My hypothesis is that Seattle will slowly see some loss of residents back to the Bay Area (which is more than okay as i understand it with most washingtonians)… however, this will help to drive down prices to some extent.

If the concept (believe from some) is that in the late 90s – current day, 1st time home buyers that couldn’t afford homes in the Bay Area moved to WA but were able to “over bid” some properties thus adding to the run-up….

… some of these individuals may be willing to take any gains and run, pricing to sell below market which will be teh pressure you all predicting losses will need to see your projections prove out.

I am one of those individuals that is “looking” back in the Bay Area.

Yes, i understand there is a lifestyle difference, guess i am ready for that.

I consider Bay Area to be akin to the “Gold Standard”. Seattle, Pheonix, San Diego, etc, etc… all these places saw a run-up as people could no longer afford the Bay. Seattle will not correct as much as Pheonix, San Diego have.

Seattle does have more substance than those cities. Climate (actually not that bad), education, outdoors, city that is becoming more metropolitan, technology

This is not true right now in WA. You need good credit. Not the best, but 720+ certainly helps. I believe this is somewhere near the median credit score, perhaps a little higher.

You also need a JOB and proof of INCOME. OK, so a lot of people didn’t provide those things back in the crazy days, but most people I know have jobs and income.

The problem isn’t the amount of down payment you need, it’s the amount of loan you qualify for under sane underwriting standards. All of a sudden, the only thing the bank will give families money for is a little "chocolate"box in the middle of nowhere. People look at that and suddenly realize that something’s wrong with prices, and they wait.

Of course they won’t cut their prices 50%, that is insane. They will cut 10%, then cut 10% again next year, then 10% again the year after, and so on. This isn’t the stock market, housing moves slloooowwwwwwllllyyyyyyy. Inflation adjusted it will probably be more like 80%, judging from how the world is reacting to Uncle Ben.

When it is all said and done the Seattle area will be off by an average of about 1/3 off peak (summer 2007) prices. If you can survie that great. If you can’t….you better start thinking about it.

Don’t forget that the recession is just underway and it is going to be brutal. This will be the worst downturn since the Great Depression.

You can take that to the bank….er, on second thought.

All the economic fundamentals of WA state are good right now. There is nothing to indicate a big bubble burst here.

The economic fundamentals for San Diego were looking great a couple years ago too, just as they began their real-estate decline. In any event, the economic fundamentals for the global economy are downright terrible right now, and it’s not as if Seattle has some protective bubble that will keep us immune from massive contractions in the global economy. Just watch how quickly our economy turns south when Asia and the Middle East start cancelling aircraft and software orders.

The global credit crisis is truly of awesome proportions, making it vastly more expensive (and downright impossible) for many consumers and businesses to get financing. The spreads between sovereign debt and all other manner of credit instruments is growing dramatically, and companies are being squeezed the world over as the cost of capital has gone up.

It’s not our local fundamentals that matter, it’s the fundamentals of the global finance system that will ultimately dictate what happens to our own prosperity.

"golly"…these new trolls are smooooooooth. They sure do know how to try to play the good cop/ bad cop thing.

Funny thing is that they all seem to talk like people in the “industry” with the same lingo and conversational demeanor…and they still do a good job avoiding/ignoring the hard questions.

The crisis has been averted. You are all free to buy a condo now!

I think we should start an informational section where all of us REAL bubbleheads can list those that we think are the subversive RE trolls…but I forgot…Seattle…home of the candy ass, politically correct, over polite…well…you know.

So far we have 8% of the currently listings upside down on their mortgage. I have nothing to compare that to, whether up/down as I haven’t looked up any history if there is any.

Price reductions since 10/1 total $16,358.000. That’s an average reduction of $20,650 per listing.

For new construction price reductions total $9,497,921 or an average of $17,270 per listing.

Next time I’ll count only those that had price reductions – rather than the total listings as that would reflect a higher yet more acurate picture of average price reductions.

I’ll have lots of other interesting stats when I’m done.

#86 Freedomlover:
As a Realtor, I take exception to your statements. In 20 years of selling homes you will find none of my past clients in those “fraudulent high risk loans”. I can’t tell you how many people we had to talk out of them because the loan officers were pushing them as such a great deal. Fortunately we prevailed. None of my client’s have bought homes they couldn’t afford and only 1 client went into foreclosure a couple of years ago due to a job loss and divorce.

To lable all of us as “not honest” is flat out wrong. I am in this business for life and rely on repeat and referral business, and as a result of my ethics remain successful. There have been many times I’ve advised clients not to buy or sell for specific reasons. That is why my clients return – they know they will get an honest opinion is what is “in their best interest”.

Sure, there are categories of agents, I just don’t fit in that one.

I’ve researched foreclosed properties, like bidding on them at the courthouse and the answer is simple….you need 100% cash to buy ‘em.

Can you get a loan to have cash before the bidding begins?

Yes, but money’s tight and I imagine banks want wealth equity in back of cash loans now-a-days. So if you have no wealth, start saving.

If you can’t save much, like most Seattlites…..save what you can. I’m not saying there’s going to be a depression and run on the banks soon, God forbid that happens….but a couple safes hidden in two places with ready cash or gold is what even accountants are recommending lately instead of just money markets, FDIC CDs, bonds or equities….its a bit horrifying when your finacial experts recommend it though.

By the way, last I heard, FDIC insures your safe bank money at 1.2% deposited in their vaults in ready reserves if withdrawl lines at the banks form…lol

In sounder times, everyone put 20% down. Why should it be any different now. I can tell you stories of people buying 900K houses with 0 down….

All the economic fundamentals of WA state are good right now. There is nothing to indicate a big bubble burst here. I see a few isolated examples like Seattle condo towers.

Gold and oil plummetted…..selllllll…..

My point is folks, we’re on a long bumpy roller coaster and daily, even monthly shifts aren’t a reason to radically change investments, yet. Same with homes, your neighbor may have just sold his for a high asking price, so that means all homes sell for a high asking price? On the otherhand, if your greater Seattle neighborhood looks like mine, empty houses sitting around and for sale signs up for 6+ months with no takers….

Now, if I bought a $100K worth of gold before it dropped from a $1000/oz; I’d be telling everyone to buy gold, if I was a con. If I owned a condo in Bellevue, I’d tell eveyone condos in Bellevue will never plummet in price, if I was a con.

Cons preach from their own pocketbooks.

Ira is definitely different [so are most of the Bubble Brains] , he’s an honest pragmatic realitor and sometimes his blogs remind me of me…lol

50% off – can it already. Nobody is going to cut their price 50%.

Maybe no individual home owner will accept 50% price declines, but the banks sure will if that is what they have to do to move foreclosed inventory. Prices really start moving downward when 50% of your sales are REO properties.

Seattle is just behind San Diego by a couple years in this respect. Our first wave of foreclosures likely won’t hit till 2009. We have only just now hit zero appreciation, and it is simply a matter of time for the foreclosure numbers to pick up as struggling home-owners find that appreciation isn’t bailing them out anymore.

Remember, depreciation is the single biggest driver of foreclosures. Even life tragedies like divorce or job-loss don’t bring on foreclosures in appreciating markets (i.e. because it is easy to sell if you run into any trouble). When prices stop going up, there is no longer any cushion to help people who do run into these kinds of issues (e.g. job loss, etc). Of course, increased foreclosures and price-depreciation start a vicious cycle of further depreciations and job-loss (e.g. construction jobs, brokers, agents, etc).

Indeed. And as we approach summer, we’ll be starting to contend with the fact that the YOY prices will look awful! Even if the current price doesn’t change at all, the YOY prices will be going down due to the price bump last spring. This, combined with the likely officialization (new word) of the recession could put quite a bit of panic in the market towards the end of summer.

Less then there used to be, but they are out there. I’m one of them.

Also, I’m not sure if you’re entirely aware of the mortgage market right now. I have friends that just bought a 500K house in West Seattle with 5% down. The rate was 6.8% as they didn’t want to pay PMI and so they got the rate increased to compensate. I didn’t know you could do that.

Similarly, I didn’t know that you could get 97% LTV through Fannie Mae, and that HELOC providers are still offering 85% CLTV at prime rates (currently 5.25% – thanks Ben!). Maybe you were also not aware of this.

Also, “jumbo conforming” allows for 90% CLTV so you can very easily get a loan for up 560K for a house worth 620K with 80K down, which is easily within reach for a move-up buyer. BTW, the current APR on that loan is 6.4%.

Finally, regular jumbo rates are not 8%. Try 7.5% even for a 10 year IO payment. higher than conforming, but not AWFUL by historical standards especially when you consider we’re in a nasty credit crunch.

If your view of 50% is shaped by your understanding of the loan programs out there in WA, then you might want to revisit your estimate. I’m not saying that prices are going to stay up (they’ll likely continue to go down) but saying “50% off” and backing it up with bad information is probably not wise.

I agree to take your time and wait for the right home to come along, BUT don’t give up hope on the house you’re walking from right now. I have helped many clients get the house they want by walking away. When the house is over-priced and likely to sit on market a while longer, one approach I’ve advised to clients to take which has met success is to mail a handwritten thank you note to the seller immediately after the deal falls apart. In it you thank the sellers for taking the time to work with you, generously praise their house and the features you loved, and you express regret that you couldn’t make the deal work. You very briefly mentioned the things that concerned you (i.e., plumbing/electric) and then you ask them to please contact you directly if their situation changes and they think they might be able to make a deal work with you.

Even if you have a terrible taste in your mouth over how the deal fell apart, do this anyways. The beauty is that if they call you back and want to explore another deal the shoe is entirely on the other foot. You now have the leverage to lean on them because they know you have the stones to walk if they don’t play ball.

I recently had a client who did this and got the seller to come off his price by a hundred grand on a fully remodeled house.

Oh yeah, as I mentioned when you first told the SB about your deal, think about Magnolia.

Jumbo mortagage loan rates now 8%! Still gonna buy? 10-20% down payments! Got a hundred grand for your desposit? This will still only buy you a $550k house. How many folks ya spose have the income/credit rating AND down payment to buy now?

These issues transcend geography, economy, etc. Seattle is not immune. Sorry to burst your (ahem) bubble. You will see much lower SELLING prices because the selling prices will be the ones with all cash. Those in a mortagage obtained in the last 5 years will be upside down and unable to sell for less, hence those homes won’t sell. Sure ASKING prices may level off but not the ones that sell.

Still calling for 50% off from 2007/2008 prices!

“Housing is going down in all areas, but the impact from the south side is what is driving the drastic declines. So, don’t pack up and move just yet…”

I have a friend who is just now putting his house on the market in Encinitas, which is a cool little town on the coast about 25 miles north of San Diego, but only 5-10 miles north of the main tech area (Sorrento Valley). He’s very aware of the market (everyone down there is, finally) and estimates it to have lost about 15% since the peak. He has comps to prove it. His house is west of I5, a mile or two from the beach – all the things that are supposed to “insulate” certain areas down there.

Now, it’s certainly true that the south side and places like Escondido are screwed. This is the classic case of people moving further and further out “just to get into the market” and the froth comes right off those areas almost immediately.

Also, I just moved back from San Diego last year. I was down there for a couple of years and the weather is really great. Boringly great. I had a classic case of the Northwest guilt and felt like I had to go outside every time it was sunny. You can imagine the consequences.

Anyway, San Diego is great if you’re younger, have the cash to live <5 miles from the coast (otherwise it’s hotter than hell – which everyone forgets when they say that it’s 70 degrees all the time down there), and don’t miss things like trees and lakes.

I’m willing to put up with some greyness and misery for 6 months for the lakes, the mountains, and the snow! Each to their own. Most people can’t deal with the PNW climate, and I fully expect a lot of SD transplants to relocate back down there when they realize that if indeed WA is “behind the curve” they can sell here while the going is still kinda ok and move back to SD while the going is totally awful.

Many more “investors” acted in SD than Seattle. A home in SD (or any sunny local – like FL, AZ) not only attracts local buyers; but also out of towners.

Back in 2005 a neighbor visited a new community (here in Tampa) being built by the same builder that built our cookie cut ‘hood. He went in the model and met the same salesman that had sold him his house 4 years earlier. The salesman told him that everyone was required to put $10K down, and showed him the checks that were in the drawer just from that day; every single one was from the Northeast, not a single one from a local. He even told him: “Floridians are less than 20% of the buyers”.

I just don’t see people buying summer homes in Seattle. This is an aspect of the bubble madness that Seattle did not get. I guess this is something that we need to consider.

Like I wrote before, I hope I am wrong; and prices do go back to 1997!! (just arbitrary, relax)

I think a moratorium is a great idea, it will take a whole lot of pressure off. I would go so far as to say you should put it in a 6 month CD, then you can come in at the end of the summer season and be able to bargain with sellers who have not sold for many months while having much more inventory to choose from.

Honestly I don’t get it. Another thing is that real estate agents are not honest people. They are simply house salesmen. They should be admonishing people to not buy more then they can afford instead of pushing them into any house to get their fat commission. It’s a slimy profession.

Hey it’s just a moniker. Besides I do love freedom, what’s wrong with that? Some people hate freedom.

How does that apply to me? I’m a first time buyer.

Doesn’t everyone on Seattlebubble love freedom? Maybe I should change my name to “FreeMoneyLover”.

Redundancy 101.

If my agent “fires” me over this, Ira, I will be looking you up.

The Fed has used up more than half of its treasury back stop already ($500b+ of $800b), so they do not have much more room to buy up this garbage. Once they run out they will have to go begging to congress for more, which poses its own set of dynamics. So far the begging money is there to keep them from bankruptcy rather than them to lend out for a 4% spread. I think a lot of people are just getting discouraged with the equity/credit markets "chocolate"ting the bed while home prices sticking. Patience is required, these effects will take a while to ripple out to Joe Issaquah and his cracker box. But they will eventually, there is no doubt about it.

The Fed has a limited amount of money to loan, and they are running out. This thing has a loooooong way to go.