I’d suggest talking to someone who has a background in advertising to boost up your potential advertising revenue. It’s really not enough to say “Excellent choice. Seattle Bubble is the Puget Sound’s most popular online resource for real estate news, discussion, and analysis, and is visited daily by thousands of intelligent, local individuals that are well-qualified for the products and services you sell…”

What products or services might sell best, and what marketing data do you have to support the claim? In other words what products are sought by the readership? Other than as a donation, how can I justify spending advertising dollars here? By the way, other than your own advertising, I am not questioning the quality of your website.

The problem with your reasoning is that the banks stopped financing _because_ price declines started accelerating in parts of the country and caused the charade to end eventually. Why did price declines occur first in those places? Because they had reached the “point of no return” before Seattle did, their appreciation started earlier and therefore they reached their apex of no more buyers sooner. Contrary to popular belief at the NAR, there is a limited supply of people who can afford insane housing prices even with bull"chocolate" loans. San Diego and other parts of the country, the bubble starters, hit that limit before later areas or areas with slower appreciation. Seattle would have eventually hit it as well, if the money kept flowing. All the financing did was bring that limit down further since the lenders were no longer willing to finance all the way up.”

b, you hit the nail right on the head.

A lot of the bulls on the site think that *because* the credit crunch occurred at about the same time as the decline in Seattle, that Seattle would have been fine if the credit crunch had not occurred, and therefore will recover nicely once the money starts to flow again. That argument is simplistic, and wishful thinking.

IMO, the credit crunch did cause Seattle to start its decline, but I strongly believe it would have declined anyway. Either the funny money dries up, or the prices get too high for the funny money to support them. In other cities the funny money was still flowing and prices peaked because even neg-am, stated, teaser loans could not help those still buying get into houses. In Seattle, we peaked a little earlier (therefore LOWER too!) than we would have if the funny money was still flowing. Because we peaked lower, I think this will temper the decline when compared to other cities.

The net result of the bull’s argument is that when credit returns to how it was before, Seattle will be fine. I agree with that. HOWEVER, it will not return to how it was. Today, people can still buy houses. You can even do it with 5% down and an FHA loan up to almost $600K! You know what the problem is? You actually have to QUALIFY for that loan with silly old-fashioned things like income, and cash reserves. Yes, there are people out there with these things, but there are LESS of them. Therefore, the inventory went up, price competition came back, and prices started to go down to meet the point at which people can qualify for sane loans.

It’s quite simple when you don’t look at things one-dimensionally:

“Seattle gud. Financing go bad. Seattle go bad. Financing go gud again and Seattle go gud!!! Ugga ugga”.

If a seller lists now for around 10 percent below where it would have listed last year you may avoid chasing the market down another 10 percent. If it doesn’t sell by the summer, look out below.

I have been in Seattle for about a year and have been waiting to buy. I have the 20% downpayment and pre-approval to purchase. I have put zero low ball offers in. I am in no hurry and have no desire to antagonize sellers. I assume they will price in accordance with their need to sell.

I have several homes in my “queue” that I had come close to putting an offer on, but the prices have come down enough that I am now comfortable to wait even longer without fear of being priced out. I am in no hurry.

There are houses for rent on Mercer Island (my present rented home) for well under 2k a month. In my situation, there is almost zero fiscal upside to buying at the moment, and I see no factor that would cause an upward spike in the near term. The wife pressure is the only variable.

Not sure the exact date, but June 13th is very close to the date of the second set of BS margin calls. I imagine the repricing of risk on their subprime bonds is what got them.

http://money.cnn.com/2008/04/18/news/companies/partys_over.fortune/

Sort of a peak point for toxic financing. Given the delayed nature of the CS data, and the fact that it does not include new housing it seems to track really close to the credit crunch. Like the google trends points out consumers didn’t know about it until august.

To me the timing of the two events is too close together to try and say the local market naturally peaked independently at the moment that the credit crunch began.

I think most people would say August was when actual changes in the mortgage business were put in place, but fair to say it was building.

Interesting to check Google Trends. The term did not hit public conciousness at all until august

http://www.google.com/trends?q=credit+crunch

* N. of Greenlake, offered 6% under. 70 days later, sold for 4% under.
* Queen Anne, offered 7% under, then countered again at 5% under. 180 days later, sold for 15% under.
* W. Seattle, offered 12% under. 340 days later still for sale.

hmmm…should be more like…

Peoplewhoboughtanextrahomeandarenowtryingtoselltheirtermiteinfestedrattrapsbutareunabletoarelosers.

Seattle would have eventually hit it as well, if the money kept flowing.

I think we might have actually hit that point (or got very close to it) right at the time that the financial crisis started. Which is maybe why our first few months of declines were bigger than the first few months of declines notable areas such as Phoenix and Las Vegas.

You said:

As far as foreclosures go, it seems pretty reasonable to me that foreclosures won’t start to really pile up until you’ve had declining prices for a while.

I agree with your premise, but thus far the key piece for big declines seems to be concentration of distress. A foreclosure here or there has little impact on prices, a bunch in one area along with nearby homeowners near the edge creates the spiral downward. Here in seattle, there a few big developments concentrating foreclosures. Maybe the upcoming neighborhoods are the closest thing here as far as turning over stable homeowners into those with toxic loans.

Overall it is really hard to calculate how much damage was done here as such a high percentage of the problems so far in California, Florida, Nevada and Arizona. I thought maybe you were onto something with the San Diego comparison a year ago, but now that 40% or more of the real estate sales there have been foreclosure or short sales for the last few months, San Diego seems more like the rest of California than Seattle.

This financing bonanza supposedly created 5 million new homeowners, 2 million of them are no longer or soon no longer be homeowners already 50% or more of the crap is concentrated in 4 or 5 states. That leaves at most 1.5 million homeowners to get worked out of all of the markets in the entire rest of the country, assuming the number of homeowners nationwide returns to 2004-2005 levels.

The problem with your reasoning is that the banks stopped financing _because_ price declines started accelerating in parts of the country and caused the charade to end eventually. Why did price declines occur first in those places? Because they had reached the “point of no return” before Seattle did, their appreciation started earlier and therefore they reached their apex of no more buyers sooner. Contrary to popular belief at the NAR, there is a limited supply of people who can afford insane housing prices even with bull"chocolate" loans. San Diego and other parts of the country, the bubble starters, hit that limit before later areas or areas with slower appreciation. Seattle would have eventually hit it as well, if the money kept flowing. All the financing did was bring that limit down further since the lenders were no longer willing to finance all the way up.

Didn’t prices start dropping in other parts of the country before the financial shoe dropped?

I think so. The real financial blowups didn’t hit until just last year. Prices began to fall in some areas before then. Why? Classic pyramid scheme. Even with subprime, Alt-A, no-doc, neg-am loans there weren’t enough people that could afford to buy to get in at the bottom of the pyramid. Now this would normally only cause prices to level out except that a lot people bought way more than they could afford with the expectation that continually rising prices would bail them out. When prices leveled out those people that needed prices to increase got into trouble. Which eventually got the lenders into trouble. Who then tightened loan requirements a bit. Which removed more buyers from the buyer pool. Which caused prices to come down more which caused more defaults, more tightening etc. until we finally arrive at some equilibrium point.

Didn’t prices start dropping in other parts of the country before the financial shoe dropped? In fact, I think that the prices falling is what exposed a lot of this mess. Then financing problems reduced demand and made prices fall further.

Prices in Seattle were still climbing when loan requirements tightened. The reduced demand did not create the same immediate pressure here that it did in places with a larger percentage of underwater properties.

But demand was reduced here. That will reflect in prices in time.

I’m not sure I buy Tim’s argument that we were later to appreciate so we are later to fall. There must be some other underlying reason. Maybe human psychology issimilar everywhere and the ‘lag’ is the average time it takes for people to switch their belief in the value of housing. That model would let you make predictions like and 18-month lag, but I’m still not convinced.

I give up. Can anybody tell what he’s trying to say here?

Isn’t it obvious? He is trying to goad us into making an offer on his house.

RAL, maybe you could post your listing here so that one of us can low-ball you.

Joel you are REACHING.

Why? Do you have a reason?

Ummm DUDE, how about relo’s?

Ummm DUDE, not enough of them to prop up prices dude. And dude, not all of them can afford houses at these prices dude.

Like I said, there will always be someone that makes more dough and will jump in before you.

Like I said, there’s not enough people with enough money that don’t already own a house to prop up prices at their current level. Just because there exists someone that can afford something doesn’t mean they will buy it.

Aaaah, so you come to the Bash Seattle Real estate blog.

Huh?

For sure they can increase, are you astute/connected enough to get in front of multiple offers on a foreclosure or a short sale? Do you even know how it works? I do. It’s not easy, Good luck.

What does my ability to make offers on a foreclosure have to do with prices coming down?

The only think I would take a guess at is that you will never be able to purchase a home in Seattle at the price YOU want.

I give up. Can anybody tell what he’s trying to say here?

As far as foreclosures go, it seems pretty reasonable to me that foreclosures won’t start to really pile up until you’ve had declining prices for a while. As long as prices are rising, most people can just sell, rather than go into foreclosure. Once prices start to drop, people with zero or negative equity can’t sell or refinance, so they go into foreclosure. Then it becomes a negative feedback loop, with foreclosures driving down prices, which leads to more foreclosures.

At some point it reaches equilibrium.

We aren’t as bad as San Diego. But since we don’t know how bad San Diego is going to get, how does that give us any information about how bad it’s going to get here.

I think Joel sums up the Sea-vs-SD argument quite nicely with this quote.

Zillow is showing little correlation between SD and Seattle

Prices declines started much later here. Do you read this blog? Here, I’ll say it so you can stop talking about San Diego. We aren’t as bad as San Diego. But since we don’t know how bad San Diego is going to get, how does that give us any information about how bad it’s going to get here.

So far if you want big declines you need toxic financing, lots of new housing developments concentrating those with toxic financing and the most overpriced properties in one area. You have to go pretty deep to find that here.

No, not really. Just look at what rents are compared to prices.

I will use robert shiller to demonstrate how silly 50% predictions in seattle are:

Yale University economist Robert Shiller, pioneer of the Case-Shiller home price index, predicted in a recent speech that housing prices could be headed for a worse fall than the 30% drop of the Great Depression.
http://www.financialpost.com/story.html?id=480581

So you think we are headed for a 20% greater drop than the great depression?

Read the article next time. The 30% drop he speaks of is nationwide average, not the Seattle area.

m, mst f ths ppl lrdy wn hss?.
………………….

mmm DD, hw bt rl’s?

>Myb y wll nvr b bl t ffrd Sttl hm

gn, nthr rsn why hs prcs wll hv t cntn t fll. Hw cn MS mplys prp p hs prcs n th ntr rgn f, lk y sy, th my nvr b bl t ffrd hs?
…………….
Lk sd, thr wll lwys b smn tht mks mr dgh nd wll jmp n bfr y.

>Myb Tcm s mr ffrdbl fr y.

Prbbly, bt dn’t wnt t lv thr.
……………

Y mght jst hv t gt sd t th Tcm rm, y bvsly cnt ffrd Sttl.

>n th mntm, why r y hr f y r nt ctvly byng r sllng hm?

thr thn t ggrvt y, ’m hr t lrn bt rl stt bcs smdy mght wnt t stp bng pr, stpd, drty rntr nd by hs. Whn tht tm cms wnt t b bl t mk n nfrmd dcsn rthr thn jst trst my rltr.
…..

h, s y cm t th Bsh Sttl Rl stt blg. Gd lck…….Y Bbblhds hv wtchd th dp nd wll mn nd grn n th rs. nd y wll stll b rntrs.
………..

>r y chrldng hpng yr cmmnts wll drv prcs dwn frthr?

N, dn’t hv t.

Y r my hndl dd.

Dd, dn’t knw wht tht mns dd, bt dd, t snds drty dd.
…………..

ts nt drty, hndl s “rntrsrlsrs”
………….

Dcmntd n ll th pprs, Sttl frclsrs r mng th lwst n th Ntn.

h s, frclsrs cn nvr ncrs. Knd f lk hw thy nvr ncrsd frm lst yr’s vn lwr lvls.
……………

Fr sr thy cn ncrs, r y stt/cnnctd ngh t gt n frnt f mltpl ffrs n frclsr r shrt sl? D y vn knw hw t wrks? d. t’s nt sy, Gd lck.

>S, tht sd…Y n my pnn prsnfy th typcl Bbblhd hr. Y cn’t ffrd Sttl s lts bsh th crp t f t, gt md ttntn, nd hpflly w wll gt r 3 BR hms fr 150-200k.

Thnk y fr tllng m wh m. frgt tht hv bshd th crp t f Sttl, gttn md ttntn nd m hpng fr 3 BR hss fr 150-200k. Wht ls d y knw bt m tht dn’t knw bt myslf?
…………………………

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Dude, there is always someone that makes more dough than you.

Um, most of those people already own houses?.

Maybe you will never be able to afford a Seattle home

Again, another reason why house prices will have to continue to fall. How can MS employees prop up house prices in the entire region if, like you say, the may never be able to afford a house?

Maybe Tacoma is more affordable for you.

Probably, but I don’t want to live there.

In the meantime, why are you here if you are not actively buying or selling a home?

Other than to aggravate you, I’m here to learn about real estate because someday I might want to stop being a poor, stupid, dirty renter and buy a house. When that time comes I want to be able to make an informed decision rather than just trust my realtor.

Are you cheerleading hoping your comments will drive prices down further?

No, I don’t have to.

You are my handle dude.

Dude, I don’t know what that means dude, but dude, it sounds dirty dude.

Documented in all the papers, Seattle foreclosures are among the lowest in the Nation.

Oh I see, foreclosures can never increase. Kind of like how they never increased from last year’s even lower levels.

So, that said…YOU in my opinion personify the typical Bubblehead here. You can’t afford Seattle so lets bash the crap out of it, get media attention, and hopefully we will get our 3 BR homes for 150-200k.

Thank you for telling me who I am. I forgot that I have bashed the crap out of Seattle, gotten media attention and am hoping for 3 BR houses for 150-200k. What else do you know about me that I don’t know about myself?

I will use robert shiller to demonstrate how silly 50% predictions in seattle are:

Yale University economist Robert Shiller, pioneer of the Case-Shiller home price index, predicted in a recent speech that housing prices could be headed for a worse fall than the 30% drop of the Great Depression.
http://www.financialpost.com/story.html?id=480581

So you think we are headed for a 20% greater drop than the great depression?

Great maps!!!

< hrf="http://www.zllw.cm/rl-stt/W-Sttl-ffrdblty" rl="nfllw">http://www.zllw.cm/rl-stt/W-Sttl-ffrdblty

Clck n th 10 yr chrt.

Chrs!< hrf="#" clss="rplyt" nclck="rplyt('48355','∓#91;trll∓#93;',''); rtrn fls;">Rply – < hrf="#" clss="qt" nclck="qt('48355','∓#91;trll∓#93;',' dn\'t s th sllrs pnckng:\r\n\r\nhttp:\/\/www.zllw.cm\/rl-stt\/W-Sttl-ffrdblty\r\n\r\nClck n th 10 yr chrt.\r\n\r\nChrs!',''); rtrn fls;">Qt

http://www.newyorkfed.org/mortgagemaps/

Zillow is showing little correlation between SD and Seattle

http://www.zillow.com/quarterlies/QuarterlyThumbs.htm?msa=San+Diego+Carlsbad+San+Marcos+CA

http://www.zillow.com/quarterlies/QuarterlyThumbs.htm?msa=Seattle+Tacoma+Bellevue+WA

So far if you want big declines you need toxic financing, lots of new housing developments concentrating those with toxic financing and the most overpriced properties in one area. You have to go pretty deep to find that here.

“(according to the site) the world is ending and the sky is falling and we should save every penny since we will all be upside down by 30 – 40% in a few years time.”

I seriously don’t think anyone said the world is ending or the sky is falling, but it would be prudent to cut back on spending during an economic slowdown. Don’t you think?

JEEEZZZZ!!!

As far as being underwater by 30-40% in a few years time, it all depends if you bought at the top, for way inflated price, and have to sell. I have been house hunting for the past month and EVERY single house I looked at was reduces by at least 10%. This includes new construction, condos, and older SFH. Let’s not even get started with the half finished housing projects that have a few completed homes next to shells that have obviously been sitting that way for many months (broken windows and just crap everywhere). The realtors I met were bored out of their minds as the traffic was zero and most said the seller was very motivated or worse.

Downturns usually take years if history is a good indicator, and we are less than a year into our downturn here.

I don’t know if the median will get 30-40% off here in the Seattle area, but individual houses in my price range (300-350K) are falling fast. Seattle proper will probably see better price preservation.

Yes, I have friends who do not share my outlook on the housing market or the economy, but I do not blast them for having those views. I offer DATA and my way of interpreting the data. They either agree or they don’t. I still consider them to be friends (my fiance is one of them but luckily I have the final decision on any large purchase).

Do you have any data to offer or is your only reason for being here to spray ad hominem arguments?

jg

There is zero data (MLS, Case Shiller, Census, OFHEO) that shows a 50% decline is likely here. Seattle zip codes specificly (which is all I really care about), even less of a chance.

Garth, that simply isn’t true. Take a look at rents vs. monthly carryiyng cost of owning. There may be some places in Seattle proper (which I really don’t care at all about) where rents are greater than 50% of the cost of owning, but that’s not true about most of the county.

Most of the most bearish predictions I have read project the worst markets will decline 50%, so worst case we are going to be under that.

So you don’t really have a reason why we can’t fall 50% other than some other people said so. Do you know what their reasoning is? Also note that not 2 years ago the most bearish predictions weren’t predicting declines at all anywhere. You were considered bearish if you thought prices would just level off and not keep rocketing higher. So pardon me if I don’t trust someone’s prediction outright without actually seeing their reasoning.

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……………….
Ys, f thy r s wndrfl thn why r thy tryng t sll t? nd wht bt th ppl tht cn’t sty n thr hms?
………………..

Sm ppl wnt t sll t mv p t bggr nd bttr, sm wnt t rtr t smllr, sm hv jb rlctn plns nd vry smll MNRTY n Sttl hv fnncl prblms. Dcmntd n ll th pprs, Sttl frclsrs r mng th lwst n th Ntn.

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I think a number of people here including myself have more than enough money to put down for a house (10-20%). If you look back at most of us after 5 years I can assure you more than 50% of the people on this site will have bought houses. However “At Present” all these rational people see no sense buying into a depreciating asset. Sellers can stay in their “wonderful homes” with their wonderful “depreciating paper values”.

IF you are truly a seller and a desperate one at that (someone who purchased within the last 2 years) you will soon move to bargaining (Some please just buy my house even if it is a loser renter!!).

Lol

A happy renter paying less than 1200 a month to stay in a wonderful house!

I wonder If any of your bubbleheads can actually get a mortgage

I haven’t made any offers or applied for any mortgages (why would I want to take out an enormous loan on an asset that is going to greatly depreciate over the next few years?), but you’re probably right. I probably couldn’t get a mortgage for something I would actually want to live in. And that’s precisely why house prices will continue to fall.

Net Result = Sellers stay in their wonderful homes

Yes, if they are so wonderful then why are they trying to sell it? And what about the people that can’t stay in their homes?

Not one Bubblehead answered my question on another blog when I asked how many offers have you submitted that have been turned down

I’ll answer that. None.

I’m not looking for a “deal” or something “below market value”. I am not a full time RE person nor do I want to be. I suspect that any “deal” I get will fall into the category of “you get what you pay for”. I want a standard, run of the mill, average transaction. Low balling doesn’t get me that. I suspect low balling would get me a house that a seller is eager to unload because it has mold or termite damage that has been covered up. No thank you.

I’ll start making offers when I see properties I would be happy in long term that I can afford. Maybe that means prices will drop. Maybe it means I’ll earn more. Maybe it means I’ll keep renting. I’m not going to rent forever though. I’ll move to a part of the country where I can afford to purchase a home if that is what it takes.

I am a seller and am done cutting my ask.

You know, buyers aren’t conspiring against you. We aren’t some big nefarious organization out to show sellers who is boss by making them cut their prices. At price X there is Y% of the population that is willing to buy at that price. Lower X and Y goes up. You have two options:

1. Wait until someone in that Y% shows up (Y could be 1% — if you get five showings a week, you’ll sell in 20 weeks on average).
2. Lower your price.

Time or money. Of course, since you have holdings costs time equals money so your options are really between money and money. Figure out which one costs less and do that.

Seriously, whining about it here isn’t doing you any good.

There is zero data (MLS, Case Shiller, Census, OFHEO) that shows a 50% decline is likely here. Seattle zip codes specificly (which is all I really care about), even less of a chance.

Just looking at foreclosure data for San Diego, I don’t see any periods, even using tim’s time shift (which I think is worthless anyways considering that SD started down in 2005 and had 18 months more lax lending and seattle “peaked” at the same moment the credit crisis started) that indicate similar building and mortgage activity took place here on remotely the same scale.

Most of the most bearish predictions I have read project the worst markets will decline 50%, so worst case we are going to be under that.

You just can’t fall from heights you never reached.

Joel, San Diego has alot of subprime loans. Seattle does not.

So? If I assume your argument is the same as Garth’s (we aren’t as bad as San Diego and San Diego has only gone down 20% therefore we cannot ever go down more than that) please explain to me why you think San Diego prices have hit bottom.

Also your statement about subprime mortgages may not even be true. Take a look at this subprime mortgage map done up by the New York Times: http://www.nytimes.com/interactive/2007/11/03/weekinreview/20071103_SUBPRIME_GRAPHIC.html#

And finally, if you’ve been following the mortgage mess at all within the past several months you would’ve noticed that the problem extends far beyond just subprime mortgages.

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Don’t blame the realists who warned that this disaster was coming. Blame any job losses that result from the bubble crash on the cheerleaders in the real estate industry, the press, and policy makers.

If the press had reported on the bubble earlier and if lawmakers took the risk of the credit bubble seriously, we would be much better off today.

Even a fool could see the bubble forming, but the Tim deserves our support for providing tons of useful information on this site you can’t get anywhere else.