If you’re viewing Seattle Bubble for the first time today because you heard me, Tim Ellis, on the Dave Ross show (with sit-in David Goldstein) on 710 KIRO, I’d like to welcome you. Be sure to check out the about page to get a feeling for the purpose of this blog. If you’re interested in more of what we talk about here, I recommend reading some of the links on the Important Posts page. Feel free to jump into the discussion on the posts here on the blog and also in the forum. If you have any comments, threats, insults, etc. for me, you can contact me directly.
For regular readers who did not catch my segment on the radio this morning, here it is. FYI, although I was on for the whole hour, the actual length of the segment is only about 33 minutes after removing the news breaks and commercials.
For a limited time, you can also grab an mp3 of the segment directly from 710 KIRO.
I felt a lot better about this appearance than the last time I was on the Dave Ross show. Probably because I was the primary guest for the entire hour, so I had a lot more time to make my points. There are of course still some things I would have liked to get in but was unable to, such as addressing the “they’re not building any more real estate” arguments that some of the callers brought up, but on the whole, I think I presented the facts well.
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29 responses so far ↓
1
David McManus
// Mar 6, 2008 at 12:56 pm
All in all, a good job, Tim. I’d love to have you go on and debate a local real estate “professional”.
2
singliac
// Mar 6, 2008 at 1:24 pm
ditto
3
Clint8200
// Mar 6, 2008 at 3:43 pm
Good Job, Tim. They should let you host the show next time.
4
The Tim
// Mar 6, 2008 at 3:46 pm
Hah, that doesn’t seem likely. I think most listeners would get tired of the subject of local housing after an hour or so. Not that I couldn’t handle carrying on a show about a broader variety of subjects, but I’m definitely seen as a real estate commentator right now, which is fine with me.
5
drewba
// Mar 6, 2008 at 3:49 pm
Nice work, you represented yourself and position well.
It’s interesting that everyone who called with a contrary point of view was someone with a financial interest in the success of the housing market. Even then, I dont think any of of the realtors outright refuted your statements, they were more likely to talk about the pockets that were doing better.
BTW, nice plug by the caller on the basket company. Think he was an owner? :-)
6
Steve Tytler
// Mar 6, 2008 at 9:09 pm
Tim,
Thanks for the mention on the show.
I just wish you would have covered my butt a little by using my actual
prediction of a 10-20% drop in home prices this year rather than just
saying I predict a “20% decline.” ;)
Not that I’m afraid of that prediction.
I am sure that some neighborhoods will drop 20%, but not all of them. That’s the reason I use a range.
Good job on the radio. Next time jump in there more often and don’t let the callers take up so much of your time.
7
AndyMiami
// Mar 6, 2008 at 9:40 pm
I listened to the broadcast and actually I am a bit disappointed in the fact that you did not refer to the credit crisis that eventually will put his market in a funk. also, stats such as how Seattle ranks in the top 7 most unfordable markest in terms of median income to median house prices…you should have referred to WAMU as the next countrywide….you are a great analyst and it did not show today…you need to be more prepared..i am sorry, i love Seattle Bubble, but I was disappointed with the lack of analytics…I know it’s AM radio, but there could have been more…
8
AndyMiami
// Mar 6, 2008 at 9:47 pm
one specific example is why have mortgage rates increased..the host brought the dollar’s fall and I think that you mentioned higher perceived risk…but you should have gone into the world of easy credit is over and the US is de-leveraging big time and no one is buying any debt let alone mortgaged securities, and that the government is trying all they can with traditional stimulus policies combined with monetary easing and NOTHING is working…we are facing a severe recession and no one in Seattle has a clue…you do and it did not show today….
9
AndyMiami
// Mar 6, 2008 at 10:10 pm
http://www.businessweek.com/the_thread/hotproperty/archives/2005/09/is_florida_hous.html
10
Eleua
// Mar 6, 2008 at 10:14 pm
Great show, Tim.
Regarding home price declines…
Am I still the most bearish person on SB for price declines? I am still holding to an 65-80% decline off the peak for most of the PNW market, and no, I’m not off my meds.
My sources tell me that the reason the higher end of the PNW market has been soft has been due to the fact Californians are trapped in their homes and can’t relocate with all that wonderful equity. I know for a fact the $800K+ market on Bainbridge is dead (top half), and this is strictly a phenomenon of no X-Cal locusts scooping up properties at well-above market prices. There was a dramatic shift in October ‘07 where one day Californians could buy, and the next day they could not.
I also remember from the 2006 SB days that we estimated that a very large percentage of new jobs in the PNW were actually created in the REIC, which enticed many people to move here. Real estate became its own self-licking ice cream cone. I anticipate the REIC jobs to get hit hard as well as the tech/aerospace mainstay of the King/Sno/Pierce economy.
Unless you have been deep in the Amazon on missionary work/Peace Corps, every headline on the planet deals with the implosion of our financial infrastructure and how that is both caused by, and weighs on real estate (self-licking ice cream cone is melting). What is not said is the undeniable fact the US banking system is out of money. Yes, you read that correctly. The banks in the US are insolvent, and all private banking reserves were exhausted in Dec ‘07, and now every dime of reserves is borrowed from the FEDERAL RESERVE, and this is the first time that has happened in the lifetime of anyone reading this blog. Records of this are kept at the FED and show us to be tens of billons of dollars in the hole.
Yes, YOUR BANK is on lifesupport. It is a matter of public record, and is the biggest story not being told.
Lending standards will be going through the roof in the very, very near future, and that means higher interest rates, and higher down payments, with no transported equity (there isn’t any).
Anyway…you could have purchased a house in Seattle for $187K back in 1997, and there is the very, very real chance you could be underwater by Christmas of 2010. If you bought anytime in the past 2 years, that will likely happen by this Christmas. If you were in the habit of taking out HELOCs, then you are really going to feel it.
Entire neighborhoods in many parts of the country are now vacant and held by the banks. The banks don’t market them because they are afraid of having their entire stock marked to an abysmal market. That will happen here. We are not special. We get money from the same capital markets that the rest of the nation uses, and we are subject to the same laws of economics that everyone else is.
Views, mountains, water, lakes, Microsoft, Starbucks, and mild summers will not support your home prices. If the median household income on Bainbridge (the 24th highest in the state) is $73K, that tells me the median home should sell for $200K-$275K, not the $840K it currently does.
BTW, that is predicated on the job market staying hot and people have $60-100K in free cash available for a down payment. Unfortunately, that won’t be the case.
20 cents on the dollar is coming to a neighborhood near you.
11
Ray Pepper
// Mar 6, 2008 at 10:27 pm
So you want Tim to debate a Local Real Estate Professional?————
Hmmmmm is that what you want? Bring it on!! I will tell you exactly what you want to hear. Pumpers–were going up!! Bashers– were going down!! But all the while you will hear that there is only 1 way to BUY real estate that is listed on the MLS!………….
Get me on KIRO! Let the Fireworks begin! I have not listened to the broadcast but I’m sure you got your point across…..
But, Tim for godsakes I hope you mentioned something like this……..
” I just want your listeners to know that if you choose to Buy now, in spite of a trendline down market, then you really owe it to yourself to call 500 Realty. They tell the consumer go out and look…. Always Look…. BUT NEVER ……… EVER………… CALL THE NAME ON THE SIGN!….. IF YOU DO…….YOU LOSE BIG…….I MEAN REAL BIG!!”
I’m hoping you said something like that. I will listen to the broacast tomorrow in between a few showings with fingers crossed and high expectations………
If you didn’t mention 500 Realty no new shirt for you!! The new ones arriving in a week are very form fitting and to say the least very controversial. But I will give you a 500 Realty bumper sticker for the Tim mobile either way.
http://www.500Realty.net
12
John
// Mar 6, 2008 at 10:36 pm
Eleua, this graph shows the current real estate bubble is even bigger than the Japanese one in 1980s. http://en.wikipedia.org/wiki/Image:EconomistHomePrices20050615.jpg
I wonder if it will play out in the same way.
13
Eleua
// Mar 6, 2008 at 10:44 pm
John,
Worse. 77million Mouseketeers have all their wealth riding on overpriced real estate and the same overpriced 600 stocks everyone else is holding, at a period of historic low interest rates.
We are priced for perfection NOW. Wait until we price in the appropriate risk in the credit markets.
Ugly. Even in Seattle.
14
gobucks
// Mar 6, 2008 at 10:47 pm
Hi,
I didn’t hear the radio show - a friend from work mentioned the blog.
I have enjoyed reading through the posts.
Myself and several others at work are new to the area (past 2 months) and
looking to buy a house. Wow. Coming from the midwest, its an eye-opener out here. It looks like prices were reasonable just a few years ago, but now they are nuts. $650 for a 2 bdrm rambler? You could get a nail gun, some duct tape and a rickshaw and do better than a lot of these homes (its not clear the rickshaw would be needed). And from some of the listings on Redfin, it seems that the people in the area are fairly reluctant to lower prices. How can an area with a median household income of $80K afford a $600K house? Can I assume that most of these home owners bought these homes at $200K? It seems that a 100% return on their house just isnt fair! Its worth 300%, after all, they did add a $4K countertop in the kitchen!
15
Ira Sacharoff
// Mar 7, 2008 at 3:07 am
gobucks,
You’re so right. Sellers are reluctant to lower prices. Some of them bought too recently or refinanced too recently, others have fallen for the media hype of how special Seattle is or have agents who advise holding their ground lest the tidal wave begin. But there are cracks in the armor, some places are staying on the market seemingly forever.
The duct tape, nail gun and rickshaw idea is great. I’ll locate the land, we can market it as ” Zen inspired” or “Earth Friendly” especially if we find the rickshaw material in a dumpster.
16
Buceri
// Mar 7, 2008 at 6:18 am
“Employers Slash Jobs by Most in 5 Years- AP”; add this to, “Consumer confidence at lowest since 2002″, “Americans own less than 50% of their homes for the first time since 1945.” “Americans are getting poorer, Fed says - The Financial Times”.
Wasted decade.
17
alex
// Mar 7, 2008 at 8:11 am
Does anyone know why mortgage interest rates seem to have shot up to 6.5%, despite the weak market indicators of today?
18
deejayoh
// Mar 7, 2008 at 8:20 am
Alex - you might want to read this article at bloomberg
19
David McManus
// Mar 7, 2008 at 8:29 am
alex, just because the fed lowers their rate or the economy is not doing well doesn’t mean rates will follow. There are a lot of factors that influence rates like inflation, your situation, etc. Just because times are rough doesn’t mean you’ll get a deal on mortgage rates.
See –> The late 1970s / early 1980s. Mortgage rates around 15% and I seem to remember the economy was f-ing horrible.
20
David McManus
// Mar 7, 2008 at 8:33 am
Historical mortgage rates:
http://research.stlouisfed.org/fred2/data/MORTG.txt
I’m sure “the Tim” has this graphed somewhere.
21
Ubersalad
// Mar 7, 2008 at 8:42 am
when are you going to start charging pepper some advertising fee? base on the traffic report you put out few days ago, his ass is freeloading off you!
22
matthew
// Mar 7, 2008 at 9:19 am
At least charge the guy a “reality” fee. This is the same guy that was arguing with me that the economy was fine and dandy and we didn’t have to fear a deflationary spiral or immediate stagflation… What a difference a couple of months makes doesn’t it Ray?? How’s that 30/yr fixed looking today?
Good luck with those t-shirts!
Beige Book Hints at Stagflation
Amid Slow Growth, Prices Pressures
http://online.wsj.com/article/SB120474193760314079.html?mod=googlenews_wsj
23
The Tim
// Mar 7, 2008 at 10:02 am
David said,
Indeed. You can find that graph here.
24
Ray Pepper
// Mar 7, 2008 at 10:27 am
the same guy who said ” the econonmy was fine and dandy”
HAAAAAAA…Nice try Matt. I never said that. Those are your words! When the Dow hit 14k it was so obvious it was short time my friend. Still long my EGHT over 70k at an avg pps 1.03….. My only holding in the mkts. Although I continue to trade in/our of THC at 4.00-5.00..
I think you were thinking of one of your Real Estate pals…
Don’t place words in my mouth…Here is what I say…………Find your GEM………Do you need a definition of GEM again?…research my posts…..If you find a GEM, and can secure a loan you will be fine in 5-10 years… My Gems are currently in Dayton Nevada and thats where I find value. But, if the mkt still corrects another 20% off these lows I’m still in the money 10%..
Come get your bumper sticker and lets talk the mkt, stagflation, real estate, and GEMS! I think you will learn something if you meet me IN PERSON!
http://www.500 Realty.net
25
wreckingbull
// Mar 7, 2008 at 12:17 pm
gobucks , you have noted something which rarely comes up on this blog. That is, the overall quality of our housing stock really bites.. To find ground zero for dumpy homes at overvalued prices, come no further than Ballard. Sure there a a few decent homes, but most are just sad.
Just a few weeks ago, I went jogging through some St. Paul neighborhoods on a business trip. Yes it was a bit chilly, but man did those city fathers know how to build a home.
26
rose-colored-coolaid
// Mar 7, 2008 at 2:20 pm
Wow, the host really did not want to hear that his house could be losing value. It seemed like he was desperate (as many of the callers were) for you to tell them that they really shouldn’t worry about their house losing value.
27
Herman
// Mar 8, 2008 at 3:33 am
Hmm, Tim, here is some feedback for your next show.
I think you could have inserted more comments without waiting for the host to call on you for a statement.
You have some clear opinions on your blog — well supported by your data — that didn’t come out on the show.
You could have been more assertive and decisive about your positions. Instead I think you were wishy-washy, you did not take a side, you backed off the positions you justify with data on this blog, with words like “kinda” or “I sorta think that…”
For best radio, know your positions and state them clearly and decisively. Not like FOX news hysteria, but like an expert with an opinion.
28
Tim Ellis of Seattle Bubble on 710 KIRO | Rain City Guide | A Seattle Real Estate Blog...
// Mar 8, 2008 at 10:39 am
[...] a link to the show in this post and it is well worth the time to [...]
29
Chris Worsley
// Mar 9, 2008 at 10:29 am
Tim,
I had a chance to listen to your radio interview, certainly you were consistent with your long expressed perspectives on the issue. However, as I mentioned to you before, as both a reader, and small patron, of your interesting Blog, I would be interested to see you investigate the following:
Have you ever posted a chart measuring the price of real-estate, over time relative to the price of gold over the same time?
Going forward, the aforementioned classic tool of measurement, for land, housing, and other commodities, might be well leavened, by an estimated cost of “space born” real-estate and commodities.
Sincerely,
Chris Worsley
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