The following quote from yet another boring article about condos caught my attention due to its absurdity:
Prices range from about $219,000 for a studio up to just over $400,000 for a two-bedroom condo. Gamel touted Sapphire’s finishes and amenities, proximity to Green Lake and downtown, and Greenwood itself.
…
Sapphire’s price, the fact that it’s new, rather than an apartment conversion, and its proximity to Green Lake attracted Steve Anderes, a 32-year-old scheduled to close on his condo in June.“I moved over to Bellevue about six months ago just because it was closer to where I’m working,” he said. “But now, having the opportunity to get into a place to own, I can justify the commute.”
Wait, so you gave up a short commute so you could pay big bucks (plus HOA dues) for a space only marginally nicer than what you were renting?
That makes sense.
(Aubrey Cohen, Seattle P-I, 05.28.2007)
Jump to the bottom to add your comment. ↓
24 responses so far ↓
1
Shawn
// May 31, 2007 at 11:07 am
“That makes sense.”
Irrational exuberance does not make sense. We must remember that people are not acting rationally. Few people will go join a cult, but that part of cult members that make them blind to reality exists in all of us to some degree. We are programmed to ignore reality. Imagine if we focused on our inevitable death all day long, we must pretend we are not going to die. That is the part of us that we need to be aware of so that we don’t get swept up in things like a housing bubble, the dot com bubble. Lets see what the next bubble is, and watch the masses jump in feet first, eyes closed. We must just have a bit of compassion for them because they are responding a bit to how they are hard wired.
2
Matthew
// May 31, 2007 at 2:26 pm
“We are programmed to ignore reality.”
While this may or may not be true, it’s not entirely the case with the current situation with real estate. People are far more influenced by recent history than their perception of what the future may bring. If prices have been rising for a decade, it’s almost impossible for most people to believe that they could go down.
As soon as prices *do* go down, it takes a while for expectations and “reality” to reset. I lived in San Diego from 2005 to early this year and saw that expectation reset with my own eyes and ears. Most people there now believe that prices will still go down, but that if you can afford it “now is a good time to buy because there are so many deals out there”. It will take more declines for people to think “real estate is not a good investment”.
3
LoneLibertarian
// May 31, 2007 at 3:21 pm
The house next to me sold for over 340k.
It is a 1,000 sq foot brick home with 2 bedrooms. It is very small and has little remodeling done outside of new appliances. It has a decent sized back yard with a large storage shed but come on, 340k for a 1000 sq foot home!?!??!?!?
4
softwarengineer
// May 31, 2007 at 3:45 pm
GREETINGS TRUTH SEEKERS:
Well, its official, America is in a Recession. Q1 GDP for 2007 is a HORRIFYING 0.6%.
Of course Seattle is immune from an American Recession and its home prices will escalate though the roof.
If you believe that, I have a bridge I can sell ya.
Read a great article on the American Recession for 2007, have a cocktail ready:
http://www.rgemonitor.com/blog/roubini/197471/
5
MisterBubble
// May 31, 2007 at 4:09 pm
se:
A “growth recession” is different than a “recession” — one means “slow growth” and the other means “negative growth”.
I’m sympathetic to your point, but it’s still a bit early to be crying “fire” in the crowded theater….
6
christiangustafson
// Jun 1, 2007 at 5:26 am
Oooh! The high life in exciting Greenwood! Except for the corridor from 85th/Greenwood to the south, into Phinney Ridge, it is a pit. Walk the sidestreets and you’ll see the most decrepit 1940s shacks, no sidewalks, cars in yards, etc. This fellow lives near Green Lake, well, except Aurora Avenue is in-between.
Greenwood and the surrounding area is rife with row after row of sawdust & Tyvek townhouses. In a sane market, they might be worth $100K/unit.
7
plymster
// Jun 1, 2007 at 8:36 am
With Q1 GDP at 0.15% (0.6% annualized) and inflation (well, the one that’s reported anyway) hovering on the high end of 2%, we have a real GDP loss. If you take into account hidden inflation (food, energy, housing, medical), we’re way worse off than the 2001 recession. That said, this is just one quarter, and the one datapoint doesn’t make a trend.
Still, this might be a good time to start edging towards the exits in case they do yell “fire” in Q2. It’s better to get out of the burning theater alive and miss a bit of the movie, than to get trampled to death (especially the Pauly Shore movie that our economy has become).
8
Eleua
// Jun 1, 2007 at 8:45 am
I was looking at that report and wondered how we could have consumer spending way up (4.4%), but the slowest economy since the trough of the last recession. Keep in mind that consumer spending is 70% of GDP (I think).
Axe yourself…how does that happen? If you factor in a much larger inflation rate than is reported (I think it is just shy of 10%), the numbers make sense. The consumer is forced to spend more nominal dollars to keep things going. Even with all that spending, the economy is pretty punk.
The housing ATM is dead. Jobs suck. Plastic is filling the gap, which is why Visa and MC are seeing more spending.
Meanwhile…all the stock indicies are making new all-time highs, and morons in Seattle think they are immune from a housing defation.
9
EconE
// Jun 1, 2007 at 12:16 pm
Hey Folks. I’m in Seattle now. I leased a place at the infamous 2200westlake complex.
There are things that even the 2200life blog does not cover.
The Stranger will be interviewing me with regards to the Orwellian system set up here that was disclosed to me by the building manager *after* I had already committed to a 2 year lease.
Currently being that I don’t have internet set up yet (just moved in) I am logged on to the wi-fi here. I had to click on an “accept button” that they are recording my mac address and “personal information” and storing it on a server in Kuala Lampur, Malaysia.
Hi Paul Allen ;o)
Tim…contact me….you can see that my IP address is no longer coming out of L.A. If anybody would like a tour (Regular SB contributors only) feel free to contact me through Tim.
P.S. One of the retail establishments has told me that they also have *issues* with Vulcan also and mentioned that they weren’t the only one.
10
Roccman
// Jun 1, 2007 at 3:10 pm
Hey Synthetic - good posts at HP…thanks for the air support…this Peak Oil Pill is gonna suck to swallow!!!
11
patrick
// Jun 1, 2007 at 7:39 pm
Greenwood’s pretty ghetto. Then you have all of the drug dealers a few blocks away on Aurora. Careful riding that bus on Aurora coming home from work - all types of riffraff. Also, a good part of Greenwood is sinking due to it sitting on a large peat moss bog that gets drained with each new development.
However Greenwood does have Fred Meyer, Gordidos and Tully’s.
12
synthetik
// Jun 2, 2007 at 7:54 am
but…. greenwood has WING DOME!
13
Jason
// Jun 2, 2007 at 12:10 pm
Tim,
What’s so wrong with wanting to own something, in Seattle, even if it means a longer commute? No more “Mr. landlord may I…..” is worth a higher monthly cost to some people. The freedom to do what you want to your place and in some cases, the freedom to get something fixed w/out the hassle of trying to get a non-responive landlord to do it. Or more fundamentally, just knowing that it is YOURS. I think that’s a powerful force that takes precendence over the financial considerations for a lot of people.
My point is there are a lot of tangibles and intangibles that I don’t think you give due credit to. I’ve been a casual reader of this site since the start of the year and have had this feeling about your stance for awhile. I hear you on the financial aspects of buying these days [part of why I come here] though. I think you’re being too dismissive [calling this guy's desire to own "absurd"] of ownership in general because you’re so desparate to be right about the housing bubble overall.
I’m wondering what you would consider a reasonable price for a condo [say, at Sapphire] and what are the reasons one should buy to begin with? I wouldn’t want that guy’s commute but for me I’d probably choose living in Seattle over Bellevue too, even if it meant that commute.
14
The Bruce
// Jun 3, 2007 at 1:07 am
Real estate is hot… Yet Centex cut prices again in our subdivision. They’re trying to sell out before the crap hits the fan. They’re throwing up houses to get all their lots released and sold faster than China is building coal plants. I’m on the Bothell/Woodinville border, which technically isn’t Microsoftland, but it isn’t BFE, either.
15
wreckingbull
// Jun 3, 2007 at 10:48 am
“I’m wondering what you would consider a reasonable price for a condo”
1.2 times monthly cost of renting the same condo. AKA the historic mean before funny money arrived at the party.
16
uptown
// Jun 3, 2007 at 10:55 am
Jason,
You did notice this is Seattle Bubble? Don’t expect sympathy if you want to buy at the peak of a market.
There is nothing wrong with wanting to own the place you live in, but I have noticed that people who had no interest in buying earlier, when I told them prices were starting to go up, have all jumped in as the bubble inflated. So I suspect much of the recent interest in owning is tied to the hope of being able to cash in on the ever inflating prices.
But this being a free country ;-) you gotta do what you gotta do. And if prices do drop, you can count on me being there…
to buy your place from the bank which owns it.
17
BelRenter
// Jun 3, 2007 at 10:59 am
I seriously considered buying a condo because I could afford it and I wanted the “intangibles.” Ultimately the reason I did not was because I did not understand why prices were rising so much and that made me very uneasy. (Never buy an investment you don’t understand!) During the first coverage of the subprime lending crisis my uneasiness turned critical and although I can afford to buy there is no way I am buying this year. It sounds like Steve doesn’t share my paranoia. If he can afford his new place and plans to stay there for years congrats to him. It doesn’t change how unaffordable the area is to the average family.
18
The Tim
// Jun 3, 2007 at 2:18 pm
First, when I said that the quote caught my attention “due to its absurdity,” I wasn’t “calling this guy’s desire to own ‘absurd.’” A desire to own is pretty common, and not at all absurd. I myself have a desire to own some day. What I think is absurd is making excessive financial, time, and lifestyle sacrifices in order to fulfill that desire to own.
Secondly, I’m not “desparate” about anything. I just call it like I see it, and I couldn’t care less who agrees or disagrees with me. For the most part, I’m quite reluctant to make any specific predictions about where the market is going the future. All I know for sure is that right now, it’s way too messed up for me to be interested in purchasing.
This blog is merely an outlet for my personal observations and commentary on the market.
19
Joel
// Jun 4, 2007 at 9:00 am
“Or more fundamentally, just knowing that it is YOURS. I think that’s a powerful force that takes precendence over the financial considerations for a lot of people.”
And that is a big part of what is wrong with Americans these days. There IS something very wrong about buying unnecessary expensive things without considering your financial situation. Don’t get me wrong, everybody has urges to buy expensive things they can’t afford. However, it’s a sign of immaturity, greed and selfishness when you follow through with those urges rather than do the intelligent thing and wait.
Oh yeah, and it’s not even YOURS until 30 odd years later when you’ve made the last payment to the bank.
20
EconE
// Jun 4, 2007 at 9:16 am
I don’t think that Tim is desparate to be right in the least. I certainly don’t see him calling any absolute predictions. If owners weren’t concerned about a bubble they would be sitting at homes watching ‘Friends’ and not visiting “bubble blogs”. I think that the owners are more desparate to be right about no housing bubble because they are the ones with the huge debt burden at stake and the thought of being upside down in a mortgage must be a pretty unsettling thought.
Or maybe the homedebtors visit the bubble sites because they now know that it’s the BH’s that have made the money lately shorting the lenders and maybe we are being used for free financial advice (kidding).
Personally, I’m quite confident that there is a bubble. How it will play out is anybody’s guess. Most of the people that I have seen here are great with numbers although even with the numbers we just have to sit back and and wonder. Economics is after all part art and part science.
WTF am I doing up so early?
21
Morfydd
// Jun 4, 2007 at 10:02 am
Ahem. Greenwood is not a pit. It’s a nice working-class neighborhood. Yup, the houses are old and small. Also very solidly built. Yup, no sidewalks. I wish there were, and someday there will be. (We’ve certainly been hit with the traffic circles.) Yup, there are a ton of mini-houses sprouting like dandelions. Would I buy them? God, no. Would I buy my spiffy little house at today’s prices instead of five years’ ago? God, no.
Greenwood is not a ghetto. It does have a weird mix of very wealthy folks and very poor folks. (I do taxes in season in a little kiosk, and see the whole range.) It’s clearly yuppifying, but even if that fails (and I’m reading a bubble blog, so I think it may) the poor here are the working poor and crime is pretty low.
I like my neighborhood (Crown Hill, but close enough to Greenwood). It’s not fancy. It’s not luxurious. It’s a well-built house with nice neighbors, low crime, and plenty of amenities. And a ten minute commute to work.
Someday, when I win the lottery, I’ll buy that fabulous house in Medina. And someone will probably call that a ghetto, too. ::rolls eyes::
22
Jackson Wallace
// Jun 4, 2007 at 11:59 am
Whats with te flashing cursor? The discussion about Greenwood is
interesting, in that I think the neighborhoods that were borderline before
the last runup may fall back into that category when this recession hits.
Tukwila, Greenwood to Aurora, maybe even part of Ballard. The residential area
mixed with lots of apt buildings will not seem as great as the more
solid residential neighborhoods. Anyway, who cares?
23
Eleua
// Jun 4, 2007 at 12:14 pm
Oh yeah, and it’s not even YOURS until 30 odd years later when you’ve made the last payment to the bank.
I would argue that.
I would submit that you become a renter and the county is your landlord. Skip out on your rent/taxes, and you get evicted - just like the rest of the renting riff-raff.
Allodial title is very difficult to obtain.
24
explorer
// Jun 4, 2007 at 4:13 pm
I have lived and rented in the Greenwood/Phinney neighboorhood for 7 years, and that article was plain insulting. Those who defend gentrification by appearance alone are the ones to watch closely. They are mostly clueless.
I also went to the FIni Condos pre-sale out of curiousity, and was insulted again. The few apartment buildings in Greenwood/Phinney that are even marginal ly decent are getting converted. My own small building was just sold to a investor/speculator, and he has not filed the conversion intent yet, but has made his intentions clear. Doing the basic numbers on what other recent conversions are selling for, he stands to NET a cool 5 million if the suckers are still arround by then.
There are thousands of conversion casualties in the city. I have no intention of paying $225-300K for a 1 BD, thin-walled apartment. The new owner can take his greed out on someone else.
The rental market is BAD, but not as bad as the condo market. Did you realize that new condos/conversions are now being marketed as the new “starter homes?”
Question is, who are the suckers gonna sell them to when no one makes a “starter” income?
BTW, all the streets in my neighboorhood have sidewalks, and there are some very nice, well built Craftsmans too. Also a lot of $500K Grandma’s houses….
Jump to the top of the comments. ↑
Leave a Comment