The Challenge Is Prices Got Stupid
The Daily Astorian reports from Oregon. “An increasing number of homeowners in Clatsop County are falling behind on their mortgage payments and opting to sell their homes to avoid foreclosure. On the North Coast…Barbara Maltman, a Gearhart real estate agent said she has sold several local homes that were in foreclosure or in danger of being foreclosed. ‘We are seeing a lot of people coming through who need to sell their home because they can’t make payments and they only have so much time before it goes into foreclosure,’ she said.”
“Joe Schulte, VP of Compass Community Bank in Seaside, said subprime loan programs were available in communities all over the country, including the North Coast, though for the most part local banks were not the ones offering them. ‘They were absolutely active in this area. No doubt about it,’ he said. ‘They weren’t discriminating based on geography. They were national programs.’”
“Drew Wilkens, senior VP of residential lending for the Bank of the Pacific of Aberdeen, Wash., said the so-called predatory lenders have closed up shop since the housing bubble burst. But while they were in business, they made life difficult for home buyers and responsible lenders by tricking people into thinking they could offer a better deal than the market could realistically provide, he said. ‘We’re all glad those people have gone away,’ he said.”
“Wilkens saidhis department is facing new challenges as the loan criteria change each day. ‘Loan officers have to be ahead of the curve,’ he said. ‘There’s so many changes, you really have to be on top of it. A good loan officer is doing a heck of a lot more research than they were a year ago.’”
The Oregonian. “Marty Ray Folwick, the Portland man who put together more than 70 fraudulent mortgage deals during the housing boom, pleaded guilty Thursday to four counts of bank fraud, wire fraud and money laundering. Folwick worked as a real estate loan officer. He admits to setting up bogus transactions with a series of straw buyers. He submitted falsified loan applications to lenders and took kickbacks out of the loan proceeds once the deals were done.”
“‘My guy is a fall guy for the whole subprime mess,’ said Ernest Warren Jr., the Portland attorney representing Folwick. ‘But he takes responsibility for the false documents he submitted.’”
The Idaho Press Tribune. “When it comes to buying a new refrigerator, car, home or securing a student loan, Idahoans have begun to feel the credit crunch. ‘Our market here in the valley is comparatively not so bad,’ Randy Neary, president of the Snake River Home Builders Association, said. ‘Average home appraisals in the area are still only feeling the effects of the first to second round of foreclosures or stress sales, whereas some parts of the country are in about the fourth round now.”’
“What’s happening is so many people are short selling homes and losing homes in foreclosures,’ said Robert Pilote, a local homebuilder and past president of the Idaho Building Contractors Association, ‘and that’s affecting the price of houses on the same street that aren’t in foreclosures.’”
“‘There’s a lot of people out there that need to sell everything from guns to coins to full estates and real estate. And lately we’ve been flooded with a lot of homes and have seen a big increase in folks trying in need of selling their homes,’ said Kevin Seward, auctioneer in Nampa.”
The Seattle PI from Washington. “Around the region, families are starting to tote up the bill of just how much the Washington Mutual meltdown is going to cost them. The sums will, for many families dependent upon WaMu paychecks or WaMu investments, or both, be daunting and depressing. The region can’t easily go find itself another employer with 4,300 local jobs.”
“Notes an employee by e-mail, ‘Most floors are half empty as it is after all the layoffs; after the next purge, it will seem even more like a ghost town.’”
“A year ago, WaMu stock was selling for just under $36 a share. Now? It’s about 14 cents. Some people bought the stock in recent weeks on a wildly speculative gamble, on which they lost. But others bought and held WaMu stock for years (a sample quote from a reader: ‘I lost about 35K, and this portfolio was for my kids to go to college in 10 years’).”
“Not only will many lose their jobs, as one employee noted, ‘The people I feel really bad for are the ones that drank the company Kool-Aid and loaded up their 401(k)s in WaMu stock. I think those are the ones that will have a very hard time recovering from this.’”
“Just how much of the JPMorgan Chase acquisition was done on the fly was apparent during a conference call Thursday that Charlie Scharf, JPMorgan Chase’s head of retail operations, had with employees. One WaMu employee, noting the amount of information-technology work ahead to merge the two banks’ computer systems, raised the issue of Project Restart (the name of the outsourcing effort), and asked, ‘Is that about dead?’”
“While other employees in the meeting room laughed at the phrasing, Scharf was a bit perplexed. ‘What is Project Restart?’ he asked. ‘I’m the only one who’s not laughing.’”
“Responded the employee, ‘We’re not laughing either.’”
The Seattle Times from Washington. “Prices continued their yearlong decline in King County, the Northwest MLS said Monday. Sellers are dropping their prices, said Melanie Smith, a John L. Scott associate broker who lives and works in Magnolia. Queen Anne and Magnolia experienced one of the steepest year-over-year declines in the county last month, MLS figures show.”
“‘Our prices are $40,000 or $50,000 or $100,000 lower than they were a year ago,’ Smith said. ‘I have a neighbor who dropped his price $150,000 over 80 days.’”
The News Tribune from Washington. “Home prices in Pierce County continued to fall in September, dropping to $241,950, a 10.4 percent decline from September 2007. Home sales in Pierce County and around the country have been falling for the last year. For the four-county Puget Sound region (King, Snohomish, Pierce and Kitsap counties) the median price for last month’s sales dropped from $349,950 to $324,000, a decline of 7.4 percent.”
“Buyers waiting longer for the market to bottom out could be making a mistake, said Virgil Wells, president of the Tacoma-Pierce County Association of Realtors.. ‘I think we just need to get the media to paint a positive picture,’ said Wells. ‘The fact is, this is the best time for buyers to buy since 1996. Inventory is high, prices have decreased and interest rates are low.’”
The Olympian from Washington. “South Sound apartment vacancies remain tight and rents continue to rise, according to a fall survey of the Puget Sound apartment market. Because the housing market is slower, more higher-end houses that can’t be sold are becoming rentals and pushing average rents higher, said Tim Seth, president of the Washington Landlord Association.”
“Rich Marlatt of Olympia, who is selling his condo, plans to move into Polo Club once it sells, he said. After that, he plans to rent for a period before getting back into the housing market.”
“Denise Bach moved to the area two years ago and chose an apartment because she is so busy. In time, though, she would like to own a home again, preferably on East Bay Drive in Olympia. Bach was a former homeowner in Northern California and said she will continue to watch home prices fall further before she jumps into the market again.”
“‘Let’s get the house I want and be patient,’ she said.”
The Peninsula Daily News from Washington. “Mortgage woes continue to afflict Northern Olympic Peninsula homeowners as Clallam and Jefferson counties see double-digit increases in foreclosed homes over the last year. Kathy Miller, recorder for the Clallam County Auditor’s Office, said she began to notice a sharp increase in foreclosure filings last summer.”
“‘This isn’t the good ol’ days,’ she said.”
“Terry Roth, a private auctioneer in Clallam County, said everyone on the economic scale is being affected. In June, he said he posted a piece of property for foreclosure with a $4,300 per month monthly mortgage payment. This year he has also posted a piece of property for foreclosure in Sequim assessed at $880,000. A home in Port Townsend went back to the loan beneficiary for $607,500 in July.”
“Michael Castle of Port Angeles lost his home to foreclosure last month. Castle said he and his wife, Rebecca were able to meet the mortgage payments until February. The home went to auction on Aug. 22. It did not sell, and therefore went back to Ocwen financial corporation as the beneficiary.”
“Castle, Rebecca and 20-year-old son Michael were told to vacate their $210,000 home by Sept. 12. Castle said his wife works as a home health nurse in Olympia and will likely have a place to stay at Providence Hospital. He is unable to work due to a back injury, he said.”
“‘If I have to sleep in my van by the side of the road, I will,’ Castle said with a laugh. ‘I can laugh at it now, because what else can you do?’”
The Nanaimo Daily News from Canada. “Property values are dropping all over Vancouver Island, with the median house prices down anywhere from $3,000 in Nanaimo to $32,000 in the Cowichan Valley in September, compared to a year ago, based on the most recent statistics from the Vancouver Island Real Estate Board.”
“Falling real estate values are what In August University of B.C. economist Tsur Somerville predicted falling values, but they are now exceeding his expectations. ‘What I know about Nanaimo can be fit in one paragraph, but Nanaimo shouldn’t be exempt from all the fundamental underlying trends,’ Somerville said.”
“Sellers should lower their expectations, said Jim Stewart, a VIREB director. ‘The challenge is prices got stupid over the last couple of years,’ said Stewart. ‘If the market goes back more, even if it drops 10%, are we hard done by? Nope.’”
The Calgary Herald from Canada. “‘Calgary’s housing market has yet to rebound from the correction that began in the latter half of 2007,’ said the Re/Max Upper-End Report. ‘The overall supply of homes listed for sale is still several thousand units ahead of levels reported in 2004 and 2005. Fortunately, speculators have vanished from the landscape.’”
“Other highlights of the Re/Max report include: The priciest condominium listed for sale on MLS is priced at $14.8 million in Greater Vancouver — reduced from $18 million earlier this year.”
The Vancouver Sun from Canada. “The market for luxury homes ‘is a separate market with its own factors,’ Re/Max’s regional executive VP Elton Ash said in an interview. What’s been pushing the positive numbers in part is pent-up demand. In 2006 and 2007, there was very little inventory as people snapped up all homes, even the higher-end ones, Ash said.”
“However, the Re/Max report said that in south Surrey, many high-end properties are overpriced and have been on the market for more than a year.”
“Elsewhere in the country, sales of high-end homes in Edmonton — valued at more than $850,000 — dropped 64 per cent. But in Regina, the number of luxury home sales, with prices of more than $500,000, jumped from 17 to 69, or 306 per cent.”
“On Thursday, we asked you whether it’s only a matter of time before Canada’s housing market bubble bursts. Two-thirds of respondents — 66.27 per cent — said the bubble will burst.”
The Leader Post from Canada. “The housing market in Regina was at a frenzied pace earlier this year, but during the third quarter, prices have cooled down and flattened out, says a report by Royal LaPage Realty. ‘The listings are dramatically up and the buyers, for the most part, are sitting on the sidelines, waiting to see what’s going to happen,’ said Mike Duggleby, broker-manager for Royal LePage Regina Realty.”
“Regina still posted high year-over-year price appreciations. The Queen City (34.1 per cent) was only second to Saint John, N.B. (54.4 per cent) with regards to the increased price of detached bungalows from the third quarter in 2007. Detached bungalows are now selling for an average of nearly $279,000, compared to $208,000 last year in Regina.”
“‘Condominiums have become the entry level (housing purchase) of choice. Go back to early 2007, you could buy a three-bedroom townhouse condo for $150,000. That’s almost doubled in some cases (now),’ Duggleby said.”
“Since March, the housing market has been relatively static, as bidding up and multiple offers on a property are rare occurrences. Buyers are holding out in hopes of a significant price reduction on the market, but Duggleby doesn’t see a price reduction happening.”
“‘It won’t be as dramatic as 2007, but I do expect somewhere between five and 10-per-cent price appreciation through 2009,’ he said. ‘The people who decide to sit on their hands and not buy now, are going to be sorry six months from now.’”
Last month in Missoula, there were 11 months of inventory (residential + condos). As of October 6, there were 13 months — and that’s after a purge of the MLS listings at the end of September. http://www.missoularealestate.com/index.php/fuseaction/market.main/ID/0d95f240
Don’t miss the terrific new video on the Billings and Southern Montana housing market (including Big Sky) at http://www.topoimagery.com/billings/
Call off the perp walk on Wall Street, we’ve found out who caused everything…
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“‘My guy is a fall guy for the whole subprime mess,’ said Ernest Warren Jr., the Portland attorney representing Folwick. ‘But he takes responsibility for the false documents he submitted.’”
aladinsane,
LOL! Yep… you fellas are free to go. ( Sorry about the big misunderstanding )
We had a chuckle on the PDX Blog on THAT one! The Oregonian described him as “50′ish, balding and “paunchy” ( which goes to show ya’ during The Boom, just about anybody was getting l@id on this deal! )
But try telling that to any canuck.
They will always say- It is “different here” (why???). We have no suprime (hahha 40yr amortization, 107% MEW, MEW from parents house used as downpayment on childrens homes, pay only ARMs). Our banks are better capitalized (according to press releases, which are always truthful!). Our economy is better/ more diversified (sell natural resources to the US+ US owned manufacturing). We are recourse (they must have figured ways to collect money from the unemployed and broke). Our savings rate are positive (maybe 0.5%, though I doubt it and negative in most bubble markets).
Delusions always end when the deluded hits the hard wall or canyon floor of reality.
You’re so way off satan.
If you tell any canuck, there’s got to be at least a 10% chance that they’ll know what’s going on. I mean, I know, and I told my wife for starters. You’re a canuck too yes? That’s three at least.
And it is different here. Canadian bad mortgages are different from US bad mortgages, so there! When we can’t pay our recourse mortgages we’ll have to declare bankruptcy. Different again! And of course our banks are better capitalized. They have portfolios of mortgages that haven’t gone bad so they have absolutely nothing to worry about (I hereby forbid you from googling the words CIBC and Cerebrus together.) And I’ll have you know that our savings rate is just as negative as any Americans’. Check chart 4 in the linked report.
Ah, I feel better.
http://cfcr.ml.com/GetDoc.aspx?e=we%2f5N0iuZK6i0yToLhuauIHZFdKmBw5nBhIlTGqkN%2fyvsisdXbdtEgw5eRyin0Z3%2fVA03LtWMfy8alkPgH7TSA%3d%3d&ctbDocIDs=10769189&v=1&m=XPCq%2bVyX27bchJxbYHbpknemGiM%3d
At least it’s all contained in Vancouver.
“B.C. is like a different counrty.”
So is California.
“‘The people who decide to sit on their hands and not buy now, are going to be sorry six months from now.’””
ugh! ugh! ugh!!!!!!
“B.C. is like a different counrty.”
we more and more resemble a strip mall these days.
I hope you are being facetious…cause they are as screwed up in BC as we are down here in Calif.
I hope you are being facetious…cause they are as scre*wed up there as we are down here.
“But try telling that to any canuck.
They will always say- It is “different here” (why???).”
I have never heard a Canuck talk like that.
They will always say- “Eh, it is different here, eh! Eh, Didja see that goal?” and if you are in Alberta “Eh, it is eh different eh here, eh! Eh, Didja see that goal, eh?” in Quebec city “Ay, C’est differente ay. Ay didja see that goal, ay?”. (It is different in Quebec, I think the water causes brain abnormalities.)
“‘It won’t be as dramatic as 2007, but I do expect somewhere between five and 10-per-cent price appreciation through 2009,’ he said. ‘The people who decide to sit on their hands and not buy now, are going to be sorry six months from now.’”
Like I tell my clients all the time, just because you say something over and over doesn’t make it true. If only it were that easy.
Wow, this guy is clueless!
A 5% to 10% price appreciation would be beating the market by incredible numbers! He expects real estate to outperform every asset class on the open market.
The Prairie provinces are still back in 2006, or maybe 2007. Massive inventory, slight price correction, but with all those massive increases still just a year in the past — so *surely* the prices will start going up again soon.
He’s assuming that because prices haven’t yet fallen off a cliff that they won’t. How they’re going to rise like that in the teeth of a global recession is something no-one ever explains, except to say that It’s Different Here.
People who listened and acted on the advice of fooks like this one in CA circa 2005 are now sitting on home equity losses upwards of $100K. Try not to catch yerself a falling knife!
We’ll see who is “sorry” six months from now. I hope this guy doesn’t give out his real name and address to his clients, or he may be cutting a deal very soon with the Feds to enter the Witness Protection Program.
Or the Witlessness Protection Program.
Um, yea, we’re going to see appreciation in 6 months. In the midst of a severe recession/depression, continued credit tightening, rising home inventories, rising layoffs. Perfect market for real estate appreciation!
I’ll be perfectly content if food and gasoline are readily available and affordable. It won’t take any pie-in-the-sky real estate appreciation to keep this renter happy…
In six months, we’ll all be priced out forever (again!).
“Since March, the housing market has been relatively static, as bidding up and multiple offers on a property are rare occurrences. Buyers are holding out in hopes of a significant price reduction on the market, but Duggleby doesn’t see a price reduction happening.”
Always a called bottom…
but never a real bottom.
Calling this before winer?!?
Got Popcorn?
Neil
“The people I feel really bad for are the ones that drank the company Kool-Aid and loaded up their 401(k)s in WaMu stock.”
So the Enron example just wasn’t enough, huh?
edgewaterjohn,
Perzactly. I worked in town when all the Portland General Elec. employees were jazz’d about getting Enron shares. They’d call in like twice a day to get quotes so they could do matchbook calculations on how each uptick brought early retirement just that much earlier!
I mean after all, the PGE shares neved did ‘anything’. Then the sob stories. “I’m in my MID-50’s! What do they expect me to do NOW!?” I guess I was fortunate in that prior to Tyco’s implosion an internal memo mandated no more than 20% could be in TYC. A good idea anyway you slice it.
I just have a tough time mustering much sympathy for these workers. Really, didn’t their actions betray their greed? Even after the dot bomb era - there are still many out there looking for their own little El Dorado while on the payroll - chasing that mythical employer that will let them skateboard through the cubicle farm, drink beer in the cafe, and make them instantly rich just for working there.
Not all employees were able to move their money out. I worked at one company and all of the 401-k match was done with company stock. At the time, the only way to convert out of company stock was to quit the company and roll your 401-k over to another management company.
Also, don’t forget though, that senior members of Enron management (with Ivy League MBAs) said the company was A-OK. Forbes/Wall*Street Journal/Barrons/etc all lauded those senior Enron managers and the great job they were doing. The board of directors approved those financial numbers and gave huge bonuses based on the great company performance ( of course it cost them $13 million in lawsuits because of insider trading ).
If the board of directors of Enron( including Wendy Gramm, the former chairwoman of the Commodity Futures Trading Commission and the wife of former Senator Phil Gramm and Robert Jaedicke, the former dean of the Stanford Business School) claimed that they had no idea what was going on at the company, how was your average employee to know?
Eggs. Basket. One. No good.
My lesson was taught courtesy of the old UAL ESOP. As for what the brass collars say to hide the truth on the way down? Well, one needs to take everything they hear with a bit skepticism - it’s own of nature’s protective devices.
But with the UAL ESOP, you were unable to cash out unless you retired or quite correct?
Skip,
Good points, especially considering that Enron basically re-invented BS. I mean they were going to trade broadband capacity as a “commodity”? At least that’s the dog and pony show they put on for Analyst Day?
So… if the analysts couldn’t figure it out..?
Still and all, and I realize this isn’t a popular time to be saying this, but one of the great things about America is that you ‘can’ participate in the growth of the very company you work at. In a way contributing to your own destiny. When I look at how that simple concept has gotten so perverted, it makes me ill.
Does any one remember IBM? That was before Enron and the dot com burst. I made sure my eggs weren’t all in one basket. I made sure my family’s eggs weren’t all in one basket.
Skip, that’s changed now - I get my match in stock too, and I can sell it any time.
MacAttack,
Yeah I mean it ‘can’ be a good thing. My wife made out when she bailed and Tyco went from $80 a share to $6? Then she re-allocated and was allowed to put up to 20% into it again and rode it from 6 to 30.
You just have to be smart about it. Now they’ve down this spin-off deal so we decided we didn’t need to be a part of ‘that’ but properly done it can work for you.
I DO feel for the airlines and to be fair a lot of the Enron employees were held captive while Lay “changed 401K providers”. ( CEO’s were so smart back then )
I took the latter course, Skip - after getting my undergrad. My hit was nothing compared to those who rode it down.
‘The people I feel really bad for are the ones that drank the company Kool-Aid and loaded up their 401(k)s in WaMu stock. I think those are the ones that will have a very hard time recovering from this.’”
No pity from me. Most of these cretins were too intellectually limited or lazy to engage in critical thinking, finding it easier to just swallow everything they were told by their employers or their idiot box. Their bad - fools deserve to be parted from their money. The only way sheep like this ever learn is by getting fleeced. If they get burned bad enough they might get angry, and then start asking questions, and then - the breakthrough - a tiny handful might actually start thinking for themselves.
Legions of the same brain-dead zombies will pour into the voting booths on November 4, voting for whatever Tweedle Dee or Tweedle Dum the Republicrat Duopoly put up to con another run at the trough out of the rubes. They too will get burned, and may finally wise up over time.
Got a superiority complex?
I was thinking *exactly* the same thing.
How do you watch Enron implode, taking the 401(k)s of the employees with it, and then load up on company stock barely even 5 years later?
EVERY time my Microsoft stock bonus comes in, I turn right around and sell.
“Not only will many lose their jobs, as one employee noted, ‘The people I feel really bad for are the ones that drank the company Kool-Aid and loaded up their 401(k)s in WaMu stock. I think those are the ones that will have a very hard time recovering from this.’”
I’m always amazed at how people who work for a company can be so oblivious to its financial health. Or maybe they just couldn’t get out. Or maybe it’s denial.
I once worked for a privately held company that gave me shares as bonuses. After a few years of watching the management, I knew its destiny, and it wasn’t exactly what you’d call Kismet.
I got a call from the owner one day (I telecommuted 300 miles away) telling me I should come to the company dinner, as they were handing out the stock certificates. Thought about it, it wasn’t even worth making the trip. I quit shortly thereafter. My point? If you’re working there, you should take it upon yourself to be observant, your future is at stake.
But if you’re observant, then you are Not A Team Player. And that is bad, very bad indeed.
But if you’re observant, then you are Not A Team Player. And that is bad, very bad indeed.
Most of these cretins were too intellectually limited or lazy to engage in critical thinking, finding it easier to just swallow everything they were told by their employers or their idiot box.
This is the mindset that the vast majority of corporate America wants, encourages, demands and rewards in its non-senior-management employees — docile, gullible sheep who are easy to control.
My employer back in 2000 moved a bunch of us IT folks into a subsidiary. One of the so called benefits was an artificial stock purchase plan - the stock was artificial, but the money we paid wasn’t
. I still get reminded at tax time that I have capital losses that I can use to offset capital gains. I’m sure we all thought at the time we’d be paying off our mortgages with the stock gains… Then the tech bubble burst…it was a heck of a ride for the survivors.
“Buyers waiting longer for the market to bottom out could be making a mistake, said Virgil Wells, president of the Tacoma-Pierce County Association of Realtors.. ‘I think we just need to get the media to paint a positive picture,’ said Wells. ‘The fact is, this is the best time for buyers to buy since 1996. Inventory is high, prices have decreased and interest rates are low.’”
How often has this been repeated, and shown to be a complete lie.
Guess what?
No one believes you anymore.
Heard similar stories from realtors this weekend. Buy now before you get priced out…again…
Listen, look at any bubble chart. Any chart that shows a bubble.
Do you see?
Those prices (inflation adjusted) will not show up in our lifetime.
What amazes me is this is being said in Wamu land. But FUD works.
Right before the weak winter selling season too…
Got Popcorn?
Neil
Wow, Mr. Wells looks like he is having a great time with this “buyer’s market”. What an idiot.
http://www.tpcar.org/directors.php
Everyone is a Director in his org! I like this one - “Dick Beeson
At-Large Director”.
Now serving loss-laced Kool-Aid @ the WaMu cafeteria…
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“Not only will many lose their jobs, as one employee noted, ‘The people I feel really bad for are the ones that drank the company Kool-Aid and loaded up their 401(k)s in WaMu stock. I think those are the ones that will have a very hard time recovering from this.’”
who ever said the stock bubble was transferred to the housing market was right- greenspan ?
And we know how that caper worked out. Details from yesterday’s Democracy Now…
http://www.democracynow.org/2008/10/6/naomi_klein
I’m gonna start a radio show called “Kleptocracy Now”. My first guest will be Hank Paulson. Please feel free to recommend a list of potential guests. Maybe I’ll even take it to TV, Charlie Rose-style.
Barney F. and Chris Dodd
Don’t forget all the pro-bailout Republicans too:
McCain
Bush
Paulson
Bernanke
I think a panel with Cookie Monster, Lucy from Peanuts & Homer Simpson would cover all the bases.
I thought that was Shiller’s big idea? Greenspan preferred “froth” to “bubble”…although he did give the quote that contained the phrase “Irrational Exuberance”…if I remember correctly. Which I possibly don’t.
“Greenspan preferred “froth”
The “froth” was on his lips.
Hahahaha! Nice one, palmy.
And on the top of his colostomy bag’s contents.
(Scene I)
HOLD the Fort’s Dream Price pilgrams !!!
(Scene II)
NAR is sending uncle Ben’s Federal Cavalry charging in to our Rescue with sabers rattling and bugles blaring as we speak.
(Scene III)
10,000 tiny hostile indians peek out from behind the rocks slightly amused, smile, then continue to diligently sharpen their scalping knives.
(Scene IIII)
Censored as it is very, very messy and unsuited for the faint of heart, women and children and our other Ben’s Family Housing Blog
Wheeeeeee! I guess it’s NOT different here!
Thanks, Ben, for a lovely, lovely PNW thread.
Still some stupidized reporting, though. In today’s Olympian business section:
“Home sales show an increase.’
http://www.theolympian.com/business/story/610295.html
Well no wonder
http://www.bizjournals.com/albany/stories/2008/10/06/daily8.html
Anyone have an update on that Hobbit Village that was being built up in the somewhere in the Washington
Skip, here you go. It’s dead, but its website lives on.
http://www.bendshire.com/
Looks like Frodo and Samwise got sidelined back in Mordor. Bummer.
Omigod! Looks like Thomas Kincade come to life…. Saccharine (sp?) doesn’t cover it
How ’bout that Dow? Mm-mm-mm-mm-MM! yessir, heckuva job, Hankie. That bailout really restored confidence in the markets.
I was wondering what would have happened if Congress made the bailout conditional upon an immediate 2,000 point rally in the DJIA.
October 7, 2008, 9:44 am
Why We Should Let Housing Prices Keep Falling
By Edward L. Glaeser
Edward L. Glaeser is an economist at Harvard.
Our current financial crisis stems ultimately from the large number of investors betting, unsuccessfully, on real estate. So, when real estate markets came tumbling down, Wall Street fell with them, putting the entire global economy at risk.
The connection between real estate and the current crisis has led a number of observers to argue that the government should try to do something to stop housing prices from falling further. A miraculous new boom in housing prices would enrich our troubled banks, and reduce the need for any explicit bailout. Some argue for large-scale credit market interventions that would make borrowing cheaper. Others think that bailing out troubled homeowners will stop the price decline. Extreme solutions include large-scale public purchases of housing or destroying large swaths of the housing stock.
There is a superficial attractiveness to policies that seem to promise an end to falling housing prices, but there are three reasons why these proposals don’t make much sense to me.
Professor Bear,
Well said. I think what’s getting lost in the mad shuffle is that it wasn’t Wall Street’s demise that led to a credit crunch that led to fewer home sales that lead lower home prices.
I know it sounds silly but that’s the spin ’some’ out there are attempting. Particularly Congress. “Why if it wasn’t for those crooks on Wall Street your 70’s 3/2 ranch home would STILL be worth a fortune!”
“‘My guy is a fall guy for the whole subprime mess,’ said Ernest Warren Jr., the Portland attorney representing Folwick. ‘But he takes responsibility for the false documents he submitted.’”
And if he hadn’t been caught? Nice try. Club Fed for him.
I’m driving to Vancouver BC (from Portland) on Friday to visit relatives. Condo towers were all the rage in 2005 up there. I’ll ask my cousin (who project-managed a couple of them) what’s up, and report back.
Well, we’re going to have a mini taxpayer bailout for some overpriced condos they are building to house olympic athletes:
The athletes’ village is a massive, $1-billion, 1,100-unit development spread over seven city blocks that is destined to become private residences after the Games. The residences are about 60 per cent sold and have the highest green-building standards that exist in North America, something that also led to overruns.
…Millennium Development bought the prime land on the southeast shore of False Creek in the spring of 2006 from the city for $198-million - a price that many in Vancouver’s ultra-competitive development felt at the time was exorbitant. The city also agreed to loan the developer $30-million toward start-up costs.
So, now it’s in trouble, and our market is frozen: front page news. Bailout! The boom is just dying, however, I can still see about 15 large condo developments still under construction as I walk to work.
Our local government and media has a ridiculously cozy relationship with developers and we now have a ton of poorly constructed, poorly planned towers, which block the mountain views that used to make us a pretty city. Is that the kind of rage you were referring to
I ran the 2005 Vancouver Marathon, and there were towers going up all over that area around GM Place, and they were selling like hotcakes at the time. I did think, how horrible to grow up in there, with daycare inside the tower, school inside the tower…
They were building here in Portland like that also, and I remember looking at the prices (San Francisco prices, at that) and thinking, who in their right mind would pay SF prices for a condo in rainy Portland?
Who indeed?
Well, if you believe the puff piece headlining yesterday’s O, everyone will descend on Portland when the global warming crisis comes into full view….
Unbelievable. Now that the shimmer is off the Portland RE market, they gotta sell fear. Get your piece of Oregon now before you’re global-warmed-out forever.
I saw that too.
Portland will be safe when the seas rise?
I guess they forgot that Oregon has a coastline.
The Oregonian has been cheerleading RE just like every other trash newspaper in this country.
Bought and paid for by their advertisers.
Nobody wants to live in those towers… speculavestors thought they could rent it out to unsuspecting rubes… Every second or third night residents have to contend with 10-15 thousand drunk and beligerent hockey fans (beligerent hockey fan… I repeat myself) pour out of GM Place and swarm base of these towers and townhomes…
Whoa nelly, another 500+ pts down today. When are they going to stop calling this a ‘downturn’, ’slump’, etc and just tell it like it is…
A CRASH!
The best part is that it was an orderly decline. Not much panic, and not even a hit of capitulation. Dow 8500, S&P 850, NAS 1400 coming soon.
Dang, trigger finger getting more itchy.
hint, not hit.
Asian markets are getting slammed yet again. Tomorrow should be a doozie on WS. A lot of folks are probably about ready to click the “Sell All” button..
The Vancouver Canada market is a dead man walking. Sales volume down 50+%, prices down YOY after 4 mths of drops — faster than any of the Shiller cities.
A lot of realtors are racking up their line of credit as their cellphones and blackberries stay silent. Maybe if gas prices drop far enough, someone will want to buy their Mercedes SUV or Hummer — that’s about their main hope at this point.
No more cheap… “Become a real estate agent in 6 weeks” signs around the lower mainland… Can’t wait for the swarm of RE agents to disappear.
I took the 99B-line last week and found myself next to some poor soul studying to become a realtor. I am a true Vancouver-ite and therefore didn’t point or laugh (or display various signs of emotion in a public space), however in my heart I laughed until I cried.
REYKJAVIK, Iceland (AP) — This volcanic island near the Arctic Circle is on the brink of becoming the first “national bankruptcy” of the global financial meltdown.
http://ap.google.com/article/ALeqM5hJdb2RwrEg_X8yNRHcVvn_OE9vKwD93LRO8O1
The news of the collapse of Iceland’s second largest bank, Landsbanki Island HF, sent shivers through the tiny nation. It also put the fortunes of its two richest citizens on ice.
http://www.forbes.com/businessbillionaires/2008/10/07/iceland-billionaires-banking-biz-billies-cz_ts_1007iceland.html
Your forgetting about that little Island nation that GE foreclosed upon. Their entire economy ran off selling bat guano. Then the guano ran out… Australia is evacuating the island as its not worth providing services that far from anywhere.
But Iceland going under… scary!
Got Popcorn?
Neil
How many buyers are sittting on the sidelines? It seems to me most real estate sales people from all over the world believe there is an infinite amount of buyers with money sitting on the sidelines. Well all you buyers what the heck are you waiting for
. To use a phrase from one of my favorite Pixar cartoons:
Too infinity and beyond!
I guess that the word “unsustainable” doesn’t exist in their vocabulary!
I’m saving my money and paying off debts in case I lose my job.
Dunno about you but buying a house is no longer on my agenda things are just to flaky now. I’d only consider it if house prices where 2X median income and I could pay cash and still have 1 year salary in the bank.
Don’t get me wrong I wanted a home but until things straiten out no way will I put my family in jeopardy by taking on a mortgage.
You guys go ahead and buy right before the biggest depression ever not me.
“I’m saving my money and paying off debts in case I lose my job.”
Agreed, you’re right on as far as I am concerned. Myself, I am still confounded by those who refuse to think that some of this might rub off on them. I’m not saying throw in the towel - but for Pete’s sake - how does buying a house possibly sound like a good idea right now?
I’ve actually lost my job, and am selling my house to pay off my only debt (the mortgage!). I don’t need the money (at least am not in immediate need of it), but would rather have it in cash than locked up in a house.
My realtor assures me it’s still possible for first time home buyers to get a loan with only 5% down. We’ll see..the house lists on Friday. I have plenty of room to cut, and will do so quickly if need be…
I see the benefit of stability that owning a house can bring, assuming you can safely afford it. But in some situations that stability/lack of mobility is a hinderance, and I think it will be for me in the next few years so I am selling while I can…
better late than never
I’m on the sidelines. I don’t know _anyone_ else who is in a position to buy (secure job, 20% down in cash). And, yes, I may be overly optimistic about whether or not I can really buy (yes, I am already arguing with the word “secure” when characterizing my job–but you all can pick sides if you want).
Lots of us on the sidelines. But suddenly, secure jobs do not look that secure! I know dozens of people ready to buy under historical conditions *if* prices stabilize.
After fighting to keep some excellent workers off the ‘first to be laid off list,’ I’m less certain about my own job. Me and the misses had a dispute about buying once we could afford too; I’m now arguing that until names stop being added to the walk out the door list and instead I see a stabilization…
To think… I *never* agreed with the depression scenario before. Now… I’m worried. (Out there TJ?)
Got Popcorn?
Neil
Neil, I’ve been following this blog regularly since summer 05 and I was always skeptical about some posters making Great Depression predictions. Now the GD scenario doesn’t seem so far-fetched at all. I never thought the collapse would take so many down. It will be a scary Halloween indeed..
No way would I buy a house at this point unless it was truly a fire sale (10 cents on the dollar).
“…more higher-end houses that can’t be sold are becoming rentals and pushing average rents higher, said Tim Seth”
Of the many new and higher end homes to come on the rental market, most were never available in the past. Until recently, in my area I have never heard of, or read of a “new” house for rent, it just was not available at a market price. Of course some well positioned person could possibly rent a new house for well above the going rents, such was never advertised.
The high-end older homes are expensive to rent and do seem to push rents up on average, I think this might Not be correct. The rental prices of the new and upper end houses have dropped, alot. Enough that even I consider such, and there are so many of them - they are competing - for me, more-so as winter approaches.
$279,000 was $300,000 A-frame 3bd/ba, 3000sq.ft. for sale or rent - was $1900, now $1575. The areas top wishing average rental price did appear to be $1500, I think it has dropped to $1200-$1000. Now it cost the same to rent a new house in the Midwest as it does in CalifornIA? I think top end rental prices here will drop some more and force the rest lower. With the service sector acting as floor Im sure there will be no problems for landlords going forward. Positive cash flow restrictor?
10%?? TEN?!?
It simply amazes me.
Try more like 40 or 50% to get to actually remotely reasonable prices. And I’m being nice.
This bubble wasn’t the kind that is just a spot of trapped air under a sticker. This bubble was the kind that immune-deficient children live inside for years.
I think we failed as a species when regular people stopped thinking of homes as places to live an started thinking of them as ways to make money. It’s fundamentally wrong and amoral. When we can turn an essential human need into a fantastically bloated cash cow is when we stop being humans. Too bad the average “good person” looks at you like a freak when you suggest that they stop exploiting other people.