Ira, that particular house was in seriously bad shape, from the foundation on up. It was also close enough to the Columbia City business district that it was classified as “historic”. I gather that it took some time and effort to convince the city folks who safeguard that stuff that it was too far gone, though I can’t believe it was very hard to build a solid case for that argument. It was also on a 10K square foot lot–that’s awfully hard to come by for a single family home in the middle of a built-up neighborhood, and next to the business district beside.

I’m a sucker for a good rehab, but even I think that place was ‘dozer bait. Wish the buildings that replaced it had a little more graceful profile, but hey, at least the lot isn’t attracting squatters anymore.

Townhomes are generally just big condos. We didn’t want one but we looked because it was all we could afford. To share walls with people and have a 25 ft square yard? No thanks.

Dave

That said, everyone I know who bought one, regrets it. All of them are looking to get into a SFH.

Based on this, builders offer more of what will sell at current market conditions. And obviously, the profit margins are much higher when instead of building 6 SFHs on 3 acres, you put a building with 40 units.

Hence all those townhouses. Not my cup of tea, but people do buy ‘em.

Or used to, anyway. The new townhouses that went in near my house went up for sale in February or thereabouts and so far as I can tell none of them have sold yet. The initial asking price was lower than the figure on the sign out front as they were being built, and I can’t imagine that they’ll ultimately sell for what they’re currently asking.

The builder seems like a nice guy. Too bad he’s going to lose his shirt on this one.

I’m still grateful to him for putting up something else in place of the the decrepit, abandoned house on the weedy, trash-strewn lot that was there before.

The spring after we bought (2007) I continually saw properties with lots 1/2 the size of ours selling nearby for similar prices, since august the comparable houses on 3000 sq foot lots are selling at substantially lower prices than those on 6500+ sq ft lots.

From being at open houses that spring I concluded that if the house was listed under $400,000 (often 320-350) and had the key home depot touches (granite, stainless steel, tile and a pedestal sink) it would sell for 420-450 even if the lot was 3000 sq ft. I was kind of shocked to see how much value people put in granite and stainless steel, since appliances cost a couple of thousand and you can buy most of the countertops I saw in these houses in west seattle for $225 at http://www.valuestone.com/ .

I would also expect the market to dive under that anyway with all the oversupply that needs to get flushed.

I don’t know what this area will settle at, but I don’t think $150/sqft is unreasonable.

I think your line might be too steep. 6.4% per year appreciation seems like a lot. I think the bubble started to turn north at the end of 2003, which make the slope of your line smaller.

Probably true. As I said, it’s “kind of interesting” – I eyeballed the fit on the line, and certainly didn’t mean it to be predictive.

I was hoping to bring home the point that even though we’re down 10% already, there seems to be clearly more room to go down +20% as the California markets have done.

Any predictions?

Figure you’ll be indoors for over 9 months of the year.

Lot size in Seattle proper is, in my opinion, less important to the typical buyer than the appearance of interior space.

Maybe because of the weather?

You’re absolutely right. I figured it on peak price and, assuming your math is correct, your figures are the relevant ones. And they do show less of a disparity than the peak figures. I’d like to see the respective income levels for these areas as an additional basis of comparison. Does anyone have that info at their fingertips?

This may also explain why the price per square foot seems to show a faster drop than the median statistics. The collapse of jumbo loans last year would shift the center of market activity to less pricy areas, where $/ft2 is lower. The recent relaxing of rules on conforming loans may help shift that back.

I did some analysis of Redmond SFH houses for sale on redfin to try and find a pattern in terms of what factors make up a house price.

The first pattern that was very clear was that prices are proportional to the square of the square footage. In other words, a house that is twice as big commands more than twice the price. Sounds odd but there was a 95% R^2 confidence in that statistic.

The other thing that I found strange was that if you try to find a similar pattern with regard to lot size it is very hard to do. The correlation between either the residual or full price of a house and the lot size is almost non existant.

This tells me that the size of the house drives the pricing by the seller far more than the size of the lot. There are probably some factors driving this, but my guess is that old houses are on large lots and new houses are on small lots, and the age and lot size cancel each other out in terms of desirability.

No, you are totally right, it is the buying mentality of todays knife catchers. The people who are buying right now in spite of an avalanche of information available pointing to declines are still in “bubble mode”. The belief that the market is going to turn on a dime right back to 20% appreciation a year immediately after they buy is very strong in some people. I know a few of my friends down here in silicon valley have this belief, despite prices here already showing serious declines compared to Seattle.

Seattle = $529.1k
San Diego = 655.9k
LA = $809.6k
SF = $910k

Those seem a bit more in line with my sense of comparative market values

People have gotten used to having a huge chunk of their paycheck reserved for mortgage payments. This is one of the obstacles to “median prices” returning to sane levels – but it matters not – asking prices are dropping all around us, and it is very very evident.

In one neighborhood I’ve been preying upon, there’s been no sales over the last 6 months, there’s 5 houses for salre right now, and the asking price that used to be ~560k now is more like ~535k.

1) It seems to disregard the differences in value of the lot. A 2000 sq ft home on 10,000 sq ft is immensely more valuable and appealing than a 2000 sq ft home on a 4000 sq ft lot, but if one of each sold (at, say $600k and $400k, respectively), the cost/sq ft averages out to $250. By that measure, the former got a great deal and the latter got ripped off, but in reality they both probably got a fair deal.

2) A 1200 sq ft condo does not have the same value as a 1200 sq ft SFH. I don’t think Radarlogic discriminates the two.

3) It seems that it would be strongly affected by the mix of sales, whereas C-S isn’t. So if a bunch of million dollar 2000 sq ft condos and multi million dollar 5000 sq ft mansions sold, CPSF would be highly skewed… even if every one of them was sold at a substantial YOY loss.

I suggest a bit of caution before jumping to strong conclusions. I can assure you that the county records have a significant amount of inaccuracy when it comes to square footage reporting. Particularly amongst older homes that may have been remodeled or expanded over the years.

Marc –
thanks for the comment. I was interested in the snippet above. If county records are not reflecting increases in square footage, wouldn’t this cause exactly the opposite effect we are seeing? In other words, if I expand the square footage of a house – which is reflected in it’s sales value, but not the tax records – it should drive cost per square foot higher, right? So unless the county has suddenly gotten religion about getting square footage right – I’m not sure it should be too much of a factor on this index.

The big guys do it all the time with their investments [how do you think they got to be rich]; so Seattle homeowners, don’t be chicken to make big money now too. Yeah, your credit goes down a bit short-term, so what….your bank account can sky-rocket without that over-priced house mortgage strapped to you like a cement block before you’re thrown into Puget Sound by the organised crime that got you in this house price downturn mess in the first place.

There’s many solid financial people now that can afford their present house payments, that are just handing the keys back to the bank anyway and the money they make doing it is massive.

See the proof:

http://www.financialsense.com/fsu/editorials/2008/0408.html

That said, I’m especially surprised in the significant disparity in price per square foot between Seattle and all of the California towns mentioned. Perhaps I’ve underappreciated the differences in the median prices as well. Without thinking deeply on the issue, I’ve been under the impression that the difference between our median price and those in California were not that massive. But the prices per square foot you show demonstrate a very clear disparity. For instance, an equivalent 2500 square foot home in each local would theoretically cost:

$590,400 in Seattle
$893,350 in San Diego
$1,004,125 in L.A. and
$1,158,300 in San Francisco