My cousin and my friend’s daughter/son in law listed their homes in Bellevue for 880k and 915k the first week in March. My cousin and husband put theirs up June 07 and by October, they took it off the market till this past March. Two couples looked at it in 5 months!! They’re baby boomers and all their money is in their home for retirement. They lost $ when he was laid off during the tech bust after 10 years with the company. My friend’s son in law bought their house Jan 06 for 750k. He got a job in Tulsa of all places. I’m afraid they may lose big time. His company is paying the rent on their condo till 9/1 to give them a chance to sell their home. I so hope both couples sell and soon but there are so many homes for sale on the east side of the lake. It may be a rough ride for all 4 of them. I begged my cousin to put their home up when I did but the timing wasn’t right for them. I thank my stars literally that I got out just before it all started to go downhill.

:)

M

Now that the credit bubble is deflating, there is little else left to keep Denver’s economy afloat. Those lucrative construction and realtor jobs just aren’t to be found anymore.

This is a great case study as to how the credit bubble had major impacts even in regions that never saw a real-estate “bubble”. The credit bubble actually masked much of the underlying rot that was occuring in many regions. Yes, not every country may have seen home prices skyrocket, but easy credit allowed people to use their homes as ATMs, and find jobs in the real-estate industrial complex. Now that homes are no longer working as ATMs, there is just nothing left to hold up the economy in vast stretches of the nation.

You don’t make any money selling one house and buying another in the same market (unless it’s cheaper), any more than you make money selling 1000 shares of MSFT and then buying 1000 again.

Which is why I detest the last decade’s crazy build-up for 20, 30, 50+ storey-buildings blocking the sky. If I were Empress, I’d make it illegal to build anything above two storeys and block out the sky.

M

I’ve spent time in Denver and do not like it, as a city. Everything is a chain store, and I don’t like cities that have not hills. I don’t like being able to see for miles in any direction. It’s not natural.

I realize that taking the hedge fund gentleman’s argument at face value would be ridiculous, but on the other hand the calculated risk response was far from disproving all of his arguments and just fell flat on some as well– so I think we need to take that one with a grain of salt as well.

From what I can gather from posts on CR and various news stories Denver didn’t have big price runups, but they’re very overbuilt. They should’ve seen big price declines during the bubble years and now that financing is tighter they’re seeing the delayed effects of oversupply.

The arguement made by Calculated Risk against the WSJ article in this respect doesn’t seem to hold much water if we look at the trends in the past decade. ???

Gill

Denver is a mystery to me as well. It’s an area that had a high percentage of foreclosures despite a seemingly healthy economy and stable housing values.

http://www.zillow.com/quarterlies/QuarterlyThumbs.htm?msa=Denver+Aurora+CO

What on earth went on there?

Ray Pepper
http://www.500Realty.net

Whether you were joking or not, you still appear to be a shill and most of us don’t really like your constant pitching of your business here. I’m not the first to say it and even I remember Tim telling you to tone it down a bit in the past.

Some neighborhoods appreciate/depreciate faster than others, so it’s highly inaccurate to lump the entire region into one single number.

The zillow map clearly shows that some neighborhoods are doing much worse than others.

Home sellers are still reluctant to let go of their dreams of getting that “top of the market price” for their homes, so it will take some more time for the full effects of the market slowdown to work their way through the area’s housing supply.

As the prime home buying/selling months of March, April and May come to a close I expect to see the pace of home price drops accelerate due to a lack of buyers.

As the map shows, the farther a home is located away from the primary job centers, the greater the decline in home values is likely to be.

Market price of property exceeds present discounted value of net rental income.

That’s the definition of a bubble for any asset (substitute “earnings” for “net rental income” for stocks).

More loosely, market price is over 150x market rent. For condos, use 100x.

http://www.zillow.com/static/images/quarterlies/2008-Q1/Graph-Negative-Equity-VallejoCA.jpg

dooms day scenario huh?

got rice?

But then the economy sours. Joe/Joy loses his/her job, but find another one working at Starbucks Safeway. He/she is only making $25k a year now and the spouse is still working part time. But wait! Two of their young adult kids come back to the nest to weather the hard times. And they take in a renter they met at church. Suddenly they have 5 pretty bad incomes in that household instead of 1 good one and one low one. With an average income of $20k per worker, the household now makes $100k a year. To quote WaMu’s horrible ads. Wahoo!

Yes, Ira I do have a bit of a hair problem. The “clumps” actually fell out years ago during the dot com boom. But, in 2002 I started ordering Rogaine after seeing people grow hair on TV. In 2006 I noticed a few hundred hairs starting to emerge. Now in 2008 I’m bald as hell. I blame it on this blog, realtors, weather, my kids, and mostly myself for stopping the Rogaine treatment.

I’m now certain this market will recover when I wake up and have a head of hair like Don King.

For some reason the Boston market apparently never stopped requiring 20% down, and it kept the overall region from going into negative equity (graph) and so their bubble pop has been gradual. Riverside, CA people don’t seem to know what a down payment is (graph), so their popup is huge, although inventory has been dropping for months.

That’s why I always use “median household income,” as a measure of local incomes. It encompasses much more people.

As far as Seattle, San Diego–hubby got offered a job with MSFT, and he’s off to interview with QualComm in S.D. I prefer the idea of sunshine and lots of Hispanics in So Cal, but hate the state income tax there. I love the idea of cool weather in the PNW, but the grayness sounds depression. Honestly, I don’t like the rental prices in either city, or the fact that we’d be trading one crappy traffic area we’re familiar with for another crappy traffic area we’d have to learn to navigate.

I wish MSFT would get this urge to migrate south. :D

On the sad side: Just found out today from a pal weeping on the phone that she and hubby are in negative equity. He became disabled last year, so this is depressing as heck for them. Here, I feel great sympathy (and have and will heljp $$ wise).

On the hard to sympathize side: An acquaintance (affluent) traded up a couple years ago from a perfectly roomy and attractive home with an ENORMOUS yard, valued at 3/4 of a million (making a huge pile as it had doubled in value in a few years) for a million plus, huge, luxury property with a gigantic pool. I’m guessing they’re seriously in negative equity by now. As a case of buying ridiculously up when need was not present, I find my sympathy reserves in this case are zip.

Mir

Much of the confusion about differences in income numbers stems from the difference between household, family, and per capita income. A household can include unrelated/unmarried people who live together, while a family only includes related parties. Not to sound too much like an elitist, but unrelated/unmarried people shacking up with a mix of children generally earn less than a married family unit. Less than half of the households in Seattle are defined as ‘families,’ so family income is not a particularly useful measure here.

The definition makes a big difference; the Seattle median household income is only $58k for 2006.

Wow. I think in 2005 it was listed closer to $65k. Could we be above $100k median family income in 2008?

If home values are relatively stable then, by definition, the bubble didn’t burst.

-Dumbmoney.com.

Top 5 Cities Surviving the Housing Bust

Seattle

In Seattle, grunge rockers and tree-huggers have given way to well-paid techies. Microsoft (MSFT: 29.21, -0.49, -1.64%) is based in Redmond, some 15 miles outside of Seattle. It employs a huge chunk of the city’s residents, says Chinloy. In fact, Seattle’s employment rates far outpaced the national average in 2006, according to the Census Bureau. Some 72% of its residents made up the work force (vs. 65% across the U.S.) and median family income was $82,867, 30% more than the national average.

Out of the five best-performing cities, Seattle experienced the biggest housing bubble. Single-family home values grew a whopping 92% between January 2000 and August 2007. Steady employment, however, helped keep home values relatively stable even as the bubble burst. Single-family homes lost just 2.7% of their value from February 2007 to February 2008.

I’ve never been there, but everyone told me that was where the superficial self-righteous people were.

There should be well marked maps for this sort of thing, so the everyone ends up in the right place.

You still have some left to fall out?

Yeah, the weather and beaches are sublime, it’s just all the people that make it a hellhole.

“Unlike bubble markets such as San Francisco and Miami, these areas actually remained affordable for most residents despite years of price appreciation.

For example, the median home price in Seattle, the most expensive of the four, was $370,000 in February. And about a quarter of all homes sold there during the last three months of 2007 were affordable to families earning the area’s median household income of nearly $76,000…”

So after price declines have begun, we are still looking at an income-to-house-price ratio of almost 4.9:1, only a quarter of which houses met affordability criteria for those who bought them during the quarter. Doesn’t her second point directly contradict her first (“remained affordable for most residents”)? This sort of thing drives me up a tree.

Also, relatedly — the same article notes that Seattle is not a bubble market whereas SF and Miami are. Is there a definition, loose or otherwise, of what constitutes a bubble market? Some such lists I see include Seattle and some do not.

A lot more than most people think actually. I live in silicon valley and know several people who have gone to or come from san diego for tech jobs. I have never been there myself, but I am told it is basically paradise.

Thats It!!! I’m moving to San Diego. Between these gray days, this blog, yelling realtors, my hair is falling out in clumps. I want to just lay on the beach, eat El Pollo Loco, and flush it all down with In/Out Burger. I will just have to increase the rental rates another 20% to afford my new lavish lifestyle.

Better increase those rates by at least 30% Ray, I plan on following you down and freeloading. (oh, and get a place with at least one extra bedroom.. or a guest house .. That’d be nice…).. From sounds of it, so does Alex…(see if Ray pays, it doesn’t matter if there are tech jobs…)

According to Microsoft’s facts page, total worldwide headcount increased 7,393 between 2006 and 2007. If we make the assumption that they’re hiring at roughly the same rate in all their locations, roughly 45% of those were here. That means they added a total of 3,342 new hires in the Puget Sound region. Not quite 10,000.