Mid-Week Open Thread (2011-06-08)

Here is your open thread for the mid-week on June 8th, 2011. 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.

39 comments:

  1. 1

    Bernanke and Obama are Predicting More GDP Growth in the 2nd Half of This Year

    Goosing Seattle real estate sales?

    One of the reasons given, is the recent allegation that Japan will resume normal manufacturing this Summer….hmmmmm….does that mean last April’s allegation from Japan that normal production levels wouldn’t be reached until year’s end were false????

    Speaking of false allegations from Japan, RE: the reactors didn’t melt down last March….now they admit all three reactors that exploded had full meltdown.

  2. 2

    No QE3 Keeping Seattle Home Interest Rates Low and Stagflation Worse

    Article:

    “…The end of the Fed’s program would never be easy given the huge onslaught of scheduled Treasury borrowing, but the task will be more difficult because foreign investors in the past six months have been reducing their sizable holdings of U.S. debt, not increasing them.

    That means to get those buyers back, the Treasury may have to raise the rates it pays on the debt.

    “With the Fed pretty much out of the picture after June, it seems clear that foreign demand for Treasuries holds the key going forward,” said David Greenlaw, an analyst at Morgan Stanley. “Continued heavy buying by the largest foreign holders of Treasuries will probably be necessary” to prevent interest rates from rising, he said….”

    http://www.washingtontimes.com/news/2011/jun/7/lack-of-buyers-may-force-treasury-to-boost-interes/

    Meanwhile, OPEC members are each other’s throat, causing another reason for the stagflation spike, article:

    “…OPEC unexpectedly left its production levels unchanged on Wednesday, causing oil prices to jump, as senior officials said their meeting ended in disarray — a stunning admission for an organization that places a premium on consensus decision making….”

    http://finance.yahoo.com/news/OPEC-leaves-output-on-hold-apf-97548906.html;_ylt=AoLRekhGGZijgPGbDlU_TVi7YWsA;_ylu=X3oDMTE1Y2hvbWlsBHBvcwMzBHNlYwN0b3BTdG9yaWVzBHNsawNvcGVjbGVhdmVzb3U-?x=0&sec=topStories&pos=1&asset=&ccode=&sec=topStories&pos=main&asset=&ccode=

    The good news, as Seattle real estate values likely plummet this year with higher interest rates now likely too….let’s hope the 3 year average on property taxes will plummet too for 2012….if not, did someone say local austerity demonstrations next year??? LOL

  3. 3
    bob says:

    http://housingstory.net/2011/06/07/13-million-homeowners-or-28-percent-with-a-mortgage-in-or-near-negative-equity/

    Given that prices did not go down in WA until later in the cycle, I did not expect WA to be this high on the chart. It does look like NY is doing surprisingly well (perhaps the TARP funded recovery)

  4. 4
    S. Marty Pantz says:

    ‘Discovery of meth contamination stuns new homeowners’: http://seattletimes.nwsource.com/html/realestate/2015198336_realmeth05.html?prmid=obinsite

  5. 5
    Sweet Pea says:

    RE: bob @ 3

    Or NY’s situation could have something to do with this, which someone else posted last week (apologies, I can’t recall who). This is the first thing that came to mind when I saw NY at the bottom of the negative equity chart.

    http://seekingalpha.com/article/273162-new-york-city-home-prices-are-headed-for-collapse

    Anyone have ideas why banks / trustees would have incentive to sit on NY delinquencies moreso than for other states? My theories so far are: (a) too close to the epicenter of the financial world and the Fed to be making things look so dang bad by letting distressed properties hit the market, (b) the volume and value of these properties could cripple bank’s financial statements if they actually took the writedowns…? Just speculating here. Maybe there is a perfectly reasonable market explanation.

    The LPS April Mortgage Monitor report states that “east coast states have generally seen the largest impact from the process reviews and moratoria” but doesn’t offer why that would be the case.

  6. 6

    RE: Sweet Pea @ 5 -Have You Noticed the Richer Neighborhoods Get Longer Green Lights Leaving Their Communities to Freeway Accesses?

    Locally, the richer Kent residents shoot large Aerial Bombs off over Lake Meridian on the 4th and they aren’t the legal Class C Kind….the fire dept personnel and I both agreed on that and neither of us cared either….it was a nice display and costly too.

    In Seattle area real estate, if your neighborhood is somehow special and high priced, your foreclosed homes are more scarce too. SB has seen this suspicious anomaly several times in the charts.

    If your brand of automobile doesn’t require safety recalls [assembled outside of America], and there are zero on it to date….its probably manufacturing fraud in my book. Almost all domestic assembled cars do have safety recalls.

    If you live in a sanctuary city like New York City [BTW, we do too], there is especially high pressure by open border lobbyists using cheap labor during this Great Recession to not foreclose on the poor, as a high percentage of them are new migrants. Many legal citizens allege the protected migrants have far more rights than the rest of us.

  7. 7

    RE: Sweet Pea @ 5 – More likely to use judicial foreclosure?????

  8. 8
    The Tim says:

    Your dose of random for the day, via the Seattle Times…

    Man with dead weasel-like creature accused of Hoquiam assault

    HOQUIAM, Wash. —
    Police say a man was carrying a dead weasel when he burst into a Hoquiam apartment and assaulted a man.

    The victim asked, “Why are you carrying a weasel?” Police said the attacker said, “It’s not a weasel, it’s a marten,” then punched him in the nose and fled.

  9. 9

    By softwarengineer @ 6:

    RE: Sweet Pea @ 5 -Have You Noticed the Richer Neighborhoods Get Longer Green Lights Leaving Their Communities to Freeway Accesses?

    Cry me a river. When I was first down in Skyway, the Boeing Access road didn’t even have freeway access. From SB I-5 that didn’t seem like a big deal, because MLK is right after that, but it was because you can’t turn on MLK for almost two miles after the exit. For access to NB I-5 it was also huge because you’d have to go to 129th, again almost 2 miles away, and then back almost 2 miles again to get to I-5.

  10. 10
    Scotsman says:

    RE: The Tim @ 8

    Muskrat love. . . gone bad.

    Is that a Weasel or a Weiner?

  11. 11

    By Scotsman @ 10:

    Is that a Weasel or a Weiner?

    Better learn. There will be a test, and if you’re wrong you get punched in the face!

  12. 12

    RE: Kary L. Krismer @ 11 – That Congressman/Senator Weiner on the News Lately Seriously Needs to Change His Last Name….LOL

    Viva Oscar Meyer :-)

  13. 13
    Scotsman says:

    Oh boy- here comes war number 4. No wonder we’re broke:

    “WASHINGTON — The Obama administration has intensified the American covert war in Yemen, exploiting a growing power vacuum in the country to strike at militant suspects with armed drones and fighter jets, according to American officials.”

    http://www.nytimes.com/2011/06/09/world/middleeast/09intel.html?_r=1&hp

  14. 14
    David Losh says:

    RE: Sweet Pea @ 5

    Five million for a loft, twenty five million for a penthouse, Queens at $400K, Brooklyn at $500K. All of those loans have been sliced, and diced, into mortgage backed securities that were insured to hold value, and they have.

    The Beige Book for the Federal Reserve Board’s Second District– New York showed in June that prices had held steady. Bankers report a decrease in spreads of loan rates over costs of funds for all loan categories–particularly on residential mortgages. There were also fairly widespread decreases in deposit rates. Finally, delinquency rates rose for consumer loans but decreased for commercial mortgages and, to a lesser extent, on commercial and industrial loans. Delinquency rates on residential mortgages were unchanged.

    http://www.bloomberg.com/news/2011-06-08/u-s-federal-reserve-beige-book-new-york-district-text-.html

    What all that means is that as long as nothing rocks the boat, the real estate market place, the basis for the security for the Federal Reserve Boards Second District, we can keep trading as usual.

    The minute New York begins to unwind I would expect other metro markets to do like wise. My take is that the psycology of having New York Real Estate tank would have the bigger impact, rather than the reality that it will cheapen the securities being traded.

  15. 15
    David Losh says:

    RE: Scotsman @ 13

    Obama impresses the heck out of me for his handling of the Middle East, North Africa, and Israel. For one time only we have a President who has done something in one of the most repressed areas of the world.

    I’m going to use the opening of the border crossing between Egypt, and Palastine as an example. Try to tell me that the Arabs in that region wanted to keep Palastine locked out of Egypt. Just tell me that you think Palastine is such a pariah that other Arabs have wanted them contained. That would give you an idea of how corrupt Mubarack is.

    If your point is that we should stand by while the dictators we have catered to since the fall of the Shah bully the populace I think you are delusional. The people of the region want change, they want the democracy they founded thousands of years ago. Our time there is limited, and I’m pleased that it’s being used wisely.

  16. 16
    pfft says:

    By softwarengineer @ 2:

    No QE3 Keeping Seattle Home Interest Rates Low and Stagflation Worse

    we don’t have stagflation. inflation is under 3%. core inflation is BELOW the target of 2%. we don’t have enough inflation.

  17. 17
    pfft says:

    By softwarengineer @ 12:

    RE: Kary L. Krismer @ 11 – That Congressman/Senator Weiner on the News Lately Seriously Needs to Change His Last Name….LOL

    Viva Oscar Meyer :-)

    he should change his last name to Vitter…

  18. 18
    pfft says:

    By Scotsman @ 13:

    Oh boy- here comes war number 4. No wonder we’re broke:

    “WASHINGTON â�� The Obama administration has intensified the American covert war in Yemen, exploiting a growing power vacuum in the country to strike at militant suspects with armed drones and fighter jets, according to American officials.”

    http://www.nytimes.com/2011/06/09/world/middleeast/09intel.html?_r=1&hp

    hey genius we’ve been in Yemen for years.

    Bush hit a target in yemen in 2002. Most likely what is happening is that they have great intel from the bin laden raid.

    Yemen Killing Based on Rules Set Out by Bush
    http://www.nytimes.com/2002/11/06/international/middleeast/06YEME.html

    do you read or watch the news at all?

  19. 19
    BillE says:

    I heard on the radio that Weiner’s wife is pregnant. I want to see a headline that says, “Wife impregnated by Weiner.”

  20. 20
    Scotsman says:

    RE: pfft @ 18

    “do you read or watch the news at all?”

    No, I just pulled the link you’re responding to out of my ass. Do you think at all?

    Life’s hard. It’s really hard if one’s stupid. God bless you.

  21. 21
    David Losh says:

    RE: Sweet Pea @ 5

    Actually this is really interesting. When I look at metropolitain areas around the country the bright spot is always the down town core. It’s the same here in Seattle, for those rings around down town, like Fremont, or Ballard, Queen Anne, or Magnolia, Columbia City, or Lake City. Every city has an epicenter that if it collapses the surrounding area goes with it.

    It might start with New York.

  22. 22
    ChrisM says:

    Jim the Realtor’s comments on the Orange County Association of Realtors’ attempts to stifle free speech (or is that too biased a summary?):

    http://www.bubbleinfo.com/2011/06/08/ocar-vs-ihb/

  23. 23
    No Name Guy says:

    By pfft @ 16:

    By softwarengineer @ 2:

    No QE3 Keeping Seattle Home Interest Rates Low and Stagflation Worse

    we don’t have stagflation. inflation is under 3%. core inflation is BELOW the target of 2%. we don’t have enough inflation.

    HA HA HA HA HA HA!!!!!!! Phht….quit it dude…you’re killing me.

    http://www.zerohedge.com/article/guest-post-qe2-bernanke-chronicles

    Start Quote
    * Oil prices have risen 35% since September 2010.
    * Unleaded gas has risen 50% since September 2010.
    * Gold has risen 24% since September 2010.
    * Silver has risen 85% since September 2010.
    * Copper has risen 20% since September 2010.
    * Corn has risen 67% since September 2010.
    * Soybeans have risen 40% since September 2010.
    * Coffee has risen by 44% since September 2010.
    * Cotton has risen 88% since September 2010.
    End Quote

    No inflation….yeah. So, have you been to the grocery store recently there Phht? You just stay there in the lounge listening to the band while the crew is telling you all is well and that ice berg just scratched the paint. Those who can think for themselves and acknowledge reality that they can see with their own eyes will quietly move to the life boats.

  24. 24
    Lurker says:

    RE: No Name Guy @ 23 -Well, this depends on your definition of inflation. Commodity costs are higher and if “higher prices is inflation” then yes, I guess you are right. However, the increase in money supply has been somewhat minimal, so inflation in that regards is pretty nil.

  25. 25
    No Name Guy says:

    By Lurker @ 24:

    RE: No Name Guy @ 23 -Well, this depends on your definition of inflation. Commodity costs are higher and if “higher prices is inflation” then yes, I guess you are right. However, the increase in money supply has been somewhat minimal, so inflation in that regards is pretty nil.

    Blah, blah, blah, money supply BS. And it depends on ones definition of frosting on the cake. Spit is spit, not frosting. Change in the money supply is not a measure of inflation, prices paid for goods is….sheese. Nice attempt at a dodge.

    Things that most folks buy on a continuing basis:
    Gasoline – more dollars for the same product. Inflation
    Coffee – more dollars for the same product. Inflation.
    Sirloin steak, bottom round, bacon, chicken breast – more dollars for the same product. Inflation
    Milk – more dollars for the same product. Inflation.
    Bread – more dollars for the same product. Inflation
    College tuition – more dollars for the same product. Inflation
    Jeans – more dollars for the same product. Inflation.
    Soap & TP – more dollars for the same product. Inflation

    None of the above are subject to the BLS BS of adjusting for “qualitative” adjustments. A gallon of 2% milk is a gallon of 2% milk. Bread is bread. Gasoline is gasoline. Levi’s 501’s are Levi’s 501’s.

    Even the focus of this blog – purchased residential real estate, is problematic. Unless one is buying NOW, the price movement of purchased housing stock is moot. If you bought 4 (or 2 or 8 or 15) years ago, your mortgage payment is what it is, it doesn’t go up or down to reflect the increase or decrease in housing prices since when you bought – you lock in your cost at that point in time (assuming a traditional 30 year fixed mtg purchase model). My mortgage payment was the same in January 2011 as it was at the peak of the boom around 2007 despite house prices in the greater Seattle area dropping, what, 30+%. Rent on the other hand…..

  26. 26
    Lurker says:

    RE: No Name Guy @ 25 -So were the large increases in home values up to 2006 because of steep inflation? More dollars for the same product, right? A house is a house? Again, I think it comes down somewhat to a definition of inflation. If higher prices are the cause of inflation or a result of inflation. Perhaps I am looking at it the wrong way. Anyways, I don’t disagree that prices are higher, obviously many things are but commodity prices can flux a bit in short term which I believe the CPI tries to adjust for and according to CPI, as Pfft has mentioned, inflation has been low.

  27. 27
    LocalYokel says:

    God. Just like my PHIL 101 class in college. All talk, no results.

    The buck stops when you have to pay more for steaks in the frig, little kittens
    are crying for milk, and you do not make enough to cover the difference.

  28. 28
    Lurker says:

    Yes, I am probably just splitting hairs. If stagflation is low economic growth accompanied by higher prices, well then, I’m a believer.

  29. 29
    Blurtman says:

    Q1 Flow of Funds: Household Real Estate assets off $6.6 trillion from peak

    The Federal Reserve released the Q1 2011 Flow of Funds report this morning: Flow of Funds.

    The Fed estimated that the value of household real estate fell $339 billion in Q1 to $16.1 trillion in Q1 2011, from just under $16.5 trillion in Q4 2010. The value of household real estate has fallen $6.6 trillion from the peak – and is still falling in 2011.

    http://www.calculatedriskblog.com/2011/06/q1-flow-of-funds-household-real-estate.html

    Now is a great time to buy!

  30. 30
    Blurtman says:

    RE: BillE @ 19 – Part of the screening process to be on Hilary’s team is to have a dufus husband who cannot control his impulses.

  31. 31
    David Losh says:

    RE: No Name Guy @ 23

    We call this the rusty nail argiment. Just because people are willing to pay $500 for a rusty nail doesn’t mean it’s worth $500.

    Real Estate is a good example of that, today. The price may have spiked, but that didn’t change the value. What I think is happening today is that big land owners are trying to get rental prices up so that the value of property can appear greater than it actually is.

    It’s the same across the board. OPEC didn’t raise production because demand for oil hasn’t been that great. There’s a lot of talk about the demand for oil, but very little real demand. China production isn’t what it used to be. Supplies have been constant.

    Food production was being discussed, or Kary was attempting to make a case for food shortages on the Global Economy Thread, but there is very little to prove shortages of anything.

    What it is looking like is that more “investors” are buying, borrowing, cheap dollars to buy up futures to have an illusion of demand. If they make even 1% from borrowed dollars it’s millions of dollars in profit.

  32. 32

    RE: David Losh @ 31 – Congratulations Dave. You’re now making the exact same arguments as Maria Cantwell and Iran. :-D

    http://www.benzinga.com/etfs/commodities/11/06/1151093/opec-leaves-output-unchanged-crude-soars

    BTW, it’s pretty hard to raise the price of food commodities without shortages, because what isn’t sold tends to spoil.

  33. 33
    David Losh says:

    RE: Kary L. Krismer @ 32

    From your link,

    “Excessive speculation in the futures markets increases volatility unrelated to fundamentals and efforts by governing and regulatory bodies in the consuming countries to minimize such speculation remain imperative.”

    On May 24, Goldman Sachs and Morgan Stanley issued bullish outlooks on the commodity to their investors. Goldman raised its 12-month price target to $130 from barrel from $107, while Morgan Stanly set a price target of $120 a barrel.

    Crude oil futures rose close to $102 per barrel on the session before closing around $101 per barrel, up over 1.75%.

    You’re still talking like food, or oil are sitting on the ground. They aren’t. The speculation is in the future.

  34. 34
    pfft says:

    By Scotsman @ 20:

    RE: pfft @ 18

    “do you read or watch the news at all?”

    No, I just pulled the link you’re responding to out of my ass. Do you think at all?

    Life’s hard. It’s really hard if one’s stupid. God bless you.

    yes god bless me for having to deal with you. so when are you going to refudiate what I said?

  35. 35
    pfft says:

    By No Name Guy @ 23:

    By pfft @ 16:

    By softwarengineer @ 2:

    No QE3 Keeping Seattle Home Interest Rates Low and Stagflation Worse

    we don’t have stagflation. inflation is under 3%. core inflation is BELOW the target of 2%. we don’t have enough inflation.

    HA HA HA HA HA HA!!!!!!! Phht….quit it dude…you’re killing me.http://www.zerohedge.com/article/guest-post-qe2-bernanke-chroniclesStart Quote
    * Oil prices have risen 35% since September 2010.
    * Unleaded gas has risen 50% since September 2010.
    * Gold has risen 24% since September 2010.
    * Silver has risen 85% since September 2010.
    * Copper has risen 20% since September 2010.
    * Corn has risen 67% since September 2010.
    * Soybeans have risen 40% since September 2010.
    * Coffee has risen by 44% since September 2010.
    * Cotton has risen 88% since September 2010.
    End QuoteNo inflation….yeah. So, have you been to the grocery store recently there Phht? You just stay there in the lounge listening to the band while the crew is telling you all is well and that ice berg just scratched the paint. Those who can think for themselves and acknowledge reality that they can see with their own eyes will quietly move to the life boats.

    I didn’t say that there wasn’t any inflation. I said inflation was low. commodities don’t tell you much about inflation. commodity prices are volatile. commodity prices are not a big component of the CPI. I repeat, commodity prices aren’t a big component of the CPI.70% of a companies costs are wages. wages aren’t going up. there are massive deflationary forces out there. unemployment is too high. wages aren’t going up much. the consumer is still deleveraging. housing is still challenged. natural gas is a big tell. it’s the only commodity that is basically only consumed in the US. there is no world market(yet) for US nat gas. nat gas prices plunged.

    why would you compare my YOY number to a number from sept 2010?

    commodity prices are tracking world demand, not QE whatever.

  36. 36

    By David Losh @ 33:

    RE: Kary L. Krismer @ 32

    From your link,

    �Excessive speculation in the futures markets increases volatility unrelated to fundamentals and efforts by governing and regulatory bodies in the consuming countries to minimize such speculation remain imperative.�

    Yes, that’s the quote of what the Iranian said. You, Maria Cantwell and Iran are all repeating the same nonsense.

    Tell me–how far away from Baghdad do you think U.S. forces are? Is the Iraqi arming still holding them off? ;-)

  37. 37
    David Losh says:

    RE: Kary L. Krismer @ 36

    Well then there is todays report that demand will outstrip supply later this year. It will be the highest demand to supply ratio since 2007.

    What makes no sense is that in 2007 China’s production was at an all time high. We were on the verge of an economic collapse. The collapse happened, we are still adjusting, China is also said today to be on the verge of a Real Estate market “correction” and yet demand for oil is unchanged?

    I think you are correct that Iran is seen as a culprit in all of this, and maybe we need to march in there and help them. I personally don’t think that’s going to happen.

    Saudi Arabia, at the end of the meeting, also agreed to increase production, on it’s own, to make up for the short fall. Oil Prices fell slightly down to $101 per barrel. Come on, if this isn’t the most blatant attempt at wind fall profits, I don’t know what is.

    Oil tried in 2008 to make a case for higher prices, demand dropped, hasn’t recovered, and they are making another run at driving up prices.

    The long term outlook of the producing nations is correct. We don’t need the product of oil. Oil is cheap and the infrastructure is in place. Emerging markets use more oil as they gain the wealth of cars, and machinery. Once the price of oil reaches a certain point alternative energy will take over. It’s a dance that right now is working in the favor of speculators.

  38. 38

    By David Losh @ 37:

    I think you are correct that Iran is seen as a culprit in all of this, and maybe we need to march in there and help them. I personally don’t think that’s going to happen.

    Saudi Arabia, at the end of the meeting, also agreed to increase production, on it’s own, to make up for the short fall. Oil Prices fell slightly down to $101 per barrel. Come on, if this isn’t the most blatant attempt at wind fall profits, I don’t know what is.

    I’m not saying Iran is the culprit, I’m saying they’re just spreading BS.

    The thing about cartels is that it’s to the mutual benefit of each member to restrict production (supply) to get higher prices, but it’s to their individual benefit to cheat to get more money. The more they restrict production, the higher the prices, and the greater incentive to cheat. From what I’ve read, right now there is widespread cheating within OPEC in that many are exceeding their limits (e.g. SA). That would moderate prices.

  39. 39
    David Losh says:

    RE: Kary L. Krismer @ 38

    Now look at the stock market. Look familiar? We could say it’s the budget debate, debt ceiling, or any host of bad economic data, but I think it has to do with oil prices.

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