Seattle Bubble

• Poll: Is it ethical for a home debtor to “walk away” from a mortgage?
• Poll: What is Seattle’s MOST special attribute?
• Poll: What characteristic of a home is most important to you?
• Poll: What’s your new year’s housing resolution?
• Poll: Marijuana Grow Operations & The Housing Bubble: Connection?

Jump to the bottom to add your comment. ↓

31 responses so far ↓

• 1 The Tim // Sep 27, 2007 at 3:25 pm

  Some possible scenarios that qualify as “other” include:

  - In school, living on-campus (I wouldn’t exactly call that ‘renting’)
  - Still living with parents
  - Assisted-living
  - Backwoods mountain man, living off the land
  - Fortunate coincidence allows you to live rent-free in a property not belonging to you or any relative
  - Living in a van down by the river

• 2 t shirts funny // Sep 27, 2007 at 4:00 pm

  Hey Tim-

  When I try to select “Rent from a bank (i.e. - own a home loan)” I get “Please select a valid poll answer.

• 3 t shirts funny // Sep 27, 2007 at 4:03 pm

  edit: lol, nevemind. The sidebar only works.

• 4 Lake Hills Renter // Sep 27, 2007 at 4:33 pm

  I can’t vote. I guess someone else from MS already voted.

• 5 Joel // Sep 27, 2007 at 5:57 pm

  I was watching something on HGTV a while ago and they profiled some family that lived out in the boondocks in Idaho and were homesteaders. I didn’t even realized such a thing existed anymore.

• 6 pat // Sep 27, 2007 at 6:08 pm

  okay, i’m dumb. how do i vote?

• 7 SellOut // Sep 27, 2007 at 6:57 pm

  Today , having sold our house in Puyallup and getting ready to move to Seattle, we begin the transition from renting from a bank…back to renting from a landlord at least for a year or two.
  Please tell me I’ve done the right thing.

• 8 James // Sep 27, 2007 at 9:17 pm

  Wait just a minute. What if I bought 8 years ago and have only 5 years left on my mortgage? I think I fall between “free and clear” and “rent from a bank”. Would I vote other? I propose adding a between category.

• 9 misty buss // Sep 27, 2007 at 11:14 pm

  SellOut, we are in our second year of renting from the landlord after selling our house. The adventure starts now for you. The lack of house projects and having to accept the new property, it is what it is, will give you freedom to take trips, visit local points of interest and search for neighborhoods you find fit your style. We sleep really good at night debt free, saving and looking for the best options to keep our depreciating dollars out of trouble.

• 10 Joel // Sep 27, 2007 at 11:56 pm

  Free & Clear is more like renting from the government.

• 11 Angie // Sep 28, 2007 at 6:57 am

  Tim, I like the poll idea, and your unique spin on the categories. “Rent from the bank” made me laugh even before the coffee had fully sunk in. I’d consider college students in a dorm to be renting from a landlord, but hey, that’s a minor quibble.

  Joel, have you ever lived in government housing, or with Section 8 support? From what I’ve seen it’s a whole different ball game than paying taxes on a house you otherwise own free and clear. No contest.

• 12 The Tim // Sep 28, 2007 at 7:04 am

  pat, you should be able to vote using the radio buttons and the “vote” button on the sidebar. Please disregard the “vote” link in this post. It doesn’t work, and I’m still trying to iron things out like getting rid of that link.

• 13 Rob Dawg // Sep 28, 2007 at 7:51 am

  I was all set to check “rent from bank” but hesitsted. Sure I have a mortgage but I also have enough investments to pay it off. The difference is that the mortgage after deductions is some 2-2.5% lower than even my most conservative investments.

• 14 softwarengineer // Sep 28, 2007 at 9:10 am

  INTERESTING RESULTS

  Looks like the home owners are a minority on your blog, but that makes sense, most Seattle home owners want to believe in the tooth fairy and Santa Claus….where Tim’s Bubble Analysts bring snap us out of our day-dreams.

  Besides, truth is truth, and higher numbers on your property tax statements won’t buy ya hamburgers….but they will cost ya….

  Home ownership is a great long term investment too, who cares if it collapses in price the next several years; give it 10-20 years down the road and it nets a healthy 4%.

  If a bubble happens and you own a house, don’t sell.

  If you have to sell in the next few years, you’re shafted. But ya know, I bet no one wants to bail out Enron retirees or GM’s pension plan….so take your losses and go on with life.

• 15 Jaz // Sep 28, 2007 at 12:06 pm

  Thinking about the few who own “free and clear”… We talk about how the Easy Money (thanks, Al!) has driven up prices. What would house prices be if we couldn’t get loans at all? I’m guessing they’d be where a lot more people could own a house free and clear.

• 16 Joel // Sep 28, 2007 at 12:53 pm

  Joel, have you ever lived in government housing, or with Section 8 support?

  Huh? Where did that come from?

• 17 melonleftcoast // Sep 28, 2007 at 1:16 pm

  Jaz,

  You said” What would house prices be if we couldn’t get loans at all?”

  An older friend of mine who owned a few income properties said that when interest rates were so high in the eighties, most people didn’t qualify for a mortgage for what the prices of houses cost. Prices came down some, but not enough, and that he, and everyone that he knew that bought houses in that time period, had seller financing.

  This was in Boston.

  Are there any “older” readers that have anectdotal evidence of what happened in Seattle during the eighties when interest rates were high?

• 18 Garth // Sep 28, 2007 at 1:45 pm

  At my last job I worked with a couple of guys who had purchased homes in the early 80’s. One got a fantastic VA rate of 12%, being a vet saved him 5%.

  You can see prime rates since 1929 here:

  http://research.stlouisfed.org/fred2/data/PRIME.txt

• 19 TJ_98370 // Sep 28, 2007 at 2:36 pm

  Actual situation - March 1989 in Kitsap County

  $90,000 home purchase minus $20,000 down for a $70,000, 30 yr mortgage at 11% interest. This resulted in a monthly PITI payment of a little over $800. This during a time/place where $13 per hr as a recent college grad was considered good money. As a single income household, it took six years to save the $20,000 down.

  Back then two people could actually live on $1,000 per month if you were really careful.

• 20 OCInvestor // Sep 28, 2007 at 2:49 pm

  66% renting…

  You bitter renters… LOL!!!!!

  Count me in… I am one bitter renter as well.

• 21 on topic // Sep 28, 2007 at 4:11 pm

  I think we’re mostly happy renters looking for defences against our workmates and families who are always trying to convince us we have to buy.

• 22 rukiddingme // Sep 28, 2007 at 5:02 pm

  Very happy 35 year old renter.

  I moved to WA from BC in 2000 to live the American Dream. I was immediately struck with the impression that everyone was rich in Seattle. Most people my age had a big boat, big tv,and a big truck. I started to chase this and soon realized that everyone was tapped to the nuts and living paycheck to paycheck. So in 2005 I sold my house and shifted my priorities. Now I spend 8% of my monthly gross on rent to a 30-something landlord stuck in a $500k neg-am ARM. Allows me to max my 401k + 20% of gross to cash savings. Now I travel to far away countries, buy toys when I want and have fun. At 50, I’m moving back to Canada to retire with my fat 401k, corporate pension and cash account with free healthcare.

  Meanwhile my 30 something landlord with the neg-am and big screen tv can barely afford his current mortgage payment let alone groceries and forget about retirement.

  Thank you America!

• 23 uptown // Sep 28, 2007 at 5:40 pm

  Just browsing through the rental listings on craigslist. Wow, there are some great places being listed and prices are pretty good. Starting to think it might be time to move on up.

  Of course Aubrey C. in the PI says “Seattle-area apartments are increasingly scarce and more expensive”. Maybe she should get out more often, reading those industry supplied reports can be hazardous to your health. seattlepi.nwsource.com/local/333464_apartment28.html

• 24 Alan // Sep 28, 2007 at 5:59 pm

  I think rental prices drop during the winter months. I’m seeing a lot of good deals too.

  http://seattle.craigslist.org/search/apa/est?query=&minAsk=min&maxAsk=1200&bedrooms=2

• 25 Monica // Sep 28, 2007 at 8:46 pm

  We bought our first house in Seattle in 1989 at a “good” interest rate of 10.1 percent. We had to pay points to get that. Our house payment was only $100/month more than renting the crummy 2 BR appt. we were in (so it made sense to buy).

• 26 Garth // Sep 29, 2007 at 10:27 am

  I lived in the same 2 bedroom 1200 sq ft apartment in Seattle for 7 years because it was $650 a month, but at some point I just didn’t want to share walls with anyone else anymore. That apartment afforded me a great deal of financial flexibility at some key times and made it possible to purchase a house on good terms, but I never wanted to rent forever.

  I just looked at an apartment I rented in 99 (2 BR at Hampton Greens in bellevue) for $850 a month that is now renting for $1400 a month. Hampton Greens, which is not a great facility, was leaps and bounds better than Colonial Square

  http://www.apartmentratings.com/rate/WA-Bellevue-Colonial-Square.html

  where I paid $650 a month for the worst 1 bedroom apartment ever that was about 110 degrees 5 months out of the year ever next to a guy with Tourette’s who would yell the best 3 of the seven words at anyone who knocked on my door. I had to move in there because the sweet mother-in law on Bellevue way I was renting was sold and I had 10 days to find a place. The only website where I could find a price showed Colonial square renting for $899.

  Nobody should buy a house until their finances and lifestyle are ready for it, but it I don’t totally understand the mentality here that renting is always better. Sure the numbers look good on the NY Times calculator when you enter your current cheap apartment and put rent increases at 4%, but I was never willing to rent a really nice place because I always figured at that point it would make more sense to pay my own mortgage instead of someone else’s. Eventually I wanted to live in a nice place and when that point came I could rent a place with one more bedroom than I could buy for the same monthly payment costs, so I bought.

  Also for income producing investment properties (not necessarily flippers) people I know want the rental income to pay close to the interest portion of the mortgage at the beginning of the loan and the whole mortgage and taxes after 5 years. Rents do go up over time too. (This works less well for condos because of the variable condo fees that increase over time)

• 27 old timer // Sep 29, 2007 at 12:09 pm

  @software engineer - you write:

  “most Seattle home owners want to believe in the tooth fairy and Santa Claus’

  WTF is that coming from?

  Since I paid my bank off over a decade ago, I could care less about home prices except as they affect tax assessment value.

  Yeah, stuff is expensive, and back in the 70’s everyone was "dog"in’ about how expensive the homes and loan rates were. Now, the same places are selling at over 10x the 70’s price.
  No one knows how much inflation will destroy today’s money. History shows that it can be relentless.

  Difference today is that labor has no place at the money table. Get too uppity and your job has gone overseas or to some illegal. Only folks assured of a place at the table are licensed electricians and plumbers, and maybe auto technicians. All the rest are fungible.

  I’m amazed at the rapidity of sales of 3 floor insta-slums for $300-$600K here in West Seattle.

  One day it’s an empty lot, then framing, then drapes go up in the windows and someone is cooking dinner in the place.

  Are these buyers crazy? Who knows?

  It’s a hard place to be. Watch for your opening wherever it may occur, and go for it.

  Life is a crap shoot at best, and no matter what your status, if you are living in the American Empire in 2007, you are living better than 95% of all who have gone before you.

• 28 Matt // Sep 29, 2007 at 2:40 pm

  Very interesting that so many are renters. I don’t believe all are bitter, but certainly some come across as being about as objective as real estate agents.

• 29 JohnnyBigSpenda // Sep 29, 2007 at 5:17 pm

  I like that people have stopped talking about realestate as an investment. Its a start. There are still lots of flippers and people who overbought/overpaid that will continue to sell as things become unaffordable… but, once they get shaken out, we’ll be back on track with a new found sense of reality. Prices will likely continue upwards (although more conservatively at first) as they always have overall. Then eventually, people will start to think that realestate is a good investment, and the cycle will repeat (as it has many times on a local level).

  In any case, there are few (if any) who can time the market effectively. Obviously, when there are 10 bidders on an 1100sqft shack in Ballard, you know you’re near the top of the cycle… I’d say the bottom is when everyone thinks they made a bad decision by buying or that it would be a horrible idea to buy ‘now’. This board definitely gives you a sense that this kind of sentiment is growing. (I’m sure the bostonbubble blog is filled with the next level of dispair since they are 18 months ahead of us). Are they close to the bottom? Who knows?

  As ‘oldtimer’ said, pick your spot and get in when it fits your situation.

• 30 50%off // Sep 30, 2007 at 2:45 pm

  I checked ‘Other’. Sold my condo (in SoCal….shhh) in 2005 at the very peak. Bought my dream sailing vessel and now live aboard in the San Juans fully paid for. I’m waiting for the day of reckoning to get something real nice out here in the islands at…. you guessed it…. 50% off. ( I take current asking prices, divide by two and there’s my offering price….when they’re ready, that is) (and they will be ready in a year or so, desperate even)

• 31 Peter // Oct 2, 2007 at 3:45 pm

  Of course the frustrating part of renting here is the landlords.

  In Australia most rental properties are managed by real estate agents, and when you have problems you call them and they fix it on your behalf. There is also a consumer protection service that enforce the rental code.

  Here, I am renting, and all the properties we’ve lived in have been managed by the landlords. When something goes wrong, it’s so painful to get it fixed. You need to wait for the landlord to respond, and nag the landlord to get it fixed.

  Our current house had working A/C when we moved in, and when it died the landlord was able to say he didn’t write it on the lease so it’s not getting fixed. The house has old plumbing, so we are getting rusted water in the main bathroom, he won’t fix it because it’s too expensive.

  Renting here is painful.

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