I just knew this would be in the media when I heard the Starbucks news as I was heading home last night. Good for you for calling them on it!

Amazing!  Paper losses on real estate and their affect on coffee purchase...wow!

I do not believe this article you have read either.  The media is looking to hang on to bad news. Good for them. Send a free Starbuck coffee coupon.

Good one.

Bad housing market news is also causing more cancer now.     

I wonder how business is for psychologist and therapists?  Many REALTORS and mortgage reps could probably benefit from a session about now.

Poor Starbucks.  Their coffee costs as much or more than a gallon of gas! 

Everything that has gone down is REAL ESTATES fault.  You didn't know that.  Just kidding I actually hate it when they do that.   

The media has never really looked at the true market and clarified that the nation as a whole has many different markets that can be healthy or poor.

YES IT IS TRUE!

DONT YOU GUYS GET IT!!!

when the consumer has 100 to 300 k equity in his house he is much morel likely to SPEND.  he will refinance an BUY that mercedes, or he will get an equity line and use his home as an ATM machine.  TAKE AWAY THE EQUITY OR GIVE HIM NEGATIVE EQUITY AND THE CONSUMER DOES CHANGE HIS SPENDING HABITS.

WAKE UP REALTORS!  

Hey, when you can point a finger at soemone else, why not? It's the PC way! Just look at Congress.

Give me a break is right.  That is so far-fetched.  They will blame anything on the housing market and it is not nationwide.  Homes certainly are selling here in Needham, MA.  They are reaching for sure.  The further from Boston one gets it gets the market is tough but in Needham and surrounding communities we are ok.  Not a boom but OK.  Certainly not what the media wants to get out there.  Especially the Boston Globe which a case of biting the hand that feeds you.  I refuse to buy the Globe (which I call the Glob) or the NY Times (same folks).  I read it online or in the office but I don't want to line their pockets with my money.

Pat Baker, Realtor, Needham, Wellesley, Newton, Weston, Dover, Dedham, Westwood, Sherborn, Holliston, Natick & South Natick. 

You are missing the obvious connection between the housing market and venti lattes at Starbucks... REAL ESTATE AGENTS!  With so many agents getting out of the business and those whose business is slower than in past years perhaps real estate (and mortgage and title) professionals are drinking fewer expensive lattes and choosing instead to drink the nasty tasting Folgers that most offices have in a pot getting stale all day for free.  Gotta go now... time for my third Gingerbread Latte of the day!  :) 

Some funny and thoughtful posts here. . .

I must reply to Randy from Fresno regarding home equity.

There is another article in today's Washington Post Real Estate section on just that topic which states:

 ". . .Despite declining prices in many markets, homeowners still control near-record equity holdings, just under $11 trillion."  While some who bought at the peak of the boom and haven't been in thier homes long enough to realize a gain in equity and homeowners in parts of the nation where unemployment and forecloures have seen a loss in equity, ". . .many of these stories fill the news pages and cast a pall on consumers' perspectives. But, sad as they are, they are not the predominant reality in real estate across the country. . . . the fact is that most homeowners' equity stakes are intact, or even growing."

So, Randy, what exactly do you want Realtors to wake up to? 

WELL  I GUESS YOUU DIDNT READ THIS FROM THE NEW YORK TIMES :

Homeowners Feel the Pinch of Lost Equity

this is just a small portion of the article  click the link above to read full story 

From 2004 through 2006, Americans pulled about $840 billion a year out of residential real estate, via sales, home equity lines of credit and refinanced mortgages, according to data presented in an updated working paper by James Kennedy, an economist, and Alan Greenspan, the former Federal Reserve chairman. These so-called home equity withdrawals financed as much as $310 billion a year in personal consumption from 2004 to 2006, according to the data.

But in the first half of this year, equity withdrawals were down 15 percent nationally compared with the average for the last three years, and consumption supported by such funds plunged nearly one-fourth, according to the Kennedy and Greenspan data.

This summer, the size of withdrawals fell even more sharply to about one-third below the level of late last year, according to Mark Zandi, chief economist at Moody’s Economy.com.

“This slide in equity withdrawal is very recent,” Mr. Zandi said, “so you wouldn’t expect the drop in spending to occur until now, or Christmas.”

Only a year ago, money taken out of houses was still more than 9 percent of the nation’s disposable income, Mr. Zandi calculated, using a sampling of Equifax credit reports to supplement Fed data. By this fall, it had dropped to about 5 percent, a difference of about $350 billion a year.

Much of the attention in the recent collapse of the housing boom has focused on those in danger of losing their home or facing higher monthly payments in their adjustable mortgages. But the broader effect on the economy is likely to come from the much larger group of homeowners who can no longer count on rising home values to bolster their wealth.

Consumer spending accounts for about 70 percent of all economic activity in the United States, or about $9.8 trillion, so even a slight dip in home borrowing takes huge amounts of money out of the flow. The prospect of a slowdown, combined with the squeeze on households from higher oil costs, is sending shivers through the retail world, as apparel merchants, furniture dealers and electronics stores brace for the possibility that the all-important holiday shopping season will disappoint. Automakers are bemoaning sluggish sales.

“A fall of 2 percent in consumption would be big enough to trigger a recession,” said Christian Menegatti, lead analyst for RGE Monitor, a consulting firm in New York.

_______________________________

YOU LEFT OUT THIS SENTENCE FROM THE ARTICLE YOU QUOTED FROM:

Bottom line: The housing price correction cycle continues in many - not all - parts of the country. It is sobering or painful for just about everybody except buyers. 

WAKE UP TERI DEANE!

all emphasis mine 

Randy --

Thank you for your comments.

I left out the last line of the article in the Post because it only restated the point I thought I had already made.  Real Estate is local and most local markets are showing that over the past 5 years the huge gains in home equity have off-set the moderate market adjustments IN MOST PARTS OF THE NATION.  This was the thrust of that article and, I'm sorry, but I thought I had made that clear in my post.

As to consumer spending, I highly doubt people are using their HELOCS to finance a Starbucks habit.  What does make sense, is that home improvement projects are being set aside because consumers don't want to tap into their equity. 

The housing bubble has not burst, it has only deflated somewhat in many markets, and in other parts of the country not at all.  So, do we focus on a few areas where other factors (besides housing) have caused a crash (Cleveland or Detroit for example) and say this means the housing market everywhere is crashing?  Where's the logic in that?

The New York Times article is just another example of the negative media blitz on the housing market.  As a person who is doing business in real estate, you should not "eat" the media hype and fall into their negative black hole.  Negative reporting sells the news.  Has it helped you sell homes?

Teri,news is what it is.

i dont need the news to tell me how bad things are.  have you lent thousands of dollars to a former client to tide them over rough times and save them from losing  their home lately?  have you had agents ask you to preview their homes because they are forced to sell; or a respected associate  ask you for $xx,000 loan to help them so they dont lose their home.  i dont need the news.  when i see our MLS , which has 4234 agents, sold only 250 listings last month out of around 8000 - i dont need anY news to tell me the numbers are negative - THEY ARE WHAT THEY ARE.

the negative equity situation will play itself out. i am telling you facts.  the fact is when home prices were escalating people were spending more.  now they are spending lesS - ON EVERYTHING AND THAT INCLUDES SBUX!

oh - a broker from one of the wealthiest communities in our area told me recently that MANY  of the agents in her office have plainly stated that they are living off their home equity credit lines.  what will they do when the credit runs out?

WAKE UP TERI! 

I have to go with Steve Shatsky's comment -- Starbucks' problems obviously have to do with fewer real estate agents spending whatever discretionary income they have PLUS they're meeting fewer clients at Starbucks.   All those contract presentations over a Frap or a latte.  A quick stop over to talk about the houses that were visited during the day, Killing a little time before settlement. 

So, actually, the downturn in the market is not only responsible for fewer agents going to Starbucks it's also responsible for fewer clients of agents.  It's exponential.  No wonder the media has made the astute connection between a housing downturn and Starbucks' woes.

I, therefore, call upon all Realtors to immediately go to the Starbucks website and order a bunch of gift cards for their favorite clients.

Come on!  The entire US economy is depending on us!

(full disclosure - I'm a SBUX shareholder and anything you can do to help the stock price will be appreciated!) 

Steve & Ken -- points well made.  I just hadn't realized what a potential crisis this was.  Guess I'll just have to pitch in and do my part -- after all, this is for the US economy (and Ken's stock portfolio)!

Considering I think of Starbucks as the business model I want to emulate that was a bit odd.....I guess housing is to blame for everything.

There was a business article written many years ago about Starbucks...it had to do with disposable income.  The reality is that as spendable income is squeezed ( As in rising gas prices ) persons will start watching those treats and and little indulgences.  I feel that Starbucks is more related to rising gas prices and energy than housing.  It is also a company that has reached a saturation in growth.  The main generator of income for Starbucks is coffee, not music, small kitchen appliances, or food items.  Besides, their coffee is not the greatest!

If Starbucks didn't charge $5 for a stupid coffee, then the "housing woes" could be lightened. Imagine... fewer venti latte frappe mache chapiatos equals more mortgage payments that get sent in on time!

No not really.. but yes this is ridiculous and has nothing to do with each other.

Ken - I frequently meet with clients at Starbucks.  It's a nice, clean, relaxed atmosphere.  However, it might be time to diversify your stock portfolio.  McDonalds seems to be targeting Starbucks and the coffee drink market for their growth.  And with how much real esatte agents love their cars and all those McDonalds drive-thru windows I think they might make a dent.  And their new coffee is not half bad, but to help you out, I'm going to take your idea and give Starbucks gift cards as gifts.  And I don't think I am going to meet with clients as McD's... no T-mobile Hot Spot and too distracting when the deep fryer buzzer keeps going off!

I'm not sure if anyone wrote about this in the comments (I...ahem...skimmed through them) but if the problem with Starbucks is the housing market maybe if we beefed up Starbucks' sales the housing market would rebound. Sounds like a cause and effect type thing to me :-)

Steve - I've hear McDonald's has better coffee but I've never tasted it myself. I'm with you, though.  The Starbucks ambiance is a little more conducive to client conferences than McD's and they do have that hot spot thing going on.

And I am a little more diversified than just a position in Starbucks. Heck, my SmithBarney guy wouldn't have it any other way.  He wouldn't make any money.

Teri -  What a great thread? Maybe there is a connection between real estate (or at least Realtors) and Starbucks. I'm not sure the economics of it is as cut and dried as the Washington Post would have us believe.

Jim, Michael, Steve & Ken -- you all made me curious about coffee quality, so this morning I boogied out to McDonalds for breakfast (see my posting on the Realtor Diet) and tried their "new" coffee.  I had tasted this coffee last week and was less than impressed.  Today's was a truer test because I had just filled up on Starbucks coffee from my Cusinart coffee maker.  Results are, the McD coffee isn't bad and would certainly do in a pinch, but I still prefer my home-brewed Starbucks (cheaper than the venti, too).

As for ambience, probably Starbucks would win for that as well (the beeping fryer thing drives me crazy, especially as they never seem to stop it, and I start imagining all the greasy fries burning to a nice roasty-toasty brown).  But the McD sausage McGriddle ... mmm, good!

Ken -- this thread has proven to me that the connection between Real Estate, Realtors and Starbucks goes deeper, much deeper than I had thought.  Perhaps the inverse is true and all we need to do to turn the market around is drink more Starbuck's coffee, lattes, etc.  Would that it were so.

I have no idea why they would compare Starbucks to the housing market, they have absolutely NOTHING to do with each other and frankly I'm getting sick and tired of hearing how bad it is, because its not!

Michael -- I completely agree. . .the market isn't bad. . .it's a super time for buyer's right now and as soon as more people come to that realization it will really take off. . .especially in our area.

Teri, thanks for sharing the news with us. You know some here in Louisiana are more busier than I ever wanted to be. We have tried to get the media to cover a story about the first Brokers tour since Hurricane Katrina and not one showed up. So them don't watch are buy there papers.