Seattle Bubble

• "Boom is Likely to Continue"
• A Gold Star For Times Cartoonist Eric Devericks
• Correction: Income Decline Map
• Rents Climbing In 2006
• Super Special Seattle

Jump to the bottom to add your comment. ↓

53 responses so far ↓

• 1 Ray Pepper // May 9, 2008 at 8:04 am

  **2008 CRV** Anyone contemplating buying a new car I highly recommend this vehicle and its MPG. My wife drives a 2004 and a month ago we bought a 2008 EX for 23,100. Were just a 2 car family and I have NEVER enjoyed a vehicle so much.

  Whenever you buy new go to http://www.cars.com . Get the invoice price and call ahead to see if they will sell it to you for this price. Domestics are easy. Toyota and Honda take some haggling.

  Get your NEW CRV gas saver and enjoy driving around our beautiful State looking for GEMS. You will be happy you did. But, remember…………NEVER ….EVER….Call the name on the sign!!

• 2 AndySeattle // May 9, 2008 at 8:07 am

  GEMS? Today’s a Woot Off! (pops)… Talk about GEMS you’ll see so many today that your head will spin!

• 3 Everett Renter (Used to be Buyer) // May 9, 2008 at 8:35 am

  I am looking into some continuing ed on my day off from work today. I found this course currently offered at my local Everett Community College:

  “ACQUIRING WEALTH THROUGH REAL ESTATE (4HRS) $45

  More fortunes have been acquired through real estate investing than any other medium - even stocks! You, too, can learn to invest wisely in the real estate market. During this workshop you’ll identify the critical financial data required for planning, discover the triple benefits of owning real estate, and discover how to integrate your other assets with real estate.”

  Anyone know what the “triple benefits of owning real estate” are? I have done well with investing in stocks, but have been unaware that I have even better prospects “acquiring wealth through real estate”. I think the analogy of the folks that acquired wealth by selling all the picks and shovels and other supplies to the Alaska gold rush miners here in 1898 is broadly applicable to this and many other aspects of the RE industry.

• 4 Everett Renter (Used to be Buyer) // May 9, 2008 at 8:45 am

  BTW, said analogy not meant to apply to Mr. Pepper’s Gem mining operations… I think there is legitimate wealth to be made there - unfortunately it will be at the expensive of those that were previously misguided…

• 5 brettro // May 9, 2008 at 8:48 am

  Posting in nostalgic thread!

• 6 jimmythev // May 9, 2008 at 11:31 am

  Ok… I just saw this on Redfin… guess this flipper didn’t get the memo.

  http://www.redfin.com/WA/Bellevue/4044-156-Ave-SE-98006/home/233966

  Last Sale: April 23, 2007 for $365k
  Asking Price: $446,950

  The part of the discription I like the most:

  “Fully remodeled & updated home, even the gutters and insulation are new! New cabinets throughout with slab granite in kitchen and both bathrooms, hardwood floors, new paint and windows.”

  So what are the chances this guy is even going to get $365k for it…?

• 7 AndySeattle // May 9, 2008 at 11:59 am

  Last Sale: April 23, 2007 for $365k
  Asking Price: $446,950

  This just drives me nuts. Blatant greed is driving this, nothing else. There is no value here. Damned flippers.

• 8 Buceri // May 9, 2008 at 12:08 pm

  What the heck; it’s Friday. And it’s open thread.

  This video has been seen over 30 million times at youtube.

  Pretty amazing; watch the whole thing.

  http://www.youtube.com/watch?v=LU8DDYz68kM

• 9 MrRational // May 9, 2008 at 12:14 pm

  I doubt the guy will get anything over $400k…especially with no garage or carport.

  “Located in the highly desired Eastgate neighborhood.” Eastgate? Highly-desired???

• 10 TheHulk // May 9, 2008 at 12:26 pm

  Just noticed that the SFH inventory for King crossed 12000. Considering that the Dow fell triple digits today any guesses on whether the two will cross paths? :)

• 11 TJ_98370 // May 9, 2008 at 12:37 pm

  Buceri - Incredible video!

• 12 Buceri // May 9, 2008 at 12:52 pm

  National Geographic Channel will carry it tomorrow night (saturday) at 9.

• 13 b // May 9, 2008 at 1:22 pm

  Interesting take on rent increases/housing price decreases over at Calculated Risk. It shows why rent prices might be increasing here right now, since we are in the bottom part of the graph where home prices have just started to drop. Not sure what the numbers are like for Seattle in particular, but if we assume a similar ratio then something renting in the area now for $1500 could be bought for around $500k and will end up priced around $360k in the end. Thats quite a haircut, even if you expect that rents will rise somewhat to meet it you are still looking at at least another 20-25% drop in prices here.

• 14 Buceri // May 9, 2008 at 1:48 pm

  An NPR piece this afternoon (at 4:40) in All Things Considered in combination with This American Life, explaining the mortgage crisis.

  Remember “anyone with a pulse can get a loan”? Well, it seems being alive was optional; 23 dead people in Ohio got loans!!!!

• 15 lurker // May 9, 2008 at 2:43 pm

  jimmythev, I will admit that the remodel _does_ make it look nice. But dumpy exterior, mediocre location…. pfft maybe I’d throw $250-275k at it.

• 16 Sniglet // May 9, 2008 at 4:56 pm

  You can find the NPR story about the global pool of lending behind mortgages here.

  http://www.npr.org/templates/story/story.php?storyId=90327686

• 17 Mikal // May 9, 2008 at 5:34 pm

  I have real estate valued at about $1.6 million at the peak. Seeing that I put down no more than 25 thousand to do this there is money to be made. I don’t plan on selling so if they are worth fifty percent less at the end of the drop oh well. They pay for themselves and my own mortgage as well. There is money to be made. If I were starting over I would wait to buy.

• 18 Jillayne Schlicke // May 9, 2008 at 7:15 pm

  Okay, I watched the Battle at Krueger youtube video. Thanks alot. I screamed during the initial attack scene….even though I knew it was coming. Probably the estrogen in me.

  Great video. Real estate analogies anyone?

• 19 Cougar // May 9, 2008 at 7:58 pm

  Happy Mothers Day to all the Mom’s out there!

  This goes out to my Mom who is 90 years young and to my daughter who is a wonderful mother of two at 23.

  Without Mom’s we wouldn’t need houses ;)

• 20 TJ_98370 // May 9, 2008 at 7:59 pm

  You’re funny Jillayne-

  Let me guess on your analogy - the “bulls” win in the long run?

• 21 TJ_98370 // May 9, 2008 at 8:06 pm

  Right on, Cougar!

• 22 TJ_98370 // May 9, 2008 at 8:51 pm

  Jillayne -

  How about “predatory” lenders are on the run.

  Sorry - I know it’s lame.

• 23 TJ_98370 // May 9, 2008 at 9:10 pm

  Jillayne -

  How about the young and inexperienced are vunerable to killer hazards when following herd behavior.

  Okay. I am stopping now. There are a lot smarter bubbleheads than me that visit this blog who can continue with better analogies, if they are so inclined.

• 24 Jillayne Schlicke // May 9, 2008 at 9:21 pm

  Hmmm, TJ98370, I’m more of a bear.
  Okay, let me try.

  How about prey becomes predator.
  Consumers band together as a group to fight off predatory lenders.

  Then how does the alligator fit in?

  Alright, how about: The baby bull represents the consumer and the lions and alligator represent lenders and a real estate agent.

• 25 TJ_98370 // May 9, 2008 at 9:31 pm

  Jillayne – you do have a sense of humor.

  Predator / prey that is the market place, right? Caveat emptor!

• 26 Sandy // May 9, 2008 at 9:33 pm

  Without moms we’d be living in caves. :-)

• 27 TJ_98370 // May 9, 2008 at 9:58 pm

  Sandy- Mom’s do rule!

  Appreciate them while you can. Unconditional love from most. You’re not going to find it anywhere else.

• 28 MisterBubble // May 10, 2008 at 12:04 pm

  Holy crap…y’all absolutely need to listen to the full-length This American Life piece about the mortgage collapse. It’ll be posted as a podcast here starting on Monday, or you can stream it from the site.

  This one was a collaboration between TAL and NPR news, so there’s a really good mix of hard analysis and human interest….

• 29 Jillayne Schlicke // May 10, 2008 at 12:20 pm

  Alright, Mr. B. Will do.
  Am I going to scream again?
  Also, is there a place I can listen to it over the weekend?

• 30 MisterBubble // May 10, 2008 at 12:25 pm

  I don’t think it’s playing anywhere but on the radio this weekend. I just heard it on KUOW, but it might be playing again this weekend, or possibly on KPLU.

  As for screaming…I guess it depends on how shocked you are by crooked bankers.

• 31 softwarengineer // May 10, 2008 at 2:05 pm

  FUTURE SEATTLE REAL ESTATE BUYERS?

  Here’s an essay (I helped tutor it) to enjoy on the “con” side that continued unplanned growth in Seattle helps real estate, (it got an A+ 100% by the way):

  Unit 5: Our Changing Nation Essay Assignment

  The various websites I found for immigration are listed in my Works Cited and one of them is a useful neutral non-partisan discussion website (Messerli, Joe), albeit lacked recent immigration news issues that the mainstream media generally omits anyway. I went to the Numbers USA website (Comparison of Immigration Reform Proposals: SAVE Act (2007) vs. H.R. 4432 (2005)) to get the recent legislation scoop on immigration, as it’s the best source that I know about on recent government law actions in process.

  The reliability of all my websites is they are all non-partisan and Numbers USA is non-profit too. The BalancedPolitics.org website (Messerli, Joe) source I used documents both “pros” and “cons” to maintaining/increasing immigration in America , so it’s appearance is trustworthy, but in my opinion, still lacks key details on the “con” side of the issue. The Numbers USA sources are obviously “con” websites only, but since mainstream media and alleged neutral immigration websites generally refuse to publicize recent bi-partisan government actions to limit immigration, I used them as a best/only sole source available. I added more references as I wrote the essay to back up my salient points too.

  The differences of opinions on the subject of immigration are documented in some detail from the BalancedPolitics.org website. The “pro” side had much more details and emphasizes increasing diversity of ethnic groups and providing big business plenty of cheap labor, while offering amnesty as a way to eliminate the illegal alien counts. The “con” side description from this “alleged balanced website” of increasing/maintaining immigration did a poor job in my estimation, as they omitted the adherence to America’s Constitutional Immigration Laws by our employers as a key rationale (in my opinion, it is); irrespective, the website focused on drug elimination and wage depressions. It also omitted another key “con” argument, uncontrolled population growth (Messerli, Joe).

  The Numbers USA website documents the Secure America with Verification Enforcement (SAVE) Act of 2007 (Comparison of Immigration Reform Proposals: SAVE Act (2007) vs. H.R. 4432 (2005)) hitting the Senate and the House for possible Discharge Petition; which has absolutely no amnesty provision and basically emphasizes border protection and employer enforcement only. It has clear and substantial bi-partisan support (The Campaign to Pass the SAVE Act), as its split between 162 Democrats and Republicans alike on support and petition signatures to date. Congressman Pelosi and Senator Reid are against the bill, but when it comes to immigration overpopulation they don’t listen to approximately 90% of the voters’ desire to trim growth from their neighborhoods’ roads, wetlands, parks and schools, as they apparently want to add to it and support more and more overpopulation amnesty. Then they want green house gas reduced too, with their magic wand.

  The mainstream media usually weasel words pro-amnesty polls to say, “Do you support guest workers on farms”, to split the results, but you’ll never find an intelligent Zogby Poll that asks, “Do you support more growth in your neighborhoods”.

  My take on immigration is very clear; we need a break from it. We have more important issues impacting our country like hyper-inflation destroying our economy due to uncontrolled growth. The Federation for American Immigration Reform (FAIR) documents 87% of the American environmental destruction overpopulation is legal/illegal immigrants and asserts the other 13% is the illegal anchor babies. The baby boomers are environmental kings and queens, as they kept population in America on a positive environmental decline, until greedy illegal businesses pushed unplanned growth and reversed their positive trends (Cleaning the Air on Immigration and the Environment). Yet we hear on mainstream media the horrors of the baby boomers for being infertile and not overpopulating America like good citizens increasing our carbon footprint, so we need illegal immigrants’ anchor babies to bring us back to utopia again. The brainlessness of this is not educated liberal in my book, as it’s clearly unplanned nonsense and the result in my opinion: the subprime banking mess, $4/gal gas, bridges collapsing and masses of unemployed kids with college degrees heading into this current American recession, etc, etc. It’s clear from the Bureau of Labor Statistics, only about 20% of the growth in jobs requires a degree, yet, about 30% of American youth from age 21-30 have degrees (The 30 Occupations with the Largest Employment Growth, 2006-2016) and (Leaf, George).

  In my book, the next President doesn’t win the election, he inherits this hopeless mess that took decades to create and will be serving one term too, especially if he/she doesn’t implement depopulation in immigration ASAP to head off possible stagflation depression. My generation is doomed too, if we don’t depopulate now.

  Works Cited

  “Cleaning the Air on Immigration and the Environment.” The Dan Stein Report. May 2008.

  .

  “Comparison of Immigration Reform Proposals: SAVE Act (2007) vs. H.R. 4432 (2005).” Numbers USA.2008.

  http://www.numbersusa.com/PDFs/SAVEvHR4437chart.pdf.

  Leaf, George, “The US doesn’t need more College Grads.” The Christian Science Monitor. Sep 2006.

  .

  Messerli, Joe. “Should America Maintain/Increase the Level of Legal Immigration.” BalancedPolitics.org. 2008.

  .

  “The Campaign to Pass the SAVE Act.” Numbers USA.2008.

  .

  “The 30 Occupations with the Largest Employment Growth, 2006-2016.” United States Department of Labor Bureau of Labor Statistics. Dec 2007.

  .

• 32 Rentersarelosers // May 10, 2008 at 7:40 pm

  I resent as a taxpayer facing the possibility of future tax increases to bail out people that had no friggen business buying a home in the first place.
  Yes, the bankers were lenient, but the consumers were taking advantage of it, and knew damn well the couldn’t afford “reality”.

  “Walk away” was made too damn easy.

• 33 economist // May 10, 2008 at 8:21 pm

  There is money to be made. If I were starting over I would wait to buy.

  I think we have a bit of a contradiction here. If waiting to buy is a good idea, that means there is money to be lost.

  There was money to be made. Past tense.

  There also will be money to be made in the future.

  But there is no money to be made by buying now.

• 34 TJ_98370 // May 10, 2008 at 9:31 pm

  ….I have real estate valued at about $1.6 million at the peak. Seeing that I put down no more than 25 thousand to do this there is money to be made……. If I were starting over I would wait to buy…..

  Mikal - details please? Interested / curious minds would like to know.

• 35 Mikal // May 10, 2008 at 9:58 pm

  Two duplexes bought ten years ago. Rents have increased from $600 a unit to $1200 while my payment has gone up about $100 a month. I maintain them so that cost is my time plus materials. The first cost $97000 and a year later the second was $150000. There were deals in the Central District then. Whatever equity is there doesn’t matter till I’m old and ready to sell. I understand much of the anti buying attitude here and agree with some of it. However, there is money to be made in real estate. I haven’t had to pay a dime for my housing cost in over ten years minus the occasional carpet replacement. I live six blocks from Greenlake.

• 36 economist // May 10, 2008 at 10:38 pm

  I understand much of the anti buying attitude here

  The attitude here is not anti-buying, it’s that buying is only a good idea when prices make sense. As your example itself indicates.

• 37 TJ_98370 // May 10, 2008 at 11:12 pm

  …Two duplexes bought ten years ago…..

  Mikal - The key point here being that you bought before the bubble? I wish you continued luck with your investment endeavers.

• 38 Mikal // May 11, 2008 at 6:00 am

  Real estate here has always been expensive in comparison to most other cities. Good luck finding the bottom. At the time I bought my father still thought I was crazy and that it was to much. I have a family member that bought their house 50 years ago and still live there. Their payment was $150 a month at the beginning. When it was paid off there taxes and insurance was less than $200 a month. Maintenance a year is not that much. Yes you have to paint every ten years and replace the roof every 30 years. Inflation makes that motgage payment seem more and more reasonable every year. It is worth it to me to know that I will never have the cost or the utter enjoyment of moving ever again as there is nothing that sucks more.

• 39 wreckingbull // May 11, 2008 at 6:37 am

  However, there is money to be made in real estate.

  Very true. Shorting the REIC been berry berry good to me.

• 40 Lanny Poffo // May 11, 2008 at 9:33 am

  For those interested in listening to the This American Life episode about the Global Mortgage crisis - Giant Pool of Money - it will be playing on here at 10 AM Sunday, May 11th.

  http://www.opb.org/radio/?mode=highlights

  Lanny

• 41 Teacher_Greg // May 11, 2008 at 9:54 am

  Can you hear that? Listen closely now…that is the sound of prices dropping. There is also a little hint of desperation here and there. Its like a bar at 1am….not that I’d know much about that of course.

• 42 matthew // May 11, 2008 at 10:07 am

  You can make a ton of money on real estate right now…

  It’s called “ticker symbol SRS”

  ULTRASHORT REAL ESTATE

• 43 MisterBubble // May 11, 2008 at 10:21 am

  “Real estate here has always been expensive in comparison to most other cities. “

  Yes. And now, after an historically unprecedented run-up in prices, real-estate is nearly twice as expensive as it was just five years ago. Moreover, the price run-up was a direct result of a historically unprecedented credit bubble.

  In other words, I think you’ve missed the point: you don’t need to know where the bottom of the valley is, to know that you’re standing on the tippy-top of a mountain.

• 44 TJ_98370 // May 11, 2008 at 10:21 am

  Mikal - I think we are in agreement. There are many good reasons to buy real estate and own your own home. It’s just that right now is NOT a good time to buy. You yourself said that you would wait to buy, if you were “starting over”.

  I believe most who are waiting to buy a home have already formed their own strategies on when they are going buy. There is a lot of info / opinions on that very subject elsewhere on this blog. My personal strategy is that since most socio-economic trends on the west coast of the good old USA tend to originate in SoCal, I am going to wait until after SoCal real estate markets bottom out. I’ll get serious about six months after I see median sales prices stabilize or trending up in SoCal. I may not time my purchase to coincide with the very bottom of the market in the Puget Sound region, but I am betting that I will be close.

  Another little factoid that should influence home buying decisions is that I read somewhere that the average time a buyer owns their newly acquired home is seven years. If someone buys now in a declining market, will seven years be enough time to recoup losses? That is a question no-one can answer with absolute certainty.

• 45 MisterBubble // May 11, 2008 at 5:40 pm

  Anyone else read the gag-inducing feature on home costs in the Times today?

  I’m sure glad that the Times can still afford to pay a reporter to wax philosophic on the insane cost of living here, but it’s too bad they couldn’t afford any critical analysis on whether the rising costs are supported by fundamentals.

• 46 S. Marty Pantz // May 11, 2008 at 5:42 pm

  Speaking of Southern “California Screaming”

• 47 TJ_98370 // May 11, 2008 at 7:08 pm

  S.Marty Pantz - Wow! Remarkably candid article from the MSM. You can’t say that bubbleheads didn’t see it coming though.

• 48 economist // May 11, 2008 at 9:22 pm

  Good luck finding the bottom.

  Finding the bottom is a matter of luck, but finding a good price isn’t.

  Rent equivalence is always a good time to buy. Prices may go down a bit more, but you truly can’t lose in the long run.

  I find you a bit puzzling. You claim to have made a lot of money in RE, but you don’t seem to understand why you’ve made money. You bought at the right price.

  Or maybe you really do understand, and you’re just trying to pump up the market because you want to sell? Well you’ve picked the wrong board for that.

• 49 S. Marty Pantz // May 12, 2008 at 9:53 am

  Multiple listing services begin to appear on real estate sites, according to this article in the NYT.

• 50 Alan // May 12, 2008 at 11:28 am

  Why are all the bubble critics so concerned with finding the bottom? I just want something I can afford that I will be happy living in for at least a decade.

• 51 Tsuru // May 12, 2008 at 11:47 am

  All this bottom-calling is very, very premature. The real carnage hasn’t even begun to have an impact yet because there are still shenanigans going on in the mortgage world.

  See: http://www.msnbc.msn.com/id/24580917

  “No down payment? No problem
  Loophole still allowing risky mortgages by disguising money as a gift”

• 52 Mikal // May 12, 2008 at 6:38 pm

  Maybe economist you can find a board for whining.

• 53 S. Marty Pantz // May 13, 2008 at 8:03 am

  Homes prices continue to tumble, as reported today here.
  And here:
  http://money.cnn.com/2008/05/12/real_estate/Q12008_home_prices/index.htm?postversion=2008051310

Jump to the top of the comments. ↑

Leave a Comment