A family just rented the house next to mine (which is larger than mine) for ~3500/month. They are local – not corporate high-flyers who need a short term company-funded place.
That is 2X my 15-yr fixed mortgage.

Again I’ll point out that a lot of people don’t have any understanding of how much wealth there is out there.

I’m somewhat curious, and have always been, about who the hell is renting for 4k+ a month? Is anyone actually renting these things?

Take your time my friend!

Across America being a renter is no longer viewed with a negative light! So many currently view their home as a Lead Weight around their necks and this “feeling” will take many many years to correct.

Prices will be flat with a trendline down bias for a very long while. However, there will be GEMS to be had this month, next month, and over the next decade.

Just always be looking.

Lots of examples in my neighborhood of folks holding properties off the market or renting until “things return to normal.” All of these are within a few minutes drive of each other:

Rent for $2K, buy for $945K
http://seattle.craigslist.org/est/apa/1292374272.html

Rent for $5.5K, buy for $2.0M?
http://seattle.craigslist.org/est/apa/1292664679.html

Rent for $4K, buy for $1.3M?
http://seattle.craigslist.org/est/apa/1296049697.html

Was for rent, now for sale again:
http://seattle.craigslist.org/est/reb/1296051084.html

Most of these were built with Microsoft money. They will never be worth these prices again in real terms during my lifetime.

The reason is from behavioral economics and is essentially psychological – demand curves can collapse overnight, but supply curves for housing are sticky (they adjust slowly), and are increasingly so the higher the price of the house. It takes a long time for a falling market to break down the wishful thinking of a stubborn seller to where they eventually modify their expectations and yield to the new market conditions. SAAS, I would figure, would display fairly chaotic behavior in this period.

Many sellers in this period will remove their properties from the market altogether, and potential sellers will tend to wait it out. I’ve seen half a dozen high-end properties simply disappear unsold from the market because of this effect. They must think they’ll get better later – but I’m guessing they won’t for a long, long time.

There are three phases to the high-end seller’s psychology in a popped bubble:

1. This is an unrealistic panic, things will return to rationality and get better soon and I’ll hold out until then to get the “true worth” out of this asset.
2. Things seem to have stabilized and I’m slowly becoming motivated to sell at the going rate
3. These declines are real and they are ongoing, I had better get out while the getting is good!

We’re still in phase 1 in Seattle, in my judgment – so the SAAS measure should tend to break down until phase 2. The key is that “true worth” line of thinking. Folks, there’s no such thing as “true worth”. The price you get for something is what the market will bear, and depends entirely on the number of people who can afford the asset and the number of competing assets being offered at each price.

In short – where supply meets demand. There is no intrinsic value to anything – but sellers, especially at the high-end, tend to become trapped by that kind of thinking for an extended period in a downturn.

In searching for homes over the last six months I have seen a lot of unrealistic sellers pull homes off the market because their price is too high. That said, in the last week I have experienced multiple offers and bidding wars on upper priced homes East of 405 (area 530 above) that have completely caught me off guard as a buyer. I have noticed a steep decline in the “quality” (i.e. newer or remodeled) of listings on the East side. My best guess is that the inventory out there (my perspective is the East side) has either been pulled off the MLS or is priced to meet demand as the chart shows above. However, I also suspect the recent shortened distance between supply and demand is a seasonal thing and will creep back toward the buyers side come the Fall.

I’m seeing the same scenario on the SE end of King County, even super cheap homes for sale aren’t moving fast. Buyers are very picky and right now, don’t want to plunge into any type of debt [low inventory or not].

I had coffee yesterday with an IT who just moved out to Renton from Miami, she’s renting and makes very good money and saves too, why? She held her fingers in the sign of a crucifix, re: buying RE right now. Her kids are professionals and still rent too.

MSM today made a big deal about slightly less unemployed Americans [exclusion of giveups and severely underemployed]….stocks reacted favorably to the news too. Yet, the MSM talked about profits to companies saving costs by laying off employees this year….how long before this Ponzi Scheme blows up in their MSM face and the lower unemployed rate with lower employment creates even more masses with their fingers in a crucifix to RE? LOL

Can you please explain this in simple English?

“Perhaps parity in inventory is dismal news; it means there aren’t enough units with low enough prices, that can be listed normally, to attract normal buyers? “

I’m wondering how many of the over supply glut in January 2009 were pulled off the listings, because the sellers asked too much and the inventory wouldn’t move?

Also, assuming the high priced inventory didn’t move; how much of it transferred to bank owned or foreclosed?

Perhaps parity in inventory is dismal news; it means there aren’t enough units with low enough prices, that can be listed normally, to attract normal buyers?