I have to ask – why would I buy a house for as much as I could buy an in-city house for (maple leaf, northgate, etc.). To be an hour or so further from work (one way)? Come on – prices are dropping on house in Shoreline because they are too far away.

You are going to have to drop that price a huuuggggeee amount – unless there are a large number of snoqualmie ridge people looking for a macro cookie cutter house on a micro lot.

Oh – by the way your house has been listed about 6 months. It was listed when the market was still going strong (April to June) – and it didn’t sell then. Why in the world do you think it is going to sell now?

I am asking honestly – we just bought – do you really think someone is going to pay that much for it? I predict you will sell at between 425,000.00 and 450,000.00.

Slightly above jumbo terrritory, so that someon with equity can come in and get for less than jumbo.

My two cents – debate as you wish.

Dave

Thanks very much for taking up my offer and posting the MLS. You have gotten a lot of suggestions that you should atleast read and try to see from the buyer’s side.

Now w.r.t to your house – your main competitor across the parkway is at $495K, bigger sq ft, slightly smaller lot.

Also, I know that quadrant and other builders are still selling in the ridge area

Snoqualmie ridge hs earned a reputation for long commute. This is from watercooler talk at office.

Finally as Tim rightly pointed out, looking for a 13.5%/Yr
appreciation is a …tad optimistic to say the least.

I guess this does says something about our market in WA state!:)

Give a fake phone number, and ignore the emails. That’s what I did – it’s no big deal.

“Hello, Osama we have a great deal for you.” “Osama, did you know now is a great time to buy?” etc. etc.

I know its juvenile, but every once and a while I clean out my spam e-mail inbox and it makes me laugh when I see all of the real estate come-ons.

If I were going to live in East Bumblefuk, I would want some land.

The key in a declining market is to not chase the market down. Slash the price and maybe you’ll luck out and find a few buyers willing to bid it up.

If you wait too long, the market may force you under-water.

But Is that a signed Texas A-Rod Jersey?

Is it included!?!

In that case, raise the price!

With that said, econ101, your house is nice, clean, and well-built. However, IMHO the location is too far away to warrant the price you’re asking. For that kind of price a person can purchase a house that’s much more closer to the city where it is more convenient, since most people’s jobs are in or near the city. Imagine a snow storm that took out power like last year or trying to get home in that kind of weather. Granted that some people like to get away from the city and live closer to nature but personally I wouldn’t pay close to 600K for your place. Tim’s suggestion of dropping 50K is too generous. I’d ask for a 20-25% reduction at least, after all the house is in a cookie cutter community with small spacing in between houses.

To paraphrase Benjamin Graham: price and value are two different things; the price you pay doesn’t necessarily reflect the value of the thing. To me, the value of a house is determined by the material, workmanship, and location.

I have gotten surgical with my pricing (thanks for reminding me – notabull), and have dropped my price quite a few times already …

If you really are here to learn and provide insight into the market then welcome. I spent many months trying to understand why this market was so expensive and asking questions like:
- How are these prices supported?
- Am I really earning that much less than everyone else?

Like most of the people who have been here a while, I’ve come to the conclusion that the current prices are simple unsustainable and that they will fall. It is as impossible to predict when a bubble will pop as when it will begin, but it seems that prices are going to start dropping.

Housing prices are set at the margin. When there is a large supply of buyers in the market then only the buyers who are willing to pay the most will get to buy a property. A buyers has to be more aggressive in his offer than the next guy to get a property.

When there is a large supply of sellers, then only those sellers who are willing to sell for the least (with respect to house quality) will get to sell. Sellers have to be more aggressive than the next guy to get the property sold.

It is those aggressive prices that set market prices. A common theme we discuss here is that many people will follow the market down. As they see comps fall, they will lower their price with them, but so does everyone else so it doesn’t help. You have to get ahead of that curve.

I’d also like to talk for a moment about loss aversion. Humans seem to have a strong natual bias to avoid immediate losses even if an immediate loss will is less than a probable future loss. I’m told this is very common with stocks. Instead of selling a bad stock when it drops 10% below the initial investment, people will often hold onto it until it drops even further in the vain hope it will bounce back, even if there is obvious news that the stock is in trouble. It is also a common mistake in poker by new players. New players will think of all of the money they have put into a pot and continue to put more money in with obviously losing hands just so they don’t have to voluntarily give up “their” money.

According to redfin, you bought your house for $390k in 2004. If you listed it for $450k, you would still be netting $60k over only three years. Compare that to the amount of money you put down and figure out the annualized return. I bet it would crush any mutual fund you could find. My advice is to be ecstatic about getting such a great return (in addition to living for free during that time period) and don’t sweat that extra $50k-100k that you think is yours but is really in the pot in the middle of the table in the poker game of real estate. Fight your instinct for loss aversion.

Of course, this is all presupposed on the conclusion that prices are going to drop. If you have a convincing argument that prices will continue to rise, then we would all love to hear it. If your only argument amounts to your gut telling you truthiness, then expect to be ridiculed.

Well, Orbusmax got a huge bump a few year back from a mention on KVI, so you never know.

For what it’s worth, the “unique visitors” count did jump up a bit yesterday. Ended up with nearly 3,600 visitors, compared to the recent weekday average of 3,000-3,100.

Keep up the good work. I will reading you daily. Right now I am going through this real estate nightmare. Time heals all, so for us its renting and savings. At least we have good jobs and time.

http://www.pbs.org/newshour/bb/business/july-dec07/jitters_10-16.html

“DAVID HALE: I think we have to wait and see how far house prices fall. As Rob just indicated, we’re down 4 percent year on year. The Chicago Mercantile Exchange now has a futures contract for house prices projecting in the year ahead a further price decline of 5 percent to 6 percent.

If that comes to pass, that means a price decline of 10 percent. A few bearish economists are warning about a 20 percent price decline. We can probably live with 5 percent; 10 percent is a challenge; 20 percent might finally set the stage for a consumer downturn.

The fact is, the whole situation is unprecedented. There has not been a decline in America’s National House Price Index since 1933. We’ve had many regional downturns, very severe 15 years ago in Los Angeles, very severe 20 years ago in Houston. But we’ve not had since the Great Depression a year-on-year decline in the National House Price Index.”

Thanks for listing your MLS#. That’s a gutsy and upfront thing to do on a blog like this.

I see a few problems with you getting a quick sale:

1) There are just a TON of listings in your price range in that area. I did a search on RedFin for 3/2 houses with 2250+ sq feet betwen 450 and 600K. Wow – you’re in a sea of inventory out there.

2) Your listing price is in the middle, or even towards the middle-to-top of the price range for that “sea” I talked about above. I didn’t look at any of the pictures of the inside, so perhaps your house is nicer. Perhaps it isn’t. Doesn’t really matter, as when you’re presented with that many seemingly similar options you’re bound to start focusing on price along with everyone else in this “buyers market” which people are beginning to accept is upon us.

3) Location. While I’m sure it’s very nice out there, what I’ve seen in pretty much every other bubble that’s burst in the country is that the outer areas get hit first. If I can have a home in Sammamish/Issaquah for the same price as your house (which I can, easily, $/sq ft) then why am I going to travel further? While inventory is low, people will willing to go out further just to get in to the market, but when inventory grows the price pressure is seen on the outskirts first. I saw this in San Diego where I just moved back from. If anything, it’s likely to get worse where you are, and it’s likely to be worse, for you, than the media states it is for the area in general.

4) OK, I looked at your pictures. You talk about greenbelt and views, but I don’t see that. All I see is pictures of your house and the surrounding houses. It makes me feel like you’re right up close to all the other houses, which you are, but you’re also up against greenbelt. Can I see that please? If I *am* going to move out of the city, then I’d like to see the trees, mountains, etc. I think some of your pictures could be changed to highlight the space around you, and not the other houses.

5) Appeal to the man of the house too. Throw in the projector and the rest of the media room stuff. But don’t refer to the screen as “installed”. The lady might think that means it’s not removable! Maybe something like “Media room equipment and furniture comes with house if buyer wishes” or something like that. I mean, how much would it really take to replace that stuff anyway? Maybe 5-10K, which is a small price reduction.

Ultimately, though, it’s the price. I search for 500-600K and saw a ton of places. “Wow”, I muttered to myself. So I reduced my range to 450-550 to see what’s out there. Still a lot of places of similar size and appearance to yours. Note that your house is not on that second search of mine. Honestly, if you need to sell this place soon, you should start dropping it. Perhaps 10K a week (or two) until someone bites, but I think your first drop should be larger, like 20K. That will get your below 550K so you’ll turn up in some more searches.

Best of luck.

I was wondering (and I think someone else also pointed out), we should have a section on this web page about such price drops. When enough data has been accumulated, we can use the data to figure out how much price cuts are happening around here. What do you guys think?

BTW: This is happening in Redmond, just 1.5 miles from Microsoft’s Redwest offices.

you “blow away the equity” because the equity does not actually exist. its a figment if your imagination. its better to take your lumps now and put the actual cash you can get into an appreciating asset than sit on it hoping the losses will cut themselves for you.

50k? That’s harsh man… I’ll test out at this price for a bit, see wat happens… then go down again. There is a point where the rubber meets the road…. Just no telling what it is. At least I aint pretending.

What Econ101 does not realize is that this blog is one of the most upbeat, hard-analysis HB blogs out there. Tim is an engineer. Tim is also a nice guy. He prefers patient analysis over bombast.

My personal sentiments on the bubble tend much more towards those of Keith of HousingPanic, i.e. I’m laughing daily at the carnage and folly of the homedebtors, but dreading the impact of their fraud and insatiable greed on the rest of us (sensible people). I desire maximum pain for all who crash and burn in the coming years, including keeping the full tax liability in place for 1099s. But that kind of harshness is out of tune here, you see, except for a bout of extreme creepiness by Meshugy some time back, SBB is a nice place.

And Econ101, you didn’t have to be a psychic to see the housing boom for what it is, a ponzi scheme and classic bubble. I’ve known it since 2003. Any bubble blog has been over the rent/buy ratios, debt-to-income ratios, etc. It was all so "golly"ed obvious, which is why we long-time bubbleheads (or armchair economists) have worn out our tongues warning anyone who would listen about this. Read the entry on Wikipedia if you still don’t get it.

I would consider this an excellent selling point even though I don’t golf.

I can’t comment on price as everybody knows on SB…I follow the condo market and don’t have my finger on the pulse of the SFR market.

Yet maybe it’s just not worth $569K? I would see what comparable houses are listed for in the area and try to go a bit (noticeably) below that.

PS- I am not one of those that thinks there will necessarily be an absolute crash in house prices, but do feel it’s pretty clear there is a good change of prices dropping 10% to 20% across the board in the coming two years or so.

If you are set on selling, then given the odds, you would likely be better off dropping the price now to get it sold – IMHO. If you have gained considerable equity since 2004, so much the better for you :-)

But don’t regard this blog as a bunch of raving lunatics or rationalizations – I think the trends are now indicating that posters here are much more connected to reality than those that have a great stake in the real estate market. Among all the regular posters I have been reading here for the last year or so, there are many who have intelligent and insightful observations. aside from all of the data presented here, which you may question-two simple facts should convince that Seattle is poised for a considerable decline: 1. the fact that house prices have clearly over-shot the purchasing power of the average buyer ( for an “average” home that is), and 2. that it is clear that there has been significant “exotic” / no doc financing in the Seattle area as well.

I wish you good luck, and hope that you consider the advice you are getting here.

Why do you think you deserve to sell for an amount that would equate to an average of 13.25% appreciation, per year?

If you really want to sell, why don’t you drop the price by $50,000? You would still be sitting on an average of around 10% appreciation per year, for doing essentially nothing.

Tim – you get to be right on your own blog man.. I’d never argue that there is a Seattle bubble – best I could hope for is to poke a hole or two in your truth ;).

Speaking of which, he’s been awfully quiet lately. Hmm…

There should be more blogs like this that speak the truth and deal with empirical data instead of worthless RE rhetoric.

Econ101, go find another blog to whine on, the housing situation is only going to get worse and your whining is only going to get louder.

I never said you should not listen to what is being said here – all I’m saying is "female dogging" about the situation (e,g, this blog) doesn’t encourage people to think. It only serves one purpose – to instill fear.

I never said that you did say that. What I am saying is that you’re wrong about him “"female dogging"” and not encouraging people to think. He definitely isn’t instilling fear either. He’s merely reporting the facts with good data and reasonable analysis. It would seem that you’re purposely trying to mischaracterize what The Tim is doing because you’re angry about your property not selling (apparently) and you want to discredit him. Otherwise I don’t see how you could characterize this blog as “"female dogging" and instilling fear”.

Additionally, I think you’re misinterpreting a lot of our situations. Like many people on this board, I’m waiting to buy until purchasing makes sense for my long term financial plan. Beyond putting 20% down, I want to make sure I have a healthy nest egg set aside so my wife will be able to stay home with our (future) children. Having that cushion is more important to me than owning a home; it’s not about waiting around for a magic 20% or 80% price drop.

Finally, I know it sometimes seems like we Bubbleheads are sitting around and gloating about the drop in prices and increase in foreclosures. Trust me, we really don’t want to see people suffer, but some of us have gotten tired of hearing about dumb we were for not busting our budgets to get into a house. Based on current trends, I suspect the gloating is going to get a loss worse as the housing market worsens. It might be healthier for you to take a break from the blog until your house sale closes.

I see prices going down for the next 3 years for many reasons, so to you who want to buy now, more power to you.

I’m going to bait. Econ101 is going to rent it out in a few months if it doesn’t sell for the same reason he didn’t sell last year before the market started to go south.

Alan – you don’t think your (or Tim’s) word creates realities? It is an interesting outlook on language you guys have…

Have you been reading “The Secret”?

And how is this for an ultimatum: If I can’t afford to buy a house at a sane price in a few years then I am going to move to another part of the country. I bet there are just as many potential buyers who think like me as there are potential sellers who think like you. Any guesses on who has the strategic advantage?

it seems like it is do or die time for you. the housing market goes comatose during the winter here and by spring everyone will realize the market is heading south.

so, it sounds like a 10% price drop today or a 10% price drop in the spring plus carrying costs from hanging on to it over the winter.

if you bought in 2004 it seems like you should be able to absorb a 30% price cut and still break even, so a 10% cut should be acceptable, if not ideal.

Please educate us on why it makes sense to rent out your place instead of selling it right away. Have you run through any financial scenarios on this? Do you think the market will turn around next year?

BTW I’m not baiting here–these are serious questions.

Hey, if you can afford to take that hit…You have a strong financial psyche. Either that, or your payments are really low… and you might benefit by the tax deduction.

Just speculating like you are. No one knows, but the odds are not good. Good luck.

The market will lose 8-10% of its value a year for the next three years. Good luck.

Have you hired Tim to help sell your property? Why would you expect him to act in your financial best interest?

Maybe you think that Tim is somehow hurting the sale of your property. If so, I think you greatly overestimate his influence. This blog is just documenting the fall — not creating it.

I’m not mad at all. I have gotten surgical with my pricing (thanks for reminding me – notabull), and have dropped my price quite a few times already and am on par with some 3 bedroom properties that still are holding their value in the area where I live. It’s a new 2004 home from an excellent builder in Washington state, and it is in immaculate condition – you can not tell it apart from a brand new 2007 home. We’re DINKs, and the home had no damage of any kind…

I don’t really give a rat’s ass if it sells immediately or not – I’ll rent it out if I see no reaction in the next 2-3 months…

If you “saw it coming”, may I use some of your powers and could you foresee when the market will stabilize so I know whether to rent or not? :) Pretty please with sugar on top – predict the future for me.

Here’s what isn’t helping your sales:

-Mortgage credit crunch means that people that can’t afford your house, can’t get an unaffordable mortgage any more
-Houses just are not affordable.
-The soaring market and crazy loans brought demand forward, so there are really not a lot of people that want to buy a house out there. The “fundamental” demand has not changed, but a lot of this years buyers bought last year, and so on.
-Overbuilding compared to population and household growth.

If your property is not selling as fast as you expect, perhaps the situation is indeed worse than you expect? And perhaps other more “bleak” assessments of the situation are closer to reality than yours?

My advice to you (having been a home owner and home seller before) is to lower your price before everyone else does. Everyone else is lowering their prices, and you can see it all around you. Houses *are* selling, and houses will always sell. But you’ll need to lower your price to get it sold. Simple Economics 101. Best of luck.

You haven’t a clue man. People will be fearful regardless of whether or not this blog exists. If you want a rational market, fear must be balanced against greed. That’s how all functional markets work. There was no fear for the last 5-10 years in real estate (depending on where you count), and look what happened.

You should be thankful some of us (like yours truly) are interested enough in seeding fear that we might some day soon return to normal market conditions.

Oh, and if you’d read this blog a year ago you would have seen this coming, cashed out, and been sitting on the sidelines like the rest of us. You’re just mad you didn’t become a troll until it was too late.

And Joel – I never said you should not listen to what is being said here – all I’m saying is "female dogging" about the situation (e,g, this blog) doesn’t encourage people to think. It only serves one purpose – to instill fear.

No…just watching a slow motion trainwreck from the sidelines and documenting every last “crunch”. You on the other hand seem to be riding in the caboose sipping a drink and are now the king of the hit and run troll comments yet you name yourself Econ101 to try to fool people into thinking you have some credibility.

Back of the line.

come on tim… pessimism in the form of blogs filled with resentment isn’t helping.

What blogs are you talking about?

Educate people instead on being responsible so next time around the down cycle isn’t as “bad”…

I can personally vouch for The Tim and say that his blog has helped educate me on the reality of real estate and real estate bubbles.

Why so much resentment? Are you a realtor or underwater homeowner?