Seattle Bubble

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Here’s a quote that caught my attention in today’s headline P-I article: Boeing bosses spy on workers.

“It’s not quite indentured servitude, because you can quit, but when you look at the mortgages and car payments, especially in Seattle, you’re not exactly free,” said the surveilled former employee.

Real estate salespeople are always talking about the “intangible” benefits of home buying, especially since today’s market makes it impossible to argue for the financial benefits. What they obviously won’t talk about are the intangible detriments that come from jumping head-first into a ridiculously large loan on an overpriced home. Detriments such as being trapped in a spirit-crushing job.

(Andrea James, Seattle P-I, 11.16.2007)

As home sales in the Seattle area (and state-wide) plummet and prices stagnate and begin to decline, it looks like government revenues are following suit:

On top of November’s wet weather and the Northwest’s cooling housing market, the state’s top economist had dreary news for state leaders Thursday when he announced that Washington would be taking in about $132 million less than expected in his quarterly revenue forecast.

Washington’s housing and construction sectors are doing better than those in most other states, but ChangMook Sohn said the real estate slowdown is occurring sooner than in the most recent prediction. The subsequent change in the revenue forecast has a lot to do with predicted declines in real estate excise-tax collections.

This is exactly what Mr. Sohn has been warning would happen for some time now (see related posts here). I guess he didn’t get the memo from the Washington Realtors though, because they told me that Washington State has a strong economy and we’re adding tons of new jobs, making our real estate market “the envy of the nation,” and practically unsinkable. (Yes, George beat me to the punch on that joke, but I intend to get a lot of mileage out of these Realtor ads.)

“Though the decline in projected revenue is very small, this forecast reinforces the need to continue to save money to make sure we have the resources to maintain the services expected by Washington citizen,” Gregoire said.

I completely trust the government to manage our money wisely as the housing market continues to drag down state revenues, and the shortfall turns from “very small” to “surprisingly large.” Because saving money is what they’re good at.

(Chris McGann, Seattle P-I, 11.16.2007)

Except of course that some people will actually believe it. Not many, but certainly some.

From the Washington Realtors’ “Get The Facts Straight” ad campaign. I’m sure I will post more on these over the weekend, they’re just too hilarious to ignore. Thanks to Doug for pointing out the link to these.

Sorry, I got nothin’ today. So instead of a real post, here are some links to recent posts on other local real estate blogs that you might be interested in reading and commenting on. What with 50-100 comments on most posts here lately, I thought maybe we could spread the comment love around a bit. Enjoy, and be nice.

On Rain City Guide by Jim Reppond: The Sky is Falling! The Sky is Falling!

Yes, real estate is somewhat cyclical. And at times there are market fluctuations. But the human tendency to gravitate towards fear, as well as to not look at things in historical perspective, makes people think things are much more dramatic and dire than they are in reality, IMO.

Hey, wait a minute, that post looks familiar… I love it when the real estate sales offices circulate informal talking points memos like these.

On Redfin Seattle Sweet Digs by Katrina Munsell: Can Price Drops Give you Carpal Tunnel Syndrome?

That’s exactly what I was thinking as I was compiling this week’s list of Eastside price drops greater than $25,000. If this trend keeps up, I’ll be able to tell you pretty darn soon.

On Urbnlivn by Matt Goyer: You weren’t featured in the Seattle Times

There’s a number of condo projects that email me every week about how they were featured in the Seattle Times when in fact all they did was buy advertising in the Seattle Times.

On Home Forum Extra by Becky Bisbee: National outlook gloomy for 2008

At the National Association of Realtors convention here, the big question on everyone’s mind is: When will the real-estate market rebound?Economist John Tuccillo is predicting the end of 2008 or beginning of 2009 for the nation as a whole.

However the Virginia-based consultant and former NAR chief economist stressed that “there are hundreds of thousands of real-estate markets, so it doesn’t matter what the national picture is.”

What really matters to buyers and sellers is what’s occurring in their own area.

On Open House by Devona Wells: California baby selling local mortgages

Two of my co-workers received an ad in the mail last week in an envelope that is white, slightly over-sized and addressed in black ink using a pretty, occasion-type font. It would be easy to mistake the presentation for a wedding invite.Open it, however, and there’s a picture of a cute baby gazing at you from the cover of a card. A birth announcement? No, an attempt at mortgage marketing.

On SeattleBubble? by Tim Dunn:

…oh wait, blog-spamming realtor Tim Dunn hasn’t posted since September. I wonder why?

Update: In response to a comment on his most recent post, Mr. Dunn indicates that he hasn’t posted lately because he has been “very ill.” I would like to extend my best wishes of a speedy recovery to Mr. Dunn. That is all.

Picked this up from Aubrey Cohen’s blog. Lawrence Yun, Chief Economist for the NAR and well-known real estate seer has confirmed what our local press and real estate folks have know for years: Seattle really is special! It’s about jobs and Microsoft millionaires. Why didn’t we think about that?!?!

Seattle a “superstar” market
Seattle is becoming a “superstar” market, where housing costs may never settle back into historical relationships to incomes, a national analyst declared on Tuesday.

Speaking at the annual conference of the National Association of Realtors, association Chief Economist Lawrence Yun used comparisons of mortgage payments to incomes to put much of the nation in a positive light.

“If anything, middle America appears to be under priced,” he said.

Some coastal cities where the payments and incomes are less in balance may be overpriced, Yun said.

An article in Fortune magazine recently predicted Seattle housing prices would fall 19.5 percent in five years, while rents would increase 19.2 percent, to bring prices and rents back into their historic relationship. (See this story.)

But it’s also possible that some are joining the ranks of international cities like London, Paris, San Francisco and New York, where costs are less tied to incomes, he said. “Now I’m beginning to think: Miami, Seattle, are they becoming superstar markets?”

Many wealthy baby boomers are moving to Miami, Yun said. “In Seattle, Microsoft millionaires are there.”

While the Seattle area’s job market is still strong, Yun said the affordability crunch caused by rising home costs would slow sales and cause prices to plateau.

“I feel that the Seattle market is very healthy in terms of the local job market conditions,” he said. “I don’t see any prolonged price declines.”

Now remember, this is from the guy who has provided the following forecast of Pending Sales - in which even when he possessed 9 of the 12 months of data, he still couldn’t get the annual forecast right… (Chart courtesy of Paper Economy)

Addendum by The Tim:

Elizabeth Rhodes also made sure to point out the “superstar” quote as well. It’s also worth mentioning that this “superstar” thing seems to have become a yearly ritual. The first sighting of the label came a mere month after I started the blog, in September 2005. Then it was repeated a year later in October 2006.

It’s really just a variation on the refrain that Seattle is becoming a “world class city,” a claim that we’ve addressed here before, and I still don’t buy. Seattle’s nice, but it can be both a nice city and stupidly overpriced at the same time. In fact, I contend that is exactly what it is.

(Aubrey Cohen, Seattle Real Estate News Blog, 11.13.2007)
(Elizabeth Rhodes, Seattle Times, 11.14.2007)