A Kinder, Gentler, Blog

HeartIt seems like with increasing frequency I am having to write some variation of this post. Clearly as the housing market has shifted, views of its future have polarized. A lot of statistical data on the market isn’t good. That can’t really be argued. There are positives too. What the result will be is any body’s guess. Some will be right others will be wrong. When we get there (when and where TBD) there will be no “neener neener neener sucks to be you” or “I told you so” on this blog. It simply isn’t necessary.

The question was asked, “why are buyers buying? What are their reasons?” I personally don’t think I would have commented if I had been a buyer because it has become to clear that the response is going to be “you’re nuts” or “I want some of what you’re smoking.” It would make a great discussion but the tone of the comments makes keeping one’s mouth shut more appealing than walking into a firing squad. The conversation and discussion is being damaged by the tone. The content is on the mark (both positive and negative), the delivery of the negative, often, sucks. I don’t need to remind regular readers of the Portland Real Estate Blog Chorus (short version: everyone has their own reason for (or not) buying or selling in any market).

I implore you that even if you don’t agree with me or other participants be polite in your reply.

Previous posts on this topic:

Why there is a Portland Real Estate Blog
Why There is a Portland Real Estate Blog, Again

49 Comments on “A Kinder, Gentler, Blog

  1. I like the general chaotic tone of this blog’s discussions and disagree with your statement that it is detrimental to the blog. The controversial nature of “the great debate” is why I come here. If it was in pure harmony I would not look forward to coming to your blog. That would be dangerously monotonous.

  2. Buffet seems to be a kind and gentle man.

    Buffet released his annual letter yesterday, February 29, 2008. I excerpt a couple of interesting quotes:

    “You may recall a 2003 Silicon Valley bumper sticker that implored, “Please, God, Just One More Bubble.” Unfortunately, this wish was promptly granted, as just about all Americans came to believe that house prices would forever rise. That conviction made a borrower’s income and cash equity seem
    unimportant to lenders, who shoveled out money, confident that HPA – house price appreciation – would cure all problems. Today, our country is experiencing widespread pain because of that erroneous belief. As house prices fall, a huge amount of financial folly is being exposed. You only learn who has been swimming naked when the tide goes out – and what we are witnessing at some of our largest financial institutions is an ugly sight.”

    While I think that outlines the major problem with the larger lending and housing market, I find this the most interesting:

    “If your adviser talks to you about double digit returns from equities, explain this math to him – not that it will faze him. Many helpers are apparently direct descendants of the queen in Alice in Wonderland, who said: “Why, sometimes I’ve believed as many as six impossible things before breakfast.” Beware the glib helper who fills your head with fantasies while he fills his pockets with fees.”


  3. Gah, I should have never misspelled BuffetT. Sorry.

  4. Now THAT’S what I’m talking about!!! Great article! 🙂

  5. At this point I am beginning to wonder what a “dissenting view” is when related to the housing market, especially in and around Portland, Oregon. At this point “continued appreciation” seems to be a dissenting view, as illustrated by Naysayer the other day.

    In any event, hopefully we can have some lively and interesting discussion on both sides, regardless of which side the dissenters happen to be at a given moment in time.

  6. C’mon now. This is America in George Bush’s “ownership society”. The people who bought and experienced huge gains enjoyed rubbing others’ collective noses in it, especially those of us who were warning how insane things were getting. We were chided, ridiculed, accused of having sour grapes (a particularly enraging accusation as it comments on the character of a person in an underhanded, very rude way) and generally looked down upon by the oh-so-smart and savvy people who bought into this mess.

    Now those same people are expecting us to feel sorry for them, bleating and whimpering to the Congress to allow judges to simply wipe away their debt and change the rules of their loan obligations to keep them in houses they should never have purchased and oh, while you’re at it, make sure our paper gains don’t go away! Meanwhile, the realtors at the front lines of the fraud were smiling at us like Cheshire cats from every paper, billboard and bus stop, warning us that soon, we would be priced out of the city we live in because well, we missed the boat! And who will pay for this little bailout? WIll they ask the Wall St types who made billions selling bad debt to give that back? Will they ask the NAR to hit up its members for some of that commission money they took? No, we’ll socialize the risk by asking the greater society to fund the bailout.

    We have people living in the f*cking STREETS, people who have real, basic needs, but the Congress is concerned with comforting the comfortable, making sure they get to keep the granite counter tops and stainless steel appliances and not to worry, we’ll get the renters to help you out. Why, it’s their obligation! The most enraging aspect of this mess is the not-so-subtle warning that if we don’t bail out these wannabe land barons our economy will be destroyed and well, you renters will suffer too. THAT makes me CRAZY. Or should I say, crazy-er.

    The amazing thing to me is how QUICKLY this all came to pass. It seems like just yesterday that those of us on the sidelines were raising the red flags. But no, this was a “new paradigm”, the market had shifted, it was going to be good times forever and ever! Well, at least for those willing to bet their futures on a 2BR 1BA fixer upper off Alberta for a cool 300K.

    So yes, there is a LOT of anger around this subject and it’s fraught with social comments on class, status, responsibility and tons and tons of resentment. If you expect a blog about housing to be sugar and spice and everything nice at a time when the folly of the ostentatious threatens to take us all down, forget it.

  7. THANK YOU, NAYSAYER! I figured that if I waited long enough someone would say it better than I could:O)

  8. Naysayer-

    I have a similar feeling. I look at my window and see the for sale sign in the front yard of the neighbor. While the names have changed from time-to-time, a sign has been there for over a year.


    I watch the couple prepare the home for showing–fighting over every little detail. I’ve seen her go pick up small scraps of paper and individual leaves out of the road, so as to present an idealized life.


    I’ve watched the asking prices in the neighborhood go down, and then down some more, but amazingly most seem to have hit a floor. Others talk about both “short sales,” and then there are some that say “selling below purchase price” in some of the other listings.

    Then there are the FSBO.

    Really I don’t wish anyone bad, but when the air horns were sounding, and no one took notice, what should be done?

    In the past I was the one who was considered to be a fool, and now it appears that I am just plain mean.

  9. Hey, bearlee-

    I was thinking about you earlier today. I was talking to a friend who has a shop near the Boeing plant in Everett, Washington. Back to the multiplier…

    I don’t know why, but for whatever reason people seem to appreciate the multiplier when a company pulls out, but new business is lost in the Gaussian noise, apparently.

    Boeing just lost a contract that was expected, and now people are talking doom and gloom, and it extends beyond the Boeing workers. If they get a new contract, for whatever reason it seems that people concentrate more on Boeing.

    At the same time, the residence of Alabama seem quite happy.

    Think of what would happen in Intel pulled out: It would be much worse than just the Intel workers, the affect could cascade into many other areas…

  10. Thanks, JP, another good example. I was thinking of the ‘Intel effect’ about a little over a year ago when they announced the 10K person lay-off, luckily not all in Hillsboro but most:O( My first thought, ohhh, the housing market out there. And now that I hear that Intel folks commute all the way from the east side, too. So definitely a ripple effect.

    Charles, I got to thinking about the similarites you and I share after reading your post from Feb 29, 2008 5:05:59 PM under the migration topic. Looking ahead to this year you and I will both make a living off of the ignorant and naive. You already know my stance on those who buy now (yeah, sure, some will negotiate a great deal but those are in the minority). As for my income, I get paid to treat those who abuse their bodies over the years. Sure, some were dealt bad genes or had accidents but for the most part it’s noncompliance, “personal choice(s) and includes factors that may be unique to (their) situation(s)”.

    Cheers, bearlee

  11. Oh, and one HUGE difference. As an RN it is my ethical duty to educate patients to not make the same mistakes that got them admitted to the hospital to begin with!

  12. “As an RN it is my ethical duty to educate patients to not make the same mistakes that got them admitted to the hospital to begin with!”

    Is this really an issue in real estate? What would you say, “I know you had a failure in the past, so you must forever rent, or better yet, I suggest you live under a bridge.” Housing is a basic need, but smoking and drug abuse certainly are not.

  13. What I am referring to is the fact that folks are getting in over their heads because “It’s a great time to buy” BS. NAR should be ashamed of themselves for running this campaign.

  14. bearlee-

    Respectfully I disagree. First of all, the homes sell at “fair market value,” right?

    Second, even if it is bad, when is a great time to buy cigarettes?

    I have also spoke about how Enron was purchased by the State of Florida–do you think they thought it was a bad time to buy? Note that the bought and sold at market, but they did take a big hit. We all have different situations and expectations about what will happen in the future.

    I’ll ask you: When is a good time to buy?

  15. I would buy this summer if I found a great house in a great neighborhood at a great price! All relative, huh?

  16. I thought I found you a nice place in a great neighborhood. All the homes in the local area are selling for about $300,000, but this guy just wants out today for $150,000.

    By the way, I purchase a car from a graduate who had a residency far away. He wanted the sale to take place immediately, and the price was right. In fact, I drove the car for two years and sold it for more than I purchased it for.

    There are always deals to be had, and different people have different situations. I am sure that Doctor was happy to be working on the other side of the country…

    Was the fire sale a good deal for both of us?

  17. A heated debate is part of the price of allowing open commentary. I wouldn’t come here if it wasn’t for JP, bearlee, naysayer, and the others who are passionate about their opinions, and who back them up with strong logic and/or facts.

    Given that I’ve made the “smoking” comment a few times I know that remark was directed at me, and I might be sarcastic at times, but I try to avoid being rude. If I offended I’m sorry, but it’s that “owning is better than renting” mentality that drives me nuts and is in part a result of NAR marketing campaigns. I’m a marketeer so I naturally spot marketing tricks and enjoy blowing holes in them when the story doesn’t match reality.

    If you don’t want the discussion here I”m happy to have it over on my blog 🙂 http://portlandrealestateoutsider.blogspot.com/

  18. “Was the fire sale a good deal for both of us?”

    yes. price is only one element of any deal. there are always other factors, but most people forget that.

    for example, when we left germany we gave away our kitchen (ah the joys of renting an apartment in Germany!) to the first person who would come remove it. i needed it gone, someone else needed one cheap. we both won. good deals are always out there if you look hard enough, the trick is to have $ when others are selling.

  19. Respectfully I disagree. First of all, the homes sell at “fair market value,” right?

    There’s an article in the NYTimes today by Robert Shiller that is pertinent to this discussion:
    How a Bubble Stayed Under the Radar.

    Some excerpts:
    The failure to recognize the housing bubble is the core reason for the collapsing house of cards we are seeing in financial markets in the United States and around the world. If people do not see any risk, and see only the prospect of outsized investment returns, they will pursue those returns with disregard for the risks.

    Were all these people stupid? It can’t be. We have to consider the possibility that perfectly rational people can get caught up in a bubble. In this connection, it is helpful to refer to an important bit of economic theory about herd behavior.

    Three economists, Sushil Bikhchandani, David Hirshleifer and Ivo Welch, in a classic 1992 article, defined what they call “information cascades” that can lead people into serious error. They found that these cascades can affect even perfectly rational people and cause bubblelike phenomena. Why? Ultimately, people sometimes need to rely on the judgment of others, and therein lies the problem. The theory provides a framework for understanding the real estate turbulence we are now observing.

    Let’s update the example to apply it to the recent bubble: The individuals in the group must each decide whether real estate is a terrific investment and whether to buy some property. Suppose that there is a 60 percent probability that any one person’s information will lead to the right decision.

    In other words, that person’s information is useful but not definitive — and not clear enough to make a firm judgment about something as momentous as a market bubble. Perhaps that is how Mr. Greenspan assessed the probability that he could make an accurate judgment about the stock market bubble.

    The theory helps explain why he — or anyone trying to verify the existence of a market bubble — may have squelched his own judgment.

    The fundamental problem is that the information obtained by any individual — even one as well-placed as the chairman of the Federal Reserve — is bound to be incomplete. If people could somehow hold a national town meeting and share their independent information, they would have the opportunity to see the full weight of the evidence. Any individual errors would be averaged out, and the participants would collectively reach the correct decision.

    Suppose houses are really of low investment value, but the first person to make a decision reaches the wrong conclusion (which happens, as we have assumed, 40 percent of the time). The first person, A, pays a high price for a home, thus signaling to others that houses are a good investment.

    The second person, B, has no problem if his own data seem to confirm the information provided by A’s willingness to pay a high price. But B faces a quandary if his own information seems to contradict A’s judgment. In that case, B would conclude that he has no worthwhile information, and so he must make an arbitrary decision — say, by flipping a coin to decide whether to buy a house.

    The result is that even if houses are of low investment value, we may now have two people who make purchasing decisions that reveal their conclusion that houses are a good investment.

    As others make purchases at rising prices, more and more people will conclude that these buyers’ information about the market outweighs their own.

    This theory poses a major challenge to the “efficient markets” view of the world, which assumes that investors are like independent-minded voters, relying only on their own information to make decisions. The efficient-markets view holds that the market is wiser than any individual: in aggregate, the market will come to the correct decision. But the theory is flawed because it does not recognize that people must rely on the judgments of others.

  20. Apparently the point has been missed. The owner of the site, who offers it as a chance to discuss Portland’s local market and with an actual Realtor, is setting standards for his own site that he runs and pays for. If you don’t like it – feel free to explore alternatives or start your own blog. PDXOutsider links to his blog and makes it clear he welcomes more colorful discussion. Pretty much every manner of rudeness can be found on the Portland Housing blog. Bottom line – the owner makes the rules and mature adults should respect them.

    From my perspective, Charles Turner comes across as an intelligent, professional individual, and if his blog (which clients, prospective clients, and competitors see) is “chaotic” and draped with the kind of comments that plague other blogs against his wishes it’s an unfair mark against him.

  21. Furthermore, I see by reading the provided links to previous reminders that there was no argument whatsoever before. Now that the “Naysayers” are closer than ever to vindication, why the unnecessary anger? And why the inability to contain yourself in a discussion forum?

  22. Define the inability to contain oneself in a discussion forum? You will get 10 answers from 10 people. This forum is only as good as the people who come here. Charles should be sending Thank You notes to Naysayer, Bearlee, Tip, PDXOutsider, and all the other people who come here to be involved in this blog’s success.

  23. Everyone is “right.” Kirk is right about the comments leading to the success of the blog (last week had a record number of views). Not Paul is also right.

    I can say, “I disagree with you” or, “you are a !!#@ing moron for thinking that.” Same meaning different tone. I wrote this post because I was afraid we were getting to close to the latter. Positive commenters (right or wrong) were starting to walk into Whack-A-Mole. Stick your head out to participate and it is going to get ripped off.

  24. TiP- 1. you forgot to close the bold.

    2. There is “auction psychology” where people bid based on the other bidder’s valuations. If bidder A bids, then bidder B bids based on that information. If both play this game, the end price can go quite high.

    In the case of the financial markets and housing, I think Buffett said it best above. The basic problem was that housing price appreciation would save the day.

    As far as the “efficient market” claim. I often wonder which is better:

    1. To buy low and sell high.
    2. To buy high and sell higher.

    Not Paul Avery-

    “[Charles] is setting standards for his own site that he runs and pays for” This is true. In fact, he can turn comments off, he can delete comments, and so on.

    So far Charles has continued to suggest that he will accept spirited discussion, both for those who think the time is right to sell and for those who are seeking to buy.

    If this place isn’t right, I understanding finding a new e-home with new e-friends is relatively easier than a real home with real neighbors.


    I have a friend who purchase some property in Europe some time ago. One dollar purchase more than one Euro at the time.

    He planned on moving soon, and he wants to move, but the exchange rate is such that his wealth is no longer where it needs to be. Sorry to say, but he is considering selling his European home. Even if sold at a reduced price, he will probably realize a gain in US dollars. He assumed that the dollar would remain strong, like some assumed the housing market would.

    Now he isn’t sure what to do.

  25. I think the concern here is that Charles created this blog in part to be advertising for his services and when folks post things that may discourage buying he may lose business. I would be concerned, too.

    As for bubble sitters getting so vocal in the past few months…well, there weren’t very many venues to voice our opinions up until recently. The few of the blogs I visit have only been up and running since early 2007, ie CR and Clint’s. And as it becomes more and more obvious that Portland will not be spared the pain yet folks are still saying we are too special how can one NOT become more vocal.

    When Ryan is toddling toward the busy street do you whisper, “Please, stop.” No, you yell and chase after him.

  26. Charles-

    Topic Suggestion:

    With more hits than ever, how about an occasional reader introduction post especially for those who have never posted here before. A post that does not have much in the way of real estate content, so as to provide a safe area for introductions. Something along the lines of “Feel Free to Introduce Yourself.”

  27. Ryan doesn’t have the ability to digest a conversation, make his own decision and be respected for it. I hope most readers here do.

    Bearlee, I’ll remind you of my previous answer to a question of yours. I’d rather have a happy client that refers later than an unhappy one with regret now.

    Good topic idea JP.

  28. Loved the article in the Times by Schiller. Some interesting things to think about.

    Bearlee, I too do not care that the NAR seems to continually promote homebuying. In their defense, their ‘job’ is to promote a real estate market. Why an individual would solely listen to the NAR and consume their stance without looking at other sources of information too, is beyond me.

    Also, Realtors do have an ethical code to follow. No where in that code does it say that they get to make the decision for their client. They are to provide information and knowledge as part of the code. But in the end, the client gets to make the decision.

    The reality is that there are many different reasons buy a home. If one is buying a home to live in, typically it is a decision with a lot more emotion than someone buying an investment property. There may be children’s school needs involved; closeness to family; work, etc.. Price is not always the deciding factor. My experience has shown that people will attempt to stretch their budget to get into their dream home.

    Charles, I personally like the debating on a blog. I believe it shows your willingness to be open to more than one side of a discussion. As for the namecalling, it’s something that seems to be very common in blogs, but nonetheless, I really don’t care for it.

  29. bearlee-

    For a sale to take place there is both a buyer and a seller. It’s not like everyone can bail out of the market–ultimately someone is going to own the homes.

    At a minimum you should add who you think should be in the market versus out. For example, let’s take someone who has owned for some time, and enjoys the ownership position, even in a falling market. This is far different than the first time home buyer who wants to put zero down.

    Then there are those who hold investment property. Charles has blogged about his 1031 exchange. In any event, it could be that selling a property might cause a 40% taxable event. Taxation adds an additional level of complexity. (The question: Where is the break even point when both the time value of money and taxes must be considered?)

    It’s not a simple matter of “now is the time to get out.”

    By the way, I have written about how I suggested a friend sell GM when it was near $70. He suggested that the price was going up–so he held and sold down in the 20s.

    Finally are you familiar with the Fibonacci sequence?


    While I am not going to go through the extensive application of the sequence or how the closed form is developed and proven, I want to make note that there are “Wave Theorist” who believe that the Fibonacci sequence can be used to predict future prices.

    For example, Elliott Wave:


  30. JP: Yep, apparently I forgot to close bold. Hope this fixes it.

  31. JP: regarding the predictive nature of Fibonacci sequences – I’m not sure I understand your point there. Are you saying that Fibonacci sequences predict that prices go to the skies? Sorry, but that sort of thing always struck me as some sort of numerology.

    Oh, I did find this interesting from the Elliotwave site:
    Why you should care that 395 of 641 (62%) publicly offered bonds failed – on one day in February – that’s 10 times the 44 failures during the past 23 years!

  32. “Are you saying that Fibonacci sequences predict that prices go to the skies?”

    First of all, I am not a Elliott Wave member. That being said, some wave theorists believe that the Fibonacci sequence predicts the future prices, both up or down. Again, I don’t follow the Elliott Wave group enough to know which direction they are predicting today.

    It is often the case, however, that the wave theorists are contrary to the majority sentiment. Bearlee has made it clear that she expects the PDX housing market to go down, so everyone should sell. I note it’s only a matter of a price. At a low enough price bearlee would have a different outlook.

    Oh, and Fibonacci is very different from numerology.

    “The number of ways of picking a set (including the empty set) from the numbers 1, 2, …, n without picking two consecutive numbers is F_(n+2). The number of ways of picking a set (including the empty set) from the numbers 1, 2, …, n without picking two consecutive numbers (where 1 and n are now consecutive) is L_n=F_(n+1)+F_(n-1), where L_n is a Lucas number.

    The probability of not getting two heads in a row in n tosses of a coin is F_(n+2)/2^n (Honsberger 1985, pp. 120-122). Fibonacci numbers are also related to the number of ways in which n coin tosses can be made such that there are not three consecutive heads or tails. The number of ideals of an n-element fence poset is the Fibonacci number F_n.

    Given a resistor network of n 1-Omega resistors, each incrementally connected in series or parallel to the preceding resistors, then the net resistance is a rational number having maximum possible denominator of F_(n+1).

    The Fibonacci numbers are given in terms of the Chebyshev polynomial of the second kind”

    “The Fibonacci numbers give the number of pairs of rabbits n months after a single pair begins breeding (and newly born bunnies are assumed to begin breeding when they are two months old), as first described by Leonardo of Pisa (also known as Fibonacci) in his book Liber Abaci. Kepler also described the Fibonacci numbers (Kepler 1966; Wells 1986, pp. 61-62 and 65). Before Fibonacci wrote his work, the Fibonacci numbers had already been discussed by Indian scholars such as Gopala (before 1135) and Hemachandra (c. 1150) who had long been interested in rhythmic patterns that are formed from one-beat and two-beat notes or syllables. The number of such rhythms having n beats altogether is F_(n+1), and hence these scholars both mentioned the numbers 1, 2, 3, 5, 8, 13, 21, … explicitly (Knuth 1997, p. 80).”

    It goes on and on and on…

    Greek Architecture
    Human Anatomy
    Pine Cones

    and on and on and on…

    Spiral shells of mollusks
    Georg Simon Ohm (Ohm’s law in electromagnetism) brother Martin Ohm wrote about it in 1835 (Die Reine Elemantarmathematik)

    and on and on and on…

    It has application in religion:

    In Religion of Man Tagore wrote, “Somehow we feel that through a rose the language of love reaches our hearts.”

    And on and on…

    And some claim it has application in predicting future market prices, both up and down.

  33. Just to reiterate: I am not trying to stifle the debate, I’m trying to keep it civil so that everyone feels comfortable participating if they have something to say. This has been and will remain an open forum regardless of what the market does as long as the participants are civil.

    Thanks, Charles

  34. TiP-

    Without going into too much detail, here is a summary of the Ellitt Wave theory:


    Note that “Mandelbrot has questioned whether Elliott waves can predict financial markets.”

    (Mendelbrot is the one who is credited for the development of fractal geometry.)

    “Mandelbrot found that price changes in financial markets did not follow a Gaussian distribution, but rather other Lévy stable distributions, having theoretically infinite variance. He found, for example, that cotton prices followed a Lévy stable distribution with parameter α equal to 1.7, rather than 2 as in a Gaussian distribution. “Stable” distributions have the property that the sum of many instances of a random variable follows the same distribution but with a larger scale parameter.”


  35. Oh, and Fibonacci is very different from numerology.

    No, I’m familiar with the Fibonacci sequence from a mathematical standpoint – however trying to use that sequence to predict markets seems a bit … out there. Sounds like Mandelbrot agrees.

  36. TiP-

    At one time I read the Elliott Wave newsletters. They really are not out there that much, as far as trend analysis goes. Why believe one system over another? Elliott Wave has not been tested, mainly because it takes too much time for an appropriate sample.

    Historically all trend analysis has eventually failed.

    As a supporter of the efficient market hypothesis, Mandelbrot is anti-trend analysis, including Elliott Wave and other theories, such as Dow’s chart trending.

  37. Charles –

    Thanks for this post. I like the data and arguments here but it seems a lot comments here are not Portland specific — which is why I was attracted to this blog — and it makes this blog hard to follow most of the time. I think a lot of back and forth comments here are best suited for private emails between two or three folks.

    I really dont care much about what happens in Miami or Phoenix and the rationale behind the surge in house pricing in recent years in those areas.

    Generally speaking, it seems many people treat housing as an investment NYSE/nasdaq stock and get too deep into the analysis without realizing that for most people (i know) who buy houses, immediate value appreciation is not the biggest concern. You and others have clearly pointed out what those other reasons are. As you said, people will buy housing no matter what the conditions are.

  38. Well sure, promoting a house as an investment isn’t the smartest thing to do in a falling market. Now it’s back to the “home& hearth”, Norman Rockwell rationale. But for most of the past several years buying a house was promoted as a savvy investment. Personally, I rarely heard anyone talking lovingly about buying a house, tears of joy welling up in their eyes. All I saw was people bragging about their smooth financial management skill in buying a dwelling that was netting them the big bucks, dollar signs in their eyes.

    The story seemed to change as the market softened. Imagine that.

  39. As you said, people will buy housing no matter what the conditions are.

    I can haz ur money!


  40. I really dont care much about what happens in Miami or Phoenix

    You may not. However, if you ignore what happens in other areas you do so at your own peril. There are many indications that we’re just 12 to 18 months behind some of those other markets (also in CA). I recall looking at a Sacramento bubble blog a bit over a year ago and people there were saying it couldn’t happen to them either for various reasons (State capital meant they had lots of stable, good paying state jobs) and now it’s happening in Sacramento in spades. To many of us when we hear “it can’t happen here” we remember hearing that in other parts of the country a year or so ago. So looking at what’s happened in other markets is instructive.

    The other issue is the larger economy. Credit contraction is effecting markets everywhere. MGIC one of the mortgage insurers has included Portland on the same watch list that includes all of CA, FL, parts of Nevada, Phoenix, etc. These guys insure mortgages they need to know the risks and to them PDX looks risky at this point.

    Generally speaking, it seems many people treat housing as an investment NYSE/nasdaq stock and get too deep into the analysis without realizing that for most people (i know) who buy houses, immediate value appreciation is not the biggest concern.

    I think this was a big problem during the runup. People got dollar signs in their eyes. The thing you need to be concerned about now is what if you buy a house today and in a couple of years it’s worth 10 or 20% less than you paid for it? Then what happens if you get transferred or lose your job and need to sell? Nobody buys a house expecting that they’ll need to move in a couple of years, but it happens. And if you’re underwater in that house (owing more than it’s worth) you’re kind of stuck. At this point it’s prudent to consider those kinds of scenarios.

  41. “Nobody buys a house expecting that they’ll need to move in a couple of years, but it happens.”

    At least no rational player.

    This statement, “As you said, people will buy housing no matter what the conditions are,” needs to be balanced with: “Some people must sell, no matter how low the selling price (see also–short sale, bankruptcy, foreclosure).”

  42. “I have a friend who purchase some property in Europe some time ago. One dollar purchase more than one Euro at the time.

    He planned on moving soon, and he wants to move, but the exchange rate is such that his wealth is no longer where it needs to be. Sorry to say, but he is considering selling his European home. Even if sold at a reduced price, he will probably realize a gain in US dollars. He assumed that the dollar would remain strong, like some assumed the housing market would.

    Now he isn’t sure what to do.”

    Is he here or there? It doesn’t sound like a problem to me if he owns property in Europe that he wants to sell.

    We still need to pay our German taxes for last year, and the dollar has slid almost 20%. That’s gonna suck. I should have left some Euro’s there for this situation, but I didn’t trust our bank. Oh well!

  43. PDXOutsider-

    He is here with dollars, but the property is there, which can be sold in Euros.

    The problem is that after that 20% hit (or whatever it is), he does not have sufficient wealth in Euros, so he is uncomfortable doing the exchange.

    If the dollar was strong against the Euro, then he would be all set for life. He’ll probably end up selling the property and remaining here in the United States–what a bummer for him.

    I feel your pain. If the exchange rate would have gone the other way, then life would be good for you and him both.

    Note how homes keep getting cheaper for “outsiders” who hold the stronger currency.

  44. Note how homes keep getting cheaper for “outsiders” who hold the stronger currency.

    Problem is, while a lot of Americans dream of retiring in Europe, I doubt many Europeans dream of retiring in the US.

  45. TiP-

    “Problem is, while a lot of Americans dream of retiring in Europe, I doubt many Europeans dream of retiring in the US.”

    If the dollar keeps up its current trend, I think you’ll find a lot more Europeans that dream of retiring in the US…

  46. If the dollar keeps up its current trend, I think you’ll find a lot more Europeans that dream of retiring in the US…

    I don’t think so. Most of my European friends and relatives view the USA as a dangerous and violent nation. Worth a visit…but not the kind of place you want to live in.

  47. If the dollar keeps up its current trend, I think you’ll find a lot more Europeans that dream of retiring in the US…

    I seriously doubt it. Think about it: if you’re of retirement age you’re likely facing some health challenges. Would you want to move to the US and give up your free European healthcare plan?

    Like se_renter says: most Europeans view the US as being barely on the civilised side of barbaric. I was fortunate enough to live in Europe for a few months a few years back. Had a lot of conversations with people there. When I would explain how the healthcare system in the US works they couldn’t believe it.

    And then there’s aesthetics… I distinctly recall the reverse culture shock I experienced after returning from living over there (for only a few months mind you): my main reaction was that everything was so damn ugly here (we were riding down 82nd Ave coming home from the airport – ’nuff said?).

    No, I don’t care how far the dollar falls against the Euro – this will not be a retirement destination for Europeans.

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