Posted by: Timothy Ellis (The Tim)

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

73 responses to “The Ballard Conspiracy”

  1. Anonymous

    ok, ok, what’s the consensus here? Selling the house: Good move. Buying the condo: Bad move. IMO, they should have rented to at least see how they’d like downtown first. But these two are real estate agents and if they think the downtown condo prices are going up, they sure put their money where their mouths are.

    Rate this comment: Thumb up 0

  2. Anonymous

    selling the house, poor move. $700k in Ballard is a pretty nice house and they ought to own it free and clear, so who cares?

    buying an older condo in the Denny Triangle, probably a crappy move. plenty of newer stuff coming to market and lots more on the way that will undermine the market even further.

    Rate this comment: Thumb up 0

  3. Anonymous

    Look, they bought the home in 1988 – nearly 18 years ago. And they moved into a $450k condo (not a $700k condo or even a $1m luxury Vulcan condo). They’ve at lesat pocketed the $~200k difference and perhaps paid more than 20% down so their mortgage is not higher.

    After 18 years in Ballard, a childless couple with no pets decides decided they were tired of maintaining the house and yard which I totally understand. Doesn’t sound unreasonable at all.

    Perhaps, they bought this condo with the same kind of long-term outlook their bought their house with? Does anyone consider that? Lots of good reasons to down-size.

    Or did people expect them to sell the house and buy a $116k condo in Enumclaw?

    Rate this comment: Thumb up 0

  4. Anonymous

    They could have put that $700,000 into a CD. $38,000 a year in interests can rent you a nicer condo than the one they bought for $450,000.

    Rate this comment: Thumb up 0

  5. Anonymous

    Kudos for downsizing. Who can fault them for that?

    Yes, the value of the condo will probably go down over the next several years but WHO CARES? After the Ballard windfall, they can afford to lose some money.

    Move into those downtown condos folks, that’s why they built ‘em.

    Not sure why we’re talking about this couple in a forum.

    What was the point again?!

    Rate this comment: Thumb up 0

  6. Anonymous

    PS Seattle does not NEED air conditioning. By next summer they’ll have a system worked out to keep windows open and noise out- I use a fan as white noise and never miss a night’s sleep.

    Installing air conditioning to use a grand total of 3 days per year is just plain stupid.

    Rate this comment: Thumb up 0

  7. Anonymous

    Hell yeah, anon 12:00:57 — 38k per year is more than the rent on even the most expensive luxury condos I’ve seen.

    Their decision strikes me as penny wise and pound foolish. At the very least, you’d have to seriously question your instinct to buy, when you can rent an equivalent condo for a fraction of the same-property monthly mortgage payments.

    This whole business feels more and more like the dot com bubble with every passing day. 1998 Pets.com, meet 2006 Ballard craftsman….

    Rate this comment: Thumb up 0

  8. Anonymous

    pushed by the RE establishment this year as the cool place to be for one reason:

    It’s the last area of North Seattle close in to downtown that had anything close to a 400K home. Cheap by Seattle standards.

    Now that they’ve succeeded in pushing up prices in Ballard, watch those dominoes fall.

    Ballard is to North Seattle what Everett is to Seattle.

    Nobody really wanted to live there until they got priced out of the more desirable areas.

    And yes, I like Ballard, but facts are facts. If it wasn’t so expensive to live in Wallingford, Green Lake, Fremont, etc., Ballard would have stayed off the map.

    Rate this comment: Thumb up 0

  9. Anonymous

    Very Interesting article in the Denver Rocky Mountain News:

    http://tinyurl.com/zwv8x

    “The number of foreclosed homes is rising near record territory, adding to the supply of unsold homes clogging the market.

    Typically, this would mean that prices would drop because sellers would be forced to lower their prices.

    But sales activity at the top of the market remains brisk, skewing the overall average and median prices, Realtors agree.”

    Sound familiar?

    Rate this comment: Thumb up 0

  10. Anonymous

    They could have put that $700,000 into a CD. $38,000 a year in interests can rent you a nicer condo than the one they bought for $450,000.

    That could also pay the entire mortgage on their condo. Renter logic at it’s finest.

    Rate this comment: Thumb up 0

  11. Anonymous

    Bad news for home prices- the powers that be are going to be taking a look at risky loans. Since risky loans are the ONLY thing that allowed prices to go up, watch out below.

    Also, the Fed is speaking clearly now about saving the dollar. Watch those interest rates climb as home prices fall.

    See links at todays (July 7) Housing Bubble Blog.

    Best case scenario for bears: by a house with CASH. Especially those who’ve sold recently and made their 250K tax free on the sale.

    The fast unwind now is starting.

    Rate this comment: Thumb up 0

  12. meshugy

    Sound familiar?

    Except that we don’t have record foreclosures nor high inventory. Inventory is still historically very low in Seattle right now. We need 30% more just to get back 2003 levels.

    Rate this comment: Thumb up 0

  13. Anonymous

    That could also pay the entire mortgage on their condo. Renter logic at it’s finest.

    It’s called a hedge. If you buy a turd for $100, and it’s worth $50 two years from now, all you have is a pile of chocolate and a $50 loss.

    Despite what you may have been told by the news media, it is not always in your best interest to buy things.

    Rate this comment: Thumb up 0

  14. Anonymous

    Except that we don’t have record foreclosures nor high inventory. Inventory is still historically very low in Seattle right now.

    A year ago, inventory wasn’t high in Denver, either.

    Rate this comment: Thumb up 0

  15. marin_explorer

    Inventory is still historically very low in Seattle right now.

    Ever the eternal optimist; the world needs people like you. I hope you’re in sales.

    Then again, with the market turning elsewhere in metro areas, why can’t Seattle follow? It’s simply behind the curve a little. Take a look around.

    Rate this comment: Thumb up 0

  16. meshugy

    Then again, with the market turning elsewhere in metro areas, why can’t Seattle follow? It’s simply behind the curve a little. Take a look around.

    Let’s look the historic #s:

    Inventory June 2006

    Seattle: 2,082
    King County: 8,011

    Inventory June 2003

    Seattle: 3,183
    King County: 12,275

    So we’re way below normal….1,000 more houses were for sale in Seattle in 2003. over 4,000 more for the whole county.

    Rate this comment: Thumb up 0

  17. Anonymous

    Dude, I’ve been reading your BS for several months now…. do anybody pays you or you are just an idiot!

    Rate this comment: Thumb up 0

  18. Anonymous

    I think that it is quite clear the media has every intention of feeding the bubble as much soap as it needs to get larger and more impressive. My neighbor is a manager of a real esate office. Few people know that they have connections to the media and actually have a hand in writing all these articles.(LOL)

    Rate this comment: Thumb up 0

  19. Anonymous

    I don’t agree with everything meshugy says but he isn’t spewing crap with no facts to back it up. If this site is really about getting to the true, then his interpretation of the facts is just as a valid as someone else’s.

    This blog is really going downhill lately and this “Agree with us or we’ll mock you chocolate” leads outsiders to think you only want people around who agree 100%.

    If this blog is for all the bears to get together and pat each on the back for renting then say so, otherwise it is a continued search for the truth of what will happen to this market. Since no one knows for sure, everybody is making predictions based on fact and seems exactly like what meshugy is doing, he just happens to disagree with you.

    I’m nothing but an anonymous poster, but I have to say the last week or so this blog has really taken a turn for the worst.

    Rate this comment: Thumb up 0

  20. Anonymous

    Sorry, in 2003, inventory was higher in just about every area of the US outside of the extremely now overbuilt markets.

    So it’s not really terribly relevant.

    9/11 and recession anyone?

    Rate this comment: Thumb up 0

  21. Anonymous

    Supply needs to far outstrip demand in order to have a crash.

    Vegas’ inventory hits 20,000 in June, an all time high. Seattle needs to at least get closer to its all time high for a crash to happen.

    Rate this comment: Thumb up 0

  22. marin_explorer

    So we’re way below normal….1,000 more houses were for sale in Seattle in 2003

    Yeah, I’m not denying that, but judging from RE markets elsewhere, I’m not as upbeat as you. Was 2003 even remotely a “normal” market? We need to take “history” back further than 2003. Anyone can select data to prove their own point. I could also cite 2006 inventory trends for Seattle:
    3 month: +29.1%
    6 month: +36.5%
    Again, it all depends on what we want to see.

    Not to harp on you, but I made the point because your position mirrors the optimism seen here in SF last year—and is starting to wane. Numerous indicators suggest the market peaked in July-August 2005 (builder stocks, mortage app volumes, construction spending, etc: they strangely line up) I see the situation like a bubble of hot gas expanding outward from the hottest markets. It’s already cooled here, but Seattle is apparently basking in its warmth (for now).

    So guess what happens next? There’s only so much credit expansion left to keep demand going, home buying has frontloaded the next few years while builders keep creating supply. Not to mention: short-term speculation has hit a wall due to rate increases.
    Personal opinions aside, time will tell.

    Rate this comment: Thumb up 0

  23. Anonymous

    Despite what you may have been told by the news media, it is not always in your best interest to buy things.

    This wouldn’t be a weblog without the standard distrust of the ‘MSM’ in favor of the unqualified opinions of renters.

    Do you really think they are going to move in two years? Do you think that is why they downsized? As ironic as it is, it’s short-term thinking like yours that led the real estate market to where it is now–and your mangy ass is still renting whereas most people actually have equity built up. People are going about their lives without worrying about rent increases and possibly having to move while you are poring over the listings in Lynnwood wondering what you can afford.

    Chart the numbers yourself and see. Look at it from every angle, the difference is negligible unless you factor in catastrophic contractions. If that happens, you probably won’t have a job, much less the money to afford a house. So keep rooting for armageddon, numb-nuts. Now, your break from Target is almost over, get back to work.

    Rate this comment: Thumb up 0

  24. Anonymous

    anon @ 1:49

    This blog is really going downhill lately and this “Agree with us or we’ll mock you chocolate” leads outsiders to think you only want people around who agree 100%.

    That’s all the internet is.

    This blog is a place for 20-nothings that are priced out of Seattle but feel entitled to have everything that their parents probably worked years for handed to them on a plate. Anyone who went for it and locked in and has equity now obviously did it illicitly and they want for them to fail. Ideally the whole economy will fail and we’ll all be dumpster diving and cooking over sterno but somehow they’ll be insulated and able to scoop up housing for pennies on the dollar. But, given the track record of the players involved, they’ll misjudge the bottom and eat chocolate then too.

    Rate this comment: Thumb up 0

  25. dash_point

    “This blog is a place for 20-nothings that are priced out of Seattle but feel entitled to have everything that their parents probably worked years, yada, yada, yada”

    What a concise, accurate assesment of people’s input here! I’m curious how you rise above the ongoing “bitter renter” dialog? Or do you just represent the “smug owner” crowd? Same deal. I find it pretty clear who are contributing to the dialog here.

    Rate this comment: Thumb up 0

  26. Anonymous

    Marin explorer-

    Seattle is basking in the warmth of nothing. You are taking the RE media articles too seriously.

    There are a lot of price reductions here- a clear sign of the top. Seattle is also top of the lists for outrageous loan practises.

    Like everywhere else in the US, there are still buyers going out and foolishly buying at inflated prices. They will keep the median growing for a few more months.

    The median is still growing in most places in the US, not just Seattle. That does not mean the bottom has not been pulled from under those markets.

    The rug’s been pulled from every US market. Statistically it’s not showing up yet outside of a few places like San Diego. I believe the San Franscico market median is still climbing also.

    Why anyone would listen to an industry hack over clear economic indicators is beyond me.

    Rate this comment: Thumb up 0

  27. Anonymous

    Anon 2:23-

    Wow the vitriol of elusive paper equity holders is something to behold.

    Suggestion: start saving your money. That “instant equity” is about to dry up.

    Rate this comment: Thumb up 0

  28. meshugy

    Statistically it’s not showing up yet outside of a few places like San Diego.

    Then how do you these markets are tanking? If it’s not showing up in the stats, it’s clearly not happening.

    Rate this comment: Thumb up 0

  29. marin_explorer

    Seattle is basking in the warmth of nothing. You are taking the RE media articles too seriously.

    Anon @ 2:37
    Thanks for the reality check, as I haven’t lived up that way for a while. As recently as a visit last fall, I recall a peak of RE optimism, at least in Kitsap county. Glad to hear many people aren’t fooled by the hype.

    Rate this comment: Thumb up 0

  30. Anonymous

    “Wow the vitriol of elusive paper equity holders is something to behold.”

    Oh lick off. Day in and day out this blog is one monotonous tide of bullchocolate aimed at anyone that dares even suggest that this market might not implode. Now someone throws it back at you and you respond like you’ve been persecuted. Let me get a crowbar to help you down off of that cross. My wife and I pay 19% of our gross income in annual PITI. We are fixed at sub-6 flat for 30 years. And all I see on here is the inverse of the 5/1 ARM crowd crowing for people to “cash out” now and “take their profits” without realizing that you are just a reflection of the exact same mentality that you so disdain. Keep waiting, y’all. In order to occupy your time, read back on some of the posts of the bubble blogs from 2003 and 2004. It ought to sound familiar, eerily familiar.

    Rate this comment: Thumb up 0

  31. Anonymous

    Anon 2:55-

    I really do not understand the anger of people such as yourselves who CLAIM to be fine financially yet care so intensely about the RE market imploding.

    Why do you care?

    Rate this comment: Thumb up 0

  32. BubbleRider

    This blog should be renamed: “Bop The Meshugy”… I love that guy (I’m thinking he might really be The Tim’s alter ego).

    These postings are not about “getting to the true” (anonymous), it’s an observation post for market watchers like me. Not players. I admit it, I like to watch. I made a post a couple months ago, announcing Robert Shiller’s new housing derivatives to allow Bubble watchers to bet against the market. Anyone make a hedge play on San Diego or Las Vegas tanking, anyone, anyone? I didn’t either…

    Comparing Seattle’s housing market to three years ago adds up to nothing. One needs to watch the current trends. King County’s daily ACTIVE SF inventory was 5800 end of April. This afternoon it’s 7160. What’s that, about a 23% increase in homes for sale in two months? Add in the increased postings on Craigslist, and you’ve got a trend you can sink your teeth into.

    Today’s PI headline article wasn’t about downsizing, it was about real estate professionals dumping their personal inventory. The McCoy/Creasys are figuring their little Ballard house isn’t going to be worth $1,050,000 (50% appreciation) in a couple more years….. People get ready, there’s a train acomin….or not.

    Rate this comment: Thumb up 0

  33. Anonymous

    Seattle is full of homes that have been on the market for upwards of 200 days now. Many taken off and re-listed as new.

    Seattle proper has 36 homes out of 1435 active or contingent that have been on the market since before 1/1/06. The MLS has used a designation called CDOM for the last couple of years which stands for cumulative days on market which was put in place to counter the strategy of removing and relisting.

    Rate this comment: Thumb up 0

  34. Anonymous

    Thanks for the input Bubblerider.

    Lord I wish more people such as yourself would post here.

    Rate this comment: Thumb up 0

  35. MLS lies

    Sorry 3:13, it was none other than a Seattle Realtor who posted about the re-list with new MLS # just a couple months back.

    At any rate, the practise is more than obvious to somebody who watches the MLs lists so it’s silly to try to deny that it happens all the time.

    Rate this comment: Thumb up 0

  36. Anonymous

    2:55 – And somebody throws it back at you and you say “oh lick off”. Nice.

    I’m all for debate. The data can be read many ways, for or against a bubble. Only time will tell.

    My situation:

    Bought a house in Magnolia in 2000 for $425. Did a remodel and sold in 2004 for $585k.

    I moved to New Orleans for 2 years and recently moved back because of Katrina. In that 2 years, my magnolia house sold again for $640k and now zillow has it’s value at $725k.

    I know this house intimately. It is *not* worth this amount.

    I’m still sitting on the gained equity from the sale in 2004 (and some insurance money from Katrina), and I’m patiently waiting for prices to come down. (because I believe they will).

    I’m happily renting a 2bd apartment near Pike Place Market for $1350 and loving it.

    Not bitter – just happy and living my life, trying to make good financial decisions.

    Rate this comment: Thumb up 0

  37. Anonymous

    “I really do not understand the anger of people such as yourselves who CLAIM to be fine financially yet care so intensely about the RE market imploding.

    Why do you care? “

    I used to actually offer information here but anything that didn’t jibe with the desired results was ignored or qualified with random unfounded BS. So I stopped offering useful information. Now I just loft the same invective that is aimed at meshugy back at the self-proclaimed experts here.

    I don’t give a chocolate whether you think I am secure or not. I saved for 20% down, bought in a neighborhood that I thought was relatively undervalued and enjoyed upside. I am a financial analyst and work in an office where the average income is over six digits. Oddly enough, I know many others in a similar financial situation as myself. There was a long time where I mocked and derided those who I saw riding the front end of the low-interest rate wave and then I decided that I had enough of renting and bought. I don’t plan on moving for fifteen years at least and, if I lost my job, I could make my share of the mortgage payment for eight years. My wife could make her share for close to 30. You seem to think that this town is full of deadbeats…and I am here to tell you that it’s not. Sure, they are out there but not nearly on the scale you think. Go outside of Seattle and there are a lot more of them but there are plenty of well-capitalized people clamoring for a good close in house in Seattle.

    Rate this comment: Thumb up 0

  38. plymster

    Then how do you these markets are tanking? If it’s not showing up in the stats, it’s clearly not happening.
    –Meshugy

    Meshugy, you are right, but the stats are at best conflicting. Increasing inventory, declining sales, rising interest rates, collapsing mortgage firms, stagnant wages, and negative savings rates do not line up with ever increasing median sale prices. I think what most people here are keying off of is the fact that there are very few positive indicators for the housing market nationally, and an overwhelming number of negative indicators.

    Incedentally, I agree with Anon 1:43: This blog has become rather vitriolic lately. I would attribute that to folks’ egos getting stepped on combined with the insanity of the situation. A couple making $100K a year and $50K in the bank cannot afford the median home in Seattle. I’d be pissed to if I were cut out of the “American Dream”, and ahead of 90% of the nation financially. Inflamatory statements like Anon 2:23′s don’t help either.

    Most of the contributors to this blog have shown themselves to be thorough and thoughtful analysts and frequently back up their opinions with hard numbers and well thought-out arguments. Some cherry-pick their data, but who isn’t guilty of a little hyperbole when making an argument?

    Please, let’s keep it civil.

    Rate this comment: Thumb up 0

  39. meshugy

    King County’s daily ACTIVE SF inventory was 5800 end of April. This afternoon it’s 7160. What’s that, about a 23% increase in homes for sale in two months?

    What’s your source for the #s? MLS records show:

    Res Only for April 2006

    King County: 5,526

    Res Only for June 2006

    King County: 6,489

    a 17% increase…but that’s normal this time of year. Inventory always goes up in the summer. And so do sales:

    Sales:

    Res Only for April 2006

    King County: 2,344

    Res Only for June 2006

    King County: 3,000

    An 28% increase in sales

    Rate this comment: Thumb up 0

  40. dash_point

    Please, let’s keep it civil.

    Second that. Ad hominem only betrays a weakness in your argument.

    Rate this comment: Thumb up 0

  41. BubbleRider

    I’m an agent, that’s Realtor with a capital R. Just checked again, it’s up to 7176.

    Thanks for your sweet words, Anonymous. How’s about we come up with a name for you. Tim, you should disable the “anonymizer” feature. Peoples gotta at least have a name…let’s lighten up this blog load a bit.

    Rate this comment: Thumb up 0

  42. Anonymous

    I find it surprising that so many of you consider your friends, relatives, and coworkers complete idiots for buying a house.

    The smartest guys in the room are long term bond traders and they aren’t betting on a crash yet, fellas. Ironic that you’re accusing everyone of being scared when fear is driving this entire discussion.

    Get over the idea that people are “investing” in real estate. They’re doing whatever they can to get into a house. The boomers have all the money and they have decided they want houses in cute cities. Sucks for us but you can’t change reality out of sheer willpower and vitriol.

    Rate this comment: Thumb up 0

  43. T.S.

    Just checked again, it’s up to 7176.

    Nothing like interpreting HOURLY data to extrapolate macroeconomic trends. Ridiculous.

    I also fear this blog is becoming an echo chamber.

    Rate this comment: Thumb up 0

  44. Anonymous

    Well, well well. I think that our friend “nick” is back, posting as anonymous.

    The anger, the insults, the stupid, unnecessary use of foul language…it screams of nick.

    Welcome back, nick. Now, please go away.

    Rate this comment: Thumb up 0

  45. Anonymous

    When I pointed the obvious that the couple in the article could have rented a better condo with $38,000 in interests earned, I should have also said that CD is the worst they could do. Bonds, dividend funds, those can even do better. Unless real estate goes up 20% a year forever…

    Rate this comment: Thumb up 0

  46. Anonymous

    Another meshug-ism:

    “a 17% increase…but that’s normal this time of year. Inventory always goes up in the summer. And so do sales”

    Uhm…meshugy? Did you even bother to read the latest NWMLS numbers?

    King county active listings are up 16.83% year over year.

    King county pending sales are down 6.08% year over year.

    King county closed sales are down 3.2% year over year.

    Get it? Regardless of what is “normal” for King County in the summer, this year is worse than last year. That’s the beauty of year-over-year statistics — they allow you to look beyond seasonal trends.

    Rate this comment: Thumb up 0

  47. BubbleRider

    Dearest t.s.

    Sometimes macroeconmic trends have micro climates within. Your history of housing markets neglects Seattle’s last change of wind. Here’s a review for you from when the market turned off like a faucet in 1990. No Macro here, I was building houses and the market went from on to OFF!! in a matter of weeks, not one more drop…..(sorry, the PI won’t let you see a link unless you have an acct.)

    By Jim Erickson and Elizabeth J. Mann P-I Reporters
    Tuesday, January 1, 1991
    Section: Business, Page: B5

    Puget Sound homeowners ought to be fitted for neck braces, given the whiplashing they suffered in the 1990 housing market.

    The area had the hottest housing market in the country in 1989 and through the first three months of 1990, as a robust economy and a shortage of available housing drove average home prices up an incredible 30 percent.

    But in spring, the market suddenly fell silent. Within the past nine months, home values have given up roughly half of what they gained in the previous 15.

    “In 17 years in the (real estate) business, I’ve never seen a market go up so fast and respond so quickly to a brick wall, go down so fast,” said Karen Lavallee, president of the Seattle-King County Board of Realtors.

    “We saw happen in one year what normally takes a whole decade to occur,” said Jim Hebert, president of Hebert Research Inc. in Bellevue.

    ….t.s, now THAT’s ridiculous…

    Rate this comment: Thumb up 0

  48. carol

    Bubblerider you are awesome!!!

    Thankyou for injecting some sanity into this discussion.

    For too long now all we’ve heard is “Seattle never corrects”, etc. even though we did have a poster months back who relayed the news clips of a fallen Seattle market from 1990.

    Those clips have been ignored ever since and it’s been back to “don’t confuse me with the facts”.

    Agree with Anon above PLEASE keep posting here.

    Thankyou.

    Rate this comment: Thumb up 0

  49. SeattleMoose

    I am keeping a weekly spreadsheet that lists King Country inventory from a RE website (Glover). I am not looking for any specifics, just trends. I obtain the data from the same source as a “control”. Here are the numbers for the past two months for King Country RE inventory.

    7-May 7302
    15-May 7486 2.52%
    21-May 7665 4.97%
    11-Jun 8099 10.91%
    18-Jun 8154 11.67%
    24-Jun 8352 14.38%
    1-Jul 8417 15.27%
    7-Jul 8472 16.02%

    Numbers always speak for themselves….

    Rate this comment: Thumb up 0

  50. meshugy

    Regardless of what is “normal” for King County in the summer, this year is worse than last year.

    2005 was the tightest year on record….of course it’s a bit slower this year. But prices are 15.34% higher…

    The reason I posted those #s was because bubble rider was talking about April to June gains.

    Rate this comment: Thumb up 0

  51. Anonymous

    Is there anyway I can get the MLS history on a property as a normal person? i.e. not an agent. I’m interested in figuring out which houses had price reductions.

    Rate this comment: Thumb up 0

  52. Anonymous

    2005 was the tightest year on record….of course it’s a bit slower this year.

    Of course nothing. 2006 could have been even worse than 2005, but so far, it isn’t — there’s more inventory. The market is slowing.

    I love how you’ll do any number of mental backflips to avoid the obvious — if inventory goes down, the market is hot Hot HOT! But if inventory goes up? Oh well…that’s not cooling, that’s just a lack of hot-ness.

    Also: don’t preach to me about median sales prices. People with critical-thinking skills look at rising median prices in a falling market, and want to know why. They don’t take it as a sign from the gods that high real estate prices are ordained….

    Rate this comment: Thumb up 0

  53. meshugy

    That’s an interesting article bubble rider.

    Here’s one from 1991 with some #s:

    STATE HOME SALES PLUMMET 10%

    The existing home market perked up nationally during April, May and June, but sales dropped more than 10 percent in Washington state, a trade group reported yesterday.

    Prices rose nationally, and in Tacoma and Spokane, but dropped in the Seattle area from the previous year’s levels, the National Association of Realtors reported.

    Sales of used homes posted double-digit gains in 20 states as the housing industry emerged from the recession. At the same time, prices advanced in nearly 80 percent of the 119 cities in the Realtors’ survey. Prices had dropped in 40 percent of the cities during the first quarter, when sales were weak.

    The seasonally adjusted annual sales rate of existing homes in Washington state was 57,200, down 10.2 percent from the second quarter of 1990. That was the third biggest drop among the 50 states, trailing only Hawaii and Oregon.

    The median price was $143,800 in the Seattle market, down 2.6 percent from a year earlier. In Tacoma, the median resale price was $94,800, up 12.9 percent, and in Spokane it was $63,300, up 14.5 percent.

    So there was a 2.6 percent drop in 1991.

    This one gives some 1991 inventory #s:

    HOME SALES BOUNCING BACK
    BUT GLUT KEEPING LID ON PRICES

    Last month, about 19,600 homes were up for sale in the Puget Sound area, a huge jump from the 9,600 on the market in April 1990.

    So it looks like we’ll need at least 19,600 homes on the market for prices to start coming down about 2-3%. Probably more, since our population has gone up a lot since then. In 1990, 9,600 homes were on the market and that was still a strong market. Right now we have about 7-8,000 houses for sale. So we have a ways to go…we probably need over double the inventory to see some small price drops.

    Rate this comment: Thumb up 0

  54. Anonymous

    Um…19,000 homes for the PUGET SOUND area.

    Hello!!!! That’s a bit wider territory than King County.

    Comparing apples to oranges doesn’y fly.

    Why are you arguing with a Realtor Meshugy? Really frickin’ obnoxious.

    Rate this comment: Thumb up 0

  55. lou

    Anon 7:23-

    To find price reduction history, go to Zip Realty -www.ziprealty.com- link is also on front page of this blog.

    Get a free account and you’ll have access to price reduction history for every property in every zip code in WA.

    It’s a terrrific service.

    Keep your eyes open and you’ll notice that after a homes been on the market ‘a while” it is sometimes de-listed and presented with a new price and MLS# a few weeks later.

    But all in all it’s a good way to keep track of what’s really going on around here. LOTS of price reductions.

    Rate this comment: Thumb up 0

  56. Anonymous

    According to the 1990 census, there were approximately 2.6 million people living in King-Snohomish-Pierce Counties. OFM 2006 projections have this population at 3.28 million or a 28% increase from 1990. Taking the number of listings listed in the article of 19,000 and adjusting that for population indicates that roughly 24,300 active listings would be required to resemble market conditions then. As of June 2006, there are currently approximately 15,000 listings on NWMLS for King, Snohomish and Pierce Counties.

    Rate this comment: Thumb up 0

  57. Anonymous

    I am surprised that none of you bubble watchers pointed out that Year-to-Date New Listings for King County is actually down year over year from 2005.

    YTD 2005 New Listings: 21,579
    YTD 2006 New Listings: 20,878

    Some anecdotal historical evidence on closed sales:

    In June 1997, when there was a roaring economy and full employment in King County, there were 2344 closed sales.

    In 1999, the last summer of the dot com boom, there were 2423 closed sales.

    This year, there were 3000.

    Make of this information what you will.

    Rate this comment: Thumb up 0

  58. Eleua

    As long as x-Cal equtiy locusts represent 38% of a massive state growth rate, the housing market will stay hot.

    This is what happened in ’90.

    When California sneezes, Washington gets the flu.

    Once California inverts, the Washington REIC will experience a ghoulish nightmare that will defy comprehension.

    So, how are San Diego, OC, and SF/SJ holding up?

    Rate this comment: Thumb up 0

  59. dash_point

    “OFM 2006 projections have this population at 3.28 million or a 28% increase from 1990…”

    How many of those 680K more inhabitants since ’90 represent potential homebuyers?

    Rate this comment: Thumb up 0

  60. Anonymous

    San Diego YOY median going down. Great sign for us here in Seattle.

    Also, despite that there are still some idiot CA equity buyers out there buying terrifically inflated Seattle RE, has everyone noticed that there seem to be many CA equity people who are wise to this bubble and so are holding off buying in Seattle?

    This one’s been so over the top that it’s made more people than usual sit up and take notice.

    Rate this comment: Thumb up 0

  61. Anonymous

    “The sellers in the article are Realtors who sold there Ballard home because they knew it wasn’t going up to a million”

    Everyone catch that in the post above?

    Rate this comment: Thumb up 0

  62. Anonymous

    Wow, a lot of heated arguments here.

    Any way you cut it you can’t ignore the fact that rising interest rates coupled with home builder stocks dropping, and some 2 trillion in readjusting ARM’s next year are going to have an effect.

    Seattle has housing prices have increased at an incredible rate while wages have not kept up.

    The falling dollar, rising commoditities. Basic market analysis says that something will have to give. My guess is it will be housing.

    Rate this comment: Thumb up 0

  63. Anonymous

    But in spring, the market suddenly fell silent. Within the past nine months, home values have given up roughly half of what they gained in the previous 15.

    So if this scenario were to repeat, I read this to mean my house that I paid $400K for in April ’05 (15 months ago), which has risen in value by 20% to $480K could lose 50% of that value by the end of the year/early 2007. That means my house would be valued at $440K. Still coming out ahead. I’ll take that kind of crash.

    Rate this comment: Thumb up 0

  64. Anonymous

    Thank God. Somebody who reads this blog and owns a home and can take the thought of said home depreciating rather than charging full steam ahead on appreciation.

    Good for you.

    Rate this comment: Thumb up 0

  65. meshugy

    Looks like rents are going up:

    Multifamily market makes its big move

    Apartment buying closely tracks job growth, said Frank Bosl, a senior vice president at CB Richard Ellis, and Conway Pedersen Economics has predicted the region will add 140,000 new jobs from 2006 to 2009.

    More jobs mean tighter vacancy rates, which mean fewer landlord concessions and, ultimately, rent increases.

    Dupre + Scott Apartment Advisors, a research firm in Seattle, reports apartment vacancies were 4.6 percent as of April, down from 6.5 percent a year ago. This is the first time the rate has fallen below 5 percent since 2001, the firm said.

    Starting next spring, rates are predicted to dip below 4 percent and stay there through the end of 2008. Dupre + Scott expects rents will rise about 5.2 percent a year.

    Rate this comment: Thumb up 0

  66. meshugy

    And the market is Strong:

    Multifamily market makes its big move

    Based on Spill Zone’s three-year forecasting, the Seattle-Bellevue-Everett area is the 12th-fastest-appreciating American market (among 290 metro areas), with 36 percent appreciation expected between August 2006 and August 2009.

    That means out-of-state investors are coming, especially in 2008, Ross says.

    “When a downturn starts [in some markets], it takes about two years for investors to decide to pull out,” Ross says. “So Seattle has a two-year waiting period before people start coming here.”

    “The beauty of the Seattle real-estate market is that it has seen consistent growth for the last four 10-year cycles,” said Candice Chevaillier, in-city investment specialist with Marcus & Millichap in Seattle. “We see a run-up in value and then a leveling off, followed by another run.

    “Contrast this with the boom-and-bust markets such as Texas, Nevada, Arizona and California, where market timing is much more critical.”

    Rate this comment: Thumb up 0

  67. meshugy

    Here’s another article from 1989 that gives a historical perspective on inventory:

    SCRAMBLE SENDS HOME PRICES SOARING MANY BUYERS IN KING AND SNOHOMISH COUNTIES LOSE OUT AS MARKET SHOWS ‘A LITTLE BIT OF A PANIC’

    According to records kept by the Puget Sound Multiple Listing Association, the number of houses, condominiums and mobile homes for sale by member agents in December fell to its lowest level since the association was formed in 1984.

    At year end, 12,391 homes were on the market in King and Snohomish counties. That was down 17 percent from the previous December, and was fewer than half the 25,547 homes for sale in July 1985, the high-water mark for the past four years.

    So there were 12,391 homes for sale in King/Snohomish in 1989…that was a record LOW.

    Bubble Markets Inventory Tracking Site shows 11,257 for sale now. So we’re below the histoic low of 1989. And nowwhere near the 25,547 for sale in 1985.

    Rate this comment: Thumb up 0

  68. seattle long term buyer

    Just my 2 cents…

    It’s really obvious that Meshugy or whoever he is is actually paid by somebody to keep this blog from giving potential buyers the wrong idea…

    nobody has as much time to do the real research he has done just for a blog unless it’s your part-time job aka. you’re paid to do it…

    at least he does actual research even if it’s biased… I actually like reading his posts for the facts and ignore the opinion since I can make my own…

    Back on topic, this post is about predicting the top and bailing out… that’s what the couple did… sure they could have made another 100k if they hung out a little bit… but they could also easily lose all of that paper equity… so why not make it cold hard cash… smart move, and a sign of things to come…

    x-cal equity is still around… seattle’s bubble will burst as sure as the sun sets… (I didn’t say crash, just burst)… you really can’t expect that condo they bought for 400K to be worth a million in a few years….

    the median price is skewed at this point… the x-cals want to buy as much home as they can (reverse sticker shock) even if they still can’t afford it (just coz they made 250K in cal equity doesn’t mean they can pay off a 750K home)… but they think they can…

    bottom line you gotta live somewhere and if you cash in on your equity you either downsize or move to a cheaper area… unfortunately for us, we are the cheaper area for the x-cals…

    Rate this comment: Thumb up 0

  69. Eleua

    Comparing ’89 to ’05 has some validity, however there are many differences.

    Highly leveraged, toxic loans were not part of the late-80s landscape.

    Job growth in the REIC is much higher now, than back then.

    Interest rates were substantially higher than they now are, but inflation was not as much of a threat. The FED could, and did, cut rates to save the housing market. No such option exists today.

    Boomers will panic to save their principle retirement vehicle, whereas 16 years ago, that was not part of their thinking.

    The only thing that the ’06 market has going for it descends from the fact California is becoming a very hostile place for middle to upper middle income families to live.

    Rate this comment: Thumb up 0

  70. sue

    re: rents going up:

    We’ve discussed this before on this blog but it needs to be repeated for first time readers, especially in light of the post above:

    If/when rents go up, it is easy to get around. Simply do not pay the new price.

    With all the “rents are going up” propaganda, there will be landlords who try to raise rents exhorbitantly. Give them notice. Often, they will retract. It’s a chicken game.

    Building owners who are cash flow negative- must be a lot of those by now- will attempt to get high rents on their properties to cover their mistake. Don’t play that game. Just move along to a better deal.

    Who knows if rents will actually go up or not. But I’m sure some the newer LL’s will try to see what the market will bear. Just move along to a better LL.

    Rate this comment: Thumb up 0

  71. meshugy


    It’s really obvious that Meshugy or whoever he is is actually paid by somebody to keep this blog from giving potential buyers the wrong idea…

    nobody has as much time to do the real research he has done just for a blog unless it’s your part-time job aka. you’re paid to do it…

    No, no one is paying me. But if you’d like to I’ll take the $!

    Honestly, it takes very little time to look at the records. They’re all on line. It’s not like I’m digging up old stuff at the library all day. I was an anthropology PhD student for years….so the research part comes naturally to me.

    Rate this comment: Thumb up 0

  72. Anonymous

    In case anyone is still reading this blog. The first thing I thought was that their home was/is located in an area that is zoned for multi-family. I work for a construction company and we buy homes just like this to build townhomes. The city has them zoned this way and owners of those homes can make a fortune. If the home was located a block away zoned single-family they may have been able to sell it for $400K, not $700K. I think the reporter should have given more information like this and not lead people into believing that they own a gold mine.

    Rate this comment: Thumb up 0

  73. Seattle Bubble • Friday Flashback: “I tease the bubble bloggers!”

    [...] real estate salesman Mack McCoy, writing on the now-defunct Seattle Real Estate Professionals blog in October 2007: I tease the [...]

    Rate this comment: Thumb up 0

Leave a Reply

Do you want a nifty avatar picture next to your name, instead of a photograph of Tim's dog? Just sign up with Gravatar, and make sure to use the same email address in the form below. It's that easy!

Sorry, you have already posted the limit of 5 comments on this post.

Archives

Find us on Google+