Recent Stories with tag seattle bubble
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TagsLast week, Redfin CEO Glenn Kelman was quoted by CNBC's Diana Olick, saying:
The real estate market is like a fat man that can't get up. The U.S. government has modified loans, extended tax credits, lowered interest rates; we've fired a lot of our guns, and at this point the market is just going to have a long slow period of decline.
(Kelman is good with quotes: "I've sometimes wondered if God calibrated the size of our brains and the amount of fuel in the sun to give us just enough time to figure out the universe & send a space-ark toward a new galaxy, but the only guys who could figure this out are working for Wall Street.")
This is the kind of wry observation that appeals to skeptical inquirers like Seattle Bubble, who have applauded Redfin's entry into monthly real estate data reports: "Redfin has taken a page from the NWMLS playbook, torn it out, shredded it, burned it, flushed it down the toilet, and written a whole new book from scratch on the subject of monthly data releases."
Full disclosure: the Bubble's Tim Ellis contributes to Redfin's "Sweet Seattle Digs" blog, but this would only seem to add to Redfin's credibility, since the Bubble's readership is, if anything, more critical than Ellis, and would probably turn on him in minutes if he slipped up. (In this I seem to disagree with 360Digest's Marlow Harris, who couldn't see any point to noting real estate was over-priced, back in November 2008, and questioned Redfin's viability. She will have to wait a bit longer for Redfin to fail.)
But Redfin's credibility isn't simply derived from a refreshing bluntness. Old school real-estate watchers often sound like they have a crystal ball secreted away somewhere--they employ the astrologer's and psychic's tools of saliency and confirmation bias. They are exquisitely sensitive to the "mood" of the market, so far as ad hoc rationalizations go. In the absence of a testable, fresh-data-driven model, there's a tendency toward superstition and making bets. (As Dan Ariely points out, our intuition works best when drawing on observable cause-and-effect, throw in a time-delay and we're mainly guessing.)...
Windermere has a Capitol Hill condo selling for $149,000 down the street from The SunBreak offices, at 1125 E Olive (at 12th Avenue). It's 436 sq. ft., hardwood floors, forced air, HOA is $200. It's the lowest-priced condo on my email update by far, with $40,000 between that and the next listed price. But if it's snapped up before you can put down an offer, stay cool.
Whether you call it depreciation or affordability, Goldman Sachs says the next two years should bring more of it; Seattle Bubble (naturally) spotted their prediction that Seattle home prices would lead other major U.S. urban areas with a 22 percent decline over the next two years.
Goldman Sachs calls our situation a "back-loaded price decline," which has a familiar ring to anyone familiar with Seattle Bubble's time-adjusting housing price graphs. Las Vegas and Portland join us in home devaluation "due to high homeowner vacancy rates and/or rising mortgage delinquencies," but Seattle is way out down in front, losing ten percent more in value than Portland over the next eight quarters....
Someone needs to invent a way of leveraging negative equity, and then name it a SNORKEL. The PSBJ reported yesterday that 15 percent of mortgages in the Seattle-Bellevue-Everett area are under water (it's 16 percent statewide, 24 percent nationally).
This is based on First American CoreLogic's Negative Equity Report, covering 85 percent of all U.S. mortgages. Their chief economist, Mark Fleming, notes that millions of people owning a home worth less than they owe on it tends to drives up foreclosures. For one thing, not being able to sell your house limits your ability to move to find a job if you've been laid off.
Seattle Bubble has an assortment of graphs based on the latest numbers from Case-Schiller; the C-S data breaks out the "Seattle" market (King, Snohomish, Pierce counties) into high, mid-level, and low cost tiers based on sales volume, which is interesting. "Low" at the moment is under $266,000. The Tim casts a cold eye on the last ten months of flat house values--despite the stimulus.
Former Seattle Times real estate editor Tom Kelly quotes Edward Pinto, former chief credit officer at Fannie Mae, as saying, "All we are doing is kicking the can down the street." Writes Kelly, who once offered to sell me a huge old Capitol Hill home on 17th Avenue East for $220,000 and I didn't jump at it, which is why I have trouble sleeping:
Basically, Pinto believes the extra cash the government is tossing into the housing market is simply adding fuel to the fire by depressing prices while foreclosures continue to flood the market.
RealtyTrac shows 3,495 foreclosure filings in Washington this year. This ain't over yet.
On their blog, Estately makes a bold prediction about spring real estate sales (boldface is theirs):
Spring and summer of 2010 will be different! Every year, there is an annual increase in people searching for real estate from December to January. But this year we are seeing a much bigger bump – 80% bigger. This year we are seeing 40% more people searching for homes on Estately in January than we were in December.
Seattle's seasonal bump in traffic is among the top, at 55 percent, Estately says. They expect a slow January, agreeing with the Seattle Bubble that the $8,000 homebuyer credit hoovered up a lot of future demand, as people decided to buy before the cut-off deadline (since extended).
They also argue that they outrank Google Trends in this department because they're an MLS-based search site, which cuts down a lot of media noise having to do with real estate market ups and downs, rather than prospective buyer searches. (In a tongue-in-cheek way, Seattle Bubble's The Tim suggests that Google's search trends may finally allow us to see Robert Schiller's "animal spirits" in action.)
Seattle Bubble actually agrees to some extent with the prediction for a spring surge, but points out that the tax credit may be a harsh mistress: "I can see February through April being better, but if the Fed’s MBS purchases really end and no new tax credit is enacted, I think there is a distinct possibility that sales will drop to frigid levels again, pushing prices even further down."
Zillow, says Seattle Bubble, is down on homeowners in the western U.S. for being "overly optimistic" about their new underwater living arrangements. While 72 percent of all U.S. homes (Zillow's statistic) lost value last year, 51 percent of starry-eyed Westerners think their home's value stayed the same or appreciated.
Maybe, though, homeowners are expecting to get the kind of break that home builders are getting. Jon Talton, while commenting on the nosedive in new housing permits, also linked a story about how home builders can write off losses in 2008 and 2009 against profits as far back as 2004.
This is astonishing for two--no, three--reasons: First of all the provision was tucked into the unemployment benefits extension. Secondly, the government is rewarding home builders for overbuilding during a boom. And lastly, there's nothing about the provision that targets home builders whose losses might drive them out of business. A company sitting on $1.9 billion in cash will get a boost, too.
So who is not realistic,...
What's a good pictogram for the employment situation, I asked myself. Photo courtesy The SunBreak Flickr Pool shootist Slightlynorth.
I just heard via Facebook (oh, the cold blade of irony) that Classmates.com has "graduated" another round of employees, and TechFlash has the story on Microsoft's 800 layoffs, 200 from the Seattle area.
Jon Talton's timely "Sound Economy" post includes the warning: "More importantly, the holiday layoff season--when companies clear their year-end books and start serious job cutting--is only beginning. Talton observes that while we "only" lost 200,000 jobs nationwide last month, we really needed 125,000 new jobs, net, to keep up with new entrants to the workforce.
So far, as the Seattle Bubble will graph out for you, the stimulus has worked far better for financial giants and stock market profits than for job creation. Now, you have heard that employment is a "lagging indicator," but that doesn't mean it's allowed to lag to infinity--from Talton: "Rutgers economists say it could be 2017 before we recover the lost jobs."
The Tim claims (yes, there's a graph), unemployment is now one percent higher than that predicted by administration economists without any stimulus. This has to be of some consternation in the White House, as historically, high unemployment results in presidential unemployment.
Thanks to Flickr user respres for the photo.
The big economic news reverberating around the Washington blogoshere today is the home foreclosure rate in our fine state. Per the AP report in this morning's Seattle Times:
The number of U.S. households caught up in the foreclosure crisis rose more than 5 percent from summer to fall as a federal effort to assist struggling borrowers was overwhelmed by a flood of defaults among people who lost their jobs.
Locally, it's a more complicated story. While the Seattle P-I reported the news as a shocking twist ("Foreclosure filings in the Seattle metropolitan area were up in September compared with August, bucking a trend that saw the month-to-month rate decline nationally"), Tim Ellis at Seattle Bubble actually called the trend back in August.
Ellis argued in a post on Aug. 13 that a new state law delaying foreclosures by an additionally 30 days would lead lenders to rush to foreclose, leading to a temporary drop-off in new foreclosures before the rates rose again.
"The new law essentially makes it more difficult for a lender to foreclose on owner-occupied homes with mortgages minted from 2003 through the end of 2007," he wrote,
...and adds an extra 30 days to the process. Since a notice of trustee sale comes 30 days after the notice of default, a surge in default notices filed before the bill became law in late July could result in a continued surge in notices of trustee sale through this month.
After that, it is likely that we will see a lull in apparent foreclosure activity for a month or two as the newly-legislated time in the pipeline fills up. My guess is that by the end of this year we will probably be back to a more “normal” post-bubble foreclosure level of ~1,000 notices of trustee sale per month.
This morning, he wrote, "Not surprisingly, as the newly-mandated 30-day pipeline begins to fill up, foreclosures seem to be resuming their upward trend across the Sound." As per usual, Seattle Bubble's a step or two ahead of the real estate journalists.
The other big news this morning was the reports of the teetering fortunes of Spokane-based Sterling Financial Corp., the parent company of Washington's second-largest bank, Sterling Savings. The Puget Sound Business Journal reported this morning that "Sterling’s stock dropped more than 12 percent to $1.45 in early morning trading on the news. The Spokane-based bank ousted its chairman and chief executive Harold Gilkey, 70, who co-founded Sterling in 1983. It also ousted Heidi Stanley, the chief executive of Sterling Savings Bank."
Matt Goyer of Urbnlivn and Redfin.
"It should find the place that's for sale right here," Matt Goyer said, gesturing toward Trace Lofts as we stumbled blindly down 12th Avenue between Pike and Pine, both of us staring down at our iPhones as rush-hour traffic idled at the light. "So, it pulled out 1408 12th Avenue, number 407, so that's one of the two units for sale right now."
This was last Friday afternoon, and Goyer was giving me an on-the-spot demonstration of Redfin's iPhone app (click here to launch iTunes), along with some insights into a couple other apps that deal with real estate and neighborhoods. His day job is actually at Redfin, where he works in marketing, but in certain circles he's better known as the author of Urbnlivn, one of Seattle's best condo blogs.
Like Tim Ellis's Seattle Bubble, Urbnlivn was a product of Seattle's housing boom, but whereas most real estate and condo blogs were little more than marketing efforts by real estate agents, Goyer won his readers by offering thoughtful (and frequently...
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