Hey, it looks like somebody on the P-I editorial board is a secret fan of Seattle Bubble (or at the very least, they read Thursday’s post). Check out yesterday’s “P-I Editorial”:
Last week, The Wall Street Journal published a comprehensive look at loan data for what it called, “The United States of Subprime.” The newspaper found “that the subprime aftermath is hurting a far broader array of Americans than many realize, cutting across income, race and geography.”
And guess what, folks? Seattle is not immune to the housing downturn.
You don’t say. Seattle is not immune? Who could possibly have seen that coming?
I would like to take a moment to welcome the Seattle P-I to reality. It is nice to finally have some company here.
(P-I Editorial Board, Seattle P-I, 10.14.2007)
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48 responses so far ↓
1
Chris
// Oct 15, 2007 at 2:31 pm
B-b-b-b-but they forgot about the ponies. The beautiful, sweet pink ponies that live in the garages and yards of every Seattle home. Don’t they understand? The ponies will save us!
2
Sniglet
// Oct 15, 2007 at 2:40 pm
If Seattle can have massive year-on-year price increases then there is no reason there can’t be declines of a similar scale. Even more importantly, though, statistics clearly show that the Puget Sound real-estate boom relied heavily upon all the new types of exotic mortgages (e.g. 100% interest, negative amortization, no doc, etc), just the same as the rest of the country. With credit standards tightening nation-wide, there is no way Seattle will stay immune. And just what will happen to the market if a large portion of buyers are driven from the market (i.e. because they can’t get financing due to tougher standards)?
3
The Dude
// Oct 15, 2007 at 3:04 pm
Does anyone know of a good stock/investing blog?
4
Brian Bigelow
// Oct 15, 2007 at 3:15 pm
Good Stock Blog… The best ones I follow are PhilStockWorld.com. You can see his free posts on there. Also the Big Picture by Barry Riholtz is very good also.
5
rose-colored-coolaid
// Oct 15, 2007 at 3:34 pm
Stories nobody should ever believe in Seattle (but we do):
Seattle is bubble-proof.
The Seahawks will win the Super Bowl.
We’re building real light rail system.
The Mariners will win the World Series.
The new Nicholas Cage movie will actually be good.
Glad the PI finally joined the party. There’s still some dip left, but not much.
6
nitsuj
// Oct 15, 2007 at 3:46 pm
Here’s an interesting article from the Times
http://seattletimes.nwsource.com/html/businesstechnology/2003950324_brier15.html
7
Leo
// Oct 15, 2007 at 3:57 pm
nitsuj said,
Here’s an interesting article from the Times
http://seattletimes.nwsource.com/html/businesstechnology/2003950324_brier15.html
“With salaries averaging above $145,000, it’s no wonder this housing market took so long to start sputtering.” –what a paradise, AVERAGE salary at MS is more than 145k already :)
8
Cringe
// Oct 15, 2007 at 3:59 pm
I’m lost. What’s the purpose of this website? People will think what they will think regardless of any amount of evidence. Personally, I think that over the long haul, home values rise. I think there is plenty of evidence to support that thought. If you dont think that, then more power to you and I suppose you can dig up evidence that supports your view. Either way, who cares. Why keep talking about it. Either you think it will go up or down. End of story.
9
biliruben
// Oct 15, 2007 at 4:03 pm
What’s the point of any website, Cringe? Share thoughts.
Don’t despair. Only 20 months until spring. Hang in there.
10
Leo
// Oct 15, 2007 at 4:05 pm
Cringe,
Stocks also rise over long period of time, and even Nasdaq will be above 5000 some days :) Those who bought Nasdaq at 2000 should only wait now for that “long haul”
11
Economic Crisis
// Oct 15, 2007 at 4:05 pm
Cringe, if no one cares, then why are you here?
12
Alan
// Oct 15, 2007 at 4:16 pm
People will think what they will think regardless of any amount of evidence.
I predict that people who do that will make bad decisions.
13
Plissken
// Oct 15, 2007 at 4:22 pm
Has anybody looked at Fortune’s “Best Places to Retire”?
Here’s the link to the results for major cities: http://tinyurl.com/23rukv
There are some pretty interesting statistics in there.
NYC has a median family income of $48,246 and a median home price of $684,502
LA has a median family income of $44,713 and a median home price of $664,013
SF has a median family income of $73,210 and the median home price is above $800K
In comparison Seattle appears to have much better fundamentals with a median family income of $72,354 and a median home price of $471,923. (http://tinyurl.com/27c2bf)
Based on those numbers alone, you’d expect cities like LA or NY to crash before Seattle or at least harder than Seattle.
BTW they also provide the cost adjusted purchasing power of the median family income. Quite an eye opener too.
14
TJ_98370
// Oct 15, 2007 at 4:23 pm
Leo,
Other sources indicate MEDIAN salaries at Microsoft are $93,600.
Payscale
.Boeing! Microsoft!
15
Scott
// Oct 15, 2007 at 4:25 pm
“With salaries averaging above $145,000, it’s no wonder this housing market took so long to start sputtering.” –what a paradise, AVERAGE salary at MS is more than 145k already ….
Hey, that was the same in the Silicon Valley during the .bombs! Airbus has finally gotten it’s SuperJumbo off the ground and Boeing has delayed the plastic and carbon dream machine, and MS well considering the dollar vs. rupee and then it’s time to start cutting that management staff at home ….
Don’t count your earnings until it’s been sold ;-)
16
off topic
// Oct 15, 2007 at 4:29 pm
Cringe, adjusted for inflation, over the long haul, individual house’s prices rise at a rate of 0%, according to Case-Shiller.
The amount the population spends on housing increases, but individual houses on average, adjusted for inflation, financially do nothing in terms of price.
as for exotic loans going forward, who cares if they exist? people were willing to use crazy loans b/c they thought it was a great way to make silly money. if people only think of houses as a place to live, they won’t intentionally use loans that transform into something they can’t afford.
17
Leo
// Oct 15, 2007 at 4:32 pm
TJ_98370,
I realized MS salaries kind of below 145, that’s why I put that add ) Thank’s
18
TJ_98370
// Oct 15, 2007 at 4:38 pm
Leo,
Got it. Subtleties are sometimes lost on the web.
19
Cringe
// Oct 15, 2007 at 4:52 pm
Off topic - Case-Shiller can “say” whatever it likes, bottom line is that folks who bought a house on Queen Anne for $35k in the early 70’s can sell it today for over a million. The house price has gone up, a profit can be made and real dollars can be put in your bank account because of it. Call it whatever you like.
Economic Crisis - Why am I here? I’m curious why everyone else is here. Seems like everyone is just here to whine, complain and speculate. I guess misery loves company?
biliruben - Lots of sites have a point, they provide information. I dont doubt this site does as well, it just seems like this site is trying to beat a dead-horse on a daily basis. I don’t understand why? No despair here, I laugh reading this site more than anything else.
20
rose-colored-coolaid
// Oct 15, 2007 at 4:54 pm
Cringe,
-I’m lost. What’s the purpose of advertising? Either you’ll buy a product or not. End of story.
-I’m lost. What’s the purpose of a voter’s pamphlet? Either you’ll mark one box or the other. End of story.
-I’m lost. What’s the purpose of electronics manuals. Either you’ll set the clock or it will blink 12:00. End of story.
-I’m lost. What’s the purpose of money. Either you take something home or you don’t. End of story.
This is actually kind of a fun game. Who else wants to take something for granted by stating opposites on a spectrum? Just remember to end your story after your pointed out that possibilities do exist. Otherwise people might mistakenly think your two positions are negotiable. IE “Either you think it will go up or down” could be changed to ‘either you think it will go up or you’re a popsicle”.
Anyone else starting to notice that the ‘bubbles are forever’ positions are starting to sound a lot more like Jon Madden? “Boom, you see this house? What it wants to do is appreciate in value. So it’s going to use granite countertops here and here and here to keep the bubbleheads off balance. We ran the countertop play in Oakland, and it always either worked or didn’t.”
21
Leo
// Oct 15, 2007 at 5:00 pm
Cringe,
If you keep home for 40 years you definitely get some decent appreciation. However, you might buy house today and might run into situation you need to sell it 5 years later –in this case “long run” wouldn’t work. That’s why it’s stupid to buy on the peak
Thank’s
22
The Tim
// Oct 15, 2007 at 5:15 pm
Plissken said,
Plissken, we’ve covered this topic before. NY, SF, and LA have always been more expensive places to live than Seattle, as evidenced by their low afforability levels. The question is how much has the affordability changed in the last 5-10 years in Seattle and other cities, and has there been any material change to the living conditions in said cities to merit such a change.
23
Bellingham REnter
// Oct 15, 2007 at 5:20 pm
rose-colored-coolaid…
That was the funniest thing I have read in a long, long time…
24
deejayoh
// Oct 15, 2007 at 5:22 pm
Just wondering, Is an increase in the troll count a bullish or bearish sign?
maybe we need a poll
25
Pegasus
// Oct 15, 2007 at 5:27 pm
It had to happen. Real estate sales have slowed in the area and inventories are building. The media whores will now promote whatever helps their financial supporters best. If the suckers have stopped buying and financing is eliminating the last suckers it is time for a different mantra.
((((PANIC)))))
Yes that will get owners to lower their prices and get the commissions and fees back up so they can buy ads in the media again. Simple isn’t it?
After convincing everyone that there is no place like an expensive home they will now try to convince everyone to sell so their benefactors can increase their sales.
It has begun and no one knows where the bottom is but it certainly is not here.
Bernanke is starting tell a partial truth that includes bad news today.
Local developers are now openly offering incentives and price reductions.
(((((PANIC)))))
Get used to it. It is coming……..
26
magnolia44
// Oct 15, 2007 at 5:41 pm
Well had the flu bug and was watching cnbc this morning. The ReMax ceo stated now is a time to buy, its not going to get worse and guess where she mentions as good strong places? Yep…Seattle and Portland, they are really holding on to us as a battle cry, its over… funny how Greenspan and Bernake had comments on housing today its going to slow further, the lady was patehtic and.
27
just_checking
// Oct 15, 2007 at 5:42 pm
They put it on the editorial not the front page or even the real estate page. How many read the editorial ?
I doubt the Times and PI have the objectivity to go against their advertisers.
28
deejayoh
// Oct 15, 2007 at 6:24 pm
Plissken said,
I think he meant like this
29
rose-colored-coolaid
// Oct 15, 2007 at 6:35 pm
Bellingham REnter,
thanks. ;-)
30
george
// Oct 15, 2007 at 7:26 pm
Cringe, here’s the relevant question: are housing prices going up or down in Seattle over the next 6 to 12 months? How about the next 3 to 7 years?
If you don’t think the answers matter, then I have a couple questions for you: A) Do you still live in your parent’s basement? B) Are you ever planning on moving out?
31
faster
// Oct 15, 2007 at 8:25 pm
Pegasus - that’s a great conspiracy theory - seriously. I’d never even considered the newspapers might have a reason to try and scare sellers into lowering prices. :)
I don’t necessarily now that I believe it, but it has just enough logic in it that you can’t dismiss it out of hand.
32
Plissken
// Oct 15, 2007 at 8:26 pm
Tim,
I don’t understand how you can come up with time shifting graphs to show us that eventually we’re heading the way of Phoenix or Miami, and not consider the possibility that in terms of affordability (or lack thereof) we might be following San Francisco’s or NY’s lead.
Our circumstances today may not be that different from the ones that were prevailing in those cities when they started becoming unhospitable for the average family.
33
redmondjp
// Oct 15, 2007 at 9:21 pm
RCC said:
Anyone else starting to notice that the ‘bubbles are forever’ positions are starting to sound a lot more like Jon Madden? “Boom, you see this house? What it wants to do is appreciate in value. So it’s going to use granite countertops here and here and here to keep the bubbleheads off balance. We ran the countertop play in Oakland, and it always either worked or didn’t.”
LMAO!!!
This quote needs to go on the sidebar somewhere — you are the Mack McCoy of SBB!
34
b
// Oct 15, 2007 at 11:05 pm
Plissken,
Do you really think Seattle is on par with SF and NYC? What about London, Moscow or Tokyo, the other cities considered in the same class? Seattle is pretty nice, but it isn’t anywhere near the upper echelon of world cities.
35
Joel
// Oct 15, 2007 at 11:05 pm
I like Market Ticker.
36
nitsuj
// Oct 15, 2007 at 11:10 pm
“…and not consider the possibility that in terms of affordability (or lack thereof) we might be following San Francisco’s or NY’s lead.
Our circumstances today may not be that different from the ones that were prevailing in those cities when they started becoming unhospitable for the average family.”
I’d be inclined to say that comment has legs IF SF wasn’t hope to Silicon Valley and the major VCs that funded the startups that grew the Valley. And NY is currently the financial capital of the world.
37
Bitterrenter
// Oct 16, 2007 at 12:05 am
I’ll tell you why people go to bubble blogs. Schadenfreunde.
Some of us got sick of hearing how we “missed the boat” and oh, you should see the granite countertops and stainless steel appliances we bought with our amazing phony equity! The pretense, the ostentation. People rejoicing in housing unaffordability like they are the last people to ever need housing. Don’t worry about other families who didn’t buy or young families starting out. It’s all about YOU, sweetie.
Well, it’s a competitive culture and of course we’re going to enjoy seeing things come back to earth and hey, if you get screwed, tough "chocolate". Admit it. Half the fun of seeing your home values skyrocket was larding it over the people who didn’t fall for the trap. Now we get to gloat.
And then there’s the people who think they’re savvy investors for buying before the fake runup like they knew it was going to happen. Sure was fun bragging! Hope you sold because if you didn’t, OUCH!
Ugly? Perhaps. Human? Sure.
38
EconE
// Oct 16, 2007 at 12:41 am
Thought I’d jump in as people are talking about L.A. Yeah…it’s taking a hit. Even in the truly “different/special” areas. I know as my father has had his house up for sale for well…let’s just say a while now.
However…when I look at houses and condos in Seattle I think that they are actually priced right up there with Los Angeles in many respects and I try to compare what would be “similar” neighborhood even though it’s hard. The inland empire down there has basically collapsed as has the central valley. That’s going to spread like a cancer in varying proportions to different areas but no place is immune from a downturn IMHO.
One thing that hasn’t seem to come up with the comparisons to Los Angeles is the fact that L.A. not only has many large businesses, hospitals yada yada yada….you know…like the Boeing/Microsoft argument…but what Los Angeles has is the Television and Film Industry. Everything that is bought and sold is done with advertising for the most part. TONS of those $’s end up in Los Angeles. People in the Industry make quite a bit of money. They are all unionized for the most part down to the most seemingly menial task. Plus, they work a ton of overtime…you’d be surprised seeing how many people are just on the shooting sets of commercials/sitcoms/etc and the kinds of budgets that they have. Not to mention…they have SERIOUS political clout (I’ve seen it) so talk of Hollywood moving to Canada/Seattle and not bringing in the $’s is old news and they’re still filming like crazy in L.A. so that the American Sheeple can have something to watch on their flatscreen with the requisite surround sound system.
Also…my anecdotal experience also tells me that there are many many many people that are not listed as residents that are the multitudes of people that move to L.A. & NYC in hopes of reaching stardom and are willing to live 3 people to a studio apartment. I know people that even sleep in a room in the back of their workplace or in a makeshift studio in a warehouse. They are a dime a dozen and for every one that I have encountered there are countless more.
Where does the bottom lie? Who knows…but we sure as hell aren’t there yet and I’m certainly going to wait until that Credit Suisse ARM reset chart has run enough of it’s course for me to feel like things are somewhat sane again.
39
Burk
// Oct 16, 2007 at 6:48 am
They sould move MS to Boise or Spokane -at least half of their staff- so that cities can be leveled.
40
george
// Oct 16, 2007 at 6:51 am
Another depressing headline for home sellers in the PI today.
http://seattlepi.nwsource.com/local/335614_incentives16.html
41
Seattle Bubble » Blog Archive » Boom, you see this house?
// Oct 16, 2007 at 7:22 am
[...] the “Best Comment of the Week” award goes to rose-colored-coolaid for his gem on yesterday’s post: Anyone else starting to notice that the ‘bubbles are forever’ positions are starting to sound [...]
42
Cringe
// Oct 16, 2007 at 8:46 am
George - Over the next 6-12 months, I suspect house prices will flatten in some areas, drop in others, and tick up in others. Location is important. So, does this help you make a decision in some way? Over the next 3-7 years, no one knows! But history would indicate that 7 years from now prices are more likely to be some degree higher than they are now. Does this help you make a decition in some way?
I’m just trying to understand the perspective of the folks that post on here, it truly is fascinating. To answer you other question, with your passive-aggressive suggestion that I’m some dork living in my parents basement, no, I don’t. Try being polite to strangers, don’t let a Blog’s anonymity turn you into a $#!@.
43
Cringe
// Oct 16, 2007 at 8:48 am
rose-colored-coolaid - No idea how to reply to that one, other than that you dont make any sense. In any case, what value do you get from this site? What have you learned? I’m trying to understand…
44
rose-colored-coolaid
// Oct 16, 2007 at 9:34 am
My real answer: I like to read opinions which may not be receiving play in the MSM. People on this blog produce actual analysis with numbers to back it up. A wide variety of people post varying opinions.
I am able to look at the numbers and the opinions and learn from them. Sometimes it confirms a view I already held, other times it causes me to rethink that view.
Why would I want to do this. Someday I might decide to buy a home with my massive savings. I’d like to pick the right time, rather than just doing it because everyone else is.
45
Cringe
// Oct 16, 2007 at 10:40 am
rose-colored-coolaid - Certainly a reasonable answer. So, you’ve seen all the data that this site has to offer, you’ve read a lot of comments in the many posts, let me ask you a two questions:
1. When do you anticipate it will be the right time to buy a home in the future?
2. If you could time travel and pick a time in the past, when would it be, and why?
46
WestSideBilly
// Oct 16, 2007 at 12:10 pm
Cringe wrote “I’m lost. What’s the purpose of this website? People will think what they will think regardless of any amount of evidence. Personally, I think that over the long haul, home values rise. I think there is plenty of evidence to support that thought. If you dont think that, then more power to you and I suppose you can dig up evidence that supports your view. Either way, who cares. Why keep talking about it. Either you think it will go up or down. End of story.”
Cringe wrote “I’m just trying to understand the perspective of the folks that post on here, it truly is fascinating.”
WestSideBilly responded: I was starting to house shop earlier this year, hoping to have my finances squared away by this time (they are). I had what I thought were reasonable expectations for a home - 2BR, 2BA, garage, small yard - but was blown away by the asking prices for homes in this range. Having moved from an area where that type of property would go for ~$100k, I was struggling to figure out why, and more importantly how, someone would pay $400k for it here, not to mention how/why someone would pay upwards of $1mil for a mid sized condo with no parking. All the real estate “professionals” and blogs like RainCityGuide sounded like cheer leading, implying things were perfect, with only a short term view - 10% appreciation every year! It’ll never slow down! Get in, the water’s fine!
I found this site and there are a lot of people who post useful info, a fair number of people who don’t, and some cheer leaders for both sides - and the requisite interweb trolls. So, in essence, this site has affirmed my suspicion that the people bidding against each other for a run down 100 year old house in green lake were indeed nuts (at least financially), but I’ve learned a great deal too about how things work and how we got here.
So, I’ll go on renting, paying half as much for twice the house, and not worrying…
47
Cringe
// Oct 16, 2007 at 2:24 pm
WestSideBilly - Your reply makes sense and I can understand your reasoning. Real estate prices are a local thing- the reason why someone would pay $400k here versus $100k somewhere else is because if you want to live her, that’s the price. Friends of mine just bought a brand new, 3000+ sq. ft. house with really nice fixtures in the tri-cities for $245k. That house in Seattle would be $1.5 Million. Why? The tri-cities house is downwind from a nuclear waste dump for starters. Not as many folks want to live there.
Regardless, I have a question - you are going to just keep renting. Forever? Until you move out of the region? Just curious..
48
WestSideBilly
// Oct 16, 2007 at 6:12 pm
Cringe - I’m aware that location, desirability, school districts, and many other factors affect the price. Desirability is a big factor, but you can’t make something so desirable that people without the means to buy it go ahead and buy it anyway. There is a limit. I was struggling to grasp the local real estate market, as it simply didn’t seem like the local salaries ($72k median family?) could possibly support the local home prices ($450k median?). The old 3:1 house:income and 125:1 house:rent ratios were nowhere to be found here. As I mentioned, all I was hearing was how great the insanely high house prices were, and that everyone should buy buy buy, get in now, don’t get left behind! I found this site to be a counter balance, and have also found the fact-based posts from The Tim, deejoyah, and others to have more merit than the sales pitch posts on RCG, various RE agent sites, and the local media.
I did (and do) intend to buy, some day, as I loathe moving - something I’ve done a lot of in the last decade - and would like a stable place for many years. But until house prices come into line with salaries, as they were until ~2002 from what I can tell, I will rent and hope I find a stable landlord. So I guess that puts me in the camp of “hoping for the sky to fall…”
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