so quick to suggest “stupidity.”

    What you are not seeing Tim is some of the GEMS I have seen Buyers get. Between the free money and rates sub 5% I have personally witnessed some deals of a lifetime.

    I’m closing on 2 this month in Bellevue that when they hit the market there was tremendous interest and the price mutually accepted would have to go back to prices I saw when I moved here in 1986.

    Not to mention the weekly county auctions. The investors I know have consistently been Buying and selling 90+ days later these flips and making their 40k+. I personally just wrote an offer up for 30k cash on a property. I will let you know how/if it turns out and the MLS # when it closes in 14 days.

    The Banks/Sellers want these homes GONE and the Buyers need to be looking!

  3. 3
    Flotown says:

    very solid analysis, tim. Thanks

  4. 4
    Ray Pepper says:

    Heres a NEW one….Almost comical if it wasn’t so tragic… Alot more of these companies coming over the next 5 years unless we get the Obama backed Cramdown:

    http://youwalkaway.com/kit.php

  5. 5
    DrShort says:

    If the tax credit is really responsible for the surge in sales, shouldn’t we be seeing downward pressure on the median price since the mix of homes sold is being greatly skewed to first time buyers?

  6. 6

    To be clear, I’m saying that both the tax credit and the “fear” element (or you might call the latter the short-memory element) are driving the significant increases in YOY numbers going forward starting in November. Determining the effects of each is difficult, but we didn’t go from about an 18% YOY rise in sales in October to a projected 66% rise in November solely because of the tax credit. Sales dropped off a cliff last year, making the YOY sales gains seem huge, but if you go back further than that sales are still mediocre at best.

    Also, I wouldn’t agree with Tim’s statement that sales have been on an upward trend recently, while the CC index has been flat. If you remove the seasonal adjustment, the sales too have been fairly flat. Here are the numbers since June:

    1655
    1727
    1609
    1618
    1758

    November probably won’t reach even 1600. So to me that’s six months of rather flat sales. If you go back further you will see more of a trend of increases, but that gets back into the period where people still remembered September.

  7. 7

    By DrShort @ 5:

    If the tax credit is really responsible for the surge in sales, shouldn’t we be seeing downward pressure on the median price since the mix of homes sold is being greatly skewed to first time buyers?

    Remember that many of those first time buyers are buying from people that will then buy a more expensive home. Also, with the extension there’s a $6,500 credit for most people who have owned a home at least 5 years. So I would say no to answer your question.

  8. 8
    David Losh says:

    To me the charts show that Doctor Schiller’s theories about group thinking are more accurate than I initially gave them credit for. People are making stupid mistakes today.

    In 2007 it was industry hype without a counter measure, but today, with all the information available, people are still paying high prices for questionable properties.

    Ray, I want to see those homes thar are selling for 1986 prices. You are correct though that investors are buying at auction and selling at premium prices for profits. The profits are really pretty low compared to the past.

  9. 9
    AMS says:

    RE: DrShort @ 5 – Extending Kary L. Krismer @ 7, if the value of all homes individually went down 10%, but buyers continued to buy more expensive homes, the median and average would go up. As prices go down, the cost per square foot goes down, but the total square feet purchased may go up.

  10. 10
    Ray Pepper says:

    RE: David Losh @ 8

    As soon as they close I will send you MLS #’s. Including my 30k offer. I give it a realistic 20% chance with my flexibility up to 40k.

    The investors are making an absolute killing at the auctions. But, it takes ALOT of time and effort. I drove around with 4 on Monday and we saw 17 homes in less then 90 minutes. (that also included a stop at Wendy’s because I was hungry). They only liked 3 and will most likely buy 0-1 unless of course there is the typical “stay” placed on it prior.

  11. 11
    zebra says:

    Tim, Would it be possible to see a chart depicting sales of homes outside the normal “first time home buyer” range? I’d be interested to see whether the same rise applies for those who aren’t eligible for the credit.

    We are fourth time home buyers who moved here 20 months ago and stood on the sidelines for a very long time, making low ball offers and walking away when they were not accepted (without regrets). We finally pulled the trigger on a place in mid-November and while it could well be that prices will see another drop in 2010, we got a great home at a good price on fantastic terms (4.75% on a 30-year fixed conforming jumbo with $20K in paid closing costs). For us, the interest rate is a key factor because it has a huge impact on the cost of owning a house. As an example, if we borrow $500K at 4.75%, our mortgage payment costs us about $2600 per month. If prices drop another 20%, but interest rates rise by a couple of points, such that we only need to borrow $400K but our rate is 6.75%, it still costs us $2600 per month. Since: (1) I don’t think prices are going to drop another 20%; (2) it’s fun to own a house; and (3) I think interest rates will rise or, if the economy stays bad, terms like the ones we just got will not be available, I think we picked a pretty good time to buy. Could be others chose to buy for similar reasons and not because of the tax credit (which isn’t available to us).

  12. 12
    Matsayswhat says:

    RE: Ray Pepper @ 4

    Wow, that’s crazy.

    How tightly are banks actually bound by the fair credit reporting act? I mean, I’ve heard the term “5-7 years” thrown about in terms of how long a foreclosure stays on a person’s record (3-5 for short sale?), but I would think that after taking such huge losses that banks wouldn’t be very interested into entering into future agreements with those people that previously cost them so much money.

    Then again, I suppose we the taxpayer are on the hook for a lot of those defaults, so maybe there won’t be any significant impact 5-7 years from now…

  13. 13
    Ray Pepper says:

    RE: Matsayswhat @ 11

    The banks will be VERY interested in entering agreements in the future with these buyers because these homeowners will have to “explain away” what occurred to future lenders. I assure you that if they qualify based on their income, and they have the money down, these walk-away Buyers can buy in 2 years OR LESS.

    Just as we “explain-away” a collection, this too will be explained-away. Its not very hard to claim a job loss at the time. I’m sure they will not admit to strategic defaults. However, astute homeowners who walk-away, as the website suggests, should be educated on what they can do to increase their stay in the home thus saving more and more money.

    In Nevada, the walkaways have been going on much longer then here in the PNW. I know about 6 familes who have done this and all tell me it was the best decision they could have made for the property values have deteriorated even further then when they walked and their payments are 1/2 in rent compared to what they used to pay. None seem to have a desire to buy again now. Well, actually one does.

    I contend…Its all about family 1st. Do whats best for your family and you will know what you should do.

  14. 14

    RE: Ray Pepper @ 4
    Cramdown Stimulus I and We Can’t Afford Stimulus II: Wait Until the Unemployment Runs Out Come 2010 For Many in Seattle

    We’re running on gas fumes and with Seatte’s horrifying population density of 6717/sq mi (2000 Census), and add-in the Seattle population density has grown about another 3% since 2000….its horrifying….to put it in perspective: Beijing, China’s population density is only 2687/sq mi….LOL….we’re 3 times worse than Chinese municipalities in population density….LOL

    And our ex-mayor wanted to pack more into Seattle? What’s he smoking?

    An excerpt from Dr. Roubini’s website [albeit I may not believe it will get quite this bad, I do agree it may likely approach this horrifying scenario very soon in 2010 and ther’e’s nothing we can do about it]:

    “…Real nasty times are just around the corner and nothing can be done to prevent them. The system must be purged. More major layoffs are on the way, real wages will fall and taxes will rise. The Dow will settle somewhere between 1,500 and 4,200. We won’t know where until we get a lot closer. Companies have maintained the bottom line by firing people, offshoring and outsourcing and insourcing overpopulations. That method of cutting costs is approaching a threshold of diminishing returns. The next big wave of layoffs will be municipal in towns, cities, counties and states that no longer have the reserve to pay employees. Some states, such as Florida has no funds to pay for unemployment benefits and were it not for the stimulus plan they would have stopped issuing checks a year ago. At this rate in many states municipalities will cease to function and schools, fire and police will be disbanded. That is where this is all headed. Americans have to be told the truth about what is really going on and who and what caused it….”

  15. 15

    RE: Matsayswhat @ 12

    A Joke About Today’s Bankers Commuting to Work

    They do their nodding “NO” exercises to get in shape….

  16. 16
    zebra says:

    I definitely agree that sellers are making a mint if they have cash to buy houses at auction. We had a signed P&S on a place on Bainbridge for a price that seemed more than reasonable given the house and the location. Then we found out that the house had just been purchased at auction 2 weeks beforehand for $1 over the required “minimum bid”. The offer we made was more than $300K MORE than the buyer at auction had paid, and yet even with the knowledge of how much he had paid, we couldn’t say we were getting ripped off. We decided not to proceed (not because of the price, but because we decided we couldn’t deal with Bainbridge). The seller then listed the house for $100K MORE than he had originally listed it (when we looked at it). According to redfin, sale of the house is pending.
    http://www.redfin.com/WA/Bainbridge-Island/10026-Edgecombe-Pl-NE-98110/home/12487787

  17. 17
    mukoh says:

    RE: Ray Pepper @ 2 – Ray is correct, people are seeing deals that equate to 1992 as well. I bought another rather sizable 3 acre piece for 1993 prices.

    Post 10 is right on too. Throw 10-15 offers just to get one.

  18. 18

    By Ray Pepper @ 13:

    RE: Matsayswhat @ 11

    The banks will be VERY interested in entering agreements in the future with these buyers because these homeowners will have to “explain away” what occurred to future lenders. I assure you that if they qualify based on their income, and they have the money down, these walk-away Buyers can buy in 2 years OR LESS.

    Right now it’s three years if you believe what that law professor wrote. Since he didn’t tend to have good citations, I wouldn’t put any money on that being correct.

  19. 19
    Packet says:

    RE: softwarengineer @ 14

    Horrifying density? The majority of Seattle is single family homes. For some perspective, San Francisco has 17,323 people/sq mi. Beijing that you quoted? Urban districts are 79,248/sq mi (http://www.demographia.com/db-beijing-ward.htm). New York City as a whole? 27,440.

    Seattle isn’t that dense. I’d hardly say that we’re packing them in here.

  20. 20

    RE: Packet @ 19

    See the Proof:

    http://en.wikipedia.org/wiki/Beijing

    17,430,000 in a 6487 sq mi municpality…..you do the math

    next time if you want to trump SWE, please give me your proof website like I did.

  21. 21
    Packet says:

    RE: softwarengineer @ 20

    I did give you proof in my original post:

    http://www.demographia.com/db-beijing-ward.htm

    Beijing as a whole includes 16 districts and 2 counties including 289 villages according to wikipedia. Comparing that to seattle proper is a bit of a poor analogy.

  22. 22

    RE: Packet @ 19

    Please Don’t Put SF on a Pedestal Either

    That city and California have so many population density problems, especially schools and healthcare, it goes off the Richtor Scale….ask Scharznegger…LOL

  23. 23

    RE: Packet @ 21

    Exactly my point….Seattle has no land for pop density and China doesn’t either….but we’re far worse than China.

  24. 24
    Matsayswhat says:

    RE: Ray Pepper @ 13

    Regarding strategic walk aways… Can’t banks just pursue judicial foreclosure and go after their savings, assests, and 401ks?

    Though now that I say that, I imagine consumer protection laws probably prevent them from touching 401ks, and judicial foreclosure is probably much more expensive than non judicial and would likely only net the banks lawyers a gain…

    I’m curious, of those six families/people you know, how many were short sales and how many were actual foreclosure? Any deed in lieu of foreclosures?

    I have a friend who is under water on his condo and contemplating a short sale, but I don’t think his “hardship” fits the technical description enough to qualify. He’s got some decent assets outside of the house so I’m trying to get him to speak with a lawyer before he starts skipping payments and risks the bank coming after him.

  25. 25
    Packet says:

    By softwarengineer @ 23:

    RE: Packet @ 21

    Exactly my point….Seattle has no land for pop density and China doesn’t either….but we’re far worse than China.

    Beijing has 6487 sq miles according to you. That’s lots of land. Seattle is sitting around 6700 people per square mile. Every major city I’ve looked at has multiples of the density that we have. We’re more on par with Saint Louis than we are with San Francisco, Chicago, or New York when it comes to density.

    If you actually want to compare densities with some of the other major cities of the world, you’d have to include most of the Puget sound area. Many of the older cities have either swallowed most of the suburbs or they’re included for density measurements.

  26. 26
    Packet says:

    By softwarengineer @ 22:

    RE: Packet @ 19

    Please Don’t Put SF on a Pedestal Either

    That city and California have so many population density problems, especially schools and healthcare, it goes off the Richtor Scale….ask Scharznegger…LOL

    I’m certainly not putting SF on a pedestal. California certainly has its problems and they’re not directly tied to population density. Washington on the whole is much better run than California in any case.

    I just don’t see where this chicken little ‘the sky is falling’ attitude is coming from these days. I certainly haven’t seen the supposed signs that the world is coming to an end and our economy is going down in flames. While I’m not a fan of the home buyers credit (I was looking for a house and I don’t qualify for the credit (new or old), so it propped up prices for the near term thus making sure that I’m not going to buy that quickly), I can see why it was originally implemented.

    Housing has been extremely overvalued this decade. If you think Seattle is bad, take a look at san francisco that you mentioned. You will pay far more and get far less for your dollar there. Salaries aren’t that significantly different than the Seattle area and SF proper has stayed fairly stable (especially compared to the exurbs that crashed and burned).

    I’m also with Kary on this one. Numbers last november were artificially lower due to the crash so pretty much everything is going to look better than that. We’ll probably see lower numbers in december due to what people thought was the credit running out. I guess the hope long term is that the extended credit will get the housing market nationwide through the slow winter season and summer will at least stay flat.

  27. 27

    RE: Packet @ 26

    You Need to Read Pete Murphy’s “Five Short Blasts”

    He proves that population density is the root cause to almost all America’s/World’s economic problems, especially unemployment and wage deterioration. He simply uses scientific charts and “politics or wanna be garbage” is not in his book.

    And don’t point at horrifyingly densely populated countries like S. Korea or Japan….without the other less dense countries feeding them and buying their stuff, they’d be down the population toilet decades ago [and I imagine you know it too]….LOL

  28. 28
    Packet says:

    RE: softwarengineer @ 27

    Well if you want to continue down the population density route..

    Nearly every other major city in the world is more dense than we are. What makes Seattle so special that it’s going to crash and die? There are many other apparently stable dense cities in this country alone that have a couple hundred years of growth going through far worse than a recession that didn’t kill them.

    Housing prices may go up slightly, they may go down. This isn’t going to be the end of society as we know it. What exactly makes this specific moment the end of civilization?

    We in the US have lived off credit for the past 20-30 years. This is going to change and credit is going to be harder to get. That doesn’t mean that the country is going to fail or that inflation is going to go up to 30,000%.

  29. 29
    Ray Pepper says:

    RE: softwarengineer @ 14

    software…what does it matter anymore…were dropping 40 BILLION into Afghanistan.

    Go ahead and dog the tax credits, Fed bonus bucks, and all the other programs rolling out. I say at this point it simply doesn’t matter. How about the billions dropped into the BS Global Warming endeavors.

    Good God!

    It goes on and on. The tax credit is the LEAST of my concerns.

  30. 30

    RE: Matsayswhat @ 24 – The big problem with judicial foreclosures, from the banks’ point of view, is that to retain the right to a deficiency the owner gets a 12 month redemption period. If the property was their residence, then as part of the homestead rights they get to live there during those 12 months (plus the time to get to sale, which can be many more months).

    Most the people who will face deficiencies will be those with 80/20 loan packages, where the 80 forecloses.

    (This is based on my recollection of Washington law–I have not looked at the statutes for amendments.)

  31. 31
    Scotsman says:

    What do you wanna bet some realtor is going to print off the first chart without reading the background text and use it to show the market is back?

    2010- buy now or be priced out forever!! Baby, we’re back!

    Otherwise, nice work Tim. That’s a well reasoned and very convincing argument that the tax stimulus is behind all of these “green shoots.” I also read yesterday that the TARP and related stimulus is responsible for driving 3rd quarter GDP positive and giving a statistical end to the recession. But without it real GDP is still negative, and the recession/depression continues.

    There is no real turn around or growth in this economy at this time. And there are no signs, minus stimulus, that any of the fundamental factors have turned positive. The party will continue until the checks bounce.

  32. 32
    Ray Pepper says:

    I have to scram but wanted to leave this quick story and hopefully someone here can translate to the topic on hand so Tim doesn’t get bent for being off topic.

    I took my daughter to school yesterday and we had breakfast. All the milk and juice were in a fridge on the outside by the tables with signs everywhere that says “only 1 please”. As my daughter got her breakfast I overheard the cook say now grab your milk..”only 1 please.” The cook says this over and over to each student.

    I sat with my daughter and watched kids glance at the cook and sneak 2 over and over. I said Kara did you see what the kids are doing? They are grabbing 2. She said I know they always do that. I then proceeded to get up because the bell rang and I began to walk with my daughter to class but she stops and goes back to the fridge and grabs another chocolate milk. I said “What are you doing? It says one!” She says , Dad I took one 5 minutes ago….. and now I also took one. “Its Ok!”

    I took the milk out of her hands and brought it right back a bit cranky. As I left I shook my head and again realize we are in a terrible terrible mess.

  33. 33
    The Tim says:

    By Kary L. Krismer @ 6:

    Also, I wouldn’t agree with Tim’s statement that sales have been on an upward trend recently, while the CC index has been flat. If you remove the seasonal adjustment, the sales too have been fairly flat.

    It doesn’t make any sense to compare a data series with a strong seasonal factor to one without a seasonal factor without making a seasonal adjustment to the former. If you do, you end up with a nonsensical meaningless chart like this:

  34. 34

    RE: Ray Pepper @ 29

    You Got It

    We’ve reduced oil consumption [basically solved global warming] since 2006, we’re using 44% less oil this year.

    Yet these numbskulls want oil consumption “Stimulated” to cause global warming [and uncontrolled growth] again….and with chronic population density increases….its an “inconvenient truth”….LOL

    They need to screw their flourescent light bulb brains on….LOL

    I hear Obama says we need to keep fighting in Afghan to keep the extremists out of the Pakistan Nuke Cookie Jar….sound like possibly that Weapons of Mass Destruction excuse again…correct me if I’m wrong.

  35. 35
    Matsayswhat says:

    RE: Kary L. Krismer @ 30

    Ahhh, I wasn’t aware of that, but now I understand why non judicial, especially ‘deed in lieu of’ would be preferred by the bank.

    Though, in the 80/20 situation where the 80 forecloses, what happens with the 20? If they’re with seperate lending institutions are the two expected to work/negotiate together?

    I suppose I’m kind of off topic now, but it’s Ray’s fault :)

  36. 36

    RE: The Tim @ 33 – I realize it wouldn’t work at all for longer periods of time. But for just the past several months both the CC index and sales were flat. The sales, however, would normally not have been so flat–they would have gone up even more in the summer months. So if anything it seems like seasonally adjusted the CC index was flat and the sales depressed. Is that perhaps because your seasonal adjustment is based off of January? If not, can you explain the seasonal adjustment?

  37. 37
    mydquin says:

    Interesting. Tim, at what point are you going to finally start doing multiple regressions instead on relying on bivariate plots? How else can you test the relative influence of the recent stock market run up?

  38. 38

    RE: Matsayswhat @ 35 – Deed in lieu wouldn’t work if there are any junior liens or interests.

    If the 80 forecloses, the 20 is typically free to sue on the note, just as any other creditor could do. Actually, they can do that before the first forecloses, and probably can do that even if it is the same institution.

  39. 39

    By Matsayswhat @ 35:

    RE: Kary L. Krismer @ 30

    Ahhh, I wasn’t aware of that, but now I understand why non judicial, especially ‘deed in lieu of’ would be preferred by the bank.

    Though, in the 80/20 situation where the 80 forecloses, what happens with the 20? If they’re with seperate lending institutions are the two expected to work/negotiate together?

    I suppose I’m kind of off topic now, but it’s Ray’s fault :)

    When a property gets foreclosed, the second lienholder is just screwed. Sometimes in a short sale, the first lienholder will negotiate with the second to ensure that the 2nd lienholder gets a little something, often 80% less than what they are owed. And yes, it is Ray’s fault :)

  40. 40

    By softwarengineer @ 34:

    I hear Obama says we need to keep fighting in Afghan to keep the extremists out of the Pakistan Nuke Cookie Jar….sound like possibly that Weapons of Mass Destruction excuse again…correct me if I’m wrong.

    Just further evidence for my claim that there’s not much difference between Obama and Bush. Unlike prior performances, I’m not even sure Obama did a better job on the speech last night than what Bush could have done. The only difference is Bush would have made the speech three months ago.

  41. 41
    The Tim says:

    By Kary L. Krismer @ 36:

    The sales, however, would normally not have been so flat–they would have gone up even more in the summer months. So if anything it seems like seasonally adjusted the CC index was flat and the sales depressed.

    I honestly have no idea what you’re talking about, because the exact opposite is true. The second chart in the post shows seasonally adjusted sales, which are up.

    Look at that non-seasonally-adjusted graph above @ 33 or the closed sales by year chart from last month’s NWMLS update. June is quite often the sales peak for the year, with sales falling off precipitously in the third quarter. This year they were flat, which is up relative to the usual pattern, hense the rise in the seasonally-adjusted data.

  42. 42
    Haybaler says:

    RE: softwarengineer @ 14

    24 States have borrowed from the Fed to fund Unemployment Insurance payments because the States are broke.

    The terms of these “loans” require repayment to the Fed in 24 months…..The theory is that 24 months is long enough for the states to modify the compensation packages and tax levies to bring the funds into balanced budgets.

    In the event that the states fail to do so then the Fed will levy a Federal Unemployment insurance premium increase.

  43. 43
    Scotsman says:

    RE: Ray Pepper @ 32

    Sorry, I couldn’t get past the part where your kid’s school is serving them breakfast. Let me know at what point I’m paying for your kid’s clothes too, will you? It already seems the school is teaching them that it’s OK to steal- we’ll just (wink, wink) look the other way…

    A major cleansing can’t come soon enough.

  44. 44
    Scotsman says:

    RE: Kary L. Krismer @ 36

    You must be able to predict the future, despite your protestations, if you can discern what “normal” is or was at any time during the past 4 years.

    I’m not sure what it is you want to see, but you’re working awfully hard contorting reality to fit your needs.

  45. 45
    AMS says:

    RE: Kary L. Krismer @ 36 – David, is that you?

    This is one of the funniest posts I have read in quite some time. I’d like to see it in graph form!

    (Maybe you should claim that January has too much variance to be a good base. June might have less variance? Aligning January maximizes the potential range late in the year.)

  46. 46

    RE: The Tim @ 41 – If you just focus on June-Sept, 2009 wasn’t that different than several years, including from memory, 2001, 2003, 2005 and even 2008. The difference is the runup in October, which probably was FTB credit related, and the runup prior to then, which was September scare and FTB credit related.

  47. 47
    k2000k says:

    RE: Ray Pepper @ 32

    I think that illustrates whats happening today in America very well now say as opposed to 50 years ago when my grandmother was a teacher. Back then kids still would have tried to sneak that extra chocolate milk, but a teacher or the cook would have been on them like a bat out of hell. There would have been some serious consequences, but now, at best a little scolding. Replace its OK I had my milk five minutes ago so this counts as a knew one with, its ok the house is more than I can afford but if my income doesn’t go up the government will bail me out.

  48. 48

    By Scotsman @ 44:

    RE: Kary L. Krismer @ 36 – You must be able to predict the future, despite your protestations, if you can discern what “normal” is or was at any time during the past 4 years..

    Huh? How do you possibly need to predict the future to know what’s normal? To know if it’s normal for rain on December 25, you look for past records of December 25. That’s entirely different than what you would do to predict whether it will rain on December 25 this year.

  49. 49

    By AMS @ 45:

    RE: Kary L. Krismer @ 36 – David, is that you?

    This is one of the funniest posts I have read in quite some time. I’d like to see it in graph form!

    (Maybe you should claim that January has too much variance to be a good base. June might have less variance? Aligning January maximizes the potential range late in the year.)

    I’m claiming January 2009 was too odd of a month to be much use for anything. That’s why the first chart above shows 2009 to have record sales as a percentage later in the year.

  50. 50
    AMS says:

    RE: Kary L. Krismer @ 48 – “To know if it’s normal for rain on December 25, you look for past records of December 25. That’s entirely different than what you would do to predict whether it will rain on December 25 this year.”

    But one could develop probabilities of rain, and if the past reflects the future, then over long periods of time the forecast will be correct, within a normal variance.

    I wrote about how Vernonia, OR had two major floods separated by about 10 years. It was considered that the first flood was so rare that a similar flood would not be seen by those alive today. The second flood was significantly higher.

  51. 51
    AMS says:

    RE: Kary L. Krismer @ 49 – You mean record low sales.

    Possibly % of sales for the year should be broken out?

    Perhaps some smoothing where a 3 month average is used?

    Other than just finding something to support your preconceived notion, what do you think is a fair presentation, and why?

  52. 52
    Scotsman says:

    RE: Kary L. Krismer @ 48

    Huh. I though a full set of super-powers included knowing normal, predicting the future, 20/20 hindsight, and a free BS detector. Maybe you got the discounted set.

    At any rate, I’m not buying your distinction knowing what normal and predictive qualities- they are far to intertwined.

    Why do you fail to fully acknowledge the impact of the tax credit? Do you really believe that this market and economy are going to turn around any time soon, or do you just want to? When do you think we’ll return to 2007 pricing, both nominally and inflation adjusted?

  53. 53
    Scotsman says:

    Wow- just re-read my post above. Sorry about that. Clearly, my brain moves faster than my fingers type. I’ll try to do better.

  54. 54

    By Scotsman @ 52:

    <Why do you fail to fully acknowledge the impact of the tax credit? Do you really believe that this market and economy are going to turn around any time soon, or do you just want to? When do you think we'll return to 2007 pricing, both nominally and inflation adjusted?

    I’m not failing to acknowledge the impact of the tax credit. I’m saying there are two factors that are causing 2009 to look like a record year in the first graph above. Why are you failing to acknowledge the fact that people were scared to death by the events of September 2009, and that that affected sales going forward several months?

  55. 55

    By AMS @ 51:

    RE: Kary L. Krismer @ 49 – You mean record low sales.

    Possibly % of sales for the year should be broken out?

    Perhaps some smoothing where a 3 month average is used?

    Other than just finding something to support your preconceived notion, what do you think is a fair presentation, and why?

    This whole thing started as a result of my noting that the dip and rise in the Consumer Confidence data mirrored the drop and rise in the sales of SFR in King County. I asked Tim to try to graph that going back to September 2008. Tim went back even further though, and because he went back further he added seasonal adjustments, which I don’t have a problem with, but it wasn’t quite what I asked. I was comparing the CC index data to non-seasonally adjusted sales.

    Then the discussion evolved into whether the sales for the summer months were flat. Tim’s seasonally adjusted data shows that it isn’t flat. But if you look at the non-seasonally adjusted data, the sales for June-Sept varied 4.4%, using June as a base. The CC Index, in contrast, varied 10.5%, using June as a base. Which is flatter?

  56. 56
    AMS says:

    RE: Kary L. Krismer @ 54 – How do you compare Consumer Confidence, which is not seasonal, to housing which is seasonal without a seasonal adjustment?

    See #33 above.

  57. 57

    By Scotsman @ 52:

    Why do you fail to fully acknowledge the impact of the tax credit? Do you really believe that this market and economy are going to turn around any time soon, or do you just want to? When do you think we’ll return to 2007 pricing, both nominally and inflation adjusted?

    This may show up as a double post–sorry if it does.

    I’m not failing to acknowledge the tax credit had an effect. I’m just saying that the other reason for the 66% YOY gain is the reaction to the news in September 2008. Why are you failing to fully acknowledge that the tax credit is not the sole reason for the numbers?

    As to the rest of the comments quoted, I’m not even sure what that has to do with anything we’re discussing. But remember I’m on the fence on the inflation/deflation debate, so it wouldn’t surprise me if we see significant inflation and thus reach 2007 levels for that reason. I would think that 2007 in inflation adjusted values would be a very long way off, if ever.

  58. 58
    One Eyed Man says:

    RE: softwarengineer @ 20

    SWE, I’m not interested in trumping anybody but I think Packet may have a point regarding the population density of the urban center of Beijing. The 6400 sq mi area of Beijing is bigger than the entire state of Connecticut. Below is a site that uses only what I assume to be the most populated 740 square kilometers which is still over twice the size of Seattle. I didn’t read the methodology to see how these guys came up with their area and population data but they show Beijing as #12 in world in population density at 11,500 people per sq kilometer using only about 748 square kilometers of its total area. I didn’t rely on the Citymayors site data for Seattle because it appears to include the suburbs which are less dense. The data from Wikipedia shows Seattle at about 2700 people per sq kilometer using a land area of about 215 square kilometers (which I think leaves out the suburbs and also appears to leave out about 150 sq kilometers that’s covered in water).

    http://www.citymayors.com/statistics/largest-cities-density-125.html

    http://en.wikipedia.org/wiki/Seattle

  59. 59
    AMS says:

    RE: Kary L. Krismer @ 56 – I’ve asked for you to divide the 66%, but you have suggested it’s not possible.

    I’ll give you a small part of the 66% as some sort of financial problems of 2008, but the November 30 deadline is the majority of the increase.

    Maybe we should look at November sales as a percent of average sales for the past three months? Would that be fair?

  60. 60
    The Tim says:

    By Kary L. Krismer @ 54:

    But if you look at the non-seasonally adjusted data, the sales for June-Sept varied 4.4%, using June as a base. The CC Index, in contrast, varied 10.5%, using June as a base. Which is flatter?

    If you look at the non-seasonally adjusted ata, the high temperature measured at Seatac Airport for June-Nov varied 29%, using June as a base. Earth’s core temperature, in contrast, varied 0.01%, using June as a base. Which is flatter?!?

  61. 61
    AMS says:

    RE: One Eyed Man @ 57 – For Seattle proper, the data are available at Census.gov

  62. 62

    RE: AMS @ 55 – I’ve said it is better to use seasonal adjustments if you go a long way back. But my original comment, what started all this, was comparing the CC Index to the sales raw numbers. They both dropped to historic lows in February, and then recovered, and then leveled off.

  63. 63
    AMS says:

    By Kary L. Krismer @ 61:

    RE: AMS @ 55 – I’ve said it is better to use seasonal adjustments if you go a long way back. But my original comment, what started all this, was comparing the CC Index to the sales raw numbers. They both dropped to historic lows in February, and then recovered, and then leveled off.

    Is it any surprise what a little free money can do?

  64. 64
    One Eyed Man says:

    I think everyone screaming “its only the tax credit” is more interested in supporting their hypothesis than objectively analyzing the facts. No one said the tax credit isn’t an important factor. All Kary said was that the tax credit isn’t the only important factor. He said that in addition to the tax credit that last fall and winters closed sales numbers were abnormally low due to fear. His conclusion was that part of the increase in volume is due to dissipation of fear in addition to the tax credit.

    Perhaps consumer confidence isn’t the best metric for fear and the dissipation of fear in this instance. Maybe the stock and bond markets are a better index for fear when it comes to long term investment. As I recall, the stock market started up in late March (the same time people signed purchase agreements for May closings) and is up 50% without a specific tax credit to rely on.

    And how about the 10 yr treasury? It showed a lot of fear in the markets when it dropped from 3.8% in mid Nov 2008 to 2.1% in mid Dec 2008. It retraced that drop between Dec 2008 and June 2009 and has been in a trading range between 3.9 and 3.2 since then. You can tell me you weren’t scared now, but I’m surprised that Haines earings didn’t skyrocket after the fall of 2008 because I think a lot of people had to flush their shorts down the toilet.

    http://finance.yahoo.com/echarts?s=%5ETNX#chart4:symbol=^tnx;range=2y;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined

    If the chart doesn’t come thru its just Yahoo finance’s 2 yr chart for the 10 yr treasury.

  65. 65
    AMS says:

    RE: One Eyed Man @ 63 – Well, let’s start with the fact that there is little, if any, dispute: CFC had a big impact–far beyond initial expectation.

    I do not dispute that there may be other factors, but given the psychology of American consumers as reflected in the CFC data, it’s tough to not think that the income tax credit is not driving a good portion of the housing market.

  66. 66
    explorer says:

    This thread is a fine example for those statistcs and probablity geeks to chew on. Preconcieved notions indeed. Overthinking seems to be a habit for some. Sometimes a credit is just a credit, except when it’s not. Some things you can indeed take at face value.

    Keep up the honest assessments.

    BTW, Ray’s daugther and the other kids are merely exploiting a loophole in the policy. They are allowed to interpret it as “only 1 (at a time), please” so if one ONE TOTAL is not explained to them, they will continue to think otherwise.

    That may have some relevance to how adults behave, or not.

  67. 67
    deejayoh says:

    I don’t get it. Wasn’t the point of the tax credit to stimulate home sales?

    I can’t reconcile these two statements:

    I’ve been trying to come up with the best way of visualizing just how effective the inefficient, expensive, and economically stupid $8,000 tax credit has been at boosting home sales in the Seattle area, and I think I’ve finally come up with something really good

    When the $8,000 tax credit was initially passed, I doubted that the effect would be that strong, especially here in Seattle where $8,000 represented a mere 2% of the median home price. I stupidly assumed that most people would be smart enough to realize that 2% is essentially a worthless incentive when home prices are falling at a rate of over 10% a year

    .

    Seems like you’ve done an analysis that shows it was pretty effective at boosting sales, for a relatively minor investment. Does anyone here actually know how many of those buyers used the credit? I know don’t qualify. So let’s just guess it’s around 30%. That would be an $8k credit for ~4500 home sales. $36mm for a (eyeballing this) ~40% lift in sales on average over the last 10 months? Seems cheap to me. If you think it is expensive, remember that every one of the buyers probably got an equivalent tax write-off for MI and ppty tax deduction – that’s 100% of them. No one is complaining about that.

    you may not agree with the goal (to maintain home demand and thus prices) but it seems like it’s been a pretty effective program.

  68. 68

    RE: AMS @ 64 – Actually there’s that bogus (IMHO) Edmunds study that said that CFC had little impact.

  69. 69
  70. 70

    RE: deejayoh @ 66 – I think part of the reason why Tim thought it wouldn’t be effective is he was comparing the $8,000 to the purchase price, not $8,000 to the amount people put down. It’s much more significant to the latter.

  71. 71
    AMS says:

    RE: deejayoh @ 66 – $8k/$200k = 4%, and $200k is a relatively low-priced home for the area. If the supposition is correct, a lot of people jumped at a 4% discount.

    It makes one wonder, how little of an incentive could have a similar effect? Would people jump at the same pace for $6k? Would $10k have attracted many additional qualified purchasers?

    I also suspect, but I am not sure, that if sellers would have simply reduced the price by 4%, or less, few people would have taken much notice. While I am at it, let me remind everyone that not all buyers qualified.

    My CFC MSRP was $19,500. The CFC rebate was $4,500. The final price, after factory and other incentives was under $10,000, including the clunker money. The $4,500 CFC rebate is closer to 33% of the purchase price (4.5/~13.5), after the factory and other incentives (the final cost would have been about 50% more without the CFC money). I suspect that if the domestic auto makers would have offered a $4,500/$3,500 additional discount for a clunker, the results would have been similar. I am still surprised that $3 billion was used up in about a month, which represents about 750k vehicles sold under the program. There is still much debate as to how many additional vehicles were sold, but that is going away with additional history.

  72. 72
    AMS says:

    RE: deejayoh @ 66 – One more comment: I negotiated the deal without respect to the CFC, and then the Obama $4,500 was an added bonus. In other words, the dealer didn’t raise the price $4,500 and then offer a $4,500 discount. The $4,500 was in addition to all other rebates, incentives, and so on.

    Maybe there was a mentality that the seller was selling at a minimum price, and then the qualified buyer gets $8k instantly.

    Normally the purchase price is whatever a buyer pays for an asset, not some higher number with the fantasy of ‘instant equity.’ In this case, however, if the qualified buyer purchased at the ‘fair price’ of a non-qualified buyer, then the qualified buyer did get $8k almost instantly. Thus the buyer negotiates the best possible deal, and then is given a free $8k that is only loosely connected to the purchase price (10% maximum). The rebate has little to do with the seller, however.

    So should the net cost, after income tax rebate, be used as the cost basis of the home? Or maybe the recorded price at the county should be used as the cost basis?

  73. 73
    WestSeattleDave says:

    RE: deejayoh @ 66 – Calculated Risk did a nice write-up recently using numbers from the National Association of Realtors. NAR estimated that out of approximately 1.4 million homes sold under the program, about 1M of them would have been sold anyway, WITHOUT the credit. So the credit was only responsible for about 30% of the total sales (400K) during that period. Looked at in this light, sales did not go up nearly as much as assumed.

    In addition, they calculated the program cost against the additional sales attributed to the credit, and figured that each additional home sold cost the government $43,000. Which is why I think that the Tim is correct in labeling the credit “inefficient, expensive, and economically stupid”!

  74. 74
    The Tim says:

    RE: deejayoh @ 66 – I made my case for why I believe the $8k tax credit to be a giant waste in this post: Estimating the Local Effects and Aftermath of the $8,000 Tax Credit

    I think your estimate that only 30% of people buying homes this year qualified for the credit is a huge underestimate. Also note that even people who bought in the month and a half before the bill was enacted were given this handout (any “first-time” sales closed from 01/01/2009 to 12/01/2009 were given $8k). How on earth can anyone claim that those were “stimulated” sales? It was just a pure handout.

  75. 75
    David Losh says:

    RE: The Tim @ 73

    It goes to the psychology of the sale. First you had the tax credit classes put on by Real Estate agents. Agents were talking it up before it passed. Then you had the National Association of Realtors with the now is a good time to buy campaign. On top of that you had every one talking about interest rates being historically low. We also had the frustration of the short sale process that started people thinking there were really good deals out there.

    I agree the tax credit was a good ignition point, but once one person buys then it must be, “A Great Time to Buy!”

  76. 76
    mukoh says:

    RE: Ira Sacharoff @ 39 – Second lien holders lately have exercised and allowed short sales however have not released complete debt and the obligation. At least in most of the files that escrow officer told me about. They will still have the right to after the debt, just people don’t know it yet.

  77. 77
    Scotsman says:

    RE: WestSeattleDave @ 72

    ” each additional home sold cost the government $43,000…”

    Cost who? AArrrghhhh!

    Why don’t they just stick the money in an envelope and mail it out? Cutting everybody’s taxes and not collecting the $43K in the first place would do even more good.

  78. 78
    Groundhogday says:

    By Kary L. Krismer @ 69:

    RE: deejayoh @ 66 – I think part of the reason why Tim thought it wouldn’t be effective is he was comparing the $8,000 to the purchase price, not $8,000 to the amount people put down. It’s much more significant to the latter.

    Kary is absolute right on this point, and I’m surprised it hasn’t gotten more attention. The tax credit can be used toward a downpayment, and with leverage that $8k becomes $80k. Add in cheap financing, minimal downpayment via FHA, and loose underwriting (FHA heading toward a big bailout, Freddie and Fannie ask for $billions every quarter). Stir up that tasty stew and you get what we’ve seen. A very nice Thanksgiving feast courtesy of Uncle Sam.

    NOW… what happens in the middle of 2010 when unemployment is still rising, the stimulus is wearing off, the tax credit ends (okay, maybe it doesn’t ever end), the inventory restocking ends, the Fed’s bloated balance sheet makes more agency purchases too risky, CRE losses explode, foreclosures pile into the market after modification programs are exhausted, and we slide back down into a double dip recession? The ol’ “hair of the dog treatment” for the credit bubble might not look like such a wise move by next year.

  79. 79
    Urban Artist says:

    Well, I have seen prices come down a bit in the Ballard area, but not anywhere close to early 90’s prices. If they did I would be buying a house. Ballard is the only area I would consider buying a house. I’m not sure the tax credit has changed the sales rate in Ballard. Houses here have been selling fast usually in a month or two. I’m not sure the tax credit has changed the sales rate in Ballard that much. I have been looking for gems here I guess I’ll be waiting a bit longer.

  80. 80
    Herman says:

    I want free money. I’m not doing a darn thing until the government stimulates me to do it with free money.

  81. 81
    Scotsman says:

    RE: Herman @ 79

    Patience, Grasshopper- they will be handing it out soon enough.. But no one will want to take it from you. Ying, and Yang.

  82. 82
    AMS says:

    RE: Groundhogday @ 77 – “The tax credit can be used toward a downpayment, and with leverage that $8k becomes $80k.”

    As previously discussed, this is not practically or technically true. The IRS pays the tax credit long after closing.

  83. 83
    rationalguy says:

    RE: softwarengineer @ 34
    Except that Nuclear weapons really exists , safe havens for alqaeda exists, and dubious track of Nuclear proliferation. None of those existed in Iraq. :)

  84. 84
    Scott Weitz says:

    From the Great Crash of 1929:

    ‘Nothing could be better planned to make sure the sufferring was spread across the populus’.

    I see this tax credit, and other govt props precisely in line with that quote. In the end, current pricing is unsustainable, and will continue to fall. Now we have even more people that will suffer from falling real estate….our biggest asset.

  85. 85
    Scott Weitz says:

    RE: mukoh @ 76

    Short Sales are ina tough position right now. Big Banks (BOA, Chase) are going after the deficiencies. Forunately, Obama has a program in the pipeline that will not allow deficiencies on short sales:

    https://www.hmpadmin.com/portal/index.html

    If a person who only has a 1st mortgage is looking at a short sale, I feel compelled to tell them that, aside from a potentially greater credit hit, you would likely be in better shape if you simply let the bank foreclose.

  86. 86
    David Losh says:

    RE: Scott Weitz @ 85

    Foreclosure has gotten to be the much better option for the home owner. This short sale thing has simply gotten to be a game for the Banks. I would also suggest bankruptcy or a settlement of all debt in the foreclosure process.

  87. 87

    RE: Groundhogday @ 78 – The tax credit cannot be used for a down payment (at least in Washington). My point was more that it replenishes part of the funds used for a down payment, and is significant in that respect.

  88. 88

    RE: Scott Weitz @ 85 – The release of any claims is something that needs to be negotiated as part of the short sale process. I’m not really sure what Obama could do about that.

    The big problem is that it’s difficult/impossible to negotiate with a bank prior to getting an offer. Also, I doubt (but don’t know for sure) that you’re ever going to get a release from a second mortgage creditor that is only getting $5,000 on $100,000 of debt.

  89. 89
    shawn says:

    RE: Scotsman @ 77 – yeah, but now we see who has the power, it is not us.

  90. 90
    AMS says:

    RE: Kary L. Krismer @ 88 – “The release of any claims is something that needs to be negotiated as part of the short sale process. I’m not really sure what Obama could do about that.”

    There are several states where deficiency judgments are prohibited. What could Obama do? idk, a new tax credit, maybe?

  91. 91
    Scott Weitz says:

    RE: Kary L. Krismer @ 88

    Middle of the page:

    https://www.hmpadmin.com/portal/docs/news/hampupdate113009.pdf

    Of course, its not mandatory, but hopefully it helps.

  92. 92

    RE: Scott Weitz @ 91 – Thanks, that apparently doesn’t go into effect until next year, and doesn’t apply to Freddie or Fannie loans. I’m not seeing what benefit the lender gets using the program.

  93. 93

    RE: rationalguy @ 83

    I’m Not Disagreeing With You, But I’m Seriously Not Convinced Pakistan’s Nuclear is an Afghanistan Security Issue Either

    Either is most Americans [last summer’s Afghan support has flip-flopped to disagreement], as Afghanistan support has gone down the toilet for Obama per Dec 1’s Gallup Poll, states in part:

    “…Americans are far less approving of President Obama’s handling of the situation in Afghanistan than they have been in recent months, with 35% currently approving, down from 49% in September and 56% in July….”

    BTW, it was 56% approve, 34% disapprove just last Jul/Aug, the Gallup Poll question asked:

    “Do you approve or disapprove the way Barrack Obama is handling the situation in Afghanistan?”

  94. 94
    mukoh says:

    RE: Scott Weitz @ 85 – Scott agree and disagree at the same time. A short sale will impact credit history probably less then a foreclosure. Not by much. However if a short sale is done with complete forgiveness with no recourse then its not a bad option. Some agents though from what I assume don’t even know what they are doing in respect to bank documents and just fly their clients through it.

  95. 95
    Scott Weitz says:

    RE: Kary L. Krismer @ 92

    Kary,

    From what I’ve read, the govt will pay banks several thousand to not pursue deficiencies…I’m sure there will be more news to come.

  96. 96
    Scott Weitz says:

    RE: mukoh @ 94

    You’re absolutely right….if a short sale without deficiencies is a possibility, it is the superior choice. That said, my expereniece is that big banks (BAC, CHASE) are not waiving deficiencies very often right now.

  97. 97

    RE: mukoh @ 94 – A number of agents/brokers are requiring the short seller to get legal counsel prior to taking the listing active. That, IMHO, is a good policy.

    As to Scott’s comment, I seem to recall hearing somewhere that a bank’s willingness to release might be dependent on who is doing the negotiating, with their being most likely if it is an attorney.

  98. 98
    Groundhogday says:

    RE: Kary L. Krismer @ 87

    I didn’t realize that the original media splash was false… great to hear. Now if we could just kill this stupid tax credit program.

  99. 99
    AMS says:

    RE: Kary L. Krismer @ 87 – While not practical, a buyer can borrow the expected tax credit funds and put those borrowed funds down, even in Washington. The practical problem is finding a lender. The State of Washington isn’t going to lend buyers the funds, but that does not suggest that there are not private lenders. Friends and family or a signature loan might be a possibility, but practically speaking, no lenders exist.

  100. 100
    Scott Weitz says:

    RE: Kary L. Krismer @ 97

    I certainly don’t think it hurts to have an Attorney doing the short sale negotiations. I spoke with BOA re: a client that already filed Ch. 7 (thus no underlying debt to persue), and they still refuse to say they will not persue a deficiency.

    Of course, they are not technically able to, but I’m sure that wouldn’t stop them from selling the ‘deficiency rights’ to a collection agency, and creating an utter mess.

  101. 101
    The Tim says:

    RE: AMS @ 99 – You just gave me a great idea. Attention first-time homebuyers. I will give you a personal loan for $7,000 to use on your downpayment, with payback of the loan consisting of payment to me of your full $8,000 tax credit. You know where to find me.

  102. 102
    AMS says:

    RE: The Tim @ 101 – Uh, I hope $1,000 covers the risk of default…

  103. 103
    The Tim says:

    RE: AMS @ 102 – I’ll just have the contract written up like one of those payday loan places, where late payment results in crazy fees and outrageous interest rates. Also I’ll be sure to structure it to be non-dismissible in bankruptcy. Step 3: profit! ;^)

  104. 104
    AMS says:

    RE: The Tim @ 103 – I can hear you now, “Just bring the title to your CFC replacement…” lol

  105. 105

    RE: The Tim @ 103

    Just as long as you don’t get stuck with the house.

  106. 106
    WestSeattleDave says:

    RE: The Tim @ 103 – the Tim — when you said “crazy fees and outrageous interest rates”, I thought you were talking about the regular banks, not the payday loan folks.

  107. 107
    mukoh says:

    RE: Kary L. Krismer @ 97 – Likewise I think any seller getting involved with just an agent in negotiating a short sale or forgiveness should have legal counsel.

  108. 108

    By Scott Weitz @ 100:

    RE: Kary L. Krismer @ 97

    I certainly don’t think it hurts to have an Attorney doing the short sale negotiations. I spoke with BOA re: a client that already filed Ch. 7 (thus no underlying debt to persue), and they still refuse to say they will not persue a deficiency.

    Of course, they are not technically able to, but I’m sure that wouldn’t stop them from selling the ‘deficiency rights’ to a collection agency, and creating an utter mess.

    That wouldn’t create such a mess. I once had a credit card debt assigned where the client not only had filed Chapter 7, but also the debt was over 10 years old, and thus there was a clear SOL defense. They quickly went away. By simply sending the letter they’re technically in contempt of court, so they tend to back off quickly.

  109. 109

    RE: The Tim @ 103 – I think you’ll have some serious usury issues unless you’re licensed as a payday loan place, out of state, etc. There are a number of exceptions to usury, so it’s hard to actually find one, but I think you may have hit on one.

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