Case-Shiller Tiers: All Three Tiers Powered Up In June

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: < $322,535 (up 1.3%)
  • Mid Tier: $322,535 – $515,661
  • Hi Tier: > $515,661 (up 1.2%)

First up is the straight graph of the index from January 2000 through June 2016.

Case-Shiller Tiered Index - Seattle

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

Case-Shiller Tiered Index - Seattle

All three tiers were still rising steadily as of June.

Between May and June, the low tier increased 1.9 percent, the middle tier rose 1.7 percent, and the high tier was up 1.2 percent.

Here’s a chart of the year-over-year change in the index from January 2003 through June 2016.

Case-Shiller HPI - YOY Change in Seattle Tiers

Year-over-year price growth in June was larger than it was in May for all three tiers. Prices in all three tiers are still double-digits above last year’s levels. Here’s where the tiers sit YOY as of June – Low: +11.6 percent, Med: +11.4 percent, Hi: +10.8 percent.

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

Case-Shiller: Decline from Peak - Seattle Tiers

Current standing is 3.9 percent below peak for the low tier, 3.5 percent above the 2007 peak for the middle tier, and 8.6 percent above the 2007 peak for the high tier.

(Home Price Indices, Standard & Poor’s, 2016-08-30)

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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.

154 comments:

  1. 1

    “Lastly, here’s a decline-from-peak graph like the one posted yesterday . . ..”

    Tim, it might be about time to change that sentence. ;-)

  2. 2
    tina says:

    does anyone have suggestions for houses on educational hill? It seems like there are multiple new construction sites and priced between 800K-1.4M. How does it compare to Kirkland(98033) or Bellevue(98005,98006)?

  3. 3
    Sarah says:

    Steady as she goes … Vancouver just put their foreign ownership tax in place though, so sales could increase even more in coming months!

  4. 4
    Macro Investor says:

    RE: tina @ 2

    Many agents will chauffeur you around all day for free. Taxi drivers who fill out paper work too.

    When I was looking, she actually offered to help with errands and pick up dinner on the way back. A very pleasurable experience.

  5. 5
    Sherfrz says:

    Whats that hissing sound? I believe it is that huge bubble in silly valley. http://www.zerohedge.com/news/2016-09-01/if-you-own-home-palo-alto-ca-sell-it-now

  6. 6
    greg says:

    RE: Sarah @ 3

    Vancouver monies will not be spilling south of the border. It is more likely to seek safety further east in CA.
    I find it super funny that cheerleaders saw the BC inflation as a win and now see the BC implosion as a win….

  7. 7
    greg says:

    this case shiller data feels so old as to be misleading. As far as I can tell we peaked already. We are done the top topped already, but I guess we will need to wait a while for NAR and Case Shiller numbers catch up.

    (does anyone vaguely connected to case shiller even have a part in their numbers these days? Just wondering)

  8. 8
    js says:

    By greg @ 6:

    this case shiller data feels so old as to be misleading.

    I completely agree. Case-Shiller reports make headlines, but I think a lot of people don’t realize the data is 3 months old. Yesterday’s news. Even if most people do read the dates on the report, it draws extra attention to the crusty data when people should be focusing on the current data.

    It might even give a slight advantage to sellers in a falling market, and buyers in a rising market.

  9. 9
    Erik says:

    RE: greg @ 5
    Not following you Greg. If you think money will not come south of the boarder, it would not go to California.
    BC inflation is a win because it’s similar to Seattle and on the west coast. Them raising their taxes is also a win because it may drive sales to Seattle. We have many similarities….
    I have been making a large attempt to not be so critical of people, but I’m struggling here with this comment. Please elaborate.
    My opinion is that there is a good chance Vancouver raising tax on foreign buyers will increase foreign sales in Seattle in turn raising our prices.

  10. 10
    Erik says:

    RE: greg @ 6
    We peaked at high demand and low supply? What do you do for work Greg? I’d like to get a better understanding of where you are coming from because your comments have no correlation with the facts. Actually, they are opposite the facts.

  11. 11

    By js @ 7:

    By greg @ 6:

    this case shiller data feels so old as to be misleading.

    I completely agree. Case-Shiller reports make headlines, but I think a lot of people don’t realize the data is 3 months old. Yesterday’s news.

    I’ve been saying that for years here. But it’s worse than you claim, because the data is a three month moving average of old data. And it’s of such a wide area (three counties) that it would be useless even if the data were more current.

  12. 12

    RE: js @ 7 – One more thing on this topic.

    I created databases from December 2004 of the CS and NWMLS King County data, performing basic calculations on the same. I quit in December 2014 because I realized it’s all pointless. With the possible exception of months’ supply of inventory (which ironically I didn’t track), it doesn’t tell you squat.

    Our market has been just as unhealthy the past year or two as it was when the official median and CS data reached its low point–it is just unhealthy in a different way. And the data has never given you any reasonable idea what a specific house was worth–you’d probably be just as good off going to look at a Zestimate. And the data didn’t tell you when it was safe to buy first and then sell, although maybe it did tell you when you had to buy first and then sell. And finally, looking at past price patterns on graphs isn’t going to tell you where those price points are going to be six months or 12 months in the future.

  13. 13
    Doug says:

    Tim, will we get August’s inventory numbers today?

  14. 14
    Sherfrz says:

    The high end is flat in NY London Miami and Australia. Thats the foreign money. Not sure if Hongcouver will spread their love south of the border.

  15. 15
    Gooddeal says:

    RE: Erik @ 8

    Erik, look at the context. He’s talking about Vancouver, BC so CA stands for Canada, not California. :)

  16. 16
    Josh says:

    RE: Erik @ 8

    I assume by CA he meant Canada, not California.

  17. 17
    Erik says:

    RE: Gooddeal @ 13
    Haha! I was wondering how California got in the mix. Thanks for the help. I wouldn’t mind seeing more inventive for the Chinese to buy more real estate in Seattle. It could be the next “Seattle Bubble.” That would be a fun one to navigate. Every time there is a catastrophe, it creates an opportunity for some people to get rich as mr. Peppers did last bubble.

  18. 18
    Erik says:

    RE: Doug @ 12
    Go to the Seattle bubble home page. Scroll down until you see “inventory.” This section gives a day to day inventory count for each county. I like to compare year to year to try and get some sort of prospective on where inventory is at. Stop reading this comment if you don’t want me to spoil it for you.
    We are at an all time low in inventory for houses in King county. I look at that list because it drives everything else around it. King county housing is the leader in this area. Housing prices are likely to rocket in double digits the next few years. We are at about 3200 houses in King county right now. To be neither a buyers or sellers market, we need about 6000 houses for sale. Until we hit that number, keep buying.

  19. 19
    Eastsider says:

    By Erik @ 15:

    RE: Doug @ 12
    We are at about 3200 houses in King county right now. To be neither a buyers or sellers market, we need about 6000 houses for sale. Until we hit that number, keep buying.

    On the other hand, when prices become out of reach, the number of transactions will dry up. Just sayin’

  20. 20
    erik says:

    RE: Eastsider @ 16
    Right, and that will increase the number of houses for sale in king county. You are describing a factor that can boost inventory. I’m not smart enough to understand all the factors that change inventory and then monitor them all. I just look at the inventory. If it is low, prices will probably go up. If inventory is high, be careful.

    Here’s how I see it… I’m totally guessing on this one, but this seems probable to me. Prices continue up and up for about 5 more years and then kinda level off. Then interest rates start to go up. Homes will be far out of reach for most buyers in the area for a longtime. This is more the reason to buy more real estate now. I think houses will be out of reach for years when this happens. If you own the houses, you can rent them and have someone pay your mortgage that cannot afford a house. Rental prices will keep going up when this happens since nobody will be able to afford to buy.

  21. 21
    Blurtman says:

    ACLU pitch would set precedent for sleeping on public property

    A proposal made by local homeless and legal advocates could allow people to legally camp not only in Seattle parks, but on its streets. And it’s something that could become a reality if it catches on with city officials.

    The American Civil Liberties Union (ACLU) and other advocates recently submitted a call to action, arguing that the city’s policies for homeless issues and clearing out encampments are harmful and make things worse. They proposed their own ordinance, which “strikes a balance between the rights and needs of people sleeping outdoors and legitimate public health and safety concerns.” They also argue it “will lead to more effective and efficient use of public resources.”

    Related: Toddler found eating off ground at Seattle homeless encampment

    But if such an ordinance was approved, it could set a precedent that would make sleeping in public places even easier, former Attorney General Rob McKenna told Seattle’s Morning News. Such an idea could change the fundamental nature of public property in the city, and quite possibly the expectations people who live near those properties have.

    “It does,” McKenna said. “We’re not just talking about parks or freeway underpasses. Imagine if someone drives up in an RV and parks it in front of your house on the street and takes up residence there.

    “Under the proposed rule, the police … could not evict the RV owner from living in front of your house without following all of these procedures, including providing alternative housing.”

    http://mynorthwest.com/382456/aclu-pitch-would-set-precedent-for-sleeping-on-public-property/

  22. 22

    RE: Blurtman @ 18 – It is rather interesting how it’s illegal to exist. And also not surprising that things done to help a group actually end up causing harm (although I’m not sure clearing encampments is something designed to help).

    A couple years ago I was driving through Bellevue, Idaho, which is quite a bit different than our Bellevue. Anyway, it was getting late and I didn’t know if there would be a spot open at Craters of the Moon State Park, so I pulled over at this roadside park. It didn’t have much in facilities, other than rather two fairly large toilet buildings (maybe containing showers?) which I never checked out.

    The reason I bring it up is it was free, and you could stay there something like 14 days a month, but you had to follow their rules. I think the appeal was probably for a group other than the homeless (hunters, off road enthusiasts, etc.), but I don’t know why you couldn’t do the same thing with the homeless. Have 3 or more parks, don’t let anyone set up permanent shop in any one park. Keep track of those who don’t follow rules. Provide some incentive for them to want to stay there.

    Wait, I do know why you can’t do that. Everyone with homes would protest it being in their neighborhood, and just the risk of one being in someone’s neighborhood in the future would make it very unpopular.

    Finally years ago there was a comic called Travels With Farley, where Farley was a reporter and interviewing a homeless couple who thought Reagan was trying to help them. He asked the couple how exactly was Reagan trying to help them and their answer was “Build more bridges.” Given the era, this obviously has been a long standing problem, and not just something from the 20s with Hooverville. http://depts.washington.edu/depress/hooverville_seattle.shtml

  23. 23

    By Eastsider @ 16:

    On the other hand, when prices become out of reach, the number of transactions will dry up. Just sayin’

    If only there were some force, maybe an “invisible hand,” that would help keep things balanced out. ;-)

  24. 24
    Blurtman says:

    RE: Kary L. Krismer @ 19 – And then there is this, below. Something amiss?

    “Stunning” Rise in Death Rate, Pain Levels for Middle-Aged, Less Educated Whites
    http://www.nakedcapitalism.com/2015/11/stunning-rise-in-death-rate-pain-levels-for-white-middle-aged-less-educated-whites.html

  25. 25

    RE: Blurtman @ 21 – Well, yet another explanation for why the unemployment rate is so low. Rather than dropping out of the employment market, some people just cease to exist altogether. Probably not a coincidence that their employment prospects would tend to be low.

    I wonder what those stats will look like for the period between the two conventions and the election–or inauguration. Not only are Hillary and Trump disliked, but they are also feared, and Hillary is feared more than Trump!

    Driving the election is antipathy toward the competition: 80% of Trump supporters and 62% of Clinton supporters say if the other candidate wins in November, they would feel “scared,” the most negative of four possible choices.

    http://www.usatoday.com/story/news/politics/elections/2016/09/01/suffolk-poll-hillary-clinton-donald-trump-fear/89577824/

  26. 26
    Eastsider says:

    RE: erik @ 17

    I’m afraid it is wishful thinking. This time is different because of central bank QEs. The asset bubbles could not have come about without the excess liquidity flooding the market. Who knows if the CBs will (be forced to) withdraw the liquidity? But if that happens, you can count on another crash in the housing market.

    Ps. Yes, your reasoning would have been valid otherwise.

  27. 27
    Blurtman says:

    Alternatives to spending $54 billion on more light rail

    Rather than spend $54 billion on light rail that only some will use, why not invest in bus rapid transit, which is cheaper and more efficient?

    Let me make the case real clear: Rejecting the Sound Transit 3 light rail proposition on Nov. 8 is not saying “no” to transit, it’s only saying no to a $54 billion bloated monstrosity that costs nearly twice the state budget. The plan is not convenient, it does not provide transit throughout, it does not carry a lot of people, it is not cost effective.

    But you’ve heard me complain about all this before, and rather than dwell on the problem of the Sound Transit 3 plan, let’s look at the fact that there has simply got to be a better solution. Or better solutions.

    The Sound 3 plan promises 62-miles of light rail over a 25-year period. It “also establishes bus rapid transit on I-405/SR 518 and SR 522/NE 145th; expands capacity and service of the Sounder south rail line; includes ST Express bus service; improves access to stations for bicyclists, pedestrians, drivers, and pick-up and drop-off services, and expands parking at stations.” And, did I mention, it will cost taxpayers $54 billion?

    I asked Mark Ahlers, from the website Smarter Transit, about some alternatives to Sound Transit’s plan. Ahlers is not a professional. He’s not a government official. What he is is someone who loves urban planning and is a certified fan of transit. He’s traveled to 35 countries around the world to study their modes of transit.

    Like me, Ahlers doesn’t believe that Sound Transit’s primary goal is to move people efficiently, nor is it cost effective. Ahlers compares Seattle’s costs to multiple other cities, including Vancouver. Ahlers calculated that light rail cuts Vancouver’s operating costs by 65 percent compared to buses, while Seattle light rail increases costs by 74 percent compared to bus travel. He found that the Canada line is 4.2-times cheaper to build per ride than Seattle Central Link Light Rail. And, what’s more remarkable, the construction conditions were phenomenally more difficult in Vancouver.

    “When Vancouver builds light rail, they do it to reduce the operating cost,” Ahlers told me. “Sound Transit builds light rail and it increases the operating cost per passenger mile. That’s unheard of. I’ve searched to find other cities where the same thing happens.”

    Ahlers recommends Seattle instead consider the transit models used in areas such as Brisbane, Australia, and Portland. Here’s what Ahlers would do:

    1. Like in Brisbane, take the outside lanes of the freeway and turn them into bus lanes, building a bunch of stations along the way. Brisbane is moving 160,000 daily riders. Central link has 38,000 daily weekday riders.

    2. Double-decker buses: They’re more economical than a traditional bus. Maintenance costs are less and the travel is more comfortable with the airplane, high-back seats. The 80-seat buses have a similar capacity to a light-rail train car and cost about $1 million, as opposed to the $6 million for a single light-rail car.

    3. Vanpools: These have the lowest operating and maintenance costs of any option — 4.3-times cheaper than light rail and three-times less than express buses.
    ——
    Driverless cars

    To me, it’s Ahlers’ thoughts on the driverless cars that throw the biggest wrench into Sound Transit’s plan.

    In my opinion, the purpose of this rail is to ensure government jobs — highly inflated government jobs. Part of that reasoning is because city officials see driverless cars coming around the bend. Ahlers explained that one of North America’s biggest transit problems is that most areas don’t have enough adequate population density, which makes the cost of moving people very high. That makes sense, as I often see 40-seat buses go by on rush-hour with five people aboard. It’s a waste. The driverless technology is already here and is a potentially huge cost-saver. Some countries are already using driverless buses. As Ahlers explained, driverless cars better match capacities with people.

    “It’s absolutely going to revolutionize transit, making it much more cost-effective,” he said.

    http://mynorthwest.com/380840/better-options-than-light-rail/?google_editors_picks=true

  28. 28
    Justme says:

    “Rental housing website Zumper announced that Seattle has fallen off its list of the country’s ten most expensive renter markets. Tanguy Le Louarn, head of digital marketing at Zumper, says that’s explained in part by luxury apartments in Seattle becoming more affordable for rich people. ‘This [is a] kind of mini correction that we’re seeing,’ Le Louarn says. ‘There’s so much rent price that people can stomach, so the high end luxury complex…cannot increase forever.’”

    http://www.seattleweekly.com/news/luxury-housing-is-becoming-more-affordable-for-rich-seattleites/

    Seattle is special!!

  29. 29
    Justme says:

    RE: Blurtman @ 24

    Good article. The problem is that some people in power think that Light Rail is intrinsically a good thing, whether or not Light Rail is in fact an efficient (and cost-effective) solution to a transportation problem. Such thinking can be extremely expensive.

  30. 30
    Corndogs says:

    RE: Kary L. Krismer @ 1 – Yeah, and the name of the blog should be changed from “Seattle Bubble” to “Seattle – Priced out forever – the story of how I missed the chance of a lifetime and ended up in a shack”

  31. 31
    whatsmyname says:

    RE: Blurtman @ 24
    Wow! Good one Blurtman; thanks for the reference. People should look at this.

    For Ray and other people in Pierce County; they plan to charge you $1.50 for each $1.00 they spend on you. What do you get for your money? A $304million train to Dupont serving 625 projected riders. It would be cheaper to buy each of one those riders two low end lamborghinis- plus a third one for the money they’re not even spending on you. Something to think about on your unchanged two hour trip to Seattle.

  32. 32
    whatsmyname says:

    RE: whatsmyname @ 28 – By reference, I meant reference to Ahlers’ smarter transit website – as opposed to the linked news article . I had not seen either before.

    http://www.soundtransitrevealed.com/

  33. 33
    Blurtman says:

    Million Dollar Shack: Trapped in Silicon Valley’s Housing Bubble

    https://www.youtube.com/watch?v=SBjXUBMkkE8

    They are crap shacks.

  34. 34
    ronp says:

    RE: Blurtman @ 24
    ST3 is a good solution when matched with transit oriented development up zones to maintain housing affordability in the region.

    No one wants to double deck I-5 and 405, destroy neighborhoods by widening roads, or cause more global warming. Light rail is popular and each line can carry as much as 20 lanes of traffic.

    No one will vote for BRT and the other cheaper options you mention. People like the comfort and speed of trains and the limited disruption to other transport options when under construction.

  35. 35
    ess says:

    RE: Blurtman @ 30RE: Blurtman @ 30

    Interesting video, appreciate it being posted here.

    In some ways, this area is similar to the Bay area 10-25 years ago.
    Will this area become the next Bay area? Who knows? Lots of similarities between the Bay area and Puget Sound.

    We will have to wait and see. It is starting to have that feeling – but Puget Sound has many more reasonably priced areas closer to the tech centers than the Bay area has. So it is still possible to buy a nice house for a decent price that isn’t 90 miles away from one’s job as that poor commuter had to.

    At least I understand why people from the Bay area relocate up here – one can buy a nice house in this area and have lots of change left over if they had bought their house in the Bay area some years ago.

    I did enjoy the rental tent in the back yard – at least that is housing that has a very low carbon footprint. Can’t say too much about the “Great Room” in it though…….

  36. 36
    Anonymous Coward says:

    I’d be far more likely to vote for ST3 if our rail system wasn’t developed by morons instead of people thinking logically about the most cost effective way to move people from where they want to be to where they want to go. Examples: why, in the name of God’s green earth, did we rip out the railroad tracks between Renton and Bellevue instead of just buying some rail cars? And now we’re proposing $54billion dollars assuming that everyone trying to get from the South End to the East Side will be totally happy with riding the train to Seattle, stopping for a transfer, and then riding another train over to the East Side? And why are we going to spend tens (hundreds?) of millions of dollars to build a new train bridge to West Seattle instead of using the *existing* tracks and bridge and just building a park & ride in the SW corner of the now-empty terminal 5? And have you seen the map of how we’re going to get train service to Burien? Yes, we could just build a 2-3 mile spur line from the airport and start it tomorrow, but oh, no, we’re going to build a much, much longer extension from South Park which won’t receive its tracks until sometime after 2030. The only rationale for getting Burien its rail service via this route is because we want to pad our ridership numbers for that fancy new West Seattle bridge so that it looks cheaper per rider. And where, exactly, are we putting all the new homes in? That’s right, places like Four Corners/Black Diamond and SE Tacoma. And how is ST3 supposed to alleviate the new traffic? Oh, that’s right, all those people buying the new 3+ bedroom homes are going to rent apartments near where we are building rail lines. Except we’re not building any 3+ bedroom apartments, now are we?

  37. 37

    By Justme @ 26:

    RE: Blurtman @ 24

    Good article. The problem is that some people in power think that Light Rail is intrinsically a good thing, whether or not Light Rail is in fact an efficient (and cost-effective) solution to a transportation problem.

    Reminds me of anti-bacterial soap, where so many people think that’s a good thing that Costco quit carrying anything but. At least the FDA is cracking down on that one, instead of putting it up for a vote.

  38. 38
    Evelyn Lewis says:

    Light rail is taking passengers off buses, not cars off the road. I live one mile from the Columbia City light rail station. We used to have two buses through our neighborhood. One was an express to downtown and one went from Southcenter, through SE Seattle, Beacon Hill and then to Belltown. Both had average ridership. These buses connected with the #48 to go to the Central District and the UW.
    Our bus service was cut due to the light rail proposed completion, which was a couple of years before actual completion.
    It then took three buses to get anywhere. Passengers found other options–like driving. By the time the light rail was finished, there were so few riders that they bought little shuttle buses that looked like something recycled from a third-world country with no air conditioning or shocks. They replaced these old buses when the last transportation levy passed, but there are still very few passengers.
    Instead of going downtown and connecting to a bus that goes to the UW, Garfield, etc, this shuttle goes to the light rail, then takes a 2-mile side trip to the SODO Home Depot, goes back to Spokane Street and continues a scenic trip through West Seattle to Alki Beach. It crosses the major freight and passenger rail lines, which means it often has to stop for 20 minutes at train crossings.
    Of course, this effects the schedule.
    All of the passengers on our former two buses are now in cars. Of course, with the billions they spent on light rail, they didn’t put a parking lot near the train for commuters, even though land was cheap at that time. Parking around the stop is 2-hour only and is clogged with cars of renters of new apt buildings so it is even hard on local businesses.
    It now takes me at least 15 to 30 minutes longer to get anywhere by public transportation.

  39. 39

    RE: Anonymous Coward @ 33 – I’ve not looked at this much at all, but one thing I would point out is that when you’re dealing with projects like this, what makes sense can be affected by the availability of federal dollars. If the feds will help you pay for “this” but not “that,” “this” can look much better than “that” when otherwise it would make less sense.

    My understanding is that the expanded Monorail project never got off the ground because of the lack of federal dollars. That though probably didn’t make any sense even if the federal dollars had been there.

  40. 40
    Justme says:

    RE: Anonymous Coward @ 33

    http://www.eastsiderailnow.org/faq_dismantle.html

    Good information about the history of the Renton-Bellevue-Kirkland railroad dismantling, which sounds like world-record-level stupidity.

  41. 41

    RE: Justme @ 36 – That has material that fits my point about federal funding.

    [Ron Sims] is now saying basically that the right of way should be used for both a bicycle trail and a transit system, but that the tracks should be removed temporarily and replaced by a trail. Then he would be eager to apply for federal and state aid to reinstall the tracks. [Emphasis supplied].

  42. 42
    Justme says:

    RE: ronp @ 31

    >>No one wants to double deck I-5 and 405, destroy neighborhoods by widening roads, or cause more global warming. Light rail is popular and each line can carry as much as 20 lanes of traffic.

    You are setting up quite a strawman, there, user ronp. Blurtman was writing/quoting about double-decker BUSES, not double-decker FREEWAYS.

    >>ST3 is a good solution when matched with transit oriented development up zones to maintain housing affordability in the region.

    Aha, so ST3 is the “solution” to providing transit to housing that does not exist yet. Great.

    >>No one will vote for BRT and the other cheaper options you mention. People like the comfort and speed of trains and the limited disruption to other transport options when under construction.

    Buss Rapid Transit (BRT) is so cheap compared to 54B light-rail that it probably does not even need to be voted upon. In reality, your propaganda is there because you are worried that people may vote AGAINST the ST3 measure.

  43. 43
    Blurtman says:

    Surviving in the Intellectually Bankrupt Monetary Policy Environment, Richard C. Koo, Chief Economist, Nomura Research Institute, auf der ACATIS Value Konferenz 2016 in Frankfurt am Main (20.05.2016).

    Our economics is based on the assumption of profit maximization. However, what happens, when this assumption is no longer valid, when companies pay down debt at zero interest rates? This is when the economy has entered a balance sheet recession. In such a situation, monetary policy becomes a largely useless weapon. After years of monetary policy with limited effectiveness, Richard C. Koo is asking: How can we escape from the QE-Trap?

    https://www.youtube.com/watch?v=8YTyJzmiHGk

  44. 44

    RE: Blurtman @ 39 – I wonder just what companies he thinks are paying zero percent interest? Banks and other financial entities can get some of their funds at very low rates, but even they are not getting zero percent, particularly if you look at the cost of all their funds.

    It really isn’t the quandary that is suggested. Governments do things all the time to encourage certain behavior. Sometimes they even take over the behavior (e.g. building roads).

    I’m not saying there are not necessarily problems with the economy, and the fact that the fed has been forced to keep rates so low isn’t a problem. More that maybe he’s describing a symptom of a problem rather than a problem.

  45. 45
    Blurtman says:

    RE: Kary L. Krismer @ 40 – It’s a bit of a long video, but Koo seems convinced that the Bay Area is in a housing bubble, and that the regional Fed bank governor was calling for a rate increase to slow it down. His presentation does address why in spite of massive QE there is little to no inflation (except asset inflation, that is.). His view of the challenges of Fed deleveraging is also interesting.

  46. 46

    RE: Blurtman @ 41 – Yes, it is a very long video, and I’ll admit I didn’t spend an hour and a half watching it!

    There are probably a number of reasons that there’s no inflation. First and foremost we’re in an energy glut, and the inflation numbers do not properly adjust for cheap energy to give a true inflation number. Second, the Fed doesn’t control the Legislative or Executive branches, but I think it’s pretty safe to say that if they did they wouldn’t have passed Obamacare and some of the tax measures. Those things run very counter to what the Fed was trying to do. Third, they don’t control the other economies of the world, and many of them are not doing well, which does affect us.

    That said, I’m sure reversing course will present a lot of challenges, unless the economy suddenly starts to take off (unlikely). So again, he probably has many valid points. I’m just not going to spend 1.5 hours listening to them.

    Edit: One more thing. Spending on war is not thought of as being as stimulative of the economy, because all you get is the multiplier effect of the spending of the employees, and nothing really productive (bombs exploding in the middle east don’t contribute to GDP). Now though we also have all the spending on NSA and such, and that also does not contribute beyond the multiplier effect. Not to say preventing 9/11 type events isn’t worthwhile, just that preventing them is a drain on the economy.

  47. 47
    sleepless says:

    By Kary L. Krismer @ 42:

    There are probably a number of reasons that there’s no inflation.

    No inflation my ass. It is unbelievable how clueless some “no inflation” trolls are. Food is going up, energy prices are up, clothing prices are up, housing is up (both rents and SFHs / condos), most of the services are up (day care, child’s activities like gymnastics, math classes, my barber increased the the haircut price just a couple of months ago, car repairs are up, etc), health / car insurance is up, car prices are up, furniture prices are up. Pretty much everything goes 10%+ a year in price except a few items like my cell phone bill, internet, TVs / computers. But those would not go up as the result of technology advancing which is “deflationary” by definition (mare automation, etc).

  48. 48

    RE: sleepless @ 43 – I wouldn’t be calling others clueless when you just list off a bunch of things and expect us to accept them, when the second one you list is obviously wrong.

    http://www.pe.com/articles/prices-812298-cents-year.html

    You would think that you would catch on to that when the next sentence in my post that you quoted indicated that energy prices are holding the price index data down.

    But I will admit to sloppy language. I should have said “no significant inflation.” If you think this is a period of inflation you are obviously very young.

  49. 49
    Blurtman says:

    RE: sleepless @ 43 – Supporting your observation: http://thefederalist.com/2014/07/08/food-prices-are-soaring-and-washington-doesnt-care/

    “The increases since June 2009 are: Beef and veal: +35.2%, Pork: +27%, Fish and seafood: +20.1%, Eggs: +33.1%, Dairy: +16.1%, Fresh Fruits: +13.8%. At the same time, Average Hourly Earnings have increased by 10.1%.”

  50. 50
    ronp says:

    RE: Justme @ 38 – Yes BRT can be cheap, but it is more expensive run long term and cannot carry as many people in a given alignment.

    My issue is where will you get the lanes for BRT? People get extremely upset about HOV lanes currently — you need tolls to manage access and free up space for buses. People love tolls, right?

    Tunnels and rail get you the capacity of 20 auto lanes in a very small space. It makes sense all around the world, and in a awesome region like Seattle, it makes a great deal of sense too. Vote yes on ST3 – https://seattletransitblog.com/2016/08/30/yes-on-sound-transit-3/

  51. 51

    RE: Blurtman @ 45 – Well first, there are going to be items that go up in price and down in price more than others. Cherry picking examples of higher prices only shows bias and not “inflation” and also shows that the author of that piece doesn’t know what inflation is. For example, that there was some sort of production problem with eggs last year, causing egg prices to skyrocket (when you could find them on the shelves) didn’t mean that there was inflation. It meant there was a shortage of that product.

    Second, the CPI is calculated both including and excluding food and energy. http://www.bls.gov/cpi/
    They do that because food and energy then to be much more volatile. So it’s not like the government is not tracking the information or ignoring the information. It’s just that the overall number is low.

    Now there are problems with how the CPI numbers are calculated, but no matter what they do they won’t fit everyone’s situation. For example, my expenditures having to buy individual health insurance will be different than those whose insurance is provided by their employer.

  52. 52
    Justme says:

    RE: ronp @ 46

    Your argument again consists of false choices. One does not need new lanes to run Bus Rapid Transit. They can run in existing HOV and TOLL lanes. No, there is no need to add MORE toll lanes. Discard tolling and make the lanes free HOV instead. And finally, Seattle will be MORE awesome, not less, with a better plan than ST3.

    Seattletransitblog.com is a pure propaganda outlet for ST3.

  53. 53
    pfft says:

    By Blurtman @ 45:

    RE: sleepless @ 43 – Supporting your observation: http://thefederalist.com/2014/07/08/food-prices-are-soaring-and-washington-doesnt-care/

    “The increases since June 2009 are: Beef and veal: +35.2%, Pork: +27%, Fish and seafood: +20.1%, Eggs: +33.1%, Dairy: +16.1%, Fresh Fruits: +13.8%. At the same time, Average Hourly Earnings have increased by 10.1%.”

    and that proves what? it proves nothing. it’s easy to cherry pick one thing or a certain subgroup to prove your point. inflation is an AVERAGE though. congrats, you just figured out what an average is.

  54. 54
    pfft says:

    By sleepless @ 43:

    By Kary L. Krismer @ 42:

    There are probably a number of reasons that there’s no inflation.

    No inflation my ass. It is unbelievable how clueless some “no inflation” trolls are. Food is going up, energy prices are up, clothing prices are up, housing is up (both rents and SFHs / condos), most of the services are up (day care, child’s activities like gymnastics, math classes, my barber increased the the haircut price just a couple of months ago, car repairs are up, etc), health / car insurance is up, car prices are up, furniture prices are up. Pretty much everything goes 10%+ a year in price except a few items like my cell phone bill, internet, TVs / computers. But those would not go up as the result of technology advancing which is “deflationary” by definition (mare automation, etc).

    sorry dude, inflation is below target. I can even confirm it with MIT’s Billion Prices project.

  55. 55
    Blurtman says:

    RE: pfft @ 49 – It supports the observation in post 43 that food prices are going up. Regarding the use of averages, recall that if half your body in on fire, and half frozen solid, on average you are fine.

  56. 56
    Blardian says:

    How’s price-to-income doing?

    That seems like the most telling metric, the best measure of affordability. Seattle has a lot more high-income work than it used to.

  57. 57

    By Blurtman @ 45:

    RE: sleepless @ 43 – Supporting your observation: http://thefederalist.com/2014/07/08/food-prices-are-soaring-and-washington-doesnt-care/

    “The increases since June 2009 are: Beef and veal: +35.2%, Pork: +27%, Fish and seafood: +20.1%, Eggs: +33.1%, Dairy: +16.1%, Fresh Fruits: +13.8%. At the same time, Average Hourly Earnings have increased by 10.1%.”

    RE: Blurtman @ 51

    June 2009 was a point just into the recession when a ton of people had lost their jobs. Using such a starting point itself suggests another form of cherry picking–picking a start date which gives the desired results.

    Returning to real estate, if I gave you the increase in the King County median from June, 2009 to June, 2016 it would be about 26.5%. If I used June 2007 to June 2016 it would only be about 6.3%.

    Some people try to make statistical points by picking a start date which gives them the best result. Given what happens with a family food budget when a household is either unemployed or worried about unemployment, it wouldn’t be surprising if the food prices in June 2009 were relatively low due to lower demand, particularly for the items mentioned.

    Percentages from NWMLS sources but not compiled by the NWMLS or guaranteed.

  58. 58
  59. 59
    pfft says:

    By Blurtman @ 51:

    RE: pfft @ 49 – It supports the observation in post 43 that food prices are going up. Regarding the use of averages, recall that if half your body in on fire, and half frozen solid, on average you are fine.

    nonsense. if some prices are up it could be offset by some prices that are down.

    I could just as easily post we are in deflation by posting only the items that went down in price.

    prices are always rising and or falling at the same time that the overall index is rising or falling.

  60. 60

    RE: pfft @ 53

    Can you tell me which food prices went down? I’d really like to know.

  61. 61
    pfft says:

    By Ardell DellaLoggia @ 54:

    RE: pfft @ 53

    Can you tell me which food prices went down? I’d really like to know.

    i don’t know.

    http://www.bls.gov/cpi/#tables

  62. 62
    Macro Investor says:

    By Blurtman @ 24:

    Alternatives to spending $54 billion on more light rail

    Driverless cars are coming in a few years. This is a game changing technology that may make trains and buses obsolete. It is possible that far fewer people will even choose to own a car. Instead many of us will call for rides as needed. I suggest everyone think about this before voting to tax yourself into the poor house.

    A decades long project is insane right now. And you can be sure $54 billion is just a teaser rate. It will really cost 2-3 times that, as every gov project always has.

    Personally, I always vote “no” for anything that costs even one cent. I’m sick of government constantly begging for more money. It is their job to ALLOCATE RESOURCES. That means if you want something new, you find something less important to cut. Force them to do their d@mned jobs for a change.

  63. 63
    pfft says:

    By Macro Investor @ 56:

    By Blurtman @ 24:

    Personally, I always vote “no” for anything that costs even one cent. I’m sick of government constantly begging for more money. It is their job to ALLOCATE RESOURCES. That means if you want something new, you find something less important to cut.

    seems a sensible way to run one of the largest countries on earth.(sarcasm).

  64. 64
    Sam Hunter says:

    I have included this picture to help any newbies here trying to decipher the facts.

    I think we can all learn a little bit from the movie Momento.

    http://imgur.com/a/ewDVt

  65. 65

    RE: Sam Hunter @ 58 – You really need to post something about where I’ve been wrong. Otherwise you’re nothing but a troll. Oh wait, even then you’d still be nothing but a troll.

    Great movie though. One of my favorites!

  66. 66
    greg says:

    RE: Kary L. Krismer @ 59
    To be fair Kary, you are somewhat of a troll yourself. You argue on topics that you don’t understand and get in over your head time and again.

  67. 67

    RE: greg @ 60 – Examples please. Just saying I’m wrong or that I don’t understand something doesn’t mean squat. It just means you disagree with me, and more likely than not that is because it is something you don’t understand.

  68. 68
    Blurtman says:

    RE: pfft @ 53 – Substitution fallacy.

  69. 69
    David B. says:

    RE: Blurtman @ 24 – Bus rapid transit: It almost always ends up being a bait-and-switch. It starts by making the (valid) argument that buses on a dedicated right-of-way can offer service as reliable as rail on a dedicated r-o-w. Then comes the switch: a much cheaper “BRT” proposal is floated that has little or no dedicated r-o-w for the buses. And that lack of a dedicated r-o-w is precisely the reason the BRT proposal is much cheaper; it’s the right-of-way costs that make light rail so expensive.

    Driverless cars: Generally it’s techno-hype, on par with the 1990s predictions that the Internet would make traditional brick-and-mortar stores obsolete. (Really, now: Did Rural Free Delivery allow Sears to render brick-and-mortar stores obsolete?) The biggest problem with cars is basic geometry, and making them self-driving cannot repeal those laws.

  70. 70

    By Blurtman @ 62:

    RE: pfft @ 53 – Substitution fallacy.

    What’s the fallacy? You don’t think that if beef prices rise significantly that people will eat more pork, chicken and fish instead?

    That’s a basic premise of economics, and people who don’t believe that make all sorts of mistakes in their thinking. For example, price controls back in the 1970s. It lead to gas lines, rationing and a widespread belief that we’d be out of oil by now.

  71. 71
    pfft says:

    By Blurtman @ 62:

    RE: pfft @ 53 – Substitution fallacy.

    don’t think so.

  72. 72
    Blurtman says:

    RE: Kary L. Krismer @ 64 – What if they are all going up? I guess then, folks can drink gasoline. Vrooom!

  73. 73

    By Blurtman @ 66:

    RE: Kary L. Krismer @ 64 – What if they are all going up? I guess then, folks can drink gasoline. Vrooom!

    Soylent Green!

    Well, if they are all going up, and virtually everything else is going up with them, then you have inflation. But just the price of beef going up alone, not inflation. At best it would be a tiny insignificant piece of evidence of inflation.

  74. 74
    David B. says:

    RE: Blurtman @ 66 – But statistics for overall inflation indicate that prices are not “all going up” very dramatically. Quite the contrary: central bankers are far more worried about the prospect of deflation these days.

  75. 75
    colonialman says:

    Here’s a more recent article addressing the recent deflation in the cost of food:

    http://www.wsj.com/articles/food-price-deflation-cheers-consumers-hurts-farmers-grocers-and-restaurants-1472490823

  76. 76

    RE: David B. @ 68 – What amazes me is how people will simultaneously complain about the lack of wage/income growth and then claim there is inflation. You need something to create inflation, and absent an economy that is doing (too) well, you are not likely to see inflation.

    That is not an absolute, however. In the 70s we had “stagflation” where there was inflation with a poorly performing economy. My belief though is that was caused by the type of thinking that we are seeing on this webpage–that the price of certain things going up was inflation, as opposed to just a change in the price of a commodity. At that point oil prices shot up dramatically, which caused price increases on many other items, which in turn caused the policy makers to put the brakes on the economy to control what they mistakenly thought was inflaction, but didn’t do a heck of a lot to reverse the price action which was caused by a then effective cartel.

  77. 77
    Blurtman says:

    RE: David B. @ 68 – I am only addressing food price inflation. See: http://www.wsj.com/articles/as-food-prices-rise-fed-keeps-a-wary-eye-1404672384

    Some might argue that you can substitute cereal for beef. I would consider that fallacious.

  78. 78
    Justme says:

    RE: David B. @ 68

    >>Quite the contrary: central bankers are far more worried about the prospect of deflation these days.

    Central Banks are worried about ASSET deflation, not consumer deflation. All the talk about the supposed danger of consumer deflation is just a ruse to justify endless ZIRP and endless asset INFLATION.

    Hasn’t everyone understood yet that central banks never speak the truth? There is a reason that the person with the most obfuscatory speaking talent always gets elected to the FRB chairmanship (Greenspan, Bernanke, Yellen).

  79. 79
  80. 80
    Erik says:

    RE: Kary L. Krismer @ 59
    Just because someone is has a different opinion, it doesn’t make them a troll Kary.

  81. 81
  82. 82
    David B. says:

    RE: Erik @ 73 – No, but just because they’re trolling does.

  83. 83
    David B. says:

    RE: Kary L. Krismer @ 69 – Well, there actually was significant overall inflation in the 1970s, because as you mentioned the price of oil is reflected in the price of pretty much everything else. Agree completely on policy makers causing further problems by treating that inflation as a sign of an overheated economy. There really was no easy solution to the oil price shocks of that era.

  84. 84
    pfft says:

    By David B. @ 76:

    RE: Kary L. Krismer @ 69 – Well, there actually was significant overall inflation in the 1970s, because as you mentioned the price of oil is reflected in the price of pretty much everything else. Agree completely on policy makers causing further problems by treating that inflation as a sign of an overheated economy. There really was no easy solution to the oil price shocks of that era.

    Ironically the oil shock helped wring energy costs out of the CPI through efficiency gains. our energy expenditures as a percentage of CPI is way down. commodity costs of many goods are just a small fraction of the overall price.

  85. 85
    sleepless says:

    By Kary L. Krismer @ 47:

    RE: Blurtman @ 45 – Well first, there are going to be items that go up in price and down in price more than others. Cherry picking examples of higher prices only shows bias and not “inflation” and also shows that the author of that piece doesn’t know what inflation is…
    …Now there are problems with how the CPI numbers are calculated, but no matter what they do they won’t fit everyone’s situation…

    The BLS CPI/Inflation numbers are the most bogus stats you would come up with. Yes, the gubmint understates the inflation and debt and yes, it overstates GDP and employment numbers. Just like employment stats are complete BS (they count two part time jobs as two jobs, and don’t count people that don’t receive unemployment benefits). Here is http://www.shadowstats.com/alternate_data/inflation-charts as it was calculated in 1990. When troll talks about cherry picking, I guess, 90% don’t care. Yes, the food is up, yes the medical and car insurance is up, yes, the clothing prices are up, yes, the housing prices are up, the utility bills are up. I do agree, some items like gas has declined, but who cares, 90% of the items people care the most rise in prices on daily basis. Yes, the 4K TV is cheaper no, so, yes, here is your “cherry picking” goes. 1 items no one cares about goes down in price, 10 items everyone needs go up in price. And i don’t need the dumbing to “tell” me what the rate of the inflation is. I spend money on goods and services on daily basis, we keep monthly family budget, I know exactly what goes up and how much.

  86. 86
    sleepless says:

    Some interesting read on the “inflation”:

    However, the government has incentives to keep this statistic as low as possible. In fact, the CPI doesn’t even measure inflation, rather a range of consumer spending behaviors. The CPI is perhaps one of the most important government statistics because it affects a number of public programs and is used as a benchmark to set public policy.

    http://www.forbes.com/sites/perianneboring/2014/02/03/if-you-want-to-know-the-real-rate-of-inflation-dont-bother-with-the-cpi/#28264da4118b

    The CPI is tied to the incomes of about 80 million Americans, specifically: Social Security beneficiaries, food stamp recipients, military and federal Civil Service retirees and survivors, and children on school lunch programs. The higher the CPI, the more money the government needs to spend on these income payments to keep pace with the cost of living.

    “Cherry picking” indeed…

  87. 87
    Justme says:

    RE: pfft @ 77

    >>Ironically the oil shock helped wring energy costs out of the CPI through efficiency gains.

    It is not due to efficiency gains. It is due to overproduction. That is, we and Saudi Arabia and others have drilled too many expensive holes in the ground, and we “have to” pump and sell at any price in order to service all the debt incurred for the drilling and fracking costs. Think of it as half a can of soda with 10 expensive gold-plated straws in it, and everyone consuming like crazy.

    There is a new movement afoot called LEAVE IT IN THE GROUND. It is the best thing we can do.

  88. 88
    Erik says:

    RE: Kary L. Krismer @ 61
    Yeah, here’s a example of when you are wrong… real estate investing. Mr. Peppers owns you when you try and battle him about that. Ardell owns you on this site repeatedly.

  89. 89

    By Erik @ 73:

    RE: Kary L. Krismer @ 59
    Just because someone is has a different opinion, it doesn’t make them a troll Kary.

    No, what makes them a troll is making claims that I’m “wrong” about something without making any other point, or ever saying how I’m wrong.

    I don’t have a problem with people who disagree with me in a proper manner. I only have a problem with trolls.

  90. 90

    By pfft @ 77:

    By David B. @ 76:

    RE: Kary L. Krismer @ 69 – Well, there actually was significant overall inflation in the 1970s, because as you mentioned the price of oil is reflected in the price of pretty much everything else. Agree completely on policy makers causing further problems by treating that inflation as a sign of an overheated economy. There really was no easy solution to the oil price shocks of that era.

    Ironically the oil shock helped wring energy costs out of the CPI through efficiency gains. our energy expenditures as a percentage of CPI is way down. commodity costs of many goods are just a small fraction of the overall price.

    Well I think they also adjusted the system so that it didn’t reflect changes in mortgage interest rates as much (if at all). If so, that would be two things that would have been showing deflation over the past several years that are no longer included.

  91. 91

    By Erik @ 81:

    RE: Kary L. Krismer @ 61
    Yeah, here’s a example of when you are wrong… real estate investing. Mr. Peppers owns you when you try and battle him about that. Ardell owns you on this site repeatedly.

    Erik, we’ve gone over that. You’re just too ignorant to realize that Ray and I tried to sell a house at the roughly the same time, and that he failed and I succeeded. You’re also too ignorant to realize that I’m solvent and he at least a few years ago, when he did his offer in compromise, that Ray was insolvent. You’re also too ignorant to realize what Ray being subject to a judicial foreclosure (maybe two) means.

    But thank you for at least pointing out a situation where you think I was wrong. That allows me to point out that my purchase of real estate about the same time has benefited me greatly through not having paid rent or a mortgage (ignoring HELOC used for other purposes) for about 8 years now. That’s worth probably at least $150,000 in after tax income (more in gross income) AND I still have a house that is worth more than I paid for it. Ray in contrast has been collecting rent and accruing interest debt which is probably greater in amount, paying taxes on the rental income (less depreciation), while accruing a large liability, and facing tax consequences when the property (properties?) are finally foreclosed. Fortunately Congress has extended the Mortgage Debt Relief Act and hasn’t repealed the insolvency exception, so those tax consequences might not be too bad (assuming the creditor(s) don’t seek a deficiency judgment).

    So no, Ray isn’t a great investor by any means, and he has done rather poorly compared to myself. You just don’t understand that because you are gullible and have fallen for the same BS Ray uses to do whatever it is Ray does.

    And BTW, you probably aren’t doing Ray any favors by repeatedly bringing him up. His financial situation would be embarrassing to most people, but Ray doing whatever it is he does has to pretend it’s a good situation. On an episode of Major Crimes a few weeks ago they described an identity scheme situation that put its victims in roughly the same position as Ray. The difference? The victims in that fictional story actually had a way they could fight the personal liability claim (ignoring the fact they were also murdered). Ray’s situation sucks, but you’re too ignorant to know that, and Ray for some reason doesn’t want to reach out and tell you to quit dragging him into things.

    Finally, as a courtesy to Ardell I won’t let you drag her into this.

  92. 92

    By Justme @ 80:

    RE: pfft @ 77

    >>Ironically the oil shock helped wring energy costs out of the CPI through efficiency gains.

    It is not due to efficiency gains. It is due to overproduction. That is, we and Saudi Arabia and others have drilled too many expensive holes in the ground, and we “have to” pump and sell at any price in order to service all the debt incurred for the drilling and fracking costs. Think of it as half a can of soda with 10 expensive gold-plated straws in it, and everyone consuming like crazy.

    There is a new movement afoot called LEAVE IT IN THE GROUND. It is the best thing we can do.

    By efficiency gains I think things like fracking were meant, but also other ways to pump/extract more cheaply.

    You do bring up an interesting point. At what point does the owner of a producing well shut it off? They’re not going to pump long if it costs them $30 to pump $29 worth of oil. But when they determine their costs are the including any sunk costs or interest on loans that paid for those sunk costs? I would suspect that some include the interest but few include the sunk costs of drilling the hole. But in any case it doesn’t work as you suggest. They don’t continue pumping just because they spent money to drill a hole.

    As to your “new movement,” just something pushed by people who don’t understand how things work. Subject to government restrictions and control, economic forces determine how much oil is pumped. More exploration is done as prices increase (and visa-versa). More oil/gas wells are utilized as prices increase (and visa-versa). It’s not random as those people seem to think.

  93. 93
    Erik says:

    RE: Kary L. Krismer @ 84
    I could give 2 sh!ts how Ray got there. At the end of the day he did very well for himself and he’s about ready to retire. You paid almost all cash at the top of the market. I’m just observing and not trying to hurt anyone. The more lucrative method would be rays method in this case. Without discussing lawyer details, who walks away with more cash? I rest my case.

    So as a reader that doesn’t really know a whole lot about the details, the more lucrative way is to buy now and let assets foreclose if necessary. Donald trump declared bankruptcy multiple times doing something similar to what Ray did. Now trump could be our next president. It’s not illegal to play within the rules Kary. You just need to be careful to not break the rules when you do so.

  94. 94

    By Erik @ 86:

    RE: Kary L. Krismer @ 84
    I could give 2 sh!ts how Ray got there. At the end of the day he did very well for himself,

    No he didn’t! You’re just too ignorant and uninformed to understand that.

    So as a reader that doesn’t really know a whole lot about the details, the more lucrative way is to buy now and let assets foreclose if necessary. Donald trump declared bankruptcy multiple times doing something similar to what Ray did. Now trump could be our next president. It’s not illegal to play within the rules Kary. You just need to be careful to not break the rules when you do so.

    Trump didn’t do anything like what Ray has done, other than the fact that Trump did make some bad investments. BTW, Trump never did file bankruptcy–his entities did. The same cannot be said for Ray, and his bankruptcy was recent. That sort of shoots down your theory on how well Ray is currently doing. No one in their right mind would file a bankruptcy if they were doing well financially.

    Again, you’re not helping Ray out. But you are at least helping with my goal of ensuring that Ray doesn’t use this site to troll for future sucker victims.

  95. 95
    js says:

    Kary L. Krismer @ 87, Erik @ 86, Kary L. Krismer @ 84, etc

    You guys are killing us. Who cares whether Ray made money during the crash or Kary bought at a bad time. Both of those people have a roof over there head, food on the table, and own their own cars. They are very well off by world standards.

    The Tim might be reluctant to post August stats because he is tired of the comments degrading into a bunch of immature idiots throwing poop at each other.

  96. 96

    RE: js @ 88 – I care in that Ray has used this site to promote himself and try to convince others to do questionable things (to say the least). Any time someone pops up and starts promoting that BS it should be swatted down.

    But apparently I haven’t done enough if you think Ray is “well off” by any standards.

  97. 97
    greg says:

    RE: Kary L. Krismer @ 82

    Fail Kary.

    You are repeatedly rude, unprofessional and often offer no rebuttal other than claiming people don’t know what they are talking about. As such you are somewhat of a TROLL.

    Furthermore if you seek examples just look at any random thread, there you will be crying , stamping your feet and declaring everyone who disagrees a fool. From time to time you try to moderate yourself but within a few posts you are back to your ways.

    now that I think about it you have some common characteristics with Mr Trump, neither of you seem to be able to control yourself when you feel the slightest slight.

  98. 98
    pfft says:

    By sleepless @ 78:

    By Kary L. Krismer @ 47:

    RE: Blurtman @ 45 – Well first, there are going to be items that go up in price and down in price more than others. Cherry picking examples of higher prices only shows bias and not “inflation” and also shows that the author of that piece doesn’t know what inflation is…
    …Now there are problems with how the CPI numbers are calculated, but no matter what they do they won’t fit everyone’s situation…

    The BLS CPI/Inflation numbers are the most bogus stats you would come up with. Yes, the gubmint understates the inflation and debt and yes, it overstates GDP and employment numbers. Just like employment stats are complete BS (they count two part time jobs as two jobs, and don’t count people that don’t receive unemployment benefits). Here is http://www.shadowstats.com/alternate_data/inflation-charts as it was calculated in 1990. When troll talks about cherry picking, I guess, 90% don’t care. Yes, the food is up, yes the medical and car insurance is up, yes, the clothing prices are up, yes, the housing prices are up, the utility bills are up. I do agree, some items like gas has declined, but who cares, 90% of the items people care the most rise in prices on daily basis. Yes, the 4K TV is cheaper no, so, yes, here is your “cherry picking” goes. 1 items no one cares about goes down in price, 10 items everyone needs go up in price. And i don’t need the dumbing to “tell” me what the rate of the inflation is. I spend money on goods and services on daily basis, we keep monthly family budget, I know exactly what goes up and how much.

    shadow stats is complete joke. whatever the inflation rate is they just add a number too. even they claim they aren’t accurate. according to shadowstats we’ve been in recession since the 90s.

    MIT’s numbers are much better.

  99. 99
    pfft says:

    By sleepless @ 79:

    Some interesting read on the “inflation”:

    However, the government has incentives to keep this statistic as low as possible. In fact, the CPI doesn’t even measure inflation, rather a range of consumer spending behaviors. The CPI is perhaps one of the most important government statistics because it affects a number of public programs and is used as a benchmark to set public policy.

    http://www.forbes.com/sites/perianneboring/2014/02/03/if-you-want-to-know-the-real-rate-of-inflation-dont-bother-with-the-cpi/#28264da4118b

    The CPI is tied to the incomes of about 80 million Americans, specifically: Social Security beneficiaries, food stamp recipients, military and federal Civil Service retirees and survivors, and children on school lunch programs. The higher the CPI, the more money the government needs to spend on these income payments to keep pace with the cost of living.

    “Cherry picking” indeed…

    so Forbes, which I am sure criticizes the government for spending too much money is accusing the government of manipulating statistics…to spend less money? and they are mad about that?

  100. 100
    pfft says:

    sorry I just caught this and laughed.

    “1 items no one cares about goes down in price, 10 items everyone needs go up in price. ”

    yeah, nobody cares about tvs. LOL. inflation truthers often have a bias against technology prices. they do this while typing on a computer that is miles better and cheaper than older computers.

    when you buy a computer do you not care about the price or newer specs? LOL.

    the fact is just about everyone buys tv and computers and phones. their costs matters. inflation truthers just dismiss this though for some reason. the same people complain about house prices. homes are purchased even less often than phones or tvs in most cases. yet home prices count but phone prices don’t?

    total bias.

    EDIT: and to reiterate, shadow stats is complete joke.

  101. 101
    Erik says:

    RE: greg @ 90
    Kary does know stuff about real estate. But instead of trying to help people, he tries to hurt people. Ray, Ardell, and Corndogs are in the business and try to help us that are trying to learn. Not sure what Corndogs does, but he seems to know a crap ton. Kary is mean and tries to beat us down. ?

  102. 102
    Erik says:

    RE: Corndogs @ 27
    You said back in 2012 or 2013 that the market would level off after the bounce off the bottom. Wrongo Chongo. This market has done nothing but go up and I think it will continue for years to come.

  103. 103
    Gooddeal says:

    By Kary L. Krismer @ 87:

    By Erik @ 86:

    RE: Kary L. Krismer @ 84
    I could give 2 sh!ts how Ray got there. At the end of the day he did very well for himself,

    No he didn’t! You’re just too ignorant and uninformed to understand that.

    So as a reader that doesn’t really know a whole lot about the details, the more lucrative way is to buy now and let assets foreclose if necessary. Donald trump declared bankruptcy multiple times doing something similar to what Ray did. Now trump could be our next president. It’s not illegal to play within the rules Kary. You just need to be careful to not break the rules when you do so.

    Trump didn’t do anything like what Ray has done, other than the fact that Trump did make some bad investments. BTW, Trump never did file bankruptcy–his entities did. The same cannot be said for Ray, and his bankruptcy was recent. That sort of shoots down your theory on how well Ray is currently doing. No one in their right mind would file a bankruptcy if they were doing well financially.

    Again, you’re not helping Ray out. But you are at least helping with my goal of ensuring that Ray doesn’t use this site to troll for future sucker victims.

    Thank you. This needed to be said. All posts should stay on-topic to maximize the usefulness of the information and to better the site’s reputation. I’ve noticed that viewership and participation has dropped precipitously since the heydays and I have no doubt that this unprofessional-ism is one of the primary reasons.

  104. 104
    Gooddeal says:

    Thank you. This needed to be said. All posts should stay on-topic to maximize the usefulness of the information and to better the site’s reputation. I’ve noticed that viewership and participation has dropped precipitously since the heydays and I have no doubt that this unprofessional-ism is one of the primary reasons.

    For some reason it quoted the wrong post in my reply. I was referring to the post by JS.

  105. 105
    David B. says:

    By Kary L. Krismer @ 85:

    As to your “new movement,” just something pushed by people who don’t understand how things work. Subject to government restrictions and control, economic forces determine how much oil is pumped. More exploration is done as prices increase (and visa-versa). More oil/gas wells are utilized as prices increase (and visa-versa). It’s not random as those people seem to think.

    Most of the movement “Justme” alludes to are climate activists (of which I count myself as one). Why the assumption that climate activists are unaware of how economic forces (basically, prices) incentivize production? I’d certainly never claim such a bizarre thing, nor would most of the people I know.

  106. 106

    By greg @ 90:

    RE: Kary L. Krismer @ 82

    Fail Kary.

    You are repeatedly rude, unprofessional and often offer no rebuttal other than claiming people don’t know what they are talking about.

    No rebuttal? Actually, I state quite specifically where they are wrong and how they are wrong. Give me a break. If you want to be critical of something I said be specific. This site does have the ability to quote others. Use it!

    I just went through this thread, and ignoring Goodeal’s mistake, only two people have even attempted to quote what I said. Sleepless on the inflation issue and pfft also on inflation. Seriously, that’s a pretty sad inability to rebut an argument and level of discourse. Maybe it isn’t only the stats on this site that are getting boring.

  107. 107

    Maybe there is significant inflation in food, because the WSJ is reporting significant deflation affecting earnings of companies in the industry, and they are almost always wrong! ;-)

    http://www.wsj.com/articles/sprouts-farmers-market-shares-slide-on-outlook-cut-1473255167

  108. 108
    Justme says:

    RE: Kary L. Krismer @ 85

    >>They don’t continue pumping just because they spent money to drill a hole.

    It baffles me that you find so much to disagree with here. Yes, oil companies often DO continue pumping because they spent money to drill a hole. Especially if large sums of money were borrowed and spent on drilling, which was the case in the post-2010 fracking boom. Companies need to pay back the loans, and in that situation, pumping (the physical act of which is not that expensive) is their choice, even if they are not making a profit overall. Otherwise company owners face default and bankruptcy AND losing their ownership of the company.

    You can look at some data yourself (first graph in reference below) . In 2015/Q2, US onshore oil producers spent 82% of their revenue (annualized) on debt service. Clearly they are not stopping pumping just because the overall project became unprofitable.

    From the 2nd reference, I quote:

    “Simple marginal cost reasoning has limits in this industry. There is considerable anecdotal evidence that firms may choose to temporarily operate at prices below their costs for a variety of reasons. Many firms bought price hedges that have allowed them to continue selling some oil above spot prices, though some of these contracts will expire by the end of 2016. Shut-in costs–the costs of shutting down producing wells–are significant. Some firms may choose to operate below cost to retain market share or a core of skilled workers, to maintain cash flow for debt servicing or dividends, or to avoid losing production rights under certain types of lease terms. ”

    References:

    http://focusonfracking.blogspot.com/2015/09/ohio-supreme-court-rulings-frackers.html

    https://www.federalreserve.gov/econresdata/notes/feds-notes/2016/unraveling-the-oil-conundrum-productivity-improvements-and-cost-declines-in-the-us-shale-oil-industry-20160322.html

  109. 109
    Justme says:

    RE: David B. @ 97

    What David B. said. I consider myself both a climate activist and an oil preservationist. Why oil preservation, apart from climate considerations? Well, the answer should obvious. BECAUSE WE WILL NEED IT LATER.

    Therefore: LEAVE IT IN THE GROUND

    Don’t pump and burn just because we have a temporary overproduction, caused by cheap loans (“Bernanke Bucks”, “Yellen Bucks”) looking for a place to go and die. It is morally repugnant, and just another example of how the FRB ZIRP policy distorts the economic system, funds unproductive activities, AND manages to cause great environmental harm and future shortages at the same time.

  110. 110
    pfft says:

    Well since we are off track anyway Trump just lies and lies and lies.

    Donald Trump just lied about opposing the Iraq War before it started. Here’s proof.
    http://www.vox.com/2016/2/18/11057968/donald-trump-iraq-war-2002

    the thing is in his brief answer he lied like 3 times. He was for it. He didn’t say it was going to be a disaster either that we can find.

    Matt Lauer occupies a high up position in the journalism world. he is the best we can do? SAD! IF trump is elected it will be with the help of the media.

  111. 111
    Erik says:

    RE: Gooddeal @ 96
    Please, for the reputation of this site… if you can’t even reply to the right comment, maybe you should no longer comment.

    Also, why would I be professional? I am here electively and I don’t get paid to be here. I’m not going to wear a suit and tie while I scoot my chair up to my desk using proper grammar. No, I drive 70mph on the freeway while eating an Arbys sandwich while writing a comment on my smart phone.

  112. 112
    pfft says:

    By Justme @ 101:

    RE: David B. @ 97

    What David B. said. I consider myself both a climate activist and an oil preservationist. Why oil preservation, apart from climate considerations? Well, the answer should obvious. BECAUSE WE WILL NEED IT LATER.

    Therefore: LEAVE IT IN THE GROUND

    Don’t pump and burn just because we have a temporary overproduction, caused by cheap loans (“Bernanke Bucks”, “Yellen Bucks”) looking for a place to go and die. It is morally repugnant, and just another example of how the FRB ZIRP policy distorts the economic system, funds unproductive activities, AND manages to cause great environmental harm and future shortages at the same time.

    so first the Fed was artificially inflating the price of oil but now that that is not the case it’s actually holding oil prices too low?

    geez people, pick an argument.

    EDIT:

    “It is morally repugnant, and just another example of how the FRB ZIRP policy distorts the economic system, funds unproductive activities, AND manages to cause great environmental harm and future shortages at the same time”

    do you plan on providing any sources for these arguments. there is a lot wrong with the environment but it’s not the Fed. People will blame the Fed for EVERYTHING. rates hit zero in dec of 2008. oil peaked in the summer of 2008…your timeline is off. rates are but one factor in the price of oil just like with housing.

  113. 113

    By Justme @ 100:

    You can look at some data yourself (first graph in reference below) . In 2015/Q2, US onshore oil producers spent 82% of their revenue (annualized) on debt service. Clearly they are not stopping pumping just because the overall project became unprofitable.

    Carrying debt does not mean that they are selling below cost. It just means they financed their expansion in order to expand faster.

    From the 2nd reference, I quote:

    “Simple marginal cost reasoning has limits in this industry. There is considerable anecdotal evidence that firms may choose to temporarily operate at prices below their costs for a variety of reasons. Many firms bought price hedges that have allowed them to continue selling some oil above spot prices, though some of these contracts will expire by the end of 2016. Shut-in costs–the costs of shutting down producing wells–are significant. Some firms may choose to operate below cost to retain market share or a core of skilled workers, to maintain cash flow for debt servicing or dividends, or to avoid losing production rights under certain types of lease terms. “

    I wouldn’t disagree with any of that. First it uses the term temporarily. As noted there are costs to shutting down and restarting a well. It’s not just flipping a switch back and forth. Second, if they have contracts which allow them to sell above the current market price, that wouldn’t be a situation where they are selling below cost (but it would impact the market if there was a significant number of such contracts.) The last sentence just deals with some of the shutdown/startup costs specifically, but adds in a situation where rights to pump might terminate if they stop. I’m not sure how common that is, but that obviously could delay a decision to stop pumping on a market price dip. Those are all exceptions to the general rule.

  114. 114

    On the topic of the price of food, it is possible that the price action here in Washington doesn’t match that of the rest of the country. The federal government basically screwed us by allowing mergers such that the grocery market is now dominated by only two companies because FM and QFC have common ownership as do Safeway and Albersons. And in so doing they also managed to wipe out a smaller competitor (Haggens). Not exactly a situation where you would expect to see declining prices.

  115. 115
    Justme says:

    RE: Kary L. Krismer @ 105

    I’ll leave it at that, Kary. I think readers can make up their minds by themselves. I think the fact that 82% of revenue was used for debt service would convince most people.

  116. 116
    David B. says:

    By Kary L. Krismer @ 106:

    And in so doing they also managed to wipe out a smaller competitor (Haggens). Not exactly a situation where you would expect to see declining prices.

    Haggen mostly wiped themselves out, by taking on a rapid expansion that they were incapable of properly managing (or even negotiating the purchase terms of).

  117. 117
    Justme says:

    RE: pfft @ 104

    >>so first the Fed was artificially inflating the price of oil but now that that is not the case it’s actually holding oil prices too low?

    This should not be hard to understand, should it? (I did not say that FRB is HOLDING oil prices down — that is your phrasing). First, around 2009, ZIRP and all the liquidity sloshing around, went into speculation in oil and other commodities, causing a rise to $140/barrel. Then, that high oil price, ZIRP again, a lack of other creditworthy borrowers (the great recession, remember?), and some energy policy changes caused a powerful incentive to lend (banks) to oil companies, drillers, frackers, causing the fracking boom, which in turn busted in 2014-2015 when oil prices dropped below $30 from all the over-drilling and overproduction. It is very plain and simple. One wildcard was that Saudi Arabia got worried that the US would not need them anymore and decided to keep pumping even at low prices. Saudi Arabia did not frack, so could have reduced production and resumed later, but instead they went mad with pumping to “keep market share” and beggar the competition.

    So yes, this was all caused by ZIRP and liquidity support by the FRB, but with some other factors in play as well. FRB will reduce interest rates, but cannot (and will not!) control where all the new debt goes. They cannot decree, “ok, bankers and wall st, remember, this essentially free debt should only go into re-inflating the housing market”.

    As with Kary, I am not going to have a discussion with you about this. Readers can read the above, and that ought to be sufficient.

  118. 118
    Sam Hunter says:

    Kary – You have yet to answer my question. I will ask for a third and final time. If you do not answer, I will assume you have admitted defeat like the useless bag of skin you are.

    Question:
    If you are such a knowledgeable real estate expert, who is not wrong often, WHY did you buy a house almost all cash at the NEAR TOP of the market?

    Certainly someone as wise as you would have waited for the bubble to pop? And please do not answer with things like, a house is not an investment — so timing does not matter, or my wife forced me too, please don’t blame your wife Kary.

    I mean an expert like you should have seen the biggest crash in the housing market right? You missed it you old geezer, just admit it!! Funny you have been so traumatized by your failures in real estate that you continue to shill that a bubble is about to pop.

    Kary answer the question.

    And for all those who are new and don’t know who Kary is, just refer to this picture.

    http://imgur.com/a/ewDVt

  119. 119
    Justme says:

    Another data point: 56% of commercial bankruptcies so far in 2016, among big companies (big enough to issue bonds), were in energy companies. Overall, commercial bankruptcies up 26% yoy in Aug 2016.

    http://wolfstreet.com/2016/09/07/u-s-commercial-bankruptcies-soar-great-debt-unwind-beneath-surface/

    Generally speaking, this blog could benefit from more readers getting out of their Seattle cocoon and understand what is going on in the world. Things are not going well, by any stretch of the imagination. Seattle is NOT special.

  120. 120
    StupidLifeDecisions says:

    By Justme @ 118:

    Another data point: 56% of commercial bankruptcies so far in 2016, among big companies (big enough to issue bonds), were in energy companies. Overall, commercial bankruptcies up 26% yoy in Aug 2016.

    http://wolfstreet.com/2016/09/07/u-s-commercial-bankruptcies-soar-great-debt-unwind-beneath-surface/

    Generally speaking, this blog could benefit from more readers getting out of their Seattle cocoon and understand what is going on in the world. Things are not going well, by any stretch of the imagination. Seattle is NOT special.

    I so agree with your last paragraph.

  121. 121
    Doug says:

    RE: Justme @ 119 – Do you think your bearish position generally stems from outrage over wealth inequality?

  122. 122
  123. 123
    Doug says:

    RE: Justme @ 122 – Of course not. My bullishness is nothing more than a product of the fundamentals; low rates, low supply, strong demand.

    How we got here is getting a little too political for me. I just want to understand what the current environment means for assets — up or down.

    The only reason I asked is because I’ve noticed that your posts are generally less about material economic indicators and more you just howling at the moon.

    Trust me, I want nothing more than a bear to appear here and give me an actual reason to change my position.

  124. 124
    wreckingbull says:

    RE: Sam Hunter @ 118 – Maybe he did not want to rent? I sold in 2006 and rented until 2011. It was a great financial move, but it was a big pain in the ass. I’m not entirely sure I would do it this way again.

  125. 125
    Doug says:

    RE: wreckingbull @ 124 – Phenomenal timing, though! Congrats.

    What does your crystal ball say this time?

  126. 126
    wreckingbull says:

    RE: Doug @ 125 – My primary concern today is when the baby boomer generation realizes they don’t have near enough money for retirement, then try to unload their highly appreciated homes to a risk-averse generation drowning in student loan debt. When and how will this play out? Your guess is as good as mine.

  127. 127
    StupidLifeDecisions says:

    By wreckingbull @ 124:

    RE: Sam Hunter @ 118 – Maybe he did not want to rent? I sold in 2006 and rented until 2011. It was a great financial move, but it was a big pain in the ass. I’m not entirely sure I would do it this way again.

    I want to know why it was a huge pain in the ass. You had golden timing, I’m so jealous.

  128. 128
    Doug says:

    RE: wreckingbull @ 126 – I can see that happening. What will be your sell trigger, though? As simple as rising inventory?

    What was your sell trigger last time?

  129. 129
    erik says:

    RE: StupidLifeDecisions @ 127
    Because Wreckingbull is 90. It’s difficult to move at that age after you have been writing computer code for money at a desk for the past 30 years.

    Seriously though, computer monkeys like wreckingbull complain about everything. They are lazy and they only know how to write code for cash.

  130. 130
    StupidLifeDecisions says:

    By erik @ 129:

    RE: StupidLifeDecisions @ 127
    Because Wreckingbull is 90. It’s difficult to move at that age after you have been writing computer code for money at a desk for the past 30 years.

    Seriously though, computer monkeys like wreckingbull complain about everything. They are lazy and they only know how to write code for cash.

    I just got done reading an article about how silicon valley companies don’t want to hire anyone over 40. Maybe age discrimination in the IT industry will make it’s way up north to the seattle area, just like overpriced housing prices did.

  131. 131
    erik says:

    RE: StupidLifeDecisions @ 130
    Yeah, IT seems like one of those fields in which you gotta really keep up with or you get left behind like Wreckingbull did. I do aerospace stuff using stress analysis tools and tools to do computer design with. It seems like the more experience people have in aerospace, the better they get at the job. The tools change slightly, but for the most part things stay the same. This is partially why I don’t want to go to a company like Facebook. I want to get better and better at the job as opposed to getting pushed out as Wreckingbull did.

  132. 132
    Doug says:

    Where oh where has The Tim gone?

  133. 133
    whatsmyname says:

    RE: Doug @ 132 – He must be really busy. The NWMLS numbers are out. KC new listings are up, but less so than sales. So YOY inventory is down 2%; pending sales up 7.5%; closed sales up 8.3%; and prices up 10 %. Median prices are down $5,000 for the month. But, they’re up $50,000 for twelve months.

    If you’re hooked on Seattle proper, the median is $625,000, and the months of supply is less than one.

  134. 134
    Cap''n says:

    Someone probably already posted this. I just couldn’t stomach reading most of the comments to determine whether I am being redundant.

    http://www.rsir.com/blog/category/china-market/

    Funny how the negatives of foreign investment in Vancouver are noted at the same time they trumpet how they will make sure the same thing happens here. It reminds me of many extractive industries. Sure, it’s bad for everyone in the long run, but we can make money now. So, you know, there is demand and stuff. We are just doing what the market and our economy needs right now……

  135. 135
    Justme says:

    RE: Doug @ 123

    >> My bullishness is nothing more than a product of the fundamentals; low rates, low supply, strong demand.

    None of those factors are fundamentals. They are all factors engineered by the central bank. Low interest rates are a manipulation by the FRB, at great costs to pensioners and savers. Further, low supply resulted from FRB allowing the top 0.1% to buy the foreclosed homes of the bottom 90% using cheap funds and loans that were made possible by bondholders selling (via banks) the foreclosed loans (bad bonds) to the FRB. This is all that TARP/TALF and additional temporary repo-type facilities allowed banks to do, followed by QE, which was an even greater swindle where FRB would buy (or rather accept as reserves, which is how FRB “buys” things) these very same bad bonds at highly inflated prices. Blackrock and many other hedgefund-type companies made a killing by turning around and buying said foreclosures at a huge discount relative to the peak bubble prices. And they could count on the FRB to suppress interest rates so that house prices would rise again after the privileged few bought a huge chunk of them.

    The top 0.1% now own and rent out the previously foreclosed homes, and are largely unwilling to sell them, hence the low supply (A.K.A low inventory) problem, see reference (1),

    Finally, we reached a point were Wall St and the top 0.1% again need to involve the middle class (what is left of it) to inflate asset prices (incl house prices) even further, so they are pushing FHA, VA, FNM , FRM and others to make or guarantee more risky loans again (since about 2014 or so).

    The above is just a gigantic theft of assets from the bottom 90%. The housing market is not the least bit based on fundamentals, and has not been for many years, if ever. Fundamentals are wages and real income of people that need to buy houses. Wages have been in the crapper since 2008-2009, and indeed stagnant since the 1970s.

    Doug, do you not care at all about the massive fraud and immorality of the whole bubble/foreclose/steal/reflate scheme? You look at “indicators”, you say, indicators that are manipulated and engineered to death at great expense of the average man. Why not look at what is really going on, and whether it is sustainable. When the current bubble bursts, the millenials will not have forgotten, and this time they WILL bring the proverbial pitchforks to the street protests.

    (1) Bill McBride of Calculated Risk thinks that low inventory last several years is mainly caused by “investors” that bought up the foreclosed homes while awaiting reflation by the Fed and at the same time extracting rents. He says so in the podcast, you have listen to it.
    http://www.calculatedriskblog.com/2016/09/my-interview-with-barry-ritholtz.html

  136. 136
    Anonymous Coward says:

    By Justme @ 135:

    RE: Doug @ 123

    >> My bullishness is nothing more than a product of the fundamentals; low rates, low supply, strong demand.

    None of those factors are fundamentals. They are all factors engineered by the central bank.

    Tell me again how the fed engineered, what was it, ~4000 (supply) new homes sold in King county in 2015 for 35,000 new residents (demand)? Your comments might imply that the fed has made the Seattle market more bullish than it would otherwise be, but the fundamentals point to a bullish market for at least the near future.

  137. 137
    ESS says:

    By Cap”n @ 134:

    Someone probably already posted this. I just couldn’t stomach reading most of the comments to determine whether I am being redundant.

    http://www.rsir.com/blog/category/china-market/

    Funny how the negatives of foreign investment in Vancouver are noted at the same time they trumpet how they will make sure the same thing happens here. It reminds me of many extractive industries. Sure, it’s bad for everyone in the long run, but we can make money now. So, you know, there is demand and stuff. We are just doing what the market and our economy needs right now……

    ——————————————————————————————————————————-

    But they left out the most important factor in the above cited article – the fact that Seattle has the same cheerful winters as Vancouver has.

    And they are also wishing to move here from other parts of the US as indicated below:

    http://www.seattletimes.com/business/real-estate/everyone-wants-to-move-to-seattle-no-one-wants-to-leave-study-confirms/

    Need to knock down a few more single family homes in Ballard and replace them with four plexes for all those new folks that wish to move here to also enjoy our winters.

  138. 138

    By Justme @ 115:

    RE: Kary L. Krismer @ 105

    I’ll leave it at that, Kary. I think readers can make up their minds by themselves. I think the fact that 82% of revenue was used for debt service would convince most people.

    LOL. That’s because most people have a 9th grade reading level or below.

    That you don’t know what that means, even after it is explained to you, that says a lot.

    Seriously, I don’t even know what you think you are saying. Are you suggesting that these companies pump oil at a loss for so long that they have to incur a lot of debt to cover their activities?

  139. 139

    By David B. @ 116:

    By Kary L. Krismer @ 106:

    And in so doing they also managed to wipe out a smaller competitor (Haggens). Not exactly a situation where you would expect to see declining prices.

    Haggen mostly wiped themselves out, by taking on a rapid expansion that they were incapable of properly managing (or even negotiating the purchase terms of).

    I would tend to agree. Locally they bought a very crappy location that was very run down and then they tried to sell product at premium prices. There was another store further away that was better, so I don’t know what the mix was, but in general I suspect they were buying less desirable stores/locations. Probably the worst sale of retail space since the state sold off its liquor stores.

    I wasn’t necessarily trying to blame the feds for causing it, as much as noting it was a side effect.

  140. 140

    By Sam Hunter @ 118:

    Kary – You have yet to answer my question. I will ask for a third and final time. If you do not answer, I will assume you have admitted defeat like the useless bag of skin you are.

    Question:
    If you are such a knowledgeable real estate expert, who is not wrong often, WHY did you buy a house almost all cash at the NEAR TOP of the market?t

    Sam, you’ve finally suggested a situation where you think I was wrong. Too bad you’re wrong about that. If only you understood something about real estate or even financial matters in general.

    I’ve answered that many times before. I had a house which I (really my wife) wanted to move from. I bought a better house, but only after researching my options (e.g. investing in stocks, rental housing, bonds, keeping the other house as a rental, etc.). I picked buying and then selling. With 20/20 hindsight I should have picked bonds and continued to live in the old house, because the value of bonds exploded with the declining rates. I could have done that, but my wife would not have been happy.

    But really, read post 91 above to see the results. I did really well (not to mention that the old house declined in value more than what the new house did, even though it was worth less). I never was planning on selling before now anyway, and since renting is not a lifestyle I would ever want. I’ve owned my home since about 1978, so why would I change and start paying rent when I could instead live rent free?

    I never was one who thought that real estate could only go up, which was one of the reasons we sold the old house. The primary reason to sell it though was to avoid ever having to calculate tax basis on a house that had been remodeled and to take advantage of the $500,000 exemption. The government doesn’t give you deals like that all the time.

    So wow, if I were wrong I’d love to be wrong like that a few more times! If you understood financial matters you’d understand that.,

  141. 141

    By wreckingbull @ 124:

    RE: Sam Hunter @ 118 – Maybe he did not want to rent? I sold in 2006 and rented until 2011. It was a great financial move, but it was a big pain in the ass. I’m not entirely sure I would do it this way again.

    It could be a huge PITA!

    First, if you want to paint a room a certain color or make other changes you have to ask permission.

    Second, you have a third party that has the right to give you notice and come into your house to inspect, etc.

    Third, they might decide to sell (or get foreclosed), forcing you do move again.

    But ignoring all that, let’s say I did want to buy a place in 2011. The bargains were mainly bank owned properties, and most of them were hardly desirable as to style and location (ignoring condition). There were some decent short sales, but buying a short sale as a renter is a bit difficult. And in any case, by 2011 I would have had to found an equivalent place for about $100,000 less just to make up for the earnings I would have had to earn to pay rent. That would have been extremely unlikely.

    So Sam’s idea I did something “wrong” is just ignorant fantasy.

  142. 142

    By Doug @ 132:

    Where oh where has The Tim gone?

    In case you haven’t noticed, Tim used to write a new piece about 360 days a year. Now he’s down to 3-4 a month.

    Perhaps he’s come to the same point I did when in January 2015 I quit tracking the data because I realized how pointless it was? With the possible exception of inventory/absorption rate, it really doesn’t tell you squat. The market is just as unhealthy today as it was in 2011, but that’s difficult to determine from the numbers, particularly the pricing data, which is all C-S is.

  143. 143
    Sam Hunter says:

    RE: Kary L. Krismer @ 140

    Kary — Love the huge long winded response. Must have been a lot to type for those old, arthritic fingers.

    What your text boils down to is, I am such an expert in real estate but my wife didn’t want to listen to me, probably because she doesn’t respect you, so we bought at the top of the market. Blah blah sure it turned out well since you have held on for over ten years. But just imagine if you were the smart real estate investor that you claim to be… you would have bought a just two years later and made hundreds of thousands of dollars. But of course for an old man like you raiding social security you don’t have to worry about an extra cool 500K.

    Nice try Kary. For all new people who don’t know about Kary: Please do not listen to him. He is chronically wrong and does not know what hes talking about. I sincerely believe he has dementia. In fact if you did the exact opposite of him you would be a millionaire. I wish Kary made the right moves because maybe it would have helped his confidence and poor self esteem. This would probably lead to him being able to please his very unsatisfied wife. Maybe then he would be a respectful and knowledgeable man. Instead, due to his poor real estate moves, he is a poor, balding, loser with a limp dick that cannot please his wife. This has created much anger that he projects on the online community of Seattle Bubble.

    Sad.

  144. 144

    By Sam Hunter @ 143:

    But just imagine if you were the smart real estate investor that you claim to be… you would have bought a just two years later and made hundreds of thousands of dollars.

    Wow, I just went through why that wouldn’t have been possible. Are you illiterate?

    BTW, one thing you may not realize is that by buying and then selling I only increased my investment in real estate by about $150,000. Not a huge deal.

    You really need to try a bit harder to find a situation where I was wrong, rather than posting something that has been gone over many times. I post a lot. It shouldn’t be that difficult to find something I said that was wrong (that I haven’t already corrected, such as that Ray probably won’t have to pay discharge of indebtedness income on accrued interest because that is likely deductible).

    You’re the one who has claimed I’m “always” wrong. Post an example. Posting a transaction that has benefited me by over $200,000 hardly counts as my being wrong, particularly when it was structured to deal with a temporary market downturn.

  145. 145

    RE: Sam Hunter @ 143 – As to your second paragraph, you’re the one with self confidence issues. That’s why you’re in Internet troll. But the difference between you and me is I can say things about you (e.g. you’re unintelligent, uneducated and ignorant) and it hurts you, because you know it’s true. It’s not just something I make up. And you know that.

    But thank you for helping to make this site worthless. I hope that makes you feel better about your pathetic little life.

  146. 146
    Blurtman says:

    Wow! Lots of tension and anger here. Why not kick back with a sixer of Bud and watch Walker, Texas Ranger re-runs and chill?

  147. 147
    Justme says:

    RE: Kary L. Krismer @ 138 – ‘

    >>Seriously, I don’t even know what you think you are saying. Are you suggesting that these companies pump oil at a loss for so long that they have to incur a lot of debt to cover their activities?

    The reader may notice that I neither “suggested” nor wrote anything of the sort.

  148. 148

    By Justme @ 147:

    RE: Kary L. Krismer @ 138 – ‘

    >>Seriously, I don’t even know what you think you are saying. Are you suggesting that these companies pump oil at a loss for so long that they have to incur a lot of debt to cover their activities?

    The reader may notice that I neither “suggested” nor wrote anything of the sort.

    Well how do you think the debt is connected to whether they sell oil at below their cost of pumping it? I’m not seeing the connection.

  149. 149

    Here’s an interesting read. I’m not sure at what point Ocwen bought these loans (they were not the original lender), but they had two of their properties foreclosed out by a water district and then failed to redeem in time, losing any ability to foreclose against the property.

    http://www.courts.wa.gov/opinions/pdf/735489%20.pdf

    As I mentioned before, Ocwen is one of the worst banks, if not the worst bank, when it comes to selling property. Apparently they also aren’t very good at keeping them! ;-)

  150. 150
    Justme says:

    RE: Kary L. Krismer @ 148

    The reader may note that Kary is again disagreeing with something I did not say. The reader may also note that Kary seems to have ignored or missed the meaning of the word “overall”, which you may search for in this thread.

  151. 151

    RE: Justme @ 150 – Go back and read post 92. The issue being discussed is when they quit pumping a specific well. It addresses variable costs, interest and sunk costs.

    I disagree with your claim that it doesn’t cost that much to pump, but my point has always been absent special circumstances (e.g. losing the right to pump if they quit) that they will quit pumping a well when it appears the costs of pumping exceed the revenue they will receive from that particular well. I’ve never tried to address whether the company is profitable overall. That’s rather irrelevant until the company actually does file bankruptcy or otherwise runs out of funds.

    But to be clear, in post 92 I said:

    You do bring up an interesting point. At what point does the owner of a producing well shut it off? They’re not going to pump long if it costs them $30 to pump $29 worth of oil. But when they determine their costs are the including any sunk costs or interest on loans that paid for those sunk costs? I would suspect that some include the interest but few include the sunk costs of drilling the hole. But in any case it doesn’t work as you suggest. They don’t continue pumping just because they spent money to drill a hole.

    In post 102 you quoted the last sentence of that and said:

    It baffles me that you find so much to disagree with here. Yes, oil companies often DO continue pumping because they spent money to drill a hole. Especially if large sums of money were borrowed and spent on drilling, which was the case in the post-2010 fracking boom. Companies need to pay back the loans, and in that situation, pumping (the physical act of which is not that expensive) is their choice, even if they are not making a profit overall.

    So you responded apparently thinking that sunk costs affect current production decisions (they don’t) and then bringing in the overall profit of the company into the discussion by using the term “overall.”

    So whatever. I’m looking at the profitability of the individual producing well to determine when that well will be shut down. You’re looking at the profitability of the entire company, which I maintain is irrelevant unless they run out of funds or file bankruptcy. And perhaps we have a factual difference of opinion on how much it actually costs to pump oil out of the ground. But in any case, you’re addressing something entirely different that the point I was making.

    So in conclusion, the reader may note that Justme changes the topic so that he can disagree with something someone else says.

  152. 152
    Justme says:

    RE: Kary L. Krismer @ 151

    >>you’re addressing something entirely different that the point I was making.

    >>the reader may note that Justme changes the topic so that he can disagree with something someone else says.

    Uh, hello, I *started* the discussion on pumping decisions. That makes it my topic. It is you that is changing the discussion, by disagreeing with something that I did NOT say.

  153. 153
    Justme says:

    RE: Anonymous Coward @ 136

    >>Tell me again how the fed engineered, what was it, ~4000 (supply) new homes sold in King county in 2015 for 35,000 new residents (demand)? Your comments might imply that the fed has made the Seattle market more bullish than it would otherwise be, but the fundamentals point to a bullish market for at least the near future.

    Nice attempt at sarcasm, but haven’t you just made a massive blunder by assuming that these 35,000 new residents needed to move into NEW HOMES? Hint: You forgot about apartment construction, and also that a good many of the new residents are children born, including many born to existing residents, and will not be buying nor renting for many years yet. I’m having a Deja Vu moment here, did I not already correct your misconceptions once before? Ah, yes I did. Here it is.

    https://seattlebubble.com/blog/2016/06/07/nwmls-strong-demand-pending-sales-hit-time-high/#comment-255832

  154. 154

    RE: Justme @ 152 – But I was clearly addressing variable costs and what the company might consider a variable cost. That you don’t understand what factors should be considered in “pumping decisions” is not really my problem.

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