Posted by: Timothy Ellis (The Tim)

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

33 responses to “Potential Pitfalls to Watch for at Real Estate Auctions”

  1. softwarengineer

    MY ADVICE

    Don’t go to auctions until about 2011 or so, when all the investors’ money is likely going to be dry bidding up 2009 and 2010 auctions.

    Haven’t you bloggers noticed the justification of grabbing up now before its price goes up and its gone; has suddenly reversed itself?

    Each week brings a new chapter of the ever changing tale of America’s economic mess.

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  2. deejayoh

    Lumen is great, if you feel like living in a three story QFC.

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  3. anony

    Minimum bids for Lumen range form $211.10\sqft to $381.84/sqft, according to the link.

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  4. Kary L. Krismer

    RE: softwarengineer @ 1 – My advice would be shorter. Don’t go to auctions, unless you’re very wealthy, and can handle (and stomach) a lot of risk.

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  5. David Losh

    You’d have to be brain dead to be the winning bid at auction, or do business with a bank.

    There again this is the most bizarre market I have ever seen. Where are these buyers coming from?

    Why would any one make an offer today when in six weeks we will see if there is any strength left in the housing market? By September, at the latest, of this year housing will either hold it’s own or tank.

    You can talk about 2011 or 2012 all you want, but this year, the year of Hope, will tell what the market is made of. So I don’t see going to an auction and plunking down cash for anything Real Estate or bank related.

    I don’t see why any one would take out a loan, but some people have to buy, and that’s OK, there are properties worth the price, but some things are just junk.

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  6. Kevin Lisota

    I went to a big DR Horton auction in December at the Westin in Seattle. It was a frenzy of activity. They had a closing room filled with escrow, title and loan reps and were lining up the winners one after another. It all felt very exciting, but I think that is the whole problem. Many of these buyers got wrapped up in the excitement of the auction, and failed on their diligence for the properties that they were buying. I saw some good deals, but I also saw many final prices that were the same as what you would have gotten by negotiating on the open market.

    As a participant at one of these auctions, you need to be skeptical of the numbers thrown around. You’ll find opening bids that are deceptively low. The $150k initial bid will hit $250k within a couple of bids. Also, you need to be aware that they will publish “previous values” to show what sort of discount you are getting. Sometimes these values are listing prices from long, long ago. That is clearly deceptive, given the price declines that have happened in the mean time.

    Bottom line, do your diligence and be careful when participating in these auctions. I wrote a post about my experience in December:

    http://blog.findwell.com/seattle-real-estate/don-t-believe-the-auction-hype/

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  7. mojo

    A suggestion for anyone considering purchase of a condo (not just at an auction) – check out the association fees. From what I’ve heard they’re very high at Lumen – something on the order of $660/month for the ~1000sf lofts

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  8. E

    LOL

    Not one mention about the potential for “shill” bidders at auctions in general.

    Then again…Lumen has Tim on the payroll (via advertising) now.

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  9. wreckingbull

    Here is the problem with many auctions, and why I stopped buying tools at James.G. Murphy auctions – A few dimwits ruin it for everyone. I often see poorly informed people who get caught up in the emotion of the moment and end up paying too much. The rest of us who did our research and devised a logical max price get screwed. I can’t count the number of times I see people buying things for more than market price.

    Of course – this is exactly what the auctioneers hope happens, and that is fair enough.

    Be careful.

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  10. David Losh

    The whole point of the auction is to generate business leads. The sales can be lost leaders but there is a market niche of dealer Real Estate.

    Some people have the hot deals, or so they say. Auctions in general for real estate are always a gamble. If it was good property, that was easy to sell, an auction wouldn’t be required.

    You can sell without disclosure at auction. The auction is the only place where you buy as is, and they can make that stick. The auctioneer is between you and the seller. Buyer beware.

    In the post Kevin linked to there was a single comment from an auction house in Florida, where the really good deals are, just kidding, it was sarcasm. At one auction condo units were selling for $30K. They were previously listed for $300K. My problem is that similar units in 2000 were selling for $30K. That’s $270K of appreciation in 8 yrs.

    That brings me to today’s market place here in Seattle. I just looked up a couple of properties I noticed had sold signs on them. What are people thinking? Why are people buying properties for $400K or $500K when in 2003 they were $275K or $350K? Let’s just say they were $300K and $400K. Why would any one pay more than that today?

    I know i’m on a bubble site, I understand about CMAs, but it makes no sense financially.

    I looked at 2005 pricing on some homes and it was high. In my opinion by 2007 the market had way over shot any reality. Why are people using that peak to compare pricing to?

    So to me comparing what a property might have sold for is no gauge of it’s value. There are no per centage discounts for random properties that have no competition. So why would any one take that kind of risk of buying at auction?

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  11. Scotsman

    RE: wreckingbull @ 9

    That’s funny, I used to go to the Murphy auctions too, until it became apparent that it would be cheaper to just go and buy new. Auctions bring out a competitive streak in just enough buyers to kill the idea of getting any kind of a deal. The one exception might be those auctions where the state has placed restrictions on access, such as insurance salvage for cars, etc. But even then every once and a while ego or competitiveness pushes logic out of the room.

    These guys aren’t desperate enough yet, and there’s a sector of the public that still thinks real estate has potential. Any one who buys is guaranteed a loss, especially on a high end condo with high end maintenance fees.

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  12. deejayoh

    By mojo @ 7:

    A suggestion for anyone considering purchase of a condo (not just at an auction) – check out the association fees. From what I’ve heard they’re very high at Lumen – something on the order of $660/month for the ~1000sf lofts

    yup. $0.60 per square foot. Gotta keep up that grocery exterior, yanno

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  13. Ira Sacharoff

    RE: Scotsman @ 11

    I’ve purchased numerous great vehicles at the Murphy Auction. The key for me has been to only bid on the most boring items that don’t attract attention, like government surplus, low mileage sedans.

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  14. Kary L. Krismer

    I’m surprised no one has mentioned eBay.

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  15. Mark J Garey

    I’m sure the Lumen auction is designed to create a sense of urgency to purchase without checking-out the facts first. On a similar note, I went to the trustee auction on Friday at the steps of the King County building (downtown 4th Ave)… Very interesting and I would suggest people check it out as there were very few people attending and it’s organized chaos (several lender’s reps/attorneys were auctioning homes at the same time)… Many homes were auctioned without a single bidder other than the lender submitting a pre-written opening bid and the lender basically buying it back (according to the auctioneer, you just had to bid $1 more). One of the attorneys I spoke with explained many new things to me and one critical point is you don’t get a warranty deed but a trustee deed (they are not the same…). Just make sure you get title insurance on the trustee deed.

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  16. mukoh

    These auctions are an interesting gimmick. So far actual seller or bank organized auctions are just that, to create that fuzzy feeling of someone getting a good deal.

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  17. Scotsman

    RE: The Tim @ 13

    Nice job! We’ve got the same Weber, love it. We’ve been BBQing our TG turkey in one for the last couple of years. Not only do you avoid having the annual TG power-out adventure, but the bird tastes great!

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  18. Ross

    I attended a couple auctions as I was purchasing a home. I’m also a longtime seller on ebay, so I have a good reasonable idea about the psychology of selling at auction (I’ve occasionally sold things like gift cards for above face value, which points to the sheer stupidity of buyer’s getting caught up in the excitement).

    The queen anne high school auctions were held in march by Kennedy Wilson in downtown seattle. The terms of this auction were about the most reasonable you get:

    - No hidden reserve (so winning bidders at or above the startingf bid price would win the property)
    - No buyer premium (so auction house was paid out of proceeds, buyer was not required to add an additional percentage to pay for the auction house)
    - No “subject to” clauses, meaning winning bids were final sales, not subject to approval by seller
    - No disclosed shill bidding

    So it was a reasonably fair auction. Homes that day sold for around 43% off peak prices (on average). My notes from the auction were posted @ http://www.urbnlivn.com/2009/03/22/queen-anne-high-auction-results/#more-1024.

    I also attended a REDC auction in April at the Medenbauer center. This was an auction of foreclosed/bank owned homes. In contrast to the QAHS auctions, the terms of this one were decidedly unfair to the buyer

    - All auctions were “subject to seller approval”, which in effect means you are bidding to give the highest offer (one which you cannot walk away from)
    - 5% earnest money due immediately on winning auction (in cashier’s check). Though, I guess this could be considered helpful if you are serious, as the largish amount will rule out some of the potential buying market. But it means this auction is hard to walk away from
    - 5% premium added to winning bid to pay auction house
    - EXTREMELY one sided contract, with no outs for buyer and plenty of outs for the seller (i.e. no contingencies, inspections, etc).

    So do your homework, and don’t believe the hype.

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  19. Kary L. Krismer

    RE: Mark J Garey @ 16 – By the time you’ve bid it’s probably a bit too late to get title insurance. I’m not sure what the enforcement methods on regarding bids, but you have to know what’s in front of you before bidding. The worst is a “lis pendens” because that means you could lose your entire interest based on the outcome of a pending lawsuit, but it would also be bad to discover you’re buying subject to a $240,000 first position mortgage.

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  20. softwarengineer

    RE: Kary L. Krismer @ 20

    GOOD ADVICE KARY

    Without a Listing Agent’s written analyses and backup; you may be buying a lot more than just a potential bargain house….like a bunch of costly leans to settle.

    I’d have to see it in writing too, verbal assurances by the auction is way too risky.

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  21. Kary L. Krismer

    RE: softwarengineer @ 21 – To be clear I was only talking of foreclosure auctions. I’d assume that these site auctions are clear of liens and such, although I guess it would be best to check on the terms of sale.

    As to the issue of warranty deed vs. trustee’s deed vs. quit claim deed, it probably doesn’t matter much if your seller is in financial trouble. The warranty is only as good as your seller, and they might have a bankruptcy in their near term future.

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  22. Andrew

    James G Murphy just held an inventory reduction auction for Sound Built homes. 29 listed and 17 sold and they are calling it a great success. Do auctions usually sell less than sixty percent of items and consider it a success, or does that mean those that were successful bidders got good deals? From what I could tell from one home sold it went for about 20% off of the price it was listed at.

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  23. David Losh

    RE: Kary L. Krismer @ 20

    Another reason for foreclosure and a buyer beware is structural or land use defect. I consulted with a guy who had talked his girl friend into buying a foreclosed property. It had a spring in the back yard.

    He wanted to sue the neighbor for water run off. Idiot.

    The house up the street from me was bought at auction and the “investor” who fixed it to sell just paid $30K in work orders for foundation work.

    Another home bought at auction that is going back into foreclosure had a main beam in roof that was rotted. You know, those 1950 open floor plan houses with the big exposed beam down the middle of the cathederal ceiling. It was rotted and the buyer was required to remove the beam and replace it or the property was going to be condemned as a hazard.

    I’ve got kind of a long list, but you get the idea. Oil tank leak is another one.

    In foreclosure there is no disclosure.

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  24. David Losh

    I came here to share that I got a solicitation from Dean Street at John L Scott the foreclosure expert.

    They are looking for more suckers, I mean buyers, and want every one to know that foreclosure auctions aren’t just for investors any more.

    Your home buyer client will be well taken care of by Dean Street of John L Scott, the foreclosure expert, he really is. He will also pay a 10% referral fee. LOL, that’s for Lots of Luck.

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  25. Jonness

    “I looked at 2005 pricing on some homes and it was high. In my opinion by 2007 the market had way over shot any reality. Why are people using that peak to compare pricing to?”

    I believe it’s due to a combination of impulsivity and stupidity. It’s neither good nor bad, it’s just how a percentage of the world operates.

    We are currently witnessing an unprecedented buying opportunity. If the value on the $500K house you want to buy goes up 10% while you wait and save $40K toward a larger downpayment, it doesn’t seem like waiting was worth it. But when that $500K house goes down 10%, and you also saved $40K, that’s $90K you don’t have to borrow. And $90K borrowed is really $180K by the time you pay off the loan.

    What’s more, if we’re really fortunate, mortgage rates will skyrocket over the next year or so. Thus, house prices will go down to reflect affordable monthly payments, and we get to write off all the extra interest added to the monthly payment.

    What really blows me away is we’ve had the good fortune of seeing other cities collapse in front of us; yet, these impulsive Seattlites are jumping in at 20% off the peak, just as the impusive Vegasites jumped in a year or so ago and wound up regretting it.

    But, I’m happy everytime I hear about another impulse buy, because that means the buyer is trapped, and when house prices get really cheap, I won’t have to compete with trapped buyers who love to bid up prices. Plus, it’s fun to witness all the impulse buyers get shaken out of the market on the way to drastically low prices.

    Everything is going perfectly according to plan. It’s happening just like clockwork. This is definitely the easiest fortune I’ve ever saved. It’s been a no-brainer from the get-go.

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  26. Kary L. Krismer

    By Jonness @ 26:

    What really blows me away is we’ve had the good fortune of seeing other cities collapse in front of us; yet, these impulsive Seattlites are jumping in at 20% off the peak, just as the impusive Vegasites jumped in a year or so ago and wound up regretting it..

    Apples and oranges.

    Case-Shiller uses an index number of 100 for January, 2000. So all the cities in the index were 100 in that month. Here are the approximate highs of some of the cities hardest hit:

    Phoenix 223
    Los Angeles 273
    San Diego 249
    San Fransisco 218
    Las Vegas 234
    Miami 280
    Tampa Bay 237

    In contrast, Seattle only went up to 192, peaking in 2007. Now that was almost a 10% annual rise, which can be problematic, but those other cities were well over that. Seattle has also done third best since 1/2000, with the two ahead being the large cities of LA and NYC.

    Cities are different. For example, in Phoenix they can build out in just about any direction. So it really isn’t surprising that their C-S number is now just over 106. You’d expect that to some extent, especially since they actually build roads down there, making commuting less of an issue. What you wouldn’t expect is a city like that doubling in value in 4.5 years, but when that does happen you’d expect trouble afterward.

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  27. To the Students from my June 18, 2009 REO Class at Firstam Bellevue : ceforward.com

    [...] Here is the article on condo auctions from Seattle Bubble. [...]

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  28. Jonness

    RE: Kary L. Krismer @ 27

    While I agree cities are different and will correct to different levels at different times, your argument sounds dangerously like the old “Seattle is special” argument.

    When it comes to RE during the bubble, all cities are apples. The reason why is obvious. The same economic fundamentals that drove prices up all over the U.S. and are now driving them down. I performed a study that showed all WA cities’ house prices went up at a similar percentage rate relative to where they began. As it turns out, Seattle had a typical price increase compared to other cities in the PACNW. If Seattle is so special, why did Spokane house prices keep pace with Seattle? What is so special about Yakima? After all, they can build out in any direction they want in those cities.

    It’s because economic factors that drove prices up in Seattle were national factors and had absolutely nothing to do with Seattle being special. By the same token, macro-economic factors currently driving down house prices in Seattle also have nothing to do with Seattle being special. If Seattle is so special, why did prices in Miami, Las Vegas, San Diego, et al outpace Seattle house prices on the way up? If Seattle is so special, why was it relatively valued less than those cities during the economic mania? What changed to make Seattle so much more special than FL, CA, NV et al starting about 2 years ago?

    To understand the future of Seattle house prices, it’s imperative to steer clear of “local bias” and ask, are house prices historically affordable? How much further do they have to fall to be historically affordable? How much might they overshoot the bottom of the impending correction? Is the local consumer saving or spending? What is the local unemployment rate? How debt leveraged is the consumer? How available are loans compared to during the bubble? How many people are making money in the market and spreading the wealth effect meme? How many people are losing money in the market and spreading the wealth destruction meme? How safe do people believe their jobs are? What effect will the coming massive wave of Alt-A/option arm foreclosures have on Seattle house prices? IOW, we need to get away from all the feel-good local bias-based economics and concentrate on legitimate economic fundamentals and facts.

    So Seattle only ran up 86% as far as Pheonix is supposedly meaningful as to whether Seattle will correct back to historical levels of affordability or not? The biggest bubble cities started correcting prior to the financial collapse. In fact, the overpriced houses are what caused the financial collapse. Recessions usually result from non-housng factors, and the pullback causes the housing market to correct. So I’m to believe Seattle is so special, not only is it immune to the effects of prices WAY beyond what is historically affordable, it is also immune to the effects of the worst economic crisis since the Great Depression? Seattle hasn’t even corrected to historical levels of affordability, let alone paid the price for the current economic collapse!

    Cities are apples, and people are oranges. Prices across the U.S. shot beyond levels of affordability due to macroeconomic factors–not because any city was particularly special. Yes, during the mania, some cities were percieved as more special and ran up further. But what’s important is the final correction level will be relative to pre-bubble levels. We can slice and dice the CS however we see fit, but in the end it comes down to cities being favored about the same prior to the bubble as they will be favored after it corrects. Thus, no one particular city will stand out as being so favorable that it is the only orange in the U.S. and can sustain the downward pressure of economic fundamentals. They will all correct back to historic levels of affordability compared to local rents and incomes and be tracking about even with where this mess began once the economy is growing at a healthy rate again. Of course, some cities like Detroit will have drastically reduced rents and incomes, thus house prices will be below where they began, but that’s another discussion. IOW, the key here is where rents and incomes land,

    Of course the Seattle is special crowd will go crazy from reading my argument and go on and on about how this factor and that factor disproves it. But, I suspect, these people fail to consider that CS measures price increases from the 100 level. IOW, prices were valued about the same in all cities starting at 100. Thus, any increase from that point is mostly due to the housing bubble mania, not because prices suddenly deserve to be permanently above historical affordability in that city because, at the end of the housing bubble, that city suddenly aquired some sort of specialness that wasn’t associated with it in the year 2000.

    Of course the Seattle is special crowd will cite that not all cities have the same unemployment rate, job diversification etc, so all cities will correct uniquely. Yes this is true to a minor extent, but when the economy comes back, as a general rule of thumb, all cities will correct relative to their incomes and CS status in 2000. IOW, no matter how great Seattle is, if it doesn’t have a jump in income compared to other cities, it won’t hold up to house price deflation better than other cities.

    “Seattle has also done third best since 1/2000, with the two ahead being the large cities of LA and NYC”

    I don’t want to go off on another tangent, but this sounds dangerously like the old “Seattle has corrected less than other cities because it is special; thus, Seattle houses have hit bottom and will bubble up from here” argument. Yet, there is a long standing historical trend of WA starting downward later in recessions and correcting upward later. IOW, the state historically lags recessions, so we should expect that the Seattle housing correction started later than the national average and will correct later as well.

    But let’s get back to this theory that NYC is slightly more special than Seattle, but both cities’ house prices will stay way above historically affordable levels from here on out. After all, NYC is a world-class city and a world-class tourist destination. It’s massively special with the Empire State Building, the Statue of Liberty, etc. It’s surrounded by water, and you can’t build there anymore. How could it not be so special that it’s immune to macroeconomically driven house declines?

    Well, perhaps we should ask the economists over at Deutch bank to answer this question for us.

    http://blogs.wsj.com/developments/2009/06/16/deutsche-bank-predicts-40-drop-in-new-york-home-prices/

    “How much further could home prices tumble in the New York City metro area? Deutsche Bank predicts a decline of 40.6% from the first quarter of 2009…Median prices in the first quarter of 2009 dropped to $446,000 in New York, down 19% from the peak of $552,000 set in the second quarter of 2007. Deutsche Bank forecasts a total peak-to-trough decline of 52.1%.”

    Have people ever heard of the terminology “local bias?” I suspect most wars result from it. Yet, as powerful as it is, it’s not powerful enough to stop Seattle house prices from overshooting the bottom while adjusting toward historical levels of affordability. Historically high Seattle house prices are due to national economic factors. As difficult as it is for the locals to believe, that’s really all there is to the story. Yes, unique local micro factors are present in all cities, but it’s important to keep one’s eye on pre-bubble vs. post bubble prices. Nothing happened in the last year or two to magically make a particular city suddenly more special than it was prior to the bubble.

    I apologize to anybody who I ticked off due to the above post, but it is the truth as I percieve it.

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  29. Kary L. Krismer

    By Jonness @ 29:

    RE: Kary L. Krismer @ 27 – While I agree cities are different and will correct to different levels at different times, your argument sounds dangerously like the old “Seattle is special” argument..

    To some extent it is, but I’d really put it more as Seattle is different, because every city is different. Quite frankly, I don’t believe your claim that every city even in Washington marched in lockstep, or even close to lockstep. Even parts of Seattle didn’t move together. But clearly cities in other states behave differently over time. Part of what gave rise to the Seattle is special argument was seeing other cities have 2-3 up/down cycles while Seattle was just rising. I don’t think that proves Seattle is special, but it does prove every city is different.

    But my overall point was that the mania that developed for real estate didn’t hit here as hard as some other parts of the country, most notably CA, AZ and FL. The reason prices started dropping in such areas 2 years before the financial crisis is because they had gone up so fast, and the resulting drop effectively caused the financial crisis. Not only did those areas suffer huge drops, but those states also have a relatively huge percentage of the population. If the real estate mania had hit Rhode Island, Wyoming and North Dakota instead, the banks would hardly have been affected. But when the banks were affected, yes that carried over and hit Seattle too.

    As to the mania that drove up prices, the tendencies of people to act in mass is really incredible. That is mainly what caused huge increases in other states–people saw others buying and wanting to buy too. That’s what causes vast numbers people today to care about John and Kate +8 or Twitter. People are not as individualistic as what they like to think. And this effect works on both the supply and the demand side. Yes you have people rushing to buy, driving prices up, but you also have others rushing to build, driving prices down. Both types of actions can cause extreme movements in price (look at condos in Seattle).

    Finally, I do think that this sort of over-reaction can be controlled, but I don’t think we’re doing it. As long as banks will make loans based on appraisals that show a property is worth 2x what it was four years ago, we’ll have extreme up and down cycles. People don’t learn and the system really doesn’t change that much.

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  30. Jonness

    By Kary L. Krismer @ 30:

    To some extent it is, but I’d really put it more as Seattle is different, because every city is different. Quite frankly, I don’t believe your claim that every city even in Washington marched in lockstep, or even close to lockstep.

    Naturally every city didn’t increase at exactly the same rate. My point is, for the Seattle is special theory to hold true, Seattle would have had to had a much higher percentage gain during the bubble years than other WA cities. Otherwise, it wouldn’t have been percieved as very special. If it wasn’t percieved as more special during the Bubble, why would it suddenly be so special now that everything is collapsing. Let’s get down to the proof and unravel the “Seattle is Special” theory once and for all.

    City…..Q1_2000..Q3_2007…Increase
    spokane….$110…..$204…….85%
    tacoma…..$143…..$288…….101%
    wenatche…$142…..$263…….85%
    seattle….$212…..$407…….92%

    (data from Global Insight; available at housingcorrection.com)

    If we believe the Seattle is special theory, then we must also believe, based upon the data, Tacoma is the most special WA city of all. Think about it. In Tacoma, you can build east forever and plug your nose as you drive by on the freeway. Shouldn’t Seattle have been more highly prized and valued during the bubble years than Tacoma? I don’t believe anybody will argue that Seattle is more special than Tacoma. So why was Tacoma more prized, relative to 2000 prices, during the bubble?

    The answer to the bubble is plain, simple, and I’m surprised so many people can’t see it. National factors of cheap and easy loans and the promise of getting rich the easy way drove up house prices all over the U.S. Everywhere went up, but what matters most to the correction is every city was valued relative to every other city in the year 2000. So unless something drastically changed for the better or worse in a city, it’s percieved value after the collapse will be relatively the same as it was before.

    Every city has someing special about it. For instance, San Diego has biotech, ocean beaches, and fantastic weather. But as special as that is, it is not special enough to permanently support house prices above historic levels of affordability.

    So, why did Tacoma house prices outpace Seattle house prices during the bubble? It had a higher percentage of subprime loans (which are now unwinding in a rather wicked manner).

    So how far down will Seattle, Tacoma, et al go? Keep an eye on the historical homeownership rate. We will adjust back very close to it. Then again, for a time, we could over-correct and drop beneath it.

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  31. Kary L. Krismer

    RE: Jonness @ 31 – I think you’re misunderstanding what the “Seattle is special” thing was about. It wasn’t about absolute appreciation. Seattle lagged a lot of other major cities in that regard, so going by value Seattle wasn’t that special at all. It was more about the time since a decline in value. I think we went somewhere around 20 years without having a YOY decline in January. Some other cities had maybe 3 declines in that period. That lead some people to think that Seattle real estate couldn’t go down. That its economy was more diversified since the Boeing bust.

    While it’s undoubtedly true that our economy is more diversified, the idea that Seattle was immune to national and international economic trends was a bit absurd. But that’s what people who thought Seattle was special thought.

    And BTW, I don’t agree with your concept that you look at other cities in Washington to determine whether Seattle is special. I don’t think people making those statements were taking city boundary lines into account, and also, the success of Seattle affected other areas (e.g. Pierce, Snohomish and Kitsap counties).

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  32. Kary L. Krismer

    By Jonness @ 31:

    So, why did Tacoma house prices outpace Seattle house prices during the bubble? It had a higher percentage of subprime loans (which are now unwinding in a rather wicked manner)..

    You would expect lower priced areas to outpace higher priced areas during periods of increases. For a time Skyway was one of the best performing areas of Seattle on a percentage basis, but that was almost solely because the prices there were less beforehand.

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