Here are some stories from the last few days that didn’t make the cut for their own posts.
Aubrey Cohen, Seattle P-I: Home buyers getting off the fence
“There’s still a lot of people who have jobs and a lot of people who’ve moved into the market area and have been sitting, waiting to have the opportunity to buy,” said Bill Riss, chief executive of Coldwell Banker Bain real estate.
Riss and other area real estate professionals argue the time to buy is now, and say they are starting to hear from more buyers.
“It’s not often you have a market where the rates are down and the prices are down at the same time,” said Deborah Arends, an agent with RE/Max Northwest Realtors.
Henry Samonte, an agent with John L. Scott Real Estate, said he saw a big uptick in calls from buyers and visitors to his listings last weekend.
“It seems that people are coming out of the woodwork,” he said.
Later in the article there’s also a great quote from a recent east coast transplant giving the classic renting is “putting your life on hold” canard. People, listen. It’s a roof over your head. No need to get so dramatic.
Yoshiaki Nohara, Everett Herald: Home sellers get creative with incentives
Perfetto Espresso wants to sell coffee, tea — and a house.
A display below the espresso stand’s menu features a two-bedroom, one-bathroom house. It’s up for sale for $279,000 in Shoreline. The house is minutes from the coffee shop in Mountlake Terrace near I-5.
The deal comes with an incentive.
“Free Coffee for 1 Year! Up to $10 per day for anyone who finds a buyer for our house,” part of the display reads.
…
Malchow said he and his wife, Amy, bought the 700-square-foot house in 2002 for about $169,000. The couple with three children moved into a bigger, four-bedroom house in Shoreline in 2006. They started renting out the first house.The first house’s value climbed to about $315,000 at its peak in 2006, and it has been losing value since the housing bubble burst, Malchow said. The problem is that the Malchows get about $1,200 per month from renters while their mortgage costs them about $2,000 per month. They pay the difference out of their pocket.
According to my (admittedly rough) calculations, they’re still about $50k overpriced. Good luck to them, but the real incentive for buyers in today’s market is an attractively priced property, period.
Eric Pryne, Seattle Times: Downtown office markets may soon see vacancy rates in the teens
Here’s some solace for the region’s office market as landlords face a bleak 2009: In downtown Bellevue, and perhaps downtown Seattle, this downturn probably won’t be as deep as the one that followed the dot-com bust, several industry prognosticators say.
Vacancy rates in the two downtowns will climb well into the teens this year as companies downsize and new office buildings — some still lacking even a single signed tenant — come on line, according to new reports from brokerages Cushman & Wakefield and Grubb & Ellis.
The current guess is that things won’t be as bad as 2001-2003. Of course, six months to a year ago, the guess was that things wouldn’t drop here at all, so you may want to take the predictions of these local economists with a grain of salt.
(Aubrey Cohen, Seattle P-I, 01.11.2009)
(Yoshiaki Nohara, Everett Herald, 01.11.2009)
(Eric Pryne, Seattle Times, 01.08.2009)
The Tim » Jan 12, 2009 at 7:46 am
Weird. Upon further investigation of the Everett Herald story, the details don’t quite match what was printed. The story says they paid “about $169,000″ for the 700 sqft house, but King County records say they paid $183,800.
Not only that, but it looks like the article isn’t telling the full story, either. Records show the original purchase in February 2002, with additional mortgage actions (Deeds of Trust) on the property in September 2002, May 2003, and April 2006. Hmm…
twostar » Jan 12, 2009 at 8:16 am
Later in the article there’s also a great quote from a recent east coast transplant giving the classic renting is “putting your life on hold” canard. People, listen. It’s a roof over your head. No need to get so dramatic.
I don’t know, my life gets put on hold for about two weeks a year each year as I vacation in a foreign country with some of the money I saved renting. So, renting does put your life on hold.
anony » Jan 12, 2009 at 8:23 am
Better buy some coffee. They probably really need the business!
mukoh » Jan 12, 2009 at 8:32 am
They just need to buck up and convert that stand to a bikini hut. Then they will make enough to pay that mortgage
Plymster » Jan 12, 2009 at 8:52 am
Twostar @ 2 – Nice one!
“so you may want to take the predictions of these local economists with a grain of salt.” — the Tim, main article
Regarding economists predictions, I don’t tend to listen to most of these guys, since (like former NAR economist, David Lereah) they spin the numbers to make their respective benefactors happy. If I’m going to listen to economists, it’ll be someone like Paul Krugman, who doesn’t have a dog in this fight.
Ira Sacharoff » Jan 12, 2009 at 9:01 am
“Later in the article there’s also a great quote from a recent east coast transplant giving the classic renting is “putting your life on hold” canard. People, listen. It’s a roof over your head. No need to get so dramatic.”
I’ve learned over many years that it usually gets me in the doghouse when I tell my wife ” No need to get so dramatic.” It tends to make things a lot worse. Feelings are just feelings, they’re not invalid.
Just because you feel that renting is like putting your life on hold doesn’t make that feeling wrong or overly dramatic. It’s a perfectly valid feeling shared by a lot of other people.
However, it also doesn’t mean that anyone needs to rush out and buy a house and pay double their rent. Some people feel that they are not happy unless they own a home. That doesn’t mean that everyone should own a home, or that many people can’t be perfectly happy as renters.
But referring to someone’s feeling as a “canard” ?
I can just hear some people’s reaction to that….”Don’t tell me how to feel.”
DrShort » Jan 12, 2009 at 9:06 am
I wonder if these “the worst is over — now is the time” actually cause inventories to rise by motivating would be sellers to put their homes up for sale?
The Tim » Jan 12, 2009 at 9:09 am
Ira, to be fair, the person quoted in the article didn’t put it in terms of “I feel like I’m putting my life on hold.” The quote was phrased in a more general way as if to say “this applies to everybody.”
CostcoMike » Jan 12, 2009 at 9:51 am
I currently rent a 12×12 room. I couldn’t be happier. I am putting away for retirement at a young age. I live simple with less to take care of. I am even saving enough I am thinking about going back for my doctoral degree in a couple years and I am only 26. I feel like renting has put me in the fast lane.
The Tim » Jan 12, 2009 at 9:55 am
I have just one question for you, CostoMike (if that is your real name)…
Why do you hate America?
If we’re going to save our economy, we must all band together and spend. Spend spend spend, then spend some more. None of this living cheaply and saving nonsense. Savers hate Freedom™. You don’t hate Freedom™, do you CostcoMike?
Herman » Jan 12, 2009 at 10:08 am
I’ve lived in a small house for 11 years.
You can’t ignore the effect that a small house has on reducing spending. It’s full and I can’t fit any more stuff. So I don’t buy much stuff. I think that has saved me a LOT of money.
Buy a 4,000 square foot house and you need to buy 4,000 square feet of furnishings, lawnmowers, tools, and all that other garbage. That adds up!
CostcoMike » Jan 12, 2009 at 10:13 am
Not a hatred for Freedom™, but I have a thirst for knowledge and new ideas. So I guess I am more old school Freedom™, you know where we invent new technology, better ourselves as a society, possible discovery of cures for diseases, or solve major issues facing humanity. I guess I am just stuck in the past…
Oh no! it must have been my fault the economy tripped and broke its nose! I better go buy a car or something. Is it ok to pay cash for it though?
Funny thing, my name badge does read Costco Mike in that order…
Lake Hills Renter » Jan 12, 2009 at 10:19 am
The Tim @ 10: “Why do you hate America?”
Hah! I was actually reflecting yesterday on the idea that’s presented here sometimes that predicting decreasing home values equates to taking enjoyment in the pain of others, and I realized that was the housing equivalent of asking someone why they hate America when they disagree with the President. So your quote is very prescient for my thoughts lately!
Dave » Jan 12, 2009 at 10:43 am
The latest PI article strikes me: some buyers say they have a feeling the market is about to bottom. Nice to have a buyer quote, but what is their feeling based on? A real estate CEO has the usual “things are getting better” quote. Tim seems to be the only person quoted whose opinion is actually based on data.
Hmm, I think I’ll listen to the person with data.
Dave » Jan 12, 2009 at 10:46 am
It does concern me that Robert Shiller is now starting to talk about low interest rates, etc. creating a false bottom, or double-dip housing decline.
I do think there’s risk in the government interfering too much in the market cycle.
wreckingbull » Jan 12, 2009 at 11:58 am
This ‘life on hold’ thing is quite interesting to me. ‘Amy’ in the post http://seattlebubble.com/blog/2009/01/10/to-buy-or-rent-not-just-an-emotional-decision/ states a similar feeling with:
It’s also hard working full time and feeling like there’s nothing I’m working toward.”
Don’t worry, I won’t tell anyone how to feel, but I do find it so interesting how some put so much value in home ownership. For me, renting actually allows me to live a much better life than if I were to buy, but I must have a very different value system to come to that conclusion.
I can’t help but wonder if this all-or-nothing attitude is what caused so many people to make so many stupid decisions during the boom. I absolutely know it is why the real estate porn shows on cable television were so popular. To each their own.
pfft » Jan 12, 2009 at 12:05 pm
“ts housing recovery largely depends on when potential buyers decide prices are low enough.”
gosh, I thought the Seattle was different mumbo jumbo went away when sales plunged and home prices fell. memo to seattle, nobody thinks you’re special least of all the market.
really, what is so special about seattle? nothing that any other large city can offer in some form or another.
pfft » Jan 12, 2009 at 12:09 pm
“I don’t know, my life gets put on hold for about two weeks a year each year as I vacation in a foreign country with some of the money I saved renting. So, renting does put your life on hold.”
Imagine how much of your life is on hold when you spend sleepless nights worrying about the declining value of your home or whether you can make the mortgage?
pfft » Jan 12, 2009 at 12:20 pm
“Tim seems to be the only person quoted whose opinion is actually based on data.”
I think that says a lot about this blog. good job tim.
Yesler Hill » Jan 12, 2009 at 12:30 pm
I had to give Cohen minor kudos for daring to even allow a The Tim quote in one of Cohen’s usual flack pieces.
BUT; the real problem with the article, and this whole line of thinking that there is a “mythic natural business cycle” just adds to our problems. We (nor most people on this earth) can afford to keep “growing” the capitalistic economy into another prosperity bubble. It’s was a 50 year bubble that has busted out on so many levels.
And as too renting: in many states on the west and east coast localities have rent stabilization ordinances that make renting a stable life long form of housing. The myth of ownership as being the height of being an “American”, is an outrageous fraud, a marketing gimmick that has become sacrosanct.
mikal » Jan 12, 2009 at 12:42 pm
Yesler Hill please name the localities with rent stabilization and area where it really works. My understanding of this is that typically those areas have loads of apartments that aren’t taken care of.
Bits_of_Real_Panther » Jan 12, 2009 at 12:51 pm
Yes there is something wrong with that math, a $2000 payment on a $180K mortgage is way out of line. Tthey must have leveraged a 2nd on that house to put a down payment on house #2. Nice work if you can get it
Groundhogday » Jan 12, 2009 at 12:57 pm
We rent a 2 bedroom apartment with all utilities included at $685/mo. I work full time (faculty) and my wife works half time (health care), and by living in this apartment we are salting away $4000/mo ABOVE max 403b contributions (~2000/mo+).
Why would our lives be on hold??? Why would we not be working toward something? When housing prices come down to a reasonable level, we’ll be able to purchase a house with cash savings and not ever have a mortgage. That is something tangible to work toward, isn’t it?
Softwarengineer » Jan 12, 2009 at 1:00 pm
PINK PONY DON’T YOU KNOW PHILOSOPHY [WITH NO FACTS, JUST OPINION]
Costco Mike hit the nail on the head, America has stopped inventing and manufacturing our own stuff is a four letter word….but I thought all those bright new minds MSFT insourced thelast decade would save our bacon….lol…it did one thing, CNN recently reported beginning engineers/scientists are now making less than the average four year degree worker in general, $35K/yr avg. They attribute too much H-1B driving tech pay and Seattle real estate down.
And, why should a kid take up engineering in school [one of the hardest curriculums at the U of W], why not become a history major and make more money?
Bits_of_Real_Panther » Jan 12, 2009 at 1:02 pm
$1200 is way too much to rent a little shack like that too, even in a cultural hub like Shoreline
Ira Sacharoff » Jan 12, 2009 at 1:04 pm
“please name the localities with rent stabilization and area where it really works. My understanding of this is that typically those areas have loads of apartments that aren’t taken care of.”
I agree with you Mikal. Most cities with rent stabilization laws are way too restrictive and landlords can’t afford to make repairs. I know a landlord in West Hollywood, however, who’s pretty happy with the laws there. He can raise rents by demonstrating that he’s spent money for repairs and anytime someone vacates, and is allowed to rasie rents based on inflation as well. He’s got a cool old 50’s building with a very eclectic mix of tenants, most of whom are pretty new, which means he can charge more for those units.
b » Jan 12, 2009 at 2:05 pm
People need to figure out that buying a home is a business decision (family business) and should treat it as such, we would be in a whole lot smaller mess if they did. Unfortunately it seems most people attach the same significance to buying a $500k home with a loan as they do to buying the latest trendy-company shirt at the mall. Ooooh, I gotta have this so my friends think I am so awesome!!1! I guess its just hard to show off when you have a large bank account rather than an overpriced Ballard "chocolate"box.
pfft » Jan 12, 2009 at 3:14 pm
“Why would our lives be on hold??? Why would we not be working toward something? When housing prices come down to a reasonable level, we’ll be able to purchase a house with cash savings and not ever have a mortgage. That is something tangible to work toward, isn’t it?”
exactly right. why wouldn’t someone without a house payment not feel good about paying off the car, credit cards and savings.
why would having a lot of money in the bank feel better than paying a mortgage? if you like a mortgage payment so much just figure one out and PAY IT TO YOURSELF!
Lake Hills Renter » Jan 12, 2009 at 5:09 pm
“if you like a mortgage payment so much just figure one out and PAY IT TO YOURSELF!”
I already do this. I pay money into a savings account every month, which becomes the basis for my down payment when I decide to buy. My rent plus this monthly extra is more than I expect to pay for PITI, so I won’t have to stretch to pay the montly payment — I already am. But then, my life is on hold while I rent, so what can you expect?
mukoh » Jan 12, 2009 at 5:42 pm
Its different for everyone. I myself have bought properties and have paid down enough on them to have income that is passive yet at the same time in the range that I don’t have to work anymore for bills, i work for my own pleasure and growth.
Some of these people that have mortgaged up houses and spent on new caddies really make me laugh. But i enjoy it as that is the kind of people the economy needs. Give them another credit line next month and they will do the same 90% of the time every time.
patient » Jan 12, 2009 at 5:51 pm
In communism you have an elite that ensures that people remain poor by law which forces them to work hard to sustain the elites lavish lifestyle and power trips. In capitalism you have an elite that ensures that the common man is driven by a culture of consumerism to over spend with credit to the same result: work hard so that the elite can keep the canyon between them and the common man.
mukoh » Jan 12, 2009 at 6:05 pm
patient,
You summed it up perfectly.
Brian » Jan 12, 2009 at 7:09 pm
Fantastic email I received today:
“Hi there!
My name is Maggie and I just read you ad on craigslist. I can’t help but wonder why on earth you would want to rent if you can afford $1450/ month? I do home loans. We lend on town houses, condos, manufactured homes, and stick homes. I can help you get into a house for about the same (most likely less in your case) you would pay for rent. As of now USDA home loans are at a great rate and they are 100% financing now money down what so ever. So if I can help you let me know I’d be happy to answer any questions. ”
My response:
“Maggie,
The main reason I want to rent is because purchasing a home right now is a foolish financial decision. I’d prefer to wait for sellers and real estate agents to become realistic about home prices. In the meantime, even if housing prices stay flat for the next few years (as opposed to falling), renting is by far the wise move. Plus, no worries about maintenance, insurance, property taxes, and I retain flexibility to move if I desire.
But I thank you for your concern and input.
Brian”
Interloper » Jan 12, 2009 at 7:51 pm
“I can help you get into a house for about the same”
Have we grown so blind to the implications of purchasing something? Yeah, with credit for many years we could “get into” something we didn’t need to own. A lot of people “got into” an underwater home using the same reasoning.
The bubble’s not over til more of this kind of b.s. stops. Right now mortgage lenders are partying like it’s 2004, meanwhile real estate is in 2009.
Hector » Jan 12, 2009 at 9:56 pm
Interloper, thought of what someone posted on the PI board in response to the first ‘Fence’ article. I’m glad someone responded immediately. Moronic…:
Posted by TheProfit at 1/12/09 6:23 a.m.
This is likely to be as good as it gets. There’s not much difference in the monthly payment for a $500,000 house at 5% interest vs. a $400,000 house at 6% interest.
The current level of mortgage rates is incredible. Coupled with the cooling off of home prices, this is an unprecedented opportunity.
Housing prices might decline more, but if mortgage rates go up, your monthly mortgage payment will be about the same.
If housing prices don’t drop much more, and mortgage rates go up, you will have missed out a great opportunity.
TheProfit
#655167Posted by xrower at 1/12/09 6:39 a.m.
That’s the mindset that helped cause this mess: Sure the house is overvalued by 25%, but it’s OK because you can afford the payments.
BanteringBear » Jan 12, 2009 at 10:23 pm
I have a few opinions. First, $180k for a 700 square foot home is WAY too much. They’re asking $279k? Dream on. Next, I would argue that purchasing an overpriced, depreciating shelter is far more restrictive than renting, for obvious reasons, therefore much more likely to cause someone to feel their life is on hold.
aman » Jan 12, 2009 at 10:23 pm
Why is renting a “far more wise move” if prices remain flat? (i.e. we’ve hit bottom) I can get 4.5% on a 30-year fixed right now, so if we’ve bottomed out then it’s a pretty sweet deal. (Disclaimer: I personally don’t think we’ve hit bottom, it’s just that this line of thinking makes no sense)
shawn » Jan 12, 2009 at 10:52 pm
If that house is only overpriced by $50k, then that is still one very expensive cup of coffee. $50k $3,650
Jonness » Jan 12, 2009 at 11:22 pm
“And, why should a kid take up engineering in school [one of the hardest curriculums at the U of W]”
Because that kid is a freak like you and me. Why else would anybody born on American soil get off on doing such hard work?
The Tim » Jan 12, 2009 at 11:45 pm
Hector @ 35,
I’m pretty certain that the person that posted on the P-I story as “TheProfit” is the same one that left this comment on yesterday’s poll.
He sounds like a real estate salesman, but I’m pretty sure he’s just a regular guy that has totally bought into the “it’s always a good time to buy” mantra.
Alan » Jan 13, 2009 at 12:31 am
I love it. And it’s true too.
Sadly it doesn’t make me feel like any less of a chump for working my ass off my whole life for a fraction of what people who worked less hard get.
Emma Anne » Jan 13, 2009 at 6:57 am
USDA provides mortgages? Do you get free milk?
Sniglet » Jan 13, 2009 at 8:48 am
It looks like another show is about to drop. The Federal Home Loan Bank of Seattle has suspended it’s dividend, citing significant losses and a possible shortfall in regulatory capital requirements.
http://www.calculatedriskblog.com/2009/01/federal-home-loan-bank-of-seattle.html
Rumour has it that many FHLBs are in pretty bad shape, having lent massive amounts of cash to struggling banks over the last couple years.
johnnybigpsenda » Jan 13, 2009 at 8:48 am
software engineer @24: recent engineering grads are making $60-80K first year at Boeing… some make more if they can get the OT authorized… not sure how long they will be around, but I hope they keep them… there is a huge separation between 55 year old enginerds and then the recent hires @ 24years old… Boeing is going to forget how to build an airplane soon.
Hector » Jan 13, 2009 at 9:40 am
Good catch Tim. If it’s not the same person, it’s the same crazy town mentality. For his sake, I hope it’s all a joke.
gitano » Jan 13, 2009 at 11:36 am
Back in 1991 engineer at Boeing got 32k out of college and a house was about $120k roughly 4 times the salary. Today new grad gets 60k to 70k and so a house should be around $240k to $280k. Over simplification!! Maybe!
Teacher_Greg » Jan 13, 2009 at 2:20 pm
Perhaps the buyers are getting off the fence, but the next few months of data will tell us which side of that fence they were heading towards.