Case-Shiller Tiers: Middle Tier Took a Big Hit in September

Let’s check out the three price tiers for the Seattle area, as measured by Case-Shiller. Remember, Case-Shiller’s “Seattle” data is based on single-family home repeat sales in King, Pierce, and Snohomish counties.

Note that the tiers are determined by sale volume. In other words, 1/3 of all sales fall into each tier. For more details on the tier methodologies, hit the full methodology pdf. Here are the current tier breakpoints:

  • Low Tier: < $241,598 (down 1.6%)
  • Mid Tier: $241,598 – $389,532
  • Hi Tier: > $389,532 (down 0.8%)

First up is the straight graph of the index from January 2000 through September 2011.

Case-Shiller Tiered Index - Seattle

Here’s a zoom-in, showing just the last year:

Case-Shiller Tiered Index - Seattle

All three tiers took a tumble in September, with the middle tier leading the pack. The low tier fell 0.9% MOM, the middle tier dropped 2.1%, and the high tier lost 0.7%.

Here’s a chart of the year-over-year change in the index from January 2003 through September 2011.

Case-Shiller HPI - YOY Change in Seattle Tiers

Despite continually hitting new lows, the low tier is showing slight improvement in the derivative. Meanwhile, the middle and high tiers both fell. Here’s where the tiers sit YOY as of September – Low: -12.8%, Med: -8.9%, Hi: -4.8%.

Lastly, here’s a decline-from-peak graph like the one posted yesterday, but looking only at the Seattle tiers.

Case-Shiller: Decline from Peak - Seattle Tiers

Current standing is 39.5% off peak for the low tier, 32.4% off peak for the middle tier, and 26.4% off peak for the high tier. Only the low tier is currently at a post-peak low point.

(Home Price Indices, Standard & Poor’s, 11.29.2011)

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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.

84 comments:

  1. 1
    me says:

    No new here. Anyone who could ever afford a house already has one, incomes are insecure and inventory is slowly rising due to properties that can at best be barely afforded by their current owners. It’ll take another ten years or so to equilibrate, and then it’ll be the best time ever to buy a home again.

  2. 2

    RE: me @ 1

    IMO, That’s Even Wishful MSM Thinking

    The term “overpopulation” was mostly taken out of our Seattle area public schools, but it’s still very important and current demographic/economic statistical science. Its a pragmatic fact, as long as chronic population density increases strike the Seattle area, there is no end to unemployment rising and wages deteriorating, hence, home prices decreasing….unless ya got a magic wand to suddenly produce good paying American jobs in a quagmire globalization mess.

  3. 3

    Buy Stocks Now [then sell like hotcakes before the plummet]?

    Article:

    “…More broadly speaking, 99% of stocks in the S&P 500 are up as I write this, and crude oil is back above $101. The situation in Europe, where EU finance ministers have announced that they were taking the next ten days off from crisis talks until their bosses meet next weekend, has temporarily been pushed off the frontpage….”

    http://finance.yahoo.com/blogs/breakout/stocks-surge-central-banks-intervene-jobs-data-heats-163617284.html

    SWE is smiling, his stock investments are making like 4% in just one day today as he blogs.

    That’s mutual funds too folks….sooooooo….get out of real estate and become a Las Vegas gambler type in the stock market where there’s big bottom fruit to pick right now…..just don’t be a day or hours late selling, the unstable winnings at Las Vegas are best dealt with by cashing in your chips before the inevitable plummet……when will that be????

    Lord only knows fellow gamblers, grab the dice and roll….

  4. 4
    JGBellHimself says:

    Now, TT, that really IS ugly.

    When we compared Seattle & Portland vs Loss Vegas & Phoenix over the last 5 years, we first noticed that for LV & AZ there was NO seasonal sales bump, everything was down. However, for S & P you still had selling seasonal highs, but each year almost every month was down YoY.

    While LV and AZ now apear to have resumed “seasonal” sales season highs, which is why the all thing they have seen the bottom, you in Seattle appear to be still sinking, badly.

    One thing you might look at for U.S., though is whether your mid-range homes are slightly “underwater”.

    What is obvious in AZ is that while the lowest priced homes are mostly foreclosures, the home priced above them have not taken “the hit”, yet. Those still will mortgages are desperately trying “short sales” to minimize their loss. Those without a mortgage, are skewered (sp) – they may not sell at a loss, but they can never, ever get the price that they missed.

    What that means is. while the average sales price appears to be going up, the truth is that the average seller is now taking a much larger loss – in real money or in lost profits..

  5. 5
    Macro Investor says:

    Look at the altos median price chart on Tim’s home page. While median has it’s flaws, this suggests case shiller will show a steeper drop the next 2 months.

    What good news can we expect next year? Governments the world over aren’t going to balance their budgets. College/gas/food/health costs aren’t going to go down. Wages/hiring aren’t going up, unless you think companies are gonna stop flooding the area with cheaper migrant labor.

  6. 6
    Yaj says:

    Anyone know how closely the CS metrics track price per square-foot in each tier?

  7. 7

    By Macro Investor @ 5:

    What good news can we expect next year?

    Obamacare being declared unconstitutional? That would help with hiring, if it happens.

  8. 8
    Jonness says:

    Where are all the unemployed strawberry pickers to snap up today’s “bargains” using 0-down liars loans? Where are all the 2003 buyers who pulled $200K in equity at the peak going to get their next cheap loan from so they can buy a another new car and another trip to Hawaii?

    The investment psychology of the housing market has radically shifted and will never go back to where it was in 2005. It’s over.

  9. 9
    Jonness says:

    By Macro Investor @ 5:

    What good news can we expect next year? Governments the world over aren’t going to balance their budgets. College/gas/food/health costs aren’t going to go down. Wages/hiring aren’t going up, unless you think companies are gonna stop flooding the area with cheaper migrant labor.

    UFO’s will land and give us the cure for cancer, aids, and aging. Unfortunately, this new technology will be somewhat expensive at first.

    Better buy a house now or be priced out forever because as soon as people stop dying, prices are going to skyrocket.

    If by some unfortunate turn of events the Martians don’t land, sell your house immediately. Boomers will be retiring and or dropping like flies. This will aid the oversupply. Sell now or miss selling at today’s high price forever.

  10. 10
    Michael Snyder says:

    Flights out of Seattle to the Islands are full, packed, every one of them.

    Im kind of surprised at the negativity on this message board.

    Im not saying you guys arent correct, but I think one thing we have proven over time is that we humans are VERY poor predictors of the future.

    Most said things were Rosey in the mid 2000’s, and now people say things are terrible now.

    I think we may have some surprised people when things turn around quicker than they think.

  11. 11
    Scotsman says:

    Are we there yet?
    ..
    Are we there yet?
    .
    .
    .
    Are we there yet?
    .
    .
    .
    .
    .
    Are we there yet?

  12. 12
    Chris says:

    House purchased.

    Been a Mega-Bear since 2004, but turned a sharp 180 over the last 6 months and pulled the proverbial trigger last month.

    Time will tell. It always does.

  13. 13
    Scotsman says:

    RE: Michael Snyder @ 10

    Show us the math, Michael- where does the new additional money come from?

  14. 14
    Cheap South says:

    “One clown says This is the bottom, he gets fired and the next clown says this is the bottom”

    Watch the short video at the start of the article.

    http://finance.yahoo.com/blogs/daily-ticker/home-prices-fall-2003-levels-housing-hit-bottom-134407799.html

  15. 15

    RE: Scotsman @ 11 – Funny! I like a good laugh in the morning. Cheers!

  16. 16
    MacroInvestor says:

    By Chris @ 12:

    House purchased.

    Been a Mega-Bear since 2004, but turned a sharp 180 over the last 6 months and pulled the proverbial trigger last month.

    Time will tell. It always does.

    Sorry to say you already lost 3-5% (see my post #5 above). Add in a 6% sales commission and you’re halfway there to being under water like the rest of em (assuming a 20% down payment). Good luck.

  17. 17
    RAY PEPPER says:

    They will ALL come back…..Just a matter of time, further Fed Intervention, and the Insanity that IS: Loan Modification withOUT principle reduction!

    http://www.cnbc.com/id/45507581

  18. 18

    RE: Michael Snyder @ 10

    Yeah, the Airfares to Hawaii are Half Price In Winter

    But crowded planes don’t mean high volume, it could likely mean cancelled flights by air carriers then cramping them in fewer packed planes. As passengers you’ll never be told this is happenning, until you get on the plane and that 300 lb gorrilla sits in the middle seat with heavy fat arms resting on your smashed arms.

    Article on Hawaii:

    “…In predicting states’ future economic performance, New York, Vermont, Maine, California, and Hawaii scored the lowest in the rankings….”

    http://www.hawaiifreepress.com/ArticlesMain/tabid/56/articleType/ArticleView/articleId/5362/Hawaii-At-Bottom-of-Future-Economic-Performance-Rankings.aspx

    I’d add too, even comparing dinky increases in tourists to the 2010 depression year is like comparing the moot point 1930 improvement to the 1929 stock market crash during the Great Depression.

  19. 19
    MacroInvestor says:

    By RAY PEPPER @ 17:

    They will ALL come back…..Just a matter of time, further Fed Intervention, and the Insanity that IS: Loan Modification withOUT principle reduction!

    http://www.cnbc.com/id/45507581

    Yes, many more to come back. But we’ll NEVER see principal reduction. Impossible because it would cause everyone to walk away and demand the same.

  20. 20
    David Losh says:

    RE: Michael Snyder @ 10

    But wait, even if things do “turn around” as they have repeatedly done over the past 15 years, it doesn’t change the basics of financial security.

    I was the first one to point out there is a global market that is boundless in potential. What happened is that potential was raped, and pillaged by the banking system. We have borrowed, and spent the future in a very, very, compressed amount of time.

    I use Peru as an example. Twelve years ago there was one retailer who offered “store credit.” People were reported to be living on a dollar a day. Today every one has a credit card, cars are sold with financing, and condos have doubled, and tripled in price, with mortgages, China, and Europe, the same.

    The people here are pretty up beat compared to those in other countries. We have a chance to recover.

  21. 21

    By softwarengineer @ 18:

    Yeah, the Airfares to Hawaii are Half Price In Winter

    Don’t you mean summer? Winter is the peak time.

    You’re right though that airlines to adjust the supply of planes to meet the demand, which is why you seldom see a plane with empty seats. That’s also why they pocketed the tax when it temporarily expired–there was no way for them to quickly adjust that supply of planes.

    BTW, not a big fan of Hawaii. I say it’s just like Eastern Washington, but with palm trees and a bad exchange rate.

  22. 22

    By Michael Snyder @ 10:

    I think we may have some surprised people when things turn around quicker than they think.

    I think you also have the opposite going on. People expecting the economy to turn on a dime from what was a major negative blow. That will hurt President Obama’s election chances, because many people will consider 4 years long enough.

  23. 23
    MacroInvestor says:

    RE: Michael Snyder @ 10

    “Im not saying you guys arent correct… I think we may have some surprised people when things turn around quicker than they think.”

    So which is it?

    BTW, December has always been the high season for Hawaii. If you’ve got anything new to add, we’ll be happy to listen. Until then spare us from more of your “feelings”.

  24. 24
    wreckingbull says:

    RE: Kary L. Krismer @ 21 – As someone who flies quite a bit, I will concur that airlines are doing a remarkable job of keeping flights full, regardless of demand. I have to think that their scheduling systems have come quite a long way in the last decade in order to reach this goal, probably using machine learning to help drive scheduling and pricing. Using empty seats on a plane as an indicator of economic would be something I would not advise.

  25. 25

    RE: wreckingbull @ 24 – I think the way they keep flights full is by constantly adjusting prices on their Internet sites. Deep discounts of a few seats will keep the plane full, and with next to no service, is better than having the seat empty.

  26. 26

    RE: Kary L. Krismer @ 21

    Corrected Kary

    Yes the Winter rates are higher….been a long time since I’ve looked ’em up….

    A friend was there in the 2009 Summer…..empty restaurants and hotels he reported, another depression type Las Vegas.

  27. 27

    By wreckingbull @ 24:

    Using empty seats on a plane as an indicator of economic would be something I would not advise.

    Maybe this would be better! ;-)

    http://www.komonews.com/news/local/Coroner-Unclaimed-bodies-costing-taxpayers-thousands-134825228.html

  28. 28

    RE: wreckingbull @ 24

    As Someone [6’1″ Tall] That Drives His Car On Staycations Now Instead of Horrifying Cramped Airline Seats

    The airlines have packed me out.

  29. 29

    RE: softwarengineer @ 28 – I fly so seldom (about once a year) that I usually opt for first class–with either mileage rewards or a certificate. I don’t like to fly, so anything that makes it “not worse” is well worth it.

  30. 30
    Ray pepper says:

    RE: MacroInvestor @ 19 – Macro many people I know have gotten their principle reduced. However, they were with the Regional players. Never say never. Look what Ocwen has done and now has an 80 percent success rate when they drop principle balances to current mkt value.

    It’s the BAC, WFC, and JPM that are still yet to be on board. Patience !

  31. 31
    Ray pepper says:

    RE: softwarengineer @ 28 – packed flight on SWA up and back to Reno for Thanksgiving. Got bumped and rerouted to Vegas on way home last Sunday night. Arrived 2 hours later but in the end the 15 hour drive is so much of a grind I’d rather fly. Plus I got a pic with Jay Buhner and my daughter at airport. Priceless!

  32. 32

    RE: Ray pepper @ 31

    Yes….I Haven’t Given Up On Flying Yet All Together

    But last summer I did local rock festivals…Festival of the River had marque acts like Canned Heat and Beauty of America [they sang White Bird] for free….did the ocean coast on a 1 in a 100 day [blue sky clear from sunup to sunset]….stayed at local hotels and resorts…staycations doesn’t mean not fun :-)

  33. 33
    Marc says:

    RE: MacroInvestor @ 23 – I agree with wreckingbull that empty seats aren’t a reliable indicator but FWIW when I went to Maui last March the plane, airport, hotel, and restaurants we visited were all doing great business. I have to admit that I hoped it was a sign of better times ahead. As for Maui, been there and won’t go back – way too brown, not lush at all. Give me Kaui next time or probably the Carribean.

    RE: Michael Snyder @ 10 – I have to agree with Michael that the regulars on this blog are sounding as bad these days as the realtors over on Rain City Guide and the Seattle PI blog back in 2006 and 2007 when they treated The Tim like a red headed step child. When I first found SeattleBubble back then I was in the midst of my own Quixotic search for a house and was extraordinarily frustrated by the ridiculous prices and multiple offer showdowns. It was great finding like minded people on the Bubble (too bad I didn’t listen though as I bought at the peak). These days the regulars here are like sharks in a feeding frenzy bad mouthing any hint that things will get better eventually.

    I’m in the cautiously optimistic camp and am putting my money where my mouth is by investing in my business. Philosophically I agree that governments shouldn’t intervene in the markets and thus firms and even nations should be allowed to fail. However, the pragmatist in me says they’ll sort their way through it and avoid Armageddon. The people who place their bets now will reap the reward. Of course, those who bet wrong will lost their a$$, myself included. C’est la vie.

  34. 34
    Ray pepper says:

    RE: softwarengineer @ 32RE: softwarengineer @ 32 – canned heat always sounded to me like Kermit the frog singing in that group. I also do the local concert tours but in the bay area where I’m from. Being an 80’s kid I saw Jefferson Starship, Y and T, Asia, Gin Blossoms, Night Ranger, and The Fixx the last couple years. Also saw Boston. What I really wanna get to us Billy Squier, Missing Persons, and J Geils.

  35. 35
    Marc says:

    RE: Ray pepper @ 30 – Yes, BAC and Wells are a cluster but Chase may be seeing the light. I’ve seen two short sale deals in recent months where the sellers actually got over $20,000 to sell their house. One was on a condo that sold for under $200k. I didn’t believe it until I saw the approval letters – all that cash and all deficiency waived. Blew my mind because I figured they could do better by foreclosing.

    I wouldn’t be surprised if BAC ends up in Ch. 11. They are completely screwed up over there and anyone with talent and options is jumping ship.

  36. 36
    The Desponder says:

    RE: Michael Snyder @ 10 – Flights are nearly all full because the airlines are cutting routes and consolidating flights.
    http://www.daily-chronicle.com/mobile/article.xml/articles/2011/09/13/35833888/index.xml

  37. 37
    The Desponder says:

    RE: Marc @ 35 – Marc, that sounds awesome. Can you say any more about how it went down? Did the homeowner go into default?

  38. 38

    By Marc @ 33:

    Give me Kaui next time or probably the Carribean.

    . . . Seattle PI blog back in 2006 and 2007 when they treated The Tim like a red headed step child.

    Try Tahiti. Although Kauai is nicer than Maui by a long shot.

    As to the second comment, maybe the reason I’ve typically treated “The Tim” well is that I grew up as a red headed step son. (Although I should add I was treated rather well, so in my experience there’s no basis for that expression.)

  39. 39
    Marc says:

    RE: The Desponder @ 37 – Unfortunately, I can’t. We represented the buyers so we weren’t privvy to the negotiations. On one of them there wasn’t an agent or a negotiator involved. The seller did the negotiations herself then, inexplicably, refused to close. Total bummer for my clients but not worth a lawsuit.

  40. 40
    Marc says:

    RE: Kary L. Krismer @ 38 – I’ve always loved the concept of “Tahiti.” Kind of like Bermuda, a place I hear about or see on TV but never think I’ll actually get to. I’ll add both to the list.

    As for the red-headed step child comment, point taken. I needed to drop that one from my repertoire anyways since my newborn daughter is auburn locked.

  41. 41

    RE: David Losh @ 20 – Hi David
    Have you ever been to Peru? With the possible exception of Lima, there’s a LOT of poverty. I didn’t see too many people flashing credit cards (nor cash) when I was there.

  42. 42
    Ray pepper says:

    RE: Marc @ 35 – BAC will not in it’s present form file chapter 11 because of the provision in the merger of Countrywide to BAC that Countrywide itself can file independent of BAC at the discretion of BAC.

    For this reason many people find BAC an intriguing bet at 5.00 backstopped by the US and the too big too fail thought of today.

    So in essence we will see this filing at somepoint of Countrywide because we Bubbleheads know will surely get worse before it gets better for housing. I predict a huge surge in pps of BAC when this occurs but my total shares I own are zero so I will cheer from the sidelines while I continue to buy gems. I’m closing on one this week for 21k and agree it’s an outstanding time now and in the many years ahead to find and grind out some properties for a lifetime.

  43. 43
    Marc says:

    RE: Ray pepper @ 42 – Didn’t know that. I wonder why they haven’t jettisoned that stinker yet. Buffett recently bought into BAC so there must be more to the story. Of course the Oracle’s preferred terms probably create little adverse exposure.

  44. 44
    Mike S says:

    RE: softwarengineer @ 18

    Prices are NOT half price in the winter and they are not because of cancelled flights from other airlines.

    I work for Alaska Airlines, and advance bookings out of the west coast are VERY high.

    Alaska Airlines is making record profits, growing at a rapid pace, and has record load factors.

    Im just pointing out that its never as bad as we think, and never as good as we think.

    The USA is very diverse, as well as is Seattle. Dont be surprised that we are very near the bottom of the housing market in Seattle.

    No, I do not think there is a rapid increase in our furture. A slow increase with a some equal downs in the next few years followed by steady improvement seems in order.

    People have money, they are out there. We just need to come back to some sense of normalcy.

  45. 45
    Mike S says:

    RE: MacroInvestor @ 23

    They arent feelings , the bookings have been extremely high for the 3 years we have been flying to the islands.

    We now have more than 42 flights a day to the islands, and they are extremely full.

    Thanks for playing

  46. 46
    deejayoh says:

    By Macro Investor @ 5:

    Look at the altos median price chart on Tim’s home page. While median has it’s flaws, this suggests case shiller will show a steeper drop the next 2 months.

    Hmmmm. Reading what Altos says on their blog, they seem to have reached a different conclusion:

    We’ve been watching the US housing market on a weekly basis for the past five years. When you run in-depth analysis with a few million data points on a regular basis, you pick up a few things. Our Mid-Cities Report, published today, confirmed what the trends from the past few months were indicating. We want to be very clear.

    It’s a great time to invest in residential real estate.

    Not after the holidays, not after the election, not after you hear it’s a good idea on the nightly news…RIGHT NOW.

  47. 47
    Mike S says:

    RE: The Desponder @ 36

    Alaska is adding flights, and adding routes, and load factors are at record highs.

    I cant speak for other airlines, but Hawaii is now Alaskas biggest money maker.

    This year will be Alaskas most profitable yet.

  48. 48
    deejayoh says:

    By Mike S @ 47:

    RE: The Desponder @ 36

    Alaska is adding flights, and adding routes, and load factors are at record highs.

    I cant speak for other airlines, but Hawaii is now Alaskas biggest money maker.

    This year will be Alaskas most profitable yet.

    Every morning I look down from my window to see how many 737 fuselages are waiting at the Interbay train terminal on their way from Everett to Renton.

    Twelve months ago, there was one per day
    Six months ago, there were two per day
    As of this week, there are five per day.

    Seems like the airliner business isn’t doing to badly

  49. 49
    Scotsman says:

    RE: deejayoh @ 46

    “It’s a great time to invest in residential real estate”

    Maybe, maybe not. But it IS a classic example of the folly of making future economic predictions based solely on past trends without allowances for future impacts. You know, things like higher taxes, heavy cuts to federal and state spending, economic collapse in Europe, etc. I read this stuff and just shake my head. In the end they may be right, but it will have nothing to do with their number crunching of past events.

  50. 50
    deejayoh says:

    By Scotsman @ 49:

    RE: deejayoh @ 46

    “Itâ��s a great time to invest in residential real estate”

    Maybe, maybe not. But it IS a classic example of the folly of making future economic predictions based solely on past trends without allowances for future impacts. You know, things like higher taxes, heavy cuts to federal and state spending, economic collapse in Europe, etc. I read this stuff and just shake my head. In the end they may be right, but it will have nothing to do with their number crunching of past events.

    So then, should I assume your viewpoint has no basis in past events?

  51. 51
    Mike S says:

    RE: deejayoh @ 48

    Alaska is estimating to have some 200 jets on property by 2019. That is almost double the amount of planes we have now.

    The 737-900s start arriving in 2012, and we total some 20 plane net growth in the next 2.5 years.

    All Boeing…

  52. 52
    Mike S says:

    RE: Scotsman @ 49

    The economy is changing, its not collapsing. It is morphing and some will suffer and some are gaining.

    I cnat think of a time in history when someone WASNT complaining about the economy. of the USA the world or otherwise.

    Things will always cycle, I do agree that number crunching of past events are poor predictors of what will happen.

  53. 53
    Scotsman says:

    RE: deejayoh @ 50

    “So then, should I assume your viewpoint has no basis in past events?”

    No- but understand that future expectations are more heavily weighted. It’s hard to ignor 100 years of CS norms and the power of reversion to the trend when a bubble like ours comes along. It’s harder to ignor unprecedented levels of leverage/debt, globalization, political turmoil and a generally negative set of expectations in what is now a consumption based economy. For home prices to go up we still need to answer the question “where is the additional new money to support higher prices going to come from?”

    Has 30% off the top for Seattle home prices taken some of the potential energy out of additional declines? Yup. Does that mean this is a great time to buy real estate? I’m having trouble seeing the full extent of the causality/connection in that argument. A better time? Probably. A great time? No.

  54. 54
    Mike S says:

    RE: Scotsman @ 53

    While we havent been this globalized, all of the other factors you talk about have always been problems.

    Its the same old story, over and over again.

  55. 55
    deejayoh says:

    My point was that the source the Macro Investor used disagreed with his premise. I offered no opinion on the piece, just observed that the source of the data drew very different conclusions. But scotsman is quick to attack anything that has the potential to undermine his doom and gloom outlook. Somebody has to be the playground bully I guess.

    More fuel for the fire from Radarlogic today:

    Radar Logic Sees Signs of Improvement in the Housing Market

    New York, NY – December 1, 2011 – While trends in home prices remain negative in most major U.S. metropolitan areas, there are indications that market conditions are starting to improve.

    FWIW, I know the Altos guys well. Very very smart. They have been ahead of the curve on most of this stuff.

  56. 56
    Scotsman says:

    RE: Mike S @ 52

    “The economy is changing, its not collapsing.”

    What’s the number- something on the order of $6 trillion in lost equity? That’s real future spending capacity, half of current gdp, that’s not going to happen over the next decade or so. It’s boomer’s retirements, kid’s inheritances, multiplied by the wealth effect in an economy where consumer spending and expectations are 72% of the economy. I’d say that’s more than just “change,” and it’s not over yet.

    We’ve pretty much stopped talking about the $1.2+ trillion dollar deficits for decades into the future, 8% of current gdp that is borrowed, not produced, every year by the federal government. Take that away with a balanced budget and we’re in a very deep recession, almost depression. And we haven’t even started to talk about debt reduction. Any idea how long it takes to “grow our way out” at 2.5% a year? You won’t live long enough to ever see it happen with the current political climate. Look at the WA. state budget thread where a cut of half in the projected growth rate is seen as a crisis.

    Collapse? Not yet, but I’m sure not ruling it out. And like the Genie that won’t go back in the bottle, this world-wide “change” is rolling on in only one direction, and it’s not good. Let me know when you figure out how to borrow your way out of debt, ’cause that’s the only trick left in the bag.

  57. 57

    By deejayoh @ 48:

    Every morning I look down from my window to see how many 737 fuselages are waiting at the Interbay train terminal on their way from Everett to Renton.

    Twelve months ago, there was one per day
    Six months ago, there were two per day
    As of this week, there are five per day.

    Seems like the airliner business isn’t doing to badly

    I would guess that a lot of that is related to the price of oil. With fuel so expensive the airlines need more modern planes to compete.

  58. 58
    Scotsman says:

    RE: deejayoh @ 55

    “My point was that the source the Macro Investor used disagreed with his premise.”

    Agreed- he shot from the hip and it didn’t make sense.

    “But scotsman is quick to attack anything that has the potential to undermine his doom and gloom outlook. Somebody has to be the playground bully I guess.”

    Oh stop it- you’re WAY too smart for that. Don’t attack the messenger just because reality sucks.

    “While trends in home prices remain negative in most major U.S. metropolitan areas, there are indications that market conditions are starting to improve.”

    Trends are reality. We’ll see what the “indications” (whatever those may be) do to the trends 6 months from now. Until then, it’s just fluff/hype.

    Cheers.

  59. 59
    Scotsman says:

    RE: Mike S @ 54

    “Its the same old story, over and over again. ”

    Checkmate. You’re correct. Unfortunately, the last time this happened it was followed by a decade and a half called “The Great Depression.” And, as the world’s largest industrial producer we were able to work our way out (grow our way out) with decades of productivity gains, high wages, and a growing and prosperous middle class. It’s going to be a lot harder to work our way out of this one by buying cheap Chinese goods and drinking coffee while others half a world away get the high growth rates. I’d think a bit harder about putting something extra away for that proverbial rainy day.

    http://paul.kedrosky.com/WindowsLiveWriter/U.S.TotalCreditMarketDebtbySector1929200_93C7/debt-trend-breakdown_2.jpg

  60. 60
    Mike S says:

    RE: Scotsman @ 56

    Read: Rich dad, poor dad.

  61. 61
    Scotsman says:

    RE: Mike S @ 60

    Oh please. While he’s right about owning your own business, even that is harder in today’s economic/regulatory environment. the only real money he’s made (after bankruptcy) was from his books and tours. that’s his “successful” business.

    “John T. Reed, an outspoken critic of Robert Kiyosaki, says, “Rich Dad, Poor Dad contains much wrong advice, much bad advice, some dangerous advice, and virtually no good advice.” He also states, “Rich Dad, Poor Dad is one of the dumbest financial advice books I have ever read. It contains many factual errors and numerous extremely unlikely accounts of events that supposedly occurred.”[2] Kiyosaki has provided a rebuttal to some of Reed’s statements.[3] Slate reviewer Rob Walker called the book full of nonsense, and said that Kiyosaki’s claims were often vague, the narrative “fablelike”, and that much of the book was “self help boilerplate”, noting the predictable common features of such books were present in Rich Dad, Poor Dad. He also criticizes Kiyosaki’s conclusions about Americans, American culture, and Kiyosaki’s methods”

    http://en.wikipedia.org/wiki/Rich_Dad,_Poor_Dad

  62. 62
    Mike S says:

    RE: Scotsman @ 58

    Reality doesnt suck actually.

    I have no debt life is good, and my finances are well under control.
    Money is not an issue.

    Most people I know are far better off, families are better off on the whole than 20 years ago.
    Most day to day living items are better, better food is more accessible.

    People are complaining because the heyday of the mid 2000’s arent continuing.

    The media likes to focus on the negative, and if you listen to them soon enough you will be in the negative.

    There is absolutely great opportunity out there for the taking, it takes guts, it takes failure, and it takes risk.

    But there is no better way to learn then by failing from time to time.

    Spreading negativity only brings you down. Dont let it enter your life.

  63. 63
    David Losh says:

    RE: Conor MacEvilly @ 41

    Yes, I have been in most places in Peru. we have family there, and in Spain.

    Any one not watching, or paying attention to the debt markets is out of touch.

    You must have family in Ireland. How is the credit market going there?

  64. 64
    David Losh says:

    RE: Mike S @ 61

    You mean a segment of society is better off. The privledged continue to live well, while more, and more people sink into poverty.

    Why is that? I know, because I live it. I’m asking if you know.

  65. 65
    David Losh says:

    RE: Mike S @ 60

    Read ’em all, met the guy. What does that mean?

  66. 66
    Mike S says:

    RE: David Losh @ 63

    I have never been privileged until recently.

    Some days I had no food when going to school. I could go on and on.

    I have thrown rocks for a living driven fork lifts, worked at fast food, you name it.

    I paid for my own college, techincal schooling.

    Are you in poverty now?

  67. 67
    David Losh says:

    RE: Mike S @ 65

    But then you are privledged. That was the goal wasn’t it? That’s the point of the books.

    Yes, you can get yours, we can all get ours, but that doesn’t happen for most people. Why?

  68. 68
    Mike S says:

    RE: David Losh @ 66

    Because I worked my a** off when others who had greater opportunities choose to sit at home?

    You tell me.

    Its about the little choices we make.

    If I wasn’t privileged I wouldn’t be wasting time on this site, I would be out working.
    Or I would be studying, going back to school. Or I would be working on my house.

    That isnt a knock on you, its just something that I told myself I would do, no matter if it takes me working 3 crappy jobs Im not going to waste time talking about it until I have what I want.

    If everyone did this, it would raise the level of the world itself and we would all be living much better than we could currently imagine.

    But thats not possible and we are always going to have people who dont make it. Some just dont have the desire, some love to complain, some dont have the mental energy, the list is endless.

    But if you are thankfull and willing to dig in the dirt you WILL succeed. But you cant waste one minute of your life talking about how you didnt make it, or how you arent making it.

    This isnt a dig at you, its a philosophy I took on, and it worked.

  69. 69
    Scotsman says:

    RE: Mike S @ 61

    I appreciate your good attitude and enthusiasm. Be assured I’m not a negative person and my life is also filled with success. But it wasn’t a belief in the powers of a PMA that got me there. It was working with reality, doing my due diligence, and not papering over the negatives that came up. Having a good attitude is important, but it’s only one of several tools required for success and certainly isn’t sufficient in and of itself.

    I’m fortunate to be a pretty well educated person with a solid knowledge of economics and finance. Sometimes I come off, at least on this site, as a bit negative or overbearing. That’s not the case in person- I’m not that interested in being the guy who’s always right. But I am interested in getting it right and remaining fact based. When I’m wrong, I’ll admit it- ask Deejayoh who has corrected me several times. But too many people, thousands a day, read this site and to some extent rely on it for information about housing and their financial futures. They need honest discussion, not realtor hype or pep talks from those who either don’t know or prefer to disavow the current economic crisis. I’m glad that your life is on track, and that Alaska Air is doing well. But remember that American just filed for bankrupcy and many people there are going to be hurt. Look around at the bigger picture a bit.

    A better book than Rich Dad, Poor Dad is the Millionaire Next Door. It’s research about real people who really made it, not just the musings of a guy who’s biggest success is a book panned by more serious people. Also remember, as you move through the phases of finacial success (survival, stability, surplus, and finally significance) that at some point (surplus?) it’s good to help out the other guy

  70. 70
    Mike S says:

    RE: Scotsman @ 68

    No, all is well.

    The arguments are how we learn a lot.

    I think you make some very good points, and you obviously know your stuff.
    Im glad I found this site!

    I bought a condo in Hawaii at the peak in 2006, and luckily enough the value is almost the same still.

    There is definitely a great deal of uncertainty and its a really good thing for people to be able to see multiple views. This is a great resource for those thinking of buying, selling or just renting for now.

    BTW- anyone know anybody wanting to rent a 3 bed 2 bath in normandy park?

  71. 71
    David Losh says:

    RE: Scotsman @ 68

    Well said.

    The airlines are kind of a good example. When they started every one was well paid, had good benefits, and pensions, with Union representation. They are full, every flight, to everywhere, because of direct computer bookings. They go down the list of people who buy retail, to PriceLine, to Expedia, to Kayak, to any one of a dozen sales sites until the plane is full, if it’s not, the flight is canceled. It’s a numbers game.

    The game now is to get cheaper labor, lower prices, cheaper parts, cheaper planes, buy, and sell routes, cram people together, and never, ever, make a profit.

    The owners, investors, and executives make millions, probably billions of dollars by cutting costs. Every nickle they steal from a mechanic, food service worker, or flight deck attendant is another nickle of bonuses paid to the people who do the least.

  72. 72
    David Losh says:

    RE: deejayoh @ 46

    Alright, that is a funny little blog. “A million data points” sounds a little like the million points of light Nancy Reagan was talking about, or was it Ronald, I forget quite frankly, because it was an absurd concept.

    Market conditions are always favorable, and it is always a good time to buy, or invest in, residential Real Estate.

    If I read that correctly they have been at this for five years. That was pretty easy to stay ahead of the curve.

    The only real question is if there is a deal worth having in today’s market. I don’t see one, so far. There are a couple of good residential purchases that can be made for mom, dad, and the kids, but investors should be severally gun shy by now.

    These past five years have been a disaster to residential property pricing. Banks are in control of the residential property market. Banks are elevating the price of property far above true value.

    Like I said, is there a deal out there? I don’t see any “deals.”

    BTW sorry to offend the Real Estate crowd. I know the term “deal” is no longer an acceptable term. It should be something more palatable to the buyers?, or is it the sellers? I can’t keep track, it’s all so confusing.

  73. 73
    Chuck C says:

    Amen David. Even by AA’s own admission, the primary purpose of bankrupcy is to “cut labor costs” (and other debt while they’re at it of course). The airlines are a prime example, but certainly not the only example, of what is going on all over the USA. Maximize executive bonuses (er, ah, shareholder profits), while paying the employees as little as possible while working them to “maximum efficiency” (i.e. FAA mandated maximum duty day, minimum rest, etc in the case of the airlines). You can bet the bean counters in conjunction with HR at AA (and others) have a pretty good idea about the minimum wages they must pay to attract a certain experience level of aircrew and maintainers in a given job market, yet still maintain affordable insurance rates and having enough staff to keep the jets flying. Unlike many other industries, however, the cost of finding “the line” in the airline industry between maximum profits and minimum labor cost can be quite costly when finally crossed (in terms of $$$, bad PR, and of course lost lives). Just ask Colgan Air.

    And I agree, an excellent post by Scotsman.

  74. 74

    RE: David Losh @ 71
    It was “a thousand points of light” and it was George Bush senior.

  75. 75

    RE: David Losh @ 63 – Good. I never trust someone who doesn’t have a passport and actually uses it. As for Ireland…completely in the toilet, home prices down 50%+ and still declining, but no riots in the streets mainly because the whole populous knows they got greedy and can’t just blame it all on the banks and politicians. Every dog has its day and we had ours. Back to being the begging bowl of Europe! I bailed when Ireland was a 2nd world country in the 80’s and missed the Celtic Tiger opulence. Even worse, I had to endure Thatcher for 7 years when I moved to London.

  76. 76

    By David Losh @ 71:

    The airlines are kind of a good example. When they started every one was well paid, had good benefits, and pensions, with Union representation. .

    Let’s not forget that it wasn’t that long ago that it was a moderately risky profession to go into. Crashes were much more frequent, and avoiding those crashes much more dependent on the skills of the crew.

    Generally risky jobs pay more money. Back then, there were machines out at the airport offering the passengers life insurance for their flight. Today maybe they should set up those types of machines again for customers’ Black Friday trips to Wal-Mart.

  77. 77
    David Losh says:

    RE: Conor MacEvilly @ 75

    But there is an under ground cash economy in Ireland.

    What’s going to happen, everywhere, is that high finance will run it’s course. Europe gave the Greeks money. The Greeks spent the money. What they have now is millions of crumby housing units left in the wake.

    The saturation point of debt is rapidly approaching. There are fewer new markets to exploit, but that’s what’s going on today. All of your stock profits are little promises to pay. Those profits are interest income from debt. Interest income is free money. Banks borrow at 1% and lend at 4% all day long. That 4% then becomes, 8%, 12%, 16%, and 28%.

    People buy crap, with credit. The smart money is invested in debt. There is no reason to manufacture, drill, mine, farm, or work. Less supply is higher prices. The damand is constant.

    The only thing people, you, me, individuals, can do is get to cash. With cash we can invest in our own communities to build wealth, and stop sending our money to China, or Germany.

  78. 78
    David Losh says:

    RE: Ira Sacharoff @ 74

    I did think the concept was a little to absurd for the Reagans.

  79. 79

    RE: David Losh @ 78 – Do you even have half a clue what 1000 points of light refers to?

  80. 80
    David Losh says:

    RE: Kary L. Krismer @ 79

    Absolutely. We are all here in a charitable fashion to do what the government refuses to do.

  81. 81

    By David Losh @ 80:

    RE: Kary L. Krismer @ 79

    Absolutely. We are all here in a charitable fashion to do what the government refuses to do.

    Well first, that’s not what it was. It was acknowledging those who engage in charitable activity, and trying to encourage more of it.

    Second, do you also have the same objection to Kennedy’s inauguration speech when he said: “And so, my fellow Americans: ask not what your country can do for you – ask what you can do for your country. ”

    In other words, do you think government should do everything?

  82. 82
    Macro Investor says:

    By Macro Investor @ 5:

    Look at the altos median price chart on Tim’s home page. While median has it’s flaws, this suggests case shiller will show a steeper drop the next 2 months.

    Maybe I wasn’t clear. Look at the chart. What do you see happening from July to the current time? You see a steep drop. Like a cliff dive.

    This isn’t a future prediction. It isn’t optimism or pessimism on my part. It’s a data point. IT HAPPENED ALREADY. Case shiller is 2 months old when published. Since then we have dropped more.

    Some folks here still seem to rely on industry predictions. Another “blogger” said it’s a great time to buy. If you haven’t learned by now, fine. Go ahead and buy. Next year you’ll cry ;)

  83. 83
    David Losh says:

    RE: Kary L. Krismer @ 81

    Or Hilary Clinton and “it takes a village?’

    It’s an absurd point to go along with the million points of data. It doesn’t mean anything.

  84. 84
    Mike S. says:

    RE: David Losh @ 71

    Which airlines are you talking about?

    You sound like someone who knows only what he reads in random news articles and is generalizing just to complain about something?

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