I’m from Europe originally and travel back every so often. Last time I was there, I rented a Saab 93 Turbo Diesel wagon. It was pretty speedy, although no sports car, and I got 41MPG AVERAGE. OK, these are UK gallons which are a little bigger, and diesel has a higher energy density. But still….

The thing that’s great about the US is that, unlike EU, it’s not willing to compromise. In the UK when gas prices go up, people shrug their shoulders and buy a smaller car even if they don’t want to (and most people don’t want to). In the US, there is an attitude that we can solve this problem a different way. “I want my SUV *and* I want it to be efficient, dammit!”. I think we’ll end up meeting in the middle somewhere as I’m not sure a Chevy Tahoe can ever get 40MPG on the freeway (please, someone prove me wrong). Still, the new Chevy Tahoe hybrid gets 21MPG in the city, like my 4 cylinder Subaru wagon does.

I agree with you about gas prices and fuel efficient cars. My former company had me in Southern Germany for an extended period of time back in ‘04. We were all amazed about the tiny little Smart Cars we saw in Stuttgart and also on the Autobahn. Also learned about the quiet, fuel efficient, common-rail diesel engines used by Mercedes-Benz. I believe gas prices back then was the equivalent of $6/gallon. By all comparisons our gas is cheap compared to Europe.

:)

Right, so prices will hold steady in the city because the burbs will drop first and hardest (which is happening, and a reasonable hypothesis). Therefore, people will be able to afford an extra couple of hundred bucks in gas a month because that cheap house in the burbs is CHEAP. Therefore, everyone will move to the burbs. Therefore prices in the burbs will increase. Therefore, everyone will move back to the city, which will make that more expensive, and the burbs cheaper. The net result is that everyone will move to the burbs AND the city, and gas will be expensive.

I think that just about summarizes where we’re going with this argument…

On the topic of gasoline: It’s not expensive. Sure, it’s double was it was five years ago. But if the price of a big mac doubles, it’s still cheap, just not *as* cheap. People have made car purchase decisions based on hyper-cheap gasoline. Now they’ll have to make a decision based on moderately-cheap gasoline. Instead of that 15MPG SUV (yes, I have one of those too), we’ll buy a 30MPG Camry/Accord/whatever. My MPG doubles, and my gasoline bill is back to exactly what it was 5 years ago.

Of course, this takes a while to play through the system. People can’t go out and immediately buy a new car when the price of gasoline changes. But if they NEED to because they can’t pay the bills, they WILL. An Everett to Seattle commuter that can’t afford to keep their pickup can easily go out and pick up a used Civic. Sure, their friends may laugh at their new silly car (because you’re only a man if you drive a big car – puff that chest out!) but you’ll be able to afford your mortgage again.

People like to complain about gas prices, just like any perceived “tax” on their existence, but that doesn’t mean it’s expensive. Ever since gas prices went over $2 a gallon we’ve heard economists predict that people will use less when it gets a little more pricey. It didn’t happen. Now it’s finally happening because we’re at the point where families need to actually change something in order to make the budget work. They’re dumping SUVs and buying more efficient cars. Fortunately, if you have a 15 MPG SUV, the world is your oyster when it comes to more efficient cars. Now, if we were all driving 40MPG Smart Cars and the price of gasoline went from $4 to $8, then I would be more worried.

http://blogs.cars.com/kickingtires/2008/05/nows-not-the-ti.html

“CNW says that, thanks to high gas prices, dealers have a 130-day supply of unsold SUVs on their used lots that were taken in trade — more than double the 57-day supply they had a year ago. A 60-day supply is considered normal.”

So you expect me to believe that people will be able to sell their homes in out laying suburbs and buy places in Seattle??? Your logic makes no sense…you said yourself that prices would hold up in Seattle and drop first in the suburbs. T

What companies are expanding in downtown Seattle to attracts workers to move closer to Seattle? Your argument doesn’t wash without facts.

http://www.downtownseattle.org/content/businesses/Workforce.cfm

Based on your excellent understanding of grammar, you must be part of the “majority of well paid employment in those skyscrapers downtown”. Therefore I propose a story-problem for you:

I spend a lot of time in a lot of “those skyscrapers downtown” (“those skyscrapers downtown”) and I spend a lot of time in offices not part of “those skyscrapers downtown”. Firms in “those skyscrapers downtown” pay a lot of rent compared to payroll. Firms not in “those skyscrapers downtown” have a higher payroll compared to rent.

Based on your genius-level understanding of accounting, finance and economics, do people in “those skyscrapers downtown” make more, less or the same as those not in “those skyscrapers downtown”?

Bonus: Based on parking charges of $225/month in many of “those skyscrapers downtown” do “the majority of well paid employment in those skyscrapers downtown” have a higher take-home than the minority of well paid employment not in those skyscrapers downtown?

So I was 10 years old during the last energy crisis, so what, I still vividly remember it.

Name some major employers downtown…are they making plans to expand their ranks? So far you have no facts to back up your arguments. The more you blog, the more ignorant portrait you paint of yourself.

Y r kddng rght? Y thnk ll ths twrs r mpty?
ky Dky…..

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I don’t think I’ve seen traffic as light as it has been this weekend for years…many many years.

I’m sure weekday rush hour still sucks though.

Mortgage rates will probably start to climb soon

I am not so sure about this. As the credit crunch continues to unwind the demand for sovereign debt of developed nations will continue to be extremely strong. When it comes to choosing between a CDO, stock, corporate bond, depreciating real-estate assets or a US or French government bond, the choice will usually fall to the sovereign debt.

People will always choose safety over yield when they are concered about risking their capital.

Everett will be ok provided Boeing does ok.
Redmond will be fine.

Seattle Metro has the majority of well paid employment in those skyscrapers downtown, plus people that want to live close to big city amenities, services and transport.

I lived through the energy crises in the 70’s, (you were probably in diapers, if even born). I saw what happened to the burbs vs City homes (on the east cost). As gas prices rose, people bought smaller cars and moved closer to the city, city homes rose in price while suburban homes tanked.

City homes are where it’s at with rising fuel costs AND no end in sight thanks to the “Chindia” boom (China and India demand for fuel has increased 10 x in the past couple of years). The USA are still paying less than Canada and Europe, but that’s another subject.
—————————————————————————————————————
I was born in ‘64 in Philly and raised in Southern NJ. I remember the energy crisis. People were not moving to the cities…in fact people were moving from Philly to across the Delaware to new Southern NJ suburban developments and also to suburban Chester, Montco and Delaware PA counties.

“Seattle Metro has the majority of well paid employment in those skyscrapers downtown”, I like some some facts and figures. I can possibly think of Amazon adding on employment, but what other major employer is downtown? I recently heard that Uni of Wash is largest employer in Seattle.

Anyone who bought after 2005, in city or out in the country, should get ready to write off a good portion of their net worth should they have to sell in the next decade.

Mk,

t’s nc t hv smn hr tht ndrstnds :-)

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LC,

vrtt wll b k prvdd Bng ds k.
Rdmnd wll b fn.

Sttl Mtr hs th mjrty f wll pd mplymnt n ths skyscrprs dwntwn, pls ppl tht wnt t lv cls t bg cty mntts, srvcs nd trnsprt.

lvd thrgh th nrgy crss n th 70’s, (y wr prbbly n dprs, f vn brn). sw wht hppnd t th brbs vs Cty hms (n th st cst). s gs prcs rs, ppl bght smllr crs nd mvd clsr t th cty, cty hms rs n prc whl srbrbn hms tnkd.

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where do you get this dramatic change in mortgage rates? The only chart I can find has shown then down over the year, and pretty much flat recently..

( from bankrate, here )

Generally, I agree. However the neighborhood I live in is within walking distance to a rail station on a line heading straight into DC. SFH and townhomes in parts of the neighborhood further from the rail line are seeing the largest drops. Homes right around the rail stations are still 15% off peak prices. FYI – the crime rate and household income levels in this area make places like North Seattle look like South Central LA in comparison. It’s not just bad neighborhoods in undesirable locations getting hit.

Now, now, LUC, don’t forget that powerhouse employer downtown, Washington Mutual. I am just certain they will be hiring like crazy in the next twelve months, since golly, the future is just so gosh darn bright for them.

Why would people move to Metropolitan Seattle? Microsoft is in Redmond. Boeing is in Everett. People would be reverse commuting. Also, Atlanta has a cluster of high tech companies and Coca-Cola in their metro area and their housing prices dropped. What makes you think Seattle is immune? Your argument doesn’t wash.

Y jst dn’t gt t.

Hghr fl csts wll drv mr nd mr ppl t th Mtrpltn Sttl r nstd f th brbs.

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So let me get this straight rentersarelosers,

We have food and fuel prices inflating very rapidly (no argument there), but combined with stagnant wages. Tack on to that, tighter lending, the spectre of increasing rates, more down payment required, rapidly increasing inventory, and rock-bottom sales volume, and this causes inflationary pressure on home prices????

You found your bottom alright, you may now want to remove your head from it.

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Fits what I’ve seen. I hadn’t been to his house in ~18mos and was astounded by the amount of teardown activity that had occurred

The tearing up of the streets you see is probably expanding water and sewage lines to haul away the waste from those housing monstrosities.

Hey you guys are whiners. Have a little patience. I’m working on it…

;^)

I’ve been curious lately about bridle trails. The few times I’ve driven around there it seemed to me to be a very upscale area, with many large lots with nice big houses and beautiful greenery and located very close to Microsoft. However, it doesn’t seem that houses sell for any more there than in other places on the eastside. Is there something wrong with bridle trails that I’m missing?

Just kidding, Tim. Unless you want to learn about mapping software, which can be pretty darn cool.

inventory under 6 months doesn’t automatically favor the seller.

One other comment, on the eastside statistics: houses over $1mm in price generally take longer to sell. I think you can probably double the rule of thumb above for those properties.