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.

32 responses to “Building “Green,” “Smart” Investments, and More…”

  1. mike2

    I talk to guys older than myself, and perhaps a bit more liberal than I, who think the green movement is going to be the magic bullet that saves the US economy.

    That in spite of the fact that the US doesn’t produce much anymore, and jobs are being aggressivly offshored due to globalization pressures, somehow the investments in green technology will create new economic growth.

    I can’t wrap my mind around this idea. Ultimately, “green” is always going to be a luxury good to the majority of the US and especially the world population.

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  2. crashcadia

    All the “good” housing news today that has the markets rallying is making me happy.
    For the greater good of our society and for the future of our children we can not afford to hyper inflate our way out of this. My fear is that our Gov will do just that.

    So I am happy to see this charade of a recover occur prior to the Fed’s meeting. Can’t cut them rates if you can point at a “recovery”.

    That baked in cut has a double edge.

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  3. softwarengineer

    GLUEBOARD HOMES ARE DINOSAURS

    Yes, we need something immediately in America besides overpopulation wage mitigation and just pipe-dream home construction, with the horrifyingly false hope of excess home building/mortgaging on financially thin ice. Its clear we need an alternative hope now.

    Trusting the brainless elites to govern America is like trusting the Captain of the Titanic; they do things in a quick buck method that obviously destroys their futures too.

    A great example is the Ford Motor Company, when they significantly raised salaries of the domestic work force [notice I didn't mention outsourcing] their stock sky rocketed and we bought cars like Hades.

    Lets learn from our recent past short-term failures in America to prop us up into new domestic manufacturing longterm hopes. I’d make sure that any new technology is putting Americans to work too, or real estate is doomed!

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  4. wreckingbull

    Here is what I expect to happen at Lock Vista:

    1. Buyer goes through with purchase.

    2. Buyer starts conversion right during full-blown condo meltdown.

    3. Rather than sell converted condos on the cheap, new owner decides to revert to apartments.

    By the way, does anyone have the latest stats on Hjarta? Their sign reads ‘Summer 2007′ but I seem to recall that only six months ago, only 10% of the units had sold. I sometimes expect to see tumbleweeds rolling through their sales office.

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  5. TheMightyQuinn

    …”who think the green movement is going to be the magic bullet that saves the US economy.”

    How does he think an industry that produces nothing (no services, no good, etc) and is based on extortion can save the economy?! It’s like saying if we’d all sue each other we would all be rich!

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  6. explorer

    My observations of the behavior going on with my smaller apt. building conversion’s progress are similar. I would bet they will be repartments next year. In fact, it seems like the strategy now is to do minor remodeling (but major noise and dust generation), in order to justify much higher rents than they would otherwise deserve.

    I know of one instance where a specuvestor bought all the condos and deliberately is renting them out, no intention of selling, changing the name of the building to include the word “condominiums” as a marketing ploy to justify much higher rents, thereby increasing cash flow. Beware the words “condo quality” in repartment listings for the future…

    Now I know why LV was posting vacancies on Craigs List frequently a few months ago. Too bad the Seattle Displacement Coalition has not gained much traction on these issues.

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  7. explorer

    BTW, Green building is still NOT the norm, at least in the PNW, and is NOT being done with affordable housing, as the article inferred.

    What is needed is to get beyond “greenwashing” marketing and political posturing to develop the domestic industries that, offer what Henry Ford did for cars, to green building, e.g. active and passive solar, alternative building materials that hold up, etc.

    It is feasible and doable. The political will is not there, for various reasons, some of which have to do with the corporate oligopolies in existance…

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  8. MisterBubble

    I know of one instance where a specuvestor bought all the condos and deliberately is renting them out, no intention of selling, changing the name of the building to include the word “condominiums” as a marketing ploy to justify much higher rents, thereby increasing cash flow. Beware the words “condo quality” in repartment listings for the future…

    Don’t forget the part where they’re actually forced to rent the things at market rate, which causes them to moan repeatedly (and loudly) in the media about how the rental market is “dismal” and how landlords are slitting their own wrists to make “deals.”

    Then, look forward to a 5-10 year period of regular crookedness — extortion increases, extra fees and so forth — by burned specu-lords who see every long-term tenant as a potential opportunity to earn back some of their losses. (Naturally, there will be no acknowledgment of the greed or speculation that drove the unnecessary, unsupported rental price increases in the first place.)

    Finally, when inflation ultimately catches up to the speculators’ internal monologue of what rentals are “worth” in the Seattle market (i.e. 5-10 years from now), look forward to more cloying MSM articles about the “prolonged depression” in the rental market, and how landlords are “finally” able to ask for more, “following years of below-market rents”.

    Don’t believe me? Please reference every Seattle Times article concerning rentals in 1999, 2003 and 2007.

    Rent control? Conversion restrictions? Not here, you commie wackos! The free market works just fine….

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  9. uptown

    A tight rental market is: when you have to be on a waiting list, or actually know the landlord and if they like you they invite you to apply the next time they have a unit available. Both of these examples occured during the mid 90′s around San Francisco.

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  10. JohnnyBigSpenda

    Ever think that realestate is basically a grown up version of ‘musical chairs’? Most people will be happy when the music stops since they have a spot to sit for awhile. I guess the one who’s left standing isn’t so happy, but hey, that’s the game. Anyone who’s surprised that there are a few left standing in this game, may have to repeat grade 1.

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  11. UrbanArtist

    I have been reading the Seattle Bubble for a few months now. I rent a house in Ballard and have lived in Ballard since 89 and have seen many changes here. Ballard is a great place and we love it. However, I do not get why the houses and Condos continue to sell for so much. Every place is starting to see a slow down but not here in Ballard. The house across the street just sold for 80,000 more than the seller paid a year ago and the house sold in a month, it is one of those dreadful skinny houses. Condo’s are still selling for top dollar. Why is Ballard still not seeing a slow down? Maybe that is why Lock Vista is going to go Condo. In reference to the last post someone refered to women as nesters with a need to buy houses when they can’t afford it. Well I’m a woman and even though I would really love to have my own house I know better than to commit financial suicide. So my husband and I are content for right now to rent and not be at each others throat. I’m afraid I do not feel sorry for people that over commited themselves. They should have known better. I guess people forgot about the saying that “If it sounds to good to be true than it usually is”. Zero down home loans sounded to good to be true, there had to be a catch, and now we all know there was a big one.

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  12. MisterBubble

    Condos are still selling for top dollar. Why is Ballard still not seeing a slow down? Maybe that is why Lock Vista is going to go Condo.

    To the contrary…the big condo projects in Ballard are having trouble selling their units. It only appears that the local condo market is strong — the numbers tell a different story.

    Can’t say what’s happening with Ballard SFH, but I will say this: Ballard is one of the last in-city neighborhoods that is livable and even remotely affordable. That is why the market is somewhat resilient. It’s just a shame that greed and stupid urban planning is going to ruin this neighborhood, too….

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  13. softwarengineer

    UNSOLD CONDOS= APARTMENTS= MORE UNSOLD CONDOS

    Imagine being the buffoons that bought a condo only to have their village turned into an apartment complex. What could you get for your condo investment, pennies on the dollar? Whose stupid enough to pay like $400K condo prices for an average $125K apartment unit? LOL

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  14. Old Ballard

    “By the way, does anyone have the latest stats on Hjarta?”

    I was in the Hjarta office a few weeks ago. Out of 79 total units 10 had “sold” and another 12 were potentials. Just FYI the building facing Market St. is only the first of two building that will be on that site. The second will stand behind the Market St. building facing 57th St. If I understood the agent correctly between the two buildings there’ll be 200 units. I wonder if the money is already in the pipe line. The agent told me that construction on the second building will begin after completion of the first. If the money is already there they no alternative, build or go bankrupt.

    Canal Station has two building with a told of 178 units. When visiting with them the agent told me, “they had stop taking earnest money on the last 30 unsold units because they were just too busy.” So, that’s 148 sold units how many were bought by investors? “About 20 percent,” she says. So, that means 50 units are really still on the market, right? “Right,” she says. So, have you had anyone who put down earnest money unable to obtain financing? She stopped talking to me and more less asked me to leave.

    NoMa has 10 units unsold and Metropole 7.

    But here’s the kicker. The Northlake Group, the people buying Lock Vista with its 191 units, have 100 unsold units on 59th St. and 24th Ave N. and another 20 units on 57th St. and 28th Ave N. So, they’re going to have to sell 311 units in the next year or two. When I heard about Lock Vista I had brain freeze. What are these people thinking?

    “Rent control? Conversion restrictions? Not here, you commie whacko’s! The free market works just fine….

    Listen, Mister Bubble, I hate to call you out by name, but have you ever heard of a guy named Adam Smith? You see he wrote about economics a long time ago. One of his basic hypotheses about a free market was that a market can only be considered free if buyers have the choice not to buy without detriment or damage to themselves or their families. There’s this idea that when a seller is selling something that the buyer has no choice but to buy the seller has an unfair advantage over the buyer and can demand an unfair price for the product. Selling or renting housing is analogous to selling water in the desert. Is it moral, ethical because you can do it? In a civil society homelessness is not an option. Living in your car is not an option for people who love themselves and their families. People must acquire housing, they have no choice. The housing market is not a free market nor is it even a true market. The minute mortgage brokers and appraisers got into bed with each other it stopped being a true market.

    Even if all the condo conversions go back on the “market” as apartments it’s going to hurt a lot of innocent people.

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  15. Lionel

    “One of his basic hypotheses about a free market was that a market can only be considered free if buyers have the choice not to buy without detriment or damage to themselves or their families. There’s this idea that when a seller is selling something that the buyer has no choice but to buy the seller has an unfair advantage over the buyer and can demand an unfair price for the product.”

    Uh, ever hear of renting?

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  16. explorer

    I see that as applying to renting too. Even more so. Renters are serfs now.

    Unless you think of living in Tent City as a viable option…

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  17. MisterBubble

    OldBallard…I think you missed the sarcasm in my final remark.
    If that’s not the case, I have no idea why you’re attacking me….

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  18. MisterBubble

    Canal Station has two building with a told of 178 units. When visiting with them the agent told me, “they had stop taking earnest money on the last 30 unsold units because they were just too busy.”

    What a steaming load of bullchocolate. “Too busy to sell”. That’s quite rich….

    Incidentally, I think Canal Station has started move-in — there were a handful of lights on in the building last night, and it looked as though some of the units were furnished/decorated. I counted a grand total of eight units with lights. 2200 Ballard, anyone?

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  19. christiangustafson

    Oh, Tim. Yesterday’s post was not a downer at all, it was heart-warming. It was perfect. What fools would make the largest purchase of their lives under duress like that. And now they are culled.

    The weak, the stupid, the greedy, the venal, are all about to get flushed down with this bubble. This is the way it should be. As much as possible, they must bear the costs of their poor decisions. A moral society is welcome to call them out and ridicule them. This is just. You must never pity these people. Never!

    The prudent saver/renters will survive and prosper in the wreckage. Many of us find the spectacle of the downside highly entertaining!

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  20. JohnnyBigSpenda

    ahhh the bitter renters… they are so wise. they knew it all along… please bitter renters, impart your great wisdom on us.

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  21. christiangustafson

    I knew in 2003 when people started waiving inspections when buying houses.

    Enjoy your ARM. Thanks for contributing to the systemic risk of our institutions.

    I agree with Travis Bickle here: “Someday a real rain will come and wash all the scum off the streets.”

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  22. Old Ballard

    “OldBallard…I think you missed the sarcasm in my final remark. If that’s not the case, I have no idea why you’re attacking me….”

    Sorry, MB, it wasn’t an attack, but somethings are just not funny.

    Canal Station is making closings and moving them in. The reason for my recent visit to they’re office was I saw one of the local furnture stores making deliveries there. Also, I’ve talk around about the QFC and as best as I can tell the whole deal has gone cold as ice. Now the best answer I can get is next summer sometime for braking ground.

    “Uh, ever hear of renting?”

    Yes, actually I have heard of renting. Ya, know, or maybe ya don’t, housing comes in many forms, but what ever form it comes in, purchase or rential, there are to kinds of people, those who have it and those who don’t, and those who don’t have anywhere to live will always be at disadvantage to those who do. If you make an effort to study the history behind the rential “market” you’ll quickly see how unfair and unfree of a “market” it really is.

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  23. JMoney

    christiangustafson,

    I’m sure that you have lovely dreams every night in your mother’s basement (that you so wisely rent) of the day when you will soon get real estate around here at fire sale prices and finally be vindicated for renting all these years. Well guess what? You’re going to be renting a long, long time.

    The worst housing market over the past year has been in Detroit, off around 7%. Keep in mind that’s amidst all of the layoffs in the automotive sector and being #1 in the country with foreclosures. Again, down 7%. And you really think that Seattle is going down 20, 30, 40%?

    Just because someone got an ARM a few years ago does not mean that they cannot afford a traditional 30yr fixed today. Even if you could have afforded a 30yr fixed a few years ago why not save substantially on your interest by taking an ARM with the goal of refinancing later. See, you think that everyone who took out an ARM did it because they were already financially strapped and it was the only way they could get in the game. Unfortunately for you there were many of us who took them out because it was a fiscally prudent thing to do and not because we were strapped in any way.

    Keep dreaming about a dramatic reduction in prices and you’ll find yourself renting your whole life. You’re just bitter that you didn’t get in the game several years ago and now the only thing that brings any kind of comfort to your sad life is to fantasize about the upcoming turmoil in our housing market and your impending vindication. Tough luck dude, it’s not going to happen.

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  24. softwarengineer

    OLD BALLARD, I CAN RELATE

    Let’s put it this way, 6.5% of American suffer homelessness, which likely means about 20% of Seattle-ites are one paycheck from homelessness….while the low income and regular apartments management are getting pickier and pickier about tennants, as overpopulation poverty grows exponentially in Seattle.

    You can now get likely evicted [I know of an example in Issaquah] for being a packrat; where years ago, it was unheard of in Section 8 low income housing. Its getting more and more cut-throat in Seattle’s rental housing, especially rental inspection requirements leading to evictions, as overpopulation increases.

    With 1-2 million subprime loans hitting the foreclosure fan and evictions of home owners occuring simultaneously, its no wonder. Most of these folks aren’t unemployed either, its just the $8-12/hr jobs out there are a joke, unless you have a room-mate [most single parent families don't], so the car becomes home.

    Yes, dealing with today’s picky landlords might drive me into a bad condo investment too, if I were younger. Good point Ballard.

    Overpopulation in Seattle is interesting, but poverty i

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  25. softwarengineer

    but poverty inconvenient.

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  26. Lake Hills Renter

    Wow, “bitter renter” in two different posts! I think we may have hit the “fear” stage.

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  27. bitterowner

    J$$,
    Do you have a derogatory and self-comforting label for those who don’t rent but still believe the housing market will experience a significant correction?
    I’m thinking a 30% decrease in values is a given, if you take into consideration the reason for the recent run-up and the current lending and affordability climate.
    Keep in mind that if the value of your property goes down only 10% over the next 5 years, when you factor in inflation it will actually be worth more than 30% less. My bet would be at least 30% down PLUS the effect of inflation – ouch.
    This is now starting to remind me very vividly of 1999-2000. I’d occasionally go to some of the yahoo finance message boards where a minority of those posting comments would be warning of the presence of a tech bubble. At first they were ignored. Then they were argued with. Then they were vilified and insulted in a manner similar to J$$’s post. Then….poof.

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  28. wreckingbull

    Yes, fear is definitely encroaching. I can smell it too LHR.

    The irony is that these trolls really don’t understand the demographic of this blog. Most of us could buy now if we wanted. Many of us have been owners in the past. I don’t think they quite realize how stupid they sound when they start blabbing the ‘you missed the boat’ and ‘Mother’s basement’ verbiage.

    Speaking of boats, I’ll be spending four days on mine this coming weekend. Life is good when you don’t have a $4500K/month PITI strapped to your back.

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  29. Schaum

    CONDO-TO-APARTMENT CONVERSION IN HOT-HOT-HOT KIRKLAND!!!

    I just saw my first condo-to-apartment conversion, and it’s in downtown Kirkland. “128 On State” is a brand new building that has been trying to sell its condos for many months (if not a year). Apparently they were unsuccessful, since they have now turned the building into an apartment complex.

    I picked up one of their glossy packets full of marketing materials. Many of the sheets inside still use the word “condominium” in them. The units are tiny and extremely overpriced. You can rent a studio from 662-788 sq. ft. for $1400-$1780, or a 2-bed + den from 1255-1435 sq. ft. for $2630-$2805. Tack on even more $$ for a pet, second parking spot, and non-refundable deposit. GOOD LUCK, GUYS! I don’t know anyone who would pay nearly this much for “engineered wood flooring” or the lobby’s “wood veneer accent wall”.

    Because I’m feeling nasty today, I’d like to share with you my favorite segment of their superbly written marketing blurb:
    “This is what makes Kirkland so desirable. It’s a rare convergence of lifestyle forces. Urban village scale and atmosphere, plus a relaxed cosmopolitan attitude and affluence, mixed into a continuous flow of youthful passion and energy.” Gee, who wouldn’t want to live here?!?

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  30. MisterBubble

    The units are tiny and extremely overpriced. You can rent a studio from 662-788 sq. ft. for $1400-$1780, or a 2-bed + den from 1255-1435 sq. ft. for $2630-$2805. Tack on even more $$ for a pet, second parking spot, and non-refundable deposit.

    This is exactly what I expect.

    Stage 1: Add bamboo floors, stainless-steel fridge to apartments condominiums. Try to pawn off apartments condominiums for 100-300% premiums over previous property value.

    Stage 2: Notice that most apartments condominiums do not sell.

    –>ATTENTION SEATTLE: YOU ARE HERE!

    Stage 3: Smugly return condominiums apartments to market at same 100-300% premium. Intent: “wait out” the downturn in the market — evict renters when demand for apartments condominiums returns.

    Stage 4: Notice that apartments do not rent. Begin to panic.

    Stage 5: Add worthless “incentives” (one month free parking! pay $4000 deposit in installments! Free meat!)

    Stage 6-8: Lower rent slightly. Notice that apartments do not rent. Repeat.

    Stage 9: Finally rent apartments for somewhere near market cost. Write off monthly losses. Hyperventilate.

    Stage 10: Face lawsuits from apartment condominium owners, who are angry that neighboring re-partments are “destroying property values”.

    Stage 11: Lose lawsuits. Declare bankruptcy.

    Stage 12: Watch as apartment conglomerates scoop up financially distressed property for pennies on dollar. Few remaining owners sell to conglomerate, rather than face mounting property-value losses.

    Stage 13: Property returns to rental status at market rates. Scumbag investors find exciting new ways to prepare cat food (hint: imagine it’s tuna — hey…it worked for apartments, right?)

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  31. Affluent Bitter Renter

    I think we need a new term for JBR – “jealous bitter Realtor™”.

    Kinda sucks having your income dry up, while being unable to unload your “investment” properties, doesn’t it?

    Who knows – you may end up penning bitter comments on bubble blogs on the weekend, for lack of anything better to do (shouldn’t you be out showing houses or something)?

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  32. Garth

    ReMuddle updated their postings with sales prices.

    http://www.remuddle.org/

    Crazy.

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