Warning: New Housing Bubble Ahead

This comment left by Ryan strikes me as a clear warning sign of another housing bubble inflating in Seattle.

Just pulled the trigger on buying a townhouse in Fremont for $745k. Haven’t closed yet so don’t want to link to the MLS. Thought I would share my thinking on why I bought and what the situation was like.

List was for around $650k. Property had multiple offers, most within a few $k of the accepted price. List to accepted offer in about 7 days. Three quarters of a mil for a townhouse seems insane but we feel good about the purchase for a few reasons:

  • My office is on the same block as the unit, can’t beat that commute
  • I’ve lived in Fremont for years and want to stay for the long haul both a resident and business owner
  • The unit was unusual in a number of ways, all good. Exceptional build quality
  • Units sold nearby with same square footage for similar price that are absolute garbage (3807 Fremont Ave N I’m looking at you)
  • We wanted a house but didn’t have the capital to buy and then remodel, most things in our geographic range needed work
  • I felt good about the potential future appreciation of the property due to being so close to all of the major tech employers

On the downside it’s definitely on the high end of what anyone paid for a townhouse in Fremont and there is no way around the fact that it’s insane amount of money. If tech is in a bubble it still feels like the early stages of the bubble and we didn’t see the situation improving. Mid term (5 year range) it seems that traffic will get drastically worse as everything under construction comes online, so it seemed smart to set up our lives not to have to leave the neighborhood.

Just one perspective from someone helping to inflate both the tech and housing bubble.

Here’s what concerns me the most:

  • $745k for a townhouse. In Fremont.
  • The home sold for $100k over list price with multiple offers at that level.
  • The buyer cites that he “felt good about the potential future appreciation” as partial justification for paying so much.

I still don’t think we’re likely to see another big price crash (yet) but stories like this one definitely scream “housing bubble” to me.

  

March Reporting Roundup: Anxious Frenzy Edition

It’s time once again for the monthly reporting roundup, where you can read my wry commentary about the news instead of subjecting yourself to boring rehashes of the NWMLS press release (or in addition to, if that’s what floats your boat). To kick things off, here’s an excerpt from the NWMLS press release: Frenzied Market […]

NWMLS: Home Prices & Sales Shot Up in March; Inventory Still Anemic

NWMLS: Home Prices & Sales Shot Up in March; Inventory Still Anemic

March market stats were published by the NWMLS yesterday. Before we get into our monthly stats, here’s a quick look at their press release. Frenzied Market Frustrating Buyers Buyer anxiety is rising as the pace of home sales is faster than brokers are able to replenish inventory, according to members of Northwest Multiple Listing Service. […]

Case-Shiller: Home Prices Slipped Just Slightly in January

Case-Shiller: Home Prices Slipped Just Slightly in January

Let’s have a look at the latest data from the Case-Shiller Home Price Index. According to January data, Seattle-area home prices were: Down 0.5% December to January Up 6.8% YOY. Down 12.2% from the July 2007 peak Last year at this time prices fell 0.8% month-over-month and year-over-year prices were up 11.9%. Year-over-year price gains […]

Housing Bubble 2.0: The Perma-Bears Respond

Ben Jones, who has been blogging about the housing bubble from down in Arizona since late 2004 at The Housing Bubble Blog linked to my “Welcome to Housing Bubble 2.0” post yesterday, prompting an interesting discussion in the comments. Here’s a selection from the conversation that ensued: Comment by Ben Jones I’ve called this the […]

Welcome to Housing Bubble 2.0

With home prices nearing their 2007 peak levels in the Seattle area (and no doubt exceeding them in some neighborhoods), I thought it would be good to step back from the monthly stats and take a big picture look at what’s going on in the housing market.

To answer the question of whether or not we are in another bubble, let’s compare and contrast the present frenzy to what the housing market went through during the Great Housing Bubble…

Don’t Blame Investors For Unaffordable Housing

An article published this week in Seattle Weekly titled A Letter to the Investor Buying Our Apartment Building pinned the blame for the lack of affordable housing in the Seattle area on investors and their dirty obsession with profits.

…Eve and Charles told us they were putting the property up for sale. Who could blame them? The building is a century old and so much work went into maintaining it, especially for a couple of people who, also, are aging. But it’s prime real estate, right on the water with a view that would make even Donald Trump drool. So we had a good idea of what would happen after the sale went through. Skyrocketing rents and a landlord we’d never see, much less ever know…