Dispatches from the Road: Arizona & New Mexico

with Crystal, the pretty pink pony

Editor’s Note from The Tim: I’m pleased to introduce Crystal, the pretty pink pony; mascot of Seattle real estate. She’ll occasionally pop in (especially over the next few weeks) to share some of her thoughts about the Seattle real estate. She has a… unique perspective that I hope you will find entertaining. Please give her a warm Seattle Bubble welcome.

Crystal on the roadHiya gang! I’m Crystal, and I’d like to thank The Tim for this opportunity to share some of my thoughts with you while we travel across the country! I’m so excited about Seattle’s real estate market, and like, this chance to see how other places stack up against our totally awesome town!

December 26:

Today we drove through Arizona and New Mexico. We drove through Flagstaff and Albuquerque, but sadly, we did not get to visit Phoenix, since we stuck to I-40. It was pretty and all, but I can easily see why real estate prices are dropping down here. First off, there’s like, a ton of land down here! I mean, in Seattle we’re totally running out of land, but in Arizona and New Mexico you can see for miles without even spotting a single house. Definitely not special.

Seriously, check it out:

Lots of empty land in Arizona

The southwest also comes up short on specialness ’cause it’s way too sunny. As you can see in that picture, here in late December the sun is still shining away. What’s with that? Hey Arizona, hey New Mexico, have you met my friend Winter? Bleh. What fun is a state where it’s this sunny in December? No wonder people don’t want to buy homes here anymore!

Also, I kept a pretty keen eye out for the most common signs of specialness, and was mostly let down. Here’s how Arizona and New Mexico stack up on the checklist:

  • Microsoft & Boeing: Barely.
  • Trees: Not enough.
  • Mountains: Yep!
  • Rivers and lakes: Not many :(

As you can see, Arizona and New Mexico don’t have much hope of ever being as special as we are in Seattle. They are fun places to visit, but don’t count on real estate there to make you rich.

90 comments:

  1. 1

    I went to Arizona too and it is land everywhere to expand and grow. In Seattle go towards West and you fall in the sea, go towards East and you hit your head with the mountains. The only way you can expand is stretch. No wonder traffic is bad and people want to stay closer to their work place. Hence Real Estate market stay cool (ofcource if employment stays good).

    Amarjit Sandhu
    http://www.500realty.net

  2. 2
    Tomario says:

    Green is nice. After spending the last three years in high dessert country…being back in Seattle is nice.

  3. 3
    Tom says:

    This reminds me of my time in the Boy Scouts (years ago…).. when one of guys got a hold of an old Care Bear stuffed animal and turn it into McCarthyism bear (it had the Soviet’s Hammer and Sickle with a red X mark though it).

    Anyway, it is at all possible to change the logo on the My Little Pony to either the Seattle Space needle, or the NWMLS logo? (or Perhaps an RE)… :)

  4. 4
    Arizona says:

    You made all these observations without visiting the 5th biggest city in the U.S.? Next time take the time to go visit Phoenix before you make real estate judgments on a entire state and it’s capital. Seattle is special, but it is not special because of you. Take your green back with you – the desert can do without you. Your arrogance about wide open spaces and sunny skies in relation a housing market is insane. People still want to buy homes here. That is such a cruel thing to say in times like this. It is my sincere hope that by the time you read this you are clear out of the Grand Canyon State. Thank you for the insults – and as we say in AZ….adios!

  5. 5
    Normandy says:

    Oh boy… Can someone please explain to these people about the pink pony sarcasm. You’ve got Mr. 500 agreeing with it and you’ve greatly insulted someone who just dropped in from the AZ…

  6. 6
    Greg M says:

    I moved most recently from Phoenix, AZ. (I was born and raised in Whitefish, MT but moved for a couple years to Phoenix to look for work). The pony is right – it’s hot, desolate, and ugly down there. I found people to be grumpy and mean and certainly lacks the specialness here in Seattle. I found it interesting that some other people made the same comments as well! I’m very pleased to be here in Seattle, WA.

  7. 7
    softwarengineer says:

    THE BUBBLE TOPIC HORRIFIES MSM TYPES

    Yes, the Pink Pony joke is harmless, but God forbid we trek into freedom of information areas that the MSM considers politically incorrect. Like Seattle overpopulation growth is killing the Orcas off, oooops, now call me a bigotted Republican for that freedom of speech anomaly….lol

    Actually, I’m an old fashion liberal for sane environmental planning in Seattle, before the Republicans took over the Democrats…..lol

  8. 8
    softwarengineer says:

    5+ YEARS OF HOME PRICE DECREASES AHEAD?

    See the proof:

    http://moneynews.com/money/archives/st/2007/12/27/120434.cfm?s=al&promo_code=41FD-1

  9. 9
    Beth says:

    [QUOTE]I went to Arizona too and it is land everywhere to expand and grow. [/QUOTE]

    What there isn’t, is water. Of course, we have some water problems here too.

  10. 10
    Amarjit says:

    I am locally from Seattle and have lived all my life in Kent/Renton area. I was just referring to geographic location of the cities, not trying to justify one city better than the other or putting anyone down.

    Amarjit Sandhu
    http://www.500realty.net

  11. 11
    Randy says:

    Why do people in Seattle assume everyone wants to move there? Yes Seattle is very green but that is because it is so wet. I will take the sun. No wonder real estate is so sky high in Seattle. You spend 99.9% of your time inside your home. Enjoy your paradise! lol

  12. 12
    david losh says:

    People get rich from Real Estate in both Arizona and New Mexico. I’m thinking Phoenix has had about six boom and bust cycles in the past twenty years.
    I don’t go there much anymore. Sedona really creeps me out. Yuppie town houses and art centers are for the very bottom of the low life loser scum barrel, but hey, some developer made a fortune buying cheap land to scar with his crappy swindles.
    You’re really not tracking on the truly magical qualities of waking up in the morning to a spoiled red bluff area that was revered by indigenous people for thousands of years. Once you squat out that new development it’s twice as wonderful.
    So in that regard Arizona has it’s own pink ponies, grazing in and around all those Indian Reservations.

  13. 13
    Kime says:

    Arizona,

    Don’t you realize that the whole pink pony thing is a total joke? Of course it’s insane, it’s supposed to be.

  14. 14
    Peckhammer says:

    Yes, I can detect the sarcasm in this post. However, it does illustrate the perception of those who really don’t know a damn thing about New Mexico, Arizona, or the rest of the Southwest.

    I have property in Taos New Mexico, with a wonderful 280 degree view mountains and within walking distance of the Rio Grande. Let me assure you that Seattle will never be known as “the enchanted land.”

    Santa Fe is an hour or so to the south, where a modest 800 square foot in-town Adobe will run you a dusty $1M. Seattle doesn’t have the market cornered on high prices, nor does it have the draw for the Hollywood types that stride though the streets snapping up $100K objetos de arte as if they were breath mints in a bowl at Santacafé.

    President Bush spends the occasional night a few doors down from some friends of mine, just outside of town. The view from there is wonderful; the Sange De Christo Mountains turning blood red in the sunlight at dinner time. Los Alamos is visible in the clear air, and you can feel the occasional rumble of a bomb being tested by wealthy government scientists who’ve just got to be lovin’ their jobs. Los Alamos may have fewer than 8,000 households, but one in five are worth at least a million bucks.

    The problem with a number of folks in Seattle is that they are blinded by green leaves and the strange luminescence of cloudy skies. This has ’em visually handicapped and they fail to actually see what the rest of the country has to offer.

  15. 15
    Kime says:

    “The problem with a number of folks in Seattle is that they are blinded by green leaves and the strange luminescence of cloudy skies.”

    You still really don’t get it. The whole point of the pink pony is that Seattle isn’t more special than other places.

  16. 16
    TJ_98370 says:

    Arizona,

    Don’t you realize that the whole pink pony thing is a total joke? Of course it’s insane, it’s supposed to be.

    Proving that satire sometimes does not translate well on a blog. Maybe that’s why emoticons were adopted? :)

  17. 17

    …..expanding the theory a bit, if you find land that is green and has lots of water, it should always be valuable and always retain it’s value. So Arkansas should be a fabulous investment, no?
    Full disclosure time: I’ve been to Arkansas and I’m very fond of it. It’s refreshingly unpretentious and has the best BBQ in the country.
    Great investment? Well, it didn’t soar as much as the nation as a whole.

  18. 18
    whats my name says:

    “5+ YEARS OF HOME PRICE DECREASES AHEAD?
    See the proof:”

    I had to share with my old friend, your landlord. He says don’t forget to tack on an extra 2 years for the Seattle lag time. Happy renting everybody.

  19. 19
    David McManus says:

    Well, I am a transplant from Louisiana who has been here for almost 10 years now and I can say I’m already tired of the Puget Sound. I think I got spoiled my first 5 years here with the good weather but the last 3 or 4 have been just absolutely horrendous. Add to that the cost of living / horrible traffic / delusional people and I have to ask myself, why would anyone want to move here. Whenever I hear people get on their high horse about how great the Puget Sound is, I just have to chuckle. I find that almost all of these people are natives who rarely leave the state of Washington. Eastern Washington is treated as if it’s a totally separate state / foreign country. My wife (native) hadn’t been out of Washington/Oregon until she’d met me. People talk about the hospitality of people up here and their tolerance, but I’ve never seen such intolerance in my life. And here’s a shocker…there’s more racism here than in the South….hands down! I asked my wife how many black people she had gone to school with and she said …. 3….. 3 people in the entire high school of 2000!!!! My high school in the deep south was at least 30% non-white.

    Now if only my house would sell. I can’t understand why no one wants to buy it for 100% more than what I bought it for 6 years ago……

  20. 20
    Nolaguy says:

    McManus,

    I’ve found the same observations as you: A large percentage of people in the NW that think it’s the best place on earth have most likely grown up here and never lived anywhere else, or they are from somewhere very cold/harsh (Minnesota, ND, SD, Iowa).

    Seattle has jobs and mild weather and natural beauty.

    But if I could make the same living in the rolling, pine-covered hills of Northern Louisiana, that’s where I’d be…

    /rant off

    Back on topic: Tim was being sarcastic. His premise is that there are great places everywhere in the US.

  21. 21
    Nolaguy says:

    Bubble Markets Inventory Tracking is recapping a shoot-out between Tim and Ardell from last spring:

    http://bubbletracking.blogspot.com/

    Good stuff.

  22. 22
    SteveH says:

    Hey David McManus, how do equate having three black school mates with racism? When I went to elementary school in Eastgate a long time ago there was one black student in the school, and you know what, I didn’t even know he was black. It never occurred to me to think of him as different in any way. We moved to Huntsville, Alabama with the space program in the sixties; now there was racism. I remember the principal of the high school calling an assembly and vowing that no black person would ever enter that school. Lived near Orlando for a year; that was a shock to the system. That was the most racist place I have ever lived.

  23. 23
    Kime says:

    I grew up in Redmond and in the early 70’s There were only a few black students in school, but I don’t think they felt the other students were prejudiced against them. I remember that in junior high one of the few black girls in the school was a cheerleader and quite popular.

  24. 24
    Eastside Eric says:

    Is Tim on Acid? Pink Pony? Talking about jumping the shark.

  25. 25
    Kime says:

    I also remember one black boy who was a special friend of my younger sister, not a boyfriend but one of the people she hung out with and he would come over to our home. We only thought of him as black in relationship to his beautiful voice because he would sing Stevie Wonder songs, etc, in the style thought of as “black”.

  26. 26
    EconE says:

    Ugh…what a boring drive.

    Try telling me how special Gallup, NM is! ;o)

    Flagstaff is a “pocket of coolness” in a ocean of dirt down there.

    Santa Fe? I felt like I was in a cult run community the way every building has to have that “adobe” look.

    Who knows…maybe they have pink tumbleweeds down there.

  27. 27
    David McManus says:

    Hey SteveH, I don’t necessarily consider it as racism, however, when you’ve got everyone claiming that Seattle is soooooo diverse, I call b.s. Everyone is so white bread it’s not even funny.

    Seattle is tolerant of everything so long as you agree with them. Differing opinions are not tolerated.

  28. 28
    Olaf says:

    Hey David McManus — You’re sick of Seattle, and I’m stuck here. So how about you sell me your house for just 50% more than what you paid for it six years ago, and we can solve both our problems!
    Seriously — if it’s a 3 BR or bigger, in Seattle proper, we may have something to talk about.

  29. 29
    OCInvestor says:

    Amarjit,

    If Seattle is so special why would you want to pay 75% as per per 500reality?

    Aren’t buyers suppose to rush into buying in hordes?

    Confusion????

  30. 30
    Buceri says:

    There is a reason the South is dirt cheap (I am typing this from my mosquito covered patio – lanai – at about 78 degrees – imagine what awaits us starting in April here in Tampa). But even the South there are lovely places. Last week there was long article in the local paper of how Florida is loosing retirees and others to the Carolinas, etc.
    Everyone has his/hers own cup of tea; mountains for some, beach for others, heat and humidity for some (humans, not mosquitoes), seasons with beautiful leave colors for others.

  31. 31
    OCInvestor says:

    Crystal,

    My personal experience.

    In late 05 and early 06, I was looking to invest in Arizona and New Mexico.

    RE pros such as you said that AZ and NM is running out of land, and rushing me into buying with age old scare tactics, so I pay any price they “demand”.

    When I asked how come land is plenty as far I can see, they said buildable land. Huh!!!!!!

    Nice. I backed off…. I will buy when I am confortable, not to make you comfortable. Even if I had to wait for many years to come.

    Enjoy Crystal.

  32. 32
    incessant_din says:

    “Los Alamos is visible in the clear air, and you can feel the occasional rumble of a bomb being tested by wealthy government scientists who’ve just got to be lovin’ their jobs. Los Alamos may have fewer than 8,000 households, but one in five are worth at least a million bucks.”

    GMAFB. Here’s a link for you:
    http://lanl-the-rest-of-the-story.blogspot.com/

    I agree that the University of California-ran lab at that location made a bunch of rich scientists, but that’s changing. They are laying off 10% of their staff this year, and new hires are getting benefits valued at 80% of what the UC used to offer. And if you want anecdotes about what employee morale is like on the hill, I’ve got those, too.

    I’ll let you have Santa Fe. It’s pretty. It’s quite possibly enchanting. I found it vapid. What little life there is in town seems to revolve around collection and redistribution of baubles, and that life comes to a screeching halt at about 4:30PM.

    To each his own. Fanta Se is not my cup of tea. Los Alamos is kind of nice to visit, and there are certainly uglier places to work. I’m sure Taos has its charms, too. I can’t comment on that. My favorite praise of New Mexico is the tag phrase, “cleaner than the Old Mexico.”

  33. 33
    Amarjit says:

    OCInvestor, this is the best deal in town. We encourage people (especially buyers) to think smart and do their homework before they rush to judgement.
    In 1994 King County where the city of Seattle is located changed its zoning codes from a minimum lot size to density based lots. Result smaller lot sizes, houses in close proximity. I think they were worried that people are running out of land. I still say good buildable land is scarce.

  34. 34
    Matthew says:

    The pink pony will ride forever!

    BTW, doesn’t San Diego have an ocean to the west, a border with Mexico to the south, and mountains to the east? Aren’t they out of land to build on? What’s that you say, their market is tanking? Huh, imagine that. Must be the job market, oh wait, what’s that? Their unemployment is lower than Seattle’s? Huh. Maybe since Seattle didn’t appreciate as fast we won’t ever see negative price declines… sure, keep telling yourself that.

    Long Ride the Pink Pony forever!

  35. 35
    David McManus says:

    “Hey David McManus — You’re sick of Seattle, and I’m stuck here. So how about you sell me your house for just 50% more than what you paid for it six years ago, and we can solve both our problems!
    Seriously — if it’s a 3 BR or bigger, in Seattle proper, we may have something to talk about.”

    Well, it is a 3BR. ;-)

    Everyone has been saying that RE goes up double digits per year every year, so you’re on drugs if you won’t give me 100%. It’s a great investment for you!

    Whoops, in the hour since you posted that comment, it appreciated 0.5%, so you have to pay me 100.5% over the original sale price. Hurry up and buy now or be priced out forever! At this rate, it will be at a 1 mill by the end of next month!!!

  36. 36
    stephen says:

    Moved here in 92′, back to Texas 03′ then back here 05′. Never plan to leave again, although a winter place in AZ might be nice :-)

    The Puget Sound is one of many beautiful places to live. If you don’t like it here you should keep looking, life is too short to spend it in a place you don’t like. Why do you need to make a 100% ?

  37. 37
    OCInvestor says:

    Thank you Amarjit!

    But what changed so drastically in just “2” years that home prices have almost tripled? I was able to afford a place to live on 1 salary in 2003, and now not anymore for the same place.

    Why should I pay $600K vs $250K. Please help me think.

  38. 38
    Angie says:

    My friends, that is not a pony. It is a unicorn. Even (perhaps especially) a 7 year old girl could tell you that.

    Which makes it a rather…emblematic choice.

    You couldn’t have picked a more representative mascot for your blog, Tim!

  39. 39
    Jonny says:

    Dear Pink Pony,

    Thanks for the enlightening all the grumpies on this board with a solid gut feeling that we can trust. Somehow I just knew all these “facts” and “graphs” were just a bunch of misleading snake oil. After all, Seattle really is special. You can just go outside and feel that specialness! I know now that I’ve seen “Arizona” there’s no limit at all to what people will pay to live in a great international city like Seattle. A million bucks is not enough for a dumpy studio condo in the central district. Not by a long shot! Half of San Francisco is probably going to move up here in the next year. And the Canadians are coming. Not to mention that every market and every house is unique. I’m going “all in” on Seattle real estate. It’s better than pure gold!

  40. 40
    SteveH says:

    Just a personal observation about Seattle. I grew up here when there weren’t a gazillion people and you could actually get away from people in the woods (which hadn’t all been clear cut). I’ve been in New Zealand for the past four years and just got back December 10. Wow, I had forgotten about the grey, damp, cold, wet, dark dank, etc. days of winter. Just left the beginning of summer in Napier and it was quite a shock. My waking and sleeping time sense is totally screwed up, with the early dark and the late light. I’ve spent more winters in Seattle than I care to remember, and I don’t remember ever feeling the opression of the dark. Having said that, I love the area. But there is no way I will pay the kind of money for a house that people want. The real issue with this whole bubble thing is affordability. How can others buy houses with 100% financing and feel comfortable when I won’t do it with 50% down? There is something fundamentally wrong with this market. Wages do not support prices. You would have to be a fool to buy a house here now. I can actually afford it, but count me out. All you people who think the market will keep gong up need to step back and ask who you are going to sell to. Take a deep breath, exhale, and realize that this is not sustainable in the long term. It amazes me that people are so caught up in the idea that rising prices are good. How about falling prices being good? How about embracing the idea that not spend 70% of your after tax income on a mortgage might be a good thing. There is a huge good side for a lot of people from falling prices. Everyone cheered as prices rose, but why? How about cheering for the good things that will happen when housing is reasonable again? And you are living in a wonderland if you believe Boeing jobs will sustain this place. Boeing has shipped all the real work of making airplanes overseas. Japan makes the wings; Italy makes fuselages, France makes tails. All we do here is glue it together. More real jobs exported, and this will continue to happen until all we do in the States is sell each other houses and insurance. It’s time we started making real stuff again, but it ain’t going to happen. All my money is out of the country because I believe the US dollar is doomed. I could be wrong, but I’m probably right. Good luck to us all.

  41. 41
    softwarengineer says:

    GREAT BLOG STEVEH

    I’d add we need attornies now [thought I’d never say that] on contingency. Its slam dunk the voices of truth in America like yours will be labeled: i.e., “Republican Bigot”, KKK or Hater, etc, etc; and this clear defamation of character launched against clear headed independents will be broadcast through corporate and fringe group rantings [MSM].

    Its slam dunk the attornies will win this “defamation of character” class action suit too. Think about it. It might be the match to light our industrial base again. They use fear and brainwashing to stifle clear thinking back to American manufacturing. Our only hope.

  42. 42
    Jonny says:

    SteveH: Can totally relate. Been here 20 years myself.

  43. 43

    Steve H,
    I can’t see for the life of me how lower home prices are bad, except for the fools who bought at the top of the market and need to sell. In 1979 I was renting a house on Capitol Hill behind Group Health, and my landlord told me he was going to sell the house, and offered me first crack at it for 36,000 dollars. I laughed and told him he’d NEVER get that kind of money for it.
    But yeah. I sell houses and I’m not willing to tell clients that these houses are “great values”, or that they could afford them. I’d love to see a 30% reduction in house prices. And yeah, winter in Seattle sucks, unless you are moss.

  44. 44
    Warren Bubble says:

    I second your post SteveH.

    As for the “job growth in Seattle” argument, it doesn’t help to have job growth if the potential employee who moves here for the job can’t sell the home in their current state and homes in Seattle are overpriced. Some companies may be willing to help out for several months but that cuts into the company’s profit.

    Also, if rents for homes are just about as much as a monthly mortgage payments, potential “residents” may look elsewhere (i.e., other states) for the right balance of job, mortgage and intangibles. Moving to this State for a job carries too much risk in this economic environment, especially if you have a couple of kids.

  45. 45
    Amarjit says:

    OCInvestor Said, “But what changed so drastically in just “2″ years that home prices have almost tripled?”

    My perspective on this is that this is still a fall out from dot.com boom arena. During the dot.com boom people made a lot of money through stocks, jobs and consulting. Salaries doubled and tripled (eg IT). Suddenly a lot of people could afford houses. Then came the dot.com bust, people pulled out of stock market or stopped investing in it, feds started lowering interest rates. Then came the 9/11, feds continued to lower the interest rates. Everybody started buying real estate 2,3,4 or even more houses. I have three properties myself. Bidding wars, lending practices crept up the prices. Like dot.com, now this is time for correction of housing prices.

    “Why should I pay $600K vs $250K?” As SteveH mentioned it all comes to affordability. I personally wouldn’t pay $600K. If you financial picture changes, it is hard to keep a $600k house than a $250K house. Rental market is strong these days, it is easier to rent a $250K house than a $600K.

    Thanks for the questions OCInvestor.

    Amarjit Sandhu
    http://www.500realty.net

  46. 46
    just_checking says:

    Also pink pony/unicorn, does AZ and NM have home based Pot growing operation like in the great PNW :)

    Seriously, remember the NPR news about the housing bubble creating these great cottage industry, well i had the (mis)fortune to walk into one listed for sale. No indication of it in the listing remarks at all…

    This was in nice SFR neighborhood and i bet the neighbors had no idea about this little operation…

  47. 47
    Markor says:

    Wages do not support prices.

    Does it not matter that plenty of people in Seattle have money besides their wages?

    And you are living in a wonderland if you believe Boeing jobs will sustain this place.

    The Seattle area has low unemployment, which is sustaining this place, so far. Thousands of businesses, not just Boeing.

    Prices may well plummet, but not necessarily because people can’t afford it.

  48. 48
    disbelief says:

    Today’s RE related story on the Seattle Times site gives the impression that it brings dire predictions for the local RE market. Then, when you read it, it comes across like more propaganda and wishful thinking. After years of double digit increases it predicts only a 1% loss before a “rebound” in 2008.
    This is presented as tough news for would be sellers and an “opportunity” for new buyers!
    Yes, would-be buyers take note: you should be happy to cash-in that 1% discount on a home that was $250K four years ago, is just under half a Million $ now, since you will be “saving” over $4,000!
    So get ready to buy, buy, buy now that the future of the housing market has been mapped out for you by Mr Cohen and his trusty economic experts. And gosh, sorry about the “tough” news for you recent buyers, I guess the double digit appreciation has been put on hold temporarily, (but get ready for more fun beginning in 08!). Gosh, I’m no RE “professional”, Economist, or some such other entity blessed with extra-special insight into the mechanisms of the housing market, but I really don’t see where this buying power is going to come from that will limit the downturn to a mere 1%, and bring about more appreciation in 2008, now that no one will lend the average income family four or five hundred thousand dollars to buy a home. But maybe I just don’t realize how may families with the required $150 to $200K-plus annual income are still waiting in the wings to buy an unspectacular tract home. That’s probably the average wage for Boeing / MS employees, Canadians,and those who are relocating to Seattle. Or maybe, articles like this will appear pretty hillarious a few years from now. One things for sure: Shills like Mr Cohen will still be writing for the Times, from “separate” buildings completely insulated from the influence of the department responsible for cashing checks from RE advertisers. Thank God for unadulterated, uncorrupted “journalism”.

  49. 49
    Markor says:

    In the forum there was some discussion about the space Microsoft is adding for 7,000 employees on the Eastside. Consensus was that it will all be to make room for cramped existing staff. I disagreed, because MS isn’t going to announce that they’re on a hiring spree, like they always have been. I was talking to a Microsoftie, who told me three managers there called BS on the “it’s all for existing staff” theory. They said they have so many open positions that they are unable to fill, that they have to cancel & re-open them or get dinged. (Yes, heresay, but this isn’t a courtroom.) MS is going gangbusters because of the cheap dollar. Shareholders are pissed that the company has so much cash not being worked to maximum gain. Even new jobs at wages that cannot pay for a house puts upward pressure on house prices.

    All that said, I think Seattle-area houses are overpriced, except for the ones that aren’t. Overpriced houses can remain that way for years, esp. with a strong local economy. Or they may not.

    Seattle isn’t special, unless you really like nature, relatively mild weather, and house prices 50% less than those in “world class” cities like San Fran, in which case it’s something of a paradise. I recall a story about a realtor stuck in traffic on the 520 floating bridge with his buyer client, who was relocating from Texas. The realtor apologied for being stuck, and the client said something like “who cares, look at this view!”

    Seattle is roughly equidistant from three national parks, each among the best in the country, if not the world. We have so much natural beauty here that some places that would likely be national parks in other states don’t even warrant wilderness status here.

  50. 50
    Markor says:

    Gosh, I’m no RE “professional”, Economist, or some such other entity blessed with extra-special insight into the mechanisms of the housing market, but I really don’t see where this buying power is going to come from that will limit the downturn to a mere 1%, and bring about more appreciation in 2008, now that no one will lend the average income family four or five hundred thousand dollars to buy a home.

    What about the families who can put down $200K+? The ones who didn’t use their houses as ATMs?

    I think the downturn will be 3.4% in 2008. I could be wrong, but I bet I’ll be as right as the average economist.

  51. 51
    Lake Hills Renter says:

    Well, since you talked to one guy at MS it must be true. I guess the fact that my entire product (>500 employees) is moving solely because of overcrowding has no relevence.

  52. 52
    b says:

    Markor,

    You’d better hope that the Silicon Valley housing market stops its rapid decline or M$ is going to be in quite a tough spot. I cannot imagine their sales pitch is going to be very persuasive if you can buy a $500k house in Bellevue or a $500k house in Cupertino. “Hey, come on up to rainy Seattle and make 80% of the pay with the same level of expenses. Sunny weather and a stronger tech job market are nothing compared to Pike Place!” Seattle NOT deflating similarly to the rest of the country would eventually be economic suicide for the region.

  53. 53
    disbelief says:

    “What about the families who can put down $200K+? The ones who didn’t use their houses as ATMs?”

    Markor, you’re referring to the those buyers who both had had perfect timing and where prudent enough not to piss it away?
    I’ll bet that’s a pretty insignificant number, more than offset by those who did go on spending sprees, and those who are now regretting their lack of timing. Also,as has been pointed out many times here, even those fortunate few must first sell their homes before they can buy another, no? and why would they necessarily be trading-up now?

  54. 54
    bitterowner says:

    “Or maybe, articles like this will appear pretty hillarious a few years from now.”

    I think they are pretty hilarious right now.

    Also, Markor – you clearly have a tremendous stake in the RE market somehow avoiding the inevitable correction as you grasp at one irrational straw after another to justify your claims. The entertainment value is priceless, however, so keep it coming!

  55. 55
    MacAttack says:

    “President Bush spends the occasional night a few doors down from some friends of mine, just outside of town. The view from there is wonderful;
    Yeah, ya know what his mom calls my town, Portland? “Little Beirut.” You’re welcome to your new Mexico.

  56. 56
    SteveH says:

    “What about the families who can put down $200K+? The ones who didn’t use their houses as ATMs?”

    Well Markor, I am one of those families. And I’ll be damned if I am going to buy into this overpriced market. I will continue to rent and save even more. And as far as Boeing employment supporting house prices, I have a very long memory of previous aerospace cycles in Seattle. What is interesting is that Boeing is making a lot of airplanes right now but is not hiring many people. My understanding is that the 787 assembly resulted in about 900 new hires. Contract aerospace businesses may be hiring more, but at very low wages. I really feel we are right on the edge here, and it will be pretty easy to slip.

    “I think the downturn will be 3.4% in 2008. I could be wrong, but I bet I’ll be as right as the average economist.”

    I agree with you there, you will be as right as the average economist, who has been wrong most of the last two years. Watch what happens on Wall Street when the banks start announcing their real losses in the next month or so; it is going to get pretty ugly. I’m not a doom and gloomer, but I have just returned to this country after four years abroad and I have to tell you that the States looks pretty insane to me. Standing back and watching has been interesting. I only wish we weren’t headed where we are going. I have seen a tremendous strain developing on the middle class in the US. The way income is being redistributed to the very rich is astounding. The fundamentalist religion stuff I see happening is pretty scary. I wish every on os us could stand back a bit and see the US as others do, and thus get a better understanding of what is going on. It’s pretty hard to have an honest picture of yourself; we all paint things to make them more palatable.

    And softwarengineer, I am definitely not a republican. I’m a card carrying member of the ACLU and pretty liberal in my social politics. However, I am also pretty conservative in my fiscal outlook. I think people should be responsible for their actions and their debts. All this discussion about ‘saving’ people’s homes drives me nuts. Time to let the market work. I am totally opposed to privatizing the profits and socializing the losses, as that excellent phrase goes.

    Having said all that, my daughter and I are going skiing tomorrow. Pretty amazing dumpage the last week or so. Should be awesome.

  57. 57
    Tony1790 says:

    I’m one of those people that can put $250k down on a house, but why in the heck would someone “put down” $250k on a nice home, when I can move to one of 40 other states that I can pay cash for the same home and NOT have a mortgage at all? Or if I want to stay in the Seattle area, the interest on $250k in a CD would be enough to pay rent on a home here.

    So I’m NOT buying a home here for now, this is what I advise others do as well, but to each their own.

    Take care

    Tony

  58. 58
    Peckhammer says:

    “You’re welcome to your New Mexico.”

    Why thank you! It compliments my properties in Washington and Southern California rather nicely.

  59. 59
    Displaced Seattlite says:

    Right on target, SteveH. Enjoy the snow while it lasts.
    The RE market demand, we must all remember, has been driven by the investments of masses of baby-boomers who need to make money to live their bona-fide self-fulfilling lives. Well, those others that also have ridden along with the ‘boomers get theirs, too.

  60. 60
    Peckhammer says:

    SteveH said:

    ” I have seen a tremendous strain developing on the middle class in the US. The way income is being redistributed to the very rich is astounding.”

    The strain was self-imposed, and the redistribution was done with their blessings. No one forced the middle class to emulate the rich or consume their way into debt like a bunch of feckless idiots. The middle class raced into the burning barn and it now feeling a bit hot. Stupid herd mentality should not be rewarded, IMO.

  61. 61
    Displaced Seattlite says:

    Tony & Disbelief, you are correct that such an investment would be folly now. Cash until spring is prudent. Of course, if you had to move, as I did, you will sell for less than you would have last spring, and I expect next fall will be even lower (15% per other discussions and Shiller seems about right).

  62. 62
    Markor says:

    Also, Markor – you clearly have a tremendous stake in the RE market somehow avoiding the inevitable correction as you grasp at one irrational straw after another to justify your claims.

    No, just rationally playing devil’s advocate. For example, MS is going to dedicate all 7,000 new spots to making existing staff comfier? The shareholders would be apoplectic. Not going to happen.

    If one hopes to predict the financial future, it’s best to become adept at reading between the lines. Lots of details are kept secret, to better profit the ones who are keeping them. (Iraq war? It’s about oil, more oil, and the money oil brings. To see the truth, always follow the money.)

    Why would I often say that prices may well plummet if I had a big RE stake? The US could have the worst depression in human history. Millions could starve to death. Bird flu could wipe out the remaining survivors. Don’t ever buy a house, it’s not worth the risk. Prices fall 50%? Who’s to say they won’t fall another 80%? After all, if prices can become greatly overpriced they can become greaty underpriced too, esp. if they just fell 50%.

    Markor, you’re referring to the those buyers who both had had perfect timing and where prudent enough not to piss it away?

    Perfect timing isn’t required. For example, a friend of mine’s house in Phoenix zillows for $1.1 million. If he sold it for $700K he’d have $400K after paying the bank. He’s been a homeowner for all of ten years. (OMG a sample of one! Where are statistically significant stats?) The bubble is still deflating. There’s still tons of equity out there. Yes it can be like re-arranging the deck chairs on the Titanic. It could also be that the Seattle area’s economy is relatively stronger than others, drawing people here so that our ship just lists while other ships sink.

    Bellevue is the hottest office market in the country now? Won’t those developers just walk away those new buildings rather than reduce rents? Or is it possible that they have a 5+ year plan that can survive a downturn?

    Bogle of Vanguard (supremely successful mutual funds) says the best financial advice he ever got was this, about the short term: “Nobody knows nothin’!”

  63. 63
    Markor says:

    Or if I want to stay in the Seattle area, the interest on $250k in a CD would be enough to pay rent on a home here.

    Where are these houses that are renting for $900 a month?

  64. 64
    Jonny says:

    “Where are these houses that are renting for $900 a month?”

    A better question: where are the houses selling for $1800/mo?

  65. 65
    Grubbie says:

    For example, MS is going to dedicate all 7,000 new spots to making existing staff comfier? The shareholders would be apoplectic. Not going to happen.

    I will be another to say you are wrong Markor. It is more important to keep the current employees happy and move them to the new buildings, than to move new hires to the new buildings and leave FTE’s sharing offices and the majority of teams being cramped and out of space.

    I’m currently in a building that has the FTE’s, even those that have been there 7-8years having to start doubling up in a single office. Contractors are in an even worse position, with 8 sharing a conference room, 3 or 4 sharing a single office space. And even break rooms being turned into offices with curtains to hold contractors.

    My entire group (1-2floors of a building), will be moving to the new campus, just like Lake Hills Renter. A lot of the new space is being used to help with the congestion currently for the Home and Entertainment Division. The majority of those 7,000 spots will be for existing employees and contractors.

    If they don’t use the majority of those 7,000 spots to fix the overcrowding, then a lot of employees will start leaving in the future.

  66. 66
    Markor says:

    A better question: where are the houses selling for $1800/mo?

    Few or none today. What about when the dollar is devalued by 50%, rent jumps to $3600/mo, and house prices double? When inflation hit 3000% annually in Argentina, who do you think came out ahead, renters or owners?

    I agree with SteveH, it is going to get pretty ugly. Lots of people here are doom & gloomers, but it seems most assume that renters will be better off. I doubt it. The rich will stop at nothing to stay relatively wealthy. They will devalue your currency, promote hyperinflation, start wars, whatever. They will easily have enough assets protected, because they live on a fraction of their wealth.

  67. 67
    WestSideBilly says:

    And yeah, winter in Seattle sucks, unless you are moss.

    Having spent the last week in the midwest, I can assure you there are a lot of people who would love 42° and partly sunny.. sure beats 10°, snowing, and windy.

  68. 68
    Shawn says:

    One thing I agree about is that when Seattle goes around bragging about how great it is, well that makes it not so great. See if you feel you need to tell everyone that you are great, well that really means you are not great. I have been living in Los Angeles for nearly a decade now, and never have I heard, nor read in the press, anyone in LA bragging about how cool it is. I also lived in SF for four years, same deal. What you do hear is SF folk saying LA is no good for x, y, and z reasons, and you hear LA folks saying how lame SF is for x, y, and z reasons. In addition, they both say NYC is nothing. However, you never hear them saying squat about Seattle, except that it rains there and that who in their right mind wouold move there? Reality is: Seattle is a little town with a big ego. Maybe it is going to get a dose of humility with some RE prices going down. Maybe, one can hope, Seattle will gain some humbleness as a result. I was thinking of moving back, but as time was drifting by the prices of homes started going up so high that the comparison between Seattle and LA grew less and less in Seattle’s favor. I would leave LA for Seattle if the houses were a few hundred grand less. But for me to go to Seattle to save maybe 100k on a home, naw, aint gonna happen.

  69. 69
    Markor says:

    And softwarengineer, I am definitely not a republican. I’m a card carrying member of the ACLU and pretty liberal in my social politics. However, I am also pretty conservative in my fiscal outlook. I think people should be responsible for their actions and their debts.

    Being fiscally conservative and being liberal go hand in hand. It’s the Republicans who are lousy with money and expect a handout at every turn. Their only genius is making the masses think the opposite.

  70. 70
    Markor says:

    What you do hear is SF folk saying LA is no good for x, y, and z reasons, and you hear LA folks saying how lame SF is for x, y, and z reasons. In addition, they both say NYC is nothing. However, you never hear them saying squat about Seattle, except that it rains there and that who in their right mind wouold move there?

    What they’re saying is how great California is. That’s what makes it not so great. I grew up in LA. It’s the pits, an opinion shared by everyone I know who used to live there. Have you experienced Seattle rain? It’s usually drizzle here, whereas it’s often a downpour in LA.

  71. 71
    Greg M says:

    Has anyone seen the proposed ban on outdoor burning? Apparantly, the Puget Sound Clean Air Agency doesn’t like developers burning the brush when clearing the land for a housing development, so they are trying to ban it. Problem for me is I own a small working forest that I need to burn the debris in order to keep the fuel load of the forest minimized. Chipping or composting isn’t practical for a 30 acre forest!

    outdoorburning.blogspot.com

  72. 72
    softwarengineer says:

    HI $3600/MO RENT MARKOR

    You wanna be liberals make me laugh. You think $200K per household is Middle Class. If I recall, it was both the Democrats and Republicans that got us into the Iraq quagmire, draining our budgets dry. The Democrats are a bt more social minded than Republicans, but even Democrats today are against the Alternative Minimum Tax (AMT) on the rich (them too, like their Republican buddies?). Why aren’t campaign expenditure limits suggested by Democrats (they control Congress now)? Me thinks all the Dem/Rep presidential choices (????) were selected by the rich elite outsourcers. The real Middle Class ($45K per household) got shafted decades ago. Where’s the Democrats (Reps too), at the WTO meetings outsourcing all our jobs????

    As far as the ACLU goes, if they spent half as much money and expense on the legal citizen Middle Class’ rights/job protections as they spend on undocumented immigrant overpopulation [non-citizens] for the rich elite’s slave wage rates, I’d have some respect for them again. They’re wanna be liberals in my book too.

  73. 73
    Markor says:

    Problem for me is I own a small working forest that I need to burn the debris in order to keep the fuel load of the forest minimized. Chipping or composting isn’t practical for a 30 acre forest!

    You mean you want to profit at others’ expense, little different than smokers enjoying their nicotine at others’ expense. I favor burning bans. Why should I suffer so someone else can make a buck?

  74. 74
    Markor says:

    You wanna be liberals make me laugh. You think $200K per household is Middle Class. If I recall, it was both the Democrats and Republicans that got us into the Iraq quagmire, draining our budgets dry. ..

    Lots of misconceptions there. Liberals aren’t necessarily Democrats, although they may vote for them because there’s no better choice in our two-party oligopolistic system. Voting for a war isn’t the same thing as voting for a complete bungling of it, and the evidence of the threat was fabricated. Democrats control Congress but not to the degree where they can pass what they want. Bush will veto anything the Republicans don’t want and the Democrats cannot override it by themselves. Therefore the only way the Democrats can accomplish anything is to work on things palatable to Bush; i.e. dumbass stuff, but hopefully stuff that ruins the country slower.

  75. 75
    michael says:

    I’m not a big fan of Republicans or Democrats but in defense of the Democratic Senate and Congress they have suffered from a larger number of filibusters at any time in the history of the institution. They can’t pass anything because the Republicans will filibuster anything they don’t like and Bush threatens with the veto. Statistically their have never been more filibusters in any time in our history than right now. The Republicans have been very disciplined in the way they approach legislation. The Republican strategy has been to give the Democrats only two choices. They can either shut down the government by not passing a budget or they can pass a Republican budget. I’m not saying the Democrats are not a world class group of sellouts. They took money from hedge funds so that the world’s richest people could continue paying a 15% income tax. (Hedge fund managers have their income taxed as Capital gains.)

    P.S. I’m voting for Kucinich. I love sixty year old men who can still date teenagers and be self righteous about it. He has been a great inspiration to me. It kills me when a bunch of feminists support this guy. Lechery Now, Lechery Foever. Google his newest wife!!!

  76. 76
    David McManus says:

    Yeah, that’s why the DEMOCRATIC Congress’ approval rating is in the teens. But oh, that’s right, people are stupid and they aren’t enlightened as you, blah blah. I find it funny how liberals think they’re smarter than everyone else and talk down to all those unenlightened people, yet when they keep losing national elections they can’t understand why they lost. It reminds of the “Bush is an idiot. Bush was a C student at Yale.” crowd who failed to research the fact that their candidate John Kerry got worse grades than Bush did! But Kerry was God and the smartest man in the universe and “oh, can I get me a huntin license here”. Until the Democratic party starts to respect every state in this country and not just the left and right coasts, they will never win the White House. And guess what, the people will not vote for Hillary…..ever!

    But I guess those people are just stupid, can I have your vote?

  77. 77
    Lake Hills Renter says:

    Stereotype much?

  78. 78
    Ubersalad says:

    for the record, GOP winning election is a recent phenomenon…and a short one to be.

  79. 79
    David McManus says:

    Um, that may be true, but I wouldn’t say people voting for conservatives is a recent phenomenon. It’s only been going on at least since 80.

  80. 80
    Ubersalad says:

    20 years is a short period of time for politics, most of 20th century went to Democrats…overwhelmingly did.

  81. 81
    deeplennon says:

    Someone please save this thread from itself.

  82. 82
    Ubersalad says:

    a thread about pink pony doesn’t deserve to be saved…

  83. 83
    David McManus says:

    I see a pink pony!!!

  84. 84
    wreckingbull says:


    Problem for me is I own a small working forest that I need to burn the debris in order to keep the fuel load of the forest minimized.

    I see from your blog that the Commissars would not allow a silvicultural exemption.

    I too work the land on some rural plots I own in Jefferson County and Bonner County, ID and understand your plight. Using a chipper to deal with your challenges is a joke and was clearly suggested by someone who has never had a spec of dirt under their nails. This is why I will NEVER buy rural land in the greater Seattle area. Best of luck.

    Too bad chipping the slash will release even more C02 than burning. The stuff is going to decompose anyway. That is almost as ironic as Al Gore’s $2000/month residential power bill.

  85. 85
    Olaf says:

    Wow. No wonder no one wants to buy McManus’s house. The basement’s probably crammed with anfo bombs and old Oliver North 4 President T-shirts.

  86. 86
    Amarjit says:

    Wow, the pink pony might be loosing steam. Re/max closed its 13 offices in Phoenix Arizona on Christmas Eve. It was the largest brokerage operating out of Gilbert Arizona. Will Seattle be next on their list?

    Amarjit Sandhu
    http://www.500realty.net

  87. 87
    Scuba Steve says:

    Markor said,
    You mean you want to profit at others’ expense, little different than smokers enjoying their nicotine at others’ expense. I favor burning bans. Why should I suffer so someone else can make a buck?

    Do you have any idea how this sort of thing works? You need to burn off a little of the fuel load as it builds up or run a risk of a much bigger forest fire later. The smoke impact of a brush fire to neighbors is negligible, especially when it’s not located near a property line. Live for a while outside of a city and see how all these regulations really impact those who need to make a living.

  88. 88
    Markor says:

    Do you have any idea how this sort of thing works? You need to burn off a little of the fuel load as it builds up or run a risk of a much bigger forest fire later.

    OK.

    The smoke impact of a brush fire to neighbors is negligible, especially when it’s not located near a property line.

    That’s probably what my neighbors think, when their burning makes my yard unenjoyable. It’s not just your neighbors, obviously. It’s everyone in the path of your smoke, which will most likely travel hundreds of miles. Part of Los Angeles’ smog comes from China.

    Live for a while outside of a city and see how all these regulations really impact those who need to make a living.

    Most people need to make a living. Make it at your own expense. Factories need to discard harzardous waste or run a risk of harzards. Doesn’t mean they can burn it or dump it. Instead they need to properly dispose of it. If they can’t make a profit after paying the cost of properly disposing it, they should get out of the business.

  89. 89
    In Exile/Obsessed says:

    Off topic–the pink pony topic, that is. I was very surprised by the number of houses listed today on craigslist. –14 or more pages of houses posted so far today for the seattle area, at 100 per page. An indicator of the beginning of a glut?

  90. 90
    Tom says:

    In Exile/Obsessed

    I noticed the same thing, though after taking a close look many of the home that were listed today are just homes that weren’t selling before, and were taken off the market during the holidays…

Leave a Reply

Use your email address to sign up with Gravatar for a custom avatar.
Your email address will not be published.

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

Please read the rules before posting a comment.