In markets, I believe a return to normal is more appropriately expressed as a regression to the mean. So the RE insiders are right: we are returning to a normal market; it’s just a crater-depth lower than where they think it is.

OT: I just installed the new Firefox 2.0 and it checks my spelling as I type…sweet. Me spell bad? That’s unpossible!

That chart sort of reminds me of the part of a roller coaster ride where the ‘clicka-clicka-clicka-clicka’ ends and there is this serene silence before the screaming begins.

Great chart on Seattle listing prices. Look at the flat line for the last several months and now the down trend for the last few weeks. Info here includes inventory stats heading up. (Note the area is not the same as the gov. MSA.)

Unfortunately, I can’t figure out how to copy the chart here.

Notice the housing section of the Seattle Times today,(Sat.) lots of price reductions and buyer incentives.

For example we were told by a rep of the Dwelling co. that the Bellevue townhouses would start in the 800,000’s now the ad comes out with starting prices in the high 600,000.

Prices at Highpoint are also falling. They are advertised lower than what we were told a few weeks ago when we visited the site and looked at the properties.

Also NWMLS stats for “Summary Report” for the month of Sept. have median prices trending down in Island and Whatcom counties.

Odd I know. Prices never go down in Puget Sound.

I’ve given that serious consideration. Perhaps by spring…

The Marin POS blog is tooooooooo good.

Feel free to add, if you come up with any.

http://marinpos.blogspot.com/

Love the “Space 1999″ reference!

And the “Goddess Studio” – did it have a “potting shed” (= plywood lean-to)?

—

Cheap plaster/plastic toro (Japanese lantern) optional. I believe a red-leafed maple tree also qualifies.

personal favorite!

Goddess Studio.

Yes, I kid you not! In my most polite way, I asked the agent just WTF is a ‘goddess studio?’

Apparently, it is a detached, New-Age feminist version of ‘The Cave.’

The Cave is where guys go to be guys. They drink beer, watch sports, build model airplanes, but most importantly it is a place where guys go to get away from the unending torrent of requests for their time and money (unless it is a poker game with other guys).

So, this ‘goddess studio’ was some freaky-deaky woodshed with a wood-burning stove, some art supplies, crystals, shrunken heads and Heaven only knows what else – voodoo dolls of her husband, whatever…

Apparently, the house was for sale because (and if you didn’t see this one coming from over the horizon, you are an idiot), they were getting a divorce.

We passed.

Then, we toured a house that had no kitchen. Apparently, someone stole the kitchen. I wasn’t up on just how one steals a kitchen on Bainbridge Isl., but apparently it happened. The house was fundamentally flawed, with the house sprawled over the side of a hill, and each bedroom had its own set of stairs. The floorplan looked like Moonbase Alpha from Space 1999, but no kitchen.

They stole the toilets too.

Just how do you fence a stolen crapper? Psst, buddy! Do you want to buy an American Standard, cheap? Step back into this alley and check it out.

Wierd, very wierd…

Mrs. E is studying for mid-terms, and I had kiddie duty.

This is the exciting life we all dream about when we are in our early 20s.

E

“Japanese garden” = ungroomed bamboo tree and ceramic frog.

“park-like setting” = clearcut

“high quality construction” = at least one person on the job site speaks English. Builder’s pending law suits have not yet bankrupted him.

“affordable fixer” = Has been neglected for 50 years, and you are the overambitious sucker that we are looking for.

“seasonal pond” = mosquito breeding ground. Wetland that renders most of the property worthless and will be protected by a phalanx of overeager civil servants. Will be taxed at waterfront rates.

Name that view.

—

Birds, being highly mobile, are among the first to get out of Dodge when something Bad is in the air. I’d speculate those birds, with that avian sixth sense of theirs, were fleeing the undertow being generated by the aggregate weight of all the underwater owners in the Newmark.

- Mark-in-Tokyo
- At least Newmark owners have ready access to the latest black-tar goodness to take the edge off their condo-indebtedness.

“peaceful and serene” = UPS won’t even deliver here

“shop” = rotted-out 6×8 woodshed

“watch the eagles soar from the comfort of your Bainbridge dream home” = roof needs replacing

“eclectic” = owner’s multiple do-it-yourself projects make the place look like Fred Sanford lives here.

“unlimited potential” = tremendous money pit

“old world charm” = 95 year old woman, painted the house pink prior to WW2.

“good investment potential” = you wouldn’t want to live here.

“highly desireable neighborhood” = characterless track home.

“priced for immediate sale” = we hope you don’t lowball us.

“good highway access” = freeway noise will rattle the fillings out of your teeth.

“revived in-town location” = chalk outlines have been washed away.

“gourmet kitchen” = kitchen

That Eleua really cracks me up!

I have seen quite a few views in my day. One of my very best view experiences was in unit 2404 Newmark at 1415 2nd Downtown Seattle. I felt like I was in a Salvador Dali painting when 50 birds flew by and I was looking down at their backs.

Name that view.

AKA – Inventory increase per second/per second. :)

I think you are missing something. I’m not comparing on a month-to-month basis. I’m looking at year-to-year figures for the last few months. In the table I was referring to the May ‘06 numbers are the percent change from May 2005 to May 2006 in Inventory and Sales. Likewise through September.

It’s a bit confusing to many people, but what I find quite interesting is the second derivative of the inventory and sales numbers. The first derivative is simply the rate of change—the YOY figures. The second derivative shows the rate of change of the rate of change—a number that has been climbing every month since January for inventory and decreasing (becoming increasingly negative) every month since May for sales.

CRASHCADIA!!!!

You coined PEAK IDIOT!

Thanks,

Now, what term do I use for someone that can’t use a basic search function?

Just how do you use the search function to find “PEAK IDIOT.”

I’ve spoken of it today, and it has appeared on this blog over the past few days, yet when I use the search, I don’t get dinky-doo.

Anyone have a tutorial on “PEAK IDIOT’S GUIDE TO USING BLOGSPOT SEARCH FUNCTION?”

The winner is…

Oil and energy stocks
Precious Metals
Mining and refining co’s
Building Related Stocks to Short
Overinflated Bank/Lending Stocks
Family Guy

Watching housing has no point really, anyone that has a pair of eyes and ears knows where it’s going.

[sound of toilet flushing]

Sorry.

OK, which one of you Seattle Bubblonians coined “PEAK IDIOT?”

>until there’s some clarity about what’s propping up prices

Dick Cheney is killing kittens, which is causing the housing market to go up in value. I read it on Wikipedia.

Ah, you mean the ones that keep getting bought out.

You can do more than infer. That is exactly what will happen. You, sir, are dead-on-balls-accurate on that score. The bigger money will abandon the outlying areas and then move in to the pricier suburbs. The rats are moving to the higher parts of the ship, but the ship is still sinking.

What do you think it would take for devaluation to cross over on the ferries?

Not much. I am amazed that people are moving to Kitsap and commute to Seattle and Bellevue. If you hit the ferries perfectly, you are still looking at a 90 minute commute – ONE WAY! Every dollar you spend on tolls is one dollar that does not support your house.

Californians come here in the summer and take a ferry ride to Bainbridge. They think this will be a superior way to commute, but fail to realize that parking in Bainbridge sucks ass, and if you don’t work in downtown Seattle, you are still taking your car.

The romance of ferry living wears off pretty quickly. Now, if I worked directly in Downtown, that’s different…How many people can engineer that kind of location for their job? Not many.

Bainbridge is not the home of the truly deluded. That is Kingston and Silverdale. In addition to all the hassles that you encounter when you live on BI, you have to add another 30-40 min (EACH WAY) to your commute.

A nice, new home in Silverdale runs $400K+, and Kingston is one of the most inconveniently located cities in Kitsap.

I don’t get it.

Bottom line…people are bidding homes up because they think they are not the ‘greatest fool,’ or as Synthetik puts it – PEAK IDIOT.

Once the PEAK IDIOT buys his home, it is all downhill. Yes I am forcasting a big, BIG drop in prices, and I stand by that prediction.

The other area that perplexes me is Orting/Graham. You are truly, truly out in the middle of nowhere, the place being overrun with new homes, and the traffic to anywhere is a clutch-grinding, mind-bending, follicle killing, cardiac-arrest inspiring hellish nightmare – on a good day.

Nope, this won’t take long to jump the Sound and make its way to Mercer/Medina/Redmond/Kirkland. They will be the last to fall, but they will still fall.

May I infer a hypothesis that severe price corrections could start in Kitsap &/or Island and work their way into the Lake Washington basin?

What do you think it would take for devaluation to cross over on the ferries?

Sadly true. I won’t conjecture about how long it will last until there’s some clarity about what’s propping up prices. Obviously, something has to give. Right now, our negative savings rate absorbs the financial imbalance. There’s also that backsliding of real wages and benefits. As long as Americans tolerate these conditions, your observation will be true. Given this situation, local price movement will be determined largely by whether money is moving out of or into PNW. Watch the major employers.

Traditionally, retail doesn’t pay high enough to justify these prices.

Verily. However, I was talking about corporate HQ’s, not outlet stores. There are also the obvious heavy-hitters in coffee, aircraft, law, insurance, and universities. The biotech startups are worth watching too.

So true, eleuh, so true!

My wife and I were visiting some friends in the MIDDLE of Mercer Island a few years back, passed a FS signpost with the added top sign stating ‘WATERFRONT PROPERTY’. WTF?? We were nowhere near the water. Turns out there was a man-made lake (well, lake is too strong of a term), or pond, that several of the houses were built around–looked to be about 6″-1ft. deep (suspect that maybe it wasn’t originally intentional–as in maybe developer screwed up and forgot about drainage or something). I laughed all the way onto I-90! As sales keep tanking, some of these RE blogs will morph into comedy I think . . . (at least if your not a FB or a GF, or a Realtor)

Rinse cycle almost over, ready for spin?

Not sure where this idea came from that 2001 was a “normal” market. 2001 was a nasty bloodbath as far as the local job market was concerned. I clearly remember going to BBQ’s that summer where more than half of the 20’s/30 year old professionals were laid off – some multiple times in the past 12 months.

Friends were fleeing the city (and state) left and right. Not to say there was a direct spillover into the housing market, but those were very uncertain times.

If you check back in the county records for homes sold in 99/00 and resold in 2001 or early 02 you can find examples of people selling for significantly less than they paid. This trend was short lived though and nowhere as severe as it was in Silicon Valley right after the dot com collapse.

Housing weakness bashes down GDP

A slumping housing sector helped slow economic growth in the third quarter to its weakest pace in more than three years, the Commerce Department reported Friday.

hmmm… yes…. Well if we could get the darned media to quite reported and the inconsequential things like ‘facts’, industry shills wouldn’t have to write articles like this…

Days Before Halloween, NBC Treats Real Estate Like Dawn of the Dead

Oh, the horror!!

“The good news is that fewer new listings are coming online. A stable sales pace is expected to draw down the number of listings to a supply balance that will support positive price growth within a few months,” the real estate trade group president added.

mmmmhhh… yeahhh… alright dude.

Well, it looks like the media’s driving down the real estate market, not fundementals… Bad reporting=agrevatted housing sector=drop in GDP…

Wow, if I were the media outlets reading this, I’d feel like a turned-out hooker, where’s the love? These were the people hyping the market for years, and now when the news turns on ‘em, nothing?

This goes back to my ‘theory’, which I don’t think is a theory at all.

Housing will lead to recession, recessions hit Seattle harder than the rest of the country, viscious circle = depressed home prices

Sorry folks, there is no ‘normal’. Normal’s merely an inflection point on a cruve as it passes through the zero point e.g. throw an egg into the air, they’ll be a small moment in time, where the egg appears to float in mid-air, defying fundementals of gravity… on a slow enough time scale, one could assume we’ve decoupled from the affects of gravity themselves…

(sorry, my degrees in physics)

Why not? One of the big reasons the REIC touted the viability of higher prices was a curious lack of inventory. If prices go up on lower inventory, why wouldn’t they go down on higher inventory?

Now, I’m of the opinion that the main reason we had a lack of inventory was due to a short-circuiting of the feedback mechanism in classical economics. We had a bubble, and in a bubble the normal propensity to sell into higher prices is inverted, causing people to hoard. Now that the bubble seems to be unwinding, I expect to see exactly the opposite happen: people selling into weakness. Also, as the prices grew, new construction came on-line at a record clip. Perhaps on the Eastside, you are getting added population, but on the Westsound, we are losing population, while building more houses. Every school district in Kitsap County – except Bainbridge – is losing enrollment, yet prices continue to climb.

Yes, I am arguing that population growth and affluence will keep prices unobtainably high for the median income.

For how long? This works if the entire population gets replaced by higher wage homeowners, and all the Great-Unwashed don’t sell, unless it is to move out of the PNW. Absent that, someone will shout “fire” in an overpriced market, and put homes into the affordability range of people who are the buyers. Wages in the PNW are not increasing, and are not high enough to support current prices.

We have such a conglomeration of export industry here: Nordstroms, Amazon, Eddie Bauer, etc. that median demographics hardly influence housing prices.

Traditionally, retail doesn’t pay high enough to justify these prices.

If the world made sense, Downtown would suffer much more for its poor school districts and transportation problems.

Don’t fret; it will very soon.

Like a few others, I was disappointed to see continued inflation in Oct. I’m LOOKING FOR MY FIRST HOUSE.

I wish you well. If you are patient, and don’t blow too much of your income on your airplane, you will be able to buy more than you think.

You can do an MLS statistical search without hitting the 250 return limit. Just hit the Stats button at the top of the page. The limit this way is 10,000 results–still too small to do a Year-to-date on King County, but better than trying to make 250 results yield macro trends.

“professionally landscaped” = Pedro’s lawn service.

That’s really lovely.

appreciation=the increase in value of an assetWe’re talking about the overall housing inventory, not specific assets, so I chose words with care. But I can try to avoid terms like “negative inflation”.

I’ll look up some data on 2001 when I get a chance. Thanks to eleua for the above eloquent exploration of my profession’s BS.

Let me help you out.

“return to normal” is REIC-speak for “we have no freaking clue what is happening, but we slap up this euphemism to keep the panic down to a dull roar. All we know is the salad days of 20% y/y appreciation, and bidding wars are over.”

“passive security system” = bars on the windows

“vibrant neighborhood” = multi-linguistic ghetto

“peakaboo view” = in the dead of winter, during a 50 knot gale, you may, if conditions are perfect, be able to use a 500 power telescope from the upper windows in the laundry room, and be able to see more than 1/4 mile for half of a second.

“looking for an owner that will give plenty of TLC” = crack house.

“recent thorough renovation” = granite countertops with Made in China cabinets from Home Depot.

“quaint/charming” = smaller than a NYC studio apartment

“professionally decorated” = gay chic.

“blue ribbon schools” = we, along with 99.999999999999% of all sellers, believe our school district is the best in the state.

“exemplary schools” = our graduates can read their diploma

“won’t last! HOT! HOT! HOT!” = recently relisted due to lack of activity over the past 6 months.

“professionally landscaped” = Pedro’s lawn service.

“natural setting” = house being overrun by vegetation.

“convenient walk to…” = can get to your destination with less than a gallon of gas. The walk refers to the distance to your garage.

“terrestrial view” = no view

“semi-private” = zero-lot-line zoning.

“classic architecture” = 70s style tri-level.

“two mile exercise loop outside the front door”*** = you can run on the county road that goes by your house.

***That last one is absolutely true. We looked at a home on Bainbridge Isl with this write-up. I’m fairly familiar with the neighborhood, and wasn’t aware of a PAR course, or bike path. The RE agent said, with a straight face, that she was referring to Agate Pass Road.

I asked why she didn’t include the entire Interstate Highway system.

how’d that work out, seattle bull’s? maybe there is a price moat around seattle.

I guess the PNW would be more stable than California, if you draw in your historical perspective close enough.

How is it that the Northeast has declining population, but is quite bubbly, yet Texas has rapid population gains, but homes are quite affordable?

For Seattle proper we are $15k away from negative YOY in December (september numbers). However we are currently $7k under Negative YOY in March, which is why I predicted march as the turning point.

Mostly this is due to the fact that March 06 saw a whopping $27k uptick in median over February 06.

Now I am disillusioned. I was going to compliment you on the clarity of your crystal ball!

I can do stats on a smaller scale, but not on a County scale, as I can only get 250 at once. Would doing one zip code in Seattle and one on Eastside give me any quantifiable results?

A couple thousand experienced IT hires (ie: people with multi-million dollar homes to sell in the Bay Area) would explain why prices continued to rise in some areas. And if that’s the case, that wad’s been spent, now. It might put us in double jeopardy now, though, since some of those homebuyers may be losing their shirts on their old homes in California.

Of course all of this is just hypothetical until we find some data on MS hires, but I think it’s a decent working theory.

Incedentally, “negative YOY inflation” might be easily described as “deflation”. Deflation of housing prices specifically should probably be referred to as “depreciation”. I’m not trying to nitpick; I’ve just seen conversations devolve quickly in other blogs based on the terminology used.

We’re only $7K away from YOY zero in December 06. A larger than $7K drop in the median sales price over the next 2 months seems plausible. Heck, -$11K by November would put us negative.

I think you should read some of this blogs archives… It may dispel some of the common myths that those in the RE industry so commonly hold to be gospel.

IE: Seattle is some BOOMING major metro area when in fact the population growth here has remained almost stagnant.

On the other hand, another theory I have is that although we came to the party later than other areas which are now falling, we may play catch up as sellers are influenced by media reports of what is happening in other parts of the country to drop prices and escape before the damage gets worse. In other words, I expect our area to take less time to drop than, say, San Diego.

It was me, in this post. Of course, a day or two later I realized that it had already happened.