A few days ago I got an email from a reporter named Luck Mullins from US News & World Report, telling me about his new housing blog: The Home Front. Then yesterday, a story pops up on his blog specifically about Seattle. Looks like someone really wants to get our attention for some reason. Here’s an excerpt from his post: Next Housing Market to Crash? Seattle
Few American cities have weathered the national housing crisis better than Seattle. According to the recently released S&P/Case-Shiller Home Price Indices, home values in the drizzly gem of the Pacific Northwest have fallen a modest 4.4 percent over the past year—a cakewalk compared with former housing boom hot spots like Las Vegas (-25.9 percent), Miami (-24.6 percent), and Phoenix (-23 percent).
But that may soon change. In a recent interview with U.S. News, ZipRealty CEO Pat Lashinsky predicted that Seattle’s so-far resilient housing market would suffer big losses relatively soon. Excerpts:
What makes you think the Seattle housing market is going to crash?
In Seattle, if you look at it right now, on a year-over-year basis, you will see that inventory levels [of unsold homes] are up between 45 and 50 percent. And then if you looked at prices—in the price report that just came out—it would say that prices are down in Seattle by 4 percent. This is exactly what we saw in the rest of the country six to nine months ago. We saw inventory levels starting to spike [and] properties were taking longer to sell. But the sellers were not willing to [reduce] the price; they were holding the line. And so you get into this scenario where buyers don’t buy, because they have too many choices and they are trying to get a good value, and sellers are trying to hold on to their value. So now, nobody buys a home today, and then more homes go on the market tomorrow. And then all of a sudden, people have to sell or foreclosures come in. And all of a sudden it pops because everyone is competing against a significantly lower price.
This is not really anything new to people that have been paying attention to housing trends here and elsewhere, and have not deluded themselves with the fantasy that Seattle is somehow special and immune.
(Luke Mullins, US News & World Report, 05.29.2008)
Blah » May 30, 2008 at 11:27 am
I wanted to post this again because I think it’s relevent.
This house http://www.4142-53rdavesw.com/ is competing with the house across the street http://www.zillow.com/HomeDetails.htm?zprop=48656286 that is, I believe a comparable comp, that is trying too sell for ~$250K less. Did this flipper get cought in a bad market? What can they do to sell this thing?
Ben » May 30, 2008 at 11:47 am
My Redfin search updates showed me some interesting stuff last night.
The first thing was a whole lot of Buchan homes properties dropping 50k – 100k overnight. Some of them on market for about a year already. Some of them have raised the price before and now dropping back down. The fact that they all happened the same day makes me imagine that there was a directive at head office to drop some prices.
The other interesting thing was a neighbourhood in Issaquah, where somebody put their lived-in house for sale for $1m, a few doors down from a brand new house of exactly the same floorplan selling for $50k less. Why their agent set a price above a brand new house, of the same floor plan, that has not sold for months and months (so long that it has been relisted once already) is beyond me. The same neighbourhood also has another house 210 days on market, with the asking price $165k below the original asking price after 5 price drops.
I think that the industry is still made up of people naive about technology, most of whom have no idea that it is very easy for me to observe stuff like this. I spend maybe 15 – 30 minutes a day, a few days a week, playing around with Redfin and I bet I see more patterns than a lot of agents do. Or do they know what is happening and they think it is hard for others to find out?
Thanks to Seattle Bubble I know of at least one sensible agent to talk to when (if?) the time comes (Ira).
Jimmythev » May 30, 2008 at 11:51 am
Ouch Blah! That guy is smoking something if he thinks he’s going to get 850k for that house!
Ben » May 30, 2008 at 11:57 am
Blah,
The more expensive house is remodeled, so that is worth something. Not 250k though.
At least they made a good website for the house with lots of pictures. Considering the effort and expense for this (pretty much zero dollars + a day) it is amazing that more people don’t do it.
softwarengineer » May 30, 2008 at 12:00 pm
THEY LIVE IN A TRAILER NOW
My friend knows a Seattle area couple that inherited a $450K home decades ago by paying off their siblings $20K. Well guess what, this average Seattle two income family [approx $50K/yr] thought, geeeee….my home is a cash machine, so 2nd mortgaged it to death at $350K.
Over a year ago they tried selling it for $450K, it simply wouldn’t sell. They finally lowered the price to $350K and sold it, as they were forced to drastically lower the price because the 2nd mortgage balloon payments were eating them alive and it was sell low or lose everything.
This subprime mess isn’t just new buyers. This couple had it made in a cheap affordable Seattle home and they totally blew it with 2nd mortgage greed.
TheHulk » May 30, 2008 at 12:12 pm
Ben,
I have seen patterns that are similar to what you have observed. I think there are 2 things at work here.
1. The seller is unrealistic about current prices. I don’t blame them entirely. Its hard to stomach losses, even if they are paper losses. I am sure a bunch of sellers are regretting the fact that they decided not to sell last spring (more so if they remodeled and “upgraded” to granite and whatnot). If they look at comps nearby (homes sold in last 3-6 months), they are still going to see the inflated prices that some people paid just when the bubble was bursting. Add to this the optimism that “my house is the BEST in the BEST neighborhood with the BEST schools” and throw in a 10K premium if not more. Ego also comes into the picture with (I maintained my house better than HIM and see how much that dump sold for!! etc etc.)
2. Now enters the realtor. Business has been tough lately (sales down 50% or whatever it is, yada yada yada). He desperately needs the to sell homes (any homes). Thus, he needs to get THIS guys house on the market. A sensible realtor (Ira?) might try convincing the owner that his delusions do not make sense in this market and that his house is only going to sit on MLS for a year. A greedy realtor might even inflate the owners expectations (whats he got to lose? if he can get a sucker to buy the house at that price, his commission is still 3%).
Both these factors contribute to the weird prices that you see more often than not.
Don’t worry too much about it. Like the main article says once the “peak” selling season passes and people see the “trough” in house sales lets just say it wont be pretty. I expect 15-20% declines across the board and upto 40% in outlying suburbs that have the most foreclosures. We should be back to 2002/2003 prices in a couple of years.
vboring » May 30, 2008 at 12:34 pm
at least now people can stop blaming Seattle Bubble for falling prices.
US News gets to be the new whipping boy.
vboring » May 30, 2008 at 12:42 pm
TheHulk,
you seem to have your Buyer’s Agents and Seller’s Agents mixed up.
a Seller’s Agent is hired by the seller. their incentive is to decrease the amount of time it takes the house to sell by convincing the seller to reduce the price.
the Buyer’s agent is hired by the buyer. their incentive is to encourage the buyer to buy anything at any price as quickly as possible.
both types of agents have the additional incentive to appear smart and helpful so that they will be recommended to their client’s friends and family.
this topic was covered very well in Freakonomics (the book).
Happy Renter » May 30, 2008 at 12:46 pm
Are either of those linked houses worth nearly so much?
I guess if the more expensive one was the same price/sqft as the less expensive, it’d cost about 700k (so that’s a bit less of a discrepancy) …but still..
I might pay 500 for the remodeled one, if I were in the market for a 500k house. I need to move back east. :)
Ray Pepper » May 30, 2008 at 1:28 pm
Just a few notes…Homes in Nv and other hot spots went up 100-300%. Homes in Washington in the same time frame did NOT ever Reach those levels of appreciation. Homes did double but I have not seen a triple here like I did in Reno, Sac, and Vegas.
So therefore assuming its the same Bubble we are talking about we have alot less to come down. Use your graphs and chart it but i lived it and touched it.
As for Zip Realty. Come on! Anyone ever call their offices? Notice how nobody ever picks up? Giving Buyers 20% of their commission? HELLO!!!!!!!!!
HELLO!!!!! 20% !!!! 25% savings when you sell???? They better get that Merger with Zillow completed so they can get some web traffic. They have a FAR INFERIOR MODEL to 500 Realty and Red Fin. Good GOD! Look at there share price of 4.00!!…
Get yourself Fixed Zip and give some more money back to the Consumers instead of lecturing on the markets. Lecture on your PPS and how you will BRING VALUE TO THE SHAREHOLDERS with a 25% REBATE TO BUYERS!!
HELLO HELLO!!
Ray Pepper
Broker
http://www.500Realty.net
TheHulk » May 30, 2008 at 1:37 pm
vboring,
I get your point and understand the concept. Regardless of “buyers” agent or “sellers” agent don’t they both make 3% of the sale price of the house. Thus, if the house sells for 200K, both agents get 6K each.
Back to my point. You are the sellers agent. Your clients adamantly insist my house is worth 750K. In your mind, you know unless they price it at 600K they are not going to get any offers. For you, if you keep insisting that they lower the price, they might refuse to go with you as their agent and find someone else. In a market where you are looking for *any* business, wouldn’t you say well ok, lets try listing it at 750K if we dont get any offers in x amount of time, we will bring the price down etc. That is the reason Ben is seeing those out-of-whack listing prices.
I have read the book you mention as well. In that, the author points out that the sellers agent has no real incentive in pushing the price by 10-20K since all they see is a 300/600$ increase in their paycheck (in fact its 50% of that since half the commission goes to the company). But they wont see any harm in listing it at a higher price initially if its just to retain the account.
I also remember that the author obtained this difference in behavior by comparing what the agents houses sold for in the same market as compared to clients houses (thus them getting 10K instead of 300).
AndySeattle » May 30, 2008 at 1:37 pm
Nice commercial Ray… Who are you talking to again?
Ira Sacharoff » May 30, 2008 at 1:52 pm
I noticed that in the 834,000 dollar house, the owner is a licensed real estate agent.
So you can’t accuse the seller of not taking his agent’s advice, since he is the agent.
Maybe there are pounds of cocaine in the basement, but it sure seems to be overpriced by about 200,000+ dollars.
Birdie Num Nums » May 30, 2008 at 2:03 pm
So, Softwarengineer, what did that couple do with that $350K they got on the 2nd mortgage? Invest it? Splurge? Or what?
Ray Pepper » May 30, 2008 at 2:25 pm
Andy I got a little carried away. I think I’m looking forward to that movie “The Strangers” tonight. Nothing better then a lil Panera Bread for dinner then Slice em and dice’em!
Sorry Zip. You 20% return to the consumer is a great service to the community!
I applaud your efforts!
Blah » May 30, 2008 at 2:54 pm
TheTim,
You should work something up like this, http://activerain.com/blogsview/529657/Predicting-The-Future-of, for the Seattle area.
Gill » May 30, 2008 at 3:12 pm
I don’t get this blog…am I the only one?
When I first came across it Seattle Bubble looked like an objective look at real estate/market data for Seattle and the nation but the longer I hang around it just looks like TheTim’s hellish interpretation of the all-too-positive Seattle real estate agent’s heaven-on-earth.
Seriously, if you keep presenting this kind of bullsh*t in an authoritative fashion and as fact there’s really no reason to check in here any longer. Sensational at best.
The ego-inflated arguments are sometimes fun to follow, but…where’s the data, dude?
John » May 30, 2008 at 4:16 pm
Gill, where’s data? You see the charts, right? Case-Shiller? Are you also blind to the name of this blog? Home prices are going down in Seattle, even the Seattle Times says so. There isn’t much of a middle ground if that’s what you are looking for. It is either raining or not raining. Tim and others have presented their arguments with statistics and personal observations in the industry. That’s good enough for me.
Bits_of_Real_Panther » May 30, 2008 at 4:19 pm
“home values in the drizzly gem of the Pacific Northwest have fallen a modest 4.4 percent over the past year—a cakewalk compared with former housing boom hot spots like Las Vegas (-25.9 percent), Miami (-24.6 percent), and Phoenix (-23 percent).”
Those other three areas peaked much higher, anywhere from 227 to 280 (Miami) on the index. Seattle peaked at 192. If you want to interpolate some numbers to get a target decline for Seattle that’s fine by me but this comment implies something else. Miami is still above 200 by the way, as Seattle sits at 178
Ubersalad, Ph.D » May 30, 2008 at 4:38 pm
Right now we’re in the season where sales from month to month is improving every year…so naturally everyone is spinning it in a positive way.
SeattleBubble can probably shut down for the whole Summer and turn back on in Fall, when it’ll be clear if bubble exist or not.
magnolia44 » May 30, 2008 at 4:49 pm
gulp… just got our reassesment of property taxes nice to see they raised the value $40k on our home. This is BS but i guess one of the joys of ownership, when will they take the downturn into account? (lol i know they never do its a joke)
Can some of these taxes go to the roads, i swear we have the worst roads in america… they make my nice car sound crappy at times.
Ubersalad, Ph.D » May 30, 2008 at 4:57 pm
Worst roads? Go visit Orlando =).
Sarge » May 30, 2008 at 5:55 pm
The English language is polluted with plenty of slang these days and in that spirit I would like to coin this as a new term for the items people bought with their 2nd mortgages that are now ‘upside down’ (mortgage is more than the value of the house). New boat, motor home, kitchen remodel, vacation, etc.
What’s your Upside-down?
johnsgonefishin » May 30, 2008 at 6:51 pm
Ray Pepper said “Just a few notes…Homes in Nv and other hot spots went up 100-300%. Homes in Washington in the same time frame did NOT ever Reach those levels of appreciation. Homes did double but I have not seen a triple here like I did in Reno, Sac, and Vegas.
—————————————————————
So therefore assuming its the same Bubble we are talking about we have alot less to come down. Use your graphs and chart it but i lived it and touched it. ”
Seattle area over the last 20 years has had a huge run up with no correction. I think it would compare to the 300% you are looking at. Seattle run up was longer and a little slower than NV and Phx but Phoenix was very slow to stable growth for the 20 years prior to run up. I believe because of this Seattle may have the furthest to correct and will take the longest to recover.
alex » May 30, 2008 at 7:07 pm
I commented before about how 500k seems to be a “hard to break” psychological limit for the typical “nice house” on the Eastside (newer/2000sqft/3+beds/2.5bed).
Here’s evidence that this psychological limit is finally being broken:
http://www.johnlscott.com/propertydetail.aspx?GroupID=66968273&ListingID=31920260
alex » May 30, 2008 at 7:11 pm
I don’t see my own posts…. what changed?
[troll] » May 30, 2008 at 8:19 pm
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Ubersalad » May 30, 2008 at 8:27 pm
Why exactly are you here? It’s obvious that everyone sings the same tune here, what benefit does it serve you to argue your point here. I am actually being generous by referring your gibberish as point, which there is none.
Stabilize? Show me signs of actual stabilization, where’s your data?
economist » May 30, 2008 at 8:43 pm
the Buyer’s agent is hired by the buyer. their incentive is to encourage the buyer to buy anything at any price as quickly as possible.
Which means, of course, that they are really the seller’s agent.
Oh BTW they aren’t “hired by the buyer” because they are paid by sales commission. You wouldn’t say a used car salesman is hired by the buyer would you?
Ben » May 30, 2008 at 9:15 pm
Ray,
I don’t think that people have a problem with you putting your competitors down because they like them better. People don’t like you putting your competitors down when it sounds like an advertisement.
You are obviously the small business type who can’t stop talking about your business, and it does not sound like advertising to you any more. I believe that you add value to the blog, because you see a lot of stuff here and in other places. But when you start to sound like an infomercial it is a bit much.
Ben » May 30, 2008 at 9:17 pm
RentersAreLosers,
I have finally decided that you are a troll. I came to this conclusion because nobody in their right mind would call our situation stabilizing. I think that you are here to entertain yourself.
Oh – and just a reminder again, I don’t rent. I don’t plan to rent for a very long time. But I don’t think people who rent are losers.
[troll] » May 30, 2008 at 9:29 pm
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Thomas B. » May 30, 2008 at 10:02 pm
Wow… rentersarelosers sounds bitter. Must be a realtor that lost his shirt flipping. Is this Ben Kakimoto? Didn’t you threaten to kick someone’s a** on your blog? If this is Ben, I think you should seek mental help before the stress makes you have a breakdown. Seriously.
Scotsman » May 30, 2008 at 10:07 pm
I’ll repost these two homes I’ve been watching for a while. They are exactly the same square footage, literally within a block of each other, and the same age and level of finish. No action on either one for months. To me this shows that prices for both still have a ways to fall.
What chance does the higher priced seller really think they have of selling?
http://www.johnlscott.com/propertydetail.aspx?IS=1&ListingID=30990559
http://www.johnlscott.com/propertydetail.aspx?IS=1&ListingID=31652925
Scotsman » May 30, 2008 at 10:19 pm
My apologies if this posts twice- it didn’t seem to go through the first time.
I’ve been watching these two houses for some time- since the first of the year. Both are exactly the same square footage, both were built the same year, to the same level of finish, and are within a block of each other. The asking price difference is $70,000, or about 10%. Neither has ever gone STI. To me this suggests that prices still have a long way to fall before buyers will come back into the market in force.
http://www.johnlscott.com/propertydetail.aspx?IS=1&ListingID=30990559
http://www.johnlscott.com/propertydetail.aspx?IS=1&ListingID=31652925
Mikal » May 30, 2008 at 10:19 pm
Amen brother. RAL, I agree with what you have said. However, I have had to work in Spanaway the last couple of days and there are ALOT of houses for sale. While driving through an area I counted at least 100 lots that had utilities and streets already done that I will be shocked to see built. Granted it has been ten years since I had to work down there, but who knows. The slow down there will connect to the more local area in someway as I think investments are all interrelated. To what degree who knows. You are right about the graph as being the biggest load of SHI@. That said, have you donated? This is a great place to pick up people that want to be parted from their money. And you know the saying. Housing will always be more expensive here than only a handful of other cities in the US. They will never drop enough for some of you to afford it. If a house on Queen Anne that was selling for a million at the top of the market were to drop to even $350,000 it wouldn’t be you getting it as there would be 1000 others and probably more chasing it . Be realistic. For one, if the market drops that far the world will be in a depression and we will most likely all be out of work meaning you still won’t be able to afford it. Yes, I still think anyone buying a house right now is out of their minds. And I don’t mean this to all here. Some here have some really interesting views on things.
Ira Sacharoff » May 30, 2008 at 10:52 pm
Rentersarelosers,
While I find some of your posts interesting and actually agree with you once in a while, I’ve got to say that you’ve brought some of this antagonism on yourself.
first, your handle. Second, referring to renters as folks living in noisy, bug infested apartments…Are you currently a landlord? If so, is it healthy for you to have such utter disrespect for those who help pay your bills?
I’ve been a landlord, and have had a mix of tenants ranging from perfect tenants who I remain friends with many years later, to the tenants from Hell( like the Michael Keaton character in “Pacific Heights”).
But I’d never lump ‘em all together and call them losers, and then expect to have a decent conversation with them
Ubersalad » May 30, 2008 at 10:59 pm
If you think Seattle housing price is justifiable, God bless you for that you have a foot in the door before this recent boom.
100k household can’t afford this ridiculous housing market, please tell me how anyone can raise a family and purchase home in Seattle without racking up crap load of debt.
Just do some simple math…
Ubersalad » May 30, 2008 at 11:05 pm
Oh another thing, it’s quite misleading to think you’re somehow ahead because you had purchased your home prior to the boom, and traded your way up into a price tag of 600k-700k. Now you feel the need to defend your newfound status as middle class American and of course, you can’t imagine yourself living in the 200k slum anymore. I feel your anguish as well buddy…
Scotsman » May 30, 2008 at 11:12 pm
Owners ARE losers. They’ve lost equity over the past year, and stand to loose a lot more over the next two or three years. That fact is indisputable. Now whether renters are losers is open to debate. But the facts suggest renters are more likely to have had their net worth increase over the last year or so than owners. That would make them winners in the context of this blog.
Rentersarelosers is a troll. plain and simple. No facts, no reasoned debate, just insults, ad-hominem attacks, and anger. Don’t feed the troll.
economist » May 30, 2008 at 11:15 pm
You just don’t like to hear it., probably because you are underwater.
Um RAL, how could anyone be underwater if the market is still going up as you claim?
Maybe you’re the guy who’s underwater? Who’s the real loser?
Bankruptcy Attorney » May 30, 2008 at 11:17 pm
None of us can learn from group think. This blog would lose all credibility if dissenters are banned. Although I generally disagree with RAL I enjoy his or her posts. RAL is a little abraisive but not offensive.
Ray Pepper » May 30, 2008 at 11:38 pm
Ben, I apologize that you see my blogs as infomercials for 500 Realty. MANY TIMES They Are!. Our message is too important to not be heard. I pray for the day that there are more companies doing what we do. The public simply just doesn’t understand. I suspect it will take another few years.
Until then, whenever I take the time to Blog prepare to be educated a bit more on 500 Realty and my praise for Red Fin, Shop Prop, Iggy’s, etc….But, as for Zip Realty. Hey….25% back to the Consumer? No Way!! That is by far an inferior company as illustrated by its pps on the Nasdaq. Not even in the same league as 500 Realty and Red Fin.
Furthermore, I must “apologize” ahead of time for what you will be seeing this summer. $10,000 alotted to college kids is buying 500 Realty 1176 hours of sign holding our messages up at busy intersections throughout Bellevue, Seattle, Tacoma, Renton, and Gig Harbor.
Is it Tacky ?? Maybe! Is it Gorilla marketing Yes! Has it ever been done by Real Estate companies?? Has any Real Estate company ever had a message so important to hear? I doubt it… That just goes to show you how important we feel our message is…NOW MORE THEN EVER!….
Excuse me for my ramblings but there is and continues to be TOO MUCH WASTED from the consumers in buying and selling Real Estate. The Consumers need this money now more then ever. We will continue to do our small part….Just be happy we exist.
You will also be happy to know any money I EVER make goes right back into 500 Realty. My family lives off our Real Estate investments. I know that maybe hard for many to believe here but trust me when I say REAL ESTATE will always be the answer to wealth. The stock market has always been titillation for me and I never made any real money. I’m not smart enough to invent something. So I buy and sell…Mostly Buy.
Find your GEMS……………………………Ben….the commercial is over…..
Ray Pepper
http://www.500Realty.net
The Tim » May 30, 2008 at 11:54 pm
The funny thing is, the only commenters that come across to me as “frustrated” are the angry home “owners” like RAL and Nostra.
shawn » May 31, 2008 at 1:28 am
“My best guess is that they will all be left in the dust when the markets take off again.”
So, you are telling me that what typically happens in real estate markets is that there is a ramp up of pricing followed by a slowdown, maybe a drop in prices. Then, almost immediately, prices takes off again rising, pricing me out forever. Wow, thanks for the heads up. I was foolishly thinking it tends to “flatten” after it hits a bottom followed by slowly rising again. ;)
Ben » May 31, 2008 at 1:46 am
Ray – you certainly are entertaining. Let me give you some points:
a) Commenting on somebody else’s blog is not blogging in my book. To me, blogging is when you make your own blog and make posts on it. Do you have something like this? You can make your own for free at blogger or wordpress. The best thing is that you can go on about whatever you want, and it is your blog and your rules. But when you post here, you should respect Tim.
b) Your horrific spelling makes me cringe when I read your stuff. If you want to get ahead in business, you need to take five minutes to spell better. It took me a while to see that when you said “Gorilla” you meant “guerilla”. I will abstain from pointing out your other mistakes, but suffice to say you come across like somebody who did not finish school.
c) Why are you telling people here about real estate business models? Nobody on this blog has ever defended them, and my observation has been that the bubble blog camp on the internet is against the whole traditional real estate commission model. I ask you because you come across like you are expecting an argument from people here, and it makes your posts sound antagonistic.
d) I think that your $10k would be better spent sprucing your website and paying college kids to help you make a web site for each house that you are trying to sell. This would give you great word of mouth in the end, and show that you are really doing more for the money than your competition. Spending it on kids holding signs at intersections just annoys people and makes your brand more tacky. Just sayin’.
Ben » May 31, 2008 at 1:54 am
RentersAreLosers,
I have no idea if I am underwater or not. But I really doubt it, based on watching the inventory move in my little community. I honestly don’t care, because to be underwater I would have to have prices at less than 2003 levels, and if prices got back down to there I would gladly buy a bigger place.
I am clueless as to why you read here and post here unless you want to antagonize people. That makes you a troll. All of the graphs that Tim posts have clear explanations of the axes and explains what is going on. You must be really insecure to feel like he is trying to bamboozle you.
But if it makes you happy to come here and give people crap, go ahead and do it. I don’t care if you get banned or not. Sooner or later even I will get sick of trying to talk to you. It seems like you want to throw hate at everybody who disagrees with you, and you only want to give out disagreeable conversation.
[troll] » May 31, 2008 at 6:06 am
Th fnny thng s, th nly cmmntrs tht cm crss t m s “frstrtd” r th ngry hm “wnrs” lk RL nd Nstr.
…………………
Tm,
Nt ngry. Mny hr hv n sns f hmr. Thy fl t rcgnz tht th dscrptv psts n rntl ccmdtns s rthr cmcl nd xggrtd t sy th lst.
hv ntd hwvr, tht mny hr sm t pst wth gl spcltng tht sllrs r dsprt hmwnrs wth fnncl dffclts nd ll tht s rqrd s t wt thm t n rdr t pck p th hms fr sng. Nthng s frthr frm th trth.
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ll n my hmbl pnn f crs………….< hrf="#" clss="rplyt" nclck="rplyt('49166','∓#91;trll∓#93;','48'); rtrn fls;">Rply – < hrf="#" clss="qt" nclck="qt('49166','∓#91;trll∓#93;','Th fnny thng s, th nly cmmntrs tht cm crss t m s &crc;frstrtd&crc; r th ngry hm &crc;wnrs&crc; lk RL nd Nstr.\r\n.....................\r\n\r\nTm,\r\n\r\nNt ngry. Mny hr hv n sns f hmr. Thy fl t rcgnz tht th dscrptv psts n rntl ccmdtns s rthr cmcl nd xggrtd t sy th lst. \r\n\r\n hv ntd hwvr, tht mny hr sm t pst wth gl spcltng tht sllrs r dsprt hmwnrs wth fnncl dffclts nd ll tht s rqrd s t wt thm t n rdr t pck p th hms fr sng. Nthng s frthr frm th trth. \r\n\r\nTh S cnmy s nt n bd shp, w r nt hdd nt rcssn r dprssn. mrcns n gnrl hv vry hgh lvng stndrd cmprd t mny thr wstrn cntrs. W r spld rttn.\r\n\r\nW my hv hd mld \&qt;bbbl\&qt; n Sttl Rl stt, bt y cn rcgnz tht Sttl hs nt xprncd th wld swngs n hsng prcs tht thr rs hv ncntrd. Sttl hs bn n slw stdy clmb nd th pllbck n 10 yr chrt sms mnr t ths pnt. Shld th hrdst ht rs n th S strt t prk p ( xpct ths t hppn sn) prdct Sttl wll rsm t\'s stdy clmb gn. Dwnsd rsk s lmtd t ths pnt. \r\n\r\nll n my hmbl pnn f crs.............','48'); rtrn fls;">Qt
Ray Pepper » May 31, 2008 at 6:36 am
Ben, I will spend more time when I blog. I cannot stand grammatical errors in any form of business or even blogging. It DOES make one look unprofessional. I fully agree. I assure you I rarely make spelling errors.
Ben please trust me when I say this. I believe there are many that like my content when I blog. I get emails and phone calls all the time. Only YOU and various agents get on my case. Tim, also has warned me a couple times to tone it down. So I have. However, if you mention Zip Realty in any context YOU WILL GET MY OPINION of failed IPO and why it has.
Is it possible you can skip over my blogs? I’m on Yahoo message boards and I always do that when I Bash or Pump company stocks.
Lastly, you and my partners must be correct about the 500 Website. One of the shareholders for 500 Realty works for Marchex in Seattle and everyday I hear from him stating the entire website must be changed. Word-capture, Google, Yahoo, etc. I’m truly inept about. We start the “college” campaign in 2 weeks. Maybe I will pull the plug on it. However, I like the website. Its simple. I wanted it like that! The Red Fin Site and MLS 4 Owners site is too difficult to navigate in my opinion. I just wanted a few buttons. Buyer…Seller…..Search… …I think we will change the website….GULP….But, I truly do like it… Even the 450.00 lady who walks out for 30 seconds. Some hate her others love her.
It seems the more tech oriented the person is the more they hate our site. Many love it but computer oriented people can’t stand it.
Thanks for the input. Send me an email and I will send you 2 shirt’s. Our controversial ones are SOLD OUT. I will send you the ones I sent Tim and many others from this website. They are very form-fitting and you will look far more handsome wearing it then any other shirt in your collection.
**Todays a big day. I attend the Quadrant Open House in Tacoma. 400 People on the waiting List for the Gig Harbor development. I go with 3 different Buyers. I have never been to one of their events and I hope the food is good. You can be assured I will be there with a few hundred fliers in hand and 500 Realty Shirts galore. **
Ray Pepper
http://www.500Realty.net
AndyMiami » May 31, 2008 at 6:47 am
Rentersarelosers
No recession, continued increases in real estate with Seattle leading the country…check out the link which totally agrees with you
http://www.economist.com/displayStory.cfm?story_id=11465476
Ray Pepper » May 31, 2008 at 7:05 am
WOW, ANDY MIAMI !!
I can see somebody passing out literature on this Economist Press release at the Quadrant Event. It would make everyone go home. If they have a home!
AndyMiami » May 31, 2008 at 7:26 am
Ray Pepper
Pretty sobering chart…but of course Seattle will not suffer one bit…we are just so perfectly immune..just like there is no crime, no unemployment, no foreclosures..we live in a beautiful BUBBLE…we are so lucky
george » May 31, 2008 at 7:32 am
The fact that the CEO of ZipRealty is predicting a crash in Seattle is very interesting, even if his reasoning isn’t new or based on an innovative graph.
My only question is when is it going to drop 20 percent plus? Any thoughts on what sounds like his prediction of 6 to 9 months from now? If we reach a 20 percent plus drop by Feb. 2009, will you be surprised?
The reasons Seattle is likely to crash 20 percent plus are simple. Simple enough for most potential buyers and sellers to understand at this point.
[troll] » May 31, 2008 at 7:34 am
ndyMm,
rlly ddn’t wnt t g hr, bt hr r my thghts.
W r n n lctn yr. Glm nd Dm s th Lbrl mntr, nlss thy gt lctd ftr whch ll wll b pchy. Th Md s cprtng wth ths mntr s t slls nwspprs.
f th cnmy ws trly n sch bd shp t wld b rflctd n th stck mrkt. W r lss thn 10% ff r ll tm hghs n th brd S∓P 500. f th cnmy s rlly hdd fr rcssn/dprssn dn’t y thnk th bg tm nvstrs wld b pllng t n drvs? ftr ll, th mrkts lk hd rghly 6-9 mnths. Frm wht s ths slwdwn wll b (s) shrt nd shllw.< hrf="#" clss="rplyt" nclck="rplyt('49172','∓#91;trll∓#93;','54'); rtrn fls;">Rply – < hrf="#" clss="qt" nclck="qt('49172','∓#91;trll∓#93;','ndyMm,\r\n\r\n rlly ddn\'t wnt t g hr, bt hr r my thghts. \r\nW r n n lctn yr. Glm nd Dm s th Lbrl mntr, nlss thy gt lctd ftr whch ll wll b pchy. Th Md s cprtng wth ths mntr s t slls nwspprs.\r\n\r\nf th cnmy ws trly n sch bd shp t wld b rflctd n th stck mrkt. W r lss thn 10% ff r ll tm hghs n th brd S∓mp;P 500. f th cnmy s rlly hdd fr rcssn\/dprssn dn\'t y thnk th bg tm nvstrs wld b pllng t n drvs? ftr ll, th mrkts lk hd rghly 6-9 mnths. Frm wht s ths slwdwn wll b (s) shrt nd shllw.','54'); rtrn fls;">Qt
Jonny » May 31, 2008 at 7:54 am
“The US economy is not in bad shape, we are not headed into a recession or depression.”
Just want to make sure I can quote you on this.
John » May 31, 2008 at 8:43 am
Things are not peachy now. A middle class family with 2 cars and 3 kids will have to cut back or else. Food cost, gas price, declining home price? Truckers aren’t happy with $4 gas. I wonder what they will do when it hits $5. Warren Buffett is predicting a long recession but nah, he is just a fear monger.
AndyMiami » May 31, 2008 at 8:59 am
Rentersarelosers
You are an imbecile. The S & P 500 when measured against other indexes like Euro EFTs, Gold EFTs has been the worst performer. You need to look at the real return adjusted for inflation. DOW just raised its prices 20% for all its products.
If the FED had not backed the Bears Stearns acquisition, the markets would have suffered systematic collapse. The threat is still there despite the FED’s efforts. Look at credit spreads and in particular LIBOR. Take a look at what mortgage rates are doing…
You are SO Seattle…take a trip to Detroit or Boston, or Miami…then you’re IQ may return to normal
johnsgonefishin » May 31, 2008 at 9:15 am
Rentersarelosers,
The economy is not in bad shape? Seattle went through a “mild bubble”. Do you understand what bubble means. By definition it is not mild. You could say Seattle had a small correction, or decline but “mild bubble” is an oxymoron. Even you admit its a bubble, and the bubble just burst.
People who post here are not all renters, some of us own right now or have owned. It is a bad time to own in the Seattle area if you look at property as an investment. If you look at it the right way, as a home for your family it makes sense to own. You personally would be better served in selling any property you have and using the money to fund your education. That is, if you are not upside down which is likely based on the frustration of your posts. Perhaps a community college would be a great start for you as alot of times they can help you complete your GED and have classes on basic economics and investing.
Keith » May 31, 2008 at 9:17 am
>> The Economist story
Yes, the rate of change is higher than during the Depression, but I attribute that to the increased information flow we have available today. EVERYTHING happens quicker than it did 80 years ago. Markets spike and crash much more rapidly. Historically, recessions lasted years – now they are over in months.
>> The economy is not in bad shape
I follow Bill Conerly’s “Businomics” blog – even bought and read his book – and I think Bill makes a strong case for this as well.
>> Seattle vs. NV
I’ve made this point before, but Seattle has had – and will likely continue to have – growth in the kind of jobs that pay the salaries (and options, and bonuses) that support $1mm housing. Nevada, absent the gaming and entertainment industries (where the high incomes are highly skewed) is basically a low-paid service sector. Phoenix…well, I think we can all see that there’s nothing fundamentally behind their economy.
>> frustrated blog readers
I see a couple different manifestations of frustration here. The first is over local market conditions which are either depressed too much / not enough depending on the individual’s POV – with no in-between. Face it, everyone here is pulling for prices to decline more (most likely renters) or increase (homeowners). Mindless cheering for either outcome doesn’t really help anyone, but relevant insights on any aspect of this situation might help those who listen to better predict the future.
The other form of frustration I see arrises from an inability to convince other blog readers that a particular POV is the most correct. Frankly, I don’t see any value in trying to convince someone to switch their positions.
Matthew » May 31, 2008 at 9:21 am
The economy is great as long as you don’t have to fill your car with gas or go grocery shopping…..
Does RAL work for CNBS or something? Give this guy a pair of pom-poms!
Lionel » May 31, 2008 at 9:25 am
“The US economy is not in bad shape, we are not headed into a recession or depression. ”
Hmmm, who to believe, RAL or Warren Buffet, who thinks the recession will be long and deep? Tough call.
AndyMiami » May 31, 2008 at 9:33 am
Keith // May 31, 2008 at 9:17 am
>> The Economist story
Yes, the rate of change is higher than during the Depression, but I attribute that to the increased information flow we have available today. EVERYTHING happens quicker than it did 80 years ago. Markets spike and crash much more rapidly. Historically, recessions lasted years – now they are over in months.
Information flow certainly accelerates movements of capital. Henry Kissinger was quoted this month..
“For speculative capital, nimbleness is the essential attribute. Rushing in when it sees an opportunity and heading for the exit at the first sign of trouble, speculative capital has too often turned upswings into bubbles and downward cycles into crises”
Not bad for an old time conservative. The current downward pressure on house prices and how fast they have come down are a result of CREDIT BUBBLE BURST. The unprecedented increase in home prices, including Seattle, was fueled by easy credit – stated income loans with teaser rates. Traditional credit analysis was simply thrown out the window. Now, the pendulum has moved back to traditional lending standards which eliminates 1/3 of potential buyers.
Go to RealtyTrac and check out the rapid increase in Seattle foreclosures. We are not California or Florida, but when I see so many homes in Bellevue in some stage of foreclosure, then even those high paying jobs cannot stop the continuous drop in home values.
[troll] » May 31, 2008 at 10:11 am
Hmmm, wh t blv, RL r Wrrn Bfft, wh thnks th rcssn wll b lng nd dp? Tgh cll.
…………………………..
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Jst tk stk n Krft.
f t’s gnn b lng nd dp why dsn’t h wt fr bttr dl?
t’s sy fr hm t sy h ws wrng bt th rcssn whl hs shrhldrs r prftng frm hs qstns.
ntrstng, n?
[troll] » May 31, 2008 at 10:26 am
ntrstng st. Wht th Bg Bys r byng. vn Grg Srs byng p S qts! Yh, thy tlk rcssn, y dmp, thy by!
< hrf="http://www.grfcs.cm/StckBy.php?GrNm=Grg+Srs" rl="nfllw">http://www.grfcs.cm/StckBy.php?GrNm=Grg+Srs
Chck t Bffts nd thr’s bys s wll.< hrf="#" clss="rplyt" nclck="rplyt('49182','∓#91;trll∓#93;','64'); rtrn fls;">Rply – < hrf="#" clss="qt" nclck="qt('49182','∓#91;trll∓#93;','ntrstng st. Wht th Bg Bys r byng. vn Grg Srs byng p S qts! Yh, thy tlk rcssn, y dmp, thy by!\r\n\r\nhttp:\/\/www.grfcs.cm\/StckBy.php?GrNm=Grg+Srs\r\n\r\nChck t Bffts nd thr\'s bys s wll.','64'); rtrn fls;">Qt
alex » May 31, 2008 at 10:40 am
Yesterday, I mentioned about the “500k limit” being broken, with this 2200sqft house selling at 475k:
http://www.johnlscott.com/propertydetail.aspx?GroupID=66968273&ListingID=31920260
And today, another house, identical to the one above, and just 1 block away, has come on the market for 460k:
http://www.johnlscott.com/propertydetail.aspx?GroupID=66997722&ListingID=31956895
Take that, Rentersarelosers!! :)
And Ray, the only thing better than today’s Gems… is next month’s Gems!! :)
economist » May 31, 2008 at 11:00 am
Just took a stake in Kraft.
If it’s gonna be long and deep why doesn’t he wait for a better deal?
Ever hear of “inferior goods”?
http://en.wikipedia.org/wiki/Kraft_Dinner
alex » May 31, 2008 at 11:15 am
Yesterday, I posted about a 2200sqft Eastside house that came up for 475k, showing that as a sign that the “500k limit” is broken.
Today, an identical house in the same neighborhood came up for 460k!! Now that’s some nice action – spread the news!
Lionel » May 31, 2008 at 11:18 am
“Just took a stake in Kraft.”
Hard to imagine commodity prices rising. He’s just being smart, targeting a company that produces cheap food when grocery prices are rising rapidly. I don’t see him buying real estate.
LUC » May 31, 2008 at 11:22 am
RAL,
Step back and look at what you just wrote. Kraft is a food and beverage company. There is currently inflationary pressure on food prices. That’s why Buffet is a smart investor. All stocks don’t react the same way during a recession, especially stocks that are not subject to discretionary spending.
economist » May 31, 2008 at 11:24 am
While Buffet talks recession he is still buying.
Just took a stake in Kraft.
http://en.wikipedia.org/wiki/Kraft_Dinner
http://en.wikipedia.org/wiki/Inferior_good
SLU_Renter » May 31, 2008 at 11:26 am
57 & 58 I agree with your assessment. I’m not planning on buying for at least 1 more year. My wife wants something badly so we can start a family. We moved over here from the east coast, and own three properties, pre-bubble (currently being rented). So, yes we can afford to buy something but why bother. (We can easily put down a $200K down payment by cashing out some stock.) But we’d lose it in buying a house so I’d rather keep it diversified in the stock market, Asia, ,Latin America (Brazil), Europe, and some U.S. although I am skeptical of the current run. I think after the elections we’re going to be headed back down as people start to realize things aren’t going to be as rosy even after a newly elected president and it will be hard for us to change course.
Take a look at this chart. Another 1000lb gorilla is going hit the housing market in 2010-2011, when the options adjustable rate and Alt-a resets. It’ll be like the 1-2 punch. The 1st punch, is the subprime mess, which may have staggered the economy and lowered housing and we may have survived it (still too soon to tell), but the 2nd punch may put the U.S. econ and housing on the floor.
Both my wife walk downtown to work. We love it. Not only is it healthy to walk 1- 1.5 miles in one direction a day. But, we fill up our gas tanks every 4-5 weeks.
http://photobucket.com/albums/f53/midtowng/optionarm.gif
LUC » May 31, 2008 at 11:27 am
RAL,
Step back and look at what you just wrote. Kraft is a food and beverage company. There is currently inflationary pressure on food prices. All stocks don’t react the same way during a recession, especially stocks that not subject to discretionary spending. That’s why Buffet is a smart investor.
whats my name » May 31, 2008 at 11:32 am
“This is exactly what we saw in the rest of the country six to nine months ago. ”
Really? Is that what we saw in SD six to nine months ago? In Miami? In NYC? In Charlotte? Well, OK Pat Lashinsky. I know the analytic minds on SB wouldn’t miss a sweeping and gross misstatement of the facts from a Realty executive in the MSM just because the tune was the right one.
Tim, it’s time to adjust the offset period in your graph.
thelongwait » May 31, 2008 at 11:59 am
alex wrote:
dude, that house is about the same commute distance as from Renton. It’s on Eastside alright.
whats my name » May 31, 2008 at 12:01 pm
Great chart SLU-Renter. You will notice more resets in 2008 than in 2007, yet we hear much less about it . That is because in 2007 indexes had moved higher resulting in payment increases. In 2008 the indexes are lower, resulting in payment decreases. Who knows where they will be in 2010.
LUC » May 31, 2008 at 12:18 pm
Interesting site. What the Big Boys are buying. Even George Soros buying up US equities! Yeah, they talk recession, you dump, they buy!
http://www.gurufocus.com/StockBuy.php?GuruName=George+Soros
Check out Buffets and other’s buys as well.
______________________________________________________________
One company is Portuguese, Foster Wheeler is international, the telecom listed is Russian, one is a Canadian oil and gas company and I do see a discount retailer (Walmart). Do your research before posting!!!
SLU_Renter » May 31, 2008 at 2:09 pm
Whats my name, thanks. Yeah, we (my wife and I) aren’t anti-owning a home. But, the chart is pretty scary because it looks like another wave may hit in ~2 years. (No one knows what the future will hold, but being patient never hurt.) There is a lot to be said about having your own place, especially when you go from owning to renting, and as both of us get older we may take the plunge because we really want to have kids before it is too late (early – mid 30s).
We are keeping our eyes and ears open as we are still discovering all the neighborhoods around Seattle. West Seattle is a place we really like. We are not looking to catch the bottom, but at the same time we don’t want to put down a huge down payment that took years of hard work to earn only to see it evaporate.
Also, I just can’t see myself locking up a huge chunk of money that is not very liquid during uncertain times. My ideal mortgage would be $2000 or less with PITI which would be ~350K house + 20% down. I don’t think people should be paying more than 20% of their AGI on homes. Especially if a spouse loses their job because of a down turn in the economy, the other can take care of the payments. But in this current Seattle market that is pretty unrealistic, so we are waiting on the sidelines as it is cheaper to rent than to own.
It will also be very interesting to see what happens as the 10year note starts moving up as I understand that the 30 year fixed is based off of that. Will that mean less buyers? or will that mean people will be able to afford less house since more money goes towards interest than principal? The chart below shows that we could potentially see another 1/2 point increase on the 30year which means a move from the current 6.02% rate to 6.52%. This is all speculative of course but I think the 30 year fixed rate is going to rise even more as we are and have been at historic lows.
http://stockcharts.com/c-sc/sc?chart=$TNX,uuh,awaclyyaypb40!f][vc60][iue6,12,9!lj[$spx]]
SLU_Renter » May 31, 2008 at 2:21 pm
LUC, very true. During times of uncertainty, smart investors turn to defensive positions by buying utilities, food and consumer staples. It is strange that tobacco, alcohol and drugs (prescription that is) also does well. But I guess when people are depressed or stressed they turn to their vices more often then not. I doubt smart investors such as Warrern Buffet, Soros, etc are buying up the the housing index ($HGX) through ETFs or Mutual Funds nor would t hey be buying home builders either.
denismurf » May 31, 2008 at 3:20 pm
Here’s an op ed on the housing market from the weekend Financial Times. It makes a pretty reasonable case that price trends in housing, once established, will stay that way for a long time. Anybody else have a comment on it? http://www.ft.com/cms/s/0/d0dccfa2-2e6e-11dd-ab55-000077b07658.html?nclick_check=1
alex » May 31, 2008 at 3:37 pm
[thelongwait]
dude, that house is about the same commute distance as from Renton. It’s on Eastside alright.
===========
There’s no comparing Woodinville with Renton – but that’s not the point. Compare those two houses with similar houses around them for sale, and notice how they are clearly avid sellers driving the market down, where it belongs.
rose-colored-coolaid » May 31, 2008 at 3:56 pm
#27 Rentersarelosers,
I respect the fact you hold much different opinions than the majority of the posters on this site, and I am glad we have some “contrarians” who post here. I know this is an invalid rebuttal to the many positions you espouse. I also recognize that what I am about to do is an argumentative fallacy, but here goes anyways.
As far as I can tell, you sir are mostly wrong and entirely an ass.
#59 Keith
Surprisingly, this is not so. Many people on this site have sat at the sidelines, saved up six-figure down payments, and are eager and ready to dive in when the time is right. I, for example, could jump into a $500k home tomorrow if it suited me. The problem is that I am 100% certain prices will be lower tomorrow and the next day and the day after that. I’ve worked hard for that money and don’t want to flush it down the drain. Am I rooting for falling prices? Sure, I’d like to get more home for my money. But overall I can get a home I’d be happy with at todays prices, I’m just waiting for some signs that the most catastrophic price declines are behind us. Frankly, we aren’t there yet.
If this sounds like cheerleading, I apologize. Still, here’s one vote that wouldn’t mind price stabilization.
————————————————————————
There has been some debate whether or not this article is even news worthy. It seems to me that you certainly cannot use it to predict the future. However, it is noteworthy and probably newsworthy that someone with detailed information in many markets is predicting that Seattle is only months away from a freefall. Further, it is significant that his assessment is based on the same sales/inventory numbers that Tim has focused attention on at this site, and which many MSM outlets have largely ignored.
Face it, Tim’s a person like any other. A lot of his research and predictions are turning out to be remarkably accurate. Give him a break, and let him bask in this just a little bit.
Alan » May 31, 2008 at 4:33 pm
Let’s consider a hypothetical buyer. He is married with a child, earns $100k a year, and has saved $100k that he is willing and able to put as a down payment on a house. Also he works at the main Microsoft campus in Redmond. He would prefer to have a short commute.
RAL, what do you suggest he buy today?
[troll] » May 31, 2008 at 6:26 pm
80 rs-clrd-cld // My 31, 2008 t 3:56 pm
#27 Rntrsrlsrs,
rspct th fct y hld mch dffrnt pnns thn th mjrty f th pstrs n ths st, nd m gld w hv sm “cntrrns” wh pst hr. knw ths s n nvld rbttl t th mny pstns y sps. ls rcgnz tht wht m bt t d s n rgmnttv fllcy, bt hr gs nywys.
s fr s cn tll, y sr r mstly wrng nd ntrly n ss.
…………………
Rs clrd Cld, m n vry gd cmpny hr.
…………………..
81 ln // My 31, 2008 t 4:33 pm
Lt’s cnsdr hypthtcl byr. H s mrrd wth chld, rns $100k yr, nd hs svd $100k tht h s wllng nd bl t pt s dwn pymnt n hs. ls h wrks t th mn Mcrsft cmps n Rdmnd. H wld prfr t hv shrt cmmt.
RL, wht d y sggst h by tdy?
………………………….
dn’t knw th rl stt mrkt t ll n Rdmnd, nd hvn’t rntd n bt 28 yrs, dn’t vn cnsdr tht s n ptn fr myslf.< hrf="#" clss="rplyt" nclck="rplyt('49202','∓#91;trll∓#93;','83'); rtrn fls;">Rply – < hrf="#" clss="qt" nclck="qt('49202','∓#91;trll∓#93;','80 rs-clrd-cld \/\/ My 31, 2008 t 3:56 pm \r\n\r\n#27 Rntrsrlsrs,\r\n rspct th fct y hld mch dffrnt pnns thn th mjrty f th pstrs n ths st, nd m gld w hv sm &crc;cntrrns&crc; wh pst hr. knw ths s n nvld rbttl t th mny pstns y sps. ls rcgnz tht wht m bt t d s n rgmnttv fllcy, bt hr gs nywys.\r\n\r\ns fr s cn tll, y sr r mstly wrng nd ntrly n ss.\r\n.....................\r\n\r\nRs clrd Cld, m n vry gd cmpny hr.\r\n.......................\r\n\r\n\r\n\r\n81 ln \/\/ My 31, 2008 t 4:33 pm \r\n\r\nLt&crc;s cnsdr hypthtcl byr. H s mrrd wth chld, rns $100k yr, nd hs svd $100k tht h s wllng nd bl t pt s dwn pymnt n hs. ls h wrks t th mn Mcrsft cmps n Rdmnd. H wld prfr t hv shrt cmmt.\r\n\r\nRL, wht d y sggst h by tdy?\r\n...............................\r\n\r\n dn\'t knw th rl stt mrkt t ll n Rdmnd, nd hvn\'t rntd n bt 28 yrs, dn\'t vn cnsdr tht s n ptn fr myslf.\r\nf rntng nc 3 br hm mght cst $2 k\/mnth sms t m h wld b bttr ff byng. s fr s ffrdblty, vryn hs dffrnt spndng pttrns nd prrts, s dffclt t gg bt wld ssm 400k hm wld nt b t f th qstn.','83'); rtrn fls;">Qt
f rntng nc 3 br hm mght cst $2 k/mnth sms t m h wld b bttr ff byng. s fr s ffrdblty, vryn hs dffrnt spndng pttrns nd prrts, s dffclt t gg bt wld ssm 400k hm wld nt b t f th qstn.
softwarengineer » May 31, 2008 at 7:53 pm
SLU_Rentor
Here’s some great financial advice from SWE:
Sell those foreign stocks, see the International (I & S) stock averages, parenthesis numbers are negative losses:
http://www.tsp.gov/rates/returns-tsp.html
Take your stock money out and pay off any principle owed on your rentals, NOW. The 6% or so interest ya pay for principle is really like 8-9% investment interest before taxes.
I don’t see stocks going up for years. I’m paying off a real estate principle too, I kept it to offset my standard deduction for deducting property tax and charities; its a joke with 3% CDs now, let alone negative international stocks. The Buffets know when and what to buy, us little guys will be flattened, time to GET OUT OF DEBT fast!
You might want to move out of the city, even if you have to drive a bit. Get close to a wholesale grocer like WINCO or Costco, the money saved on food there is like 30% savings over major grocery stores….there’s no wholesalers in downtown Seattle and Fred Meyer is high priced like Safeway too. [even with a few sales items thrown in the cart] Food is much worse than gas in price per month and tied directly to gasoline increases too, even just feeding you and your wife, especially if you like exotics [fresh fruits and vegetables].
faster » May 31, 2008 at 8:25 pm
>You might want to move out of the city, even if you have to drive a bit. Get close to a wholesale grocer like WINCO or
>Costco, the money saved on food there is like 30% savings over major grocery stores….there’s no wholesalers in
>downtown Seattle
Costco is just south of downtown on 4th – just a couple streets over from 99. And it’s a heck of lot less crowded the the Issaquah Costco. There’s also stores like Uwajimaya, and Big John’s PFI to get the less common things you might want.
Alan » May 31, 2008 at 8:37 pm
RAL,
I rented a 3/2 house for $1800/month for a year. Zillow estimates it at $600k down from a peak of $670k. Personally, I found $1800/month too expensive and moved to a smaller and cheaper place. I put $1800 as my upper limit on housing expenses — purchased or rented.
A quick look at craigslist found some 3/2 houses near Microsoft that rent for around $2k with a value of $400k, but there are also houses that rent for less. I also found a $1M house that rents for $2400 and a 3 bedroom that doesn’t list the address or bathrooms for $1400.
What is the monthly nut on a $400k house with a $100k down payment? Finance $300k at 6% comes to $1500 in interest a month. 1% annual taxes adds another $300. Generously add another $100/month for maintenance that is included in rent. You also lose the investment opportunity of the $100k down. Say you can earn 6% after taxes and that is another $500/month. But then most people don’t really consider the opportunity cost. Personally I see that opportunity cost quite accutely.
But why put $100k of capital into a falling market? Especially one that moves as slowing as real estate? Real estate isn’t immune to to laws of supply and demand. As long as inventory:sales is higher than it was in other depreciating markets then it will continue to depreciate in this market.
I plan to buy at some point. Now isn’t the time.
[troll] » Jun 1, 2008 at 8:03 am
ln,
Y hv shwn tht byng 400k hm s pssbl fr y vs rntng.
hv nvr vn cnsdrd “pprtnty cst” f th dwnpymnt. gss tht’s whr my vws dffr cnsdrbly frm th mjrty hr. lwys cnsdrd th dwnpymnt s n nvstmnt n my lfstyl, n ssrnc tht wldn’t hv t mv n smn lss whm, n pprtnty t cstmz my lvng nvrnmnt t my prsnl nds, nd n ssrnc tht my csts r bsclly fxd t tdys nmbrs. Th lngr trm (7+ yrs) grwth n qty rlzd thrgh lngr trm rl stt pprctn s wll s prncpl rdctn mr thn tks cr f th “pprtnty cst”. 5% ncrs n 400k hm s 20k. t wld tk 2.5 yrs wth yr 6% tx fr rt t chv ths nd by thn yr rnt wld hv ncrsd by cpl hndrd mnth vs th mrtgg rmnng th sm. wld rcmmnd tht y lk t 10+ yr chrt n Sttl hm prcs t gn sm prspctv n pprctn. Th crrnt dwntrn n prcs s bt mnr pllbck n th chrt.
Tht sd, (s hmwnr) t’s mprtnt t b dvrsfd nd s yr ncm grws th xcss gts nvstd n thr vhcls lk stcks, cd’s tc. g bck t my prvsly pstd stts n Nt Wrth f hmwnrs vs rntrs shwng (f rmmbr crrctly hmwnr n th 80k+ ncm brckt hs n vrg nt wrth f 460k+ vs rntr rnd 87k.) Ds ths rng ny blls? t’s nt chvbl vrnght ,nd t pprs th crrnt gnrtn f hmbyrs wnt t ll, rght nw, srvd p n plttr.
BTW dn’t knw whr y cn gt 6% ftr txs n 100k rsk fr, pls dvs. wld lk t prk sm mny n tht.
f t sn’t rsk fr, wll y cld vry wll b fcd wth dcln n prncpl ffctvly ttlly ngtng th pprtnty cst rgmnt.< hrf="#" clss="rplyt" nclck="rplyt('49211','∓#91;trll∓#93;','87'); rtrn fls;">Rply – < hrf="#" clss="qt" nclck="qt('49211','∓#91;trll∓#93;','ln,\r\n\r\nY hv shwn tht byng 400k hm s pssbl fr y vs rntng.\r\n\r\n hv nvr vn cnsdrd \&qt;pprtnty cst\&qt; f th dwnpymnt. gss tht\'s whr my vws dffr cnsdrbly frm th mjrty hr. lwys cnsdrd th dwnpymnt s n nvstmnt n my lfstyl, n ssrnc tht wldn\'t hv t mv n smn lss whm, n pprtnty t cstmz my lvng nvrnmnt t my prsnl nds, nd n ssrnc tht my csts r bsclly fxd t tdys nmbrs. Th lngr trm (7+ yrs) grwth n qty rlzd thrgh lngr trm rl stt pprctn s wll s prncpl rdctn mr thn tks cr f th \&qt;pprtnty cst\&qt;. 5% ncrs n 400k hm s 20k. t wld tk 2.5 yrs wth yr 6% tx fr rt t chv ths nd by thn yr rnt wld hv ncrsd by cpl hndrd mnth vs th mrtgg rmnng th sm. wld rcmmnd tht y lk t 10+ yr chrt n Sttl hm prcs t gn sm prspctv n pprctn. Th crrnt dwntrn n prcs s bt mnr pllbck n th chrt. \r\n\r\nTht sd, (s hmwnr) t\'s mprtnt t b dvrsfd nd s yr ncm grws th xcss gts nvstd n thr vhcls lk stcks, cd\'s tc. g bck t my prvsly pstd stts n Nt Wrth f hmwnrs vs rntrs shwng (f rmmbr crrctly hmwnr n th 80k+ ncm brckt hs n vrg nt wrth f 460k+ vs rntr rnd 87k.) Ds ths rng ny blls? t\'s nt chvbl vrnght ,nd t pprs th crrnt gnrtn f hmbyrs wnt t ll, rght nw, srvd p n plttr.\r\n\r\nBTW dn\'t knw whr y cn gt 6% ftr txs n 100k rsk fr, pls dvs. wld lk t prk sm mny n tht. \r\n\r\nf t sn\'t rsk fr, wll y cld vry wll b fcd wth dcln n prncpl ffctvly ttlly ngtng th pprtnty cst rgmnt.','87'); rtrn fls;">Qt
SeattleMoose » Jun 1, 2008 at 8:04 am
I predicted 2 years ago that Seattle prices would fall an average of about 33% from peak (20% to 50% range) depending on how much “froth” accompanied the departure from reality. Traditionally SALARIES determine home prices and now that lending practices are returning to traditional upfront affordability requirements, the market, which was fueled by dodgy loans, flippers, and CA equity locusts, has nowhere to go but back to where it should have been all along.
I stand by my prediction and as such, we have a long ways to go. We are about 1.5 years behind CA and their markets are in free-fall. In fact it could even be worse than my prediction as I did not anticipate the higher gas/food prices which reduce the amount of money available “upfront” to qualify for and pay a mortgage.
Still not sure if the gas/food run-up is purely demand or also fueled by speculators who are always hunting for, and hence causing, the next speculative bubble. I suspect more of the latter. If the recent jump is just “demand” than my predictions are actually conservative.
alex » Jun 1, 2008 at 10:04 am
[Alan]
I put $1800 as my upper limit on housing expenses
———–
Dang, I wish most of the people who earn up to 100k thought exactly like Alan does! That’s my line of thinking too! And if everyone restrained themselves to this, that restraint alone would keep the market sane!
But no, somehow, somewhere, due to some crazy sense of competition (envy?), it became okay to spend $3000 a month on living expenses – or to sign a contract that would lead to that kind of monthly payment in a few years.
I don’t know about you guys, but I’m personally resentful with people who allowed this to happen. People who mortgaged themselves beyond their limits drove the markets up, and reduced *my* opportunity to live in a nicer house at reasonable expenses.
Keep those foreclusures coming!
jon » Jun 1, 2008 at 10:56 am
“reduced *my* opportunity to live in a nicer house at reasonable expenses.”
Reminds me of this: http://www.theonion.com/content/node/38644
george » Jun 1, 2008 at 12:43 pm
DenisMurf @ 29: Thanks for the link to that article. Now that the market has turned, the forced sales and panic sales will follow. Who knew the Seattle market and the UK market had so much in common?
The article reminds me why the real estate industry is shooting themselves in the foot every time the say this is a great time to buy. It’s still a very risky time to buy (although not quite as bad as last year).
What real estate agents should be saying is it’s a very smart time to sell. You can still get a fair price near the peak. If you wait to sell, then you risk finding out that irrational market momentum goes both ways.
As it is a lot of sellers are chasing this market down rather than pricing right.
Sellers need to wake up and smell the coffee. Everything on the market should be priced 5 percent below where it is right now.
Look at it this way: sellers right now want a buyer to take over their risk of a downturn and we haven’t even felt the aftershock from a national recession that the FED can’t solve due to inflation. Can anyone honestly say we won’t see a big drop here of 20 percent plus, followed by a long period of a flat market?
That 20 percent downpayment of 100K buyers made last July could easily be wiped out by next July. Depending on how this plays out nationally with the economy, people who buy near the top could still be underwater a decade from now.
Sellers need to get out now before it’s too late.
Alan » Jun 1, 2008 at 12:45 pm
I don’t quite make $100k and $400k is the bottom of the market. If I can just barely afford the bottom of the barrel then what about the 75% of area household that can’t afford that?
Not according to this article: http://www.nytimes.com/2006/03/05/magazine/305tulips_shorto.1.html?ex=1299214800&en=bb36dc2d13b1c24f&ei=5088&partner=rssnyt&emc=rss
Over the long term, real estate basically tracks inflation. The huge run ups of the past few years have been due to “inflation” caused by loose and easy credit. Maybe that inflation will stick around. Maybe it will revert. If it sticks then everything else will catch up to housing prices — including eventually salaries.
I already get $10500 as a standard tax deduction. If I pay $18000 a year in mortgage interest then I am really only getting $8000 a year tax free. My tax savings are only around $2400 a year. That means $15600 is down the toilet just as good as rent. I’m paying $13800 in rent right now for a 2 mile commute and 1200 sqft. There is nothing in the market that can compare to that right now.
Every dollar I put into low yield real estate is a dollar that I cannot move between more liquid investments that I believe are higher yield.
So is a 5% loss. That is a lot of saving and sacrificing when luck doesn’t give you a ride on the real estate equity train.
I can leverage my self up in the stock market by opening a margin account if I really want that sort of risk.
Cargo cult mentality: http://en.wikipedia.org/wiki/Cargo_cult
Buying a house will not make me rich. Being rich will allow me to buy a house. (where “rich” is defined loosely as “well off”)
The stock market has historical gains of 10% over the long run. Since business actually creates value, a 10% is realistic over something like gold or real estate (real estate can be part of a business that returns 10% ). Granted you have to be in it for the long term. Park your money in a low cost index fund and let me know how you did in ten years.
Michael » Jun 1, 2008 at 2:57 pm
I like RAL comments. It gets the message board going and I want to hear opposing points of view. I totally disagree with just about everything he says but my view is the real estate boom and busts are more connected to the new financial engineering on wall street than local factors.
Andrew » Jun 1, 2008 at 3:42 pm
Any opinions on this line of reasoning? ~
As values decrease, the pool of buyers may actually very well decrease as well, due to diminishing and finally evaporated equity that would normally be used by this group to ‘buy up’ — With this aspect factored in, along with tighter lending standards, inflation ramping up even further and other various factors outlined here before, it seems to me that as prices fall, all of the internal/external factors are assembling themselves to amplify the downward spiral.
As it becomes apparent what is happening, regardless of the # of ‘renters’ waiting to purchase with diligently nurtured savings accounts [cash] that may very well qualify for the standard 20% down payment – what % of these folks are going to be aggressive about a home purchase, regardless of the immediately preceding discounts (10% – 30%?) they may be seeing?
As one of these ‘renters’ waiting and planning, my disposition may be harder to convince at this point in the near future, despite prices being much more attractive. What will the economy and general sentiment indicate as this time (3-9 mos.?)?
…just speculating, and especially interested in the legitimacy (or not) of the 1st portion.
Seattle Real Estate: Spare Us Your Wild Speculation « Surrounded By Water: A Mercer Island Blog » Jun 1, 2008 at 5:11 pm
[...] 1, 2008 · No Comments ZipRealty’s CEO predicted the Seattle market is the next to crash, according to Seattle Bubble Blog. That prediction would be scarier if he had cited data that [...]
magnolia44 » Jun 1, 2008 at 5:32 pm
lol you guys are funny, this thread has turned into quite the animal.
shawn » Jun 1, 2008 at 6:49 pm
I really do find the bubble mentality interesting. It makes sense though. People see an opportunity to make some good money. After a while it gets out of control and then there is a shift where everyone who was irrational before gets wise and the bubble bursts. This tends to happen when the commodity gets so expensive that no one can afford it anymore. Now I find it interesting to analyze those who are on the fringes. They refuse to accept the reality that the rest of the previously irrational folk now accept. They keep holding on to the rehetoric that initially got the bubble going, the keep parroting the stuff that people used to spout a while back and stuff that people used to believe a while back. I can’t help but wonder if they are just left holding the bag? They bought in at the end, and have a very delusional hope that if they just say it long enough loud enough the bubble will reoccur. Even when all indicatior and history are against them, they hold on. Reminds me of folk that could have taken a few million dollars in losses, and kept a few million during the dot com bust, but they just couldn’t let go, and in the end they had nothing. RAL, what motivates you? What will it take for you to admit reality? Will you admit that there was a dot com bubble and that it burst a while back?
mike mcc » Jun 1, 2008 at 7:12 pm
Scotsman, # 34, you don’t think a greenbelt is worth a premium? I certainly do.
The lower priced house looks as if it could just reach thru the windows and grab a cup of coffee from the neighborh, the higher priced home looks like it’s got some real privacy. Privacy is a valuable commodity out on the ghettos of the plateau … those tiny lots make me cringe.
Alan » Jun 1, 2008 at 7:15 pm
“Buying up” becomes more difficult as prices go up. If prices are falling then people are more likely to be able to move to a more expensive place.
This is not true if someone has a property in a desirable location and is willing to move to a less desirable location. In that case, his property might have appreciated more than the less desirable location and he can move to a large place more easily.
My theory about bubbles says that speculator demand is positively correlated to a time weighted summation of price changes. The longer prices go up the more speculators come into the market. The longer prices go down, the more speculators leave the market. Speculator demand will go down in a falling market, but it is not clear how much of the current demand is due to speculators.
Michael » Jun 1, 2008 at 7:19 pm
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If you have so much money quit using SPAM SEO tactics in your links. Give me a break you start the link with SEATTLE REAL ESTATE? Could it be that you are trying to SEO your site from the term Seattle Real Estate from Seattle Bubble’s high page rank? If you want to advertise then buy it! How about I fill out a Google PR complaint report for SPAM tactics. Then see how long it takes your blog to get rank.
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[troll] » Jun 1, 2008 at 9:11 pm
plgz fr sng cps, bt mny hr, fl wld ls th rythm f ths cht s t wh sd wht f ddn’t. RL
……………
ln // Jn 1, 2008 t 12:45 pm
Y hv shwn tht byng 400k hm s pssbl fr y vs rntng.
dn’t qt mk $100k nd $400k s th bttm f th mrkt. f cn jst brly ffrd th bttm f th brrl thn wht bt th 75% f r hshld tht cn’t ffrd tht?
…………………..
S Y LD BT YR NCM, HW FR R Y WY FRM 100K, 50% ? R Y JST WNNB HMWNR?
Th lngr trm (7+ yrs) grwth n qty rlzd thrgh lngr trm rl stt pprctn s wll s prncpl rdctn mr thn tks cr f th “pprtnty cst”.
Nt ccrdng t ths rtcl: < hrf="http://www.nytms.cm/2006/03/05/mgzn/305tlps_shrt.1.html?x=1299214800∓n=bb36dc2d13b1c24f∓=5088∓prtnr=rssnyt∓mc=rss" rl="nfllw">http://www.nytms.cm/2006/03/05/mgzn/305tlps_shrt.1.html?x=1299214800∓n=bb36dc2d13b1c24f∓=5088∓prtnr=rssnyt∓mc=rss
Y S N RTCL FRM MSTRDM T BCK P YR RGMNT?
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STTL RL STT HS BN RSNG T BT 8%+ PR YR FR 10 YRS NW, NFLTN RNNNG RND 2-3%, TRY GN.
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Y WLL B LVNG N HM DBL TH SZ F Y BY. CMPR PPLS T PPLS, WHTS TH RNT N 2200 SQ FT HM. Y BBBLHDS TRY T PPLY P/ RTS T HM PRCS, WLL S YR LGC PRPRLY. WHY R LVNG N SHBX?
vry dllr pt nt lw yld rl stt s dllr tht cnnt mv btwn mr lqd nvstmnts tht blv r hghr yld.
5% ncrs n 400k hm s 20k.
S s 5% lss. Tht s lt f svng nd scrfcng whn lck dsn’t gv y rd n th rl stt qty trn.
Y R LKNG VRY SHRT TRM, LK T TH 10 YR CHRT GN N STTL RL STT.
cn lvrg my slf p n th stck mrkt by pnng mrgn ccnt f rlly wnt tht srt f rsk.
Y HVN’T GT TH BLLS.
g bck t my prvsly pstd stts n Nt Wrth f hmwnrs vs rntrs shwng
Crg clt mntlty: < hrf="http://n.wkpd.rg/wk/Crg_clt" rl="nfllw">http://n.wkpd.rg/wk/Crg_clt
PST WTH YR LT N LF?, YR RL NT WRTH LSS THN RNTR? FTR LL, Y LD BT YR NCM, PRBBLY LD BT YR DWNPYMNT S WLL.
Byng hs wll nt mk m rch. Bng rch wll llw m t by hs. (whr “rch” s dfnd lsly s “wll ff”)
Y WN’T B BL T CTCH P.
BTW dn’t knw whr y cn gt 6% ftr txs n 100k rsk fr, pls dvs.
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DN’T LCTR M BT TH STCK MRKT, MK TN F DGH SWNG TRDNG. F DN’T KNW WHT THT S :
< hrf="http://n.wkpd.rg/wk/Swng_trdng" rl="nfllw">http://n.wkpd.rg/wk/Swng_trdng
K SMRT GY, PLL P CHRT F TH S∓P 500, N TH PST 10 YRS Y R RGHT BCK WHR Y STRTD 10 YRS G N 1998, 0% NCRS N TH PST 10 YRS, YR TF WLD MRRR THT 0% GRWTH N 10 YRS. NW, PLL P THT CHRT N STTL RL STT. WHT HS BN TH BTTR NVSTMNT N TH PST 10 YRS?
Y WNN TLK GLD? BGHT GLD FND N 1995 T $6 BCKS/SHR, NW T $45. WHN DD BY?.
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mark » Jun 1, 2008 at 9:14 pm
“I really didn’t want to go here, but here are my thoughts.
We are in an Election year. Gloom and Doom is the Liberal mantra, unless they get elected after which all will be peachy. The Media is cooperating with this mantra as it sells newspapers.
If the economy was truly in such bad shape it would be reflected in the stock market. We are less than 10% off our all time highs on the broad S&P 500. If the economy is really headed for recession/depression don’t you think the big time investors would be pulling out in droves? After all, the markets look ahead roughly 6-9 months. From what I see this slowdown will be (is) short and shallow.”
RAL
Have you gotten in touch with reality lately?
Since GW’s first day in office:
DOW is up 539.02 or 4.265%
S&P is up 57.84 or 4.13%
NASDAQ is down 247.72 or -9.82%
Those are total returns the market has delivered for 7+ years. The less than 10% we are down sure looks juicy compared to the abysmal returns that we’ve gotten so far.
[troll] » Jun 1, 2008 at 9:24 pm
Mrk, gr wth y. Rl stt hs bn bttr nvstmnt vr th pst 10 yrs.< hrf="#" clss="rplyt" nclck="rplyt('49243','∓#91;trll∓#93;','103'); rtrn fls;">Rply – < hrf="#" clss="qt" nclck="qt('49243','∓#91;trll∓#93;','Mrk, gr wth y. Rl stt hs bn bttr nvstmnt vr th pst 10 yrs. \r\n wld ncrg y t lk t th bttm f th mrkt ftr 9-11 whn ttrbtng mrkt gns t GW. Whn h tk ffc w wr tnkng wth th dt cm bst, thn th 9-11 ttck. thnk th Fd hs dn dcnt jb gttng th cnmy bck n trck ftr 911.\r\nTh S∓mp;P 500 dbld frm 3rdQ 2002 t 2007.','103'); rtrn fls;">Qt
wld ncrg y t lk t th bttm f th mrkt ftr 9-11 whn ttrbtng mrkt gns t GW. Whn h tk ffc w wr tnkng wth th dt cm bst, thn th 9-11 ttck. thnk th Fd hs dn dcnt jb gttng th cnmy bck n trck ftr 911.
Th S∓P 500 dbld frm 3rdQ 2002 t 2007.
WaitingForSanity » Jun 1, 2008 at 9:55 pm
Are others noticing that builders are very willing to rent out their freshly built houses? A 799k asking price brand new house will rent for 3000/month in Woodinville. I have seen numerous other cases on the eastside.
Why is this happening? Why doesn’t the builder simply reduce the price and let the market clear?
economist » Jun 1, 2008 at 11:09 pm
I think the Fed has done a decent job getting the economy back on track after 911.
Are you joking? Creating the biggest asset bubble in history is “getting the economy back on track”?
The US should have just taken its lumps in 2001 and gotten back to a real economy, not a make believe one. The adjustment coming up, and there’s no way around it, is going to be a lot more painful.
alex » Jun 1, 2008 at 11:17 pm
WaitingForSanity, that is the scariest thing I’ve heard lately.
I’ve been counting on builders to drive the market down, because they are the ones that don’t need to make money on every transaction, as they win on the volume… if builders become “patient” like that, then we may live in this molasses mode for a while.
Alan » Jun 1, 2008 at 11:42 pm
If they rent for that much. I think we will see just how much demand there is for non-appreciating $3k monthly housing.
Peckhammer » Jun 2, 2008 at 6:49 am
“Real Estate has been a better investment over the past 10 years.”
Hogwash. That sounds like something a person who has difficulty counting might say. I’ve averaged 10% returns per year in a diversified mutual fund portfolio, after expenses (ignoring the first half of this year, of course). And that is basically from operating on auto-pilot; no granite counter tops installed, no sweat equity, and no interest payments.
NotaBull » Jun 2, 2008 at 9:05 am
“I’ve averaged 10% returns per year in a diversified mutual fund portfolio, after expenses.”
If we want to compare returns, you might want to tax your stock market returns as most of the gain on housing is tax free, in the majority of cases… I’m not an accountant, so am not going to put a tax rate on it, but perhaps take off 25%? So your return might be 7.5% long term… Still better than real estate which I think is something like 4 or 5% over the long haul.
Also, there are a lot of smart people out there saying that the years of 10% returns are over for quite a while. I think Buffet is strongly in this camp. So if we’re looking at 8% pre-tax (6% post tax) then this really isn’t far off housing.
Of course, there’s always a benefit to buying low(er), so I’m not saying “buy a house now”…
obelus » Jun 2, 2008 at 9:38 am
So let me ask the regular posters here a question: What do you consider a good deal regarding the price per square foot? It seems the general assumption of over $300 being too much. Anything below $200 is a deal?
Aaron Smothers » Jun 2, 2008 at 10:34 am
> Ben // May 30, 2008 at 11:47 am
> My Redfin search updates showed me some interesting stuff last night.
> The first thing was a whole lot of Buchan homes properties dropping
> 50k – 100k overnight
By any chance are any of these Buchan properties located on the Eastside?
AS
softwarengineer » Jun 2, 2008 at 10:49 am
HI MARK
Stocks are a good investment the last year? LOL
Negative losses are parenthises, I already gave you the URL above, but apparently your MSM (liberal?) Rosy Bush Economy brainwashing worked on you too well. Here’s the Government TSP conglomerate URL’s data (C= American Stocks, I & S= International Stocks, G= money markets and F= Bonds):
Returns & Share Prices Current Returns
G Fund F Fund C Fund S Fund I Fund
May 2008 0.32% (0.74%) 1.27% 4.88% 1.09%
Year-to-date 1.47% 1.34% (3.80%) (0.05%) (2.87%)
12 Month 4.36% 7.09% (6.68%) (5.27%) (2.28%)
The bond fund went up almost 8%, but rises when the feds cut interest rates [that's over I predict, because of hidden horrifying inflation by the way].
All Types of Stocks generally collapsed -2-7% the last 12 months and I predict the uncontrolled bleeding will go on for years too.
What’s this got to do with your alleged liberal media brainwashing us before the election?
I don’t like liberal or conservative labels anymore, they’re totally meaningless. We lost our environmental liberal definition a long tome ago when the Seattle area’s population went up 400% since 1990 and the alleged liberals think its liberal?
Off topic a bit, what do you guys think about Mayor Nickels’ 100 mpg Prius? The one that goes 30 miles [before the nicads get weak after a couple years of use], but requires 4 hrs charge, or it goes back to just a 1100CC motorcycle engine lugging a heavy car [approx 20 mpg with weak/dead batteries]. Mayor Nickels touted after 7 years the cars’ $10K options “pay for them selves”. Did that unscientific politician ever add in the cost of dead nicad battery replacement every two years (approx $3K) and the cost of electricity to charge the thing for 4 hours so you could drive it an hour? LOL
WaitingForSanity » Jun 2, 2008 at 10:57 am
Here’s an example of what I’m talking about
New construction priced at $839950 on Redfin http://www.redfin.com/WA/Kirkland/12023-NE-70th-St-98033/home/514286/nwmls-27025899
It’s also for rent on Craigslist for $3500
http://seattle.craigslist.org/est/apa/704644604.html
This doesn’t pencil out very well. Advice to builder: take the market rent of $3500, multiply by 150, price at $525000, sell for $500000.
mark » Jun 2, 2008 at 11:27 am
Hi Sowtwearengineer;
Sorry about the confusion. If you would have been following the thread a little closer you would have noticed that I was responding to RAL earlier post where he brought up the liberals are spreading doom and gloom, the stock market looks forward 6-9 months, and we are only down about 10% on the S&P from its all time high.
The reality of life is that since GW took office in Jan. of 2001, the markets as measured by the major indexes are up in the case of the DOW and S&P by a miniscule %4+ and the NASDAQ is still in the red, and that was of last friday. The markets are getting pounded again today. The “ONLY 10%” that the S&P is down in a year is a huge number compared to the paltry 4% return of the past 7 plus years. Thats the only point.
Sorry about the formatting. I hope you don’t lose any sleep over the fact that I didn’t put the losses in parenthesis.
Alan » Jun 2, 2008 at 11:40 am
obelus,
My first house in NC was $60/sqft. My condo in TX was $100/sqft. Seattle is going to have a premium. I don’t think there is an easy way to determine what that premium might be in the future.
[troll] » Jun 2, 2008 at 11:41 am
Mrk,
Th Bbblhds r ttmptng t “tm” th rl stt mrkt. Why dn’t thy s thr “fnncl gns” t tm th Stck mrkts? ftr ll th S∓P 500 DBLD frm 2002 t 2007.
Rsn: Thy cn’t pck bttm, nd thy stll cn’t ffrd Sttl hm prcs s th bst thy cn d s try t “Hckl ” th mrkt dwn.
vn Tm cn’t rs th $2500 msly bcks h’s lkng fr hr. Myb h shld lwr hs sk?
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Peckhammer » Jun 2, 2008 at 11:58 am
“If we want to compare returns, you might want to tax your stock market returns as most of the gain on housing is tax free, in the majority of cases…”
RAL said “investment” which would exclude your primary residence by definition. I am curious to know more about the class of real estate that is an investment and is not taxed. Please let me know so I can buy some of it. ;)
I’m not an accountant, so am not going to put a tax rate on it, but perhaps take off 25%?”
The current long term capital gains rate is 15% if I am recalling correctly.
Peckhammer » Jun 2, 2008 at 12:08 pm
“Still better than real estate which I think is something like 4 or 5% over the long haul.”
Does that 4 or 5% account for mortgage interest, taxes, insurance, maintenance, etc.?
Civil Servant » Jun 2, 2008 at 12:25 pm
Obelus @ #110 — It’s all subjective of course and it depends on what your preferences are (renovated kitchen, view, large lot at the expense of some square footage, etc.), but if you’re looking for subjective opinions then I concur that anything under $200/sf that meets your needs and is well built is probably a deal in today’s market. This could change! Here’s a fun game: go to Redfin and find a place you like in a neighborhood you like. Lower on the page, check out the ppsf for Nearby Similar Listings vs. that for Nearby Similar Sales. The latter captures sales over the last six months. As a test case, I just looked at 750-1250 sf houses in Ballard, and the two figures are $394 and $449 respectively. I know this is an extremely inexact science, and the more inexact the smaller the sample (insert additional flame-retardant disclaimers here) — it’s just a set of numbers I like to look at.
economist » Jun 2, 2008 at 12:30 pm
Mortgage interest is a portfolio cost, not a cost of the house. Suppose you borrow money to buy stocks. The interest you pay has nothing to do with the return on the stocks, which of course is the same for all shareholders regardless of how they paid for them. Likewise mortgage interest has nothing to do with the return on the house. It’s the return on a short position in fixed income, i.e. a loan.
Property taxes (not income taxes), insurance, etc are asset costs and should be subtracted to get the net return.
The reality of life is that since GW took office in Jan. of 2001, the markets as measured by the major indexes are up in the case of the DOW and S&P by a miniscule %4+ and the NASDAQ is still in the red, and that was of last friday
That’s in USD of course. If you measure them in real money (i.e. anything other than the USD or currencies pegged to it) they are down substantially.
Ben » Jun 2, 2008 at 12:38 pm
Aaron – yes, the discounting Buchan properties are on the Eastside.
Peckhammer » Jun 2, 2008 at 12:55 pm
“Mortgage interest is a portfolio cost, not a cost of the house.”
O.K., got it.
“Property taxes (not income taxes), insurance, etc are asset costs and should be subtracted to get the net return.”
I get the bit about income taxes not being figured in for determining net return, but are you saying portfolio costs are not factored in when calculating net returns?
thelongwait » Jun 2, 2008 at 1:22 pm
Ben,
You have a link or MLS# to one of those the discounted Buchan properties? Are they in Education Hills or Bothell?
Mercer Island blogger » Jun 2, 2008 at 3:00 pm
Michael (comment 100),
I’m surprised you think my blog is spam. I often cover real estate in my Mercer Island blog. Yesterday I spent about an hour writing a post, looking up related market information and making it relevant for my readers, Mercer Island residents. I try to offer a coherent opinion on our very local market. You’re free to disagree on the coherence of my thoughts on Mercer Island and its real estate market, but you’re wrong to assume it’s spam. If spammers spent as much time on each post as I and most neighborhood bloggers spend, they’d be very poor indeed. Speaking of money, I’ve never made a penny from my blog. So as a spammer, I’m a failure.
The title of the post reflected the post itself, which was a reaction to the comments of ZipRealty’s CEO on Seattle Real Estate. I guess I could have called it “Zimbabwe Real Estate: Spare Us Your Wild Speculation” but I feel that would have been confusing to my readers.
As a blogger I’ve seen plenty of comments that are spam. The viagra touts, link requests and “hi, great post- mysite.com” comments are pretty easy to identify. If a 500-word post with charts and data looks like spam to you, I wonder what you find to read.
deepcgi » Jun 2, 2008 at 3:04 pm
The big lie we are seeing right now in the media is that “the credit crisis is contained and unlikely to drag down the economy.” The derivatives market is still unwinding and bank failure rumors continue unabated. I see no impetus for the real estate market to stabilize or rebound. I’m one of the few who predicted more than 55% price drops in LA and San Diego and we are already pushing 30% in those areas. Seattle is going to lose 35% easily – probably closer to 45% – and then don’t expect a rebound for 7 to 10 years. The socialists will see to it that the blood is spread evenly over the entire society. In the end, renters may be the only ones free to live as they please.
economist » Jun 2, 2008 at 7:35 pm
I get the bit about income taxes not being figured in for determining net return, but are you saying portfolio costs are not factored in when calculating net returns?
They of course are factored in when computing the return of your portfolio, but not the returns of the individual assets.
Everyone gets a different return on their IRA, but everyone gets the same return on MSFT. Likewise the return on a house has nothing to do with financing. The financing is a separate asset (a short position).
Michael » Jun 2, 2008 at 8:05 pm
You started a link with Seattle Real Estate and the title tag of the page that it linked to was Seattle Real Estate. It is an obvious 1999 era SEO ploy. Your content has nothing to do with it. You were posting to load your page in the search engine for “Seattle Real Estate” because it is a high ad value term. Don’t pretend we’re idiots.
It’s called Blog Spam and I notice in your second post that you cut that junk out. If you want page rank for Seattle Real Estate then pay Tim for your ad.
Michael » Jun 2, 2008 at 8:07 pm
You post is not spam. But loading a link to an article with an obviously BS search term is absolutely SPAM and you know it or your wouldn’t have used it.
Lake Hills Renter » Jun 2, 2008 at 8:16 pm
I could be wrong, but I believe that blog link was automatically posted by the forum software when someone links to an article, aka a “trackback”. I’ve seen the same things in several other forum software. It’s pretty standard practice in the blogging world I believe.
The Tim » Jun 2, 2008 at 8:24 pm
LHR is correct, it was automatically posted by WordPress when the blog post on the Mercer Island site went up. Also, I wouldn’t consider it spam anyway, and as far as pagerank goes, all links in the comments automatically get rel=”nofollow” added to them, which means that they get no search benefit at all.
Mercer Island blogger » Jun 2, 2008 at 8:38 pm
Yup, it was an automatic trackback.. Thanks Tim and LHR.
Michael, my blog’s about Mercer Island. The post’s title reflects that the post is a response to ZipRealty’s CEO’s comments on same.
Anyway, enough ’bout that. Seattle Bubble Blog’s one of my favorites- I love the data-centric approach. Keep it up.
Everett_Tom » Jun 2, 2008 at 11:18 pm
I suppose it happen because it’s late, but when I first read Mercer Island blogger’s last comment I read
as “I love the drama-centric approach.
Shelley » Jun 4, 2008 at 9:01 am
I think everyone is forgetting that Seattle home prices went up after California’s home prices went up. We are about 2 years behind them.
Aria » Jun 4, 2008 at 9:59 am
I grew up in Burien and now I live in Tacoma’s Old Town neighborhood with a beautiful view of the bay and Olympics. I love the emptiness of Tacoma and there are some really cool neighborhoods I didn’t know anything about when I lived up near Seattle. I predict people from Seattle will discover these areas and for a short Sounder ride, will trade down to Tacoma where prices are more affordable. I think Tacoma will be THE place in another twenty years.
Rhonda Porter » Jun 5, 2008 at 6:53 pm
Did you catch Aubrey’s follow up interview w/Zip? http://blog.seattlepi.nwsource.com/realestatenews/archives/140400.asp
“I don’t think that ‘crash’ is appropriate language in Seattle, but I do expect that it’s going to continue to soften and prices are going to come down some,” he said. “It’s kind of unrealistic for people to think it’s not going to happen.”
“I don’t think home prices are going to come down dramatically,” he said. “It’s hard to find that home that you really like. If you find a home that you really like, that’s the right place for you and your family, I would tell you it’s a great time to make an offer.”