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.

94 responses to “Case-Shiller: Prices Flat in Seattle”

  1. meshugy

    Home prices fell from December to January in 17 of the 20 cities; only Miami showed any price gains. Prices were flat in Charlotte, N.C., and Seattle.

    Prices being flat in Seattle from Dec to Jan isn’t really all that alarming. Actually, its better then normal! Often prices decline over the holidays…even during the hottest years:

    Dec 2004 KC Res Median: 304K
    Jan 2005 KC Res Median: 293K

    Dec 2004 KC Res Median: 335K
    Jan 2005 KC Res Median: 329K

    Dec 2005 KC Res Median: 393K
    Jan 2006 KC Res Median: 390K

    So during the last three of the hottest years on record, we had price declines from dec-jan. Pretty normal….

    This quote give a more accurate assessment of the situation:

    Eleven of the 20 cities had negative price appreciation in the past year, led by Detroit (down 6.9%) and Boston (down 5.6%). The biggest increases were in Seattle (up 11.1%) and Portland, Ore. (up 8.7%).

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  2. The Tim

    1) The report shows that Seattle was flat not just December to January, but from November to January.

    2) The Case-Shiller index is a far more accurate gauge of the market than MLS median data. From the story: “The Case-Shiller index is considered to be a superior gauge of home prices compared with the median sales-price data released by the Commerce Department or National Association of Realtors, because it tracks multiple sales on the same property and is therefore not influenced by a different mix of homes sold in a period.”

    3) The Case-Shiller index for Seattle was practically a solid upward curve from 2003 to 2006, even through the winters. The current flatening of the graph has lasted far longer than any flat line since about 2002.

    I’m afraid you have succeeded yet again in proving nothing more than your own poor reading comprehension skills.

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  3. Matthew

    Nice try Shug, keep trolling!

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  4. Deejayoh

    Bless you Tim

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  5. meshugy

    The report shows that Seattle was flat not just December to January, but from November to January.

    Same difference….prices usually go flat or drop from Nov. THIS IS COMPLETELY NORMAL. You’re going to have to come up with something better then that to convince me that a crash is looming.

    KC Res Median Nov. 2003: 300K
    KC Res Median Jan. 2004: 293K

    KC Res Median Nov. 2003: 300K
    KC Res Median Jan. 2004: 293K

    KC Res Median Nov. 2004: 335K
    KC Res Median Jan. 2005: 329K

    KC Res Median Nov. 2005: 389K
    KC Res Median Jan. 2006: 390K

    etc, etc….

    This happens every year….Spring is when the magic happens. If prices remain flat over the Spring then I would agree there is a stronger chance of a correction. But flat from Nov-Jan really says nothing at all.

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  6. The Tim

    Did you bother reading beyond point 1 in my comment above?

    Can you honestly look at this graph and say with a straight face “it’s just normal winter price behavior”?

    Again, we’re not talking about MLS median values here. Quoting more MLS numbers at me will get you nowhere.

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  7. ron

    How Come Meshugy are you the first one here posting?

    Also if your not interested in this site for investment reasons or Just im priced out? why are you here?

    Its almost like your a PICKETTER.. At this Blog??

    You have your sign and your going Faithfully back and forth.

    I Just dont understand how you can spend so much time monitoring this website & posting.. dont you have something better to do?

    Why dont you start your own website in protest of this one- though up a donation cup and some banner ads.

    Lets Call it:

    SEATTLE UNBUBBLE
    or maybe SEATTLE IS VERY SPECIAL

    Or just the famous SEATTLE WERE DIFFERENT

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  8. ron

    Mushegy We Need to Get You a STRIP CLUB UP THE STREET FROM YOUR HOUSE.

    So you have something else to pickett..

    Then you really have something to blame when the price of your Ballard Palace falls…hahahahaa

    Tim id watch out for Meshugy, I Think meshugy is one of those who doesnt accept responsibility.. going to maybe come after you claiming your website made him/hers house fall in value.

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  9. meshugy

    Again, we’re not talking about MLS median values here. Quoting more MLS numbers at me will get you nowhere.

    Speaking of reading comprehension…I think you failed to notice their methodology. That graph considers Seattle ALL of King, Snohomish, and Pierce counties. So we’ve got Tacoma #s in their….yuck.

    Anyway, that’s way too general for me. This is the Seattle Bubble Blog, right? So let’s look at Seattle data which clearly shows normal sales patterns right now.

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  10. The Tim

    Speaking of reading comprehension…I think you failed to notice their methodology.

    No, I did not fail to notice it. But thanks for the feeble attempt at misdirection. You’re always good for a laugh.

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  11. Comrade Chairman Greenspan

    “How Come Meshugy are you the first one here posting?”

    I can’t believe how stupid I’ve been.

    Meshugy = Tim :)

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  12. meshugy

    Meshugy = Tim :)

    golly…busted!

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  13. meshugy

    No, I did not fail to notice it. But thanks for the feeble attempt at misdirection. You’re always good for a laugh.

    Well Tim, if you don’t think there’s a difference between looking at just Seattle data vs. ALL of King, Peirce, and Snohomish, then the integrity of all your research is in question.

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  14. Alan

    Every piece of data helps to complete the puzzle picture.

    Median price changes do seem to reveal seasonal trends. What does it mean if Dec 2006 to Jan 2007 followed the same trends as 2004-2006? Who knows? Meshugy is only posting data during a huge bull cycle. We need to know how the market behaves in a bear cycle, or right before a bear cycle, to be able to make an inference. And even then the inference is not perfect and we need to look at other pieces of data to add or remove evidence to our conclusion.

    But Meshugy did not even post the 2006-2007 median data. I don’t even know what he is arguing about the present.

    (Actually I know he is trying to argue the bull market will continue, but his argument is so weak that if I did not know his stance it would sound like random spouting of statistics).

    I am sure there are condition under which Case-Shiller statistics paint an inaccurate picture. I would not depend solely on those numbers either.

    (although reading about how Case-Shiller is calculated makes me think it is pretty solid)

    Meshugy is also under the mistaken impression that we want to convince him of a bear market. In truth, I (and probably most of the people here) could not care less if Meshugy makes or loses money in the housing market. I think most of the people here are looking for convincing evidence that their theories about the housing bubble are wrong. I know I am.

    If I am somehow missing something and prices are sustainable and are going to keep going up then I do want to get into the market before they go up any further. So far I have not been able to find evidence that convinces me of this and so I will wait patiently as a renter until reality behaves as I expect or I discover the facts that I may be missing.

    This is why in theory I welcome Meshugy to this board. Unfortunately, empirical evidence suggests that Meshugy is incapable of providing value in this conversation.

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  15. seattlehotty

    Isn’t one valid way of looking at this data is that Seattle really is different right now than other markets? I know the prevailing opinion here is that Seattle is in a bubble, but in fairness there is another side to this data. One thing Seattle and Charlotte have in common (the two cities that did not decline) is that they both have very strong job growth. Buyers don’t care what the state of the market is, they care that they need a place to live reasonably close to their job.

    I can see the argument that we may just be seeing a delay in declines from these other markets, but there is this other reasonable side, too. We did miss the slowdown that hit the rest of the country around 2005, so it is possible that we won’t be hit as strongly with real estate declines, if at all.

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  16. meshugy

    We did miss the slowdown that hit the rest of the country around 2005, so it is possible that we won’t be hit as strongly with real estate declines, if at all.

    Yes, I’d agree with that assessment.

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  17. Deejayoh

    I have to call BS on the “we have great job growth” argument. Last year Seattle/Tacoma/B’vue was #86 MSA on job growth, yet we are still #1 on housing price increases. Bellingham was #22, Everett was not on the list.

    Link

    Seems like we should be #1 with a bullet if the “specialness” theory is true.

    However, I woudl LOVE to see someone make a compelling argument why the fundamentals in Seattle are so much better that we can justify a belief we will remain a bubble w/in the bubble. Fundamentals – not just extrapolating today’s trends into eternity.

    Anyone want to take me up on it?

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  18. rentalbliss

    ” Buyers don’t care what the state of the market is, they care that they need a place to live reasonably close to their job.”

    This may be true for some, but when you need a place to live and you can rent for less than half of what it would cost to own, I think many people will care where the market is going. With such a huge gap in rents and owning seeing even a flat market many will rethink the buy now scenario.

    In our case we live in a house that if we bought now would pay 2.5X our rent, we are in one of the best school districts in the state and to think of buying would be in my opinion rediculous.

    I see more instability in our econmoy than anything so to think wages will rise and so will rents does not hold much wheight for me. I could be very wrong but I do not see my rent catching up to if we bought now for the next 10 to 15 years. Thats along time to be tied to such a huge mortgae payment.

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  19. Kaleetan

    Just 11% golly, thats horrible..

    this has got to be really frustrating to all the peak renters who for the last 5 years have called the top.

    I guess i will say it first this time…2008 is the year that the bubble will burst. Pennies on the Dollar, Blood in the street…people living in cardboard boxes outside their foreclosed homes…I am investing heavily in REI as Tent cities will sprout everywhere….

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  20. MisterBubble

    “this has got to be really frustrating to all the peak renters who for the last 5 years have called the top.”

    Who would this be?

    Seriously….name one person who has been “calling the top” for the last 5 years. I’m waiting….

    Incidentally, I love how you guys get ever more trollish as the market continues to deteriorate. So long as Meshugy doesn’t completely snap (and start hunting people down at home), this could be a fun ride to the bottom!

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  21. meshugy

    This may be true for some, but when you need a place to live and you can rent for less than half of what it would cost to own

    I do think that in mosts cases it now costs a little more to own then to rent. But you’d have to provide some data to convince me that it would cost half to rent.

    But over the longer term, owning still works out better because of tax deductions, appreciation, and fixed housing costs (rents are rising pretty rapidly now.)

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  22. msrelo

    Speaking of tent cities…
    Maybe its time to invest in a camping equipment company! Deman for their products can only go up!

    The Coleman Company, Inc. Contact Information
    The Coleman Company, Inc.
    3600 N. Hydraulic
    Wichita, KS 67219
    KS Tel. 316-832-2700
    Fax 316-832-3060
    Type: Subsidiary
    On the web: http://www.coleman.com
    Employees: 3,690

    The Coleman Company makes what it takes to be a happy camper. As a leading manufacturer of outdoor recreation gear, the firm also produces coolers, backpacks, footwear, camp stoves/grills, and other camping accessories, sold under the BackHome, Coleman, Campingaz, Exponent, and Peak 1 brands. Coleman has sales offices and distribution facilities worldwide and sells its products mainly through mass merchandisers, home centers, and other retail stores, as well as through its Web site and about 18 Coleman Company Factory Outlet stores. Founded in 1900, Coleman was acquired by Jarden Corporation (formerly American Household and Sunbeam) in early 2005.

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  23. Chris

    I can’t believe how badly you guys have been taking Shug’s bait in the last couple of weeks. These threads used to be A LOT more civil. Yeah, he’s trolling and you guys just can’t resist biting the wigglewort.

    His last post is so blatent, yet he knows somebody will take the bait. As much as I hate to admit it, I’ve been getting some great laughs recently.

    I wonder when the “triple dog dare” will come out.

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  24. matthew

    Kaleetan, Shug, FinanceGuru, and Seattlehotty (which by the way nice name for a dude!) should all start their own anti-bubble site!

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  25. Matthew
  26. Deejayoh

    “rents are rising pretty rapidly now”

    Source?

    Best I could find is 2.9% “asking” increase. From $813 to $846. This was characterized in the article as “Rents Soaring”

    Rents out of whack with cost of ownership is definitely a sign of one of the two being mispriced – but I’d love to see how you think we are closign the gap.

    Link

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  27. Deejayoh

    Chris –

    oops, I guess I took the bait!

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  28. matthew

    If gone unchallenged, some poor first timer might actually believe the propaganda that the Shugster is spewing.

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  29. Alan

    The prices increases in recent years provide evidence that we are in a bull market. They do not provide any evidence that the market will continue.

    Seattle was late to the appreciation party. If you had predicted that Seattle was “special” and was not going to see much appreciation based on the fact that prices were going up everywhere else but not here then you would have been wrong. Still, the fact that prices here have held while the rest of the country has dropped is evidence that something different is going on here. It creates enough doubt in me that I want to keep looking for new theories and data to confirm or debunk the theories.

    I think it is also a fallacy to think that Seattle is just time shifted from the rest of the market. The fact that we started appreciating later does not imply that our crash will be later by itself. I think you need to understand why we were late to the party. Maybe that cause will also explain why the crash will be late. I do not think anyone has proposed an explaination for that (although it could be that our prices are heavily influenced by prices in CA with a delay of several months between cause and effect — but we would need data to support that claim — like the percent of housing sales that go to CA transplants).

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  30. meshugy
  31. Shawn

    Not science, but …
    http://www.ezloanapply.com/rentvsbuy.php

    NET COST OF RENTING: $52,265.92 NET COST OF BUYING: $108,983.02
    Summary: You will save $56,717.10 if you rent instead of buy. That looks to be about double the cost to buy versus rent, hmmm.

    Numbers fed to calc:
    Monthly rent ($): 1100
    Monthly rental insurance ($): 15
    Expected annual inflation rate (%): 4
    Purchase price of home ($): 450000
    Down payment amount ($): 40000
    Length of mortgage term (# of years): 30
    Mortgage’s annual interest rate (%): 7
    Discount points on purchase of home (%): 1
    Origination fees (%): 1
    Other loan costs ($): 0
    Mortgage Insurance (PMI %): .4
    Homeowner’s insurance rate (%): .5
    Monthly association dues ($): 0
    Average monthly maintenance ($): 100
    Annual property tax ($): 2000
    State plus Federal income tax rate (%): 28
    Interest rate you expect to earn on savings (%): 7
    Expected percentage your home will appreciate by each year (%): 3
    Number of years you will stay at this property: 5
    Realtor commission rate (%): 7

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  32. Deejayoh

    Shug –
    thanks for posting that. Dupre & Scott are a firm that make their living advising people to buy apartment buildings. Take what you may from that

    History has been a bit different

    Average Change in Rent for Kingco
    2000 3.9%
    2001 5.3
    2002 1.5
    2003 -2.0
    2004 -2.3
    2005 0.9

    So it looks like the best years of home appreciation have coincided with declining or flat rents. on second thought, maybe the reverse is true and you are right…

    well see increasing rents and dropping home prices

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  33. Kaleetan

    It looks like the PI has found the same Case Shiller article…interesting that their headline reads “Seattle housing prices up 11%”…

    While tim’s headline reads Prices Flat in Seattle*

    *WOW…week over week

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  34. seattlehotty

    I was watching the E! True Hollywood Story on “Who’s The Boss” last night, and the creators of the show brought up that part of the idea for the show was what was happening to real estate in San Francisco at the time (must have been the 70’s?). During that time the median home cost was above the median income, and a popular thing to do was for two people to go in on buying a home together as partners.

    I was surprised to learn about real estate history on E!, but it does point out that prices can go up even when individual buyers can’t afford them. We may very well see more home sharing in Seattle if rents increase beyond where renting is attractive.

    Alan, your post succinctly summarizes my position: It creates enough doubt in me that I want to keep looking for new theories and data to confirm or debunk the theories. I have been lumped in with meshugy for my optimism, but my mind is not made up and I appreciate this blog for presenting theories and data from both sides. Thanks to all!

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  35. rentalbliss

    Seattlehotty;

    If rent prices went up to where people are sharing units, that would generally mean less supply than demand. Tim and others have already shown demand is not out stripping supply almost the opposite. Unless most are comfortable with excess vaccant units this could be true.

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  36. tacoland

    My rent went up 11% I live a few blocks from REI downtown Seattle.

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  37. meshugy

    Expected percentage your home will appreciate by each year (%): 3

    try at least 7%…more like 14% in recent years.

    Purchase price of home ($): 450000

    Good luck renting a $450k home for $1,100

    If you put in more realistic numbers you’d see it’s a lot closer then you think.

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  38. MisterBubble

    I have many friends renting in Ballard for less than $800 a month (myself included).

    If I were willing to spend over $1100 a month on rent, I would be able to live in new construction (granite countertops and all).

    Tell me again how buying is cheaper than renting? I want to laugh.

    (Incidentally….I can’t help but notice that FOR SALE signs are sprouting like mushrooms in Fremont and Ballard. So much for “limited supply”….)

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  39. BanteringBear

    seattlehotty said:

    “Isn’t one valid way of looking at this data is that Seattle really is different right now than other markets?”

    No. That is not valid. Seattle experienced a hyperinflation in home prices due to the credit bubble (loose lending). It was totally unrelated to job growth, and salaries. Median incomes do not support median home prices, therefore your job growth argument is refuted.

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  40. softwarengineer

    Nation’s Housing
    You need to get your own appraiser to value your property or pay too much property tax in King/Snohomish County:

    Appraisers get pressure to fudge figures
    By Kenneth R. Harney

    Syndicated Columnist

    WASHINGTON — With home prices softening and sales volumes sagging in many local markets, real-estate appraisers say that pressure on them to inflate values has reached pandemic proportions.

    A new survey of the national appraisal industry found that 90 percent of appraisers reported that mortgage brokers, real-estate agents, lenders and even consumers have pressured them to raise property valuations to enable deals to go through.

    That percentage is up sharply from a parallel survey conducted in 2003, when 55 percent of appraisers reported attempts to influence their findings.

    Both surveys were conducted by October Research, a Richfield, Ohio-based firm that publishes Valuation Review, a popular industry newsletter.

    The latest survey involved 1,200 appraisers representing a statistical cross-section of the industry in 50 states, the District of Columbia and Puerto Rico.

    The results have a margin of error of plus or minus 2.8 percentage points.

    “I call it a perfect-storm scenario,” said Alan Hummel, senior vice president of Forsythe Appraisals of St. Paul, Minn., one of the largest property-valuation firms in the country with 40 offices and 190 licensed appraisers.

    Forsythe co-sponsored the new research study.

    “You’ve got a situation where sales are down so everybody in the deal needs it to go through” at the contract price — the mortgage broker, the real-estate agent, the lender and even individual sellers.

    Loan brokers are now routinely “dialing for values,” Hummel said. “They call up appraisers and say, we’ve got this sale at $335,000 at such-and-such an address. Can you get to that number?”

    If an appraiser answers yes, he or she gets the assignment. If not, the appraiser is bypassed.

    Worse yet, said Hummel, when an appraiser comes back with a market-value estimate that is lower than the sales-contract price, the appraiser may not get paid for the work and frequently is blackballed by the mortgage broker or real-estate agent.

    The survey found that 75 percent of appraisers reported “negative ramifications” if they refused to cooperate and come in with a higher valuation.

    Sixty-eight percent said they lost the client — typically a mortgage broker or lender — following their refusal to fudge the numbers, and 45 percent reported not receiving payment for their appraisal.

    Hummel said real-estate agents may retaliate against noncooperative appraisers by telling local mortgage brokers or lenders, “Look, I’m not sending any more [home purchaser] clients to you if you continue to use that appraiser.”

    Mortgage brokers were ranked the most common source of pressure — 71 percent of appraisers said brokers had sought to interfere with their work. Real-estate agents came in second at 56 percent.

    Both numbers were up significantly from the 2003 survey. Also identified as sources of pressure were consumers — typically home sellers (35 percent), mortgage lenders (33 percent) and appraisal-management companies (25 percent).

    Mortgage brokers represent the biggest problem, Hummel said, because they are generally lightly regulated at the state level, often wield the power to bestow or withhold appraisal assignments at the application stage, and ultimately “if the deal goes south two years from now, they’re long gone” from the transaction.

    On the other hand, lenders, including banks and mortgage banking companies, “have more skin in the game” — they are more intensely regulated and can be forced by bond-market investors to “buy back” defaulting mortgages that have inflated appraisals or other defects.

    Hummel emphasized that responsibility for the problem of pressure rests not only with loan brokers, real-estate agents and lenders, but with the appraisal industry itself.

    Large numbers of newcomers with inadequate training and little experience flocked into the appraisal field in recent years, drawn by high housing sales volumes and constantly escalating prices.

    Now that sales are down, Hummel said, “you’ve got more appraisers out there who think, ‘Gee, if I don’t [cooperate], maybe I’m not going to get any more work.’ “

    The vast majority of appraisers resist the pressure they receive — from any source — and simply refuse to submit valuations they know to be inflated, he added.

    Hummel said Congress needs to enact legislation making pressuring appraisers to distort their valuations, or interfering with appraisals in any way, a federal offense, subject to criminal penalties. And state regulators need to step up enforcement against fraudulent appraisals, pressure tactics and appraisers who give in.

    Kenneth R. Harney: kenharney@earthlink.net

    Copyright © The Seattle Times Company

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  41. rentalbliss

    Heres an example this house is in a good nieghborhood good schools and among nice well kept homes.

    http://seattle.craigslist.org/est/apa/299174528.html

    It hase been for rent at least a copuple weeks and still not rented, if they were selling they would probably be asking around $500k. The rent is less than a dollar a sqaure foot. Depends on how you run the numbers but roughly 1/2 rent to purchase.

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  42. meshugy

    Seattle experienced a hyperinflation in home prices due to the credit bubble (loose lending). It was totally unrelated to job growth, and salaries. Median incomes do not support median home prices, therefore your job growth argument is refuted.

    If that’s the case then why have other markets slowed and not ours? Rates have been more or less the same over the last 6 months. Seattle has been fine, while other areas have had trouble. Same rates, different results?

    Even Schiller says rates don’t matter that much:

    The Bubble Guru’s Take On Housing

    Are low long-term mortgage rates supporting the market?
    Mortgage rates have been falling for 25 years and when I look at the whole history of mortgages and home prices, I don’t see a strong relationship. The psychology is more important. In the late ’70s, interest rates rose to double-digit levels, and there was still a housing boom.

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  43. Alan

    I have wondered SF has been able to sustain such high prices for so long.

    My current theory is that prop 13 and rent control reduce the effective supply of housing.

    Prop 13 makes people unlikely to sell even if they are leaving the area. If they return, their property tax on a repurchased home could easily triple. The property tax savings make them hold on to the property in case they want to return in ten years (the savings of paying propety tax on the value from 10 years ago can be tremendous in a quickly appreciating market).

    Rent control operates the same way. If you have a rent control apartment, you do not let it go because the $300-600/month carrying costs are less than the lost opportunity cost of moving back into the city.

    Lower effective supply means higher prices. If WA does something similar to prop 13 then I may jump into the market immediately.

    Puget Sound does has growth managment acts that limit supply growth but, as Tim has shown, it has not prevented supply from falling behind the population demand. I believe it has allowed supply to fall behind population+speculation demand. But that is a good thing. It means that Seattle can not overbuild based on speculation demand. I think growth management acts as a damper so that we do not get into a boom/bust cycle.

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  44. meshugy

    Depends on how you run the numbers but roughly 1/2 rent to purchase.

    Bad example…that house is practically on 405. If you want to pay $1650, then be my guest. Just about every rental that’s been posted has been like this…old, rickety, bad location, etc. All you’re doing is reminding me why I don’t rent.

    Again, usually there’s a big trade off of quality of life when renting:

    1) Poor locations (busy streets)
    2) Outdated houses
    3) Difficult land lords
    3) Bad neighborhoods
    4) Unexpected rent increases
    5) Unexpected evictions

    etc…sure some or all of the problems can be remedied by the perfect rental. But you’ll pay top dollar for that, and still won’t earn equity or have the security of knowing you can’t be evicted.

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  45. meshugy

    (Incidentally….I can’t help but notice that FOR SALE signs are sprouting like mushrooms in Fremont and Ballard. So much for “limited supply”….)

    and so are the sold signs….they’re everywhere!

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  46. meshugy

    I have many friends renting in Ballard for less than $800 a month (myself included).

    Show me what you can get for $800.

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  47. Deejayoh

    I don’t think the driver is low interest rates, per se. more like availability of money at those low rates to people who’d not traditionally qualify for a mortgage. Owner occupied homes in King County rose 28% from 2000 to 2005 – vs. a 1.1% increase in population.

    how did all those people get into homes? Lower mortgage requirements is a pretty good hypothesis – especially in light of recent sub-prime woes.

    from the census, for king county

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  48. rentalbliss

    Shug;

    It is nowhere near 405 in terms of noise and sight, about 3 miles from 405, and great views with no freeway in sight. this is a nieghborhood of all $500k+ homes with a view on the hill. Hardly any rentals around unless you have seen it in person which I do everyday you do not know what you are talking about. The street it is on is niether busy or bad.

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  49. biliruben

    Rates have been more or less the same over the last 6 months. Seattle has been fine, while other areas have had trouble. Same rates, different results?
    -Shugmeisterflash.

    Take a look at the median prices of houses for the last 6 months (actually check 9 months). A generous interpretation is they have been flat. I would say teetering, and starting to slide down the hill.

    I still haven’t gotten your agreement on our bet by the way – inflation adjusted YOY median price change in King County in July will be negative, remember? Pictures of flacid balloons on your Ballard Palace’s eves? Should be entertaining.

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  50. meshugy

    Bliss…it’s right close to 405:

    9625 NE 141st Pl.

    You definitely hear lots of noise from the freeway….

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  51. meshugy

    I still haven’t gotten your agreement on our bet by the way – inflation adjusted YOY median price change in King County in July will be negative, remember?

    Sure…what’s the wager?

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  52. Erik

    Shug said:

    Again, usually there’s a big trade off of quality of life when renting:

    1) Poor locations (busy streets)
    2) Outdated houses
    3) Difficult land lords
    3) Bad neighborhoods
    4) Unexpected rent increases
    5) Unexpected evictions

    etc…sure some or all of the problems can be remedied by the perfect rental. But you’ll pay top dollar for that, and still won’t earn equity or have the security of knowing you can’t be evicted.

    So I’m supposed to believe that renting in Ballard means living in a bad neighborhood while buying in Ballard means living in a good neighborhood? Or did you mean to suggest that living in a nice neighborhood costs renters more but not buyers? I’m confused: which ridiculous claim were you making?

    Shug, I agree that paying less than $800 in rent won’t get someone a house like you live in. On the other hand, it could get someone a perfectly comfortable Ballard apartment. Sound limiting? Well, one nice thing about renting is that you don’t have to live in it forever. Which you can’t say about a house when you’re upside down in your mortgage. Rather live in a house? Well, this one’s a bit further north, but it took me all of 30 seconds’ worth of research to find it:

    http://www.seattlerentals.com/6616

    Not too pricey.

    Which leaves us with:

    …and still won’t earn equity or have the security of knowing you can’t be evicted.

    Not sounding to secure about yourself, Shug. Something making you nervous? Maybe that’s your over-dependence on real estate for your financial well-being and sense of self-worth. Don’t feel bad. It’s pretty common around here these days.

    (And, no, I will not give you my address.)

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  53. rentalbliss

    Shug

    You have the wrong map try the google map from the page. Great now I am being sucked into shugs vortex of absurdity.

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  54. Eagle Eye

    Friends, family and self included have faced declining income. Small business and large look for ways to cut expenses and increase profits and lately have taken to asking for more $$ in the form of wages and benefits. Often times when workers are let go they are not replaced.

    The erosion of our standard of living is inevitable and the more efficient we become economically as individuals the better off this country will be.

    Housing is falling in line with these changes but it seems to be adjusting slowly. I believe that Seattle prices have peaked, there may still be a rally left in this market, if so it will be short lived.

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  55. darth_s

    WHAT’S WRONG with Shugy these days? He’s acting like someone that is pushed to a DEAD END???

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  56. waitingforseattletocool

    Below are the statistics for King and Snohomish county inventory and pending sales for March of each year (March of 2007 is estimated).

    You will see inventory is actually above the 10-year moving average and pending sales are approaching the 10-year moving average.

    I don’t buy the argument that inventory is low. These stats don’t take into acount the countless condo projects that are not listed in the mls or that are in the works.

    Year Inventory Pending Sales
    1993 15428 3409
    1994 11624 4097
    1995 14213 2925
    1996 14048 3714
    1997 10937 4145
    1998 9255 4378
    1999 10211 4348
    2000 11201 4324
    2001 13405 4137
    2002 13743 4074
    2003 16426 4973
    2004 13247 5984
    2005 9854 6397
    2006 9601 5982
    2007 13417 5559

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  57. Lionel

    I’ve just arrived in Wellington, New Zealand. I just picked up the paper and here’s the headline: Impossible Dream – Survey shows crisis in home affordability. It goes on to state that a Kiwi with a median income would reuire 73% of that income to buy an average home at present. In Auckland, one requires 93% of income. In Queensland, it requires over 105% of your income.

    Nope, no worldwide equity bubble.

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  58. BanteringBear

    seattlehotty said:

    “One thing Seattle and Charlotte have in common (the two cities that did not decline) is that they both have very strong job growth.”

    “Beazer Homes USA Inc. said in a statement late Tuesday that it “can not comment on or verify any investigation,” following a report in the Charlotte Observer that federal authorities have launched a criminal inquiry into the company’s business practices, including its role in arranging mortgage loans for buyers in its subdivisions. The Observer said its investigation into the home builder, published last week, found “the company’s aggressive sales tactics were producing an unusually high rate of foreclosures in many of its Charlotte-area developments.”

    Here’s the link:

    http://tinyurl.com/2fdetr

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  59. meshugy

    So I’m supposed to believe that renting in Ballard means living in a bad neighborhood while buying in Ballard means living in a good neighborhood?

    Depends…living in a GOOD part of ballard. Not on a busy street or in the rental ghettos S. of 65th.

    http://www.seattlerentals.com/6616

    Example A: Much smaller then my place (the basement is unfinished). On 80th which is a major arterial. And I highly doubt it’s updated inside. Sorry, this only reminds me why I don’t rent. Seems that no one can really find a good rental that is cheaper then buying an equivalent house.

    Well, one nice thing about renting is that you don’t have to live in it forever.

    But you can get evicted any time. Sorry, I’d rather have the security of deciding when I move.

    Which you can’t say about a house when you’re upside down in your mortgage.

    This is a pretty weak argument right now since anyone who bought in the last few years is now sitting 100-200K in Equity.

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  60. refractedthought

    Shug just won’t stop. The man is on a mission.

    All I have to say is I can’t wait to see some numbers for March. Of course, no matter what comes out, there will be no end to the twisted statistics trying to show how the PNW is still special; but there’s gonna be some hurtin’ in those numbers — for the whole country. The whole country.

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  61. msrelo

    I am on the south side of 65th. Didn’t realize that I am in ghetto. I live on a busy street but I don’t mind at all. I love sitting on my porch and watching it all go by. I do agree that it would not be ideal for a family but I really like it. I have great neighbors and have not had any problems with crime, homeless, etc…

    I would like to mention that I absolutely would not buy on 65th. Regardless of the price. It is extremely common to see people driving at freeway speeds. Great place to be a single renter though!

    About the renter ghetto comment… The only part of ballard that isn’t full of drab 65 year old houses is west of 32nd between 80th and 60th.

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  62. Chris

    Here’s the thing. For these people that believe that a house is primarily an investment, as opposed to being something you live in, then when is it a good time to invest in the housing market place?

    Rule of thumb: BUY LOW, SELL HIGH

    If you want to throw away your money, the best thing you can do is jump in late to an overheated marketplace. If an investment looks like it’s overpriced, and you have some reason to think prices may decrease, DO NOT BUY!!! Just ask the people that bought Amazon at +$100/share.

    Right now prices in KC and nearby areas are at historical highs. Why anyone would invest in a market that is this historically overpriced and expect to make money in the short to medium term is beyond me.

    But buying a home shouldn’t be primarily an investment. You shouldn’t plan on making money on the home you live in. Some people do, and that’s great. The people that bought in prior to the run-up in prices and sold last year hit the market perfectly. But some people lose their shirts, as we will see across the country this year.

    You live in your house. Owning a home has all the advantages that shug says, and he’s right. But that’s because you should be motivated to buy a home to live in it, not make money.

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  63. Richard

    9625 NE 141st Pl.

    Huh, that’s 2 blocks from the house of a guy I camped with last summer. He actually lives east of the house in question (closer to the freeway).

    I would have never guessed we were that close to 405. Never heard it. On the eastside, it all depends on what side of the hill you’re on.

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  64. iwantthatone

    RentalBliss,
    Look closer at the “map” Shug presented you – he used the following for the, ahem, “address”:

    [10800-10899] Ne 141st Pl
    Kirkland, WA 98034, US

    What a laugh! Here’s the actual address from the CL ad:

    9625 NE 141st Pl.
    Bothell, WA 98011

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  65. The Tim

    I don’t know if it’s Mapquest or Meshugy that’s way off base on this one, but here is a link to the address in question. As has been pointed out, it’s nowhere near the freeway, and definitely not on a busy street.

    Swing and a miss!

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  66. rentalbliss

    iwantthatone;

    I know I tried to point that out but he only sees what he wants, so there is no point arguing with him from now on I will ignore him.

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  67. Richard

    Here’s an interesting chart of “% of banks reporting tightening of lending standards”.

    It appears banks were loosening on average until late 2006, when the trend rapidly changed course.

    Buddy, can you spare a loan? (PIMCO)

    Liquidity crisis?

    Full article

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  68. matthew

    Meshugy is the master of disinformation! The voice of the gollyed gets louder as judgement day approaches!

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  69. biliruben

    Sure…what’s the wager?
    -Meshugy

    As far as I recall it was something like if you lost you would take a picture of your house with a whole bunch of flacid balloons hanging from the eves, and send it into Tim to post.

    If I lost… I can’t remember. Something like putting “Housing only goes up up up!” on my roof and similarly posting a pic. I’m open to your suggestions, however, if you have a novel idea.

    It’s in an old thread someplace, though I wouldn’t know how to find it.

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  70. meshugy

    Right from the mouth of the Standard & Poor’s Index Committee.

    Seattle housing prices up 11% from last year

    Seattle, unlike most, if not all, of the other metropolitan areas, continues to see robust increases in home prices,” said David Blitzer, chairman of Standard & Poor’s Index Committee. “My sense and suspicion is this says an awful lot about the general economic climate in the Seattle area.”

    Seattle market observers have said the area’s strong job growth has helped buoy housing prices. As for flattening prices in recent months, Blitzer said Seattle is not immune to national factors, such as higher energy prices and interest rates and slowing economic growth.

    “I think (prices) will continue to slow somewhat,” he said. “But are you going to look like Detroit in six months? No, I don’t think so.”

    And are good friend Crellin says:

    “You don’t see much month-to-month change in prices in the dead of winter, even in a temperate climate like you have in Seattle,” he said. “The March-though-May-June time period, I think, is really going to tell us a lot about the market.”

    Crellin said he expects year-to-year appreciation to be 5 to 7 percent in the next few months and 3 to 4 percent by the end of the year. That’s still fairly strong, but down significantly from the booming market of the past couple of years.

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  71. meshugy

    As far as I recall it was something like if you lost you would take a picture of your house with a whole bunch of flacid balloons hanging from the eves, and send it into Tim to post.

    Ok

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  72. biliruben

    Cool, Meshugy.

    I’d like to use inflation adjusted (CPI) Single Family, King County, because I think that’s what we originally specified last summer, but I can’t find it. All I can find is Res+Condo, which was 390K (now 393K – so with inflation, I think I would currently be good).

    I suppose the MLS will show the breakout when it comes around, however. SFH cool?

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  73. meshugy

    Oh…sorry. adjusted for inflation…this all depends on what sources your using to do your calculations. What data will you be citing?

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  74. biliruben

    CPI

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  75. biliruben

    We’ll use the simple inflation calculator 2006 to 2007:

    CPI inflation calculator

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  76. Pegasus

    Does Beazer build around here? The fun is just starting. I said before that nothing brings out the fraud like a declining market. This is going to spread to everything now and everywhere, even here in Seattle. (((((PANIC)))))

    AP
    Beazer Homes Faces FBI Investigation

    Tuesday March 27, 6:52 pm ET
    Feds Looking Into Fraud Allegations Involving Homebuilder Beazer; Stock Plunges

    ATLANTA (AP) — Beazer Homes USA Inc., which has recently suffered hefty losses amid a downturn in the housing market, now faces a federal investigation of mortgage fraud and other allegations involving the homebuilder. Beazer shares plunged 15 percent in after-hours trading Tuesday.

    The FBI and the U.S. attorney’s office in Charlotte, N.C., along with the Internal Revenue Service and the U.S. Department of Housing and Urban Development, launched an investigation of Beazer Homes last week, FBI agent Ken Lucas said Tuesday.

    Lucas, a spokesman for the FBI’s Charlotte field office, said the inquiry involves “fraud in general” and more specifically is related to corporate, mortgage and investment issues.

    http://tinyurl.com/3dfgmv

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  77. meshugy

    Ok…so the median Res for Seattle was 435 in July 2006. Adjusted for inflation that will be 439 in July 2007. So if the median in July 2007 is higher the 439, I win. If it’s lower you win…OK?

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  78. biliruben

    Sounds good! I think it’s a pretty fair bet, actually.

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  79. Grivetti

    Depends…living in a GOOD part of ballard. Not on a busy street or in the rental ghettos S. of 65th.

    Rental ghettos? Dude, you’re too much. What an a elitist snot…

    The GOOD part of Ballard? get real… You’re such a joke. Good parts of Ballard you couldn’t even afford…

    blogger A:”Just found a great rental for under $1200/month, zillow’s for 500K”

    Shugster:”Yeah, but its in a ghetto, I would never live there because I’m an effeete intellectual who appreciates quiet, that and I think its healthy for my kids to play in the road”

    Funny, a dude that cruthces on zillow for his self-worth, dismisses it when the properties aren’t up to his bizarre immeasurable standard.

    Start your own property website dude… or stop quoting zillow

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  80. Richard

    The GOOD part of Ballard?

    The irony of this is that the cultural center of Ballard is Market street – well south of 65th.

    The northern end of Ballard is Blue Ridge – winding streets with ocean views. What’s in the middle? Loyal Heights.

    24th ave could evolve into a boutique boulevard between the high priced view homes and the entertainment district. Yet Meshugy sees it’s current underdevelopment as a detraction.

    Not sure how to take that. If Ballard gentrifies along the same path as Capitol Hill, the areas closest to the entertainment center will see the greatest appreciation – and anything in between the luxury neighborhoods and the restaurants will be improved respectively.

    I get the feeling that Meshugy likes the trendy appreciation of Loyal Heights, but hates the fact that it is in part driven by the low rent district that gives the neighborhood some character.

    Fact is, Ballard night life is driven by the rockabilly punks and artists that moved there because the rents were cheap. Now that it’s becoming a yuppie haven he wants that element to leave.

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  81. meshugy

    Fact is, Ballard night life is driven by the rockabilly punks and artists that moved there because the rents were cheap.

    Haha….that’s me! I’m a musician and have been playing the clubs in Ballard for 10 years! That’s why I like it here.

    It’s simply fascinating how I can make one comment and you guys will analyze it to death. It’s like I’m a prophet or something….

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  82. Richard

    Meshugy, have you got your PhD in ethnomusicology yet?

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  83. refractedthought

    “fraud in general” and more specifically is related to corporate, mortgage and investment issues.

    God, is there any company in the housing industry that was not turned into an instrument of wholesale looting?

    Is there no end to the slime? We’ve just scratched the surface, and I already want to hurl. Part of me thinks prison is too good for these people; we should be wheeling out the f’ing guillotine.

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  84. MisterBubble

    Hey…I live in the Ballard ghetto! I’m a badass! I guess the old people and the yuppies in new luxury condos are all part of my posse now — I think we’ll call ourselves “the Nords”.

    Still…you wouldn’t think that the Hebrew Hammer would be threatened by elderly swedes…Oy gevalt! What are we gonna do now? Is there ever gonna be a shemozzle if these nudniks get outta control!

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  85. deeplennon

    Ok…so the median Res for Seattle was 435 in July 2006. Adjusted for inflation that will be 439 in July 2007. So if the median in July 2007 is higher the 439, I win. If it’s lower you win…OK?-Meshugy

    0.91% inflation? Are you kidding? What planet does that happen on?

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  86. biliruben

    That’s a good point. It must be year to date instead of YOY, unless the inflation rate has been that low…?

    I’ll look more closely come August 7th to make sure we get the inflation adjustment right.

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  87. deeplennon

    inflation calculator link

    It’s currently at 2.42% (feb 06-feb 07)

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  88. The Bruce

    Shugy posted – Crellin said he expects year-to-year appreciation to be 5 to 7 percent in the next few months and 3 to 4 percent by the end of the year. That’s still fairly strong, but down significantly from the booming market of the past couple of years.”

    Funny, having just relocated from Phoenix metro, I heard the exact same ‘market analysis’ about the Phoenix RE market from the same ambiguous ‘market observers’ before it started slumping.

    Apparently these ‘observers’ were run out of town, and have set up shop here in Puget Sound.

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  89. meshugy

    Apparently these ‘observers’ were run out of town, and have set up shop here in Puget Sound.

    Actually, Crelling has been around a long time. He runs the Washington Center for Real Estate Research

    My guess is that he knows a hell of a lot more about the market then we do.

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  90. Nolaguy

    “Charlotte and Seattle were flat”.

    Based on this, some people have assumed that Charlotte, (and Seattle by association) are special. (strong job growth was stated).

    I found this ABC news video at Housing Panic:

    http://www.youtube.com/watch?v=NyaNpw4IKdU

    If this is the same Charlotte mentioned in the Shiller article, then something is certainly wrong.

    Could it be that there is a quantity of exotic mortgages in Charlotte still available that has allowed housing to remain relatively strong? Is there still plenty of mortgage medicine to keep housing activity (and prices) up?

    I don’t know – but when 20% of a new housing development loses their house due to foreclosure, that doesn’t sound like a strong economy.

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  91. matthew

    We should trust a professor at WAZZU 5 hours away in Pullman, WA??

    I’m sure he has a great understanding of Seattle, WA, coming from a town that when school is out, has a population of 2k!

    No thanks, I’d rather listen to Fleck!

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  92. Erik

    Haha….that’s me! I’m a musician and have been playing the clubs in Ballard for 10 years! That’s why I like it here.

    Funny thing is, Shug, that if you are actually correct in your grand vision of appreciation, Ballard’s “punks and rockabillies” will be long-gone before too long. They can’t afford a half-million dollar mortgage or your imagined skyrocketing rents. They’ll all be in White Center, Rainier Beach, or (gasp) Tacoma.

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  93. Eleua

    nolaguy,

    I think you are confused between Charlotte NC, and Charlotte SC.

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  94. The Bruce

    You’re right, Erik. Having just moved here after not visiting for a decade, I was shocked to see how yuppified Seattle had become.

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