A Few Properties Still Seeing Multiple Bids

Posted by The Tim on May 2nd, 2008 at 8:46 AM · 121 Comments

I wonder if Aubrey Cohen is getting story ideas from reading Seattle Bubble? In the big front page feature article in today’s P-I, Aubrey takes a look at something a that a few home seekers commenting here have talked about: the continued competition for homes in a handful of certain price ranges and neighborhoods.

Erin and Andy Mathias started looking for a new house around the start of the year on the north side of Seattle because it was convenient to work, shopping, parks and other amenities.

They found a good selection, but at least as much competition for anything decent in their price range, up to $350,000.

“We would see a listing the day it came out, try and see the house either that day or the following day, have our Realtor check into it and there were already multiple offers on the table,” Erin Mathias said. “It became a little frustrating after a while.”

Although the Seattle-area real estate market has slowed, buyers still don’t have the advantage over sellers in such areas as North Seattle, West Seattle, Capitol Hill, Lake Forest Park and East Bellevue.

This phenomenon can be seen in the stories from home-seeking commenters here, as well as in our monthly neighborhood months of supply updates.

The article mostly focuses on the few areas around Seattle where sellers still have the slight upper hand, but it does admit that this has become the exception rather than the rule.

Some homes still are selling above asking price with multiple offers, without contingencies for financing or inspection. But those with less-ideal prices and conditions are sitting much longer than they would have a year ago, even in popular neighborhoods.

Despite their relative strength, North Seattle neighborhood inventories over the past seven months have doubled, on average, from the same months a year earlier.

If that sounds familiar, it might be because I said the same exact thing two weeks ago in the March Neighborhood Months of Supply Update. Of course, I didn’t have a spiffy color-coded map to illustrate my point. But don’t worry, we will soon.

(Aubrey Cohen, Seattle P-I, 05.01.2008)

Categories: News
Tags: Cohen, Neighborhoods, Seattle_PI

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121 responses so far ↓

1 Bella // May 2, 2008 at 9:45 am

I see that the couple they are talking about are looking in maybe Phinney Ridge (near the zoo?) which has totally amazing houses, and unless we are talking about the zoo right next to Aurora, is not going to have much in that price range, so I am not surprised that are multiple bidders!

I have been keeping track of a similar price range in the Ballard area since about the beginning of the year. There were almost no listings worth considering a few months ago, but as of a couple of months ago, more starting showing up. Over the past two months, the prices on several I have been watching have been reduced, and all that I was watching are still on the market. For a long while, there weren’t any new listings of note, but just this week, I noticed a few more had popped up.

I have not seen any listings in the area they are talking about for that price - unless they are two blocks from Aurora. I suppose if I were younger and didn’t have a kid, I’d consider something two blocks from Aurora, and just start a blog about getting propositioned and about what I overheard the hookers talking about at the coffee shop :D
2 Ira Sacharoff // May 2, 2008 at 9:53 am

“just start a blog about getting propositioned and about what I overheard the hookers talking about at the coffee shop ”

For some odd reason the real estate ads for houses around there never mention that.
3 softwarengineer // May 2, 2008 at 11:03 am

ONE OR TWO HOUSES IS A SAMPLE JOKE

OK, if one house makes a point, here’s a $400K house in Renton the owner told me about, that went on the market the last year [sat unsold for a year], got reduced in price by 20% twice and still won’t sell during this time. She tells me the higher end ($400K) homes have NO QUALIFIED BUYERS. She still owns it as a single home owner…she’s looking for a husband….lol

Hmmmm….that -3 YOY figure Tim uses sounds like a complete joke. Try -20-30 YOY from my example….
4 Tsuru // May 2, 2008 at 11:13 am

We are just starting to see the knifecatchers come out in force around here. This is why prices are “sticky” on the way down - the suckers have to come out and be fleeced until there are none left. When there’s none left, prices ratchet down and the next wave of knifecatchers comes running out to be fleeced. Repeat.
5 Lionel // May 2, 2008 at 11:47 am

You truly would have to be an imbecile to jump into the market now. A few doors down from me in Bryant a house virtually identical (same builder, same layout) to the one I’m renting for 1800 sold for 670. It was a couple who cashed out of Mass. and paid cash (which is fine for them). Coincidentally on the Irvine blog, a house for that amount is listed and the following breakdown is given: Downpayment required 172K; income requirement 215K. I can tell you from meeting my neighbors that that hardly comports with the neighnorhood’s demographics. In fact, I recently picked up a Seattle Metropolitan magazine that listed median household incomes for various areas and Ravenna was listed at around 55K (essentially a teacher’s salary). I realize it’s an imperfect measure, but that median doesn’t come close to supporting the house prices around here. I’m new to Seattle, so some of these median household incomes surprised me. Nearby in Laurelhurst, which I’d thought of as very wealthy, has a median of around 95K, which is respectable, but hardly wealthy. Meanwhile I’ve seen houses there sell for a million or so. If you’re patient and smart about this, house prices will come crashing down. If my rent is any indication of the reality of what people can actually afford, the couple who bought the house a few doors down overpaid by a staggering amount. In fact, I broached this subject with another couple, who bought next door to me, and despite having bought in 2003, were fearful they had overpaid.
6 Moe Ronn - Realitor® // May 2, 2008 at 11:59 am

I think it has more to do with the $350K range being the upper limit for most middle-income families. Hence, there are quite a few competing for those properties right now. However, I believe, as well as many of you, that in about two and half years the selection will be much larger.
7 SeattleMoose // May 2, 2008 at 12:02 pm

Dead Cat Bounce = RE Pounce (Rah Rah Sis Boom Bah!!!!)
8 david losh // May 2, 2008 at 12:05 pm

My wife and i were talking about this today. We have two friends who have sold houses these past few weeks for what I thought was for too much money, but the houses sold quickly.

The real discussion was a Real Estate agent friend of ours who put a house on the market near Green Lake with offers to be reviewed on Tuesday April 29th. The price was close to market value and it did come on my hot sheet as pending yesterday.

These are strange times for sure.
9 goin' for it // May 2, 2008 at 12:48 pm

Anyone else see this yet?

http://www.bid-to-own.com/

Whats this?! A house auction in our very own “its different here” Seattle? (OK, it is Renton)

I love this quote from the website ” This is not a HUD or foreclosure auction ” Ok, I get that you’re not in foreclosure YET but why the heck are you having a sealed bid auction instead of just selling them normally?

Anybody have input on this? Am I missing something?
10 EconE // May 2, 2008 at 4:26 pm

I’m seeing homes listed in Los Angeles now on Redfin where the prices were so low that I was in disbelief. After clicking on the link I saw that the homes were actually up for auction and the listed price was just the “starting bid”. It’s no wonder that the REIC down there is cheering about “multiple bids” coming in on houses.

I don’t expect it to be any different here within the next year.
11 george // May 2, 2008 at 7:38 pm

Home-buying mania is nearly done, but inventory numbers talk.
12 softwarengineer // May 2, 2008 at 8:07 pm

2% MONEY MARKET

Everything is plummetting right now except gas and food. That $95K or $55K household incomes are way too high by the way, you need to scrape away the top 10% household incomes to get to the real estate market, almost all the top ten percent already bought or have enough brains to stay out. They aren’t buyers.

Try an average $40-45K for the bottom 90% of Seattle household incomes. That’s your potential wantabe buyers.

Ohhhh….the banks are tightening up, but not $350K homes for average buyers, try “your yearly income” for average buyers; like it was in 1990’s Bubble. Here’s the proof:

“…”In a normal housing market, we have ratios that you qualify for a certain amount of house at your income level,” says Anthony Sanders, a professor of finance at Arizona State University. “Since banks have tightened credit, we’re starting to revert back to those lending standards, and prices are going back to reflecting a ratio of income and median house value.”….”

The rest of the story:

http://promo.realestate.yahoo.com/promo/how-low-will-real-estate-go.html
13 johnnybigspenda // May 2, 2008 at 10:20 pm

now that you mention it, I noticed the inventory number has dropped from a peak of around 12,500 to about 11,800 currently. I thought it would continue to go up and up actually. (does this mean they sold 700 houses recently?)
14 bbraddock // May 3, 2008 at 1:07 am

A lot of multiple offer situations are coming from properties that are in good neighborhoods and priced below comparable listings. I’ve seen one in Laurelhurst and one in Hawthorne Hills recently and both looked at offers a week after listing. I know that the second sold with three offers, including one with a pre-inspection which ended up not being accepted because of price. The eventual buyer paid more than list, but nothing near what I would have expected a year ago.

That said, multiple offers aren’t necessarily a sign of a strong or improving market. They’re also a product of pricing strategy. If a car dealer lists a vehicle at 2/3 of bluebook, he’s bound to get lots of interest and several offers. That doesn’t mean that autosales are strong, or that he’ll get what he considers full value. But that also doesn’t preclude him from saying he’s received multple offers and a lot of interest to generate demand. (Take a good house in a good neighborhood, price it $50-75K below current market, and you have a similar situation.)

I gotta say that I’m so surprised at what some agents are saying about this market. One agent with a listing in View Ridge told me that many deals were falling through not because of financing problems, but because of young and inexerienced buyers agents who don’t know how to close a deal, especially at inspection. When did this become all about closing deals? Isn’t it all about people getting a fair price for a home in current market conditions? This tells you a lot about what has made home sales tick recently. (By the way, there are a lot of honest and trustworthy agents out there.) If this agent had one word of advice for her buying clients, it would probably be …

“plastics…”

Johnny, some of the decrease in inventory comes from homes that are not selling and being taken off the market.

[Okay, The Tim, I've finally joined the ranks of the mighty Seattle Bubblites. I feel a weight lifted ... LOL]
15 Garth // May 3, 2008 at 7:15 am

The fact that the through February Case-Shiller index is only down 2.7% year over year and includes pierce and snohomish counties makes it pretty clear that prices in Seattle zipcodes are not off much if at all.

When did this become all about closing deals?

When was it not? There is no SEC for real estate, only the NAR and there is no financial incentive for anyone to effectively counter them.

The MSM is not reporting the sky is falling in Seattle, because so far it has not been. Until there is at least a 10% decline they can call a “downturn” or the 20% required for a bubble the mainstream press and population is unlikely to dismiss nearly 40 years of advertising, sales data, empirical data and personal relationships.

If we have a period like San Diego and Las Vegas are going through right now where 40% of their sales are short and foreclosure sales, the mainstream opinion can be changed.
16 whats my name // May 3, 2008 at 8:21 am

“The fact that the through February Case-Shiller index is only down 2.7% year over year and includes pierce and snohomish counties makes it pretty clear that prices in Seattle zipcodes are not off much if at all.”

Isn’t Case-Shiller also discounted for inflation?
17 david losh // May 3, 2008 at 9:04 am

“because of young and inexerienced buyers agents who don’t know how to close a deal.”

I would never put a buyer into a multiple offer situation. There are way too many properties on the market where a seller will take an offer. Last year a buyer of mine paid $500K for a property listed for $650K.

There are plenty of deals to be done, but both buyers and agents don’t want to work the deal.

Buyers and agents are equally to blame. Shopping on the internet has gotten to be the norm. Agents call me up to ask about listing I have and I ask “have you seen the property?” The answer is “No, but I’ve seen the pictures on line.” More to the point the buyer saw the pictures on line and called an agent to call me.

After a property has been on the market for a month it’s old news. Agents wait for the almighty price reduction so they have something to talk with buyers about.

Buyers panic. In fact through the entire run up in pricimg good properties sat on the market while the sellers were punished for not giving up those price reductions.

Many people paid too much when they didn’t have to, it’s the same today. The easy, squeezy deal has gotten to be business as usual.
18 Greg Perry // May 3, 2008 at 9:14 am

As noted in a few comments here, multiple offers can be created by strategy (listing an artificially low price soliciting bids).

Multiple offers can happen in ANY market with a well priced, well placed emotionally compelling house.

Mostly multiple offers happen when the supply/demand favors Sellers. Absorption rates currently show that most Seattle NWMLS Areas are firmly in Balanced territory (3-6months inventory) overall, with many Areas price ranges under $500K as Sellers markets (under 3 months inventory). The last 2 weeks particularly have shown increased sales activity in the Seattle Areas. Buyers should expect competition for compelling homes in the lower price ranges in good Seattle neighborhoods and negotiate accordingly if they want the house.

Most Eastside Zones are still in Buyer’s market territory, with pockets of Balanced Markets and just a few Seller’s markets (when looked at by price range). While sales activity isn’t dropping, it isn’t increasing as much on the Eastside as the Seattle markets. High end sales on the Eastside are particularly slow.

A good agent negotiates for their client’s best opportunity. To do so, the agent must have a deep understanding of the market forces where the Buyer is offering.

Even in the hottest of markets, a house will not sell if it is grossly overpriced for the location and condition.
19 biliruben // May 3, 2008 at 10:16 am

We got multiple offers last week.

The key is to study the comps very carefully. The pattern that emerged in my segment after last summer was that houses were listing like it was May 2007, sitting on the market, and going through a series of cuts until they received an offer a few months later 10-15% below the original list.

So we priced at the top of what people were ending up paying, but 10% below last spring. We also got the house in impeccable shape.

It worked. We attracted 2 strong offers from down-sizers looking for a beautiful no-hassle, smaller home, with no contingencies, an escalator, and they waived inspection. So we got over what other folks got who had sat on the market for months, over list, and we sold before the 1st open house.

There are at least 3 properties that are larger, in just as nice condition, and priced below ours (now, not initially) that have gone stale and are continuing to sit. Our house is pretty unique, so the comps aren’t perfect, but I think that we did the right thing, and it’s a huge relief to get out of the market quickly.
20 Greg Perry // May 3, 2008 at 10:29 am

Bili,
Congrats

Perfect strategy.

I’ll almost guarentee you that you netted far more than you would have had you try to test it too high letting the market time build.
And….you got a clean deal.
21 Lanny Poffo // May 3, 2008 at 10:31 am

Hey the map in the Times article reminds me of a Forum post a while back about the “real bay area”.

http://seattlebubble.com/forum/viewtopic.php?f=1&t=1023&p=8002&hilit=real+bay+area#p8002

Maybe it is time to start tracking the “real Puget Sound”.

Lanny
22 Everett_Tom // May 3, 2008 at 10:33 am

The fact that the through February Case-Shiller index is only down 2.7% year over year and includes pierce and snohomish counties makes it pretty clear that prices in Seattle zipcodes are not off much if at all.

As of Feb, yep.. it certainly looks that way.. ( NWMLS Feb by county and MWMLS Mar by county )

But if Case-Shiller follows the NWMLS next month, that’ll go away….

(but you can always hold on to the neighborhood data after that…)
23 seattleite // May 3, 2008 at 1:16 pm

So what should be the ideal rent to value ratio for a property. Right now, rent is $1 sqft. Is that too low? If you get $2000 for a 2000 sqft house will that be a good deal vs paying 500K for it?
24 softwarengineer // May 3, 2008 at 2:05 pm

TIGHTENED BANKING STANDARDS

Hold on to your bubble brain hats bloggers; the attack of the giant bank ants has hit Seattle. The $350K middle class house refernced above is no more, if the $55K and even $95K avg household incomes bloggers reference above hold water [I think they're way too high, likely artificially propped up by averaging a small percentage of really high household incomes]; that’s the mean value house we qualify for, see the proof:

“….”In a normal housing market, we have ratios that you qualify for a certain amount of house at your income level,” says Anthony Sanders, a professor of finance at Arizona State University. “Since banks have tightened credit, we’re starting to revert back to those lending standards, and prices are going back to reflecting a ratio of income and median house value.”…”

The rest of yesterday’s news URL:

http://realestate.yahoo.com/promo/how-low-will-real-estate-go.html;_ylt=AuT1tkvtECtDbK_FNR9qAYPT4JF4
25 Garth // May 3, 2008 at 5:34 pm

Everett_Tom,

Thanks for the links, but it is possible to read the blog and not become a bubblehead :)

I think what tim said in the neighborhood data post is pretty close to what I said above.

The Seattle city limits as a whole are definitely still the worst place for buyers

I live in 710, and two houses near me have sold for 600 and 700 in the last month. One sold so fast it never hit the internet and the real estate sign was up one day, the other sold with multiple offers after being on the market for one day. Both are nice, but neither is a mansion.
26 Everett_Tom // May 3, 2008 at 7:42 pm

Thanks for the links, but it is possible to read the blog and not become a bubblehead :)

Quite True.

Sorry about the Snarky tone of the last one, I had just wanted to point out that what you’d posted was consistent with the data from NWMLS .. and somehow the pre-coffee me got a bit carried away.
27 economist // May 4, 2008 at 12:43 am

The fact that the through February Case-Shiller index is only down 2.7% year over year and includes pierce and snohomish counties makes it pretty clear that prices in Seattle zipcodes are not off much if at all.

That’s YOY from Feb 2007 to Feb 2008. Seattle didn’t peak until summer 2007, and is down today from Feb 2008.

Got math skills?
28 biliruben // May 4, 2008 at 6:54 am

Hey Garth - could you posts the addresses? I’m looking starting to look in 710 in that price range.

I’m curious if I completely missed those.
29 SeattleMoose // May 4, 2008 at 10:03 am

What am I missing here? Why would anyone buy a house whose value is only guaranteed to go down for years?

Nobody is ever forced to buy a home so this is all free will.

Wherever they went to school….they should go and get their money back.
30 Garth // May 4, 2008 at 12:46 pm

SeattleMoose,

I understand the economic arguments, but the reality is the the general population does not always act, vote or spend in their own interest. However logical and correct you believe you statements to be, your chances of convincing the majority of the population that your opinion is right and everybody else is wrong by insulting their intelligence and education are pretty small.

Bill,

I can email them to you if you want, they are neighbors and I am not sure I would want them posting my address on a blog so I don’t think I want to post them publicly.
31 EconE // May 4, 2008 at 1:22 pm

I call bull"chocolate" on anybody that mentions houses yet won’t throw up the info.

Every house that has been listed here in any thread has been “somebody’s neighbor” nobody’s asking who bought or what their blood type is…only for proof of these supposed sales.
32 EconE // May 4, 2008 at 1:22 pm

I call bull"chocolate" on anybody that mentions houses yet won’t throw up the info.

Every house that has been listed here in any thread has been “somebody’s neighbor”.

Nobody’s asking who bought or what their blood type is…only for proof of these supposed sales.
33 TJ_98370 // May 4, 2008 at 2:09 pm

An interesting trend is developing in my neighborhood. The most recent properties to sell near my residence sold for less than county assessed value! One sold in January 2008 for 92% assessed value and another sold in February 2008 for 96% assessed value.

The last 10 sales in my immediate area from Novemebr 2007 to the present have averaged 108% of assessed value. Historical sales prices going back to January 2000 have been running at about 132% of county assessed value. Of course the county doubling assessed land values since 2006 probably has alot to do with it.
34 george // May 4, 2008 at 2:56 pm

EconE. I agree! Personal tall tales about the housing market bouncing back? Bah!

I don’t see it in the Seattle Times or the PI, but more and more properties are listing below where they would have listed last year, even in the supposedly solid neighborhoods. Why is that?

Smart owners and realtors can see the writing on the wall. YOY down. More houses on the market every month. Recession building. It doesn’t take a rocket scientist to see where this is headed.

Smart sellers have a chance to get out now near the top if they price it right. Or to get greedy and take the risk of chasing the market to the bottom for some time. Two choices.
35 Ira Sacharoff // May 4, 2008 at 3:47 pm

“Why would anyone buy a house whose value is only guaranteed to go down for years?”

I’m not saying that prices are about to start going up, and in fact feel fairly confident that they won’t, but, you can actually guarantee that prices are going to continue to fall “for years?” You must be pretty powerful.
36 [troll] // May 4, 2008 at 7:26 pm

rlly gt kck t f y hmwnr wnnbs.

Y lv n yr bg nfstd prtmnts wth nsy nghbrs nd vr ncrsng rnts nd whn tht hm prcs r stll hgh.

m hmwnr nd cn tll y tht wld by rght nw. Th dls r t thr. f y ll hd ny cjns, y cld swng yrslf rl gd dl rght nw.

Bt, th mjrty f y hv bn rntrs fr mny yrs, nd wll b frvr f y dn’t ct qck.

ntrst rts r gng p, th FD ct 3 pnts vr th pst cpl f mnths nd ntrst rts hv strtd t clmb bck p.

Y cll m wht y wnt, bt y ll gt yr nss pshd p n th wndw lkng n n hmwnrshp. Fct s, y r ll bnch f whny lsrs, dstnd t b rntrs frvr.

Chrs!
37 david losh // May 4, 2008 at 7:34 pm

as you’ve read here recently some people want or need to buy near a school they want. people who talk neighborhoods are usually family types.

a seller of mine called me today to ask if they should lower the price of a condo unit i have listed on Capital Hill. he called me!

many sellers are seeing the presidential election as a stumbling block for selling next year so they want to sell now.
38 TJ_98370 // May 4, 2008 at 8:37 pm

…..I am a homeowner and can tell you that I would buy right now. The deals are out there. If you all had any cajones, you could swing yourself a real good deal right now……

Whoa Rentersarelosers …..

If you have any “cajones” you would tell us something about yourself. If you don’t respond I guess we will have to assume you have been castrated. If the little head isn’t affecting your thinking perhaps you should consider the possibility that you are suffering from a case of cognitive dissonance

Cognitive dissonance

Rave on eunuch!
39 [troll] // May 4, 2008 at 9:01 pm

bght my frst hm n th lt 70’s wth 12% 1st nd 17% scnd mrtgg, md 50% prft n tht hm n 5 yrs, mvd n t svrl mr hms. Nw n my 5th hs nd hv vr 1/2 ml n qty. nvr pt mr thn 20% dwn. Y rntrs cn d ll th clcltns y wnt tht yr mny cn rn mr n CD r n th stck mrkt, bt y knw drn wll, y jst wn’t d t. Y wll nvr nvst n yr ftr by pttng th qvlnt f wht y wld nvst n yr wn hms, nd prft hndsmly.

Y rntrs r lsrs nd wll lnd p wth nthng t th nd f th rd.
40 economist // May 4, 2008 at 9:09 pm

Interest rates are going up, the FED cut 3 points over the past couple of months and interest rates have started to climb back up.

Which means prices have to come down.

Got cash?
41 [troll] // May 4, 2008 at 9:16 pm

Th yngr gnrtn hs “sns f nttlmnt” y dn’t wnt t scrfc.
Y thnk y ll dsrv t lv n mnsns, gt pd vr 100k n yr jbs s “strtng slry”

Y ll r bt t gt ds f rlty.

“Tm” thnks h cn tm th rl stt mrkt! hv nws fr “Tm”.

hv bn rl ctv n th Stck mrkt fr th pst 20 yrs nd th lst 5 wth wth th bslt bst tls n th mrkt tdy ncldng rtcfcl ntllng nd Nrl Ntwrk lgrthms, nd cn tll y tht mk mny bt “t n’t sy” t tm th mrkts, nd tht gs fr Rl stt s wll. ll th chrts nd grphs r fn fr ntrtnmnt, bt y wll wk p n mrnng nd wndr wht th hck hppnd? Whr hv th dls gn t?

Bt thn gn, Tm lvs n lttl prtmnt nd lv n lrg hm wth gd qty, nd gt t ply th mrkts.

Bst dvc: By yr wn hm s sn s y pssbly cn, wrk hrd nd py yr blls n fll n tm.
42 [troll] // May 4, 2008 at 9:18 pm

Whch mns prcs hv t cm dwn.

Gt csh?
……………………………………………………

Plnty, nd thr wll b rsh t by s ntrst rts strt t clmb.

Bn thr, sn t.
43 q // May 4, 2008 at 9:43 pm

If you have a half a million in equity and you kill the markets with your trading scheme, why do you care what we think?

I’ve owned two houses and lost money on both, after accounting for maintenance and realtor fees. I showed up to closing with three grand to get out of my second house, in fact(In Austin, TX). It is sometimes a bitter pill to watch people cash out because they had bought a few years prior (when I was still in college), but I’ve never been in the right place at the right time for real estate (despite my efforts, a rock crushers was erected near my second house…bye bye equity).

And 100k salaries aughta be buying 300k houses, no more.
44 TJ_98370 // May 4, 2008 at 9:47 pm

…..I bought my first home in the late 70’s with a 12% 1st and a 17% second mortgage, made a 50% profit on that home in 5 years, moved on to several more homes. Now on my 5th house and have over 1/2 mil in equity……

Rentersarelosers - You’ve been investing in real estate since the late 70’s and only have 1/2 mil equity? Wow, you must have made some bad investments. Sorry- your credibility is severely lacking. You’re also not using verbiage that I would expect from someone that would at least be in their late fifties.

What’s your game, dude?
45 TJ_98370 // May 4, 2008 at 10:03 pm

Rentersarelosers = bullsh*t alert
46 [troll] // May 4, 2008 at 10:06 pm

Y’v bn nvstng n rl stt snc th lt 70’s nd nly hv 1/2 ml qty? Ww, y mst hv md sm bd nvstmnts. Srry- yr crdblty s svrly lckng. Y’r ls nt sng vrbg tht wld xpct frm smn tht wld t lst b n thr lt ffts.
……………………….

Tht’s 1/2 ml n hm qty gns. Dsn’t tk nt cnsdrtn 401k’s, Stck mrkt trdng ccnts svngs tc…,

Wht’s my gm? Nthng! Jst sck nd trd f yr “nttlmnt gnrtn” nd y s clld smrt “dds” tryng t prdct th bttm f th rl stt mrkt whl y lv n bg nfstd prttmnts t $1500 - 2000 grnd mnth.
47 [troll] // May 4, 2008 at 10:07 pm

45 TJ_98370 = lsr lrt
48 [troll] // May 4, 2008 at 10:14 pm

f y hv hlf mlln n qty nd y kll th mrkts wth yr trdng schm, why d y cr wht w thnk?

………………………………….

Bcs cr nd wnt th nxt gnrtn t njy thr lvs, nt nlyz t t dth. hm s mr thn fnncl nvstmnt, t’s lfstyl, t’s scrty, t’s n nvstmnt n yr ftr tht y wll nvr hv s rntr.
49 TJ_98370 // May 4, 2008 at 10:34 pm

45 TJ_98370 = loser alert

Rentersarelosers - to pretend to be somebody you’re not - are you compensating for lack of “cajones”?

Find a Local Psychiatrist
50 Alan // May 4, 2008 at 10:48 pm

I owned for nine years (two properties in two different cities). I saw 2% annual appreciation on one property and 0.4% annual appreciation on the other. I just had bad timing and a lack of experience to pick the best location. My upper stretch limit of affordability is around $350k. I’ll wait for a few more years to find something I would be happy in long term and then I’ll just accept that ten years of experience writing software just doesn’t make me economically competetive in this part of the country and will move somewhere else.

But hey, congratuations, RAL. It sounds like you’ve been one of the lucky ones.
51 deepcgi // May 5, 2008 at 2:03 am

Rentersarelosers: You realize that home equity evaporates in a crash, right? You realize that homes in Houston, Texas and Kyushu Japan are currently priced the same as they were 20 years ago? You realize real estate is crashing in Spain, England, Australia, New Zealand and Italy, right? You realize that I signed a new year lease last week on a 2500 sq. ft house on the Eastside for 1750, right? You realize that your real estate may not appreciate again for 15 years, right?
52 BitterInBallard // May 5, 2008 at 2:53 am

Rentersarelosers:

…I have been real active in the Stock market for the past 20 years and the last 5 with with the absolute best tools on the market today including Articificial Intellenge and Neural Network algorithms, and I can tell you that I make money but “it ain’t easy” to time the markets, and that goes for Real Estate as well…

So I guess you work for a quant shop. 20 years? You’re either CIO or SPM, most likely with an MBA. Congratulations. You’re in the top 2% of the intelligence bell curve. With your compensation and market knowledge, you should be making money hand over fist at all points in the cycle. You’re also financially savvy… much more so than the other 98% of humanity. We don’t have the tools, education and ability to compete with you as real estate investors.

… If you all had any cajones, you could swing yourself a real good deal right now…

That’s the thing; the other 98% of us don’t have the cajones to go out on a limb. We’re risk-averse and scared of market timing. I don’t want to risk my family’s financial future on what looks like a bad investment. Right now, my NET monthly housing expenditure is ~$1000/mo less as a renter. That’s money in the 401k and Roth IRA bank. It seems to me that dividend yields and muni rates are competitive with the rental returns of an investment property. Meanwhile, the capital appreciation potential seems much higher in financial as opposed to real assets. Why buy a house in Ballard when I’m renting the one next door? It seems like buying now will hurt my cash flow and my balance sheet. I’m confident that I will be a competitive renter for the forseeable future. Even if market rents rise, I won’t be priced out for quite some time. The only scenario where I lose requires market rents to rapidly appreciate upwards to the match tax-adjusted ownership costs, while ownership costs simultaneously rise at a rate higher than the rate of my income growth. Frankly, the risk of this scenario seems small. I prefer to bear this risk rather than the risk of buying now, with the cash flow and liquidity consequences that entails.

It is probably difficult for you to relate to me, given your nature as a successful, intelligent financial player. You forget that you function at a level far above most of the people you pass on the street. So please, be kind when you dispense your advice. Try to conceal your arrogance and disdain. If you had a fiduciary duty to me, would you really recommend that I make an investment that was so far out of my league?
53 wreckingbull // May 5, 2008 at 6:25 am

I enjoy engaging the trolls, but when they are paste-eaters like this one, it just takes the fun away. Someone needs to convince Meshugy to come back.
54 [troll] // May 5, 2008 at 6:32 am

Y’v bn nvstng n rl stt snc th lt 70’s nd nly hv 1/2 ml qty? Ww, y mst hv md sm bd nvstmnts. Srry- yr crdblty s svrly lckng.
…………………………………………………

D y rlz tht my ntl nvstmnt ws nly bt $15 k? nvr pt nthr dm nt hm, whn sld mvd n t th nxt n nd sd th blt p qty s dwn pymnt.

xcpt fr th frst hm (lwys th hrdst nd scrfc, smthng yr gnrtn sn’t prprd t tk n) Mnthly mrtgg nd txs ws lwys bsclly qvlnt t rnt.

Shw m hw y cn trn $15k nt $ 500k n 25-30 yrs sng yr nvstng ds. ny tkrs?

Fr th prsn tht jst sgnd ls fr $1750/mnth, my cndlncs, thts dgh rght t th wndw. Rl stt hs dn vry wll vr th yrs n mst plcs (ncldng Sttl).
55 Cougar // May 5, 2008 at 6:37 am

#48

A home is more than a financial investment, it’s a lifestyle, (keeping up with the Jones’s) it’s security, (the honeydo maintenance list) it’s an investment in your future that you will never have as a renter (owning a home is a forced savings account, disciplined money management creates wealth).

Tim reports the housing market as it is and does it very well. In the last 5 years many people got caught up in the housing frenzy and are now unable to live any lifestyle.
56 Peter Taylor // May 5, 2008 at 7:22 am

I have been real active in the Stock market for the past 20 years and the last 5 with with the absolute best tools on the market today including Articificial Intellenge and Neural Network algorithms

Someone fell for the e*Trade advertising. “Neural network” algorithms? Everyone knows that you need to re-route the encryption algorithms if you want to time the bottom. Sheesh.
57 matthew // May 5, 2008 at 7:45 am

RAL,

You could have turned 15k into 500k in a day if you had bought BSC puts…..

But hey, keep buying up Seattle real estate right now….. someone has to be the greater fool.
58 EconE // May 5, 2008 at 7:58 am

“Renters are Losers”….

1/2 Mil in Equity from investing in RE since the 70’s?

And that’s with multiple homes?

You either buy REALLY REALLY REALLY horrible RE

Or maybe you’ve been sucking on the HELOC tittie so hard that you’re gonna need a pacifier for the withdrawals.
59 Mikal // May 5, 2008 at 8:01 am

Mathew,
Should have would have could have. You could say that about any investment. Real estate isn’t just about money. Now I don’t know if you guys factor in inflation with your housing figures. My payment in 15 years will still be the same while your rent will have increased. The guy your lambasting has been a bit harsh, but you all do sound a bit bitter on your end.
60 david losh // May 5, 2008 at 8:06 am

ok, i do love this blog.

Everyone knows that you need to re-route the encryption algorithms if you want to time the bottom. Sheesh.

the guy’s saying he only puts twenty per cent down so he must bank the rest to do what he wants. with the personal residence tax exemption it’s possible to add 15% by trading up or down in real estate every two years.
61 matthew // May 5, 2008 at 8:44 am

BTW, who hasn’t bought a house in the Seattle area in the 1970’s and is not up 500k in equity???

My parents bought a house in the Tri-Cities in 1989-1990 and are up over 200k in equity right now.

BFD. Trying to make 500k sound like he is the next Trump.

My old college roomate bragged about his San Diego condo and how he was up nearly 150k in 1.5 years. Guess what? The guy is underwater and unemployed.

Think that scenario won’t happen here?

SOLD TO YOU!
62 Dave0 // May 5, 2008 at 8:52 am

Interest rates are going up, the FED cut 3 points over the past couple of months and interest rates have started to climb back up.

HAHAHA… this is completely backwords! When the FED cuts rates it causes interest rates to go down! Learn some basic economics buddy.
63 matthew // May 5, 2008 at 8:55 am

Dave0,

I think he was referring to mortgage rates not the prime rate.
64 Dave0 // May 5, 2008 at 9:01 am

I have been real active in the Stock market for the past 20 years and the last 5 with with the absolute best tools on the market today including Articificial Intellenge and Neural Network algorithms, and I can tell you that I make money but “it ain’t easy” to time the markets, and that goes for Real Estate as well.

The argument that has always been used by realtors for why there is no real estate bubble that will burst is that real estate markets move slower than stock markets, which is true. What takes a day in the stock market takes a month in real estate. What takes a month in the stock market takes a year in real estate. The flip side to this is that real estate, as a result, is easier to time. In the stock market you truely can “wake up one morning and wonder what the heck happened” but in the real estate market this won’t happen, unless you stop paying attention for a month.
65 Dave0 // May 5, 2008 at 9:05 am

smart “dudes” trying to predict the bottom of the real estate market while you live in bug infested aparttments at $1500 - 2000 grand a month.

Oh and by the way, I happen to live in a house in a nice neighborhood (by Greenlake), without any bug investations, and pay less than $500.month.
66 [troll] // May 5, 2008 at 9:12 am

BTW, wh hsn’t bght hs n th Sttl r n th 1970’s nd s nt p 500k n qty???
………………………………………….

Nt n Sttl, lvd n svrl lctns crss th cntry.

My psts r nt mnt t prvd bss fr hw wll n ndvdl hs dn.

t s mnt t prvd sm lng trm xprnc nd prspctv t prchsng n f lf’s bsc nds, “shltr” nd hw t cn bnft y fnnclly n th LNG trm.

Y cn fnd jstfctns fr nt byng nw nd fr byng nw, bt th fct s rntng wll brng y nthng fnnclly nd thts FCT. cldn’t mgn pyng 1750 pr mnth ($21,000 pr yr) n rnt wth bsltly n ncm tx ddctns fr mrtgg ntrst nd prprty txs tc. t s lsrs gm n th lng rn.

Th wlthst mrcns r hmwnrs, nt rntrs nd tht’s FCT.

Nw, y cn tlk bt frclsrs nd byrs ndrwtr, bt th fct s nyn tht bght hm wth lttl dwn nd tk n RM whn 30 yr rts wr nd stll r t hstrc lws nds t hv thr hds xmnd, r ddn’t blng n th hm n th frst plc nd hd nthng t ls by gng fr th “dl”. Thy wlk wy nd g bck t tht prtmnt r mbl hm f t ddn’t wrk t. Srry, hv n sympthy fr thm.

Prdnt byrs wth 20% + dwn nd 30 yr mrtggs, whl thy r xprncng tmprry dp n hm prcs, r nt bng frclsd n fr mrtgg nd vltn rsns. Th hsng mrkt hr wll rcvr fr th smpl rsn tht n Sttl thr s N lnd lft, nd thr s lwys smn tht mks mr dgh thn y wllng t py fr th cnvnnc f lvng n th mtrpltn r.
67 [troll] // May 5, 2008 at 9:14 am

HHH… ths s cmpltly bckwrds! Whn th FD cts rts t css ntrst rts t g dwn! Lrn sm bsc cnmcs bddy.
…………………………

Dv,

Th 3 pnt FD Rt ct hd n pstv ffct n mrtgg rts, s mttr f fct lng trm mrtgg rts r p nd wll cntn t rs s th lndrs ntcpt sn t cm FD rt hks t cmbt nfltn.
68 EconE // May 5, 2008 at 9:21 am

I can’t wait until mortgage rates hit double digits.

CD’s will reward us savers handsomely also I presume.

Yeah…I know…CD’s don’t pay very well…but as Groucho Marx once said…

“If you have a lot of them they do”

Now move along Mr. “I bought at the peak and haven’t learned how to troll a bubble blog properly”.
69 [troll] // May 5, 2008 at 9:27 am

Nw mv lng Mr. “ bght t th pk nd hvn’t lrnd hw t trll bbbl blg prprly”.
………………….

Bght t th pk? Ws th md 1990’s th pk?

Trll bbbl blg? Hw bt tryng t brng dffrnt prspctv t n sdd blg?

nd by th wy, s CD rts rs y shld scl t f stcks nd nt CD’s. t’s ll bt rsk/rwrd. Stcks gnrlly dn’t d wll n rsng ntrst rt nvrnmnt.
70 Dave0 // May 5, 2008 at 9:28 am

I think he was referring to mortgage rates not the prime rate.

I know, but still fed rate cuts indirectly lower mortgage rates, not raise them. The net effect of the fed lowering the prime rate is it makes money cheaper to borrow across the economy as a whole.

The 3 point FED Rate cut had no positive effect on mortgage rates, as a matter of fact long term mortgage rates are up and will continue to rise as the lenders anticipate soon to come FED rate hikes to combat inflation.

I think the fact that the rate cut had no positive effect on mortgage rates is because there were other variables that came into play, such as the credit crisis hitting the financial markets hard right now. I’m not arguing that mortgage rates aren’t up, but saying they are up BECAUSE of the fed cutting rates is just funny.
71 [troll] // May 5, 2008 at 9:34 am

bt syng thy r p BCS f th fd cttng rts s jst fnny.
…………………………………

Tht ws nt th ntnt f my sttmnt nd y knw t.

Bt cntn t hv yr “Sttl Bbbl Grp Hg”.

t lst hv brght dffrnt prspctv nd hpflly sm f y n th yngr gnrtn wll thnk bt t fr yr lngr trm fnncl plnnng (nd n, m nt tlkng bt nxt wk r nxt mnth)
72 Dave0 // May 5, 2008 at 9:46 am

Rentersarelosers, I appreciate the different perspective and welcome your comments. Strings like this are what makes this blog great. There aren’t too many places outside of college classroom where you can find meaningful discussions about fed rate cut effects and stock picking algorithms.

I think about my long-term financial planning everyday. It’s just I’ve come to the conclusion that in the current market, I am better off renting for at least the next 12 months, after that who knows, it will depend on the state of the markets.

I may have come off as mean, but so does the name “Rentersarelosers”. All I’m doing is counterbalancing your attacks. If you originally posted in a nicer way, I would have too.
73 [troll] // May 5, 2008 at 10:04 am

Dv

mnt n dsrspct whn chs tht hndl, th ntntn ws t ndct tht rntrs r (fnncl) lsrs n th lng rn, hmwnrs r nd wll cntn t b th (fnncl) wnnrs.
74 b // May 5, 2008 at 10:10 am

Rentersarelosers -

As someone who is investing for a long time surely you understand that markets change and there is no sure bet. Buying a home 30 years ago until today was a pretty good investment in retrospect, due to how the housing market has played out. Buying a home since around 2003/2004 looks like it will not be a good investment in retrospect, and might become a very bad investment over the next few years as least. Do you also believe that buying a stock at any time for any price is always a good investment because on average the S&P will return 7%+ in the long run? Would you make a 4x leveraged investment of several hundred thousand dollars based on that kind of thinking? That is basically what you are telling people here to do. Buy at any price because it is always the best thing ever! Do you realize how stupid that sounds?
75 EconE // May 5, 2008 at 10:11 am

Many of us *were* homeowners.

We already “won” by selling.

We invested the proceeds.

Those investments did better than housing.

There will come a time to be a homeowner again.

Now is not that time.
76 Moe Ronn - Realitor® // May 5, 2008 at 10:31 am

The financial situation in which the US currently finds itself has no direct comparison is history to use for analysis of what may happen in the futre. That being said, one must rely on their wits and common sense to decide for themselves. Myself, I’m doing some counter-intuitive investing in preparation for having more capital for when I decide the housing market is favorable for a purchase. My moving-target date is not sooner than fall 2010/winter 2011 and quite likely farther out.

It’s been asked many times before, but which do you think will happen first, your salary doubling or median house prices dropping by 40-50%?
77 economist // May 5, 2008 at 10:45 am

the intention was to indicate that renters are (financial) losers in the long run, homeowners are and will continue to be the (financial) winners.

Buying an asset only makes you a winner in the long run if the price is reasonable. If you buy an asset at a greatly inflated price, you may never come out ahead in the long run. Like someone who bought CSCO in 2001.

And no, “coming out ahead” does not mean selling something for a higher nominal return than you paid for it. It means the income from your asset exceeds financing costs over the long run.
78 economist // May 5, 2008 at 10:46 am

Correction, “higher nominal price”.
79 Ira Sacharoff // May 5, 2008 at 10:48 am

rentersarelosers,
If you’ve read this blog long enough, you’d realize that not all the posters here are renters living in bug infested apartments. There are a variety of ages and income levels here, and a lot of folks own homes.
I completely agree with you that one is likely better off over a lifetime owning rather than being a lifelong renter.
And many of the renters here do intend to buy within the next few years. I think you mistakenly see this blog as an advocacy for permanent renting…that’s just not the case.
It’s more of a counter to the ” It’s a great time to buy” or “buy now or be priced out forever” lines which are perpetrated by my industry in all economic conditions..
80 Bits_of_Real_Panther // May 5, 2008 at 12:20 pm

“I think you mistakenly see this blog as an advocacy for permanent renting…that’s just not the case”

I’ll second that but with the caveat that the tone of the comments often put the Bitter in Bitter Renter until the worm turned a few months ago…. I will say that in Tim’s “Buy vs. Rent” comparisons he seems to be underestimating the income tax implications. At median income it doesn’t help much, certainly not enough to use it as a reason to take on a mortgage, but once you get to 30-40% above median income if you can’t take advantage of the mortgage interest deduction you are getting screwed by the IRS. It saves me about 4K annually for example
81 vboring // May 5, 2008 at 12:53 pm

re: tax advantage underestimated in model

this may be a good point. my income is modest enough and my primary investments are of the pre-tax persuasion, so my tax liability is minimal. the model is good for me as it stands.

but the model should be as flexible and accurate as possible. how should it be modified to accommodate for people with higher tax liabilities?
82 vboring // May 5, 2008 at 1:03 pm

a funny coincidence just occurred to me.

the tax savings of $4k per year from the federal income tax deduction is roughly equal to the $4k in property taxes that the average homeowner in Seattle has to pay.

what else is that $4k in property tax roughly equal to? two months worth of rent income one might expect from a $400k house.
83 MacAttack // May 5, 2008 at 1:23 pm

How does anyone KNOW THERE WERE MULTIPLE OFFERS?
84 b // May 5, 2008 at 1:35 pm

Bits -

The problem is that the mortgage interest deduction has diminishing returns, while the other taxes you must pay (property and sales tax) for the RE will very likely increase over time. I do not know when the inflection point is, but for most people I think there is probably only a real tax advantage for maybe 5 years (highest interest payment years) before it becomes a tax burden overall.
85 Alan // May 5, 2008 at 1:53 pm

It saves me about 4K annually for example

Which comes out to 25 years of savings if I can avoid losing $100k on a purchase.
86 NotaBull // May 5, 2008 at 2:26 pm

“At least I have brought a different perspective and hopefully some of you in the younger generation will think about it for your longer term financial planning (and no, I am not talking about next week or next month)”

Mr “rentersarelosers”, this blog is highly tolerant of different viewpoints. Of course, there are exceptions, but the issue with YOU in particular is two-fold:

1) You decided to call yourself “rentersarelosers”. This is like me, as a straight man, going to a blog for gay people and choosing a nickname like “gaypeoplesuck” and then complaining when they all react like I’m a dick. Pun intended.

2) You made the classic mistake of thinking that there are only two possible choices. (a) Buy real estate IMMEDIATELY or (b) never buy real estate EVER, and become a permanent member of the renter sub-class. In fact there is a 3rd choice and that is ( c) rent for now, while saving money for a down-payment while watching houses go down in price, and THEN buy.

I’d say that 90% of the renters on this site are in this third elusive category. They’re not against home ownership, and they want to buy sometime. Sure, some of them are entitled and whiny, but that’s the distinct minority.

I own a place, BTW, but that doesn’t really matter. What matters is the ability to have civil discourse in a forum such as this. That takes a person of good character because, after all, it’s easy to turn up to an anonymous forum and act like an ass, as you did.
87 johnnybigspenda // May 5, 2008 at 3:04 pm

WOAH… this thread is divergence from the collective hug that is the Seattle Bubble.

Once in a while I like to take a step back to measure ’sentiment’. If you take the aggregate of all the posts on the SB, this particular thread (and a couple of recent comments made on others) mark a divergence in sentiment of ‘the housing market will not appreciate in the forseeable future”.

So, either this guy is *new* and is just acknowledging the bubble or he is bringing his experience and opinion to the table (which may have some level of reality).

Just by the fact that he was so bitterly and actively refuted leads me to believe that the opinion on the SB has swung too far in one direction. (the koolaid has been ingested by all).

Time to consider the possibilities… in stocks and realestate: when *everyone* agrees, its likely time to change your plan (or atleast evaluate the herd’s decision).

An interesting point, which I had not yet begun to contemplate is the effect of interest rate hikes. I can see a .25% increase having a psychological effect on buyers… right now they have no urgency… they are in wait and see mode… I think ‘rentersarelosers’ is onto something there.
88 b // May 5, 2008 at 3:26 pm

johnny -

You are missing the bigger picture. Everyone may agree on this blog, but thats because it attracts people who agree with its thesis. I would venture to say that MOST regular people still believe that RE is in a temporary slump and that it will likely continue its upwards trajectory soon if it hasn’t already.

The only thing higher interest rates will do is push down prices. Very few people buy the principle, they buy the payment. That is the reason we got into this mess in the first place, Burger King workers “affording” the payment on their neg-am option arm without any relation to the price paid. Higher rates mean lower prices on average.
89 OriginalCin // May 5, 2008 at 3:50 pm

Short sales are taking over the market and it’s frustrating as hell. The first home I made an offer on ended up sitting on the bank’s desk for >2 months (subject to lender approval…one of these days) and ended up with 17 offers on it. Needless to say, I bailed on that one. It sold for 57,000 more than the listing price. The second home was competitive right away and there were 3 offers on it the same day I made my offer. Rather than be recklessly aggressive right from the start, I bailed on that one, too. Now my “favorites list” is constantly changing and some homes have been on the market for what seems like eons and have been on the yo-yo of “Active/STI/Pending” and back again over and over. It is most definitely the price range, as the further out you go from the city centers; the easier it is to find property. I can say, as a real-time witness as a buyer RIGHT NOW, almost every home in the aforementioned price ranges of 200-300K is a hot item. I’ve even seen literal dumps being bickered over for the size of its lot. But I’ve just made an offer on the third home in the last 5 months and hope that the third time is a charm. I’ve had to totally revamp my criteria and priorities, but it seems to have done the trick. Granted, I will have to sacrifice my walk to work for an hour-long commute to get the home I want for the price I want. Let’s just say my next market is for a fuel efficient car! If this third offer tanks, I will go back to the East Coast where 250,000 will buy me the plantation. :)
90 johnnybigspenda // May 5, 2008 at 5:02 pm

b/

I understand that this site attracts people who agree with its premise (and trolls).

But, if the people who are typically on here (who are likely to be the MOST pessimistic) are even *thinking* about considering the possibility that the end may be in sight… that probably means that the people who are oblivious to the SeattleBubble (and its teachings) are even more hopeful about the future̷