More “Superstar” Nonsense from Lawrence Yun

Apparently the only necessarily qualification for becoming a “world class” or “superstar” city is to keep on repeating that it is so. That’s the message I’m getting from the latest quotes from the Realtor’s spokesman Lawrence Yun, anyway.

Seattle-area home prices are manageable for typical workers, according to the chief economist for the National Association of Realtors.

“You may even say Seattle is underpriced if you believe Seattle is becoming a superstar city,” Lawrence Yun told area brokers in Bellevue on Thursday. “Seattle is underpriced in relation to other West Coast markets.”

First off, we have addressed this “superstar” or “world class” thing before. If you haven’t read it already, take the time to check out On Luxury Cars and World Class Cities. Also be sure to read P-I columnist Bill Virgin’s take on the world class question. The gist of our argument is that although Seattle is great, and we love it here (really we do), it is not a world class city by any available objective measure. Sorry, it’s just not, and repeating over and over again that it is doesn’t make it so.

When people like Mr. Yun make the assertion that Seattle is a “superstar city,” they never back that claim up with any sort of quantifiable data. There are measurable characteristics that one can use to judge whether or not a city is world class (a good list can be found on Wikipedia), and Seattle simply does not measure up, any way you look at it.

But that’s not my only problem with Mr. Yun’s speech yesterday. He also made a some verifiably false assertions and ludicrous predictions.

The percentage of income a typical family would have to pay for a typical home dropped from the low 20s in 1990 to the high teens through the early 2000s and has returned to the low- to mid-20s, according to Yun.

False. Unless Mr. Yun was talking about nationwide statistics (which is possible since we don’t have the complete text of his speech, but would be pretty meaningless), that statement is simply untrue. The “percentage of income” measurement is simply a variation on the “affordability index” data that we have discussed here before (for details on how the affordability index is calculated, see this post). If you divide the assumed 30% affordability level out of the index, you get the “percentage of income a typical family would have to pay for a typical home.” Let’s see what that data looks like for King County from 1990 to the present.

Percentage of Typical Income Required for a Typical Home in King County
Click to enlarge

Sorry Mr. Yun. We were in the low 30s in 1990, and most of the 90s were in the upper 20s. The early 2000s hovered around 30, and we have since shot up to over 40%, not returned to level of the 90s. I don’t know where Mr. Yun is getting his data from, but all of my figures are based on verifiable sources (see the graph for specific sources).

Yun predicted home sales nationwide would improve this year from a slow 2007, with sales and prices picking up in 2009.

Doubtful. As Deejayoh pointed out the last time Yun began shooting his mouth about Seattle, Mr. Yun and the NAR don’t exactly have a very good recent track record when it comes to predicting nationwide sales.

Housing sales have scaled back to normal levels from the “excessive boom” of 2003 through 2006 and have stabilized, Yun said.

False. As can be seen with the latest data from the NWMLS, home sales in Seattle since August have been anything but “normal,” and they certainly show no signs of “stabilizing.”

King County SFH Pending Sales
Click to enlarge

January pending sales were 15% lower than the lowest post-2000 year on record, and the trend line is very clearly headed down. Again, he could have been talking about nationwide statistics, in which case I don’t have the data handy to debunk his claim, but for the Seattle area, his claim is clearly false.

“We are probably scratching the bottom in terms of home sales activity.”

Doubtful. You would think that Mr. Yun would have learned a lesson about calling the bottom from his predecessor at the NAR. Apparently not.

As an added bonus, licensed Realtor Christopher Braxtan over at the Real Estate Professionals blog chimes in with a false assertion and dubious prediction of his own:

…despite the recent building frenzy, the population in Seattle continues to outgrow the supply of housing.

False. We’ve debunked this claim using sourced, verifiable data at least twice before: Big Picture: Supply vs. Demand, and King County NOT Running Out of Land.

There are enough people earning above-average incomes that the prices of homes in Seattle will remain stable until we build a lot more affordable housing.

Doubtful. Again, we’ve covered this before. Incomes are neither growing all that fast, nor high enough to prevent home prices from declining.

I challenge anyone that agrees with Mr. Yun’s assertion that “Seattle is becoming a superstar city” to bring forward some quantifiable, objective data to show that this is true. Until that happens, I’m forced to believe that such claims are nothing more than hot air.

(Aubrey Cohen, Seattle P-I, 02.08.2008)
(Christopher Braxtan, Seattle RE Professionals, 02.08.2008)


About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

51 comments:

  1. 1

    GEE, SEATTLE NEEDS TO CATCH UP WITH THE OTHER WEST COAST CITIES

    Would Mr Yun be referring to Stockton, Riverside – San Bernardino, Sacramento, Bakersfield and Oakland?

    Especially Stockton, the worst foreclosure rate in America?

  2. 2
    Eastside Eric says:

    I’m not sure if you’re so used to getting so little (deserved) respect outside of the bubble community throughout the lean times when you were the only voice of reason in the wilderness, or if you’ve simply developed a reflex to counter every single word of ‘there is no bubble’ being reported in the media.

    In any case, it’s a bit overkill. No offense, man, I like you, but you’re hitting diminishing returns. Most people get it. Most people realize the ride is over. Granted, there are numbers in denial, but those aren’t people worth converting. I think all your targets have become believers (e.g. renters made to feel inferior by owners, folks weighing the buy or not to buy decision, owners on the fence about selling or not).

    I feel like you need to take this blog in a new, constructive direction. Not sure what that would look like – only you can answer that – but I don’t think it’s repeating over and over, “see, someone else says Seattle is special..how many times do I have to show you – with data and anecdotal evidence – that this isn’t the case”.

    Given your big move to self-employment (congrats again, dude), there’s going to be the pressure to sustain your own movement, to continue the rhetoric, simply in order to ensure self-preservation. I like how you’re pursuing other endeavors. That’s good, because this subject is losing steam, and unless you evolve it, you risk fighting the rising tide of irrelevance as the market eventually turns positive again – just look at Rush Limbaugh.

    I’m sure I may be flamed for these comments, but I get that. I wish you the best of luck, there’s nothing like spending more time with your loved ones, which self employment can give you.

  3. 3
    patient says:

    There are still about a thousand misguided buyer’s out there every month showing that it’s far to premature to let propaganda like this go unchallenged. I’m sure you are getting new readers by the day so please keep it up. Thanks again for the excellent work and the best of luck in being your own boss!

  4. 4
    Joel says:

    Most people realize the ride is over.

    I have to disagree. While I totally agree that eventually the general population will (forced to) “get” it and at that point the subject will lose steam, but I really don’t think we’re at that point yet. I think most people are aware of some kind of housing problem, but only in places outside of the Seattle area.

  5. 5
    The Tim says:

    I appreciate constructive criticism like Eastside Eric’s comment above. I hope nobody flames you or shouts you down, because you make some good points. I agree that the blog needs to “evolve,” as you put it. My goal is to do my best to make Seattle Bubble the best resource for data, analysis, and straight talk about the Seattle-area real estate market. With things like this week’s poll and feedback from recent comments like this, I’m getting a better idea of what that will look like.

    That being said, I doubt I’ll ever totally drop posts like this one from the rotation, as I believe they serve a useful purpose. When someone makes claims and predictions like these and gets press for it in one or more of the major local news sources, and they’re full of ****, I can’t help but call them on it.

    I probably should have at least used the “read more” feature to keep the super-long post from taking up so much of the front page though. In fact, I think I’ll go ahead and make that change now.

  6. 6
    Runs With Scissors says:

    I choose to view the post as a counter point to what Yun has said in this most recent potification. I do tend to view his comments as an Economist to be about as accurate as Cheney’s has been on the positive nature of the occupation of Iraq or Exxon’s comments on their environmental activism.

  7. 7
    singliac says:

    Eastside Eric,

    I also have to disagree with the idea that most people “get it.” I still meet people who swallow everything they hear from “Real Estate Experts” in the paper. I get a lot of pleasure out of reading these quotes. Listen to Gov. Gregoire’s recent comments and try not to laugh.

  8. 8
    biliruben says:

    Most people certainly don’t “get it”, at least in my circles.

    Even those that do, struggle mightily with the seduction that is homeownership, me included.

    I saw two homes that were pretty darn close to perfect for my family go on the market in the last few days. One would have been a real stretch, the other just on the right side of our budget. I drove by them, salivating with desire, then turned away.

    For better or worse, both had offers within a day.

    I do firmly believe there will be others, better and cheaper, if we wait a year or two, but waiting is tough while playing Eight is Enough in our small cottage.

    Maybe we need to set up a regular “Homeowners Anonymous” meeting at Targy’s.

  9. 9
    John says:

    Hey Tim

    Greetings from Vancouver, another city with “Evidence of World Class Formation”, scoring 2 points on this scale right up there with the likes of Cleveland and Oslo.

    If you folks in Seattle think you’re tired of “world class”, drive 150 miles North and its all you’re going to hear or read. We do score high in a couple of departments, however. First, we’re the sixth most overvalued real estate market in the world according to Forbes. Second, we’re the most “bubbly” market in North America according to Shiller. Third, we have to be the biggest wanna be world class city in the entire universe. Cheers, J

  10. 10

    The phrase “World Class” has become the most overused phrase regarding Seattle, but rarely used by people from outside Seattle. The sculpture park is “world class”. the new library is “world class’, and I was doing some editing/proofreading for the county 18 months ago and read the phrase “world class” to describe the upcoming light rail system. I pitched a fit and they listened to reason. I think they’re now describing the new light rail system as “one of the best”.
    I don’t know what it is that we have to describe ourselves as superstars or world class…If we were truly superstars or world class we wouldn’t have this need to broadcast that constantly.

  11. 11
    Sniglet says:

    I wonder if Messr Yun has ever seen a market he thought WAS over-valued? It’s kind of hard to trust someone saying “it’s a good time to buy” in a particular market if they never say “it’s a bad time to buy”.

  12. 12
    Sniglet says:

    I agree with biliruben that the majority of people in the Seattle region don’t realize we’re in for a serious housing crash. Sure, lots of people realize we shouldn’t be expecting 15% apprecation rates any time soon, but aside from the bubbleheads on this blog I don’t hear any of my colleagues or associates talking about 15% or 25% price drops over the next few years (let alone wackos like me who expect 50% plus declines).

    Even when price declines seriously kick in for the Seattle region we still need a blog like this to help each other determine when the bottom might be in. I have read stories of people in Japan who bought after prices dropped 25% in the early ’90s, only to find prices drop another 30% or 40%. I certainly don’t want to be caught in that situation.

  13. 13
    Chris says:

    seattle’s not world class. That said, seattle has many of the things on the wikipedia list. Seattle is a “top ten” U.S. city, IMHO, if we were going to line them up on progression to world class. (we only have four). Seattle with a robust transit system (big if) and some better targeted public investment in parks, might attract the population and corporate presence to be close to challenging for #6 on the list after DC

    World Class:
    New York, Chicago, LA, SF

    Almost:
    DC, Philadelphia, Miami, Boston, Dallas, Atlanta, Houston

    Next Rung:
    Seattle, Denver, Minneapolis, Portland, Cincinnati, Baltimore, San Diego, St. Louis, Kansas City, Nashville, Tampa, Cleveland, Phoenix, Charlotte, Indianapolis, Pittsburgh…

  14. 14
    Chris says:

    err. top 12, now that I made the list…

  15. 15

    I’m glad we’re in the same rung as Pittsburgh , Cleveland, and Baltimore.
    Betcha those places don’t go proclaiming themselves as “World Class”.

  16. 16
    Scuba Steve says:

    I can say from experience that Dallas and Houston have a much smaller transit system than what exists here. They have a small rail setup downtown, but bus ridership levels are lower.

  17. 17
    jon says:

    “The percentage of income a typical family would have to pay for a typical home dropped from the low 20s in 1990 to the high teens through the early 2000s and has returned to the low- to mid-20s, ”

    Yun may have been talking about the typical family that happens to own a home. The sudden drop to the low to mid 20s would have occured once the credit market reverted back to the old rules.

  18. 18
    patient says:

    If you’ve been in a true world class city you know that the claim of Seattle being one is just redicoulous. In a world class city you don’t wonder hmmm perhaps this is world class, it’s just in your face obvious. Don’t get me wrong I love Seattle and think it’s a great little place to live for families and outdoor fanatics like myself.

  19. 19
    Angie says:

    I knew you were going to have fun with that one when I read it this a.m., Tim!

    Back at #3, patient says There are still about a thousand misguided buyer’s out there every month showing that it’s far to premature to let propaganda like this go unchallenged

    That is a problem. Judging from the second graph up there, King County needs more like 2000-2500 misguided buyers every month to really start clearing out the inventory that’s built up….

  20. 20
    rose-colored-coolaid says:

    John, I think you have inadvertently pointed out a great example of not being a world class city. Vancouver, BC and Vancouver, WA are both roughly the same distance from Seattle. The one in BC is clearly a larger city, but Vancouver WA is a large city in its own right (top 5 in WA).

    The point is, if you head a little south of Seattle, like say Olympia and say Vancouver, nobody will be sure which one you are talking about. Whereas, if you talk with a Western Washington graduate, they do refer to Vancouver BC as just Vancouver.

    To make a Seattle comparison try this. Rename Seattle to “Eugene” or “Boise” and it suddenly becomes a lot less clear what city people are talking about. I think a lot of the “Seattle is world class” comes from the fact that it has an uncommon name. Here’s another example. Rename Seattle to Columbus, Providence, Memphis, or Reno. At that point, you would have to add WA when naming our city, because it would be unclear to most people.

  21. 21
    rose-colored-coolaid says:

    Scuba Steve // Feb 8, 2008 at 6:05 pm

    I can say from experience that Dallas and Houston have a much smaller transit system than what exists here. They have a small rail setup downtown, but bus ridership levels are lower.

    Smaller than Seattle’s? What do they have? Toy trains that run around City Hall?!?

    Still, some might argue that the lack of highways here necessitates more mass transit than is required in Texas. In fact, I would make that statement.

  22. 22
    nitsuj says:

    One thing is for sure, these real estate people must throw one helluva party because they all seem to be HIIIIIIGH whenever you read what they say.

    I used to think if I wished and tried hard enough I’d be able to use Jedi mind tricks to make my pen jump into my hand. It never worked. I’m curious if these real estate talking heads will be able to use Jedi mind tricks on buyers?

  23. 23
    george says:

    Tim, you’re missing the point. Who is Lawrence Yun? A used car salesman? His absurd track record speaks for itself.

    A lot of jobs have been added to this region in the last decade. Whether that makes us world-class? Who cares.

    The question is: will the local economy continue to grow in the face of a nationwide and global recession? Will job growth continue? Will the local bubble find more air?

    The answer’s no.

  24. 24
    patient says:

    Angie said:

    “That is a problem. Judging from the second graph up there, King County needs more like 2000-2500 misguided buyers every month to really start clearing out the inventory that’s built up….”

    Gallows humor, you’r funny! Though 2000-2500 misguided buyers won’t really cut it since we are adding about 1200 units each month to the inventory with the same amount going into pending sales. That’s 2400 miguided souls needed just to keep inventory flat at current level…

  25. 25

    Re: Rose Colored Koolaid’s take on transit:
    Seattle’s “supposed” to have one of the better city bus systems in the US, and maybe it does, but older east coast cities often have better overall mass transit, including rail systems. Boston has a great transit system. Is it a superstar city? I’ve heard that Pittsburgh too has a really good transit system, as does Newark NJ.
    From what I’ve heard, Texas is very auto oriented, and not really designed to cater to folks without cars.
    Good transit systems add to the quality of life, bu is that a part of a “world class” city, or does having a lot of rich people define a world class city?

  26. 26
    patient says:

    I see a world class city as being one of the main hubs in the world for business, culture and tourism. If it is quality of life as safety, pollution, lack of poverty, efficient public transportation etc every city and little village in Scandinavia and Switzerland would qualify…

  27. 27
    Everett Buyer says:

    NAR = LIAR

  28. 28
    Scuba Steve says:

    Smaller than Seattle’s? What do they have? Toy trains that run around City Hall?!?

    Still, some might argue that the lack of highways here necessitates more mass transit than is required in Texas. In fact, I would make that statement.

    What I was getting at for example, is Houston’s light rail which last I heard runs for about 1/2 the length that Seattle’s soon to open section goes. DFW has a short line too but I think it at least goes to the airport. Bus routes in both cities… forget about it. You’re better of taking your chances on the road.

    I lived in central Texas for 28 years; if you don’t have a car or a friend with one you’re not getting anywhere. The philosophy over there has been to continue to build more freeways but additional lanes bring diminishing returns. Houston in particular has been doing its best to mimic LA in terms of roadway size and traffic density. Traffic has gotten really bad in all 4 major cities and TXDOT doesn’t have the funds to continue to expand highways so they’re moving to toll roads for any new roadway expansion. Not such a bad idea I guess, but there is no viable alternative (biking, rail, bus, …). The 100 miles between Austin and San Antonio are home to over 2 million people but there’s not even an HOV lane to be found.

    It’s not perfect here or there… the best place for getting around that I’ve been to is Vienna, Austria but they have an awesome underground, a nation-wide high and medium speed rail network, and the Schnellbahn (a lot like the Lake Union trolley)

  29. 29
    economist says:

    The phrase “World Class” has become the most overused phrase regarding Seattle, but rarely used by people from outside Seattle.

    As other posters have pointed out, Seattle has nothing on Vancouver, BC for this. And Seattle does have Microsoft, Boeing, and Starbucks which indeed are “world class” businesses. Vancouver has, er, Lululemon. But it does have a 2 week sporting event next year which is supposed to compensate for this. I mean, there has to be some rationalization as to why it’s 70% more expensive than Seattle.

    In fact, even Victoria, BC is calling itself “world class” now. Why not? It’s more expensive than Seattle, so it must be.

    If we were truly superstars or world class we wouldn’t have this need to broadcast that

    You got it. Big hat, no cattle.

  30. 30
    notabull says:

    “Most people certainly don’t “get it”, at least in my circles.

    Even those that do, struggle mightily with the seduction that is homeownership, me included. ”

    I’m with you on both points. Just last week my wife and I went to a party and our friends (who bought last summer) said “now’s a great time to buy”. These are intelligent people.

    What they mean is “now is a better time than it was before”, which is correct. However, that says nothing about how things will be in the future. I think most people’s predictive powers take them out to about next Sunday night.

    Personally, I don’t think people will “get it” until both Case-Shiller and the regular old median have been in YOY declines for several months in a row. Given the current stagnation in sales, rising inventory, AND the large runup in prices in Spring of 2007, the YOY decline using those measures is virtually guaranteed. It would be a miracle if Case-Shiller didn’t go negative in the coming months.

  31. 31
    wreckingbull says:

    If anyone is hitting diminishing returns, it is Larry Yun and his ludicrous statements. He and Lereah, even in the eyes of mainstream media now, are starting to sound like slimy hucksters.

    I’ll say it again, Larry needs to focus on prices going down, not up. Prices falling back to a level supported by fundamentals will keep more Realtors in business than any other scenario. Isn’t keeping dues-paying Realtors in business ultimately what he is paid to do?

  32. 32
    Jason says:

    It sounds like your friends want you to purchase a depreciating asset so they will feel better about their recent purchase. Misery loves company.

  33. 33
    Cougar says:

    I now have a sticky note pasted on my bathroom mirror “It’s a Buyers Market but its a BAD time to buy”. It is helping me cope with my “I want it now!” factor. ;)

  34. 34
    matthew says:

    Notabull is dead on. The sheeple will not “get it” until you have months and months of price declines. Once the MSM can no longer deny that values are dropping rapidly, the sheeple will finally realize that buying may not be a good idea.

    However there will always be some buyers on the way down…

  35. 35
    Thaxter says:

    I appreciate your analysis Tim. Reading this PI article yesterday sort of upset me. I felt it was the last thing we need, an outsider coming into the region trying to reinflate the bubble to a group of willing-to-believe realtors . . . but your facts really put things in perspective.

    Another perspective on the “most people know things are bad”argument — yes, I know things are bad, but not being an economist or having any training in it whatsoever, I still find it incredibly helpful to read analyses like this, at the very least so I can know that I’m not crazy — that while the world around me, and muckity mucks like Yun can make crack-fueled statements to the press — that I am not alone in thinking it’s a complete scam, a lie, and the sort of propaganda that got us into this real estate mess in the first place.

    One other thing Yun overlooks is the very poor quality of home construction here. Seattle is not an OLD town, it’s a new town, and has been torn down again and again. Most of the housing stock here blows. Yes, no one would rather move to Cleveland, but I’d take just about any middle-of-the-road Cleveland house over the shacks sold here for $435k — at least I would know it had been well built.

  36. 36
    disbelief says:

    Do “world class” cities necessarily make for a better place to live or raise a family? If not, then what’s the point? Seems most of the places on the list have staggering populations as their main qualification. Not to mention stark contrasts of wealth and poverty ( Chicago, NY, etc.)
    What about history, and culture?

    How does the Smith Tower compare to the Parthenon or the Coliseum? As far as I’m concerned, most of these places shouldn’t even be on the list.

  37. 37
    disbelief says:

    “world class” = granite countertops

  38. 38
  39. 39

    If what Patient said is correct, that a “world class” city is one of the main hubs in the world for commerce, culture, and tourism, then Seattle ain’t there. Commerce, maybe, with MSFT and Boeing, and Starbucks, Amazon, etc..but Seattle, attractive as it may be, is second tier regarding culture and tourism.
    and like Disbelif says,it isn’t necessarily a better place to live and raise a family,.
    I really react strongly to “world Class”. Why is that something we should want?
    To me , it just sends a message of ” we hate poor people.”

  40. 40
    vomitingdog says:

    Please don’t change anything yet. I’m still in Vancouver, BC with every person I talk to saying how the bubble bursting cannot possibly happen here. I need to be linked to all the counterpoints I can get. We think we’re a world-class city up here and we’ve got nada for world-class jobs.

    I’m self-employed, love it, but be careful. Saying you’re self-employed kind of invites other people to criticize and get involved with telling you how you should conduct yourself. A lot of that is misplaced good will, it’s kind of like being single and having all your married friends chime in with advice. You got here by doing what you do your way. Stick with it and watch out for advice from people who’re jealous.

  41. 41
    b says:

    Jason H –

    Trouble is that I live in the real silicon valley where home prices are falling quickly and sales are dead. I don’t think Seattle wants to emulate us just yet.

  42. 42
    Angie says:

    I love the quote at the end of that article Jason linked to–about people in Seattle not getting distracted by sunshine outside. Way to look on the (wholly proverbial) bright side!

  43. 43
    Chuck says:

    Don’t ever forget that Yun is a salesman. He has something he wants you to buy. He is not in the least interested in telling you the truth or presenting any factually useful information. He is the official booster for the NAR. His job is to persuade you to buy a dwelling so you will give money to members of his employer-organization. Don’t hold it against him for being a shill like any other salesperson. Just don’t believe a word he says unless you want to be one of those who P.T. Barnum said are born every day.

  44. 44
    Plissken says:

    I love it. It’s the rest of the world that doesn’t get it. The enlightened few here _know_ that a 30 pct price drop is coming. I don’t claim to know one way or the other and I certainly don’t expect 08 to be a good year for RE but I have seen an uptick in activity in my neck of the woods. Plus I meet people all the time who want to buy now that prices have dropped. Maybe they don’t _get it_ but if those people are the majority they will make the market while fence sitters like you are left holding their charts and screaming that the day of reckoning is at hand.

  45. 45
    matthew says:

    Plissken,

    SOLD TO YOU!

  46. 46
    patient says:

    Plissken said:

    “Maybe they don’t _get it_ but if those people are the majority they will make the market while fence sitters like you are left holding their charts and screaming that the day of reckoning is at hand.”

    Uhm, no. We got Seattle Bubble that tracks market changes making the risk to miss a meaningful and sustained upswing in closed sales virtually impossible.

  47. 47
    Nozferatu says:

    As Adolf Hitler once said:

    “Make the lie big, make it simple, keep saying it, and eventually they will believe it”

    This is the philosophy of the business base of this country…Yun is only keeping up with past traditions.

    What more can I say?

  48. 48
    Dan Edwards says:

    In a recent Seattle Post-Intelligencer article, Reporter Aubrey Cohen quotes NAR Economist as saying that Seattle is undervalued…in comparison to other West Coast Cities.

    A friend of mine pointed out that with the King County Median house price being $435,000 how can that be affordable. I started to look a little deeper; I wanted to know if the Median Income would allow for these homes to be considered affordable. Here is what I found out.

    The median income for a household in the county was $53,157, and the median income for a family was $66,035. Males had a median income of $45,802 versus $34,321 for females. You can find out more at: Answers.com

    Some of you may crunch the numbers and say see at 53K you cannot spend over half your monthly income on a mortgage payment, and I would strongly agree. But simple numbers don’t answer some key questions. For example, what is the percentage of households that rent vs. buy? What percent of the homes bought were upgraded homes. (Using the equity the household made over the last 3-5 years to upgrade.) But the question is not just whether the average household can afford a home; it is a question of how Seattle stacks up to other West Coast cities as far as afford ability and appeal. So let’s look at some comparisons.

    Again on Answers.com it puts together a list of 100 of the highest income counties. These are rated at a per capita income. King County is ranked 51st at $29, 521. Let’s see how King County stacks up.

    Let’s take one county with a lower income per capita. For instance Alameda County in the Oakland Area of California is a somewhat desirable place to live. Alameda County is 97th with a per capita income of $26,680. The median home price there is $540,500. Now take San Diego County is 253rd with a per capita income of $22,926. The media home price there is $435,000. Hmmmm same as Seattle, but with a lower affordability factor if you take the per capita income into consideration.

    In conclusion, yes Seattle housing prices are up there, but how they compare as far as West Coast cities, I would suggest that they are very appealing. I think the strong diverse economy and the low unemployment rate lead to a great place to live. Not to mention sports & entertainment as well as outdoor activities that the surrounding area has to offer.

  49. 49
    explorer says:

    BBBBBUT…..I thought all Real Estate was Local!

    I’m so confused now. Not. Half of your gross monthly income was never considered “affordable” until youthe goal posts for that definitiion to justify higher prices. It also does not factor in the other costs of living in this area, and that the median income level is skewed upwards the minority.

    If Seattle was still affordable to the average, not median, worker with a SINGLE income, not a double-wage earner, that would reflect traditional reality, IMO. If the median income was the sole determinant of affordability, then no one should have needed those ARM’s in the first place. Notwithstanding that many people were duped into thinking those loans were better than a traditional 30 year Fixed.
    Take out the credit bubble, and you would not have much of a price bubble, with the SAME meidan income, IMO.

  50. 50
    Finding the bottom says:

    Just got an email from a realtor that was pushing this article to combat the whole “market is in a downward trend” comment from me about RE investing.

    Desperation? where are were in the cycle now?

  51. 51

    […] abot four months ago, when NAR Chief “Ecnomist” Lawrence Yun said this? You may even say Seattle is […]

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