Desperation? where are were in the cycle now?

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.

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.

“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?

“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.

SOLD TO YOU!

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.

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.

Don’t look now, but might there be some possibility of Seattle acheiving superstar status? Hmmm…

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.

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.

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

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?

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.

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.

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)

“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…

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.

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?

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.

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.

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….

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.

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…

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.

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

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.

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.

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.

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.

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.