Before we begin May’s reporting roundup, let’s have a little review of the year so far.
January
Barb Lamoureux, owner and broker with Lamoureux Real Estate in Everett, said the typical slow December market is over. She’s seen signs the market is picking up, including a significant increase in open house traffic and even some multiple offers on properties. Her agents are expecting a busy spring.
February
February housing activity around western Washington signaled signs of an emerging spring market with a noticeable increase in open house traffic, reports of multiple offers and a big jump in pending sales from the previous month.
March
NWMLS director Dick Beeson believes the local market has “reached bottom – or pretty darn close.” Even though inventory continues to grow, Beeson acknowledged, “so does optimism among buyers, sellers and agents.”
April
Spring did start slowly, said Coldwell Banker Bain agent Margo Hass Klein. But she said traffic in the last couple of weeks has increased by at least 10 percent at open houses.
May
“We still haven’t had summer hit us yet as the weather remains cool, wet and cloudy. I expect both temperatures and the market to heat up as summer approaches,” commented Dick Beeson, broker/owner at Windermere/Commencement Associates in Tacoma. “Open house traffic is picking up and buyers are coming off the sidelines to make buying decisions.”
I’m starting to wonder if maybe, just maybe “open house traffic” isn’t quite the best measure of real estate market health.
Read on for the this month’s roundup with all the blind real estate agent optimism you can eat.
Elizabeth Rhodes, Seattle Times:
Home prices remain soft, inventory remains high and interest rates are relatively low — all of which point to a buyer’s market. With interest rates at their highest levels since mid-March and likely to go up, it would seem that buyers would get off the fence.
But sluggish sales say buyers remain unconvinced.
Proof is in median prices of single-family homes, which declined year-over-year in King, Snohomish, Pierce and Kitsap counties, according to statistics released Thursday by the Northwest Multiple Listing Service.
…
Teresa Darragh, an agent in one of John L. Scott’s West Seattle offices, said the lack of pressure is allowing buyers to make thoughtful decisions.“They’re able to take some time to look at the market and the inventory,” Darragh said. She also said prices in her area are down about 5 percent.
How great that agents are suddenly so concerned about a buyer’s ability to make “thoughtful decisions.”
In a surprising change of pace, Ms. Rhodes also has an article out today that focuses on the meaty subject of financing: Higher hurdles to home loans slow real estate sales in Puget Sound region. Be sure to check that one out too.
Aubrey Cohen, Seattle P-I: Home buyers, it’s your time to haggle
Ewan Hruska and Leya Barr plan to buy a house in Seattle — if they can sell their home, which has been on the market in Shoreline since October.
“We have our price point that we can’t go below,” Barr said, outside of an open house in Greenwood late last month. “It’s made it difficult to price it to move.”
They estimated between 60 and 80 people have toured the house.
“We’ve never had a problem with viewings,” Barr said. “It’s just, we haven’t had an offer.”
Nice. I get the impression that maybe Aubrey is as tired of the “traffic at open houses” nonsense as I am.
“There is clearly some bargain hunting going on,” said Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University. “Certainly there are some sellers out there that are panicking a little bit. Their homes have been on the market much longer than they had been accustomed to seeing homes on the market, so they have been accepting some disappointing offers.”
But the decreases are greater than what the market merits, Crellin said. “(I) don’t see that we should be having the degree of problems that these numbers are implying.”
Oh man, that’s rich. Prices are off just 8.5% from their peak, and Crellin’s freaking out. Granted, he’s been doing the real estate analysis gig longer than I have, but honestly Glenn, are you really that surprised? I think we’re just getting started. Of course, a good amount of Crellin’s WCRER funding comes from Realtors (more on that later this month), so I suppose that comments like those should be expected.
Mike Benbow, Everett Herald: Snohomish County home sales slow in May
Some brokers blamed newspaper reports on the national economy and poor housing for the lack of an expected revival in local sales. Others said the continued cold weather hasn’t helped.
Ok let me stop that one right there for a minute. How can real estate agents—with a straight face—blame the weather for slow sales? Do they seriously believe that there are people out there saying “gosh honey, I know we were planning to buy a home this month, but gosh darnit, would you look at that rain—let’s just wait until it’s sunny”? Really?
“There are such great opportunities for buyers right now to position themselves for the future,” J. Lennox Scott, chairman and chief executive of John L. Scott Real Estate, said in a news release.
…
“Buyers are realizing that interest rates may creep up, and they would be in a worse position if rates went up 1 percent than if prices fell 5 percent,” [MLS Director Dick Beeson] said.Mike Skahen, a multiple listing service director of Lake & Co. Real Estate in Seattle, said there really wasn’t a spring buying season this year as people stayed on the sidelines to see what would happen with prices.
“When the press gets less negative,” he said. “It’s going to push buyers off the fence and they’ll regret having waited.
Nice. Notice how the tone of agents has shifted somewhat in the last few months. It’s become almost threatening. “You’ll regret this…” Classy.
Devona Wells, Tacoma News Tribune: It’s spring, but home prices fall
…spring is the time of year when agents and brokers expect to see business picking up. Instead, prices have hovered around the $260,000 mark since January and the number of sales, while moving north from February through April, dropped on a month-to-month basis in May.
…
Buyers remain hesitant but sellers are getting a better handle on today’s market, said Dick Beeson, an MLS director and Windermere broker. Still, more whittling of inventory would help, considering how long some of today’s listings have been on the market and that some remain overpriced, he said.Real estate agents, he said, are having heart-to-heart sit downs with sellers and turning down properties they might have previously tried to market.
“Agents are finding they can’t spend their time on properties that aren’t sellable,” he said. “You get real with the market, no more hoping. It’s reality time.”
…says Mr. “I expect both temperatures and the market to heat up as summer approaches.”
Jim Szymanski, The Olympian: Home sales down 32 percent from ‘07
Some agents say the dropping numbers mean it is a good time to shop for real estate because many homes are available.
“People are hanging on to their wallets,” said Blake Knoblauch, an agent with Greene Realty Group of Thurston County. “Buyers are waiting to see the bottom of the market, but we don’t know when we’re going to see the bottom. For all we know, it could be now.”
Ah yes, the “better not try to time the bottom” nonsense. Of course, for all we know, the bottom could be 2012, and today’s buyers will be kicking themselves a year from now. Also, we’ve already shown that today’s “fence sitters” have nothing to lose by waiting it out, so the argument really doesn’t hold water.
(Elizabeth Rhodes, Seattle Times, 06.05.2008)
(Elizabeth Rhodes, Seattle Times, 06.06.2008)
(Elizabeth Rhodes, Seattle Times, 06.06.2008)
(Aubrey Cohen, Seattle P-I, 06.05.2008)
(Mike Benbow, Everett Herald, 06.06.2008)
(Devona Wells, Tacoma News Tribune, 06.06.2008)
(Jim Szymanski, Olympian, 06.06.2008)
Jump to the bottom to add your comment. ↓
330 responses so far ↓
1
johnnybigspenda
// Jun 6, 2008 at 8:43 am
Found an article about renting vs. buying for first time buyers:
Downsizing the American Home
by Shawn Tully
Friday, June 6, 2008provided byCNNMoney.com
During the housing bubble, KB Home priced out first-time homebuyers by building bigger. Its new, more modest model provides a glimpse of what the return of the housing market may look like….
http://finance.yahoo.com/real-estate/article/105204/Downsizing-the-American-Home
2
shawn
// Jun 6, 2008 at 8:51 am
here is the reality, people were irrational when the bubble was expanding. And the realtors loved it. People will continue to be irrational, when we really do hit a bottom, people will still be expecting more incentives and lower prices. And realtors don’t love that, so they spin. But just as when the bubble was expanding, no reasoning could stop it. Now with it going in reverse, no propoganda from realtors can stop the falling prices or get the bubble back. It will be at least ten years before people forget about this bubble. What we should all accept is that we will never, never ever, get truth from realtors or the mass media. The new age is getting our reality check from sites like this.
3
vboring
// Jun 6, 2008 at 9:23 am
re: where to get the truth
no offense, but the biggest problem with any source of information lies in the incentives that source of information is exposed to. most RE news is worthless because it is paid for by RE agents or developer ads.
the problem is, though, SeattleBubble has an incentive to make things seem bad.
i have all respect for The Tim and have seen no signs of bias. even so, people come to this site to see reasons why RE prices in Seattle will fall. and The Tim gets something out of people coming here, so The Tim is incentivized to publish bad news for local RE prices.
The Tim focuses on data analysis and critiques of other market coverage, so there is less chance that his information will be skewed. but the incentive is there.
also, i tend to prefer information from engineers over info from salespeople, since engineers seem to have a respect for testable truths that salespeople miss.
4
vboring
// Jun 6, 2008 at 9:26 am
i have no desire to be flamed, just pointing out the unavoidable
5
The Tim
// Jun 6, 2008 at 9:28 am
No offense taken, vboring. I constantly encourage readers not to take anyone’s word (including my own) on market conditions or if it’s a “good time to buy.”
Do the research yourself and make the best decision you can based on the available data and your own personal situation.
6
Tsuru
// Jun 6, 2008 at 9:30 am
This one is my favorite. I wonder if Dick has paused to consider the fact that house prices will have to drop even further in the face of higher interest rates? I assume not.
Let’s take this to the flipside and see what the opposite spin is on Dick’s statement: sellers may want to lower their prices 5% now so they can sell before buyers are “squeezed out” by a 1% interest rate hike and there are no buyers left that can afford to buy their house.
7
shawn
// Jun 6, 2008 at 9:36 am
Hi Vboring,
my main point was just where were we hearing any truth about the re bubble. If we want some alternative views we cannot get them from the mass media.
8
Ray Pepper
// Jun 6, 2008 at 9:42 am
GEM OF THE WEEK ALERT!!!
Bring the family home Lil Caesars this weekend. I have been doing it for the last 2 months. Its 10.80!!. 1 Large pepperoni and 1 cheese. It feeds 4-5. It appears we all have gained weight but HEY! I have saved at least 125.00 a month!
See its not all bad out there.!! You just have to find the GEMS!
Ray Pepper
9
singliac
// Jun 6, 2008 at 9:50 am
Ray Pepperoni?
10
NotaBull
// Jun 6, 2008 at 9:52 am
“See its not all bad out there.!! You just have to find the GEMS!”
http://www.gems-girls.org/
Ray, you’re one sick puppy.
11
Scotsman
// Jun 6, 2008 at 10:30 am
In other news, oil shot up again to over $135 a barrel and unemployment rose for the fifth month in a row, increasing by the largest margin in 22 years. But a drop in the ten year treasury rate from 4.04% to 3.96% was expected to lead to a reduction in mortgage interests rates, fueling a rebound in Seattle’s housing market. (Once the rain stopped, and open house traffic continued its upward trend.)
12
EconE
// Jun 6, 2008 at 10:31 am
Somebody better tell these realtors that the increase in open house traffic that they are seeing…is nothing but us bubbleheads out in search of free food.
Imagine if college students knew there was free food at open houses! We’d here about hundreds of people at every open. Sales?…not so much.
13
disbelief
// Jun 6, 2008 at 10:42 am
“open house traffic” really does seem to be a statistic of last-resort for the Realtor crowd - the last one they can spin into something that sounds favorable. Makes for a pretty week argument though, as it can’t be verified or, for that matter, actually quantified.
I myself have noticed an increase in “window shopping” at downtown luxury stores, and expect that this summer will be a strong one for the luxury retail market!
14
CCG
// Jun 6, 2008 at 11:01 am
My personal open-house traffic has gone from zero during the bubble years to several times a week, as the g/f and I like to look at what we can expect to pick up at nice discounts in a couple more years. Given that, nationally, all house price inflation since mid 2003 appears to have been wiped out, we’ve been using 2003 prices to give us an idea (or earlier ones when we’re feeling optimistic).
(Cue enraged screeching and trolling as to why this will never happen here)
15
David McManus
// Jun 6, 2008 at 11:17 am
CCG, I think you’re spot on. I bought right at the beginning of 03 and that seems like it’s when prices really started to get crazy around here. They can go to 1995 prices for all I care, since I haven’t been using my crib as a piggy bank and don’t think of it as an investment.
16
TheHulk
// Jun 6, 2008 at 11:20 am
Wow, with all these news I haven’t heard a peep from RAL in the past few days. Maybe all the “open house” traffic is keeping him too busy from posting.
On a more serious note with the latest round of bad news (especially problems in the prime sector), I expect things to get worse around the puget sound.
We haven’t seen problems hit the eastside yet in the prime market. I have seen foreclosures on redfin at the 800K level. These were obvious grossly inflated sales between last July and last December and obviously the houseowner/investor just gave up. However, when prices start hitting 2003 levels, I can imagine a considerable amount of pain for all the people who bought around 500K/600K and will be seeing sale prices 100K less than that.
17
David McManus
// Jun 6, 2008 at 11:25 am
Or Nostra d-bag.
18
Gill
// Jun 6, 2008 at 11:46 am
Just an observation –
My wife and I just moved to the ‘upper Ballard’ / Whittier Heights area.
I have been tracking prices here for a while and still do — I’ve noticed that the homes that are staying on the market are either overpriced by a lot, need a lot of work (or ‘have issues’) or are both overpriced and have a lot of issues.
By contrast, the homes that are in good shape and don’t need a lot of work are either selling for their asking price or just below it within the $10K range within about a 3 month period on average. These homes are generally priced between $450 and $575.
It seems like Ballard/Greenwood is still experiencing a slow or steady growth pattern — I guess it seems ‘normal’ to me overall in the face of the bubble.
I’m not saying it will continue this way, but it is holding on rather strongly in the face of the surrounding collapse at this time. Maybe it’s an anomaly and maybe not.
19
Alan
// Jun 6, 2008 at 11:53 am
Maybe fewer houses sell during rainy weather because more mold problems are observable.
20
Slumlord
// Jun 6, 2008 at 12:19 pm
This is a little off topic, but I read that Evander Holyfield is being foreclosed upon. From my own perspective, I’d hate to be the guy who has to try to evict him!
21
rose-colored-coolaid
// Jun 6, 2008 at 12:21 pm
Let’s draw a conclusion, shall we? (NOTE, some of my figures might be made up.)
In 2006, all houses sold in bidding wars within hours of going on sale. Most were sold without official inspection, or even inspection by the buyers. There was no foot traffic.
In 2008, no homes are selling regardless of price, quality, or location. Foot traffic has soared as a result of the fact that there is now time for feet to reach a home before a transaction closes.
In short, I believe that foot traffic has an absurdly strong correlation to market conditions. High foot traffic means a collapsing market and low foot traffic means an appreciating market.
Finally, foot traffic is quite the convenient measurement to use anyways, since I’m pretty certain it’s not actually being measured at all. If it were so high, would Redfin be offering free tours in June to encourage more foot traffic?
22
Mammoth
// Jun 6, 2008 at 12:22 pm
“‘We still haven’t had summer hit us yet as the weather remains cool, wet and cloudy. I expect both temperatures and the market to heat up as summer approaches,’ commented Dick Beeson”
—————————————
Given the weather we typically have here in the Seattle area, and considering how ‘hot’ the local housing market was during the bubble - to blame sluggish home sales on the weather is just laughable.
-Mammoth
23
Gill
// Jun 6, 2008 at 12:37 pm
“In 2006, all houses sold in bidding wars within hours of going on sale. Most were sold without official inspection, or even inspection by the buyers. There was no foot traffic.”
-and-
“In 2008, no homes are selling regardless of price, quality, or location. Foot traffic has soared as a result of the fact that there is now time for feet to reach a home before a transaction closes.
Um, sorry — no offense, but this is straight BS.
Do your homework.
24
TheHulk
// Jun 6, 2008 at 12:40 pm
“In 2006, all houses sold in bidding wars within hours of going on sale. Most were sold without official inspection, or even inspection by the buyers. There was no foot traffic.”
“In 2008, no homes are selling regardless of price, quality, or location. Foot traffic has soared as a result of the fact that there is now time for feet to reach a home before a transaction closes.
As said many times on slashdot, correlation != (thats NOT EQUALS) causality
25
Scotsman
// Jun 6, 2008 at 12:48 pm
Uh, guys- I think the post by RCC was a joke. Try getting out of the office once in a while.
26
Ken
// Jun 6, 2008 at 1:14 pm
RCC,
You’ve shot down the Seattle RE industry’s last remaining spin factor. Man, how could you do that?
There are some people that just can’t bring themselves to say “Ok, yeah, sales are down, prices are falling and the bottom is anyone’s guess.” Those people need some positive ending to their reporting of the negative numbers. What are they supposed to do now?
I think it’s our responsibility to come up with a replacement positive spin since the foot traffic thing is now just not working it.
How about….
“Yeah, sales suck right now, but with gas prices climbing, in-close home sales are projected to rocket up.”
…or
“Yeah, sales suck right now, but with food prices climbing, home-based farming is poised to drive up overall KC sales”.
Come on, any other ideas?
27
TJ_98370
// Jun 6, 2008 at 1:35 pm
RCC is exhibiting his genius once again. I propose a new metric for foot traffic so we can standardize and measure this phenomenon. It could be a useful tool for gaging and / or predicting market activity when coupled with other data.
How about “visitors / door threshold - day”.
28
Everett_Tom
// Jun 6, 2008 at 2:01 pm
I think we should measure foot traffic more indirectly,
like in pounds of free food consumed per day, or even better number of house fliers removed per day (as this number is easy to manipulate if thing get worse).
29
Gill
// Jun 6, 2008 at 2:04 pm
Sorry — didn’t see the “some of my figures may be made up” portion.
Shouldn’t blog at work, I guess.
30
vboring
// Jun 6, 2008 at 2:39 pm
The Tim,
have you posted on your bias versus that of other media reporting and analysis of the RE market?
a metric for degree of bias in reporting could be useful. you could look at consistency of which numbers are reported, how data is presented, degree of use of forward looking statements, use of emotional language. a sort of “distressed salesperson” index.
if it were good enough, you may even be able to use a quality of reporting metric as a way of predicting future market conditions.
a decline in quality of reporting may reliably indicate falling prices in the near future. probably not.
31
disbelief
// Jun 6, 2008 at 3:00 pm
vboring,
Nah, I think the readers of Seattlebubble do a pretty good job in reigning in TheTim when his views and sympathies towards a declining market become to “un-American” or “socialist”, as RAL can attest to.
(*Sarcasm)
32
stesmo
// Jun 6, 2008 at 3:13 pm
http://blogs.thenewstribune.com/politics/2008/06/06/tax_man_says_pierce_county_residential_p
From Political Buzz’s blog:
“Need more evidence that residential real estate is slumping? Check your mailbox after June 13.
That’s when the Pierce County Assessor-Treasurer’s Office will mail this year’s residential property assessment notices. According to the assessor’s office, 85 percent of those notices will show a decrease in value.”
33
Olaf
// Jun 6, 2008 at 3:21 pm
Open house traffic is primarily an indicator of the neighbors’ nosiness about what’s inside the sellers’ closets.
vboring is right to raise the question of “confirmation bias,” a problem that infests the entire internet. Americans are getting too much information from the sites they already agree with — be it politics, economics or sports. So yes, there is a hazard in basing one’s real estate decisions solely on a site called “Seattle Bubble.”
That said, I think Tim does a good job. He does suffer from a bit of confirmation bias — especially when he time-shifts certain graphs to suggest Seattle prices are “following” California — but given how the local newspapers have spent the last five years as mouthpieces of the mortgage and RE industries, this site’s bias amounts to little more than a mild tonic for the general mindless real estate boosterism. Read this site, glance at the papers, ignore what your home-owner friends think (talk about confirmation bias!), and you’ll get a balanced view.
34
The Tim
// Jun 6, 2008 at 3:30 pm
Which I sincerely hope nobody is doing. Not because I don’t think I am providing useful information, but because making what is likely to be the largest purchase of one’s life based on reading a single source is dangerous, to say the least.
And regarding the time-shift graph, I just find it interesting how similar they are, that’s all. When I first posted it back in July last year I was looking for a way to visualize the “behind the cycle” theory. I have said over and over that I’m not declaring the graph to have predictive value.
That said, I thought this quote from my July post was amusing:
35
Olaf
// Jun 6, 2008 at 3:51 pm
Yes, Tim, you called it last July! But didn’t you make similar predictions in ‘05 and ‘06?
(Maybe you didn’t — I really don’t remember, and I don’t feel like digging through the archives.)
I happen to share your belief about this market being over-inflated — based in large part on the raw stats you’ve so helpfully provided — but sometimes I have to remind myself not to get to hypnotized by it all. God forbid we respond in kind to the foam-at-the-mouth dogmatism of mortgage-holders like RentersAreLosers.
Check out this paragraph discussing the very psychological phenomenon we’ve been seeing in this war over the “bubble”:
“The researchers found that people tended to hold that research that agreed with their original views had been better conducted and was more convincing than research that conflicted with their original views.[8] Whichever position they held initially, people tended to hold that position more strongly after reading about research that supported their position. Lord et al. point out that it is reasonable for people to be less critical of research that supports their current position, but it seems less rational for people to significantly increase the strength of their attitudes when they read supporting evidence.[9] When people had read both the research that supported their current views and the research that was conflicted with their views, they tended to hold their original attitudes more strongly than before they received that information.[10]”
from : http://en.wikipedia.org/wiki/Attitude_polarization
Yikes. Sound familiar?
36
Joel
// Jun 6, 2008 at 4:01 pm
Anyone care to predict when reporters and realtors here finally get that the downturn is an effect of the winding-down of the credit bubble and not because of negative reporting?
37
Garth
// Jun 6, 2008 at 4:02 pm
I think this pretty much sums it up :)
http://xkcd.com/386/
38
The Tim
// Jun 6, 2008 at 4:04 pm
That’s just silly, Joel. The so-called “credit bubble” is also merely a result of all the negative reporting.
Garth, I love xkcd, and indeed that one speaks so personally to so many of us, doesn’t it?
39
deejayoh
// Jun 6, 2008 at 4:48 pm
I think this is spot on. I’ve sold three houses - each time I’ve been told by the agent “open houses don’t really sell houses, just a chance for the neighbors to come by”. Perhaps that was because they didn’t want to do the work. But it’s funny that they trot out open house foot traffic as an indicator of market health when things go to sh!t.
40
didn't just fall off the turnip truck
// Jun 6, 2008 at 5:49 pm
Garth // Jun 6, 2008 at 4:02 pm
I think this pretty much sums it up :)
http://xkcd.com/386/
now that is funny thanks for the link
41
Harley Lever
// Jun 6, 2008 at 5:56 pm
Measuring “foot traffic” is silly. Like web sites, you can have tons of traffic, but if you cannot convert the traffic into money then you are still in the same position.
I think SeattleBubble suffers from the polar opposite effect of real estate agents.
It is way too fixed on price as the sole measure of affordability. If you are going to be critical of the real estate agents you must be equally critical of your own analysis, especially considering that you want people to make the absolute best buying decisions.
Here are my gripes with the Seattle Bubble.
It does not intelligently consider interest rates and often caps the theoretical at 9% when the historical data shows highs of 18%.
It uses unrealistic examples of down payments when creating theoretical analyses often 20%; realistically 3% - 5% are what people are putting down.
It concentrates and highlights news that supports its own position; condo prices in Seattle are up 4.1% YOY and are up in King County and Snohomish County… why is that not on the headlines too?????
And as a whole the blog definitely suffers from group-think; if you disagree with the stated position you are beaten up and attacked by some of the regulars.
Lastly, the name should be changed to “Puget Sound Bubble” it more accurately describes the situation. Yeah I know, it has been grouped by economist as Bellevue, Tacoma, and Seattle. Seattle the city is doing far better than “the out of city locales”. As gas prices skyrocket, more will seek close-in places to live regardless if it makes truly good economical sense.
Don’t get me wrong, The Tim does a great job and I appreciate the analysis. He puts a tremendous amount of work into the blog and you cannot take that away from him. In interviews he is a straight-shooter which is more than I can say for a lot of the real estate cheerleaders.
However, because your stated goal is to help people make a good decision because it is “largest purchase of one’s life” it seems the blog would greatly benefit the users from a more balanced view and more realistic analysis. You should not beat up on the real estate agents when your views have holes too. I realize that highlighting contradictory facts is not in the best interest of the blog, but it certainly is for the users.
42
Joel
// Jun 6, 2008 at 6:04 pm
I heard open houses aren’t good for selling houses, but they’re good for agents to find new clients. If it is true then it means that agents do know that price isn’t very important compared to transaction volume .
43
EconE
// Jun 6, 2008 at 6:25 pm
Condo prices up 4%?
Sure…if you are a sucker for “medians”.
44
EconE
// Jun 6, 2008 at 6:26 pm
18% interest rates?
Bring em on!
Do you remember what CD’s were paying then. Sweeeeeeet!
45
Harley Lever
// Jun 6, 2008 at 6:49 pm
EconE
Not wanting to be a sucker…
then based on your reasoning shouldn’t we then throw out all the “median” data compiled on this blog that is so conveniently used to support your position?
You can’t have it both ways… I know it’s easier that away.
A CD back then paid 16% which was offset by 9% inflation and a 66% tax rate which left a net rate of return at 3.5%. Not so Sweet. The other problem is that you are assuming you will have any money to deposit… that whole inflation thing can really do a number on your savings.
46
LUC
// Jun 6, 2008 at 7:19 pm
“then based on your reasoning shouldn’t we then throw out all the “median” data compiled on this blog that is so conveniently used to support your position?”
What are you talking about all the median data compiled on this log?
Also, I had a great-Aunt and Uncle in Philly who made a killing on CDs in the mid-80’s.
47
drewba
// Jun 6, 2008 at 7:33 pm
If I could net 3.5% after taxes and inflation right now, I’d be quite pleased. I’d bet most CDs are losing value net of taxes and inflation.
48
Hen
// Jun 6, 2008 at 7:41 pm
Increased Open House traffic = more people using Redfin ;)
49
TJ_98370
// Jun 6, 2008 at 8:01 pm
Harley-
This website is a work in progress. At risk of speaking for The Tim, my impression of his primary motive for this website was to counterweight the BS published by the real estate industry. The MSM is just now picking up on what he was saying months ago.
Yes there is “goupthink” expressed by the long time readers. It is a “Seattle Bubble” blog. What do you expect?
As The Tim said in previous posts, it is not his intention that this website should be the sole reference when deciding to purchase real estate – think of it as an informed reference independent from the established real estate industry.
It’s your choice to separate the BS from the true stuff as it has always been. What is different now is that the info you get now on the internet isn’t all “paid for” MSM controlled content.
50![[troll]'s avatar](http://www.gravatar.com/avatar.php?gravatar_id=53faab72e8e5ccd40442f1fc00c033a0&default=http://seattlebubble.com/blog/wp-content/uploads/default_gravatar.jpg&size=50 "[troll]'s avatar")
[troll]
// Jun 6, 2008 at 8:02 pm
Hrly Lvr
Spt n mt!
Th Trth by Hrly:
……………………….
t cncntrts nd hghlghts nws tht spprts ts wn pstn; cnd prcs n Sttl r p 4.1% YY nd r p n Kng Cnty nd Snhmsh Cnty… why s tht nt n th hdlns t?????
nd s whl th blg dfntly sffrs frm grp-thnk; f y dsgr wth th sttd pstn y r btn p nd ttckd by sm f th rglrs.
Lstly, th nm shld b chngd t “Pgt Snd Bbbl” t mr ccrtly dscrbs th sttn. Yh knw, t hs bn grpd by cnmst s Bllv, Tcm, nd Sttl. Sttl th cty s dng fr bttr thn “th t f cty lcls”. s gs prcs skyrckt, mr wll sk cls-n plcs t lv rgrdlss f t mks trly gd cnmcl sns.
……………………..
dsgr wth ths n, blv mst wll pt dwn 20%:
…………..
t ss nrlstc xmpls f dwn pymnts whn crtng thrtcl nlyss ftn 20%; rlstclly 3% - 5% r wht ppl r pttng dwn
………………………..
Hrly, y mst rlz by nw tht mst hr cn’t ffrd Sttl Rl stt, hnc th prps f ths Blg. fbl ttmpt t dscrg ntrnt svy ppl t NT by nw n rdr t hpflly drv prcs lwr. m f th pnn tht prcs wll nvr b lw ngh fr ths lsrs, thy wll mss th flt bs nd hckl th pst bs rnp s tmprry “blp”.
51
Harley Lever
// Jun 6, 2008 at 8:12 pm
LUC,
EconE said “Sure…if you are a sucker for “medians”. He did not like the fact the the median condo price was up 4.1% YOY in Seattle.
I was simply calling him out. Well if he wants to discount/eliminate observations made about “Median Condo Prices” then by his same reasoning you should throw out any observations using “median housing prices”.
In the post “NWMLS: Sales and Prices Take Record-Breaking Dive” the fact is cited:
the Median Closed Price*: $440,000 - down 6.2% YOY (new record)”
This figure is so proudly displayed and worshiped . However when I point out that the Condo prices in King County, Snohomish County, and Seattle show a YOY increase, I am being “Poo Pooed” as being a “Sucker for Medians”.
You cannot have it both ways. If Medians are for suckers, then by EconE’s reasoning all data using “Medians” should be for suckers. You can’t just cherry-pick the data that fits your argument.
I am sure your Great Aunt and Uncle did make a killing off of CD’s. I am willing to bet they had a tremendous amount of cash to transfer in to a CD.
My grandparents were wealthy at the time and they were able to capitalize on these high yields. They too benefited, but no one else in my family did.
Most regular people had little to know savings and the idea of being able to throw the extra 10k-100k in a CD was not the reality of most people. Inflation was at 9%. My father had two full-time jobs and my mother had one and they barely scraped by.
52
Scotsman
// Jun 6, 2008 at 8:23 pm
Heh, heh, just checked Zillow for the first time in a while. The l home I rent has dropped from just over $500K to $433K in the last year, June of 2007 to the present. That’s over $5,500/mo on top of the PITI my landlord pays of about $3,000/mo.
So let’s see- I can be a renter/looser for less than $1,800/mo, or an owner for $8,500/mo. Less my rent, that’s a net cost to own of $6,700/mo. And what he owns is continuing to depreciate.
Yup, ownersarelosers…… still. I’m not to poor to own. I’m too smart!
53
TJ_98370
// Jun 6, 2008 at 8:26 pm
Harley-
Do a Google search on how median prices can be misleading.
54
LUC
// Jun 6, 2008 at 8:37 pm
Harley-Lever,
My Great-Aunt and Uncle were schoolteachers in Philly and were not rich by any stretch of the imagination. They were products of the WWII generation and were good savers. They diverted any income received from rental income to savings. Their savings were amassed over extended period of time. They took advantage of those high interest rates during the eighties.
55
Harley Lever
// Jun 6, 2008 at 8:42 pm
TJ_98370,
I truly appreciate everything The Tim does and I appreciate the fact that he has expressed on multiple occasions to use this source as one of many sources.
In my opinion I feel the blog would best serve the users by focusing on trying to provide accurate information from many resources and not to counter act the rhetoric from real estate agents. By focusing on the accuracies and providing balanced information you build a foundation of trust that will best serve the users and insure the longevity of the blog. Counter-acting the rhetoric from one-side forces you to become an “extremist” for the other side.
This puts you in a position of wiping out all credibility as soon as the market goes in the opposite direction. By providing balanced insight you will develop rapport and trust which makes you a valued and reliable resource, and not simply a mouth-piece for one side or the other.
Like I said, I appreciate the Tim’s honest and straightforwardness when he is asked questions. I just think if he wants to take it to the next level and insure his and the blog’s longevity, he should concentrate more on providing more balanced insight.
Rentersarelosers,
Thank you for your kind words. I do have one question about your assertion that most are putting 20% down. Are they doing this through “Piggy Back” loans or are they really coughing up $70,000 cash? I currently do not have the data to support my belief, but most people I talk to are getting loans for a portion of their down payments.
56
Harley Lever
// Jun 6, 2008 at 8:46 pm
Ok LUC,
So your Aunt and Uncle were rich, they were just frugal and didn’t show it off. They got rich slowly.
57
Harley Lever
// Jun 6, 2008 at 8:50 pm
TJ_98370,
I am not saying median prices cannot be misleading.
My point is don’t tout it in one instance as being a wonderful data point and how it proves your point and in the next instance call someone a sucker for using it to back up their point.
This is where the lack of balance is rearing it’s ugly head.
58
Harley Lever
// Jun 6, 2008 at 9:01 pm
Scotsman,
How the hell is your landlord paying $8500 for a $500,000 home????
I think you are a bit confused or you are renting from and idiot who got a loan from the mafia. I could see $3500/month but I think your math is way off buddy.
I am not sure I would be bragging about paying $1800/month in rent either.
59
disbelief
// Jun 6, 2008 at 9:20 pm
RAL said:
“disagree with this one, I believe most will put down 20%:”
so, being that the median house costs about $450K, I take it that most people have been putting down about $90K?
If only it were so! I think the 3-5% figure is closer to the truth, and, I believe, what S-crow has cited in his previous posts (and he ought to know).
60
disbelief
// Jun 6, 2008 at 9:26 pm
“I am not sure I would be bragging about paying $1800/month in rent either.”
Why not, if you knew that “owning” the same property, would cost you $3,500 + per month (and especially if market values where declining)
Although, I agree that $8,500 figure is outlandish.
61
Scotsman
// Jun 6, 2008 at 9:31 pm
Harley- the home I rent has lost almost $70,000 in value over the last year. That’s an opportunity cost that must be added to the owner’s direct costs in order to accurately asses his cost of home ownership. My math is fine. Read more closely, and factor in basic economic theory.
My landlord may be an idiot, or at least the victim of circumstances. I’m pretty sure he owes more on this house than it’s currently worth, thanks to a “cash out” refi in the past. Now he’s trapped. But I’m very happy to rent from him at a bit less than the market rate for comparable homes, and will probably buy from him when the market bottoms and he has a better shot at convincing the bank to go for a short sale.
62
hzg
// Jun 6, 2008 at 9:36 pm
I think the point was that the landlord is losing 5500 a month in equity and paying 3000 a month in payment.
5500+3000=8500
I think thats what the point was.
Now that the arithmetic has been explained rip into it
63
Harley Lever
// Jun 6, 2008 at 9:36 pm
Scotsman,
Please provide your equation…
64
wobbly
// Jun 6, 2008 at 9:40 pm
King County Prices.
But are prices really crashing everywhere? The King County NWMLS May breakouts don’t show that. In fact, what’s amazing is how in some areas the median price is plunging (area 500 SFH’s are down 23% in the last year) but some areas have had tiny falls, or appreciation.)
Call me dumb, but after renting and watching the market and looking at > 100 houses over the last 2.5 years (this Web site has been invaluable) we’ve just taken the plunge and bought (SFH area 710).
The markets are more complex than the doomsayers seem to understand.
There’s not going to be a universal melt-down. Some parts of the country are going to be worse hit than others, some parts of King County are going to be worse hit than others, and some types of homes, and market segments are going to depreciate more. Some may even continue to rise. I do not buy Tim’s theory that Seattle is going to mirror San Diego, just 18 months on.
Your house is not a very sensible investment (there are much better ways of making money), it’s a place to live. If you bought a house in Seattle in 1970 and still own it in 2008, you still own just a house in Seattle. You’re no richer.
People still need a place to live, preferably close to work / school or in a community where they feel safe and comfortable. Not everyone’s going to lose their job, or will hurt when oil hits $200 / barrel, inflation hits 10% pa, or the S&P500 drops 15% in a year.
Seattle’s a city with a great future. Like California, Vancouver BC, parts of Australia, and Asia, we’re going to be part of an massive economic boom over the next 20 years, as a high tech center in the next world economic powerhouse: the Asia / Pacific region. The wealth that will be generated in this region will make that generated in the US and Japan over the last 50 look like peanuts!
65
Harley Lever
// Jun 6, 2008 at 9:49 pm
HZG
Your equation assumes that it will continue to lose $5500 per month… forever. I think we know that is not true.
66
Harley Lever
// Jun 6, 2008 at 9:50 pm
Scotsman,
You are assuming interest rates will stay low. There is every indicator that they will be moving up.
At your current payment level, the house would have to drop to $200,000 to cost you $1800/month including (PITI). Do you really think this is going to happen?
67
Harley Lever
// Jun 6, 2008 at 9:55 pm
Disbelief,
I am one for living below your means. Blowing $1800/month on rent is mind-blowing to me unless you have a family and kids. Living below your means is crucial.
There are opportunities in every market regardless if it is a “buyers” or “sellers” market. To me, you need to be a smart shopper in any market and if you work hard and put some sweat equity in you will reap huge rewards.
I have yet to read the book “Renting your way to becoming a millionaire”.
68
The Tim
// Jun 6, 2008 at 10:18 pm
Harley, regarding why I don’t bother highlighting the condo statistics, the short answer is that I never have (positive or negative). For the long answer, please refer to this post. Thanks.
69
The Tim
// Jun 6, 2008 at 10:23 pm
Oh, and as far as the median price goes, I don’t see how you can say that it is “proudly displayed and worshiped,” unless you didn’t bother to notice the blue asterisk that has been included every month since I first made the post: Median Price Not Telling the Whole Truth.
70
Scotsman
// Jun 6, 2008 at 10:36 pm
$1800 a month is well within my means, and a bargain for the home I live in. I expect it’s value will fall another $70,000 to $80,000 over the next year or two, back to it’s 2003 price. I am in the area between Issaquah and North Bend where prices have been falling sharply for a year now. It is, admittedly, a very different market from Seattle proper. If the country enters a severe recession values could easily fall below 2003 numbers. Real estate does not always go up.
Will interest rates rise significantly from where they are today? I doubt it. We may see a short blip up, but my long term bets are on deflation and further rate cuts to try and stimulate the economy, not inflation. When everyone you know is getting 8-12% annual wage increases I’ll believe in inflation. Don’t confuse a few price increases in specific commodities with systemic inflation. I’d go further, but given the confusion this has already generated I don’t think it would be a very productive discussion.
71
disbelief
// Jun 6, 2008 at 10:47 pm
Harley, I agree with your sentiments about “blowing” $1800 per month. However, for those in the market to purchase, there are times when “holding-off” is a prudent thing to do. This is such a time.
If you agree that real estate does not always go up (and indeed, this site is dedicated to that premise), then you ought to agree with that.
Many people are now suffering the repercussions of purchasing under the assumption that prices would continue to go up (especially folks using non-traditional, and “exotic” financing, and also folks who took out second mortgages while “cashing out” the current equity in there home). i.e. many people do not fall into the smart shopper category.
Some would say, to be a “smart shopper” now is to wait and and least hold out for the possibility of remaining decline in the market. In any case you are very unlikely to miss out on a sudden rebound and upswing of the RE market. To understand what caused the bubble in the first place, is to understand that this is a very (and I mean very) unlikely scenario.
72
disbelief
// Jun 6, 2008 at 10:51 pm
oops, there home=their home. time to hit the rack!
73
BellinghamREnter
// Jun 6, 2008 at 11:42 pm
Hi Tim. This may be a stretch but maybe you could include Bellingham Info. I know your busy but Bellingham is going to crash SPECTACULARLY. Nearly same prices for Seattle area but very few jobs to support them. Sales are tanking also. Just came out new home sales are down 24%. Plus we consistently have the highes price gas in the state! I was just in Seattle last weekend and thought it was cheap : ) Keep up the good work!
74
singliac
// Jun 6, 2008 at 11:58 pm
Why hasn’t anybody noted what Harley does for a living. He can’t exactly claim that he has a more objective opinion than the rest of us.
Don’t worry, buddy. Your business will be ok. As sellers become more desperate, they’ll need your services even more.
75
Achoo
// Jun 7, 2008 at 1:28 am
I would also love to see Bellingham information included. Horizons at Semiahmoo tract is up for sale. It’s listed for $7,000,000 with Windermere. Looks like they missed the market.
76
mikal
// Jun 7, 2008 at 6:01 am
There it is. A person doesn’t agree verbatim with the gloom and doom people , therefore he must sell real estate. What a load of $hit. Harley is right about location. Some area have actually gained in value. The srangest thing I have noticed recently is the commute. I reverse commmute and work in in a variety of places, but observe the commute in both directions. There are less people on the roadways. Traffis is not nealy as bad as once was. Not sure if this is because of gas prices or that fewer people are working.
77![[troll]'s avatar](http://www.gravatar.com/avatar.php?gravatar_id=53faab72e8e5ccd40442f1fc00c033a0&default=http://seattlebubble.com/blog/wp-content/uploads/default_gravatar.jpg&size=50 "[troll]'s avatar")
[troll]
// Jun 7, 2008 at 6:16 am
mk,
Rght y r, nyn tht dsn’t tw th Bbblhd ln mst hv ltrr mtvs. Tht’s th “Grp Thnk” hr, nd nfrtntly th mntlty tht wll lv thm n th dst s rl stt rtrns t mr blncd mrkt.
Nt sr f ths s bcs f gs prcs r tht fwr ppl r wrkng.
……………………
My gss s gs prcs, prbbly lt mr cr pls.
……………………
Hrly:
Rntrsrlsrs,
Thnk y fr yr knd wrds. d hv n qstn bt yr ssrtn tht mst r pttng 20% dwn. r thy dng ths thrgh “Pggy Bck” lns r r thy rlly cghng p $70,000 csh? crrntly d nt hv th dt t spprt my blf, bt mst ppl tlk t r gttng lns fr prtn f thr dwn pymnts.
…………..
Hrly, g bck t n f my prvs psts n th nt wrth f hmwnrs vs rntrs shwng hmwnr rnng 80k + hvng nt wrth f 460k vs rntr t 87k.
N n hr dsptd th rntrs nt wrth s ssm ll ths Bbblhds r prprd wth t lst 80-100k dwnpymnts. Cld t b tht rntrs hr r blwng thr dgh n fncy crs, xpnsv vctns nd fn dnng nd cn’t cm p wth msly 20%? Y sy 3-5% dwn? h my! Ptfl!
78
Peter Taylor
// Jun 7, 2008 at 8:45 am
It should be pointed out that paying rent is not “blowing” money or “throwing your money away”. Rent is a service, simple as that. I would like to know if any of Harley, RentersAreLosers, or Mikal own their own electric utility, mobile phone company, cable company, or internet provider. No? Why not? You are just throwing away your money to your utility landlords! You are just lining their pockets! What a waste when you could be owning your own utility company and be paying YOURSELF! Don’t you feel humiliated when the utility companies look down their noses at you, a simple consumer of their service? Don’t you?
Seriously people, get over it. Renting is a fairly simple financial decision to consume a service and isn’t an indicator of a person’s character.
79
S-Crow
// Jun 7, 2008 at 9:03 am
Purchase business: it went from virtually nothing down all the time to 5-10% down depending upon factors. There are a few here and there that are low LTV (substantial downs) but those are usually from move up buyers with equity. Not many transactions for first timers show 20% down, from what I observe coming through the office. Mortgage insurance is a real drag for people to get used to again.
Credit worthiness of the borrower pool, both refi & purchase is much better. Mid-High 700’s and low 800’s.
This is the kind of lending that creates stable markets.
80
Matthew
// Jun 7, 2008 at 10:10 am
RAL,
I don’t think you have any ulterior motives, I think you are a middle aged loser that lives in his mom’s basement and spends all day on Seattlebubble.com!
81
Everett_Tom
// Jun 7, 2008 at 10:31 am
RAL,
you said:
For a response to your “study” that owners make significantly more then renters, please see the response I gave to your post at the time, which you ignored then too.
You can find it here
but i’ll include the key quote from it here:
82
Everett_Tom
// Jun 7, 2008 at 10:39 am
And I agree with Mikale at least a little,
Harley Lever has been here off an on for awhile. He bought a condo back in January of this year in King County (it’s in the comments back awhile ago, it’d take some digging to find).
While I don’t agree with him on many of his positions, he’s been very willing to go with the give and take.. and he knows how to do something other then just throw insults.. (like RAL or Nostra).
I’ve always felt that turnabout is fair play… since he hasn’t turned to name calling, or character assassination I don’t think it’s appropriate to do it to him..
83
Bes2wait
// Jun 7, 2008 at 11:01 am
I have been told now is a great time to buy, glad I didn’t listen
1.7825 13TH ST SE #60, Everett, WA 98205 Dr Horton Price Reduced: 02/13/08 — $513,737 to $464,950
Price Reduced: 03/08/08 — $464,950 to $454,950
2.7723 13TH ST SE #67, Everett, WA 98205 Dr Horton
Price Reduced: 02/13/08 — $484,950 to $474,950
Price Reduced: 03/08/08 — $474,950 to $454,950
3.7719 13TH ST SE #68, Everett, WA 98205 Dr Horton
Price Reduced: 02/13/08 — $478,510 to $449,950
Price Reduced: 03/08/08 — $449,950 to $439,950
4.7724 13H ST SE #56, Everett, WA 98205 Dr Horton
Price Reduced: 02/13/08 — $461,910 to $429,950
5.7806 12TH ST SE #76, Everett, WA 98205 Dr Horton
Price Reduced: 06/15/07 — $484,950 to $474,950
Price Reduced: 09/10/07 — $474,950 to $459,950
Price Reduced: 02/13/08 — $459,950 to $439,950
Price Reduced: 03/08/08 — $439,950 to $429,950
Price Reduced: 06/04/08 — $429,950 to $399,950
6.7802 12TH ST SE #75, Everett, WA 98205 Dr Horton
Price Reduced: 09/10/07 — $452,950 to $439,950
Price Reduced: 02/13/08 — $439,950 to $424,950
Price Reduced: 03/08/08 — $424,950 to $419,950
Price Reduced: 06/04/08 — $419,950 to $389,950
7.7720 13TH ST SE #55, Everett, WA 98205 Dr Horton
Price Reduced: 09/10/07 — $407,950 to $389,950
Price Reduced: 03/08/08 — $389,950 to $369,950
Price Reduced: 06/04/08 — $369,950 to $349,950
8.7722 12TH ST SE #72, Everett, WA 98205 Dr Horton
Price Increased: 04/14/07 — $394,950 to $398,950
Price Reduced: 06/15/07 — $398,950 to $398,330
Price Reduced: 07/22/07 — $398,330 to $378,330
Price Increased: 03/24/08 — $359,950 to $364,950
Price Reduced: 06/04/08 — $364,950 to $334,950
84
TJ_98370
// Jun 7, 2008 at 11:06 am
Good post, Everett_Tom. Lack of civility does detract from the discussion, IMO.
85
Alex_Renter
// Jun 7, 2008 at 11:24 am
Few years ago I used to work for WMC Mortgage in Woodland Hills and I was working on their automated underwriting system.