[photopress:st_joseph.jpg,thumb,alignright]A couple of weeks ago I was contacted by one of the producers of The Story with Dick Gordon to do a radio show on the practice of burying St. Joseph statues. The call came to me as a result of a brief interview and quote of mine in The Wall Street Journal. You may have seen it in The Seattle Times when they picked it up and ran it on more than half of the of the Real Estate section’s front page. I’ve even seen articles complaining that WSJ’s original article was the most emailed link, over and above many more “important” articles.
I’m not going to rehash the story of whether or not you should. The link to the radio program gives my general feelings on that issue. This post is to help with the confusion of which statue one should use. You will notice that the photos in The Wall Street Journal’s piece show two completely different St. Joseph statues. The first one is more like the one on the left. The image further down in the article is like the one on the right.
Can you order St. Joseph Online? Or do you have to make the trek to Kaufer’s at 9th and Harrison and get the statue shown on the left, sold separately in the box on the lowest shelf, and not the version sold in the kits?
I recently accompanied an agent to Kaufer’s who needed two statues for two homes and advised her to buy one of each. St. Joseph is one of the saints who has more than one cause for intercession. He is the Patron Saint of Families and he is the Patron Saint of Workers. For those with a more curious interest here is a list of the Patron Saints of various endeavors and maladies.
So if the Father of the family has been relocated and his concern is for the separation of his family, then the statue of St. Joseph holding Jesus may be more appropriate than the one sold in the kit. If the family is in distress as a result of the home sale or purchase, then St. Joseph as Father of Jesus shown on the left is the statue to use. If you are an agent who wants to sell the house as a result of your hard work and efforts, then you would use the statue on the right. This is the one sold in the kits and the one an agent would use most of the time.
For flippers who have done everything well and right within their power to improve the home, and have been reasonable in your sale price expectations, well then possibly St. Joseph on the right will do the trick. But if you have piled up the carrying costs to the point where selling anywhere near the price needed to make you whole is even remotely possible, you may want the statue sold just to the left of St. Joseph on that bottom shelf at Kaufer’s. It is the Statue of St. Jude. The Patron Saint of Lost Causes.
What utter BS!
This topics invokes all kinds of responses. Still, it seems very important to many, and the media certainly never tires of it. Not sure why that is.
I think that a voodoo fetish doll would be even more appropriate, and would work just as well
if one believes that there will be no consequences to having a zero-down, interest only loan, with no income verification, then I guess one can bury a statue, too, and expect it to work. It all sounds like magic to me. But then, what do I know.
Maybe some of the less respectable brokers/agents out there might find use for this
http://www.magickbroomcloset.net/LAW%20STAY%20AWAY.jpg
Instead of burying a statue, why not try lowering the price?
Thanks for this article, Ardell. Perhaps I can shed some light upon the more curious comments, here.
Icons are not worshiped nor are they voodoo; they convey images or thoughts of God to faithful Catholics. So, burying an icon of St. Joseph is pointless unless the home seller is praying for the intercession of him.
Ardell points out the difference in the images. St. Joseph, the patron saint of families, reminds us to pray for his intercession to reunite our family (when one spouse has relocated). St Joseph the Worker is the “image” we think of when we pray to St Joseph to intercede and reward our hard work.
The popularity of the St. Joseph “home seller kit” spikes during bad markets. While the “act” of burying the icon is pointless without Faith and prayer, many non-Catholics choose to “cover their bases” by performing this simple act.
I can understand how a non-Catholic would think this was “voodoo or magic”. Many things we do are pointless to those ignorant about our Faith. A good book that explains the “mysteries” behind the Roman Catholic tradition is available on Amazon:
http://www.amazon.com/Why-Do-Catholics-That/dp/0345397266
I was confused about why Muslims faced Mecca when they prayed, why Jews had a mezuzah on their doorway, and why saved Christians were apt to display the “ixthus” fish on their cars…so I asked.
The popularity of Ardell’s article in the WSJ is a testament to the Faith of some 20% of America. America was a land built upon the principle of religious tolerance. While the mystery of praying for intercessions to St Joseph for a successful home sale seems like “voodoo” to many, certainly a state of curiosity rather than judgment would promote a more peaceful existence among all of us.
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redmondjp,
Because sometimes what is needed is a little faith and a lot of patience, rather than a price reduction. Not always. But sometimes. Time on market is increasing. Those that lose patience too quickly and lower their price too fast and too often, are not necessarily taking the correct action.
Brian, I graduated from Catholic high school, and am reasonably familiar with Catholic doctrine.
One of the things that makes housing blogs so fascinating (as opposed to, say, blogs on the stock market), is that buying or selling a house is simply a commercial business transaction, yet people manage to drag in whole levels of emotion and angst into the transaction (aided and abetted by the RE industry), in a way that you generally don’t see when buying and selling mutual funds.
Nothing wrong with praying that your house will sell – the problem is, as redmondjp noted in #5, is that I suspect that most people burying St. Joseph’s statues are doing as a substitute for taking a hard look at where the market is, and how the house needs to be priced to sell in that market; rather than as a complement to correct pricing. (Besides, if your house is overpriced, praying that someone will buy it is praying that someone else gets stuck with the overpriced house – I am sure there are some interesting theological issues in that.)
I don’t know any voodoo practioners offhand, but I am sure that they are as sincere in their beliefs as those of other faiths – I have no idea if there is a tradition of burying a statue of Papa Legba when trying to sell a house, but I continue to think that it would be as effective as burying a statue of St. Joseph.
Excellent points, Sir. I appreciate your position and am grateful for your respectful dissent.
“buying or selling a house is simply a commercial business transaction, yet people manage to drag in whole levels of emotion and angst into the transaction”
Trust me. There is more emotion and angst in real estate transactions than you can possibly imagine. Your suggestion that it is “simply a commercial business transaction” is a whole lot more far fetched than burying a St. Joseph statue.
Clearly children who are leaving their friends and school behind, do not view the selling of their home as “simply a commercial business transaction”, nor do the parents who love them. Help an elderly person move out of a home where they lived for 35 years and raised their family, and then tell me it is “simply a commerical business transaction”.
When you carry your wife over the threshold of your first home, don’t whisper in her ear “this is “simply a commercial business transaction”.
Buying and selling homes is VERY emotional. There is a huge difference in selling one’s home and selling off a mutual fund. Home is where the heart is, and if you don’t know that yet, I can only hope that some day you will.
Alternate agnostic proposition:
Why not bury corn, potatoes, and beans in the back yard. If the house doesn’t sell, you get to eat. If it does sell, it’s a Thanksgiving/housewarming gift to the new owners.
Amen, Ardell! 😉 Every home I have purchased has involved emotion. I don’t recommend that for everyone and I turned out pretty lucky considering. My last house (before I was in mortgage), I could write a horror story about…in fact I did write to the Seattle Times about my purchase and my letter was published. My family was horrified over that house and what a wreck they thought it was…I loved it. You could say I was blinded by it.
The homes that I have bought (5 so far) meant something to me or had a certain feel. I did not comp them out or analyze what my possible profits would be. I also have never purchased a home planning on it being a short term investment; they’ve all been homes for me and my son to live in.
Maybe we’re all wired differently. For some of us, numbers must compute and for others, our hearts must be content. Hopefully it’s a blend of the two. 🙂
Ardell,
#9 – thanks for illustrating my point.
I did, however, like your suggestion that a segment of home sellers need to be praying to St. Jude, rather than St. Joseph. I suspect that that segment will only increase in the short term…
Actually, Rationalist, I worked on a trading desk, in the early 90s. I can assure you that there were multi-denominational prayers, uttered in Latin, Hebrew, and Arabic, at the end of many trading days.
Securities blogs are much different than housing blogs because of compliance issues. Securities brokers (and analysts) are severely curbed when it comes to personal opinion (unless you’re Bill Gross).
However, even in the “whitewashed” world of securities investments, Faith plays a role:
http://muslim-investor.com/stocks
http://www.fool.com/dripport/2002/dripport021114.htm
http://alephblog.com/?p=382
Emotion, induced by love, belief, or fear, influences investment decisions.
But hope is not a good hedge.
I’m doing just fine, Christian. Thanks for asking though. We had the most fabulous Thanksgiving this year. Had all of my daughters and all of their boyfriends and my grand daughter. I know it’s hard for some to understand, but I work all year for days like that. Actually they stayed for five to seven days. Best Thanksgiving we’ve had in years. But when I said “This is the BEST Thanksgiving EVER!”, I felt like I had said it many times before.
I still can’t believe we ate all 40 lbs of turkey and 30 lbs of potatos before they all left.
I made it past the two year pre-payment penalty period, so it’s probably time to be thinking about a full doc refi. Will keep you posted.
One of my favorite shots from Thanksgiving of my grand daughter jumping in a big pile of leaves. It’s the little things that make it all worthwhile.
About a year ago I was reading these kind of articles on blogs about interest of burying these statues in post-bubble markets such as Florida, California, etc. It is an interesting exercise to go back 12 months and re-read your own and other people’s posts and the various reactions to those posts. At that time, the mere suggestion that similar things would likely happen here in the following 12 months was met with ridicule. Some of it was likely due to the fact that some comments warning that the real estate bubble was national and due to a credit bubble (and that Seattle would not be spared a bust) came across as hostile. I never shared that hostility, but think it may have come from the prevailing dismissal attitude at the time that people calling for a bust were all crackpots and that real estate professionals knew better than “bitter renters”. In the months and years ahead, unfortunately, there will be much more pain which will impact everyone, disallusioned homeowners and renters alike. It’s really too bad because it didn’t have to be this way. There’s plenty of blame to go around – a combination of failure of regulatory oversight, greed by wall street and lenders, fraud by many professionals and consumers alike, and a combination of lack of judgement, excessive risk taking, and ignorance among most borrowers who allowed themselves to get caught up in the frenzy because “everyone else was doing it”. Unfortunately the fallout will impact not only the imprudent, the greedy, and the fraudulent – but also those who excercised better judgement. Regardless, at this point, finding fault with each other and exhibiting anger and resentment will not solve anything and only make things worse. As things progress, it will be far more important that we support each other and eventually put this behind us. This period will go down in the history books and one day our grandchildren and great grand children will hear stories of this time and just shake their heads in disbelief.
Wow, what an intolerance little thread this turned into. Mocking other peoples’ religion. Snide comments about one of the blogger’s financial condition. Trying to connect this practice up to the supposed bubble even though it’s been going on for years even in the best of markets. When I opened this thread I thought it might be fun. Quite a disappointment.
http://stjosephstatue.com/index.htm
Here is a website devoted to St. Joseph Statues… Once you start seeing stories in your local media about these statues, that’s a sign that panic is starting to set in. I remember reading about this back in late 2005 when I lived in San Diego.
No worries though, Paulson and the FEDs will save the day.
Kary,
It’s just Web 2.0. I watched “Any Given Sunday” last night with Al Pacino. The Coach was telling Steamin’ Beamen that what most players miss are their team mates. 11 other men who are like minded. Who approach everything from their same vantage point.
While it may be more comfortable to discuss real estate with other agents who are like minded, there is much to be gained from going into the stands and hearing what the people who buy the tickets have to say about it all.
You have to chuckle though. Isn’t it like standing outside and saying it’s 42 degrees day in and day out for three years? One day you are bound to be more right than others. And for a few moments here and there you are bound to be spot on.
Synthetik,
Do you see interest rates coming down even further in the first quarter of 2008? I read in one place that they are at a two year low and I read somewhere else that “rates are the lowest I have ever seen”. The latter had me laughing and wondering when was the first time that agent looked at rates.
I think I’ll go find a chart of historic rates and see where we are. Seems to me that June of 05 was an historic low point.
The honest truth is the media loves this type of thing.
I pulled this chart from Bankrate.com. Rates sure have been volatile.
Madison,
Seems to me that radio show with Dick Gordon emanated from your neck of the woods.
Ardell wrote: “You have to chuckle though. Isn’t it like standing outside and saying it’s 42 degrees day in and day out for three years? One day you are bound to be more right than others. And for a few moments here and there you are bound to be spot on. ”
Why only 3 years?
Ardell, I’m going to agree wholeheartly about the emotions involved in selling. For me, it’s not yet time to sell the family home as not only my parents, siblings, myself, and my children all have a lot of connections to that old house.
We have started a new tradition in our new home though, and like you, this was the ‘best’ Thanksgiving ever. Finally, we can handle everyone in the kitchen (and I thought we made it too big) since that’s where they all want to be.
42 and light rain is pretty accurate most of the time.
Thanks for another great post.
The lowest 30 year fixed rate that I locked in was back in July of 2003: 4.75% for 1 orig/discount. I remember telling the couple that would be the last time I would ever see them unless they decided to buy another home! Who would refi that? 🙂
Right now I’m reviewing one of my client’s 5/1 ARMs that will adjust next summer that is in the mid 3’s. He’s trying to decide if he’ll wait it out or refi now. At the time, he did not think he would retain the property this long… best made plans!
“Trying to connect this practice up to the supposed bubble even though it’s been going on for years even in the best of markets.”
“Supposed bubble” – this is just astounding to me. Supposed bubble? The denial here is beyond belief. “Best of markets” – you mean the ones with the largest bubbles, whose burst preceeded ours by 12-18 months?
“You have to chuckle though. Isn’t it like standing outside and saying it’s 42 degrees day in and day out for three years? One day you are bound to be more right than others. And for a few moments here and there you are bound to be spot on.
Kary,
I think Seattle Bubble blog started between two and three years ago.
Hi Bob!
Glad to hear that you too had the “best” Thanksgiving ever. Great hearing from you.
Jay,
Did a bubble burst somewhere? Sorry if I didn’t notice. Is there someplace where prices have gone down as much as the prices went up here in the Seattle Area? Last I looked prices where up and days on market were longer. Where did a bubble burst?
“Real estate workers who remain in denial at this point will have absolutely no credibility going forward (and that credibility will be needed to get new clients on the other side of this mess).”
Thanks, Ardell, you just proved my point, exactly!
I hope you like soup.
Jay:
Where do you see Seattle prices…
5 years from now?
10 years from now?
Brian,
In real terms (adjusted for inflation) I would not be surprised to see prices down 20-30% 5 years from now but it could easily be much more. That would require only 3% inflation and 5-15% nominal losses over a few years. That is without a major recession, just a slowdown which now even the Fed expects. I think the odds favor a significant recession next year (and the risks for a depression are higher than most people in the know care to admit publically). Even with just a decent recession, the effect of rising unemployment and reduced consumer spending, when combined with the current negative market psychology and current credit crisis (falling debt origination and more stringent lending standards) we will have a perfect storm (at a time when people are already maximally leveraged).
Making a 10 year prediction is much more difficult for obvious reasons since it requires not only understanding the fundamentals underlying the downturn but in addition the recovery. Once prices bottom out, they may remain that way for a decade or longer (as in Japan) if deflationary forces prove difficult to reverse. So many kinds of monetary and fiscal policy will be attempted (just look at the string of current proposals changing daily), who knows how much success (or more likely damage) they will do. If we are lucky, and they do more good than harm, then I would say we could be anywhere from flat (very optimistically) or maybe down 10% or so 10 years from now. If they screw things up (which currently seems most likely – and historically in severe downturns that is usually what happens with the unintended consequences of their well intentioned “fixes”) we might be still down 20%+ or more. When you read financial history, you realize that the Great Depression was created from an environment not unlike the current one (combined asset and credit market bubble and collapse) and monetary and fiscal policy just made it worse. Unfortunately, this time around, the credit bubble and bust is worldwide which makes the outlook even more grim.
It was not so long ago that the prevailing motto was “Debt is Wealth”. In the coming environment, the new saying will be “Debt is Poverty”. The exact same change in psychology followed the Great Depression. The reason that history is cyclic (it “rhymes” instead of repeating itself) is that the generational lessons of our ancestors are forgotton and relearned every 70-80 years or so (for obvious reasons). It’s happened again and again, so many times. This time is no different. It’s a shame, though. It didn’t have to happen again. We did this to ourselves.
Jay,
Where do you see yourself in five years? How will all this impact you personally?
The great depression was also global.
Our economy is much more robust this time around, however. Of course our risk taking is also deep into uncharted territory as well, so who knows what will happen. Certainly not Bernanke, who had to get a primer from some hedge funds back in August to even comprehend how the of “innovation” in even worked, much less trying to figure out it’s impact.
My wild-arsed guess – Down 30-50% in Seattle from peak 2007 prices in 5 years, adjusted for inflation. Down about the same in 10 years; barring extremely short memories.
The key here is adjustment for inflation.
The key here is “barring extremely short memories.” Since the depression America has become richer and more short sighted. Don’t you think we could bubble-bust a few more times, especially with the government getting involved?
Maybe Galen, but I’m not really sure what the government can do to inflate another bubble (though they can certainly surprise me!). We are pretty close to historic lows with interest rates.
The FED rate has a few points more to drop, but I think the dollar’s precipitous decline right after the last cut really worried them. Oil producers and China are both making noise about getting out of dollars if we continue to devalue. I’m not really sure what a cut would really do, but I’m sure they will cut a bit more for psychological effect.
It seems like their bag of tricks is pretty much empty, and it’s time to start paying the piper and start paying off some consumer debt, which is at historic levels. I just think Americans don’t have the ability to extend themselves any further. This will lead to a contraction. For how long, I don’t know. I hope it’s shallow, but I don’t think it will be short.
Ardell,
At this point there’s no way to know where any of us will be in 5 years regardless of how well we’re positioned. This will effect all of us to a great degree, although some much more than others. The only way to survivie a deflationary environment is to have no debt (ie, mortgage, credit card debt, etc) and real job security (since many jobs will be lost) with a steady income or be retired with sufficient savings in safe investments (since many investments and even some banks will go bad). Personally, I am well positioned – but even if one is well positioned the impacts on all of us and society as a whole will be very traumatic. Anyone who takes any joy in what is coming (I certainly don’t) because they think they are immune (if well positioned) just doesn’t have a clear picture of what is coming. Many people in the government such as Paulson see what’s coming and that’s why you see an about face regarding their suddenly proposing various kinds of bailouts, including those that will help people they know shouldn’t such as some speculators and banks that made bad decisions since at this point they view the obvious moral hazard as much less of a problem than the alternative. Unfortunately, these kind of efforts rarely succeed once you’ve reached the point we are already at. Japan tried everything for over a decade including dropping interest rates to zero without success – and they entered that period with massive governmental surpluses and massive consumer savings so they had a big cushion. We’re entering that period with record government deficits, no consumer savings, and massive consumer debt.
Billi
Yes, last time the ripple effects of the great depression created downturns in many other countries globally. What is differnet this time is that the problem (bursting credit and asset bubbles) and now global (multicentric) as well. So this time, it’s not just the case of we slow down and therefore buy less from China and Europe. Now, each economy has it’s own bubbles so we’ll see each economy dealing with it’s own primary problem as well as the ripple effects created by reduced trade worldwide.
Hmmm… If you are right, it sounds like we might need a greater variety of statues to combat this problem, Jay. How do Muslims feel about Idolatry?
Previous comment was a joke, in case it someone chose to take it another way. No offense meant, though my heathen sensibilities often cannot avoid offense being inadvertently given.
bili says –
“I just think Americans don’t have the ability to extend themselves any further”
You’d be surprised. People are continuing to increase the debt load onto MyHouse Street Bank. And that’s in our current lending environment, mind you.
Yes, Tim. I know. I guess I meant that the party is coming to an end, but I realize that the bottle of Jaeger still has a few shots left in it.
Unlike those in Seattle, Portland, Charlotte and a few other miscellaneous burghs, people in cities that have already begun to decline are rapidly losing their refinance ability.
IIRC, over the last several years somewhere around 7-8% of our consumption spending was coming straight out of our homes. Given than something like 70% of our GDP is conspicuous consumption, the loss of even a portion of that 7-8% spending is going to hurt our economy. Bad. And that’s ignoring foreclosures.
Declining home prices are going to give us a serious push towards recession by taking away the home ATM, even if everyone were somehow able to stay in their homes.
A few rough (inexact) statistics, because that’s the kind of dweebish fellow I am:
We have 110 million (M) households in US.
Around 75M households are owner occupied (I speculate at least 5M of those have no business being homeowners, based on historic ownership rates).
Around 50M have a mortgage.
Around 3.5M of those 50M currently owe more than their house is worth.
If what I consider conservative estimates hold true and we see a 30% decline in home values over the next 5-7 years, we could see that number grow to 20M households.
20M of the 50M, 40% of mortgage holders under water, with a strong incentive to mail in their keys.
Even is we only see 20% decline (and some parts of the country are already down 15%, and we are just getting started), that’s 13M under water.
If that doesn’t scare the bejezus out of you, and cause you to start doing things maybe a little bit more proactive than burying statutes of saints, you have a stronger stomach for risk than I do.
BTW, I have a serious appetite for risk, in case you were wondering. I own a house, after all! I just prefer to be compensated adequately for the risk I take on, and so far the house is acceptable compensation.
Also, I should probably hat-tip Calculated Risk, First American CoreLogic and the American Community Survey for those numbers above.
biliruben,
Do you have any statistics on how much debt people have outside of mortgages?
2.47 Trillion as of August, excluding mortgages.
In August consumer debt increased by annual rate of 5.9% adding 12.2 billion in August. Credit cards were the bulk of it, rising by 6.1 billion or an annual rate 8.1%.
There should be September numbers out soon, I should think.
That compares to a biscuit over 10 Trillion in mortgage debt.
Someone wrote: “Jay:
Where do you see Seattle prices…
5 years from now?
10 years from now”
WTF would anyone care about the answer to this question? Is anyone really going to base a decision based on a guess of an anonymous poster? It would be extremely unwise to base any such decision on the guess of a so-called expert.
Jay’s guess might be right or wrong, but it would be just that–a guess.
Jay wrote: ““Supposed bubble
Forgive me Ardell for not staying on topic, but I can’t help myself.
Kary, in the interest of accuracy you may wish to reference the Nasdaq composite as the measurement of the 2000 stock market bubble. After all, it wasn’t called the dot com bust for nothing. A peak of about 5200 dropping back into the 1200 range, and yes, that was in the area of the irrational exhuberance qoute. While no one can predict the short term movement of markets, a long trend line can give one a pretty good clue as to where prices will tend to go.
Jay,
Where do you see yourself in five years? How will all this impact you personally?
Ardell, you’re implying here that we bears may not ourselves like what is ahead, as if we could just wish it away or something.
Doesn’t work that way. The credit collapse underway is very real and will harm plenty of us on the sidelines who saw the foolish bidding wars (against idiots with IO ARMs) and sat it out. We are debt-free, have savings, and will be much more agile during deflation than the average underwater homedebtor.
We’re hopping mad over the damage that REALTOR®s and the Wall St pigmen have done to our economy, but we will survive. We have skills of our own and are fundamentally creative individuals.
You have a boat-anchor subprime mortgage, and are a REALTOR® to boot. How will you survive? I don’t think you will … unless … you do your part to bring prices down on the seller side. REALTOR®s live and die on commission, and are actually helping the bears now by convincing sellers to lower prices.
I’d like to buy a SFH in Wallingford for $225k – $250k. That sounds about right. I’d be happy to pay you your six percent for that, now get to work deflating the RE bubble in Seattle.
I misspoke earlier, I am about to take on a small amount of debt, buying a new car to protect my young family. We simply need the car right now, and I’m paying for it largely with WaMu puts!
Christiangustafson,
My point, and thank you for making it for me, is that those who try to create panic, are those who would be advantaged by the downturn panic would create. Those who claim Realtors have a self interest in practicing denial of a bubble, are actually the ones with the self interest of seeing the market come down by creating fear.
As to your being happy to pay “my” 6%, I never charge 6%, as that would mean I would take the buyer agent fee when I am the seller’s agent. If you have read any of my writings here, you know I don’t do that. I would think by now you would have learned the basic commission model, which is not 6% to most any agent on the sale of a home. Most sales involve two agents and not one.
Bob,
Speaking of the topic, I think there’s a misnomer that those burying St. Joseph statues are people in financial distress. Often the distress of people selling property is the inconvenience of their home becoming a product for sale. The disruption it creates on the family is prolonged by longer days on market.
Many people who bury St. Joseph statues have significant equity, but want the ability to move from here to there with less stress on the family.
Bob, I couldn’t get my Nasdaq chart to pull up when I was writing that post. I agree it would be better. I just used the two that pulled up. The point is more that people paniced, made all sorts of dire predictions, horrible press reports, etc.
But I guess if we wanted to make similar analogy here, we’d look at graphs of certain cities. LA, Detroit and Miami together would be the Nasdaq stocks. But a better analogy might be using single stocks, since what’s happened in the real estate market is more like a few stocks running up and then falling. There are vast parts of this country in which values didn’t run up much and thus aren’t dropping much. So LAX, DTW and MIA are individual stocks, not indexes. 😉
BTW, I had a good indicator of when that market was topping. When my dad started watching CNBC and my wife wanted to buy stock, I knew it was near the top. That indicator was about 1.5 years early. 😉
Wow, things are bad enough that we are talking about burying plastic statues in the ground to help sell houses.
I’m guessing that little St, Joseph’s statue, and the accompanying prayers, might just come in handy if the Depression is coming.
PSB wrote: “Wow, things are bad enough that we are talking about burying plastic statues in the ground to help sell houses.”
As I mentioned before, the practice is not new. Talking about it may be.
In the Seattle market whether things are good or bad is dependent on where you are, and what type of property it is. Some types of places in certain areas will sit, with lots of competition to keep them company. Other types of property in other places can still get multiple offers.
What’s the difference between a recession and a depression? The size of the statue one should utilize, of course. My in-depth analysis shows that the size of the statue should be 8 inches in height minus the average of previous two quarter’s GDP.
Current statue size: 8 – ((3.8 + 4.9)/2) = 3.65 inches
In a recession, we’ll see statues of 8 inches and higher. I wouldn’t even guess how big they could get during a depression, which I think is unlikely anyhow. My gut feeling is that statue sizes could go exponential, but don’t hold me to that.
“As I mentioned before, the practice is not new. Talking about it may be.”
Yes, indeed. It’s a practice I’ve heard about over the years. It’s the first time I’ve seen it discussed so seriously in WA. In addition, it’s the first time I’ve seen an in-depth analysis of which particular *type* of statue one should utilize in which situation. I think that aspect of it made me say “wow” more than anything. I wasn’t aware that people took this so seriously…
I thought the OP was tongue in cheek. In my December 3rd post I said I thought this was going to be a fun little thread, but the comments turned nasty right away.
When I came here December 3 I was going to say something like: “The Amazon ones don’t work. You need to get yours directly from the Catholic church!” 😉
Kary, this is dead serious business now. We’re about to go through a massive credit collapse and contraction, the worst recession since the Great Depression. Nothing can stop it now, we just need to have the courage to let it play out and cleanse all of the bad debt and leverage from the system.
It’s a sign of how scared the elites are that Bush is proposing nonsense like bailing out the subprime Joe Payday Loan crowd. What will he do for Act II, the Alt-A and Option-ARM implosion?
Of course, this deflation will collide with the graying of the Baby Boomers, that should be fun. At least they have lots of savings to get through this, don’t they? Don’t they?
When you finally get it, when you finally see the writing on the wall, you will see why we responsible renter-savers are so pissed about all of this. We saw this so clearly, so long ago (2003), yet it was inflated, again and again, so that it now poses very grave systemic risks. Everyone took their cut, and now we’re all going to pay.
PSB — make sure you read Ben Jones’s blog every day, especially because of its excellent coverage of CA. That’s our future.
christiangustafson, you may be right, but I seriously doubt it. Your comments are very similar to comments made about the stock market in 2001-2002.
BTW, I think there have been people who have thought house prices were too high my entire adult life (since the late 70s). Which brings up the “broken clock” comment–sooner or later they’re going to be right. The big question is when, and unfortunately there’s no good indicator for that (maybe if my dad starts watching HGTV).
“I thought the OP was tongue in cheek. In my December 3rd post I said I thought this was going to be a fun little thread, but the comments turned nasty right away.”
I thought so too, but now I’m not so sure! I laughed when I first read it, and thought that it would be perfect material for http://www.theonion.com.
“We saw this so clearly, so long ago (2003)”.
So long ago in time, and so long ago in appreciation terms.
I bought a house in 2003. The mortgage payment was a little higher than equivalent rent at the time, and about equivalent if you were to look at it today due to little bit of rent inflation we’ve had in 5 years.
Ultimately, I saw a house back in 2003 as being fairly inexpensive, and I in no way stretched my budget, and my wife wasn’t working at the time. Sure, there were lots of other people *not* in my situation, but almost everyone I knew at the time could afford a house or a condo. From 2005 onwards, things got a little stupid, IMO.
(sold the house in 2005 BTW – had to leave the state – now I’m back!)
SPB, if you want to get back in at a decent price, the biggest mistake I see people make is getting too impatient. Negotiating the buyer side can take time. If you try to negotiate a deal in days, you’re likely going to end up at a higher price.
Also, identifying the properties that are likely to go down is important. DOM and apparent equity are the keys there. Alternatively, you could stake out properties and see which sellers are digging in their front yards! 😉
christiangustafson wrote: ““We saw this so clearly, so long ago (2003)
“He called the top of the market 4 years ago, and we might not even be at the top even now!”
As opposed to NAR cheerleaders like David Lereah who assured us that the real estate boom would continue for another generation, and who stated two years ago in his book that Las Vegas RE had incredible upside potential? Hope he doesn’t have to face a crowd of recent Las Vegas home purchasers…
Noticing that a RE bubble was developing four years ago is not the same thing as calling a market top, Kary.
ABR wrote: “Noticing that a RE bubble was developing four years ago is not the same thing as calling a market top, Kary. ”
Agreed, but the point is there might not even be a bubble, at least not in the Seattle area. So the call for the last four years might be the same as a clock that hasn’t worked for four years. Actually, it’s not the same because at times the broken clock has been right.
BTW, I should mention that I hate predictions of the RE market, whether they’re positive or negative. I think trying to predict such things is a pointless exercise because you’re attempting the impossible. The only way you’ll be right is if you’re lucky, not by being good.
“BTW, I should mention that I hate predictions of the RE market, whether they’re positive or negative. I think trying to predict such things is a pointless exercise because you’re attempting the impossible. The only way you’ll be right is if you’re lucky, not by being good.”
I think that you can draw some plausible inferences about which way the market is going by looking at housing inventory for sale, and by looking at the national credit markets. It is evident that the RE market of the last few years was fueled by ridiculously easy credit (less so in Seattle than some other places, but still quite noticeable), and that the reversion to traditional lending standards is going to lead to a significant correction in housing values. One of the interesting things about real estate markets is that they don’t adjust immediately – adjustments tend to be a fairly slow process, so you can figure out which way things are going.
ABR, I’d agree with that, at least on the financing side. It’s something that affects more the lower end, but that will eventually work its way up.
I’m not convinced inventory is a problem, at least not in King County. But inventory easily could become a problem.
“Alternatively, you could stake out properties and see which sellers are digging in their front yards!”
LOL Kerry! I’m picturing a would be buyer going around at three in the morning digging up under all of the sign posts looking for the homes with statues planted 🙂
WOW! I go away for a few months and what happens? RCG is now talking about St. Joseph statues.
What happened? I thought we were special.
Somebody needs to put a 24k gold St. Joseph on the balance sheet of every mortgage bank in the US if they want to get things going again.
They would also need to put a St. Joe in the heads of all those foreigners and pension funds that bought mortgage backed securities and CDOs. After all, they have plenty of room because we know they have no brains (RE goes up forever?). Buy for $1.00 and sell for 11 cents? How does that work?
Guys (Ardell, I mean you), you need to give a RA about your local bank, and the bank across town, and the one located in NYC. They are in heap-big trouble. Can’t borrow, can’t lend, expenses piling up… It’s kinda like being constipated and having your mouth wired shut at the same time, while you have to run a marathon (pardon the visual).
In addition to my “20 cents on the dollar by 2010” prediction, I’ll add that two big West Coast banks won’t make it to 2009 without filing for BK or getting some form of bailout that guts their stock price. Just to narrow it down, one of them could be located right here in Seattle. Actually, it’s a SnL, but you get the picture.
When you have $billions of seconds and thirds that will probably be worth 5cents on the dollar, that’s going to leave a mark. It’s as if all the dumb airline execs became bankers.
When the nation’s largest bank has to go to the banker’s version of a Payday Lender (Abu Dhabi), to keep the lights on, you know that the Grim Reaper is knocking on the door. Ask yourself, “Is that the only financial grenade that’s rolling around on the floor?”
Bush/Paulson are scrambling around trying to put the pins back in the grenades, but they look like two monkeys trying to copulate with a football (tip of the hat to the late Herb Brooks, and cleaned up for sensitive RCG eyes). What a pathetic display of governance…
So, I’ll go away for a few more months and see what Cupid brings me? So far, I like what The Great Pumpkin brought.
All the best,
Eleua,
Providing a “center” for RE professionals since 2006
Kary,
Christiangustafson is dead-on-balls-accurate in what he is saying.
As far as the “broken clock” thesis goes…
Homes were able to appreciate because of securitization of the mortgages. At first, we had the GSEs that goosed the market, and when that petered-out, we got the outright non-agency securitization. When that stalled, they started bundling subprime and calling it prime (CDOs).
Well, now what? Nobody wants those securities, so that’s the end of that gravy train. Soon, agency-paper will suffer the same fate, and we will be back in the stone ages of the 1970s pricing paradigm.
Oh, one more thing…we get to price those homes on that paradigm in a 1930s-esque economy.
YUMMY!!!
Eleua,
St. Joseph isn’t the Patron Saint of Banks or Bankers. Try this one
Photo courtesy of Kris and Steve Berg.
Ardell,
OK, that got a good, loud laugh out of me.
Very nice.
It would be more accurate if he had his head up his…uhmmm…well, you know…
Glad you have a sense of humor.
All the best,
E
Elula, financing is one of the factors that lead to increased prices, but I wouldn’t even count out sub-prime for the count at this point in time. It very well might get off the mat and make a comeback, in slightly different form.
The biggest risk to the market is that of Freddie or Fannie failing, or even cutting back significantly. That could happen, but I wouldn’t bet on it.
ARDELL, that is a hysterical!
Kary,
Regarding subprime making comeback…
Your faith is very impressive. I certainly hope you have a backup plan.
SP is dead, cremated, and scattered over the ocean.
Alt-A is in hospice care
AAA just got told they have 6 months to live
Agency is complaining of chest pains.
The securitization of mortgages will be dead. 20 years from now, we will be looking back on this period and wondering what we were thinking.
I wish you well.
Hi Eleua,
Can you paint a picture for me of what the industry will be like in 20 years? I can’t see that far out.
What I do see, over the next 0 to 5 is that we’ll see some banks not make it through this mortgage crisis. They’ll go down or they’ll be purchased by bigger banks. I see a rise in the number of hard money lenders and consumer loan lenders and a decrease in the number of mortgage brokers that only existed to do subprime refi churning (okay, it doesn’t take a rocket scientist to figure that out.) I believe there is room for local mortgage brokers who are medium-to-large that have a correspondent lines of credit with banks, that are FHA approved, were already operating with adequate compliance, auditing, and training divisions, that have established, long-term client relationships with medium to top producing residential real estate agents….and I see a rise in the percentage of loans originated at banks.
If securitization slowly dies, then we go back to lending like we did in the 1970s and 80s where banks purchased the loans and held them in their portfolio, which means conservative underwriting, with full documentation on all files, which wouldn’t be a bad thing in my opinion.
If institutional investors start suing banks NOW over rising defaults, all hell is going to break loose sooner rather than later
“Also, identifying the properties that are likely to go down is important. DOM and apparent equity are the keys there. Alternatively, you could stake out properties and see which sellers are digging in their front yards!”
Kary, I agree regarding patience. In addition to waiting before negotiating on a property (the sellers need to have a few empty open houses before they accept reality) I also watch sale prices come in and see what’s selling out in the areas I’m looking at. The way I see it, even if someone *wanted* to overpay in today’s market, the appraisal situation is getting stricter, and the comps are coming in lower. Pretty soon, if it hasn’t happened already, Spring of 2007 will be a distant memory, and the comps we’ll be using for appraisal purposes will be winter of 2007.
This happened down in San Diego, where I lived before returning to WA. Comps had to be less than six months old to be valid, so once the price peak faded into the rear view mirror, financing failures become more common. Appraisers just hate to check that “prices in the area are declining” check box. For some reason it makes the bank jumpy. 🙂
Eleua, I don’t really have an interest in whether sub-prime comes back or not, it’s just that I wouldn’t be surprised if it did. Over the years I’ve seen some things that made little sense, and it wasn’t a surprise they went away. Two examples are 120% home loan seconds, and 30 year car loans secured by your residence (how to buy a Porche if you can’t really afford one). Despite all the whining in the press about sub-prime, it’s not half as nutty as either of those. I’d put it more on par with equipment leasing for business–a high risk venture that has a high nominal interest rate to account for the risk.
Will we see it in exactly the same form? No. Investors will want some bells and whistles on it. But if it does come back, even with those bells and whistles each loan will be high risk, but a package of them, not so much.
SPB, I think in any market if a comp used by an appraiser is older than six months that would set off alarm bells for the lender.
Agents don’t tend to see that many appraisals. I saw a lot more when I was working as an attorney. That might change if there is a significant decline in prices. But in that instance, it’s apparently the job of the listing agent to make sure the appraiser is aware of a few good comps–the appraisers like things that make their jobs easier. I’ve only worried about that once, where a condo project was being undervalued by agents because of imperfect information (they didn’t know about a recent major re-siding project on the complex which held down prices). Interestingly, the buyer of the unit was an appraiser himself, who apparently saw the same thing I did. Anyway, it appraised for well over our price.
RE #78: It’s St Matthew
Actually Brian, it’s St. Bernardino. But it’s a pretty sordid story so I used Bernanke.
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