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To: Jim McMannis who wrote (79802)	5/9/2002 1:02:54 AM
From: tejek	Respond to of 275872

You hit on more than one thing. Yes, commercial vacancy rates. What does that tell you? It tells me that commercial vacancy rates are not nearly as bad as they were ten years ago. I think that's a good thing. RE:"Housing prices are at their highest level in history but then again the home buying population is at a high, particularly in the the purchase of high end homes. that's because boomers are buying their ultimate big houses. And its the numerous purchases of expensive homes that is pushing the median price up, not simply inflationary pressures. The inflation is in the home prices, just light it was in the NASDAQ. Its not quite the same scenario. Tech firms were growing at a rapid clip because of the internet buildout. Their growth was prompting grander and grander forcasts of growth which, in turn, fueled a spurt in stock prices. This spurt in stock prices combined with the pie in the sky growth forecasts attracted an unprecedented infusion of liquidity into the Naz market which then pushed stock prices up even further. The two fed on each other until the bubble burst. However, people did not need stocks like they need houses. Its hard to judge all the reasons for the increase in housing prices throughout the country but if other areas are typical of Seattle, one of the biggest generator of housing sales has been the low interest rates. These rates have made more homes affordable to more people....and most of the mortgages that have been taken down are fixed. Coupled with that, inventories, due to varying reasons from region to region, have remained very low even for good times economically...........I think the current figures show a four month supply. On top of that, buildable land in most cities has decreased dramatically over the past 20 years. The result in Seattle is that in spite of an 8% unemployment rate, housing sales remain firm and the median price continues to rise. What could make this a bubble is if a lot of people are buying houses on spec. If that's the case, there could be a bubble bursting soon......however, there is a little evidence of that here in the NW. Fueled by the money flow from stock markets and the largest tax cut in history it's becaome a flipping game. A perfect example of the "greater fool" theory. AG can't help but perpetuate it with low rates. He is literally held hostage by the rest of the economy which is basically in the dumper. I've never seen anything like it. Due to the rate and steepness of acceleration, it does seem that a crash is the most likely result. We shall see... There is nothing wrong with flipping a house.....that doesn't create a bubble. Its when too many houses are flipped by too few people that starts the formation of a bubble. And like I said before, there is not a lot of that here and pretty much along the west coast. In the past ten years, lenders have made that kind of speculation fairly difficult between their occupancy requirements and higher downs for those purchases non occupied. And what's even more interesting, the home builder stocks, in spite of good growth over the past two years, are still sporting low P/Es.....earnings have more than kept up with the increasing stock prices. Again, I think the biggest threat to this economy is some unexpected and unprecedented event like 9/11. That's my worry. If that doesn't happen, I suspect AG will pull off another soft landing. ted