Richie; $128 per square foot is one heck of a haircut.

At least, I’m guessing it got sold, because now only seven of the eight units is listed in the MLS….

Paging Ira: could I drop you a line and ask you to snoop out the whys and wherefores, or at least the how much-es and dates of closings, and stuff? I am nosy, but I also figure if my new neighbor is going to be rattling around all by their lonesome amidst all those empty townhouses, I oughta at least bring them some zucchini bread or something and say “hi”.

Prices will decline far more from peak than your projections. You, yourself, have ALREADY negotiated nearly 30% off of the asking price from your owner-builder, and things have JUST BEGUN here.

You’re in for a sad, sad realization if you truly believe our market is nearing its bottom. This is a GLOBAL epidemic. All ships rise with the tide…. Unfortunately for those that are in homes who bought near peak, all ships lower with the tide as well.

I have heard that foreign banks are beginning to buy up or take over some of our floundering banks. How will that play into the whole housing and banking crisis?

It won’t have much of an impact. Foreign investors are just going to catch a falling knife. Just look at how well the sovereign wealth funds have done with their CitiGroup investments.

I remember when the Japanese were snapping up American real-estate like mad in the ’80s, and everyone was talking about how the country was being taken over. In the end, most of the Japanese firms wound up leaving with their tail between their legs. Mitsubishi lost billions on the Rockefeller center, and even Pebble Beech was a loss.

Let those foreigners waste as much money as they please buying dead banks, in the end it won’t help them one bit, and neither will it hurt the US either. Keep in mind that the banks that are heavily shopping themselves to foreigners are the very ones that would go bust if they didn’t recieve some kind of bail-out.

If it comes to choosing between a tax-payer bail-out or letting foreign investors throw money on a corpse, I know what my choice would be…

There has been a lot of discussion regarding lending and failing banks.

I have heard that foreign banks are beginning to buy up or take over some of our floundering banks. How will that play into the whole housing and banking crisis?

Great Point!

The “deals” are going to come from people who NEED to sell for some reason.

It seems like we shoud ask the questions how many foreclosure will the area see and how many people NEED to sell?

I agree that everything has a price and some sellers will not let their properties go at that price.

I recently found two houses on the brink of foreclosure. The owner-builder offered the brand-new properties in a very nice neighborhood at his cost. He cut one from $850,000 to $600,000 or $128 per square foot and another one from $950,000 to $750,000 or $172 per square feet. In a brink of eyes, they were sold at the asking price. I am not sure if I can find a similar deal again.

That really depends on whether or not the new construction is already completed and sitting there to be bought, or if it is still under construction. In my opnion, if the house is already completed and has been sitting for a while, making an offer doesn’t necessarily hurt. Developers/Builders don’t want the huge carrying costs, especially in a declining market. The developers that truly understand the market is declining and want to get rid of it before it gets even worse. Unfortunately, not many around Seattle have yet gotten their heads around the declining market concept.

If the home is still under construction, builders may not yet be willing to negotiate as aggressively as they feel they are still buying time for the project to complete … all in hopes of a market rebound happening in the interim. Well, a market rebound we all know is not going to happen. But for the 1 in a milliion chance that it COULD happen, they will just hold off on negotiating down at this time.

Manav, the consensus here would be to wait to buy any type of construction.

My question is what about new constructions? It seems the new constructions have dropped the prices significantly. Do you think it is a good time to buy these?

teh COST TO BUILD will always go up.

Not true. Materials are cheaper now than a year ago. Lumber has been tanking in price and so have cement costs. Moreover, labour costs have been coming down a lot too. All those unemployed tradesmen in Florida, California, Arizona and Nevada are driving down wages. There are plenty of stories about how builders are making unilateral rate cuts to their sub-contractors.

In short, it is cheaper to build a house in Florida today than it was 2 years ago (and that’s not even considering the drop in lot prices). Before this downturn is through I am sure we will see building costs drop by huge amounts, as material prices collapse and tradesmen are forced to take even lower salaries.

This is what’s called “deflation”.

Now is most definitely not the time to buy. The real price drops haven’t begun yet. I don’t believe it will be the REOs that change things either. They’re just the symptoms. The real problem will raise its ugly head big time next year–financing.

The banksters don’t have the money to lend and the standards will be much higher than we’ve been used to the last 7-9 years. When no one can get/qualify for a loan without 20% or more down, the pool of buyers will shrink drastically. The only homes that will sell will be owner financed, all cash deals and (desperate) REO sales. That’s desperate BANKS! or even the Resolution Trust Mark II entity.

Housing will HAVE to be cheaper than renting before things turn around. Keep your powder dry, the deals will be about a year from now. They won’t be the absolute lowest but that will be the time to start looking.

I’m guessing that between NAQDAQ and the NYSE, there were probably 100+ stocks that were up during that period. A tiny minority, sure, and how to find them beforehand, sure, but I’d wager a breakfast that there were at least 100 stocks that were up in that period.

Hmmm… You could be right. After a little digging I discovered that at least a HANDFUL of stocks were up in 2001/2002. Altria and Anheuser-Busch, for example, both gained. Still, these winners were definitely few and far between. It’s easy to pick winners when the general market is going up, but fiendishly difficult to do so when it is tanking.

I would have to disagree with this. There are times when virtually ALL stocks are overvalued. I can’t even think of a single stock in January 2000 that hadn’t fallen significantly by September 2002.

Here’s one:

EXPD Jan 00 $10.54 Sept 02 $13.97

But I agree with the majority that the gems of today will look less shiny as the market continues to decline.

Scotsman: You might think you’ve found a GEM or two by turning over a rock here and there, but soon enough they will be scattered all over the open ground.

Good analogy! Yeah, while I agree with Ray about always looking, waiting to have the pick of the litter sounds better. Plus I want to see how far the pendulum will swing the other way. People bought excessively during the run up, increasingly the likelihood that they’ll have to sell excessively in the downfall.

Sniglet: So, unless you are looking at flipping quickly, there is just no way to make money investing in Puget Sound real-estate today.

A flipper in my Bellevue neighborhood has had his/her potential profit reduced from ~$50K to ~$20K since spring, I estimate, due to several substantial price drops nearby. The houses aren’t selling at the new prices either.

I’m guessing that between NAQDAQ and the NYSE, there were probably 100+ stocks that were up during that period. A tiny minority, sure, and how to find them beforehand, sure, but I’d wager a breakfast that there were at least 100 stocks that were up in that period.

If you want to compare to the stock market, then yes there are good performing stocks for sale on any given day.

I would have to disagree with this. There are times when virtually ALL stocks are overvalued. I can’t even think of a single stock in January 2000 that hadn’t fallen significantly by September 2002.

Certainly it is absolutely true that there are times where there a large percentage of stocks are either under or over valued. Even Warren Buffett has said there are times where the smart thing is just to stay out of the market.

Of course, this is NOT to say you shouldn’t buy a home during a time when the majority of homes are over-priced. So long as you can make the payments why should it matter to you if your home dropped 50% in value several years after you bought it?

NOW could be the worst time ever to buy any real estate at any price, EVER.

but you greedy sheep better rush right out and trust your financial future to someone who “earns” a living grifting 6% sales rake offs.

The notion of this gratuitous notion is just flawed. Shame.

Redfin already shows quite a few properties in Snohomish for about $150-$160 /sq.ft. Should continue to go down to $120/sq.ft.

Everyone is so desperate just to see one offer that they’ll give away the farm if they smell a contract.

Hardly. There are virtually NO properties in the Puget Sound that can be had for even 30% off of peak prices let alone the 50% plus declines we will see in the coming years. The simple fact is that there is no such thing as a good deal in the Puget Sound market today. If you are looking for a real bargain just be patient and wait a couple years to see the real deals start to come out of the woodwork.

Also being able to milk the listing agent for info is pretty easy. Especially in this market. Everyone is so desperate just to see one offer that they’ll give away the farm if they smell a contract.

even if you get it for $460K it’s not a gem if three years from now you can’t sell it for $375K. A lot of tech stocks looked like a great buy in June of 2000, and today they don’t even exist.

Correct. Even if you get a screaming deal today, buying a Bellevue home for 15% than current market value, all that equity will have more than vanished by this time next year. So, unless you are looking at flipping quickly, there is just no way to make money investing in Puget Sound real-estate today.

We are entering unprecedented territory economically. That means the past is of no value in predicting the future. But one can look at the balance sheets of various banks and industry leaders, look at the balance sheets of American consumers, look at the budgets and future revenues and commitments of various governments and come up with a group of most likely scenarios for how and where the money has to flow. In these scenarios there’s very little wiggle room for long term solutions. Companies have to be profitable, banks have to lend at certain rates to survive, consumers can only pay so much for housing, food, etc.

The end result is we’re heading for a significant economic contraction, worldwide as well as in the U.S. You can call it a severe recession or a weak depression, but it is coming. It will take a long time to correct. And it will drive house prices everywhere significantly lower than they are today. You might think you’ve found a GEM or two by turning over a rock here and there, but soon enough they will be scattered all over the open ground. I wish it wasn’t so, but that won’t change it, for me or for you.

Since I primarily work with Buyers here and in Nevada its relatively easy if the Listing Agent “spills the beans” and many do. AHHH Yes fiduciary responsibility…..It goes like this at 500 Realty….Home is Listed at 425k

“I have a pre Approved Buyer that has shown interest in your home. They are gravely concerned about market conditions and I have a list of COMPS (provided by the Buyer) that will support their offer. Will your seller look at offers in the 300’s? Have any offers been rejected?

After I get my analysis of responses from the Listing Agent I report it to the Buyer. Sometimes I get…”Ray just submit your offer like everyone else”..But, many times I get ” Ray …Come on the Buyers already rejected 350k…BAMM once I have that then I ask will they take 360k…Then the Agent usually starts to Blab…… But, every now and then I get…”Oh please Ray just submit anything”. then I reiterate to the Agent, ” Will they look at 300k-320k (notice its the very low end of the spectrum). I advise the Agent I don’t want to waste alot of their time and reiterate the financial stability of my client and ability to close ON TIME. Furthermore I state my buyers are adamant about being WELL UNDER 350k. I then advise Buyers of what I believe will work. This is all done with phone calls and emails. We write up offers when we know we are close…

So Econ E what I tell you is if you to choose an Agent find one who has been an investor first. There are many. When your Agent is saavy they will be GEMLIKE! Be ready to walk and find another home. Every Buyer I have worked with was always happy they waited to find their next GEM. There will always be another. ALWAYS!

Now what happens when I’m the Listing Agent? Ahhh Easy Answer. I advise all Buyers and Agents to CALL THE SELLER and ask. Imagine that…What a concept!

Friends Real Estate will be conducted far differently in the next decade and I cannot wait!

What’s next? IMO, a major bank failure will drive the country further into the fear zone. The government will act swiftly to amputate the limb. Consumers will continue to lose confidence in the economy, and house prices will continue to correct toward historic income:home price ratios.