From a small northwestern observatory…

On Monday, I spoke on Low Income Housing Tax Credits at the Rainier Club’s Real Estate Roundtable here in Seattle.  It was a tag-team event — my co-speaker was Paul Cummings, who heads up Enterprise Community Partners’ Western Region.  His portion of the presentation more-or-less summarized how that market works (short answer:  affordable housing developers get tax substantial credits which they can either use, sell, or syndicate).  My portion was to discuss the state of the market (it stinks really bad because the usual buyers of tax credits are in disarray).  We both then summarized the pending legislation to fix things (Congress knows it needs to act, but is loathe to provide more aid to financial institutions.  Something will be done very soon, and we hope it’s enough.)

On Tuesday,  I attended an economic briefing presented by Jack Albin, chief investment officer of of Harris Private Bank.  His talk was mainly centered on securities, and only briefly touched on real estate (and at that, on REITs).  He found REITs a bit hard to read, because so much of their current dividend yield is in stock dividends.    Fundamentally, though, I thought most of what he said was pretty good.

Then this morning, I woke up to find myself quoted in an above-the-fold article on the lead page of the business section of the Seattle Times.  The article concerned the recent release of the Case-Shiller index, which essentially says that residential real estate prices tanked from October to November.  I added a couple of caveats to that.  While Case-Shiller is an excellent index, and one of only two residential pricing indices which currently “work” (the other being the one from the Office of Federal Housing Enterprise Oversight), the C-S index month-to-month statistics have to be taken with a huge grain of salt.  These indices are based on actual sales of homes, and they work wonderfully during “up” markets (I had an article about such repeat-sales indices in the Journal of Housing Research a couple of years ago).  However, during periods of market disruption, such as we have now, these pricing indices are skewed downward due to a bias in the data.  In short, since the data only reflects actual transactions, it’s generally picking up a huge percentage of distress sales, foreclosure sales, and other sales under duress.  My quotes in the article picked that up.

I also pointed out — for local consumption — that the Seattle market is still pretty vibrant compared to the rest of the country.  While we’ve had some noteworthy lay-offs (Microsoft’s first layoffs in history), and our other basic employers are troubled, we still have one of the best economies in the world here in the Pacific Northwest.  I’d much rather own a home here than in most of the other top-20 cities in the Case Shiller index.

Well, that’s it for today.