In response to yesterday’s post with the breakdown of what’s selling around King County so far this year, someone asked if we could see some similar data for what’s currently on the market. Great idea.
Here’s an update to the interactive histogram, with everything over $1 million in the same bin. The default display is what is currently on the market. Click the drop-down below the chart to view January, February, or March sales.
Wow. In the first three months of the year, just 185 homes have sold for over $1 million in King County, but today there are 968 homes on the market at that price. Using the “months of supply” metric (but with the closed homes statistic) that comes out to nearly 16 months of supply for the million-dollar-plus market. Ouch.
The rest of the market is also noticeably shifted to the right compared to what is actually selling. Excluding homes over $1 million, roughly 47% of the homes sold January through March were priced over $350,000. On today’s active market, over 54% of the homes have asking prices over $350,000 (again, excluding those over $1 million). If you include homes over $1 million, homes over $350k are 50% of what has sold and 66% of what’s on the market.
It would appear that there is a lot of wishful thinking going on in Seattle real estate right now.
00
Recently, I have been interested in a particular question. If you buy a home and sell it 10 years later, is the increase in property value going to amortize the costs you put into that house, including interest rates, taxes and maintenance? Of course, it depends when you buy and when you sell. But let’s assume you bought in 2000 and are selling now. According to the Case-Shiller data posted by Tim at the beginning of the month, homes in Seattle have increased in value by 45% between 2000 and 2010 which is 4.5% per year on average or less. It seems like you would just break even. And besides that, 4.5% is small compared to the gain you could make if you had invested the money otherwise.
I can understand that you might want to buy a house so that you can do whatever modifications you want, but it does not seem to be a good investment. Does anybody have any thoughts on this?
Rate this comment:
0 
0
In terms of investment, I see my primary residence as an inflation hedge more than anything. It’s locking a nominal rental rate in at a point in time. Historically (pre-bubble) houses have basically kept up with inflation.
But houses aren’t investments in general. They’re leveraged expenses on a depreciating asset (the structure).
Rate this comment:
0 
0
By HappyRenter @ 1:
Buying real estate, for personal use, is rarely a good investment. People think its a good investment, but they buy for themselves with expensive consumption features.
And btw, 45% gain over 10 years, is really 3.78% gain/yr, considering compounding. Long run, you shouldn’t reasonably expect to gain anything more than inflation (http://www.nytimes.com/2006/03/05/magazine/305tulips_shorto.1.html?ei=5090&en=bb369c2505b1c24f&ex=1299214800&pagewanted=all)
Rate this comment:
0 
0
Prices in Ballard are getting what the price would have been at the top of the market. There seems to be no price cuts in this neighborhood.. The below house had mold issues and was on the market for a year but they got most of their price. There seems to be no price reduction and maybe this is pink pony neighborhood.
http://www.zillow.com/homedetails/3417-NW-56th-St-Seattle-WA-98107/48710757_zpid/
Rate this comment:
0 
0
Here’s data from the most recent months combined into one graph:
http://img697.imageshack.us/img697/9738/homes042010.jpg
I think it’s interesting that RATIO of supply is fairly consistent across the board… almost even (1x) at the low end, gradually increasing to ~5x at the higher end. There’s a single spike in the ever-so-popular $900k-$950k range. Must be a popular psychological level? Also note the mini spikes at each $100k mark.
Rate this comment:
0 
0
By Ross @ 3:
Does it really hedge against inflation? With a 3.78% gain/yr subtract from that gain the money you have put into interest rates, taxes and maintenance, how much are you left with?
Tim, is the Case-Shiller data you usually post adjusted for inflation?
Rate this comment:
0 
0
RE: gitano @ 4 – I have to agree. This is why I got out of Ballard after 20 years. Anything west of 32nd is going to have a premium, so that plays some role in the crazy price being paid for that place. No Thanks.
Rate this comment:
0 
0
By Ross @ 3:
You can’t ignore multiple things that improve the economics of home ownership vs. other investments
1) leverage – even at 20% down – over 10 years are 4-5x the overall rate of appreciation
2) tax deductible interest.
3) tax free capital gains
returns can easily beat inflation even in a relatively flat market. a simple CAGR based on the overall rate of return is highly misleading
Rate this comment:
0 
0
By HappyRenter @ 6:
Well, one thing to keep in mind is that the inflation gain is leveraged between 5x and 20x; so just making inflation can still translate, in some cases, to high returns, even counting maintenance expenses. Of course, if the price of housing falls, that loss is also multiplied.
If you read the article I linked above which looked at certain homes in Amsterdam, the 400-year gross return on those homes was approximately the rate of inflation — which of course makes perfect sense. If housing inflation exceeded wage inflation, then compounded for sufficiently long, all housing would be unaffordable (you’re priced out forever!). But the reality of supply/demand eventually kicks in and prices drop to what buyers (and their lenders) can afford. So housing price inflation, given static lending conditions, cannot exceed wage inflation in the long run.
Rate this comment:
0 
0
I think it’s time for a Shadow Inventory study on King County.
Rate this comment:
0 
0
Wishful thinking indeed. I’m sure you noticed the NY Times article on April 21, 2010 titled “Breaking Down the Rent-Buy Equation”. The rule of thumb on the index is 20. Anything below that indicates a market where buying makes financial sense.
Guess which city comes in #5 on the list behind only Honolulu and 3 Bay Area cities (out of 45 listed metro areas)?
That’s right, Seattle, coming in at a solid 28. Ouch.
Rate this comment:
0 
0
I recently sold a house after 8+ years. I don’t want to disclose all the details but it was in an excellent Bellevue neighborhood. I haven’t bothered to figure out the rate of return but it is low. I would say that when you consider all the costs, your own time and labor, generally housing is not that great of an investment.
Rate this comment:
0 
0
Don’t Expect High Prices in Seattle Area For Fixer Uppers
That was 2006/2007, now is now. IMO, expect to pour approx 10-20% [or equivalent sweat labor, same thing] of the homes value into it to get a “5-10 yr+ lived-in home” immaculent enough to fetch about 80% of the old peak price. I hear building inspectors are getting “really” fuzzy for their clients now-a-days too. Article in part:
“…“Bill Powell, a flooring and carpet specialist who works closely with real estate agents, said the existing inventory is growing, so sellers are starting to realize their homes must be in top condition to be competitive.â€
“‘It’s not a time to put a fixer-upper on the market,’ said Powell. ‘You’re going to have to discount deeply or let it sit on the market for a while.’ ”
http://thehousingbubbleblog.com/?m=20070304
In other words, it’s likely cheaper to toss a match to it [especially if it's an upside down loan] than get it in “staged” shape to sell for 80% of the old peak price.
If you have enough equity, you can sell it for approx 60-70% of the peak price “as is”….but very few sellers can afford this now-a-days.
Rate this comment:
0 
0
RE: gitano @ 4 –
Give Tim an Address Example of “My Neighborhood is Different”
He is great at looking up the history of the house to confirm or disprove your verbal allegation that the homes are selling at their peak with mold issues.
Rate this comment:
0 
0
By Ross @ 3:
By rarely I assume you mean only in 45 of the past 50 years. ;-)
Rate this comment:
0 
0
I’m pretty sure the 16 month supply of properties over 1M is a great improvement over what it was 12-18 months ago.
Rate this comment:
0 
0
RE: softwarengineer @ 14 –
I’d Add a Caveat
What home in Seattle doesn’t have mold issues? Especially the broke/miser owners who won’t turn the heat up to 70 degrees all day/night to prevent mold.
BTW, it’s documented that turning your thermostat off when you’re at work or sleeping doesn’t save much money anyway….it costs about the same money to reheat the cold moldy walls than just keeping them always dry and warm 24/7s. Then there’s the people that just heat one room and let the rest of the house turn to mold….LOL
Rate this comment:
0 
0
By Kary L. Krismer @ 15:
No. A 20x leveraged investment in, for example, an s&p 500 index fund, over the last 50 years would have far outperformed real estate; and without maintenance, property taxes, etc.
Rate this comment:
0 
0
“There seems to be no price cuts in this neighborhood.”
I don’t know Ballard, but that is not consistent with anything on the Eastside, even including Lake Washington waterfront.
Rate this comment:
0 
0
I wonder whether this data really is showing wishful thinking, or whether this is the natural state of the market? It seems plausibly natural for what’s on the market (unsold) to be priced higher, on average, than what has sold.
Rate this comment:
0 
0
RE: Ross @ 9 –
I’m new to the concept of leverage. Wikipedia has an article about it but I’m still trying to figure out how that works. It sounds like debt is a way of making money? Can anyone point me to a good article about it? Thanks.
Rate this comment:
0 
0
By James Baker @ 20:
Couldn’t it be both?
Rate this comment:
0 
0
By The Tim @ 22:
What’s the difference? :=)
Rate this comment:
0 
0
By HappyRenter @ 21:
In simple terms, you’re making an investment with borrowed money to leverage some percentage of cash you actually put it. Here’s a concert example:
Buy a home for costing $100K, with 5% down and 95% funded by the lender. In that case, you contribute $5000 real cash, but your “investment” is worth $100,000. So in that case, you’re leveraged 100K/5K = 20x.
If the value of the property goes up to $110,000, then your return on investment is $10K/5K = 200% (we’re ignoring interest costs and transaction costs for the moment). On the other hand, if the property value drops to $90,000, then your return on investment is -$10K/5K = -200% (you’ve lost all of your initial investment and now owe %100 of it to the lender). Your returns, much like your initial investment is 20x of what it could be if you didn’t have a lender involved.
The same principal can be used for the stock market, if you trade on margin, when your broker lends you cash/equity above and beyond the amount you put in. There’s a whole bunch of rules about how this works, and margin requirements etc — but its quite easy to invest on margin, though you’ll probably not be able to get up to 20x in the stock market.
If you put 10% down on your $100K home, and it gains a nominal 3% a year (just inflation), your actual return can still exceed inflation. ($3000/$10,000K ~= 30%). Even after subtracting for interest, commisions, excise tax, property tax, maintenance and all the other stuff home owners get to enjoy, its still possible to come out ahead on a leveraged investment (though it’s also possible to come out way behind). Though, with non judicial foreclosure laws, your downside gets protected, (-100% max, if you can just send the keys back to the bank)
Rate this comment:
0 
0
By Ross Jordan @ 18:
And with more risk and with no benefit to owning the asset. But whatever. It’s hardly an argument that something is not a “good investment” by pointing out that there was in fact another better investment. Using that logic there would only be one “good investment,” and that would be whatever happened to come in first using the most leverage over whatever random period of time was picked.
Rate this comment:
0 
0
You should talk to the “investors” who bought in 2000 when Dow Jones peaked at 11250 and sold about same month in 2010 when it was 10600.
I guess now 4.5%/year look better. :)
Rate this comment:
0 
0
By Ross Jordan @ 18:
Great! now all you need to do is find a broker that let you borrow on margin at 20:1! Oh, wait. That’s illegal.
Rate this comment:
0 
0
By deejayoh @ 27:
Well, there are ways to leverage up in the stock market; i.e. short term options can provide huge leverage; though the risk also goes up.
Rate this comment:
0 
0
Why do people ignore the benefit of living in a home when calculating costs? If you buy a home, and after ten year you get back everything you put in plus some return close to inflation, you lived there for free. If you didn’t invest in that home, you would have to spend a hefty chunk to rent an equivalent home.
It really bugs me that sellers complain loudly that they have little or no profit from their sale. They should be happy that they used a home and someone is making them whole despite the years of use they got out of the home.
Rate this comment:
0 
0
By u�op �pısdn @ 26:
They’d be better off than the home buyers who bought in 2007 with 20% down. With almost any market, if you can pick the entrace and exit times in hindsight, you can prove anything you want.
The long-term return in housing approaches inflation. The long-term return in the stock market exceeds inflation. Buy a home because you want to enjoy the lifestyle, “Consume it”, but not because it makes sense as an investment. There’s always exceptions to the rule, and you can be better off by being lucky than smart. But housing usually doesn’t make sense as an investment.
Rate this comment:
0 
0
Kary @ 25
“And with more risk and with no benefit to owning the asset. But whatever. It’s hardly an argument that something is not a “good investment†by pointing out that there was in fact another better investment. Using that logic there would only be one “good investment,†and that would be whatever happened to come in first using the most leverage over whatever random period of time was picked.”
Lawyer speak for explaining why real estate is always the best investment for real estate agents. Why don’t you throw the “They just aren’t making any more land” out there too to completely bamboozle everyone? When speaking of real estate as an “investment” it should be compared to other investments. When using leverage it should be compared also. Leveraged real estate is risk free? No matter what we were told by real estate agents in the past we have learned;”they lied”. Why are we having all of these foreclosures? Leverage at a high percentage of equity. If “investors” paid 100 percent cash we would not be in this mess. N’cestpas?
Rate this comment:
0 
0
By Kary L. Krismer @ 25:
If we’re talking about “good” and “bad” investments, then you need to consider the alternatives. One investment’s oppurtunity cost is the other investments foregone. You could just as well buy tulips, gold, US dollars, zimbabwean dollars, stocks, bonds, equity, land, housing, baseball cards, antiques or whatever. The point I’m making is that the long-term return in housing is documented as very poor; and just because we’ve had a credit expansion during the last 20-30 years and some people have done better than the long term average doesn’t have implications for the next 20-30 years.
Rate this comment:
0 
0
RE: Pegasus @ 31 – Wow. You managed to combine “lawyer speak” and point out that I am a real estate agent. Great non-response.
Did you even follow the discussion? The original point I refused was that real estate to live in was rarely a good investment. I called that out. He pointed out that there was supposedly a better investment. I pointed out that just because there might be a better investment (with hindsight) does not mean that all other investments are not “good investments.”
Rate this comment:
0 
0
By Ross Jordan @ 32:
I’d agree with the last point about past history and future performance, but it still doesn’t even come close to proving your first point, that real estate for personal living is “rarely a good investment.”
And where is this documentation you refer to indicating that long term return is very poor? Try comparing the returns to other tax free returns.
Rate this comment:
0 
0
This isn’t really a histogram, for several reasons. I’m just mentioning this because I really care about statistics. Tim, you should lean on Tableau to give you the real thing :)
Rate this comment:
0 
0
I think everyone else here got my post Kary. You stated: “But whatever. It’s hardly an argument that something is not a “good investment†by pointing out that there was in fact another better investment. ” Your statement is flawed.All investments are comparable as are all factors that apply, not just the ones you decide arbitrarily are or are not(real estate).
Rate this comment:
0 
0
In any investing it depends on what you buy, for what price. Last year, and the year before, there was some panic selling. The only reason the Real Estate market is doing well today is because there have been some good purchases, and some bad, it depends on what you buy.
That’s another difference between Real Estate and stocks. You can kick tires, and make deals. A case in fact is a property on Capitol Hill that sold two years ago. Prime location that sat on the market. It was an estate where the sellers did not care about the price because the proceeds, from the guardianship, where going to a supposedly drug addicted heir who scared off most people who looked at the property early on. The guardianship just needed to get out of the way. The heir was demanding quick cash, and the guardianship had a fiduciary duty. So the heir hired her own agent who would tell prospected buyers to just make any old offer as long as it closed quick; what a mess.
Long story? Well long stories are what make up the Real Estate business.
Let me share with you all once again the secret of Real Estate Investing that I have learned in many a get rich quick seminar over the years, ready, “Buy High, Sell Sober.” Wait, Wait, that’s the way I do it, in the seminars, for $99, tapes, I mean CDs included, it’s “Buy Low, and Sell High,” I mean that in a pricing kind of way.
Geez, my apologies, it’s been so long, but it’s all coming back to me now.
Rate this comment:
0 
0
Not really tax free; just different tax structure.
Let’s see: on purchase, 3% goes to buyer’s agent; 3% to listing agent. On Sale: 3% goes to buyer’s agent, 3% goes to the listing agent. 1.78% goes to pay excise tax. Note that these tax amounts are on the principal, and not the profit.
If you buy a home for $275K, and sell at 300K, 1.78% of 300K is $5,340. So your net after commission is ($300K*.94 – $275K) = $7000, and $5430 represents a 77.5% effective tax rate (and this doesn’t even count the other closing costs for the seller)
Let’s say you did a little better, buying at 400K, selling at 500K. So 100K gross profit is 70K after commissions. 1.78% of 500K = $8900, which is still 12.7% effective tax; and again that doesn’t count all of the other various fees.
And the excise tax is regressive, even if you have a 100K loss, someone (probably the bank) still needs to pay the excise tax.
Rate this comment:
0 
0
By David Losh @ 37:
But it’s actually not really any different. There was plenty of panic selling last year in the stock market. I purchased some Wells Fargo shares at under $10 each, last year during the height of the stock market panic. They are now trading at ~$32. When there’s fearful/panicked sellers in any market, there can be oppurtunities — it’s not limited to real estate.
Rate this comment:
0 
0
By fatcat1111 @ 35:
Okay… why is it not a histogram?
http://en.wikipedia.org/wiki/Histogram
My chart seems to meet that description as far as I can tell. Or are you complaining because I grouped the data at the ends? That may make it not technically a perfect histogram, but it makes the data much easier to read.
Rate this comment:
0 
0
By Kary L. Krismer @ 34:
It’s not tax free, just a different tax structure. Consider the 1.78% excise tax (on the principal, not the profits).
Buy at $275K, sell at $300K = 25K gross profit. Less 6% RE commissions = 7K profit. Assume $1K for other closing costs, so 6K net, before 1.78% excise tax (which, on 300K = eats up $5340) leaving $660 net profit. $5340/$6000 yields an effective 89% tax rate.
Or, Buy at $400K, sell at $500K = 100K gross profit, less 6% RE commissions = 70K profit. Assume 1K for other closing costs, leaving 69K net, before 1.78% excise tax (which, on 500K eats up $8900). $8900/69K = 12.9% effective tax rate.
Even worse, if you lose money on the home, you’re still liable for tax (and more relevant for today’s market).
Say buy at $500K, sell at 400K = -$100K gross loss, less 6% RE commissions = 124K loss, less 1K for other closing costs, resulting in 125K net loss, before 1.78% excise tax (on 400K is $7120), which gives an unpleasant effective tax rate — far worse than the worst capital gain taxes. (And it could be worse if the lender forgive you the $100K, and the IRS considers that taxable income).
Rate this comment:
0 
0
By Pegasus @ 36:
Apparently you still don’t get my point. Obviously you can compare investments. But that doesn’t mean that everything that isn’t the #1 investment is not a good investment.
Rate this comment:
0 
0
RE: Ross Jordan @ 40 – Those are transaction costs, and yes RE has high transaction costs, and is also illiquid. Those are two of the main reasons it differs from investing in stocks.
But again, what I asked was to compare the rate of return you’re suggesting for real estate to other tax free investments. Or if you want to include transaction costs, how about doing your 50 year S&P investment and comparing the tax on that to the transaction costs on selling a house you’ve owned for 50 years for $500,000?
Or let’s get directly to the point. What exactly did you mean when you said “rarely a good investment?” You seem to be bringing up a lot of other points rather than trying to prove your original point.
Rate this comment:
0 
0
By Ross Jordan @ 40:
I don’t think that is taxable income on the facts you present. Actually, even before the change in the law to deal with short sales, etc., there were many scenarios where it wouldn’t be taxable income.
Rate this comment:
0 
0
This has become pretty off-topic for the thread, but on the investment issue, I think part of the problem is that people have focused on the tax deduction of the interest (which is largely illusory) rather than the fact that the amount of interest decreases over time, and eventually goes to zero (and that effect can be accelerated). This country would be a lot better off if people focused on the latter more.
Rate this comment:
0 
0
Funny that the comments on today’s post got off on the subject of homes as investments. Tomorrow’s post is the top 10 flops currently on the market.
Rate this comment:
0 
0
RE: softwarengineer @ 17 –
Our furnace has been off for two years. Just a few hours daily of space heating. No mold that I can see. Wouldn’t mold need more moisture than is in the air normally? Like in a bathroom?
Rate this comment:
0 
0
RE: Ross Jordan @ 38 –
The house I described sold for $325K and has been used as a home office. On the two year anniversary the home will be sold for $450K, quickly.
20% down, plus costs, plus $50K to get out, the $65K, returns $65K with no tax consequence, plus the use, plus the mortgage deduction.
My math, like I said is a little rusty, because it’s been a while.
I have a better one from 2007 just before the crash, but that’s a story everybody is tired of hearing about.
Rate this comment:
0 
0
By Kary L. Krismer @ 42:
So the excise tax on a real estate transaction is a “transaction cost”, but the capital gains cost, for example, on a stock transaction is a tax???
ok, let’s look at that.
http://finance.yahoo.com/echarts?s=%5EGSPC#chart1:symbol=^gspc;range=my;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined
S&P500 on Jan 4, 1960 = 55.34
S&P500 today = 1203.94
Gain = 1203.94/55.34 = 2175.5%
The best data I could find (in a quick search) for housing over the same period of time has:
http://www.census.gov/hhes/www/housing/census/historic/values.html
(Unadjusted dollars)
1960 median price – $11,900
2000 median price – $119,600
$119,600/$11,900 = 1005%
Rate this comment:
0 
0
By rational @ 29:
But right now the Seattle index buy/rent is 28! What if you invest the difference between your monthly mortgage (+maintenance+taxes) payments and the rent? Is it possible that you could outweigh what you paid in rent and have some return? I’m assuming here that rent will not significantly increase, but on the other hand taxes and maintenance can go up, too.
The question I’m asking here is: Once I am 67 and I want to retire, is it better if I had bought a house in my 30s and sell it when I’m 67 or is it better if I had rented and invested the difference?
Rate this comment:
0 
0
By Markor @ 46:
I think mold is usually due to bad air circulation.
Rate this comment:
0 
0
RE: Ross Jordan @ 48 –
Classic example of the S&P. True you can figure a return that is higher, we are however talking about a personal residence.
I used this phrase before with Kary and got my head handed to me, but the “Rent is the Rent.” You have to live somewhere. At the median price in the 1960s your price for housing was $12K? Don’t you think you would have paid that off? Let’s figure a savings of $300 a month for 30 years for $108K.
Now how are we doing?
Rate this comment:
0 
0
RE: Ross Jordan @ 48 – As to the excise tax, as you pointed out, it’s not a tax on the profit, so it is more of a transaction cost.
That data you gave is a better attempt, but for it to be apples and apple you should cut off the S&P at 2000 too (I assume that data is easy to get).
Also, there’s obviously a lot being left out of that, like interest payments, rental value, etc. As Losh pointed out, you can’t live in your stock, so you’ll have to pay rent somewhere. But your stock won’t ever need a new roof.
Rate this comment:
0 
0
By David Losh @ 51:
You probably have paid it off but you are left with taxes and maintenance. A lot of people are forced out of their homes they have paid off because they cannot afford taxes and maintenance unless they keep working as long as they live.
Maybe I’m proven wrong and owning might be the smartest thing to do, but I’m still not convinced.
Rate this comment:
0 
0
By deejayoh @ 8:
1) You pay absurd amounts of interest to borrow that leverage. You are better off leveraging futures contracts, which typically require about a 5% deposit on the value of the contract.
2) A tax break on an absurd amount interest you shouldn’t be paying for in the first place doesn’t seem like such a good deal to me. It’s better to buy futures contracts.
3) Tax free capital gains are an illusion. They don’t really exist since you must reinvest the money from the sale into another residence, thus never closing out your long position.
It’s clear. Everybody should immediately sell their homes and stick 100% of the equity into futures contracts and other highly leveraged and speculative derivatives. :)
Rate this comment:
0 
0
By softwarengineer @ 13:
I’m starting to see a lot of 2004-priced short sales and REO’s in the outlying areas. It seems the majority of listings are upside-down distressed sales or wishful thinkers wanting 3x what they paid in 1999 when inflation-adjusted wages were higher than they are now and the unemployment rate was 4.2%.
Bank of America says it plans to increase the foreclosures 600% and has already started ramping up NTS. Chase is looking at doubling its foreclosure rate.
The government is pulling 2 out of its main 3 house price propping weapons, and unemployment remains at near 10%. It’s a great time to pay 3x what the baby boomers paid in 1999. Buy now or be priced out forever.
Rate this comment:
0 
0
RE: Jonness @ 56 –
“Bank of America says it plans to increase the foreclosures 600% and has already started ramping up NTS. Chase is looking at doubling its foreclosure rate.
The government is pulling 2 out of its main 3 weapons to prop up house prices, and unemployment remains at near 10%. It’s a great time to pay double what a house is actually worth.”
Nicely summarized. But really, shouldn’t I buy before the tax credit expires? It can’t be wise to pass up $8,000 free dollars! ;-)
Rate this comment:
0 
0
RE: gitano @ 4 – Ballard a pink pony? Probably so. Scare white people to death with TV news headlines telling them chaos rules, and all white people can think about is getting enough money together so they can be surrounded by other rich white people — so they can be safe. But little do they know that rich white people turn into stark raving lunatics when the chocolate really hits the fan. Nowhere will be safe, because human beings without long-term disciplined religion are all animals, at the end of the day.
Rate this comment:
0 
0
By Jonness @ 55:
I’m not sure if you’re 5 years out of date, 10 or 15, but you’re describing the old system. Even under the old system, once you were 55 (or something) you could exclude $250,000 (or something) of gain–twice that if married. It was a one time exclusion, however, so you couldn’t exclude $100,000 one time and $150,000 the next.
Now you can exclude $250,000 each time you sell your house (twice that if married) if you’ve lived there a sufficient length of time (three of the past five years?).
Rate this comment:
0 
0
RE: Animal #5464384848 @ 58 – And then a screaming, fiery asteroid will instantly vaporize us all, leaving nothing but a smoldering wasteland of charred Lutefisk and flame-gutted Volvos.
Rate this comment:
0 
0
I don’t get the Ballard hype either. A friend told me a story about a couple who were renting the condo next door to his, in Belltown (he bought it probably 20 years ago). He ran into them one day in the parking lot and they said “Guess what, we are moving to *Ballard*!” He said they were acting like they’d won the lottery or something. When he failed to congratulate them with the degree of enthusiasm they seemed to feel was appropriate, they tried to explain it to him again as if to someone with a cognition deficit. “Seriously, Ballard! You know, Ballard. You do know Ballard, right?” Because surely no sane person could fail to celebrate a neighbor’s imminent move to Ballard.
Rate this comment:
0 
0
RE: Civil Servant @ 61 –
I think the hipsters ruined Ballard. How many places does one need for massage, Phad Thai, and organic soy lattes?
Most of the houses there are little crapholes no different than the crapholes in Skyway.
Rate this comment:
0 
0
RE: Ira Sacharoff @ 62 – But Ballard has a much nicer business district than Skyway (and I like Phad Thai and soy lattes!). That said, Skyway is much better commute wise to many areas.
Rate this comment:
0 
0
RE: Kary L. Krismer @ 63 –
Yet 20 years ago if you went looking for Phad Thai or a soy latte ( my drink of choice, by the way) in Ballard, you’d have gotten blank stares or a response like ” Pot roast? ” or ” Say lutefisk?”
Rate this comment:
0 
0
RE: Ira Sacharoff @ 64 –
you would have most likely received a blank stare from everybody 20 years ago if you asked for a soy latte. Unless you were possibly in Fremont?
Rate this comment:
0 
0
RE: Markor @ 47 –
Mold is fomed when the moisture isn’t dried in the walls and a heated home mitigates this from “eventually” happenning….the term “eventually” depends on the materials, roof overhang, roof condition, insolation thickness and time….it could be several years or months before the odor symptoms hit. Most homes built the last 20 yrs have glueboard exteriors, check the bottom of the house for rot yearly. Ants in the house or outside the house is another very bad sign. The colder, east side of your house should catch the mold odor first….it happens slowly, so you may be able to mask it with deoderizers for a while and not notice it for a while, even as it happens. You may mistake it for a smelly bathroom or laundry room.
What do you think realitors sometimes burn incense candles for before a sale….LOL?
Rate this comment:
0 
0
RE: Ira Sacharoff @ 64 –
Aren’t Most Ballard Homeowners
Old Scandinavians like Stan Boreson….eating lutefisk and flatbread…LOL
Rate this comment:
0 
0
Define investment.
: the outlay of money usually for income or profit : capital outlay; also : the sum invested or the property purchased. (Websters)
Loosely, an investment is a fancy word for spending money, but most of us think of it as spending money to make more money. I could “outlay capital” for a bridge over some swampland.
You don’t buy a house for a profit, you *sell* a house for a profit. At least that’s what the NAR wants you to believe, which they then twisted into a lie about real estate never going down, and homes being forced savings plans. Never mind the fact that roughly 1/4th of all mortgages are underwater.
Conversely, you can’t live in a mutual fund, at least not with your stainless steel apps, granite toilets, and plasma shower curtain.
Where was I going with this… oh yeah. Go Angel’s! (sorry, haven’t come around yet)
Rate this comment:
0 
0
This past year we had to move out of Ballard after 13+ years. We loved Ballard but I agree much of what made us really like Ballard is going away. But really the house prices are still crazy and rents in Ballard are also crazy. The question for me is will the prices go down in Ballard or has it gone down as much as it will? I still don’t get how people are willing to pay so much. I guess my tolerance for debt is not as high as for other people. We now rent over near Greenlake and when we decide to buy we may have to give Ballard a miss.
Rate this comment:
0 
0
By LA Relo @ 68:
But you can rent (for less than what your mortgage payments would be) and invest the difference.
Rate this comment:
0 
0
By Scotsman @ 57:
That’s actually a brilliant strategy. This coming July, when you realize you are horribly underwater and trapped, you can use the $8K to go on a nice stress-free vacation staying in 5 and 6 star hotels. When you wake up from the 2-week-long blacked out binge drinking session, you will probably have just enough left over to hire a bankruptcy attorney, write off all your debt, and party off into the sunset. If you figured out a way to have the seller gift your down-payment, then you’ve legitimately won the game. :)
Rate this comment:
0 
0
By Kary L. Krismer @ 59:
I didn’t know the exact amount, but I did know you could keep a certain amount under those conditions. My reply was more of a joke than a serious critique of Deejayoh’s post. He’s got such a good grasp of financial matters, data analysis, etc. that I don’t dare criticize him for real. :)
But you are right about the tax. I had never thought about it before, but I suppose the best strategy is to keep your long position (always trade up because your house hasn’t actually appreciated against the one you are buying) until you are midway between retirement and the nursing home. Then you downsize in $250K increments staying the minimum necessary amount of time and using a discount broker to minimize transaction costs. That way, you can pull the majority of the equity without paying taxes and use the full amount to cover the enormous costs associated with journeying to the other side.
OK, it doesn’t sound all that fun, but at least it will provide some tax-free money at the time you will probably most need it.
Rate this comment:
0 
0
Ballard sucks.
Rate this comment:
0 
0
By Jonness @ 72:
I’m not sure, but I don’t think the rollover option exists any more. Thus if you have gain more than 250/500, you have to pay tax, even if you buy a new more expensive place.
Rate this comment:
0 
0