Seattle Times: “Sellers are Growing Desperate”

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Posted by The Tim on October 2nd, 2008 at 10:37 AM · 64 Comments

An article in today’s Seattle Times goes nicely with Mr. Cohen’s article in the P-I a couple days ago.

More sellers are growing desperate as homebuying stalls locally

I especially like the first part of the subtitle text (emphasis mine):

The Puget Sound area housing market, supposedly immune to the forces pulling down others across the country, is seeing more inventory, fewer sales and falling prices, and that’s stressing out Seattle-area sellers — particularly those who need to sell quickly to avert foreclosure or move out of town. Instead of taking advantage, buyers are sitting on the sidelines.

Guess who didn’t write this article. If you guessed Elizabeth Rhodes, #1 Local Housing Cheerleader, you win. Anyway, here are some interesting excerpts:

The Seattle-area housing market, once touted as bulletproof against the forces that were pulling down other markets across the country, is now stressing out sellers, who are seeing inventories rise, sales fall and prices drop. Many are shellshocked — particularly those needing to move out of town or trying to forestall foreclosure.

I wonder why they would be “shellshocked.” Maybe because this very paper was loudly proclaiming Seattle’s immunity to the housing bust to anyone who would listen? Anybody remember this gem from a big front page story in the Times back in September 2006?

Princeton economist Paul Krugman, writing in The New York Times, said: “The long-feared housing bust has arrived.”

Nationally speaking, anyway.

If history is any indication, King County may escape it, according to a Seattle Times analysis of single-family-home prices. It shows that appreciation rates have risen and fallen, sometimes precipitously.

But not once since 1985 — through recession years, interest-rate spikes, wars and employment downturns — has the countywide median price of a single-family home fallen, although it’s come close.

Also note the subtitle on the graphic:

Prices are dropping in some cities around the country, but local economists don’t expect that to happen here.

Anyway, back to today’s article:

As recently as last year, buyers were paying above list price and sometimes even waiving home inspections to come out the winner in multiple-offer situations. Now they seem content to wait for … what exactly? Prices to drop even further? Superior mortgages? Clarification of the Wall Street crisis? The election?

Don’t you just love the condescending, almost mocking tone?

As the asking price on their Shorewood house keeps falling, the financial and emotional burdens keep mounting for Dave and Kim Mantel, who take ownership next month of a new house in Tucson, where they plan to retire.

“When we made our decision last December to go ahead and start the Tucson construction, we couldn’t have envisioned having this much trouble selling our house,” Dave Mantel said. “We knew the nationwide market was having trouble but Seattle seemed immune. We just couldn’t have picked much worse timing.”

The house in Shorewood, which is between West Seattle and Burien, has a panoramic view of Puget Sound and the Olympics. The Mantels put it on the market in April after a remodel. They’ve lowered the asking price four times — the last a $50,000 drop to $799,000 — but have yet to receive a firm offer.

On the one hand, I feel bad for people like this family that bought the line they were being fed by the likes of the Times and other rosy news outlets. On the other hand, when you’re spending close to a million dollars on something, you have at least a little responsibility to do some due diligence. Folks like this family and others that “need to sell” that bought into the hype are getting burned if they overpaid for their homes. I guess I’d have more sympathy if nobody saw the present situation coming, and today’s market came out of left field totally unexpected.

(Stuart Eskenazi, Seattle Times, 10.02.2008)

Categories: News
Tags: Eskenazi, overvalued, Seattle_is_special, Seattle_Times, sellers

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64 responses so far ↓

1 victorchai // Oct 2, 2008 at 10:50 am

Thanks Tim,good work!
BTY,
Did any1 notice the inventory on the right seems to be dropping sharply all of a sudden?!
As of 10.02.2008 @ 10:00 AM

King County
SFH: 11,795
Condo: 3,884

Snohomish County
SFH: 5,713
Condo: 1,295

Pierce County
SFH: 6,914
Condo: 793
2 crispy&cole // Oct 2, 2008 at 10:54 am

This was posted by someone at the calculated risk blog (I would guess it’s not true):

________________________________________________________
This from a friend in Seattle: “I was talking to my neighbor last night. He is in finance in the county government, King County (Seattle). He said there are some very secretive budget talks being held, very hush, hush. Apparently, the county has lost around $200 million of taxpayer money in toxic paper investments, with huge implications on the budget. He says he is not privy to the details, but he is taking a 10-day vacation starting today, because he has nothing to do since everything is in flux.”
3 wakeup // Oct 2, 2008 at 11:24 am

> Did any1 notice the inventory on the right seems to be dropping sharply all of a sudden?!

Seattlebubble has not found a way to spin this yet. Stay tuned.
4 Pegasus // Oct 2, 2008 at 11:24 am

Crispy…That comment was made today by Jim Willie here:

http://news.goldseek.com/GoldenJackass/1222959600.php

I have suspected this for a long time. I think the State is doing the same. In fact I believe this is a national problem that is being hidden from the public.
5 Pegasus // Oct 2, 2008 at 11:27 am

wake…They do this around the end or start of evry month. Suspicious housekeeping. I suspect they are cooking the numbers for some reason.
6 The Tim // Oct 2, 2008 at 11:30 am

victorchai & wakeup,

No spin needed. The inventory as reported on the sidebar always drops at the beginning of the month. We have had many discussions of this effect in the past. Here’s one example from the forums.
7 buyStock // Oct 2, 2008 at 11:30 am

On the one hand, I feel bad for people like this family that bought the line they were being fed by the likes of the Times and other rosy news outlets. On the other hand, when you’re spending close to a million dollars on something, you have at least a little responsibility to do some due diligence.

We humans are a stupid species (myself included). I’m just glad it took me 6 years to get thru college (a decade ago), or I would of likely also bought a house blindly one year ago. We saved up enough money to buy this year, and were actually even looking last month, but finally wisened up and narrowly avoided throwing away all of our money. While I am happy prices will get more affordable, i am still very empathetic to people who bought a house during the bubble; they were mislead by mainstream and will suffer a huge loss of wealth.
8 TJ_98370 // Oct 2, 2008 at 11:39 am

Reference crispy&cole comment #2, Pegasus comment #4:
.
I just posted a related comment about this in the Investments Forum. I just took a hit on my municipal bonds, two losing 10% market value last month.
.
Here is why:

Municipal Bonds Freeze Up
.
As one of my muni’s was a Chicago bond and the other was a Dallas bond, I would guess that Pegasus is right in that it is indeed a national problem.
9 TJ_98370 // Oct 2, 2008 at 12:05 pm

From above linked article-

…….A lot of governments had moved away from safer, fixed-rate bond issues, leaving them vulnerable to a sharp rise in those rates over the past two weeks. These factors could add up to serious trouble for scores of communities…..
10 old timer // Oct 2, 2008 at 12:31 pm

King County investment problems were reported in February.

http://seattlepi.nwsource.com/local/352135_bonds21.html

No reason to believe that they have been resolved.
11 uptown // Oct 2, 2008 at 12:40 pm

Pegasus;
I don’t think that author is a very reliable source, since he can’t even get his facts correct about the FDIC. The WaMu takeover cost the FDIC nothing except their labor costs. The FDIC can raise premiums on banks as much as they need too, the cash they have on hand is just their petty cash.
12 Scotsman // Oct 2, 2008 at 12:42 pm

The market in my neighborhood has been frozen for months now. Nothing selling, no new listings, the price reductions have stopped. The pressure has to be building though, and eventually I expect people to start running for the exits.

Part of the problem has to be everyone waiting to see what happens on a national level. With the elections, bail-outs, and banking issues all still up in the air, no one wants to guess wrong about where the safe path lies as they seek a way out. Interesting times, indeed.
13 Lanny Poffo // Oct 2, 2008 at 12:43 pm

I’m sorry, but for every sob story that is headlining the media, there is a corresponding success story. Why don’t we get to see those ever being touted?

For example, I have a co-worker who is a single income earner of a family of five, that for years has had to commute from the far suburbs in order to find decent living locations for the family. Recently, they were able to secure a 2 year lease on a beautiful 5 bedroom house w/ a yard and fence that is a great location to raise the family. What changed? Sellers realizing that they couldn’t sell for the prices they wanted, decided to rent instead. Now my co-worker doesn’t have a huge commute, and declining housing prices has had an immediate impact to increase quality of life for their family.

I’m sorry - very comfortable retiree’s losing that extra couple hundred K on the equity that they earned in their home that they wanted to use to retire to golf resorts and beaches doesn’t nearly offset the joy I feel knowing that a solid single income family has an opportunity to live closer to work in a place that is safe and clean for their kids.

So a question & a challenge for The Tim and the media in general: What can we do to educate the general public that a housing price correction may actually be beneficial? How can we more fairly represent that falling prices aren’t a one way street? That what a Seller loses, a Buyer gains, and we may have solid reasons for cheering on the Buyer?

Lanny
14 Dave // Oct 2, 2008 at 12:47 pm

In readng the article - am I crazy to ask what the above people were smoking? They are asking $800,000 for a house between West Seattle and Burien? After the 4th price drop of $50,000.00. I get the feeling they fiananced their entire new home construction with the asumed sale price of the old home.

Is that price completely crazy for the area? Can someone enlighten me on that? I live in North Seattle and don’t go down there (except to the beach).

Dave
15 singliac // Oct 2, 2008 at 1:31 pm

Lanny,

I think that’s why there are so many fans of this site. There are many of us who are benefiting from the housing downturn. I’m in the same boat as your friend. We’re a single-income family of four. I decided to rent a year ago, and I’ve got a great location 8-15 minutes from work. The farther the prices fall, the smaller chance I’ll end up buying a house in the boonies with an hour commute.
16 David // Oct 2, 2008 at 1:44 pm

The article says they are moving to Tucson… a new 3bed 2 bath house there is $150k built to spec. They should have no problems lowering their home price here and moving on. (Even if they lose some of the imaginary value of their home).
17 crispy&cole // Oct 2, 2008 at 1:49 pm

Pegasus // Oct 2, 2008 at 11:24 am

Crispy…That comment was made today by Jim Willie here:
_____________________________________

Thanks!
18 The Tim // Oct 2, 2008 at 1:54 pm

I found David and Kim Mantel’s Shorewood house on Redfin: 12654 Shorewood Dr SW Seattle, WA 98146

Bought October 2000 for $460,000
Original asking: $929,000
Current asking: $749,950
On the market: 157 days.

Just for kicks, my pricing calculator says their current value is about $680,000. Will be interesting to see what they eventually get for it.
19 softwarengineer // Oct 2, 2008 at 1:54 pm

BUY NOW BEFORE THE PRICES COLLAPSE THROUGH THE ROOF?

I hear mortgage rates rose to 6.1% today.
20 softwarengineer // Oct 2, 2008 at 1:59 pm

BAILOUT PLAN JUST SMOKE AND MIRRORS TO TODAY’S NEWS MEDIA PROPHET, DR. ROUBINI

To quote the good Dr. Doom today:

“…Roubini predicted the current crisis back in 2006.

He thinks US Treasury Secretary Henry Paulson’s rescue package is too late — and furthermore, it’s “totally flawed”….”

No hope for Seattle real estate prices even with a $700B Entity.
21 Chris // Oct 2, 2008 at 2:02 pm

The Somerset home: http://www.redfin.com/WA/Bellevue/4527-137th-Ave-SE-98006/home/238029

The parcel for the Factoria condo: http://www5.kingcounty.gov/kcgisreports/property_report.aspx?PIN=6389950450
22 robroy // Oct 2, 2008 at 2:10 pm

Hey, I’ll rent that shorewood house for $1,500 a month!

I mentioned to a friend at the beginning of summer that when the end of the buying season came (that would be NOW), those that have had their house on the market all summer would really begin to panic.

And I expect the worst holiday sales season in history this year. I honestly think it will be unprecedented.
23 unearthly // Oct 2, 2008 at 2:16 pm

$1.2M to live in Factoria, really? Factoria?
24 Joel // Oct 2, 2008 at 2:16 pm

Condo guy is some kind of real estate motivational speaker. Cached MLS listing for condo guy’s property. Oh yeah, it’s not in Factoria, it’s in Woodridge.
25 Joel // Oct 2, 2008 at 2:20 pm

Cached estately listing shows the price as $395,000 on condo guy’s condo.
26 wakeup // Oct 2, 2008 at 2:21 pm

>Bought October 2000 for $460,000
>Original asking: $929,000
>Current asking: $749,950
>On the market: 157 days.

Now you understand how desperate the sellers are.
27 patient // Oct 2, 2008 at 2:33 pm

That Shorewood house is nice enough and would probably be worth the $750k if it had a similar view of Lake Washington from the Eastside. Where it is I would value it to max $500k in today’s reality.
28 unearthly // Oct 2, 2008 at 3:02 pm

Things are getting desperate in the city so I don’t how Real Estate agents can justify some of these prices in the hinterlands…

2425 E Aloha St, Seattle, WA 98112

Purchased for $780k on Mar 15, 2007
Current Price is $700k and falling
29 David McManus // Oct 2, 2008 at 3:09 pm

So is this the bottom?
30 unearthly // Oct 2, 2008 at 3:11 pm

A quick perusal of Redfin shows over 100 listings on Capitol Hill over $500/sqft, of which 90% are being sold by the builder/remodeler. Either they’re waiting for a bailout or they don’t mind filing for bankruptcy in the near future. Someone will be holding the bag.
31 patient // Oct 2, 2008 at 3:29 pm

“Either they’re waiting for a bailout or they don’t mind filing for bankruptcy”.

I’m pretty sure that no bailout will result in banks taking on the same risky loans all over again and without them it’s depreciation time. So waiting for some sort of bailout to rescue inflated home prices does not carry very good odds this time around.
32 Dave // Oct 2, 2008 at 3:45 pm

Dave@#14…

Hey, you stole my name! One of us needs to change — this blog ain’t big enough for the both of us!

Main Street — High Noon — Be There!!!
33 Mike2 // Oct 2, 2008 at 4:07 pm

I mentioned to a friend at the beginning of summer that when the end of the buying season came (that would be NOW), those that have had their house on the market all summer would really begin to panic.

It has interesting effects. In my neighborhood it lead to a glut of much nicer rental properties. As these rented out, the median rent per property type climbed substantially. “Rents are skyrocketing!” the Realtors cried.

Yeah, the average rent paid on this new inventory was higher, but what you could get for the same amount of money improved as well. If I haven’t found a good deal on a house by the time my lease runs out, I’ll definitely be looking to move into a newer, larger place for the same amount of rent.
34 Dave // Oct 2, 2008 at 4:29 pm

Dave at 32

Since I was #14 to your # 32 I win.
You may use Dave1, DaveA, Dave1A…etc.

There can be only one!
Dave
35 Jillayne // Oct 2, 2008 at 4:59 pm

Yes, the bailout plan is useless because it does nothing to help stop the rising tide of foreclosures headed our way for many years to come.

I just looked through the new FHA Hope for Homeowners guidelines. I can’t think of how utilizing this program would be good for most homeowners in financial distress. I DO see how it’s going to help the banks continue to push their loan losses out further and further.

By the way, I have noticed recently that there are far fewer comments from Realtors and lenders lately blaming the media on the housing crisis.

Hopefully we’re getting some folks working their way through the “blame” part of the cycle. I was stuck there myself in 2007.
36 Anon // Oct 2, 2008 at 5:04 pm

News flash to the Shorewood couple: your house is worth no more than $500,000, and that’s a max. Your house is not downtown in San Francisco. It is in Shorewood. Even if it’s nice, now that the bubble has burst, you need to charge a normal American family price.
37 jon // Oct 2, 2008 at 5:08 pm

“FHA Hope for Homeowners guidelines … I can’t think of how utilizing this program would be good for most homeowners in financial distress.”

- They keep their current home
- They avoid the hassle of moving
- They get a fresh start on equity
- payments are reduced to comparable to renting

Sure they give up 50% of equity growth going forward, but at the new lower starting price they are starting their gains at a much lower level. So if it goes back up to their original price, that’s a 50% windfall.
38 Ira Sacharoff // Oct 2, 2008 at 5:10 pm

I wouldn’t say the bailout plan is “useless” but I agree that it wouldn’t help homeowners in distress, and mostly benefits lenders who were stupid enough to make these loans in the first place…It rewards incompetence.
39 Ray Pepper // Oct 2, 2008 at 5:54 pm

I spoke to a Realtor yesterday and she still blames the media. She also uses a dial-up. How many of these 37k agents do we have left in Washington..?? Some one check. I’m on Palin watch . By far the most attractive candidate with a striking resemblence to Jennifer Tilly! Please please please let your hair down tonight when you get stressed…Pleaseeeeeeeeee.
40 Dave // Oct 2, 2008 at 6:18 pm

Dave…

I’ve been posting on this blog for most of this year — so that makes me first. Besides, if I need a new name, I’d like it to be: “BetterDave”
41 deejayoh // Oct 2, 2008 at 6:41 pm

Things are getting desperate in the city so I don’t how Real Estate agents can justify some of these prices in the hinterlands…

2425 E Aloha St, Seattle, WA 98112

Purchased for $780k on Mar 15, 2007
Current Price is $700k and falling

Well, I wouldn’t exactly call Capitol Hill “the hinterlands” - but I remember looking at that house in 2005 before it was “rehabbed” and going for $530k. I thought it was overpriced then. I couldn’t believe they found a sucker to buy for $780k. Not surprised they’re not able to find a buyer at $700k.
42 geon // Oct 2, 2008 at 8:11 pm

I swear that Shorewood house was on the market last year. I’ve driven buy it a few times.
43 justpostingsomenews // Oct 2, 2008 at 9:04 pm

headline from tomorrow’s WSJ (already online): J.P. Morgan Sweeps WaMu Executive Suite

subtitle: “Many of Top Brass Will Leave Friday; Layoff News by Dec. 1″
44 david losh // Oct 2, 2008 at 9:16 pm

The thing about the media today is the financial markets.
Until reading this blog it never came to my mind that the cedit markets were based on credit. In the end there are no hard assets of value. It’s all a bubble.
Investors are cashing in on one of the most feeble minded politicians in history. A leader who declared victory in our economy by praising the number of new home owners.
When the media was getting daily doses of the global economies expanding on our way of doing business it seemed it would never end.

In that way # 13

So a question & a challenge for The Tim and the media in general: What can we do to educate the general public that a housing price correction may actually be beneficial?

The media has been excessively positive for too many years. It’s now time to focus on the realities of what these price corrections are doing to the assets of the financial markets.
45 david losh // Oct 2, 2008 at 9:21 pm

Yes, the Shorewood house has been on for a while. Yes, they refused to lower the price faster, or more. It was explained to them, but the agents circling the home were telling them just to keep it under a million.
Remember Real Estate doubles in price every seven years.
Agents at that point were naive. Many saw the Spring Season coming with hope.
46 economist // Oct 2, 2008 at 10:09 pm

Kudos to Tim! The famous Seattle Bubble decline graph has been adapted for the now-underway Vancouver BC bust, which is proceeding faster than any US city. Take a look:

Vancouver Winning Race Down
47 Dave // Oct 2, 2008 at 10:33 pm

Ah yes Dave - you started posting this year. I started posting a tthe begining of last year. I kept repeatedly trying to correct the assumption some would make on theis site that Seattle is a biotech hub (and of course that woudl save the housing market). Having worked in Biotech coming up on 10 years now (and other places in NA) I wanted to inform people that really - no - we are not a hub. Third tier at best really (possibly second tier if you are generous).

I win! The name is mine! Maybe you should try Bob, or Dan, or Steve, or…..

Still,
Dave
48 mukoh // Oct 2, 2008 at 11:04 pm

Yeah, Vancouver is headed for tough times again reminder of 1998-1999. When my friend had to sell his mansion on the water quick, and sit back and rent. Waited to buy back in 2002 and rode the bubblicious vancouver market again.

Almost took a condo right on Georgia street with Marina slip. I guess it won’t be $600k but $400k soon when I get to buying mode there.
49 Colin // Oct 2, 2008 at 11:09 pm

“Stanifer bought the three-bedroom home four years ago and took out a second loan on it, investing the money in his mortgage-brokerage business.

As his business dropped off dramatically in summer 2007, he did the math. With one of the loans, an adjustable-rate mortgage, about to increase by $1,000 a month, he realized he no longer could make the monthly payments, which totaled $4,000.”

What goes around comes around, though not usually so fast. This charlatan’s website (thanks Joel!) is priceless. My favorite part:

“Most business professionals, especially those in sales, will never experience abundance in life and business as a result of not knowing the “why” behind what they do.”
50 Jillayne // Oct 2, 2008 at 11:12 pm

Hey jon,

“- They get a fresh start on equity
- payments are reduced to comparable to renting

Sure they give up 50% of equity growth going forward, but at the new lower starting price they are starting their gains at a much lower level. So if it goes back up to their original price, that’s a 50% windfall.”

I have Mortgagee Letter 2008-29 sitting right here.

“The Act provides that, in the event of refinance, sale or other disposition, HUD receives the following percentage of initial equity:

During year 1 100% of equity paid to HUD
During year 2 90% of equity paid to HUD
During year 3 80% of equity paid to HUD
During year 4 70% of equity paid to HUD
During year 5 60% of equity paid to HUD
After year 5 50% of equity paid to HUD”

All existing subordinate liens are extinguished ( existing second mortgage holder must simply waive all rights to existing debt.)

If there’s a first payment default, the loan is UNINSURABLE. This means the lender doesn’t receive an FHA Mortgage Insurance Certificate and cannot sell the loan. This would be a big turn off for any lender right off the bat, especially with homeowners who are already in financial distress.

If anyone wants a copy of the mortgagee letter, send me an email with your fax number and I’ll send it over. jillayne at schlicke dot com
warning: 13 page fax
51 economist // Oct 2, 2008 at 11:50 pm

“Yeah, Vancouver is headed for tough times again reminder of 1998-1999.”

The late 90’s were just a hiccup in the market. This is going to be full scale bust like the early 80’s (45% nominal decline).
52 shawn // Oct 3, 2008 at 12:23 am

Q: they seem content to wait for … what exactly?
A: buying low

This really is rocket science.
53 Thomas B. // Oct 3, 2008 at 4:58 am

Q: they seem content to wait for … what exactly?
A: Buying at an AFFORDABLE price.

I really don’t feel sorry for people that bought in the past few years. They should have recognized a bubble market and sat on their hands and rented. There was no reason to buy right away. That mentality was encouraged by the hysteria created by realtors and the news. When I buy a house in the next year, I’m shooting for the moon; 10% off asking is the highest I’ll go. I have no sympathy for stupid people.
54 george // Oct 3, 2008 at 6:37 am

Original asking: $929,000?

Old Rules: Don’t offend the seller with a lowball offer.

New Rules: Don’t offend the buyer by pricing it too high.
55 Matthew // Oct 3, 2008 at 6:55 am

Software,

You are dead on, mortgage rates on a 30yr fixed seem to be hovering right around 6%. LIBOR has skyrocketed this week. It appears that the slight bump downward in mortgages rates has been erased since the Freddie/Fanny bailout.

Where did that troll go that was predicted a boom in sales due to the new low rates from the bailout of F/F? I don’t think he has been posting since mortgage rates have shot back up to 6%.
56 david losh // Oct 3, 2008 at 7:16 am

Buyers can make deals at any time. You can offer 50% off asking price. I, and buyers of mine, ask for 25% to 30% off many times in order to get a good deal.
Offers within 10% of asking price are traditionally considered good offers. When you see price reductions they are within that 10% range. A 10% price reduction is considered good in the Real Estate business. If there is a larger than 10% price reduction it’s a desperation move.
Amatuer agents, or Real Estate agents only in the business for the last ten years, are the ones who took low offers personally. It’s a part of the business. Real Estate agents are supposed to negotiate. Agents can see a good deal and call the buyers they think would want a property, but most deals are made by negotiation.
I think that is a big part of what happened to the industry, amatuer agents thinking that they are some how filling out paper work and causing problems to earn a commission.
57 david losh // Oct 3, 2008 at 7:28 am

The rates today make no difference. Rates can go to 18%, we all know that.
The mortgage industry is going to be the next villian in this mess. You all here focused on Real Estate agents, which may be good, but Mortgages are the problem.
Mortgages come in two kinds FHA and Conventional. They should be thirty year fixed, that’s the only way it works. There is interim financing that can be exotic, with the higher fees and interest.
I don’t see where we had thousands of loan originators, or loan officers, or loan representative selling very questionable laons to home owners, and today they are the ones looking to spin more business out of this.
58 Angie // Oct 3, 2008 at 7:30 am

Thomas B says, Q: they seem content to wait for … what exactly?
A: Buying at an AFFORDABLE price.

Here’s another factoid, also courtesty Aubrey Cohen in his PI blog. He talks about a report by mortgage insurer PMI Group. Most of Cohen’s focus is on their price predictions (make of them what you will). But a few paragraphs in, check this out:

Mortgage insurer PMI Group based its report on second-quarter data from the Office of Federal Housing Enterprise Oversight….Looking at prices, interest rates and incomes, PMI said Seattle-area homes were 1.1 percent less affordable than they were in the first quarter. (Emphasis added.)

Prices are falling, but does that mean they’re more affordable? Guess not.

When I started posting here I took a lot of heat for pointing out that even if prices feel substantially, they’d still be out of reach for median-income earners, i.e., most people still will be priced out forever. And that was assuming that the median remains unchanged, which I’m guessing it won’t. Tim, I hope you’re keeping an an eye on the work by those people at, what is it, WSU? The affordability index people.
59 david losh // Oct 3, 2008 at 8:04 am

Sorry, I miss spelled Loan in the previous comment.
I really want to know why there is this focus on the Real Estate agents and not the mortgages people.
In the affordability indexes you have interest rates. Interest rates are a part of a broader picture to owning properties free and clear. It’s the loan programs they are tied to that make interest rates a factor.
I’ll save this for another time, but I want to know why many people here talk about saving 20% down, in a bank, or financial institution, to give to a bank, or financial institution, so the bank, or financial institution will feel better about giving you a loan?
Why do you focus on Real Estate agents when banks, or financial institutions, direct the appraisers? Why is the blame the Real Estate industry when Underwriters approved these loans?
Loan Originators looked at borrowers rather than the asset. In the same way Real Estate agents left the viability of a property to home inspectors and appraisers, underwriters left the asset being loaned on to Real Estate agents and appraisers.
In a short sale today lenders do a Broker’s Price Opinion, and now an internal review of the opinion. Now they have concern about the asset.
I’m just saying this mess is a financial institution problem. They are the ones who drove the market place and they are getting a free pass here.
60 mukoh // Oct 3, 2008 at 9:58 am

Economist late 90s wasn’t a hickup, I remember bank of hong kong building being for sale and a developer who I know up there taking a $12m loss.
61 mukoh // Oct 3, 2008 at 10:03 am

David,
The blame for this mess is throughout:
Lenders
Originators
Appraisers
Underwriters
Investors
Real Estate Agents
Builders
etc…
There is no one single source to blame. Everyone has a normal aspect in their life and that is the sheep mentality i.e. if everyone is making money so should I, as well as greed. We all have greed, or this blog wouldn’t be here as well.
62 david losh // Oct 3, 2008 at 12:00 pm

Not true.
This guy built a site.
He’s good at it, took a risk, and it does well.
If, and I mean if, he makes money from this point forward it’s because of his gift for providing information.
Greed is another thing all together.
A thief who steals a loaf of bread to feed his family is still a thief.
It’s intent that creates evil.
63 TJ_98370 // Oct 3, 2008 at 10:28 pm

.
Fannie Mae forgives loan for woman who shot herself
64 unearthly // Oct 4, 2008 at 12:49 pm

“Well, I wouldn’t exactly call Capitol Hill “the hinterlands”

I was referring to Factoria/Summerset and Shorewood as the hinterlands not Capitol Hill :-)

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Seattle Bubble

News & discussion about real estate & the housing bubble in the Seattle area.