Ouch. Portland/Vancouver is worse than Phoenix? Man, considering how overbuilt Phoenix is, that's a kick in the nuts.
Those darn actuaries...
Sid,
Remember PHX peaked much earlier. They've already confronted a lot of their correction, leaving us more over priced when compared by a long shot.
Unless I am missing something - this doesn't really tell me anything about how far prices will fall. The conclusion that prices will be lower - by some unknown amount - in two years isn't exactly an earth shattering revelation.
I am somehwat surprised about the very low probability of a price decline in the Seattle MSA.
The general idea ( now that PMI has their boo-boo in a wringer ) is that these are the markets most prone to being overvalued. Lenders use this data to get a handle on how much of a down payment they'll require and additionally how to price the loan.
Of course all of this prior to evaluating the individual borrower. I don't agree with "The Donald" on much but he was right when he said "the banks aren't lending, they are being TOLD not to lend!"
How can this happen? I thought Portland was different! That's what my RE agent told me. Also I thought we were Seattle's little sister city. Seattle is way down there at 1%, so ours must have been a typo. Don't sweat this out. Just keep shopping, just keep buying houses (but put duct tape around the windows to keep the terrorists out) and everything will be alright.
"This doesn't really tell me anything about how far prices will fall.
The fed may cut rates. We may discover a new source of biofuels that crashes oil prices. Nobody can know what future prices will do in the future. We can only estimate probabilities given current conditions.
"the banks aren't lending, they are being TOLD not to lend!"
Sorry, I am a bit naive, DinOR. Who is telling them not to lend?
How can this happen? I thought Portland was different! That's what my RE agent told me.
Keep in mind this index refers to the metro area which includes Beaverton, Hillsboro, and most of Clark County. And who would argue that on average the metro area is overvalued? What your RE agent is referring to is something else entirely. S/he is probably talking up the intangibles of the Portland "vibe" and the so-called "livability" index. Also, oil futures are now over $146/bbl and gas is spendy and will continue to rise. I have a lot of co-workers who bought houses out in Battleground, Camus, or Clackamas County and commute to downtown Portland. All of them regret their decision. So livability is a real thing even if it is vague and no one knows exactly what it means for the future.
GAT Mac,
Back in Dec. 2007 when most of us were off for the holidays the Fed while pushing "Operation Liquidity NOW!" slipped in an entirely new function called TAF. Term Auction Facility.
The Primary Dealers ( the top 20 govvie dealers ) were seizing up the Fed's efforts. The Fed kept pumping liquidity into the system and the Primary Dealers were simply SITTING on it! ( Remember all that mess with the counter-party risk? )
SO!? How to get liquidity down to the regional/super-regional/local banks? Let me introduce you to TAF. Quickly followed by TSLF Term Security Lending Function and BAM! Problem solved! (?)
So my guess is that between Paulson and BB they're "jaw-boning" lenders into to looking for excuses *not to lend so they can remain solvent for the time being. Build up cash and not become an FDIC liability! They probably have to hold off on lending until the Auction Rate failures subside.
Anyone remeber differently, please share.
This is a side conversation, but what is your favorite method to search for an apartment or rental house? Craig's List?
Craigslist? Oh you mean "where dreams are FREE!" When there's no cost to advertise WTH? GO for that "wishing price"!
I'm good friends with several property managers and b/c they all compete, name a building or street address and they'll tell without the aid of any electronic device what that property should rent for!
Including strip malls, office spaces and airplane hangars! Just make that call!
I should hunt down the links, but golly, I'm lazy today! But I have read where at first it was projected that housing prices in some areas of California would drop to 2004 prices, then to 2002 prices, but some are now calling 1999 prices. Ouch! Could this also hold true for Portland?
GAT Mac ~
I found my place on craigslist. It takes time and patience, but I just trawled the listings looking for houses that stank of "we-couldn't-sell-and-now-we're-renting-it-out." I easily confirmed this on Trulia or Zillow.
These places are typically MUCH better than your average rental (all new stainless steel appliances, granite, etc.) and well taken care off. Additionally, the sellers--I mean "landlords"--are REALLY anxious to get someone in there and frequently under-cut the market. If there's lots of other applicants, you can try negotiating a simple "option to buy" for a little extra money and they'll be swayed, because selling is what they really wanted to do anyway (you don't REALLY have to buy it, it's just an "option".)
In my case, I ended up with a close-in NE dream house, 4 bed, 2 bath, 2200 sf, all new appliances, with fruit trees for only $1500/mo. They even took my large dog (something most "professionally managed" places won't consider).
Annie,
You're sneaky! ( But you're my kind of sneaky ) 
"Anyone remeber differently, please share."
On a slightly different level, and a slightly different perspective, shareholders and boards of directors have reeled in many of the shaky loans, especially with some of the smaller banks.
Also JPM must have some good loans to maintain its share price.
"If there's lots of other applicants, you can try negotiating a simple "option to buy" for a little extra money and they'll be swayed, because selling is what they really wanted to do anyway (you don't REALLY have to buy it, it's just an "option".)"
What I don't understand is why many renters don't seek the option to buy. For the relatively small option premium, you could end up quite nice if property values go up. If property values go down, you don't exercise the option and negotiate a lower price.
I also helped a person out and said, "The purchase price does not matter, as you are not going to buy anyway. Agree to a higher optional purchase price, and lower the rent a bit."
Good thing the for most so-called buyers, sellers don't hire me to be their financial consultant. I would increase the monthly payments considerably and lower the purchase price. Then if the sale fails the owner realized a decent revenue stream. And if you are unsure if the market is suddenly going to recover, as some have suggested, then a year later the property might be easier to sell...
JS hit the nail on the head. Homes in desirable close-in neighborhoods are going to hold their value a lot more than those farther afield. Even close-in, we're going to see some softening at the higher prices because the buyer pool for those will continue to shrink, but if you think you will get into a close-in area (that currently has nothing decent for under $300k) for $200k, or even $250K if you just wait, you will be waiting a long time. I think the median and average for the close-in areas will drop because of the upper end, but the floor will not move much, if at all. It's all supply and demand.
"[blahdee blah blah blah]It's all supply and demand."
I'm confused...if its "all supply and demand" then why do close-in PDX neighborhoods have 150-400% increases in supply over 2 years ago.
_ _ _ _ _ _
Could you even create a more obvious sock puppet than Mark S. These trolls suck...and I love a good troll.
Mark, I don't know if I share your confidence. But if my experience is any indication close-in neighborhoods are still holding their value while new homes in the exurbs have dropped dramatically. My wife and I have been looking in the Hawthorne District for about six months. We let several places go because we felt they were asking too much. Our agent (who is also a long-time personal friend) said it was about right. Sure enough they sold for not much less than asking. By late spring we saw the trend. So we made two offers on places in the Hawthorne District over several weeks. The first time we offered the asking price (~$295K) but we lost it because someone bid $6K more. No biggie. We're disciplined buyers. The second case three of us offered the same asking price. What does the seller do? She puts our names in a hat and draws one out. She picked someone else. Who cares. But then right about June 1 everything came to a screeching halt. Nothing was coming on the market. No one was buying. Some sellers took their overpriced out-of-code fixers off the market to wait for a better time. And I watched as the 30-year fixed crept up to 6.5 from 5.5. There was one house we were watching. It started at $349K. Then they dropped it to $339K and finally $329K. Motivated sellers. We offered them $320K, which they accepted and then post-inspection they agreed to an additional $5K for sewer repairs. We closed yesterday. From our experience through all of this I counted it as a good deal. Some conspiracy theorists here will vigorously disagree and argue I paid too much. But I'm telling you from personal experience that there are certain neighborhoods that are most definitely not imploding and Hawthorne is one of them. Given that there aren't that many for sale right now I'm wondering if there aren't a lot of people just waiting rather than putting their place up for sale. And how long will that last? Everyone seems to be in debt up to their eyeballs.
My point is certain desirable neighborhoods have limited supply. Hawthorne ain't getting any bigger. Pearl (shudder) ain't getting any bigger. And so on. That's a lot of baloney about these neighborhoods have up to 400% increase in supply. Where's that come from?
Squeezed how's it going! I take it "Mark S" means I've created a sock puppet for your entertainment? You flatter yourself buddy. And you're a puzzling contradition. Why do you gnash your teeth over house price fluctuations in the 10-20% range and whether or not we're at the bottom or the bottom is about to drop out when you're a day trader taking enormous risks with your money? I don't get that. Back in 1999 I saw plenty of software developers day trading while cutting code. Most of them lost their shirts. One guy I knew lost $30K in a week.
Preview numbers for June over at Jeff Kempe's blog.
Note to sellers from someone who just bought a house: I realize you might not have the money to buy paint or spackle but for chrissakes do a minimum amount of landscaping and clear out your junk! More than once we saw a dog from the curb and so just kept on driving. And for those of you who have renters while you try to sell, it ain't happening. I remember two or three times when renters actively tried to sabotage us. They pretended they didn't hear the doorbell. They glared at you. They closed bedroom doors and said they had personal stuff in there and you weren't allowed to go in. They had dirty dishes piled up everywhere, kids screaming, or the stereo was on so loud you couldn't talk. I felt sorry for them because they didn't want the place sold out from under them and we were the enemy. But from my point of view it was a waste of my valuable time. Huge turnoff.
Short sales. (That's where the seller has asked his or her bank if they'll agree to take a loss on the amount owed on the house in exchange for wiping the slate clean. Or something like that.) Avoid them. They're trouble. Your realtor doesn't like them because the bank refuses to pay his or her fee. The bank has already told the seller that they'll go along with it only so long as the seller keeps making payments on time. So they don't give a damn about your timetable or offer. They're getting paid so why should they care? If you find major problems during the inspection, tough luck. The bank won't negotiate. And they won't give you a closing date. They'll just hold onto your offer until the seller stops making payments or a better offer comes along. We saw a fantastic house that we really wanted. The poor seller had gone through a divorce and she needed to sell badly. She was heartbroken but said she was ready to start over. But it didn't matter what she wanted, the bank was in the driver's seat. We couldn't make a deal.
They say it's a buyer's market. But that's a hollow marketing phrase. There are several problems facing buyers right now just as there were during the bubble. They're just a different set of problems.
"day trader taking enormous risks with your money"
i'm comfortable with my risk management...are you?
"Why do you gnash your teeth over house price fluctuations in the 10-20% range"
call me crazy but identifying areas where the conventional wisdom is wrong and placing contrary bets is one of the things i really enjoy!
"10-20%"
LOL...those are your estimates not mine.
"that there are certain neighborhoods that are most definitely not imploding and Hawthorne is one of them."
a strawman. to the best of my knowledge no one here has stated that prices are imploding *now*. housing price declines in PDX have just started!
*gives JS temporary cognitive dissonance antiserum injection*
Unfortunately for you that means that you probably bought at or near the peak.
*Troll Critique*
Adding "or something like that" when you obviously know what a short sale is outed you as a troll.
The score:
You got me to respond +2.
The well executed strawman +2
The dig about trading +1
Friendly enthusiastic greeting +1
A fine effort. I score it 6/10 points.
My previous score was for
JS | 07.03.08 - 1:20 pm |
_ _ _ _ _
JS | 07.03.08 - 2:16 pm |
Humorous stories about dumb sellers and disgruntled renters +3
Pretending ignorance about short sales -2
Divorce story +2
Buyers market spin job +2
final score 5/10
Hm, I always thought a troll was someone who hit and ran, posting a howler just to incite a dozen or so flaming posts in reply, followed by a dozen more anguished souls who shouted DNFTT to deaf ears? Aren't I violating some basic code of the troll ethic here? Or am I just a troll newbie still learning the ropes? Maybe bandwidth isn't free and skateboarding really is a crime? Gosh, I hadn't thought of that!
Or would you prefer to go back to the glory days of watching the imminent decline of western civilization with a small gaggle of uncritical yes men? Isn't this more interesting?
Uncle_Git-
Jeffrey Kempe strikes again. This time it's with this statement, "Clearly the gap between list price and sold price is widening."
How clear is it?
Well I performed a minimal statistical analysis on the data, as provided by Kempe himself, as he received from Terradatum. Here is what I found. The average gap between For Sale Median (FS) and Sold Median is $44,500, with a standard deviation of about $10,400. Every month before and including April 2007 is above the average, and all but one month after April 2007 is below average. The one month is September 2007. The exact difference for June 2008 is $31,900, or over 1 standard deviation below the average. The difference for May 2008 is $34,400, or about 1 standard deviation below the average. The difference for April 2008 is $43,000.
Why is Kempe's obvious never so obvious to me?
The difference between Under Contract Price and Sold price has an average of $3,500 with a standard deviation of $6,600. The maximum difference (peak) happened in April 2007 at $14,000. June 2008 was 9,950, but there is a lot of variance in the data.
=====
I should give credit, however, to this observation:
"In the year ended June 30 - Terradatum numbers pulled from the MLS - there were 8870 fewer closed sales in the Portland Metro area than the year before, or a difference of about $2.5 billion"
It's something that I have been commenting on for the past few months. Total sales volume has been trending lower on a YoY basis. The Terradatum data suggests that the sum of the 12 months over the following 12 months is $2.5 Billion. If there are 6,000 agents (I read that somewhere) in the PDX area and if we assume a 6% commission, then each agent has earned $25,000 less on average. (2.5B*.06/6000=$25k)
Since asking prices have remained flat (as measured with average and standard deviation), the number of closed sales is the problem, which Kempe correctly points.
Interestingly enough, while Kempe claimed that inventory was trending lower (but his actual predictions were against the downward trend claim), inventory continues to climb, albeit rather slowly. We are probably getting close to the peak--both in terms of sellers frustration as well as 2008 inventory.
To JS-
For those of us on the other end of the scale: I have noticed homes here in Beaverton/hillsboro have gone down a bit. Not historic handsome bungalaows, but very decent lower cost condos, clean smaller homes and such for under 180K. Now, I know it is not near all the fashionable resturants and such but it is close to public transport and shopping, and it more quiet and diverse out here. If people are looking for a lower cost place to have as their own while doing true artwork ( I freelance write, and sorry, a busy scene all the time would be distracting) I think Beaverton would be a good place.And if you dont want to buy, rents are steady at about $750-$800/month.
Yikes! I think I am turning into a Beaverton booster. Gross.
If there are 6,000 agents (I read that somewhere) in the PDX area and if we assume a 6% commission, then each agent has earned $25,000 less on average. (2.5B*.06/6000=$25k)
JP, I heard from my agent that many have quit. She also said that a bunch of them have gone without a paycheck for six or more months. She told them to save their money for a rainy day (and boy was that some thunderstorm last night) but few listened to her.
JS, that really doesn't surprise me. Considering the number of realtors who jumped out of tech into real estate, I'm already seeing both signs of desperation (lots and lots of ads on any available surface, for instance) and signs that they're just giving up and returning to tech. Yeah, they know that they'll probably get laid off two or three times in the next year, but at least they're getting paychecks.
One of the places that I have been watching finally went pending.
3BR 2BA 1151 sq ft - $134,900 was the final listing price. It'll be interesting to see for how much it closes.
http://www.johnlscott.com/
proper...tingID=31666459
All of you "close in" trolls need to do is look at the long term charts and see where prices will end.
Also check out all of the new "close in" lofts that have been built.
Wages have been flat for many many years and now credit is dead so stop dreaming about "close in"
Perhaps this will lend some perpective:
“FOURTEEN years ago, Yoshihisa Nakashima looked at this sleepy suburb an hour and 20 minutes from downtown Tokyo and saw all the trappings of middle-class Japanese bliss: cherry-tree-lined roads, a cozy community where neighbors greeted one another in the morning and schools within easy walking distance for his two daughters.
So Mr. Nakashima, a Tokyo city government employee who was then 36, took out a loan for almost the entire $400,000 price of a cramped four-bedroom apartment. With property values rising at double-digit rates, he would easily earn back the loan and then some when he decided to sell.
Or so he thought. Not long after he bought the apartment, Japan’s property market collapsed. Today, the apartment is worth half what he paid. He said he would like to move closer to the city but cannot: the sale price would not cover the $300,000 he still owes the bank.”
Take It From Japan: Bubbles Hurt
Yoshihisa Nakashima in front of his condominium building in the suburb of Kashiwa, far from his government job in Tokyo. His apartment is worth half of what he paid 14 years ago, during the real estate bubble.
By MARTIN FACKLER
Published by The New York Times: December 25, 2005
JS
Sounds like you're trying to justify your buy.
You're a knife catcher. Accept it.
Sorry, but Portland is not different.
Look all over "The Pearl" and every other corner where they've built new lofts. Vancouver and every other ex-burb with MAX access affect you.
Downtown Hawthorne has traditionally been full of coffee baristas and bartender hipsters/hippies. Not much for high wage earners.
I don't like to rub it in the faces of fucked borrowers, but you are cocky and now you caught a falling knife.
If you don't care about cash and can handle the ride down then it doesn't matter. I hope that's the case. Good luck.
"Look all over "The Pearl" and every other corner where they've built new lofts. Vancouver and every other ex-burb with MAX access affect you."
Last time I checked, you couldn't catch the MAX in Vancouver. We'll see what happens with the new I-5 bridge. Also, living out in Beaverton or Gresham, where you have to spend an hour on the MAX and hope you don't get assaulted, is not the same thing is being able to bike into downtown in 20 minutes.
It's too bad that people can't offer opinions that differ from the herd mentality on this blog without incurring personal insults and attacks. Jerks.
Mark C.
Explain to me exactly why housing prices in Portland and everywhere else in this country have doubled since 2000, while wages have been flat to down?
It was a credit bubble that has since burst. Bear Sterns, Citi, Lehman Brothers, Wachovia etc. are all getting spanked because of it.
Explain this to me? It was a world wide bubble. Check the thehousingbubbleblog.com if you doubt this. Every market thinks "It's different here"
Portland has lagged, but it will return to the long term chart.
The truth hurts. Bubbles like this in RE only hurt the working man.
Show me where Portland has gained a huge influx of high wage jobs to support these outrageous home prices?
Wake up.
But if my experience is any indication close-in neighborhoods are still holding their value while new homes in the exurbs have dropped dramatically.
My RE agent parroted this line when I told him I see a lot of downside risks to pricing right now. I asked, and Clint8200 provided a neighborhood summary of prices. It shows broad declines across most of the areas, except North Portland (for whatever reason).
http://
portlandhousing.blogspot....ighborhood.html
Or would you prefer to go back to the glory days of watching the imminent decline of western civilization with a small gaggle of uncritical yes men?
Small minds such as sneezed see the world in simple black-and-white terms. You are either an ally or an enemy. You are either with us or with the terrorists. You are either good or evil. There is no room in their simpleton ideologies for reason or nuance. So to you, JS, I enjoy your posts and want you to keep them up. This forum needs a little more diversity of thought, and I particularly liked your observations on renting while selling and buying in a short sale.
Annie said: I just trawled the listings looking for houses that stank of "we-couldn't-sell-and-now-we're-renting-it-out."
I like this approach, but besides resorting to sabotage, how do you prevent sellers ("landlord") from selling the place from underneath you. Did you write a 2-year contract? Does the purchase option cover this situation?
If you click the link I provided it shows Portland’s value at 8.7 rather than the 79.7 I have listed. I copied & pasted the information so I’m not sure how this happened…
Butch,
I agree with most of what you wrote in your last post. There is/was a bubble, although some areas of the country escaped it. I'm certainly not saying that close-in neighborhoods will be completely immune from the correction and that the crazy appreciation will shortly resume.
What I am saying is that I think the flight to the 'burbs that began shortly after WWII is reversing. That reversal has been going on for a few years now, and is now accelerating due to high gas prices, which I think are here to stay. Since areas close to city cores are already built out, supply (for detached single-family homes) is pretty much fixed. When supply is fixed and demand is increasing...
Look at Sacramento. The market down there is the bubble poster child. Some suburban-area declines exceed 40 percent. But even there, the nicer close-in neighborhoods have held up fairly well.
Mark C.
I'm sure that the good "close-in" hoods will do better other than the newly "gentrified" No-Po neighborhoods and anything south of Division and east of 82nd.
The problem is you could buy a fantastic house in the "West Hills" which will always be the top of Portland RE for 500K in 2000.
That's the benchmark
I'm sorry, but RE in PDX has a long way to go. The long term chart always shows the way. Down is the trend.
Median income will always dictate home prices. You can't dispute that PDX incomes have been flat to down.
I don't want people to lose money, however things got way out of control.
You saw all of the cranes dotting the skyline. I don't remember new business other than retail arriving with the cranes.
Good luck
"renting while selling and buying in a short sale"
If you believe those were the musings of a simple home buyer I've got a bridge to sell you.
"Small minds such as sneezed...simpleton ideologies for reason or nuance."
This simpleton wants to know whether a certain bottom calling ex-credit suisse banker recently bought a home.
Sneezed
It's July and the sun is shining.
What do you think all of the trolls and Re shills will be saying once the rain starts pouring? July, Aug, Sept, Oops Oct. We all know how dark it gets after Oct............
PDX RE will meet its long term trend at best.
PDX RE will correct below its long term trend due to bank REO's. See the Rennasance(sp) near term bankrupcy for the guide.
World-wide bubbles also affect the NW.
Sorry to the Trolls, but this RE has hurt the working man the most.
Mark C.,
I would point out that prices collapsed even in chic neighborhoods in Japan. This is despite some of the highest urban population densities and strictest growth control policies.
"But even there, the nicer close-in neighborhoods have held up fairly well."
That all depends on what your definition of "held up well" is.
http://www.trulia.com/real_estat...acramento/1138/
I, too think close-in areas won't decline like the areas such as Battle Ground, Happy Valley, Gresham, etc but will still take a hit because of the affordability factor. And given the fact that many of us do not work downtown, what's the advantage of close-in except for living in a hip area!?!?!
I tried to explain affordability over at RePDX and got reamed for it. I am sick of folks saying that median income families ($67K) can afford $300K mortgages.
I'll pose the question here: how much do y'all spend per month on gas, auto insurance, food, maintainance, repairs for car and home, savings, entertainment, etc (excluding PITI and utilities). Can you all live off off of $1k/mo for those things?
What do you think all of the trolls and Re shills will be saying once the rain starts pouring?
I don't think anybody has said prices in Portland won't continue to decline. Who are these trolls you have tagged and disregarded? JS has suggested that certain neighborhoods won't decline as much as others, and some perhaps not at all.
I have suggested Portland will not decline into some post apocalyptic Mad Max nightmare (which would be a paradise for some here). For that I have been accused of being a troll, a closet RE agent, or a closet RE investor who is defending the soundness of my portfolio. Good gods, guys, pull your heads out. I am an IT consultant. I own no real estate. At the bottom of the post 9/11 recession during which I was out of work for 2 years I never once considered turning to real estate for employment, despite the fact it was the only industry not completely under water. That and making useless facial recognition systems for the Department of Homeland Security. Here I even proposed a model in which the Portland area might decline 38% from its July 2007 peak by April 2011.
http://gregorytucker.us/?p=53
Stop psycho-fraking-analyzing people you don't know. You are not psychics. You are not even psychologists. You have no gifts to portend the future. Nobody knows what will happen, especially economists and post-apocalyptic doomsday soothsayers. Not everyone who can spell the word nuance is a troll.
Clint ...
Since you didn't provide a link I looked up the PMI report myself, here. The actual Portland Metro number: 8.7, somewhat disparate from the 79.7 you have listed. Interesting how many are willing to believe what should at least inspire intuitive doubt. Sorry to burst the, well, bubble.
JP ...
Forgive me, I forgot you don't do trends.
Actual numbers:
Closed sales in June of 2007 averaged 2.83% off the listing price when they went pending.
June 2008: 5.30%.
And the numbers I projected for the total properties for sale are close to the actual - PDF here. Please note because of the increase in expired listings coupled with the decrease in new listings, the trend continues: down.
Best.
Sorry, corrected link to PMI here.
bearlee-
Very early on the analyst in me asked a fundamental question: How much of a car can a person afford? While my original thought was about transportation, it works the same for housing and other aspects of life.
Unless a person has lots of capital, I settled on the purchase price of a car should not exceed the annual salary of the purchaser. Sure there are many other factors, but as a rough estimate, one time annual salary is a nice starting point.
Now lets go on to housing. The question would be how many times an annual salary should a person spend on a home. Personally I don't like to see a multiple of more than about four. Thus a $67k annual income should look for a place that is under $265k. The $300k place is doable if conditions are right, such as a significant down payment, but a little heavy and risky. Very low interest rates can push up the purchase price, but we cannot escape expenses like maintenance, taxes and insurance.
You pose a question: Could I live off of $1k/mo? There are plenty of people who do.
OK. The old fashioned way:
http://phx.corporate-ir.net/phoe...71100&
highlight
Jeff:
Clint included the link, but I will repost it here:
http://phx.corporate-ir.net/phoe...71100&
highlight
That being said, the report was changed on July 3. Portland was listed as "1 Portland-Vancouver-Beaverton; OR-WA - 79.7"
Later it reads, "5 Portland-Vancouver-Beaverton; OR-WA 8.7"
Now on to your mathematics:
"Closed sales in June of 2007 averaged 2.83% off the listing price when they went pending.
June 2008: 5.30%."
First where do I find these numbers in the report presented?
I certainly didn't find it in the report:
http://jeffreykempe.com/wp-conte...median-uc-
s.pdf
Do you know what Simpson's Paradox is? Your use of ratio data is subject to similar errors in reasoning.
The data in the report includes:
* "FS Median $"
* "UC Median $"
* "Sold Median $"
* "New Median $"
From that data provided I don't think we can get to the percentage of closed sale price to listed price, given a closed sale.
In other words, the data provided does not support the claim you are making.
As far as trending goes, you are right if you say that I prefer real analysis (no pun intended) to hand waiving.
As far as the inventory trending lower claim (where you suggest actual numbers will be higher), sooner or later I am sure you will be right.
Rather than trend analysis, I am going to guess you are using a recurrence relation analysis, but you still are yet to disclose any methodology, other than hand waiving or suggesting it's obvious.
By the way, I did go to the original source of the report, and I did observe what Clint8200 originally posted was true to the source. PMI obviously changed it today or yesterday.
I noticed this crowd is so far silent on the implications of the correction. PMI is no longer predicting a catastrophic failure of the Portland housing market, which should improve the quality of loans and costs for MI. Furthermore, I suspect this blog will drop PMI news releases in the future, as they no longer coincide with the official, apocalyptic conclusions espoused by the bubble blogging community.
GAT Mac-
"Furthermore, I suspect this blog will drop PMI news releases in the future, as they no longer coincide with the official, apocalyptic conclusions espoused by the bubble blogging community."
Why not post updates from time to time. I'll admit that PMI news isn't something that I track. I do think it was worthy of a post when Portland was ranked near the top.
The PMI report is more than odd. Movement +/- 10 would be understandable, but 70 points??? That is a blinking red light to me.
Dirty data somewhere.....
>As far as trending goes, you are right if you say that I prefer real analysis (no pun intended) to hand waiving [sic].
No, JP, you don't. Real analysis would suggest an attention to accuracy. True to caricature, you dismiss anything inconvenient to the bubble paradigm, and instead try to deflect and impress with arcane references.
Thus you're perfectly comfortable shrugging off data that's off by a magnitude of ten, that takes the Portland Metro area from a risk assessment of one to that of five, that pretty much renders this entire post and all the comments moot, and launch into an 'analysis' of secondary data with tertiary significance.
[But for the record: My original observation was based on the fact that, for a five month period, the median value of homes going pending is trending UP, the median value of closed sales DOWN. If you knew anything about real estate, you'd know there's no way to extrapolate absolutes because there are too many variables in the data given: Not all pending sales close; listing price at the time of sale can differ significantly from the original listing price; closed sale prices don't reflect concessions. The ratio was established by adding the listing and closed prices of the actual closed sales in June 07 and June 08 dividing accordingly by the former.]
One more quick example:
>If there are 6,000 agents (I read that somewhere) in the PDX area and if we assume a 6% commission, then each agent has earned $25,000 less on average. (2.5B*.06/6000=$25k)
Assuming 6% - it's actually closer to 5.5% - that amount is split between listing and selling brokerages, for the sake of argument 3% each. From that is taken desk fees, transaction fees, administration fees, E&O insurance - those fees are used to pay office expenses and the salaries of administration personnel - leaving the typical agent with about $5800 on a $300k sale. From that, of course, are paid assistants, marketing fees, licensing fees, NAR fees and MLS fees.
So again, JP, stellar math operating on profoundly mistaken assumptions.
Suggestion: go wow people with a treatise on Simpson's Paradox. Real estate isn't your strength.
Sounds like you're trying to justify your buy.
Nope. I don't have to apologize to you or anyone and I don't give a damn whether you think a home purchase is a good idea or not. My participation here is based solely on the naive idea that we are each enriched by the free exchange of ideas and diverse opinions.
Sorry, but Portland is not different.
What do you mean? That the local housing market will not correct further? I've never said it won't. What I have said is that the local housing market is far more complex than you and some others will admit. You cannot make sweeping assertions about whether I'm an idiot for buying a house based on statistical indices that measure aggregate data. It doesn't work that way. Reality intrudes.
Look all over "The Pearl" and every other corner where they've built new lofts. Vancouver and every other ex-burb with MAX access affect you.
For the record the Pearl District gives me the creeps. I used to work there at a consulting firm. Is it a requirement of every loft resident to own a dog or something?
Downtown Hawthorne has traditionally been full of coffee baristas and bartender hipsters/hippies. Not much for high wage earners.
I hear your nostalgia. And elsewhere you mention that the "working man" on his median income can hardly afford houses anymore. I'm not going to disagree with you at all. I've been ranting for years that something is fundamentally wrong with our economy when a household making $40K a year can't afford to buy a house. But cities change. Neighborhoods change. Gentrification happens. As Tom Wolfe said you can never go home again. The Hawthorne of your memories will never come back. And I suppose I'm one of the culprits you loathe. I make serious money as a software engineer because I'm very good at what I do. I don't take that for granted. I'm lucky and I'm grateful that I can afford a nice home in a fantastic location. I guess what I'm saying is, us high wage earners are moving in and moving in fast.
I don't like to rub it in the faces of fucked borrowers, but you are cocky and now you caught a falling knife. If you don't care about cash and can handle the ride down then it doesn't matter. I hope that's the case. Good luck.
You don't know the first thing about me or whether I'm a "fucked" borrower or not. You don't know how much I have in my emergency savings account. You don't know my 401(k) plan. You don't know how much I put down, my debt-to-income ratio, whether I even have debts (I don't, except for a new mortgage), or what percentage of my income the mortgage payment represents. Also, you don't know the future. You sound like a loser to me rather than some fancy stock broker who can make reasonable predictions about the business cycle. Pull the beam from your own eye before pointing out the splinter in mine!
Jeff:
"Real analysis would suggest an attention to accuracy."
Read this Wiki article about real analysis:
http://en.wikipedia.org/wiki/Rea...i/
Real_analysis
Which, in part, correctly says "the scope of real analysis is restricted to the real numbers, and this defines the range of tools available.
Real analysis is closely related to complex analysis, which studies broadly the same properties of complex numbers."
I am not sure how you equate "Real analysis" to mean "an attention to accuracy." You just continue to show how clueless you are about mathematics. Recommended reading for you: Walter Rudin, Principles of Mathematical Analysis. (start with real analysis before moving to complex analysis)
I am sure Powells has a copy, but here is the Amazon link:
http://www.amazon.com/Principles...15192883&sr=8-
1
As far as the average revenue per agent, taking total revenue and dividing it by total agents is a reasonable way to show magnitude. There are going to be some agents who are impacted far less, such as yourself. And others that are impacted more, such as a broker who oversees several agents. Is it fair to say that all brokers are agents?
In the past I have discussed, however, that a $10,000 reduction in selling price impacts the selling agent for about $150 ($10,000*0.06/4=$150). However the other $450 in revenue still exists, so others are still realizing revenue. If you want to make a supervisory argument, then I completely agree that some broker type agents have had far greater reductions in income.
Again expenses may be separated from income. If we want to talk Gross Margin or Gross Profit, then expenses must be considered.
I note that you ignore this issue:
"Closed sales in June of 2007 averaged 2.83% off the listing price when they went pending.
June 2008: 5.30%."
First where do I find these numbers in the report presented?
Odd that PMI data change. Probably just a mistake in the original, I suppose.
Still, didn't we have something a while back about MGCIC (another PMI outfit) including Portland on their watch list?
GAT_Mac, I will not respond to your histrionics. The other posts are far more interesting and I find your interweb rhetorical style boring.
My participation here is based solely on the naive idea that we are each enriched by the free exchange of ideas and diverse opinions.
One of the classic signs of a troll is the indignant denial that they are here to "exchange ideas". Another classic sign is the use of extensive tagged quoting.
You cannot make sweeping assertions about whether I'm an idiot for buying a house based on statistical indices that measure aggregate data.
A classic double strawman argument. Accuse posters of making sweeping generalizations without acutally debating specific generalizations. Accuse posters of an imagined slight based on a topic "statical indices" that was never addressed in this particular thread. Good but a bit worman like.
And I suppose I'm one of the culprits you loathe. I make serious money as a software engineer because I'm very good at what I do.
Mock sympathy followed by claims of elitist superiority. The last sentence had a distinctly randian flavour to it. This was very well done JS.
You don't know the first thing about me or whether I'm a...You sound like a loser to me rather than some fancy stock broker
More mock indignation followed by the a classic referential ad hom attack. The only problem is that the attack was misdirected. Attention to detail and good googling skill is the hall mark of a pro. JS fell short here.
Troll on boys.
Sorry about that mortgage.
You'll know what the term "underwater" means once the rain starts.
Your so called skills don't seem to translate to reading a long term RE chart and understanding long term pricing patterns. Oh well.......
But, you're all independently rich, so it doesn't matter........right?
A discrepancy in a PMI report leads to accusations of bubble head blog bias. LOL just LOL.
Unlike realtors and the NAR we don't resort to making shit up:
http://www.iht.com/articles/ap/2...Sales-
Error.php
Note that this was discovered ONLY because a "disgruntled" realtor reported the discrepancy. MLSs and the NAR use opaque "in house" statistical methodologies whose soundness relies on the ethics of commission-starved sales people.
If someone believes nonsense like this is not happening in the local RMLS I've got a river-view lot in Bend to sell them.
_ _ _ _ _
I find the terms apocalypse and dooms day to be amusing. This the language of the Goldilocks/permabull crowd.
This is no apocalypse...just a badly needed correction.
One of my first forays into online polemics, JP, was on the opposite side of someone who had both a PhD in philosophy and a law degree. So steeped was he in esoterica that he insisted that cows deserved constitutional protection. His arguments rested on his consistent redefining of terms to fit his preconceptions, which is how, in his mind, cows were in fact persons. He was nothing short of an idiot.
>As far as the average revenue per agent, taking total revenue and dividing it by total agents is a reasonable way to show magnitude.
Reasonable, I suppose, unless you're interested in making sense. If you are, it's useless, inaccurate nonsense.
>First where do I find these numbers in the report presented?
You don't.
===
Jeff-I can only hope you provide half as much entertainment next month.
Your so called skills don't seem to translate to reading a long term RE chart and understanding long term pricing patterns.
I am open listening to the facts, Butch, if you would come to the discussion with any.
Sorry about that mortgage.
Karl Marx? To me it looks like Groucho Marx...
You'll know what the term "underwater" means once the rain starts. Your so called skills don't seem to translate to reading a long term RE chart and understanding long term pricing patterns. Oh well.......
Ok Dad, Why don't you school me? Forget me and my situation. Let's take the worst case scenario of a poor sap in PDX somewhere who bought a house in 2005 for $400K which has now plummeted in value to $300K. He didn't take out a HELOC. He likes where he lives. He has no plans to move. So what? Those are paper losses. You make it sound like there's a margin call coming with your "underwater" metaphor. What's your point? Or is this just a warning that I need to clean out my gutters this fall?
He has no plans to move. So what?
I hope he doesn't lose his job because his company sends his job overseas or cutbacks or when web 2.0 implodes or whatever. Good luck.
As I walk past 610 NW 22nd Ave. in Portland, I study the ecology of the unsold unoccupied large house.
Interesting to note the green sheen of moss growing across the porch, the rotting wooden posts of the stairway, the odd hanging wires, the general condition of the structure.
Well, I finally got around to searching the net and found this link on craigslist:
http://portland.craigslist.org/m.../
741513710.html
Apparently they are trying to rent or sell, but the sale price is not listed.
There are other similar houses across the street from this one. Huge magnificent homes that are obviously unsold, being rented and rotting from neglect.
Housing Bubble Ecology 101
GAT Mac ~
Sorry it took me a while to post back to you.
Basically, my strategy of renting a previously-for-sale house requires that the market stay depressed. It doesn't even need to take a nose dive; things just have to stagnate for a while. It's a risk, but I think it's a pretty safe one.
The owners of said house have already found their bottom (the price below which there is "no sale") They trying lowering the price; they tried waiting it out; now they are simply pulling it off the market till things look favorable. I join the school of thought that a favorable market's return is 3-7 years out.
Also, you can write safeguards into your lease, such as "right of first refusal" and "option to buy." In my case, they included an option to buy with a nine month lease. They wanted 9 months rather than a year, probably because that ends us up right in May. If they're aiming for the "spring bump", they're betting the market will recover by next year. In actuality, I think they'll be quite happy to renew my lease next May, as I expect a different market after the Fed finally hikes rates.
The other than that, be a trouble-free renter. Don't call them if you can fix it yourself (even for the big things... just see if they'd rather you just send them the bill). Remember, they don't want to be landlords. The more they trust you to pay the rent on time--and the better you take care of their "investment"-- they less likely they'll be to get desperate and do a short-sale.
squeezed: "This is no apocalypse...just a badly needed correction."
On this we completely agree.
I've never enjoyed so much watching a financial adviser argue with a footwear salesman about statistical analysis.
Do you ever notice Mr Kempe keeps spam comments on his blog to make it look like there is more interest in what he has to say? Cute.
GAT_Mac,
Just as I believe the current malaise is not the end of the world the great depression was also not an "apocalypse". In fact, IMO it produced some of America's finest moments in history.
Recession, boomer retirement, and immigrant outmigration (see recent economist) make it conceivable that housing will surprise significantly on the down side. I personally believe that we will test the premise that real estate never goes to zero as this bust develops.
>Do you ever notice Mr Kempe keeps spam comments on his blog to make it look like there is more interest in what he has to say? Cute.
Ah, I have to, Ralph, just to show activity. I find that many people who might otherwise comment are much more comfortable commenting behind my back. Pusillanimous, certainly, but it makes them feel, well, more secure.
===
Clint...
Since I haven't heard back via email, and since the post still stands as originally written (and manifestly wrong): link here.
It's your credibility, to do with as you like.
A used house salesman talking about credibility?????
Are you kidding me? How many people did you put into overpriced homes just to get your commision, while they went into foreclosure later.
Shame on you Jeff.
I personally believe that we will test the premise that real estate never goes to zero as this bust develops.
Some areas have seen this, especially in the hardest hit areas of California and Michigan. This bubble blog and other news sites have documented worst case scenarios, such as exurban developments turned to barren wastelands, or entire areas that have become worthless due to total abandonment and rundown conditions of the properties. I recall reading in New York Times that some jurisdictions were taking lenders to court to maintain their foreclosed properties, because abandonment was blowing home values in the neighborhoods.
So there are plenty of examples in America to document how real estate goes to zero value. The debate is whether, when, and how this will come to Portland.
I think that although the economy is worsening, the worst of the financial panic is behind us. I don't think we will see any more major credit runs like Bear Stearns within the next couple years. Maybe--I never say never. But I think the large systemic concerns are past. What I see for the next two or three years is a period of 70's area stagflation, during which we see anemic growth and high inflationary pressures that keeps interest rates on steroids.
However, I don't think any areas within Portland will go down to zero, even as prices will continue to deteriorate. I don't know about the outlying areas of the Portland exurbs. I have avoided these areas like the plague, except to visit Fry's.
It's your credibility, to do with as you like.
I agree with Jeff on this one. Clint8200 needs to publish a correction. PMI corrected the original report. Leaving the uncorrected information to hang out there is a Carl Rove-era tactic of disinformation.
GAT Mac-
"PMI corrected the original report."
Well, they certainly didn't make much of an announcement...
Let's wait to see what the next PMI Market Risk Index shows. If you move a digit point for the first edition of this report you have the second edition number. One of them is a clerical error. There is no reason to assume the second is correct without the author saying so in a footnote.
Clint could add a note at the end to comment on this change.
Am I the only one who is out enjoying the three day weekend?
Thanks to everybody who helped sort out the discrepancy.
-Clint
To be just under Detroit and ahead of Newark is nothing to be proud of...
Detroit-Livonia-Dearborn; MI 11.1
Portland-Vancouver-Beaverton; OR-WA 8.7
Newark-Union; NJ-PA 6.5
"The worst of the financial panic is behind us"
As current headlines attest this is wishful thinking.
Its interesting that none of the "its over" crowd is paying attention to the VIX. I have...
*cue evil cackling laugh*
America's heaping piles of financial garbage are still hidden away by CB intervention. IMO, we have not yet seen *real panic*.
IMO, we have not yet seen *real panic*.
True. The debate is whether we will see such a scenario in the next few years. I think the likelihood is low, but as always I may be wrong.
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