above, not about

Holland is a densely populated country, but there are several regions that have plenty of space left (Groningen for instance, or Flevoland where I grew up which was reclaimed from the sea a few decades ago). People just don’t want to live there because it is considered backcountry. In the same sense, there is plenty of space in WA, but still the amount of desirable space (where is the action, what are the commute times, etc) is limited like it is limited in Holland. As a side note, on average the Dutch find about a commute of about an hour (so 2 hours a day) acceptable, while I have to find the first Seattlelite who thinks anything about half an hour is ok. :-)

As for comparing that 1m Miami studio with a 2m studio in NYC… surely you can make a comparison taking into account at how desirable the city/ location is, how much of your income you need to pay for it, etc… I think it is perfectly possible to conclude that the 1m Miami studio is a better deal than the 2m studio in NYC. Whether it is a sound investment is only part of the whole evaluation; I’m sure no-one wants to lose money over time, but personally I don’t care about huge gains (in the end, I’ll be paying that again when moving into another house).

@jcricket
Where have you read remarks like that on this website? You’re just trying to make your views look reasonable by comparing them to nonexistent strawmen.

Does anyone here even have that view? The most bearish person I know of here is Eleua who’s looking for a 60-80% drop.

There are two kinds of “it’ll never be good to buy”. One are the people really predicting some kind of permanent downturn in the US economy (Japan-style or worse). Again, to that I say it’s the same type of commentary that’s been wrong during every recession (12) in the last 75 years, so I’d bet it’ll be wrong again.

Two, are the kind of people expecting all house prices to drop to some level they think is “fair” or “affordable” (based on whatever metric they think matters), despite historical evidence that houses in Seattle haven’t been at that metric for 20 or 30 years. So if a 20% fall means reversion to mean for that metric, they still won’t be satisfied if houses don’t fall 50% or 60% and it’ll still be a bad time to buy for these people. That’s another form of “never” that’s just laughable. It’s like waiting for milk to be $0.50/gallon, of for gas prices to go back to $1/gallon or saying you’ll never buy a Lexus b/c it should only cost $20,000.

That said, whenever some asset classes bubbliciously shoots up, it usually overshoots on the way down too. So I fully expect some areas to be “more depressed” or have “fire sale prices” for some short period. The lucky will know when that is and be in a position to buy and snap up good deals.

I agree with you are saying. Prices in Seattle in compared to other cities or other parts of the world aren’t that bad. It is all your prespective and what your experiences are/

As a foreigner (Holland), I’ve always been amazed by America’s flexibility and willingness to take action when it is needed. It seems that, unlike Europe, America isn’t filled with nay-sayers. I’m sure the downturn will be very sharp this time, and might last for a while. It might be much worse than I ever dreamt off, but I’m counting of America’s great track record of dealing with hard times.

I’m about to close on a house. Articles here made me very nervous, and I feel that houses are very expensive in Seattle compared with the rest of the country. The funny thing is that if I am comparing it to the Dutch housing situation (because after all, I could just move back and get a house there), I think the deal is pretty good here. You get to live in one of the prettiest, livable cities in the world. For about 30% of my income I get a detached house – in Holland I could get a semi-detached one at best for that -, that is almost twice as big in both lot and structure size, more relaxed building regulations, and I’m pretty sure lower real estate taxes. Not to mention the better pay (at least for my profession), lower taxes, and the lower mortgage interest rate atm.

Obviously, I’ll regret it if I go through with the buy if prices keep falling sharply for a very long time and 10 years from now my property is worth half of what I bought it for. But somehow that goes against my gut-feeling. For what it is worth.

I work for the gubment now but I’ve also been a paralegal. I am just gobsmacked that press release went out. So very, very unprofessional. And — yes — the quote! OMG. I can’t imagine who thought that was a good idea.

Agree with Joel btw re the 80-90% drop prediction comma ridiculousness thereof. I don’t think I’ve ever seen anyone here make a speculation in that range.

Those who despriately want to believe in the American Dream, will now have to pay for it with their own money. I would bet that their is a lot fewer people willing to put their money where their mouth is, especially if they don’t have the option for zero down.

That’s a good thing.

Thanks for that insider sentiment and linked press release. I guess this public agency is officially in the propaganda business now – although ostensibly for the good of the people.

That press release is pretty pathetic. Do you suppose that they have had any contact with lobbyists and RE / banking industry power brokers as of late?

The best part is the quote that starts the press release:

“The oldest and strongest emotion in mankind is fear.” – H.P. Lovecraft

Irony anyone?

But anyone who believes there’s an impending global worldwide economic depression, and 80-90% drops in housing is also delusional….it’s “no longer ever a good time to buy”

Does anyone here even have that view? The most bearish person I know of here is Eleua who’s looking for a 60-80% drop.

“I do know that DFI’s reputation is extremely pro-consumer and they bring a ton of regulatory actions against the entities that they regulate. Because of that, my best guess is that they are (a) making sure the public is informed that mortgages with good rates are still available (a lot of news stories make it sound like no one can even get a mortgage anymore) and (b) trying to make sure that our housing market doesn’t do what, say, Florida’s did… If homes really do lose a lot of value in WA then that is really bad news for people who need to refi and people who need to sell their homes for whatever reason and it is just bad news for the economy in WA in general. So, I think it is more of a stab in the direction of people retaining confidence in the WA market, which I don’t think is totally misplaced – it’s not a ‘bargain’ time to buy, but if you’re someone who has a significant down payment, good credit, and plan to stay in your home for 10+ years I doubt that it is a very risky time to buy.”

This “risk” meme is so pernicious and so maddening to me. Yes, (interventionist) point taken, if the above description applies to you – and if you’ve got much better employment security than, say, a white-collar Weyerhaeuser employee – you probably won’t be inviting tragedy to bring your down payment to the table and buy a house today. But if I ride my bike unhelmeted to get ice cream, through residential neighborhoods, that is also low risk; I am highly unlikely to get into an accident and fall on my head. Why *wouldn’t* I put my helmet on just in case, though, significantly reducing the possibility of serious injury? And why *wouldn’t* I wait to see how house-price declines play out, significantly reducing the possibility of losing more of my down payment now than I would at some later date? (Jcricket, essentially I see myself as in agreement with you — Answer Cloudy, Ask Again Later.)

And how is this “greed” – an accusation I’ve received a few times – rather than common sense? Something that is low risk is not de facto a good idea.

Argh, sorry, I am ranting. OK bye.

Did you consider that those people saying that 2009 will be a good time to buy also believe that most people will not have jumped in at this point?

Also, I think it’s important to consider that the RE market will likely not behave as it has in the recent past when it comes to upward movement (i.e. being driven up quickly as a result of a surge in demand as people jump in).

That kind of upward surge was a result of RE morphing into something very much like the stock market during the last run-up. This was made possible for the most part by a scam in which banks were able to make risky loans and pawn them off on unsuspecting investors. They thereby did away will any meaningfull criteria for qualifying borrowers and created and sustained an intense increase in demand for RE.

The days of this kind of stock market-like behavior suddenly driving up the real estate market were an abberation, and are simply over.

I think the chance of significantly “missing” the bottom of the RE market in buying a home is somewhat “slim”.

I agree. If any of the bears stated that here, I missed it. “Never” is what makes the statement ridiculous.

Over and over I read that 2009 is when the ‘timing’ is right to buy. Well, I guess I’d say the timing to buy is better before everyone else jumps in, so that must mean the ‘timing’ is just about now .

Why don’t you send Aubrey Cohen some names of the other economists you have in mind? I’m serious! I bet Cohen is under tight deadline pressure, and it’s often hard for a reporter to find “good talkers” with the required expertise. He probably keeps going back to Crellin because he just doesn’t know of anybody else.

Seriously, if you know of some other good market analysts out there, send Cohen a polite note (DON’T be Mr. Confrontational BubbleMan), offering a few names. If it’s done in the right spirit, you might be surprised at the reaction.

I’ve said in other threads, that level of catastrophe is certainly possible. But everything I’ve read shows instead that this these uber-bearish sentiments – “it’s the big one this time” and it’s “no longer ever a good time to buy” – have been wrong (long-term) in every one of the last 12 US recessions.

Let me be clear: That’s not to say now is a good time to buy a house. If you have marginal finances, are worried about your job, or don’t think the market has corrected as much as it’s going to, staying on the sidelines is perfectly rational (as Scotsman said). I myself think that housing prices are going to come down a bit more in Seattle before staying flat for a while. How much and how long? I don’t presume to know, because the factors are far more complex (interest rates, incomes, local economy, US economy, global economy, population, tastes regarding various housing types, etc.) than one can analyze in a few charts.

But the idea that we’ve entered a “new time” where it will never again be good to buy (stocks or real estate) is simply laughable.

I have a friend who works for the State in Oly and has some dealings with this office. I’ll ask her what’s going on here. On its home page the DFI charter is given as “regulat[ing] and examin[ing] a variety of state chartered financial services. The Department also provides education and outreach to protect consumers from financial fraud.” So I am sure this press release would come under the education-and-outreach rubric, but I also think it’s dishonest.

Nice catch, Disbelief.

good point about the economist. Think he owns a home?

Tim, you should put up a post regarding the zillow.com survey about the number of people who still believe their house has appreciate the past 12 months….people are delusional!!!

Seriously, I think you are underestimating the readers of this site. Most opinions are well founded. WE SIMPLY HAVE TO PAY THE PIPER FOR UNSUSTAINABLE FINANCING TACTICS utilized in the early/ mid 00s.

As a previous homeowner turned renter in 2006, I can’t tell you when I’m going to get back into the market, but I can tell you it will be at prices far less than I sold for. If you need an exact time, I will be looking for inventory to decrease substantially from these levels and remain there for at least a quarter. The pendulum never stops back in the middle….the swing to the downside will be greater than most anticipate….but most of us are certainly not losing sleep over it.

Hank – I don’t know about the beards; but I can guarantee you bank accounts are growing and most are sleeping soundly unlike (unfortunately) too many homeowners around the country.

Fundamentals my friend, just fundamentals. Former Treasury Secretary R. Rubin stood in front of journalists back in 2000 and said: “I don’t have a single penny in the stock market today”. Then he talked about the “fundamentals”.

With Real Estate going down, and every economic indicator pointing down, why would you pay a $2000 mortgage for a place you can rent for $ 1500 or less. The tax break gets eaten by the fact that the property value is going down. So, in reality, you are saving $500 a month.

Fundamentals say (scream) “THIS IS A HORRIBLE TIME TO BUY!!!”

a) when prices are at or below long term trend lines
b) interest rates are low, and likely to fall further
c) the economy and wages are poised to expand/increase
d) the tax adjusted cost of owning is equal to or less than renting

How does this ideal environment compare with today’s reality?

a) prices are just starting to correct from all time highs relative to income and inflation adjusted norms. Not good.
b) interest rates are low, and after a brief bump up this fall/winter will fall to new lows as the economy contracts. Very good.
c) the economy is poised to enter a period of negative growth, followed by a long and slow recovery. Not good at all.
d) you can easily rent for less than half the cost of owning, at least in King county. Not good.

I’ve posted this before, but it’s such a good summary of where the U.S. is economically, and worth the time to think about. It is, IMHO, intellectually void to see the past as any kind of guide to the future when the parameters of the model are constantly changing and evolving. There is no comparable past for the future we face.

http://www.oftwominds.com/blogjuly08/empire-debt7-08.html

My beard won’t grow too long while waiting for this phase to pass, and when it does I can buy and be on the winning side of the trade, having acted rationally, not emotionally.

I would be most interested in knowing what some of the nay sayers would suggest would be the ideal market in which to buy a property.

Something no more than 3.5x my annual salary that I would be happy in long term.

I would say the ideal market to buy in would be no time soon, maybe end of 2009. You think the last few years have been normal?

Could Glenn Crellin be any more discredited at this point? I don’t want to pick on the guy, but seriously? Aubrey Cohen needs to dial up a different economist. There are lots of decent colleges/universities in the area with econ profs just waiting for her call.

And my favorite: “The new federal housing measure made it easier to buy smart in the current market, said J. Lennox Scott, chairman and chief executive of John L. Scott Real Estate.” Pure, meaningless babble. Just say “NO!”

Real Estate agents have a lot of risk when taking on a listing. They put hundreds and some times thousands of dollars into marketing a home with no guarantee of a return on their investment.

I know many real estate agents who have turned down listings because the owners wanted unrealistic prices for their homes. I have personally seen real estate agents pay $500 for photography and have the listing later pulled from them.

You also have a huge time investment for open houses, staging, and other marketing efforts.

Another factor that you are forgetting is the house has to appraise for the price sold otherwise the lender will not finance it.

At the end of the day the buyer and seller determine the sales price and nothing happens unless the back approves, ESPECIALLY NOW!.

all real estate is local except when seattle is a world class city or foreigners will save us.

In a statement, Jarvis said excellent financing options exist for those with decent credit, including great programs for first-time homebuyers. Generally stable prices and a relatively strong economy also pointed in favor of buying, Jarvis said.”

Does anyone else find it disturbing that an economist who is a public servant should be so quick to jump in bed with the RE crowd?

So if, say, there were to be a further decline of 15 or 20% for example, would he lose his job for taking such a position now? (sad thing is he probably would be more likely to lose his job for cautioning people to think twice before buying).

Reporters need to earn money too. That money is earned by either selling papers or selling advertisements in those papers. Since most newspapers are hyper local and real estate is hyper local, there is a strong correlation between the two. Regardless of how ethical a reporter is (Aubrey @ PI has been much better than the times endless regurgitated–spin from the realtors), in any case the said reporter has to succumb to the reality of appeasing the advertisers.

That is why you will always see a positive spin in the local papers about real estate. It keeps people in the sheeple zone a little longer (which is why we have seen declines of only 7-10%) so far. People will willingly ignore advice to the contrary, its called being in denial. We saw it all over the country a year ago, we are seeing it here now.

Not to worry though, by x-mas I predict 15% declines and by next spring 20% from the 2007 highs.