›

Will we see Jingle Mail in Seattle?

lannypoffolannypoffo
edited January 2008 in Seattle Real Estate
With WAMU under investigation by the SEC for inflated home appraisals, I found this new term Via Calculated Risk interesting -

"Jingle Mail" - mailing the keys to the lender when the homeowner is upside down in their mortgage.

Articles about changing attitudes toward it being socially acceptable for middle class homeowners to walk away from their upside down mortgage indicate that at least for some lenders - the artificially appraised prices are starting to backfire:

Calculated Risk Blog

And

Krugman comments

So question is - will we see Jingle Mail in Seattle? If so any guesses as to when? (Or for those in the know, is it already starting to happen here?)

Comments

  • lannypoffolannypoffo
    Looks like Krugman has been been talking about it for a while now...

    Krugman GoogleTalk on th housing market crisis
  • rose-colored-coolaidrose-colored-coolaid
    Here's a key statement by Paul Krugman (more or less his quote)
    If prices drop 30%, which is my estimate, then 20 million people will have negative equity.

    That's 40% of all homes by the way...and coincidently, it's focused heavily (entirely?) on the coasts.
  • MarkorMarkor
    The effect of that could be upward pressure on house prices, due a big chunk of that 40% of homeowners forestalling moves, significantly lowering supply, since they'd either have to bring lots of cash to the table (unlikely they have it or would part with it) or trash their credit. The net effect could be that price falls are cushioned due to the negative equity factor. That may largely explain why house prices are historically sticky on the way down.
  • wreckingbullwreckingbull
    The effect of that could be upward pressure on house prices, due a big chunk of that 40% of homeowners forestalling moves, significantly lowering supply

    Um, wait a second here. If someone is not selling, that same person.....drum roll please.... IS NOT BUYING.

    Stick with your Bellevue Square Shoppers Will Buy Every Unsold Condo theory, it was more entertaining. That theory only slightly edges out your Boeing Outsourcing High-paying Jobs to Low-paying Jobs Increases Home Prices theory. But please keep the posts coming...their entertainment value cannot be beat.
  • MarkorMarkor
    wreckingbull wrote:
    Um, wait a second here. If someone is not selling, that same person.....drum roll please.... IS NOT BUYING.
    It's not that simple. When people don't sell & buy, it can significantly change the supply / demand ratio. Let a thousand homeowners sell & buy. Let there be 100 first-time homebuyers. Let there be 50 new houses. Then supply is (1000 + 50) = 1050 and demand is (1000 + 100) = 1100. The supply / demand ratio is (1050 / 1100) = 95% (almost every buyer can get a house). Now let all the homeowners keep their houses. Now the supply / demand ratio is (50 / 100) = 50% (only half of the buyers can get a house). A lower supply / demand ratio puts upward pressure on house prices (which could still fall due to other factors).
    Stick with your Bellevue Square Shoppers Will Buy Every Unsold Condo theory, it was more entertaining.
    I recently saw my first Bravern ad. That's one of the luxury condo towers being built in Bellevue. Sure enough, the ad showed a lady with white hair but a 40s-looking face (plastic surgery?) and silk robe putting on makeup, perhaps in preparation for her visit to Nieman Marcus downstairs ("the only one in the Pacific Northwest!").
    That theory only slightly edges out your Boeing Outsourcing High-paying Jobs to Low-paying Jobs Increases Home Prices theory.
    If a million $20/hour jobs were added to Seattle tomorrow, it's a safe bet that rents and house prices would skyrocket and the new employees would live hand-to-mouth.
  • EconEEconE
    Markor wrote:
    It's not that simple. When people don't sell & buy, it can significantly change the supply / demand ratio. Let a thousand homeowners sell & buy. Let there be 100 first-time homebuyers. Let there be 50 new houses. Then supply is (1000 + 50) = 1050 and demand is (1000 + 100) = 1100. The supply / demand ratio is (1050 / 1100) = 95% (almost every buyer can get a house). Now let all the homeowners keep their houses. Now the supply / demand ratio is (50 / 100) = 50% (only half of the buyers can get a house). A lower supply / demand ratio puts upward pressure on house prices (which could still fall due to other factors).

    let's rework those numbers but switch the new houses and new numbers around. 50 new buyers and 100 new homes. (probably closer to the truth anyways)

    1100 houses and 1050 buyers...1100/1050=whatever.

    going further with your calculations...(where all the homedebtors keep their house)

    100/50=2...ooops...2 houses for each buyer? Sounds a little closer to reality to me.
    Markor wrote:
    I recently saw my first Bravern ad. That's one of the luxury condo towers being built in Bellevue. Sure enough, the ad showed a lady with white hair but a 40s-looking face (plastic surgery?) and silk robe putting on makeup, perhaps in preparation for her visit to Nieman Marcus downstairs ("the only one in the Pacific Northwest!").

    priceless! In a demonstrably "stoopid" way!
    Markor wrote:
    If a million $20/hour jobs were added to Seattle tomorrow, it's a safe bet that rents and house prices would skyrocket and the new employees would live hand-to-mouth.

    I guess some of us started hitting the egg nog a little earlier today!

    What would happen if those million jobs were circus clowns? Wouldn't they just all pile back into their car?

    Markor...you certainly should win a prize for the most ridiculous statements made on SB. Maybe we could have a ceremony! We could call it the "Losh Awards" I've worked with "Special Ed" kids that had more developed critical thinking skills.
  • MarkorMarkor
    My critical thinking skills have served me well. You're right that the supply / demand ratio can swing the other way; all I said is that it can be significantly affected.

    I had said that Bellevue could also become a wasteland, with unfinished buildings and empty condos.
    What would happen if those million jobs were circus clowns? Wouldn't they just all pile back into their car?
    Probably. And if the jobs weren't mobile, the new recruits would just hunker down and eat rice & beans every day.
  • AlanAlan
    I know that was a hyperbolic example -- sort of like the thought experiment of an earthquake creating several new square miles of real estate on the eastside. That being said...

    There are too many opportunities across the country for $20/hour jobs. If something caused a million jobs like that to suddenly be created here, people would refuse to move to the area to eat rice and beans. Many of the people who leaped without looking would move away once they figured out the situation. Those new jobs would be forced to pay more to attract people. And yes, increased housing demand would raise housing prices.
  • MarkorMarkor
    Yeah it was an extreme example, just to show that low-wage jobs can increase house prices.

    I don't disagree with your synopsis. Then again if the $20/hr jobs required no skills, up to a million people in the Seattle area who are making less than that now would get a raise. People wouldn't necessarily need to move here. Some kids would even drop out of school to work, if only at the minimum wage jobs that got bumped up to $15/hour.
  • littlejilmlittlejilm
    A homeowner who can't sell his house tells the L.A.Times, "Foreclose me. ... I'll live in the house for free for 12 months, and I'll save my money and I'll move on."

    http://latimesblogs.latimes.com/laland/ ... point.html
Sign In or Register to comment.