JayB Posted March 6, 2008 Share Posted March 6, 2008 "Homeowner Equity Is Lowest Since 1945 Thursday March 6, 2:15 pm ET By J.W. Elphinstone, AP Business Writer Federal Reserve Report Shows Homeowner Equity Dipping Below 50 Percent, the Lowest on Record NEW YORK (AP) -- Americans' percentage of equity in their homes fell below 50 percent for the first time on record since 1945, the Federal Reserve said Thursday. Homeowners' portion of equity slipped to downwardly revised 49.6 percent in the second quarter of 2007, the central bank reported in its quarterly U.S. Flow of Funds Accounts, and declined further to 47.9 percent in the fourth quarter -- the third straight quarter it was under 50 percent. That marks the first time homeowners' debt on their houses exceeds their equity since the Fed started tracking the data in 1945." Quote Link to comment Share on other sites More sharing options...
olyclimber Posted March 6, 2008 Share Posted March 6, 2008 Excellent! We should have a party to celebrate. At last we have turned the corner on this sucker! Quote Link to comment Share on other sites More sharing options...
olyclimber Posted March 6, 2008 Share Posted March 6, 2008 Soon we may have Affordable Housing! http://www.msnbc.msn.com/id/23500952/ Quote Link to comment Share on other sites More sharing options...
olyclimber Posted March 6, 2008 Share Posted March 6, 2008 wait a minute. i'm a home owner! what did you trick me into celebrating jay???? Quote Link to comment Share on other sites More sharing options...
knotzen Posted March 6, 2008 Share Posted March 6, 2008 We may soon have affordable rentals. Or empty, landlord-less houses to squat in for free. Woo-hoo! Quote Link to comment Share on other sites More sharing options...
prole Posted March 6, 2008 Share Posted March 6, 2008 Act now, before it's too late! Quote Link to comment Share on other sites More sharing options...
sexual_chocolate Posted March 7, 2008 Share Posted March 7, 2008 and back in the real world (why seattle, of course), feb to feb was a modest 2.something appreciation, heading into the buying frenzy of spring. Quote Link to comment Share on other sites More sharing options...
olyclimber Posted March 7, 2008 Share Posted March 7, 2008 there is a big development here in West Seattle: http://www.thehighpoint.com/ hard to believe that the units are all sold out like the website purports.. http://www.lylehomesathighpoint.com/homes_sale.htm 996 - 1,158 sq. ft ~ Carriage house ~ 1 bedroom, loft, great room ~ 1 bath 1 car garage for 315,000... I wonder with these deals how many of them are just bought by speculators for resale in a couple of years. Those unit are really crammed in together. It just looks like a bunch of apartment buildings...maximum density for sure. Its the biggest developement I've seen in the Seattle city limits, I just wonder if they REALLY beat the crunch in their sales, or if they were snapped up by speculators. I didn't truly believe in the market value of my house till I saw how much these were going for. Quote Link to comment Share on other sites More sharing options...
Dechristo Posted March 7, 2008 Share Posted March 7, 2008 I could go for something like that, if only it was on a decent-sized piece of land. Quote Link to comment Share on other sites More sharing options...
olyclimber Posted March 7, 2008 Share Posted March 7, 2008 yeah...in this development its more like buying a condo. there is no land outside of the postage stamp your house lives on. but it isn't a bad thing! its pretty nice there, they even built a library on the site and i'm sure that the neighborhood will be transformed completely when/if people start moving in. its blocks and blocks of completely new hyperdense housing. they make my little lot crowded by the empty mansion next door look big. Quote Link to comment Share on other sites More sharing options...
Recycled Posted March 7, 2008 Share Posted March 7, 2008 We just signed the papers at 5:00 to put my house on the market. 4 br/3ba 2600 sq ft house on 1/2 acre in B'ham's best neighborhood for $395k. 3 yrs ago, similar houses around here were going for $475k+. Ouch. Quote Link to comment Share on other sites More sharing options...
Dechristo Posted March 7, 2008 Share Posted March 7, 2008 The cheaper units are described as townhomes and condominiums. Quote Link to comment Share on other sites More sharing options...
knotzen Posted March 7, 2008 Share Posted March 7, 2008 I could go for something like that, if only it was on a decent-sized piece of land. A "carriage house," or any house in Seattle, doesn't come with a decent-sized piece of land. To get land, or an affordable house, you have to buy out in the ex-urbs, and add your car to the 30-mile + daily commute into the city. (If you're a typical Western Washingtonian.) A weird system we humans have created. Quote Link to comment Share on other sites More sharing options...
Dechristo Posted March 7, 2008 Share Posted March 7, 2008 I'm spoiled being accustomed to living on 35+ acres and neighbors a minimum of a quarter mile distant and unseen. I hear 'em sometimes, though. Quote Link to comment Share on other sites More sharing options...
knotzen Posted March 7, 2008 Share Posted March 7, 2008 I hear 'em sometimes, though. When they're playin' with the goats? Quote Link to comment Share on other sites More sharing options...
Dechristo Posted March 7, 2008 Share Posted March 7, 2008 dunno. Doan wanna know. Quote Link to comment Share on other sites More sharing options...
JayB Posted March 7, 2008 Author Share Posted March 7, 2008 and back in the real world (why seattle, of course), feb to feb was a modest 2.something appreciation, heading into the buying frenzy of spring. Where are you getting your stats? I'm surprised that anyone with any skin in the game would go with anything other than Case-Shiller-Weiss. I don't think that their numbers will be out for another couple of months. As things stand now, in KC YOY inventory is up ~70%, pending sales are down ~30%, and one wonders whether the frenzy you speak of will actually materialize. The only factors I see working in favor of such a prediction are the government's efforts to put a floor under home prices by dramatically revising OFHEO conforming loan limits upwards through the end of '08, Congress jettisoning the limits on FNMA and GNMA portfolios, the IRS eliminating the tax liability associated with forgiven loan balances (this might actually accelerate the mortgage jettisoning process, but I suspect that's not what Congress intended), and whatever other actions that they may take to transfer private mortgage liabilities onto the public balance sheet. Will these efforts negate the various factors at work that are presently diminishing effective demand for housing? It's not clear, but I don't think that the distribution of probabilities favors such an outcome. FWIW - my best friend is renting a three bedroom, two bath condo in San Clemente for $2200 per month. An identical unit is available for $800,000. I can put you in touch with the owners if you'd like to make an offer. Quote Link to comment Share on other sites More sharing options...
JayB Posted March 7, 2008 Author Share Posted March 7, 2008 We just signed the papers at 5:00 to put my house on the market. 4 br/3ba 2600 sq ft house on 1/2 acre in B'ham's best neighborhood for $395k. 3 yrs ago, similar houses around here were going for $475k+. Ouch. Judging from the content of your previous posts, I suspect that the home is priced to sell, and that you will walk away from - rather than to - the closing table with a check in your hand. Having said that - any idea what portion of the housing stock in Bellingham is priced at $400K or higher? Anything more than 5-10% of the homes in Bellingham going for north of $400K seems insane unless my sense that the median household income there is hovering around ~$45-50K per year is way too low. I realize that the average household and the average home-buying household aren't necessarily the same thing, Bellingham is supposedly a destination of choice for wealthy retirees, etc, but still... Quote Link to comment Share on other sites More sharing options...
Hugh Conway Posted March 7, 2008 Share Posted March 7, 2008 Blame the French http://www.ft.com/cms/s/0/0220b174-eb98-11dc-9493-0000779fd2ac.html Quote Link to comment Share on other sites More sharing options...
sexual_chocolate Posted March 7, 2008 Share Posted March 7, 2008 and back in the real world (why seattle, of course), feb to feb was a modest 2.something appreciation, heading into the buying frenzy of spring. Where are you getting your stats? I'm surprised that anyone with any skin in the game would go with anything other than Case-Shiller-Weiss. I don't think that their numbers will be out for another couple of months. As things stand now, in KC YOY inventory is up ~70%, pending sales are down ~30%, and one wonders whether the frenzy you speak of will actually materialize. The only factors I see working in favor of such a prediction are the government's efforts to put a floor under home prices by dramatically revising OFHEO conforming loan limits upwards through the end of '08, Congress jettisoning the limits on FNMA and GNMA portfolios, the IRS eliminating the tax liability associated with forgiven loan balances (this might actually accelerate the mortgage jettisoning process, but I suspect that's not what Congress intended), and whatever other actions that they may take to transfer private mortgage liabilities onto the public balance sheet. Will these efforts negate the various factors at work that are presently diminishing effective demand for housing? It's not clear, but I don't think that the distribution of probabilities favors such an outcome. FWIW - my best friend is renting a three bedroom, two bath condo in San Clemente for $2200 per month. An identical unit is available for $800,000. I can put you in touch with the owners if you'd like to make an offer. well that's all nice and stuff, but how relevant is all that in the real world, aka seattle? but to be a complete bore for a sec, aka diplomatic, i certainly have my moments about seattle: how long can this area continue to weather the storm? i figure our "weathering" is gonna consist of flat flat flat with no real appreciation or depreciation for 5 years.... btw, you'll be happy to know our investment apt bldg appraised ~150k higher than when we bought it a year ago. that's right, during the horrors of the meltdown, when no-one in their right mind should be buying real estate, remember? hehe Quote Link to comment Share on other sites More sharing options...
JayB Posted March 7, 2008 Author Share Posted March 7, 2008 Depends. Looks like the same dynamics that have played elsewhere - rising YOY inventories, declining sales volume, increasing DOM. Usually what happens when a market stagnates and sellers refuse to budge on prices is that people who have to sell - divorce, deaths, transfers, foreclosures, etc start to set the market at the margins. Toss in what's happening in the credit markets, incomes, market psychology, etc and I think it's worth asking what will insulate Seattle from the factors that have affected real-estate prices elsewhere in the country. In any given market it may be possible to make money, but the distribution of probabilities derived from macro-factors will render each outcome more or less likely. Why has San Diego, but not Seattle, seen declines? Also - which stats do you use? The median figure from the MLS or the CSW index? Which of the two is more accurate in your opinion? As far as your investment property is concerned, that is great - but since you are doing this for a living, I presume that you actually sell a given property and make a few additional entries on the cost side of the ledger before tabulating your profits. There are a few folks in Sacramento and elsewhere that made similar claims while holding properties that have subsequently seen a rather dramatic change in their value. What is different about this property? On the plus side - I think that most of the factors that I have been droning on about for a while will increase the number of people looking to rent. Probably good news if you have a cashflow-positive property, especially multi-family. Probably not enough to bail out folks who speculated on SFR's and have a monthly nut that significantly exceeds what the property that they own is likely to rent for. I don't think that the rent/own differential that's at play in San Clemente is all that uncommon these days. Quote Link to comment Share on other sites More sharing options...
sexual_chocolate Posted March 7, 2008 Share Posted March 7, 2008 Depends. Looks like the same dynamics that have played elsewhere - rising YOY inventories, declining sales volume, increasing DOM. Usually what happens is that people who have to sell - divorce, deaths, transfers, foreclosures, etc start to set the market at the margins. Toss in what's happening in the credit markets, incomes, market psychology, etc and I think it's worth asking what will insulate Seattle from the factors that have affected real-estate prices elsewhere in the country. i would only be repeating stats about economic stability, limited inventory in particular neighborhoods, an expected 20% population growth in the next decade.... all important factors certainly. and even seattle can't be looked at as a whole for an accurate picture; look at particular neighborhoods. In any given market it may be possible to make money, but the distribution of probabilities derived from macro-factors will render each outcome more or less likely. this is only true from a statistical stand-point (and i am not a fan of statistics). statistics are for the herd, since they represent the herd. i'm a fan of counter-currents, differing perspectives, wide-angle lenses (pointed at the photographer), skulls and flowers, shit like that. daniel johnston, krishna das, bouldering in north central wa represent! (any moment now i will be graced by the sunny skies of another beautiful day in The Canyon....) Why has San Diego, but not Seattle, seen declines? don't know san diego. Also - which stats do you use? The median figure from the MLS or the CSW index? Which of the two is more accurate in your opinion? both have their place. As far as your investment property is concerned, that is great - but since you are doing this for a living nah i don't do it for a living. maybe it has sounded that way, but no, it's more like a hobby of sorts. i've got a construction biz, mainly public entity contracts, which is my main source of funds right now. I have no plans for selling this piece. it nets out positive in cash flow, rents are only increasing, and with the current numbers, i see it appreciating further. i like the idea of paying it off for maximum cash flow, maybe investing in others in the near future. with my construction resources, distressed properties appeal to me greatly (the apt was kinda one: 25k in capital improvements brought net cash flow to around 600/mo, and raised value by about 150,000. that's a pretty good deal in my book (although it's peanuts and not even worthy in someone else's). i also think the possibility is there that the current RE environment will scare off many investors (they are no longer in a position to invest, they are bankrupt!, etc) so if one can be patient, little glittery nuggets might reveal themselves. On the plus side - I think that most of the factors that I have been droning on about for a while will increase the number of people looking to rent. Probably good news if you have a cashflow-positive property, especially multi-family. already happening. look at rents nation-wide (NW is no exception). I don't think that the rent/own differential that's at play in San Clemente is all that uncommon these days. no not really. i think the gap will close with increases in rents and drops in home prices (averages, with much geographic exception). Quote Link to comment Share on other sites More sharing options...
JayB Posted March 7, 2008 Author Share Posted March 7, 2008 I see. Not impossible to make money in a declining market (never been my argument), but the requirements for doing so are rather different than those at play when a particular asset class is increasing in value. Given what I've observed in aggregate and in conversations with individuals, I think that the average person would do well to abstain from purchasing real estate if their sole or even primary motivation is to realize a profit. You may well be quite a bit more astute than the average participant in the market, in which case you may profit handsomely. Maybe we can switch the discussion to whether or not the said success and profit has affected your econo-political perspectives in any way at that point (will a greater good be served by you personally allocating the windfall to private charities, or transfer to the state, etc). As far as rents are concerned, since they generally have to be paid out of earned income rather than borrowing, the constraints on the growth of rents are quite a bit more restrictive than those that operate on home prices. There's also the matter of the condo/townhome inventory projected to come online in Seattle in the next two-three years, some portion of which will revert to rental status, and a few other variables. On the whole, I'd expect the difference between rents and mortgages to be restored primarily by declines in prices, but rising rents will play a role. Quote Link to comment Share on other sites More sharing options...
Recycled Posted March 7, 2008 Share Posted March 7, 2008 We just signed the papers at 5:00 to put my house on the market. 4 br/3ba 2600 sq ft house on 1/2 acre in B'ham's best neighborhood for $395k. 3 yrs ago, similar houses around here were going for $475k+. Ouch. Judging from the content of your previous posts, I suspect that the home is priced to sell, and that you will walk away from - rather than to - the closing table with a check in your hand. Having said that - any idea what portion of the housing stock in Bellingham is priced at $400K or higher? Anything more than 5-10% of the homes in Bellingham going for north of $400K seems insane unless my sense that the median household income there is hovering around ~$45-50K per year is way too low. I realize that the average household and the average home-buying household aren't necessarily the same thing, Bellingham is supposedly a destination of choice for wealthy retirees, etc, but still... Bellingham's an odd market. The local employment doesn't seem to have a lot to do with house prices. We have a lot of retirees bringing a lot of cash in. When they sell their $500k house in Seattle or S. California, they come up here and want a "dream house" for the same money. Thus, there are a lot of 4-5,000 sq ft+ custom houses being built up there. At the mid-end of the market, there's more money here than you would think. A lot of people (myself included) live in B'ham, but telecommute with occasional meetings in the Seattle area. Thus, we earn Seattle area professional wages, but pay B'ham cost of living prices. That's been a real deal in the past, but is becoming less so as house prices have caught up. Rush hour in Bellingham in on southbound I-5 at 6:00 AM! At the lower end of the market, there are a lot of parents that buy condos or houses for their kids, with the intention of selling them in 4-5 years with enough profit to pay for the kid's education. That's worked very well in the past, I suspect less so in the future. We're selling the cheapest house (a cosmetic fixer) in the proverbial best neighborhood. It will be interesting to see where it goes. And no... no outstanding loans on the house. Quote Link to comment Share on other sites More sharing options...
sexual_chocolate Posted March 8, 2008 Share Posted March 8, 2008 Maybe we can switch the discussion to whether or not the said success and profit has affected your econo-political perspectives in any way at that point (will a greater good be served by you personally allocating the windfall to private charities, or transfer to the state, etc). it would only be natural for one's ideas to change, as changes occur in one's life. this can be both a danger, and a sign of maturity and greater perspective. i think it's a danger when these changes hinge solely on self-interest. i've seen people go down this road, and i've certainly felt animal brain cortex pressures to do so in my own life. i believe the government has a vital role to play in mitigating a variety of problems that the private sector has no solid history in mitigating. often the lip service given to "less taxes so i can help more effectively" is either naked greed, or ideological blindness (believe me, i've seen both. some disgusting moments have been spent at small business lobbying group meetings seeing this with my own eyes, and that is a path i'd never wish to go down). i very much believe in a progressive tax system, even though it means greater taxes for myself. Quote Link to comment Share on other sites More sharing options...
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