The Craigslist Housing Forum has settled down considerably since last year, and the prevailing sentiment seems to have shifted from “mercilessly mock anyone who thinks housing is overpriced” to “well dang, looks like the market is headed down after all.”
However, despite the increasingly obvious indicators that our local market will not be spared the turmoil seen in the rest of the country, there are still a few stubborn hold outs. Posts like this one from local Realtor Patrick Beringer (a.k.a. “SeattleHomes”) really brighten my day.
At this time I see buyers sitting back, waiting for wholesale price drops. This will only go on so long before they realize that the bottom of the market has been reached. But they will not know this until they watch prices start going back up, for the most stubborn of buyers it will take about 3 months of steady increases for them to realize that the bottom of the market has passed. Prices will start inching upward probably no later than the return of sunny weather early next year. After a few months of this, buyers will get the hint and return.
Keep hope alive, Patrick. Keep hope alive.
Update: Mr. Beringer responds! Check out his comments here and here.
notabull » Oct 9, 2007 at 9:45 am
Aha!
The “Spring Bounce” theory! You saw it here first. Over the cold, dark, and SLOW winter, we will see many articles that point towards Spring as the time when things will get back to “normal”.
BlogReader » Oct 9, 2007 at 10:04 am
This blog has predicted 10 of the last, er, none price reductions in Seattle.
Brian » Oct 9, 2007 at 10:23 am
The “Spring Bounce” theory was big in California the last couple years. My wife and I moved up here to realize the same kind of crazy existed up here with housing. We thought it was unfortunate that we jumped from one overpriced housing market to another, but what can you do? I just discovered this site. Thanks for the updates to all of you that post numbers on Seattle. It’s a relief to know I’m not the only person that thinks housing is a little out of whack with reality. You know something is wrong when you are looking to buy a house and see people are trying to sell a 2-year old home for $150,000 more than what they spent buying new construction. Anyone have any thoughts about the Issaquah Highlands?
nitsuj » Oct 9, 2007 at 10:59 am
The basic laws of economics do not apply to Seattle because, duhhhhh, it’s special!
Demersus » Oct 9, 2007 at 11:13 am
That guy is a goon.
old timer » Oct 9, 2007 at 11:18 am
“Prices will start inching upward probably no later than the return of sunny weather early next year. After a few months of this, buyers will get the hint and return.”
Who knows about timing?
But as to price action,
Isn’t that the way of all markets?
Trend reversal can only be seen when the trend reverses.
It may not be in time to suit any one person’s situation, but when a market turns, it’s usually when most have given up looking for the turn.
I’m personally O.K. with missing the first move off the bottom. I’d rather be sure it WAS a bottom.
Of course, I’m not talking ‘RealEstate” here, just markets in general.
Maybe RealEstate is ’special?’
Prices Will Go Down » Oct 9, 2007 at 11:29 am
Here are quotes from the Seattle Times article:
Let the buyer rejoice: Home sales, prices fall
http://seattletimes.nwsource.com/html/realestate/2003929200_homesales06.html?ref=patrick.net
WHAT A GREADY BASTARD!!!!!!!!!!!!
Alan » Oct 9, 2007 at 11:33 am
Quote1:I like the idea of saving up for a down payment and then buying only what you can afford. [...] Maybe people will stay in their houses longer and stop treating their home as merely an investment.
Quote2: If I had a ton of extra cash I’d be buying houses like crazy right now.
Q1 & Q2 |= <empty set>
Grvetti » Oct 9, 2007 at 11:49 am
Sunny weather?…
no dude, you mean Sunny lending… because that’s the only thing that’s going to turn around this market and those days are gone-baby-gone…
Seattle Man » Oct 9, 2007 at 12:00 pm
Do you have any information about how many commenters on this blog own? Versus rent?
on topic » Oct 9, 2007 at 12:01 pm
for investors, carrying costs are margin killers and six months of slow to no winter sales is an expensive thought
we should see heavy incentives and price reductions today to avoid getting stuck holding the bag. a 50k reduction today is better than a 50k reduction + 6 months carrying costs.
as for individual homeowners, their delusion is their problem. there is probably little to be done about them.
Alan » Oct 9, 2007 at 12:17 pm
Seattle Man,
Poll: What is your current housing status?
750 respondants
David McManus » Oct 9, 2007 at 12:45 pm
I own, but personally I WANT housing to come back to reality. I bought my current home (new construction) in 2003 for 300K, and the current value of it according to zillow.com is 430K. My neighbors just listed theirs for 490K. There’s another house down the street that has been on the market now for 120 days at 480K, what makes the other guy think he’s going to get more? I spoke with my neighbor (the guy who’s had it on the market for 120 days) and they have received NO offers. Just curious, but is everyone in Seattle rolling in cash or something, because I don’t know many people that have 100K laying around in their bank account for a down payment….at least people my age (30). For the record, I have a good paying job (six fig income), and I couldn’t even image purchasing a home right now. Since I’m not a greedy bastard, I wonder what would happen if I listed my house at ….360K? Do ya think that would piss off my neighbors or real estate agents more? I think that’s what I would have to do in order to move (if I had to).
David McManus » Oct 9, 2007 at 12:46 pm
Correction….
I don’t own. I rent from a bank.
Cringe » Oct 9, 2007 at 12:59 pm
“David McManus said,
on October 9th, 2007 at 12:46 pm
Correction….
I don’t own. I rent from a bank.”
Arbitrage for the win!
explorer » Oct 9, 2007 at 1:07 pm
You could also turn that psychology around and appear be equally rational:
Seller’s stubbornly refuse to acknoweldge that the easy money ARM’s and Alt-a’s, combined with the huge numbers of re-fi’s, have run their course and there is not nearly enough of those left who can come up with the cash, nor do they want to to overpay for something they know is not worth it.
They will rent at a loss until their paper equity is used up, then dump it or let it be forclosed. They will realize the TOP of the market was reached, and panic, dumping inventory on the market, creating a self-fulling race to the bottom.
Stubborness cuts both ways. It reminds me of the Tragedy of the Commons in reverse.
Mike » Oct 9, 2007 at 1:12 pm
Sounds like a good buying strategy to me.
Buceri » Oct 9, 2007 at 1:14 pm
“After a few months of this, buyers will get the hint and return.” But the easy money is gone, a…hole!!!! Who is lending $300K these days?? And things will not get any better in 6 months.
This month has the highest loan resets on record – $50 billion. Get ready for the foreclosure numbers coming out in November.
David McManus » Oct 9, 2007 at 2:04 pm
I got a kick out of this. The Radio Transmitter looks awesome!!!
http://seattle.craigslist.org/tac/bfs/443334028.html
Rob Jellinghaus » Oct 9, 2007 at 2:11 pm
Buceri, November is too soon. The resets this month will panic thousands of people, yes — but it will take at least three to six months of missed payments by those people before the foreclosure gears start grinding. So the real foreclosure numbers to watch will be in Q1 next year. Just before much-anticipated springtime….
softwarengineer » Oct 9, 2007 at 2:23 pm
I RENTED FROM 1978-1990 FOR THE SAME REASON AS EDUCATED/INTELLIGENT PEOPLE RENT TODAY
My income was professional and substantial, so what?
They wanted almost all of it to buy a house.
Most intelligent folks that didn’t inherit a fortune they could splurge on Seattle real estate, rent.
What is the average IQ of a subprime mortgage holder?
on topic » Oct 9, 2007 at 2:25 pm
people will max out their credit cards instead of missing too many payments and banks will give people as much leeway as possible to prevent foreclosing on properties worth significantly less than the loans. it is in the bank’s interest to delay things for as long as possible if they think there will be a rescue effort by the gov’t on behalf of the taxpayers.
so, even Q1 may be early for the crash we are heading towards. drops by then, of course, but no crashes.
biliruben » Oct 9, 2007 at 2:48 pm
Already happening.
Credit Card debt rises 8.1% in August.
the clizz » Oct 9, 2007 at 3:18 pm
The fallout from mortgage resets won’t hit until mid spring or next summer…the linked article shows a graph that depicts resets hitting an all time high of $110 billion next march.
http://www.tradingmarkets.com/.site/stocks/commentary/gkitermi/-68323.cfm
Patrick Beringer » Oct 9, 2007 at 3:23 pm
Someone wrote in response to one of my comments where I said “After a few months of this, buyers will get the hint and return.” This person wrote “But the easy money is gone, a…hole!!!! Who is lending $300K these days??” My reply is “huh?” It is very easy to get a mortgage right now, you need a downpayment, decent credit and the ability to afford what you’re buying. Pretty simple. Why are you people freaking out?
on topic » Oct 9, 2007 at 3:37 pm
is the rise in credit card debt associated with a rise in consumer goods sales or a decline in incomes?
if not, then the cards are being maxed to pay the mortgage.
credit cards maxed out to pay the mortgage make for a sad Christmas.
losing “your” house afterwards is just salt in the wounds.
people are gonna be mad and want to blame someone.
Patrick Beringer » Oct 9, 2007 at 3:47 pm
Actually, let me expand on my earlier post:
Regarding the changes in the mortgage market, someone said to me:
“But the easy money is gone, a…hole!!!! Who is lending $300K these days??”
I don’t know where to start with that one, but there are plenty of mortgages out there. You need a downpayment, decent credit and be able to afford the loan. Simplicity itself. If you need a subprime loan to buy a house, then maybe you should not be buying a house? Maybe by “easy money” he meant “I have no business owning a home because I have horrible credit and live paycheck to paycheck, barely pay my bills and I’m mad because I can’t get a fake mortgage!!!” You have to be realistic about your limitations. We can’t all be Bill Gates. What we can do is live to the best of our ability and make smart financial decisions.
Here’s some ideas:
1. Don’t use your car so much.
2. Rent movies instead of going to the theatre.
3. At the grocery store, look at the endcaps, as the best deals are usually there.
4. If you can’t qualify for a conventional mortgage, keep renting and save up some money.
I love selling houses, but I don’t want to sell you a house that will force you to eat top ramen every day. I’ve been there. It’s not fun. I remember my first winter in my first house–I spent my last $300 to fill up my oil tank when all my renter friends went to Whistler.
I think that a lot of these bubbleheads wouldn’t be bubbleheads if they could afford to buy a house. I’m not poking fun, I’m just saying that there are a lot of politicians who started out as honest, idealistic young people. It’s funny how your perspective changes along with what’s going on in your life.
biliruben » Oct 9, 2007 at 3:48 pm
Probably related to serial refi addicts getting their fix smoking the resin instead of the bud.
It’s going to give them a nasty headache, but it’s hard to quit cold-turkey.
biliruben » Oct 9, 2007 at 4:10 pm
Patrick – I don’t think anyone is saying that all housing transactions will suddenly cease.
I would guess there will still be about half to a third of the buyers still in the market, once the speculators and those not able to afford a house are weeded out.
Also, you seem to under the delusion that all “bubbleheads” are renters. About a quarter on this site own.
Olaf » Oct 9, 2007 at 4:16 pm
Responding to Beringer:
You said, “I think that a lot of these bubbleheads wouldn’t be bubbleheads if they could afford to buy a house.”
…That’s exactly where you have it backwards. We’re the ones who are careful with our money. Personally, I’ve been saving up for the past ten years, and I could easily have put down 20 to 40 percent on any house I want in Seattle. We — the financially cautious ones, who don’t feel like blowing our savings on real estate agent hot air — are the ones holding out. The people who bought in are the ones who got the liar loans and are now eating ramen. THAT’s why this mortgage meltdown is happening — you lured the wrong customers.
And by the way, end caps are the the absolute WORST place to find bargains in the supermarket. As anybody who’s worked in a store will tell you, that’s where they put the overpriced impulse buys.
But that’s pretty typical buying advice from a real estate agent, anyway: If something’s flashy and in your face, BUY it!!!!! You’ll never have the chance again! Whether we’re talking big bags of licorice-flavored Doritos or a flip job with Brazilian Cherry Wood floors in Green Lake, the same principle applies.
biliruben » Oct 9, 2007 at 4:16 pm
…and another large handful used to own, but decided to cash-out at the top (or thereabouts).
zer0man » Oct 9, 2007 at 4:46 pm
“It is very easy to get a mortgage right now, you need a downpayment, decent credit and the ability to afford what you’re buying. Pretty simple. Why are you people freaking out?”
Let’s see:
1. down payment — how many people have at least $100K lying around in in order to get 20% down payment on an average property in King County?
2. ability to afford — it seems to me that to be able to afford a half a million dollar home you need to be earning a lot more then 60-70K a year, even if you do have enough cash for a downpayment. Considering that out Eastside, where I would like to buy a decent house costs more then $600K, I have no idea how can anyone afford it.
I will continue renting for a little while, and save up for a down payment, and when I feel I have enough I will take a look at house prices. If they are still unfordable (i.e. over half a million for a starter home), I will not buy.
b » Oct 9, 2007 at 4:46 pm
Beringer -
Without easy money, real estate will not be absorbed at the level it was in the last 2-3 years. With more and more inventory, and less qualified buyers, why do you think prices would continue to increase? The only explanation is wishful thinking, which when added to $5 will buy you a latte.
j » Oct 9, 2007 at 4:51 pm
Patrick,
What your argument is failing to recognize is the overall effect on demand because of tightening credit. All realtors are of course saying “yes, if you have 20% DP, good credit, and income, of course you can get a mortgage”.
However, let’s look at where all of this demand came from in the beginning that caused the price explosion. An increase in demand fueled by borrowers that shouldn’t have been homeowners that wouldn’t qualify right now. Those potential buyers are now gone, at least a third of the previous demand amount (based on whichever source you’d like to pull from, still fishy right now). Basic economics says, if demand is shifted down, what happens with prices, they drop. And we’re talking a big shift down.
Of course people can still get a loan, but when you have 50% more homes available, and 30% less potential buyers, well, something has to give. There just aren’t enough buyers available.
And yes, I own (rent from bank). Should I cash out near the top? Looking like it as the bottom has a long ways to go. My neighbors won’t like me though :(
Gear » Oct 9, 2007 at 5:21 pm
I have just relocated here and am renting. I have 100k in the bank and make 130k a year and have less than 9k in debt. I would like to buy in the Snoqualmie or North Bend. I have been watching the market in that area for almost nine months. There are a lot of homes for sale that have been on the market for a long time. There have been price reductions but nothing spectacular yet. One interesting thing that happened over the weekend is that I talked to a realtor representing Murray Franklyn and he said the builder was offering to pay 7% of the purchase price back to the buyer if the purchase closed before the end of the year. In the same breath the guy said that the prices of new homes was stable and there was no way they were going down. I am thinking that the time to buy will be in the spring. What do you guys think?
biliruben » Oct 9, 2007 at 5:28 pm
2010.
Alan » Oct 9, 2007 at 5:29 pm
I thinking that when that builder starts offering 15% back, the people who received 7% back won’t be able to tell that the price is dropping.
Old Ballard » Oct 9, 2007 at 5:29 pm
Off topic,
So the question for me is how far do prices have to fall before something is worth buying? I know it’s kind of a stupid question. It’s just that with my income there pretty much needs to be a half off sale city wide for me to qualify for anything other than a tent. So if you guys could check out this listing and tell me what it’s REALLY worth? (Please don’t tell me, “its worth what the market will bear” I’ve kind of heard that one before.)
http://seattlelistings.com/index.cfm?fuseaction=detail&startrow=97&CFID=1093725&CFTOKEN=24896565
This condo is interesting to me because I live in an apartment identical to it. I’ve been told that back in 1961 they build a lot of them in Ballard for the Worlds Fair hoping that people would come to Seattle and stay. I’m paying 1035 a month rent. What’s it really worth?
Old Ballard » Oct 9, 2007 at 5:38 pm
Sorry folks,
For reasons I don’t understand the above link sends you to Canal Stations. (Scary place from Hell.) Anyway the address for the condo I was talking about is 1751 NW 58th St Seattle, WA 98107. Maybe you can get there on the same web site. Seemed like a good talking point anyway.
The Tim » Oct 9, 2007 at 5:44 pm
There’s 3 condos for sale at that address:
MLS# 27143364 – $380k
MLS# 27143394 – $370k
MLS# 27138761 – $360k
Old Ballard » Oct 9, 2007 at 5:50 pm
Ya,
Look through the side show. Dig the furnture. It’s a wonder that they sold two of them. My cats would shred that stuff in a week.
J.D » Oct 9, 2007 at 6:01 pm
You would think from reading this board that everyone in the Seattle area is making a six figure salary. Is there something I don’t know about?
topdog » Oct 9, 2007 at 6:09 pm
Gear,
I am in the same boat (sufficient money to buy, want to move to Snoqualmie) and I’ve been following that market for a while. Snoqualmie Ridge still has a TON of space let to build in, and one of the sales reps up there told me that it will be done building out around 2010. So long as existing homes are competing with new construction, there are going to be deals out there (the prices are just starting to fall). My prediction (take it for what it’s worth) is that prices out there will fall at least 20% and bottom out in late late 2009/ early 2010. I am holding out till then. There’s just no way that that area can support current prices (ESPECIALLY those Murray Franklin homes).
Claire » Oct 9, 2007 at 6:15 pm
Well for all the interesting opinions here about the local real estate market some of us still will be buying a house because we need a home to live in we can call our own with no plans for selling for several years. So pricing maybe important but not critical to everyone.
melonleftcoast » Oct 9, 2007 at 6:21 pm
Gear,
“I am thinking that the time to buy will be in the spring. What do you guys think?”
Here’s my best guess (based on Boston fall 2005/spring 2006):
Not the spring, but summer and fall 2008 MAYBE. At the earliest. What I would expect to happen is that come December, we’ll see a huge drop in inventory as people who don’t “have to sell” take their homes off the market.
Then a huge surge of “new listings” will come on the market in March/April. Some of these homeowners will have painted and spruced up their place a bit, and will actually increase their price from what it was last listed for in December. These properties will sit and sit, and around June/July, there will be decent price reductions as sellers realize they are going to be stuck with their house another year if it doesn’t sell then.
Also, I have read that typically spring is a good time to sell (price wise) and a bad time to buy (price wise). But I would imagine it really depends on where and what you are buying.
Goldeneye » Oct 9, 2007 at 6:25 pm
Patrick,
Even I have enough money to easily make a 20-40% downpayment on a decent home in Seattle. But just because I have the money, does not mean I blow it up on insanely priced houses just because every realtor thinks its always the best time to buy or sell. You realtors are, in my opinion, what the DotCom stock agents were of the yester-years. The only thing you guys care is that 6% commission. I really feel ticked off when every realtor I meet is mouthing “Seattle cannot go down”, when in the hearts of their hearts they all know that it is wishful thinking, fuelled by blatant lies/half-truths propagated by the real estate industry. How I wish that realtors were socially responsible! Do you guys realize that your incessant chants of “prices can only go up” can mess up somebody’s entire life? I have friends who bought in the 2006 frenzy because their “friendly” realtor told them that they would priced out forever – these were people who could not have afforded the house but just got one on ARMs hoping that in future things will turn out right. Many of my friends started off with a budget when buying a house but their buying agents convinced them to go way over their budget. The buying agent must surely be smiling with all the pool of cash she collected by fooling nervous buyers, but the people who bought may regret the decision for the rest of their lives.
In 2005, the national RE cheerleader David Lereah was convincing everyone that house prices have never gone nationally down and so there was no need to panic. Now that prices have gone down nationally, you have realtors saying that RE is local and areas like Seattle can never go down. In early 2006, the CEO of (I think) Coldwell Bankers claimed that prices in Seattle would rise 40% in the coming years and would probably double by 2010. Such irresponsible statements, just to make your commissions. Tch Tch!! I feel really sorry for folks who have to fool people to make their living. I don’t know how such people sleep at night – I mean, imagine if something of this sort happened to you i.e. imagine you were an anxious buyer, making the biggest financial decision of your life and you got conned by a realtor into buying an overpriced bulk of crap that you will have to live with for a long time to come. How would you feel???
Alan » Oct 9, 2007 at 6:31 pm
Old Ballard,
I think rents probably give a more accurate estimate of the value of a home. What is the guideline I’ve seen here before? 200x the rent is the price of the house. I would estimate, just from your rent, that those places should be priced around $200k. Maybe $220k.
I wouldn’t pay that for 673 sqft but then other people may value that location more than I do.
MacAttack » Oct 9, 2007 at 6:43 pm
Over at the Portland housing blog, read the FRONT PAGE of the Oregonian (Portland’s major paper). Gist: Condos dead. Can Seattle be far behind?
MacAttack » Oct 9, 2007 at 6:44 pm
“I think rents probably give a more accurate estimate of the value of a home. What is the guideline I’ve seen here before? 200x the rent is the price of the house. I would estimate, just from your rent, that those places should be priced around $200k. Maybe $220k.”
Actually no, the standard measure is 100-120x monthly rent.
Brian » Oct 9, 2007 at 6:55 pm
Patrick,
I agree with some of the others. My wife and I have plenty of money for a down payment on our dream home and would still have plenty of cash left over for a security blanket, but why buy right now? I still have an inherent issue with giving anyone a 6 figure check even if it is a house I know we could live in for the next 15 years. Fortunately, we are still young (30), well paid, and well educated. Anyone have any feelings about the Issaquah Highlands?
Old Ballard » Oct 9, 2007 at 7:11 pm
“I think rents probably give a more accurate estimate of the value of a home. What is the guideline I’ve seen here before? 200x the rent is the price of the house. I would estimate, just from your rent, that those places should be priced around $200k. Maybe $220k.”
“Actually no, the standard measure is 100-120x monthly rent.”
So where do you guys get this “standard measure” from and why shouldn’t we expect price to fall in line with that measure?
nitsuj » Oct 9, 2007 at 7:20 pm
“If you need a subprime loan to buy a house, then maybe you should not be buying a house? ”
Yup, and if you need to be told that subprime loans drove the real estate frenzy of the past few years then maybe you should not be a a real estate professional?
“I think that a lot of these bubbleheads wouldn’t be bubbleheads if they could afford to buy a house. ”
I’m with many of the others here. Have the ability to put the down payment and swing the mortgage, but when I can live in a comparable place for 1/3 to 1/4 the monthly cash flow hit and put the rest into a diversified, liquid investment portfolio why would I?
Question for you, Patrick. Do you view a home as an investment device or a dwelling?
biliruben » Oct 9, 2007 at 8:25 pm
OB – I think it will be going for 180K, adjusted for inflation, by 2012. Wild ass guess.
AndyMiami » Oct 9, 2007 at 8:27 pm
#
Patrick Beringer said,
on October 9th, 2007 at 3:23 pm
Someone wrote in response to one of my comments where I said “After a few months of this, buyers will get the hint and return.” This person wrote “But the easy money is gone, a…hole!!!! Who is lending $300K these days??” My reply is “huh?” It is very easy to get a mortgage right now, you need a down payment, decent credit and the ability to afford what you’re buying. Pretty simple. Why are you people freaking out?
Patrick, you better start thinking of a new career. How many people in this country over the last four years, including Seattle, have had to put a 20% down payment, have a 800 credit score and have fundamentally sound income to debt ratios? Very few indeed. In the new credit environment (or the pre-1995 case), many potential buyers will be what you say they should be, renters. What will that do to the market and just for fun, throw in the foreclosures, the large inventories, the out of line income to debt ratios, and I would buy tomorrow…call me for coffee, but bring a good stiff drink and we can commiserate on the wonderful normal market, ready to correct, implode over the next five years…oh yes, throw in a recession…
Mama » Oct 9, 2007 at 8:29 pm
There is another thing too — mortgage rates on 30yr FRMs are fairly high now…going up from what I’m reading. I also have a good income but honestly, I’d barely be able to afford the monthly payment (I’m pretty set on living in a rural or urban environment, hate the developments). So I’m thinking if we “need” to buy I’d just up and move to a market where I can buy for half the price — Boston/Chicago/Philly — the condo markets are looking a lot more attractive there. Heck, I can afford a
20% paycut and still end up with more take home pay.
Ira Sacharoff » Oct 9, 2007 at 8:52 pm
Goldeneye,
I’m a Real Estate agent and I don’t think that now is a good time to buy. It felt kind of insulting to be in the “you realtors” group. We’re not all of one mind. Yeah, many real estate agents have helped perpetuate a bad stereotype, so some of em deserve it.
But, just to clarify: The 6% is for the total transaction, usually divided between two brokerages, then divided again so the agent typically gets 1 1/2 percent.
…And, not all agents/brokers charge 3% per side, some, including me charge less.
I’m suggesting to people that if they can wait to buy, they should do so. Does that sound like I’m a money grubbing realtor out for my 6 % commission?
Yeah, there is strategy involved. I want people to know that I’m straightforward and honest, and even if I earn their business 3 or 4 years own the road , when prices are lower,(and commission at a discount) it’s worth it to me because I’m never going to adopt sleaze tactics and wouldn’t even know how to.
I wonder how many used car salesman are sensitive to insults?
Claire » Oct 9, 2007 at 8:53 pm
To Mama: Geez, mortgage rate sare “fairly high now?”
LOL….wow, about 1 point from the all-time low. If you bought a house like I did back in 1985 you would have had a 30 year mortgage rate over 15%….thats right…..
I dont buy the “rates are high” thing at all.
stephen » Oct 9, 2007 at 9:06 pm
You would think from reading this board that everyone in the Seattle area is making a six figure salary. Is there something I don’t know about?
Welcome to the net, where we can all be well paid, educated professionals just by saying so :-)
I really am by the way…
Chris » Oct 9, 2007 at 9:07 pm
I’d just like to concur with Olaf and some of the others above. I could easily afford a 30%+ down payment on a SFH in Bellevue, but I feel purchasing in the current environment would be a poor financial choice.
As Olaf implied, its people like us who have a lot to lose by purchasing at the top. If the house price drops 15%, I take the loss (50% of a 30% down payment). If a no-money-down type is in the same situation, the bank takes the loss.
Another reason I don’t own is that I don’t have any need for a house currently. I am a ‘bubblehead’ because I am the kind of person who reads financial books – particularly those with a frugal, no-nonsense bent – for fun. I enjoy watching the bubble unfold in the same way that most people enjoy watching sports. It will be interesting to see what happens!
Alan » Oct 9, 2007 at 9:32 pm
I was way off with the 200x guess. At 100x-120x that condo would should sell for $100k-120k which is much closer to what I would pay for it.
I think that figure can be calculated by pretending the property is an investment and calculating the rate of return. Higher than that and you are probably better off putting your money in the stock market. The huge annual appreciation and easy credit has changed that factor in recent years. I don’t think that trend will continue.
You could also calculate that multiplier by looking at how much you have to pay for housing and how much you can invest in another place like the stock market.
John » Oct 9, 2007 at 9:39 pm
If city home prices go back to 100-120 times rent, it will be the second coming of Great Depression.
Steve-o » Oct 9, 2007 at 9:48 pm
Old Ballard asked where the standard of 120 x monthly rent or 200 x monthly rent comes from:
If a low risk bond or CD is paying 5% and you wanted a higher return, then you might want to invest in rental property. Given the higher risk, you would expect to earn at least 6% on your investment and hopefully higher. The math is this: 6% return = 200xmonthly rent, 10% return = 120xmonthly rent.
Back in the early 90s, the prime was much higher than it is today, and bonds were paying out 8 – 10% and rental property was priced around 120xmonthly. Since bonds are paying out around 5%, rental property is priced around 200x right now. However, single family homes are not being priced per the rental formula and are way beyond the 200x you would expect, even accounting for any premiums that might apply. Definately a house bought at today’s high prices cannot be rented for anything near the 200x formula you would expect to just break even.
These things go in cycles and we will see 120x in a few years. I don’t think there will be a huge prolonged drop, but instead there will be a 10% drop over the next two years and then stagnation city for 8 years with inflation eat away. So in real dollars (inflation adjusted), I think prices will be down about 60% in ten years. My humble opinion.
By the way, I own a house (well, I rent from a bank but I could easily pay off whats left of the mortgage) and have lived in it for 13 years. I plan to sell and buy a more expensive one in two years. I plan to live in it for at least 15 years. If I was in my 20s, there’s no way in hell I’d be buying a house right now, and I feel sorry for people that bought on top.
disbelief » Oct 9, 2007 at 9:48 pm
$370K for that condo! I would expect it to be in a posh down-town skyscraper for that amount. Maybe towards the top, with a nice view.
I think given a few years, the 220-230 figure is right on the nose (that’s even factoring in Seattle’s “specialness”.
I couldn’t imagine anyone feeling ok about shelling out the requisite (nearly) 2500 clams per month when all is said and done. How much money would you have to make to be Ok with that!?
Btw, they sure put a lot more money into the kitchen than into the other areas of that place. Seems kind of odd to me.
Steve-o » Oct 9, 2007 at 9:53 pm
In my earlier post I said “I think prices will be down about 60% in ten years”. What I meant to say was ” I think prices will be down TO 60% OF WHAT THEY ARE NOW in ten years”. ( ie: I think prices will drop about 40%).
disbelief » Oct 9, 2007 at 10:00 pm
No used car salesmen are sensitive to insults- even, or perhaps especially, when the insult concerns their mothers.
Jackson Wallace » Oct 10, 2007 at 1:15 am
Seattle is overblown. The weather has really sucked this year, although some of the culture is decent, and it feels safer than lots of big US cities, whether it actually is or not. If people want to live in the burbs they can, but the traffic has reached a point that friends from NYC ask me how I deal with it. Its only going to get worse from here. There is no way I’m crossing the lake, or living in snoho or some farflung county. Central Sea is expensive for a reason, and that will be the place to buy if this turns around. Seattle is one of those places that’s been spoiled, to much too many people. What made it valuable is rapidly disappearing. Rent and leave at will.
Goldeneye » Oct 10, 2007 at 1:32 am
“Claire said,
To Mama: Geez, mortgage rate sare “fairly high now?”
LOL….wow, about 1 point from the all-time low. If you bought a house like I did back in 1985 you would have had a 30 year mortgage rate over 15%….thats right…..
I dont buy the “rates are high” thing at all.”
Clara, what was the inflation rate in 1985? if inflation is 10% and you get a 12% mortgage, the mortgage rate is NOT high. In real terms the mortgage is actually 2%. If inflation is 2% and the rates are 6%, then the rates ARE high. In real terms, you are paying at a rate of 4%. As per the govt, inflation right now is 2-3% (I feel that inflation is way higher, but what do I know :).
Goldeneye » Oct 10, 2007 at 3:14 am
Hi Ira,
Sorry for the outburst. I agree not all realtors are the same. But unfortunately most of them think alike and the good ones are few and far in between. In the last several years that I have been dealing with them, I found only a handful of honest agents. There are many seller’s agents who won’t bat an eyelid before becoming a dual agent and betraying the seller. And till now I have not heard of any buyer agent who is willing to negotiate well for the buyer. Most buyer agents try to convince the buyers to pay more when their job is to make the buyer pay as little as possible. I had a buyer’s agent who I thought was a friend and whom I had strictly instructed to find me a house only within my budget. She repeatedly used to send me emails of houses about 80-90K more than my budget and asked me several times to go 100K more than my limit. Her reasoning was paying more did not matter since prices can only go up and I would be building equity that way. I of course fired her after a couple of weeks. And don’t even get me started on the lenders. In 2005 a lender was willing to lend me $700K even though I am the only earning member in my family and my salary was slightly above Seattle’s median. I told him that I could not afford that kind of house, but he assured me that I could (by paying more than 60% of my salary towards my mortgage). He said it was okay and many people were doing it.
I strongly feel that most of the people working in the real estate industry are a bunch of liars with little or no backbone, and have no sense of responsibility towards other people. And the biggest reason I believe is because of the inherent conflict of interest between a buyer and the real estate agents. After all, a buyer’s and seller’s agent gets more if the buyer pays more. Likewise, the lenders make money if people buy their mortgages and they make more money if they are able to fool the buyer into getting the *worst* mortgage possible.
I have no doubt that RE websites like Redfin will one day replace the buyer/seller agents since a software won’t try to bluff you to shell out more. Had it been buying a HDTV or a car which is a small investment, it would be ok, since a mistake made by the buyer would not cost him and in time he can recover from his losses. But here we are talking about perhaps the biggest investment that most people will make in their lifetime. And it pains me that the people with whom you have to work with such a huge amount of money are so irresponsible and unscruplous.
Buceri » Oct 10, 2007 at 4:18 am
Top dog; Greg:
Stay on the sidelines and keep studying the market as you are doing now. Soon enough builders will be putting their pants down; paying your closing costs, throwing in a showroom kitchen, wood floors and finish the room on top of the garage; or you walk out.
But it could be 1 to 2 years. Everyone wants to sell at peak prices and it takes a while before they realize the party is over.
Keep on saving, the cash will help you counter an eventual interest rate increase (which in turn – will slow the market even more).
Monopoly$ » Oct 10, 2007 at 5:42 am
Patrick,
“You have to be realistic about your limitations. We can’t all be Bill Gates. What we can do is live to the best of our ability and make smart financial decisions.”
“for the most stubborn of buyers it will take about 3 months of steady increases for them to realize that the bottom of the market has passed. …After a few months of this, buyers will get the hint and return.”
Do you see the contradiction? I’m not stubborn, I know my limitations. I get the hint, I’m not Bill Gates.
If being a homeowner who had a life change (kids) and is waiting ’til I can afford (by my own definition, not yours or lenders’) to ‘move up’ makes me a bubble head then so be it. If people like me make you angry (using words like ’stubborn’ and ‘get the hint’) then so be it.
One thing is for sure, you will not be my agent.
Kime » Oct 10, 2007 at 7:49 am
“Do you have any information about how many commenters on this blog own? Versus rent?”
We bought our home this year in March at a price that I believe will turn out to be thought of a crazy in a couple of years. We do not think of it in any way as a financial investment, we expect the value to go down maybe as much as 50%, but we paid cash and plan to live here for the rest of our lives. We want the values to go down because then maybe the taxes will go down somewhat eventually, and it will encourage people to stop living on borrowed money and stop, at least for a while, the inflating of the money supply.
Kime » Oct 10, 2007 at 8:06 am
“I am thinking that the time to buy will be in the spring. What do you guys think?”
Princes have started dropping here, although it doesn’t show up in the median prices. Think of the 7% cash back. My husband is in construction and he says that builders are having a hard time moving their homes and the electrical supply houses are saying business is dropping. We have friends who tried to sell a home and couldn’t, at the price they were asking. If home prices were really still rising I believe it would have sold.
But this is just the beginning. It takes years for real estate markets to bottom. 4 years for the last one in California. There is no way we will see a bottom next year. I estimate the true top of our market was last summer or fall. If you think of your home as a financial investment you should wait until at least July, 2009 before buying, but if you wait until next summer I believe you will be able to see that the markets that started the decline before us, such as San Diego, are still declining and that will make it clear that we will still have a ways to go.
Kime » Oct 10, 2007 at 8:06 am
I should mention that we live in Snohomish county.
Kime » Oct 10, 2007 at 8:15 am
“As per the govt, inflation right now is 2-3% (I feel that inflation is way higher, but what do I know :)”
Anyone who buys things knows inflation has been way over what the government says it is. The interest rates are lower than inflation, in my opinion. This is why the savings rate is negative.
Ira Sacharoff » Oct 10, 2007 at 9:01 am
Goldeneye is right about the RE industry in general. At every level (agents, lenders, appraisers, etc) there are charlatans and hucksters, and as a result a Redfin will prosper. However, I’ve had some dealings with Redfin, several different agents, in fact. And none of them were any good at returning phone calls. They supposedly had allegiance to the seller, and a traditional agent , motivated by that commission, would have returned phone calls and emails to try to make the deal. And it seems to me that there is a “defacto” boycott of Redfin listed properties. It’s nothing official, but it seems to me that if you are represented by a traditional buyers agent, they will try to steer you clear of Redfin listed properties.
Me, I’m happy to deal with any agent representing anybody, and at the same time not trusting them, Redfin or not.
Ira Sacharoff » Oct 10, 2007 at 9:03 am
Re: Kime’s comment about the savings rate:
Yes, inflation might be higher than officially reported, but I think the real reason that the savings rate is so low is that Americans spend way too much money on stupid "chocolate" that they don’t need.
BubbleBuyer » Oct 10, 2007 at 9:04 am
I’m late to the party but don’t have a problem with Patrick’s premise that it is extremely difficult to time the market. Just take a look at the history of this blog in terms of timing the peak. Emprical evidence and research has established that market timing is not a reliable way to generate a return. I would bet that 90%+ of the BHs posting here will still be posting and renting when the market has corrected and is heading up again.
The right time to buy as home is when you are ready both financially and in your personal life. Having said that, I would not buy a house now unless I was able to negotiate an extremely healthy reduction against asking price and comparables. At minimum I would wait for winter to find a seller absolutely needing to sell or late summer 09 before doing some low balling.
I negotiated a 7% reduction off the price of the home which I purchased 6 months ago. At the time my realtor was surprised given where the market was. I felt good then but am not so sure now. Even so, I am extremely happy I own even given the uncertainty in the market., This is coming from someone that rented for close to 18 years.
uptown » Oct 10, 2007 at 9:10 am
The time to buy…is when people stop asking that question (I’m not kidding either).
ken » Oct 10, 2007 at 9:32 am
Looks like jobs at boeing will be around for at least 6 extra months.
Brian » Oct 10, 2007 at 9:38 am
Agreed, the savings rate is negative or around 0% because Amercians like to buy “stupid "chocolate"” and live above their means. Agreed, no matter what happens in the market, some people will always remain on the sidelines.
I think after all is said and done with this market there will be a lot of people that finally realize a home isn’t supposed to be an investment – it’s supposed to be the place you live, sleep, and raise a family. There will also be a lot of people that will be working until they die as well.
Rob Jellinghaus » Oct 10, 2007 at 9:44 am
the clizz, thanks a LOT for that tradingmarkets.com Gary Kaltbaum link. I had NO IDEA that mortgage resets in the first half of 2008 will total MORE than in ALL OF 2007 COMBINED. True story — add up his numbers on
http://www.tradingmarkets.com/.site/stocks/commentary/gkitermi/-68323.cfm
2007 mortgage resets, Jan – Dec: $515 billion.
2008 mortgage resets, Jan – Jun: $521 BILLION.
After that it tapers off seriously for the rest of 2008, but we all know that it takes three to six months for the reset to hit the fan. So yeah, end of 2008 is the absolute earliest bottom for the national market.
TJ_98370 » Oct 10, 2007 at 9:48 am
“….Americans spend way too much money on stupid "chocolate" that they don’t need.”
I am shocked, absolutely shocked, that anyone would say such a thing. I absolutely need my three wireless telephones, two cell phones, four television sets, home theater system, PC, laptop, two micro-wave ovens, three portable stereo systems, two lawn mowers, four weed-eaters, one pick-up, two SUV’s, and a garage full of extra furniture.
Ira Sacharoff » Oct 10, 2007 at 9:53 am
….and you absolutely must have that 3500 sq ft faux chateau , and you must buy it right now because prices are still going up up up! Step right up! Everyone’s a winner!
TJ_98370 » Oct 10, 2007 at 9:58 am
I too am one of those who are sitting on the sidelines awaiting sane house pricing.
New worry – where to save your money in the meantime? A lot of reputable people are predicting a severe devaluing of the dollar.
nitsuj » Oct 10, 2007 at 10:02 am
Tacoma as special as Seattle?
http://www.usatoday.com/money/economy/housing/closetohome/2007-10-08-tacoma-close-to-home_N.htm
Brian » Oct 10, 2007 at 10:13 am
TJ – If you want safe, stick with savings or bonds. If you want to protect against a falling dollar, put your money into the Euro. If you want some further risk, go with mutual funds that focus on blue chip companies with international exposure. IF you want tons of growth, put your money into Eastern Europe funds.
Buceri » Oct 10, 2007 at 10:44 am
Hot market – “Buy or you will be priced out forever. This is the best time to buy.”
Level market – “Buy now, inventory is huge and everyone is competing with the house next door. This is the best time to buy.”
Declining market – “Prices won’t go any lower. It’s now, or you’ll pay more. This is the best time to buy.”
For Realtors ALWAYS is “the best time to buy”, otherwise they make less than a used car salesman. What commission based person will tell you “this is not the right time to buy; I won’t be able to pay my mortgage if I don’t get your business; but I can sleep under the park bench.”
nitsuj » Oct 10, 2007 at 10:48 am
“And it seems to me that there is a “defacto” boycott of Redfin listed properties. It’s nothing official, but it seems to me that if you are represented by a traditional buyers agent, they will try to steer you clear of Redfin listed properties.”
Same with FSBO. Basically the RE agents are trying to cling to their last bit of power, which homes to show buyers.
Joel » Oct 10, 2007 at 10:48 am
TJ,
What, no iPod? Who doesn’t need a $300 music player that can hold 7 trillion songs?
Buceri » Oct 10, 2007 at 10:54 am
Realtors are on the way out.
When was the last time you used a travel agency???
nitsuj » Oct 10, 2007 at 10:56 am
“When was the last time you used a travel agency???”
*mind blows up at the thought that people used to use travel agents*
TJ_98370 » Oct 10, 2007 at 11:35 am
What commission based person will tell you “this is not the right time to buy;……
Answer – None. Self interest being part of human nature will ensure that sales people paid on commission will always push sales, irregardless of circumstances.
jon » Oct 10, 2007 at 12:06 pm
“the clizz, thanks a LOT for that tradingmarkets.com Gary Kaltbaum link. I had NO IDEA that mortgage resets in the first half of 2008 will total MORE than in ALL OF 2007 COMBINED.”
Where did he get those numbers? New York Times has a different picture:
http://www.nytimes.com/2007/08/01/business/01leonhardt.html?partner=rssnyt&emc=rss
That chart says we are at the peak now and it goes down from here (the caption is a few months old).
Ira Sacharoff » Oct 10, 2007 at 12:11 pm
Please note: I am a commission based real estate agent and I am telling the world ” THIS IS NOT THE RIGHT TIME TO BUY!”
What am I, chopped liver?
So don’t say “none”., cause it’s not true. Maybe one, but not none.
If you absolutely insist that you want to buy a house now, I’m not going to refer you to another agent, and I’ll work my hardest to get the lowest price for you, but…prices are coming down, and there’s no sign of them coming back up anytime soon.
But my question is: If it’s not a good time to buy, is it a good time to sell? The answer I think is maybe. Prices are still high, so if you can sell, yes. But there are more listings on the market, and they are taking longer to sell.
helium3 » Oct 10, 2007 at 12:30 pm
There’s 3 condos for sale at that address:
MLS# 27143364 – $380k
MLS# 27143394 – $370k
MLS# 27138761 – $360k
Zoinks!! I used to walk past that building all the time in 2001 and I always thought “man what a s—hole”. Now it’s been converted to condos and they’re selling for $350K each? Man, that just really goes to show you how easy it is to sell people snake-oil. It’s like they assume that since you’re over-charging it MUST be worth it.
rose-colored-coolaid » Oct 10, 2007 at 12:59 pm
Ira Sacharoff,
I appreciate your take and your honesty. You should really consider linking your account to a website if you have one (underneath your name and email, is a website field). I imagine a number of people reading your comments will be interested in talking to you about purchasing a home when they decide it is time.
I also agree with the sentiment that not all salespeople are dishonest scumbags. There are some who have decided that their own worth as a person derives more from their character than their paycheck. We can only hope that these people eventually are repaid for their character as well.
That said, I would give the people on this board a little slack when they generalize. Most don’t deal with real estate agents on a daily basis. Their primary exposure is from press releases and blogs like RCG that are run by agents. They witness all the double-speak that come from such sources, and generalize that all agents are either liars or incompetent.
Again, as one of the few honest agents in Seattle, you should really get the word out about how you feel. A year from now, it might mean a lot to people.
TJ_98370 » Oct 10, 2007 at 1:31 pm
Ira,
My point is a simple one. A sales person has a large incentive to sell things if his income is based on commissioned sales, especially so if commissioned sales are his only income. How can that not be true?
biliruben » Oct 10, 2007 at 1:44 pm
Yeah TJ, but money isn’t most people’s only incentive.
Integrity and long-term reputation can easily overcome the short-term incentive that is the commission.
We are not all simply cogs in the capitalist gearing. If you try to derive people’s actions based purely on monetary incentive, you will almost always miss the mark.
Ira Sacharoff » Oct 10, 2007 at 2:31 pm
TJ,
A good, honest real estate agent ( there are a few) make most of their commissions as a result of referrals, and a good, honest real estate agent has a broad, long term horizon. Do I want to make money? Of course.
But I would much rather earn my commission a year or two from now after demonstrating trustworthiness than making a commission now and have you pissed off at me, thinking that I’m a scumbag just like all the other realtors.
I agree, most agents want the commission right now and will always chant the mantra of ” now is a great time to buy”.
But what if you encountered an agent who you felt was really in your corner?
Wouldn’t you be inclined to use him again and tell your friends about him?
That’s my strategy. I’m not drinking the industry kool-aid and I’m not going to be a cheerleader for a bunch of lying thugs. I think it’ll benefit me over the long haul.
TJ_98370 » Oct 10, 2007 at 2:42 pm
biliruben,
I will agree that money isn’t the only incentive, but I maintain it remains an important incentive. A salesperson (just like the rest of us) cannot defer paying their bills indefinitely. They either sell something, irregardless of their standards, or they get out of the sales biz.
Maybe I’m jaded, but I’ve dealt with my share of salespeople over the years and I cannot recall any of them being even a tiny bit concerned about the wisdom of my purchase with respect to my overall personal welfare. Most pushed for the best deal that I would let them get away with. I don’t fault the salesperson, it’s just the nature of that type of business transaction IMHO and I expect it. Caveat emptor and that sort of thing.
TJ_98370 » Oct 10, 2007 at 2:47 pm
Ira,
If you are real, you are very rare. I wish you the best of luck with your business strategy.
biliruben » Oct 10, 2007 at 2:51 pm
No doubt, TJ.
I think you would be surprised at how many agents who’ve been in the biz through the mania (say 10 years) are now objectively wealthy.
Sell a house a month in the high-end market, and rake in six figures annually. leverage that money, as a lot of them did, in RE in the late ’90s, and you pretty easily have assets worth millions.
It’s a lot easier to take the long-term view, when you own half a dozen rental properties on QA hill.
I’m not saying all are rolling in dough, but a number of them are – particularly those who have time and experience to blog.
For instance, I would bet Marlow and Reba are not hurtin’ for jack.
Martin » Oct 10, 2007 at 3:26 pm
By the time the market hits a perceived “bottom”, most of the people waiting to “see the bottom” will have found themselves on the sidelines again, with prices going back up again. Why people think that buying a home can be timed right, is beyond me… If you can time any market – you are God. The ‘entrance fee’ for a home might be steep in the beginning, but it’s worth every penny in the final analysis.
I’ve owned 3 homes (as my primary residences, on in San Diego, and 2 in Seattle) so far, on some I’ve made more money on some less- but I’ve never lost. The longer I stayed in those homes, the more affordable the monthly payments became (since neither me nor my wife have any extravagant appetites for anything, we are able to afford 2 homes, right now at this moment) and the deductions I enjoy from those are a blessing… With a kid on the way, I can not be happier and more thankful for being able to own 2 homes, building equity, investing in our future and living in a city as nice as Seattle…
If I could, I’d hold on to as much real estate as I possibly could. Unfortunately, between an accountant’s and an software engineer’s salary, this is all I can afford…
Timing the market? Good luck. Let me know how it works out for you.
Ira Sacharoff » Oct 10, 2007 at 3:28 pm
TJ,
I’m real. Some fellow real estate agents regard me as “really stupid, or really suicidal” but we’ll see.
Billiruben- I wish I were one of those agents who made money buying rental houses on Queen Anne. I had a rental duplex on the Leschi/Central area border which we sold in 1999, allowing my wife and I to buy a house in Renton, where we live now, without a mortgage.
I just don’t believe in displaying the trappings of wealth. Many agents will borrow beaucoup bucks to buy a Mercedes to show how successful they are. I drive a 2000 Chevy Lumina and it’s paid for. I want to impress people with my knowledge and sense of fairness, not with how much money I’ve made off their backs.
Dandy Agent » Oct 10, 2007 at 3:43 pm
Sure is nice to read from all the “experts” here how little work we do to earn our commissions!! When competing for a listing I usually have a spreadsheet I bring along to show the potential seller EXACTLY how much time and effort and expense I will support him and his house in the marketing, negotiating of an offer, and support through closing. I pay for my own signs, keyboxes, marketing, ads, postage, farming, open houses, etc. I could go on and on like the gas I use, the wear and tear on my vehicles, etc.
Oh, and dont forget the driving around of potential buyers to see homes. Sometimes I feel like a tour guide and dont get paid for that! It is not nice to have someones child throw up in your car and all you get is a “sorry” where I have to take it in to have it detailed again! Once a potential buyer does identify a house, I sit down with them and council them, write the offer, present the offer, negotiate the offer, am there for inspections, title and appraisal contingencies and other good stuff that takes my time and energy all the way through closing.
Yup, us agents are all glorified and over payed sales people selling folks the most important and expensive item they will probably purchase in their lives.
My time is nothing according to many of you here!!
Oh! Forgot to mention that Uncle Sam takes a large chunk from me each quarter and Ihave to feed my hubby, children, dog, goldfish, and the various billsand charities I donate to!
What a simple life….just kicking back and watching the easy dollars rolling in according to alot of folks here!!!
LMAO….if only you knew.
biliruben » Oct 10, 2007 at 3:53 pm
Good for you, Ira.
Martin – Just about any time in our history what you say is absolutely true.
Just not now.
I bought 4 years ago, and am happy I did.
I would never buy now, nor would I recommend buying now.
Generally I agree with you on timing the market, but anyone with eyes can see this is the most horrendously overpriced market poised on the brink for a fall.
This isn’t charting the S&P. This is looking at fundamentals, business conditions and bang you on your head-obvious trends and realizing only the someone with willful distaste for facts and money who would prefer to buy a falling down rambler in the Central District now instead of a decent in a decent neighborhood a few years from now would buy a house now.
Anyone who recommends otherwise is either blind or a moron. Pardon my insult.
biliruben » Oct 10, 2007 at 3:58 pm
Dandy –
Someone called agents lazy here?
I must have missed it.
redmondjp » Oct 10, 2007 at 4:04 pm
Cry us a river, Dandy!
Have you ever held a 7-to-6(+) job where you were chained to your desk all day? Ever worked 20-30 hours extra per week (sometimes for several months in a row) and not get paid a dime for it, since it is expected of you?
Many people here put in a lot more hours, and have a lot more invested in their education, and get paid a lot less than many RE agents. You can make on ONE SALE what it would take others several months of 9-to-5 to make, so give us a break, please.
And guess what? Uncle Sam takes a big chunk of everybody’s income, not just yours.
TJ_98370 » Oct 10, 2007 at 4:10 pm
Martin,
Do you read the news at all? Are you aware that housing prices are declining all around the rest of the country? All evidence indicates that Seattle area real estate prices are at or near a peak and it is just a matter of time before prices start falling. You’re not going to be climbing the equity ladder by owning depreciating assets!
Dandy Agent » Oct 10, 2007 at 4:17 pm
redmondjp:
I have both an undergrad and a masters degree in Business Adminsitration from UCLA.
I have had a few behind the desk or 9 to 5 jobs where I had basically no opportunity for growth.
I got my RE license over 15 years ago and have put much education, sweat, time and persistance into my career and am very proud of my accomplishments in the RE business. I have a long list of personal references which is up to date to support this and the majority of my business is through referrals and past customers.
The point being….I have earned my way into this profession and have succeeded with hard work. If there is a 9 to 5 worker out there that wants to improve their life whether it be as a RE agent or whatever profession that pays more ans is more rewarding then this country allows that person to do so.
Thank You for your reply…I am appalled at the number of RE “experts” out there who think we all sit by the phone chewing gum waiting for the buyer to call us first.
:-)
WestSideBilly » Oct 10, 2007 at 5:07 pm
http://seattlepi.nwsource.com/local/331066_mls11.html
Seems that Ira may be the real deal. Kudos and best of luck beating the liars and scumbags in your industry, Ira.
WestSideBilly » Oct 10, 2007 at 5:24 pm
Dandy, I don’t think anyone here doubts the efforts RE agents go through to procure clients and make sales. What many of the people here, not just BubbleHeads, are sick of is RE agents using the (complicit) news media and their own blogs to encourage people to go against their best interests and buy when buying may not be a good idea. If someone walked in and wanted to buy a house, “willing” to spend way outside of their means (all but guaranteeing a default on their loan within 2 or 3 years), would you find them their dream house?
Using conventional terms, people can afford roughly 3 times their household income… Yet I’ve had RE agents encouraging me to buy a house that’s close to 7 times my income with a 0% down loan – as recently as 2 months ago. Does this sound like something someone with my best interests would do?
Dandy Agent » Oct 10, 2007 at 5:49 pm
I agree with you Billy.
My job is to act as the buyers liason. I make recommendations, research and present the data and let the buyer make the decision with maybe a touch of reality thrown in if needed:-)
I work on the Eastside, most of my customers are well educated in high income jobs….quite afew are in the high tech industry and prefer to do their own research. Bottom line is I represent my client only.
Buyers are alot more educated over the past several years than when I first started in the industry. I recognize this.
I have no idea what the future portends and when I am asked (almost daily) about future price appreciation in the area all I can offer is a history of the past and should it continue or not I am not in the business of predicitons.
JayB » Oct 10, 2007 at 6:37 pm
The price of the average home is such that the standard commission exceeds any reasonable standard of value for the time and expertise provided by any Realtor. Time to modify the commission schedule to account for the fact that the time and effort involved in moving a $500,000 property is nowhere near two-times as great as that involved in moving a $250,000 property.
Consider alternate compensation models or prepare for disintermediation. Seriously.
Ron » Oct 10, 2007 at 8:30 pm
Now people on this Blog being called Bubbleheads Currently… in the future Will the people here be called Maybe= Bubble Brains??
After all this is done for…. housing resorts to its Acual real rental value, We will be called Smart for seeing the outcome, beforehand. For now we get to be Called Bubbleheads… is this in reference to Bobbleheads? those little figures whose heads bobble up and down?
Brian » Oct 10, 2007 at 9:05 pm
Martin,
I respectfully disagree with you. If you are just having your first kid and you have owned 3 homes and have not lost on any (one being in San Diego and 2 more in Seattle) I would have to assume you are in your early 30’s. If that is the case, of course you haven’t lost any money on a home yet because you’ve only owned in an up market. If you were to have owned a home in California between the 80’s – the late 90’s you would have had much different experiences. My Dad always reminds me that he is just happy if he can get out of a home for what he paid for it plus inflation. You should hope for the same as well. Prices are coming down and it’s not going to get better anytime soon. I’m not one to time any market, but when you see the crap about to hit the fan, you run into a different room until someone cleans it all up.
notabull » Oct 11, 2007 at 8:22 am
Dandy Agent,
I’m not going to disagree with the fact that a lot of real estate agents work hard for their money, and they’re not all just salespeople, etc. It’s easy to generalize.
HOWEVER, I do want to ask why you think that your compensation be linked to a % of the sale price? Given that prices are about double what they were back in 2000(ish), do you deserve double the pay? Were you being underpaid back in 2000? Are you overpaid now? OK, not “now”, but how about in 2006 when things were still red hot? You have to admit that while prices (and transaction levels) were going through the roof, your salary rate increased dramatically at a time when most people in this country experienced an inflation-adjusted decline.
If you justify your higher rate of pay due to working hard, then I can only assume that previous lower levels of pay were because you were lazy and didn’t work hard. Surely, this must be the case because hard work = good pay, right?
Or maybe you were in an industry that experienced a long and profitable (for you) peak, and now things are changing. Given your experience and education, I imagine you’ll be fine, but a lot of others won’t. Personally, I won’t feel sorry for them.
Marin Real Estate » Dec 9, 2007 at 12:32 am
Ahhhh. The spring. I’m a believer.
Patrick Beringer » Jan 19, 2008 at 1:54 pm
I just wanted to thank everyone for their posts. While we may disagree about what the immediate future will bring the housing market, we actually agree about most of this stuff even if we approach it differently.