Weekend Open Thread (2010-08-06)

Here is your open thread for the weekend beginning Friday August 6th, 2010. 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.

24 comments:

  1. 1
    Sniglet says:

    It is interesting to see that housing sales in British Columbia have taken quite a hit recently (where they’ve had a bubble that grew even larger than the one in Seattle until this year). What’s fascinating is that Canada is seeing a drop in sales at the SAME time as the US, yet they don’t have an easy excuse like the expiration of the tax credit that was present in the US.

    This makes me wonder if industry analysts are over-estimating the impact of the now-expired tax credits. Perhaps there are broader forces at work leading to the drop in sales America is seeing.

    <blockquote“Last year, we experienced the busiest July in our history and this year it was the quietest in a decade,” says FVREB President, Deanna Horn. “Although the real estate market typically slows in the summer months, we didn’t anticipate this level of change.

    http://www.fvreb.bc.ca/blog/index.php/2010/08/04/fraser-valley-home-buyers-take-holiday-in-july

  2. 2
    wreckingbull says:

    RE: Sniglet @ 1 – Of course, the 47% drop in sales was due to the beautiful weather, according to the idiot they interviewed in that piece.

    Wait a second. I thought it was bad weather that causes sales to plummet. Which one is it?

  3. 3

    RE: Sniglet @ 1 – These things can act on their own too. There were a number of markets in the US headed south before the Mortgage Crisis of late 2007. You don’t need an external event. Also, I would note that for Vancouver with their fairly significant immigrant population, the external event could be external to the country, such as an event in China.

  4. 4
    David Losh says:

    RE: Sniglet @ 1

    A buddy of mine is an out of work architect who is doing land use work for a group of Sikhs from Canada. They are buying properties to create rental units, housing developments for resale, and properties to renovate for rent. It’s like people coming here from California buying what they see as bargains.

    Canada has a more liberal immigration policy than the United States. Money transfers there from other parts of the world that are more in trouble than we are here. Again, I would expect tons of money from Asia to be dumped into Canada.

    I would also expect that investors in Canada were dumping properties during this last selling season to get to cash. What we have here in the United States is that some buyers waited until after the tax credit to get better pricing. As the sales data moves through the Multiple Listing systems for the next few months we will again start seeing the declines in housing unit prices.

    Actually, if I follow my same reasoning, we may be seeing an increase in sales at the end of this year.

  5. 5
    Sniglet says:

    I would also expect that investors in Canada were dumping properties during this last selling season to get to cash.

    Whatever the reason, I find the correlation of the recent Canadian market decline with that in the US most interesting. On its face, it would seem the market decline in Canada is unrelated to the one in the US (i.e. since Canada didn’t have a tax credit to begin with), yet the fact that the timing is so synchronized leads me to wonder if there might not be some other cause behind BOTH declines.

  6. 6
    softwarengineer says:

    Thanks One Eyed Man for the Blogger Input

    Ok, I’ve cleaned up my act [I hope, LOL], here’s a Friday 2010 version of my allegation that “MSM is a less reliable news source than Tabloids”, with no 2009 anomalies in it [albeit, even the 371,000 jobs lost in July 2009 I referenced made a 71K increase in July 2010 look like a small moot improvement, especially if they’re mostly 2010 P/T or temporary summer hires].

    The “lipstick on the economy pig” good (?) news version, states in part [BTW, you need to be registered in Washington Post to read the article, so I included more of it]:

    “…The nation’s economy continued to sputter as private-sector employers added just 71,000 jobs in July, according to a report released Friday by the Labor Department.

    The small increase in private-sector employment was more than offset by the loss of 143,000 temporary census jobs, and the nation’s unemployment rate remained unchanged at 9.5 percent. Overall, the nation shed 131,00 jobs in July.

    The official unemployment told only part of the story, as the nation continues to struggle with its weakest job market in more than a generation.

    The Labor Department said 8.5 million workers were working part-time even though they would prefer full-time work. Meanwhile, 6.6 million of the nation’s 14.6 million unemployed workers have been jobless for more than six months, continuing a historic high, the government reported…”

    http://www.washingtonpost.com/wp-dyn/content/article/2010/08/06/AR2010080600914.html?hpid%3Dtopnews&sub=AR

    It should be noted that the Yahoo Finance MSM news and the Bull Stock Market made a big deal a couple days ago about the 71K jobs added to the private sector in July 2010.

    Here’s the MSM URL needing no registration, but lacking the complete news article:

    http://www.washingtonpost.com/

    Here’s the bad news version of the same MSM take for July 2010:

    “….Nonfarm payrolls drop 131,000 in July, U.S. reports…”

    http://www.marketwatch.com/story/nonfarm-payrolls-drop-131000-in-july-2010-08-06?siteid=bnbh

    I’ll give the MSM news sources credit the last couple days, it takes a Tabloid a week to correct news anomalies, they reported much better today, than last Wednesday on the same topic. The Tabloids recently captured the Gore sex allegation story 3 weeks before MSM news admitted it was going on [the criminal charges were dropped recently, BTW]. The Tabloid Globes’ birth certificate issue agrees with CNN’s majority poll of Americans that question Obama’s domestic birth as phony….LOL

    Maybe Obama will be as lucky as Gore, on Tabloid vs. MSM reporting?

  7. 7
    Willy Nilly says:

    Toto – There’s No Place Like Home

    Somewhere over the short sale
    Way up high,
    There’s a land that I heard of
    Now is a great time to buy.

    Somewhere over the short sale
    Skies are blue,
    And the deals that you dare to dream
    Strategic defaults do come true.

    Someday I’ll wish upon a HELOC star
    And wake up where the bills are far
    Behind me.
    Where debts do melt like lemon drops
    Away above where my income stops
    That’s where you’ll find me.

    Somewhere over the meltdown
    Sellers fly.
    Sellers fly from their upside down loans
    Why then, oh why can’t I?

    If happy little bluebirds fly
    Beyond the rainbow
    Why, oh why can’t I?

  8. 8
    Trigger says:

    After news like this:
    http://finance.yahoo.com/banking-budgeting/article/110249/july-jobs-data-turns-up-heat-on-democrats;_ylt=AtwqscjYgMMp0vzOgnz.P7O7YWsA;_ylu=X3oDMTE1bm5qaWhlBHBvcwMyBHNlYwN0b3BTdG9yaWVzBHNsawNqdWx5am9ic2RhdGE-?mod=bb-budgeting&sec=topStories&pos=main&asset=&ccode=

    Bernake and Obama need to resolve the situation by more govt hiring. So increase deficit spending ASAP to hire all the people without jobs. It needs to be done immediately because people will start getting upset.

  9. 9
    Scotsman says:

    RE: Willy Nilly @ 7

    Nice!

  10. 10
    Cheap South says:

    It might be time for another poll questioning how low from peak we’ll be in_______ (any given month before next spring). Will we surpass 25%? 27%? I think we are at 23% now, so I seriously doubt it will reach 30%?

  11. 11
    Sniglet says:

    I seriously doubt it will reach 30%

    I’ll take the bait on this one. I think it is highly probable we will see Seattle area home prices down at least 35% from peak by the end of 2011, with much greater drops to come through 2016 (keeping in line with my oft cited prediction of an 80% drop in prices by 2016).

    I think we are pretty close to a resumption of the great bear market (which will start before the end of 2010), and a crashing stock market/economy will take housing right down with it. It’s hard for me to say what will happen to headline unemployment numbers because that is largely dependent on how many people are “active” in the job market. If increasing numbers of people simply stop looking for work then the top level unemployment rate won’t be very meaningful.

    Actually, the whole issue of innacurate statistics might play havoc with many of my predictions. For example, I don’t know if the calculation of average or median home prices includes the various types of distressed sales. If the statistics automatically exclude short sales, and the like, from their data set then we could have a mis-leading view as to what is really happening with prices.

  12. 12
    Sniglet says:

    To illustrate my point of how statistics don’t tell the whole story is the example of how economic changes are being hidden at the private middle school where my brother teaches in Atlanta. If you just went by the $16,000 tuition fees they advertise on their web site, you would conclude that there has been no deflation. However, my brother tells me that in the last few years they have went from providing “financial aid” to less than 20% of the students to now over 60% of the pupils. This is ad-hoc discounting which doesn’t show up officially anywhere. Anyone doing a survey of tuition rates of Atlanta schools would conclude that prices haven’t dropped, but that is clearly not the case.

  13. 13

    By Sniglet @ 11:

    Actually, the whole issue of innacurate statistics might play havoc with many of my predictions. For example, I don’t know if the calculation of average or median home prices includes the various types of distressed sales. If the statistics automatically exclude short sales, and the like, from their data set then we could have a mis-leading view as to what is really happening with prices.

    The NWMLS stats do include distressed. If they were excluded we possibly never would have gone below $400,000 for King County SFR.

  14. 14
    Cheap South says:

    RE: Sniglet @ 11

    Sniglet, I said I doubt we’ll reach 30% decrease by next spring. This would require a 1% monthly decrease from just about now until then. Then again, who knows.

  15. 15
    David Losh says:

    RE: Sniglet @ 12

    Once again your comments have started a whole new line of thinking for me. Let’s leave the foreclosures, and distressed property sales over in the corner, in a box of their own, and just deal with the price people will sell a property for.

    Let’s say you have to move for a job, or let’s say you have rented your house out for the past couple of years until the market turns. Just as an example, a woman up the street, and around the corner, has been renting her house out for the past five years. The market hasn’t turned in her favor. She has it up for rent again because people keep moving out. The house needs work. Five years as a rental can take a toll. She is obviously a reluctant land lord. She has equity that is eroding in more ways than one.

    Last, but not least is the number of people who have spent money to prepare a property for sale. Let’s say you have just dumped in $5K to $10K to sell a property. You, of course expect to get a higher price, that may never come. The property sits on the market until you reduce to a price that it will sell for, and then BAM, the offer is for $5K to $10K less than you originally wanted.

    The point is that property is a lot of work. property isn’t going up any more, so people may be wondering what the heck they are going to do now. In Professor Wheaton’s working paper he comments on the number of people who bought second homes, what about them? When they find that selling off the home they currently live in will not transfer into a second home owned free and clear what will their choices be?

    The psychology of home ownership is shifting. After the hoopla of the tax credit, and government involvement, I think some hard realizations are going to force people, real people, people with money, or without, to take some lumps that will be a bigger downward pressure on pricing than what banks do.

    I think the cocktail party conversations will turn to how little some one got for a property they sold. Could bragging about how much a person can afford to lose be new trend?

  16. 16
    pfft says:

    By Trigger @ 8:

    After news like this:
    http://finance.yahoo.com/banking-budgeting/article/110249/july-jobs-data-turns-up-heat-on-democrats;_ylt=AtwqscjYgMMp0vzOgnz.P7O7YWsA;_ylu=X3oDMTE1bm5qaWhlBHBvcwMyBHNlYwN0b3BTdG9yaWVzBHNsawNqdWx5am9ic2RhdGE-?mod=bb-budgeting&sec=topStories&pos=main&asset=&ccode=

    Bernake and Obama need to resolve the situation by more govt hiring. So increase deficit spending ASAP to hire all the people without jobs. It needs to be done immediately because people will start getting upset.

    just about.

  17. 17
    pfft says:

    The GOP(and some democrats) has been railing against deficits yet they want to add almost a trillion to the deficit in the form of extending the unfunded bush tax cuts. they will add to the deficit for the rich, but they didn’t vote for the health bill which will save hundreds of thousands of lives and subtract from the deficit. that’s not even including the other benefits to government spending from the health bill.

    Deficit Frauds Boehner And Pence Can’t Answer How Tax Cuts For Wealthy Will Be Paid For
    http://thinkprogress.org/2010/08/08/pence-boehner-tax-cuts/

    what is amazing is that they’ll probably pick up seats!

    we should have a poll on whether or not the unfunded bush tax cuts should be extended.

  18. 18
    pfft says:

    just to be clear about the slow patch we are in and why the stimulus is wearing off and causing unemployment to not snap back as fast as it should.

    The $787 billion stimulus is not nearly enough to fill the “well over $2 trillion hole” in the economy, Krugman said. “A fair bit of the bill is not really stimulus,” he adding, noting that just about $650 billion would actually spur consumer spending and other types of stimulus.

    http://www.huffingtonpost.com/2009/02/17/paul-krugman-stimulus-too_n_167721.html

    he said that in Feb of 2009 and he was right. this is the magnitude of the problem. the stimulus bill was at least $1.3 trillion too small to jump start the economy. some of the spending was offset by state and local governments cutting back.

  19. 19
    Lake Hills Renter says:

    Re: tiny house movement discussion from a few days ago

    I don’t know if I’m really going to move into a small house (400-500 sf), but I’m acting like I am. Today I started cleaning out everything I don’t really need — something I tend to do every 5 years or so, and it’s due — and I already have a huge pile to take to Goodwill. Still more to do, but I’m being very aggressive about it. Very few things get kept “just in case” I might need it. I need it, or I don’t.

    I expect I’ll be moving in a few months, at least into another rental, and this should make the process much quicker, as well as determine how small I can go. I did some research recently and found I can save an not insignificant amount over what I’m now paying, and try out the area I think I want to live in. Put that with being about to pay off my car, and my bank account is about to be even happier.

  20. 20
    Chris says:

    RE: pfft @ 18
    Pfft @ 18

    For the sake of argument let’s say a proper amount of deficit spending would stimulate the economy out of this “slow patch”, that all the money would be properly applied (ie that a large percentage of the money would not be siphoned off for corruption) and that the bubble started to grow only post-911 and that the economy does not need to be drastically restructured. How do you determine the proper amount to spend? What is your formula?

  21. 21
    wreckingbull says:

    RE: Lake Hills Renter @ 19 – Nothing better than getting rid of crap you don’t need.

    Another thing that did not come up in that conversation is the emergence of such tiny homes right in the middle of Seattle neighborhoods. These were ridiculously priced, and I’m sure the owners are now regretting shelling out so much, but the idea was sort of cool. At least better than another Ballard condo building:

    http://www.myballard.com/2008/05/13/cottage-homes-coming-to-ballard/

  22. 22
    pfft says:

    krugmans lays the smack down.

    In effect, a large part of our political class is showing its priorities: given the choice between asking the richest 2 percent or so of Americans to go back to paying the tax rates they paid during the Clinton-era boom, or allowing the nation’s foundations to crumble — literally in the case of roads, figuratively in the case of education — they’re choosing the latter.

    It’s a disastrous choice in both the short run and the long run.

    America Goes Dark
    http://www.nytimes.com/2010/08/09/opinion/09krugman.html?_r=1&src=twr

  23. 23

    The QFC/Big Lots space at Fairwood apparently will become an LA Fitness in 2001, and there is a bit of other remodeling work planned for that shopping center, including a major renovation of Bartells.

  24. 24
    Chris says:

    RE: pfft @ 22
    Pfft –
    The top 5% already pays 60% of the taxes. The top 25% already 86% of taxes and the top 50% pays 96.93%. The bottom 50% pays 3% of taxes.

    Source:http://www.taxfoundation.org/press/show/22652.html

    Do you think these number are cooked? If so how and if not please provide your position for reallocating income through taxation. How much more should the top 50% pay? The top 25%? and so on. From what I read the top 1% have been very generous in charitable giving, especially for health care related issues which you seem to favor.

    http://givingpledge.org/#enter

    Do you want the government to just take over the money before the billionaires can pass it to a foundation? If you are suggesting we go after the finance people who profited from this debacle? Krugman strongly favored the bail out of the banks and strongly favored bailing out Lehman Brothers so he offers your positions no support if it is limited to isolating the finance industry for special treatment.

    You still haven’t suggested a formula for spending our way out of the “slow patch” ( @18). If you are in favor of going into debt several trillion dollars and radically changing the tax structure, please give some specifics.

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