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.

57 responses to “Massive Imaginary Migration to Drive Seattle Recovery”

  1. Cheap South

    The new message is “buy now or be priced out forever!”.

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  2. D. in Ballard

    I’ve been looking at the extremely desirable areas in North Seattle for 3 years. My feeling is that yes, some prices are continuing to fall. But it is extremely gradual in Trendville, and there are many houses that get bought at what I would consider inflated prices. So if you’re patient, and you sift through the junk, and you don’t jump the gun, I would say even the desirable neighborhoods are not recovering. If you’re definition of recovery is prices increasing.

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  3. Lurker

    Fantastic info, The Tim, thank you so much for that.

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  4. Kary L. Krismer

    I like how for months if not years SB has had an 18 month offset graph for Seattle compared to another city or two, for “entertainment purposes,” but when someone brings up specific differences between Seattle and Phoenix or other cities, that’s somehow “totally irrelevant.” Sometimes it’s better to let a point stand than to try to refute it.

    That said, I’m not sure it was the GMA that caused Seattle to build less than Phoenix, as much as geography (lots of flat land, no water barriers, etc.) and that their market became totally overheated which attracted massive building projects. Unlike Seattle, Phoenix actually built some roads too.

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  5. Kary L. Krismer

    RE: The Tim @ 5 – If he’s trying to say we’re not as overbuilt as Phoenix, that would put us in a better position than Phoenix for a recovery, all other things being equal (e.g. similar economies, migration, etc.). So it’s something that is a valid point–although the data may be wrong.

    The offset graph on the other hand, is valid data that is pointless.

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  6. David Losh

    I’ve heard the program a couple of times. I don’t know if it’s a repeat or ongoing series. It’s a point, counter point kind of exchange. She’s talking about help with foreclosure, and he’s saying things aren’t that bad here.

    It seems to me he is right, for wrong reasons.

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  7. Kary L. Krismer

    By The Tim @ 7:

    RE: Kary L. Krismer @ 6 – Read the listener question again.

    Sandra says she would like to have a definition of a restored housing market. “If we don’t want to return to the inflated market, what does recovery mean, when we’re looking at our housing market here [around Seattle]?”

    How does what has happened or is happening in Phoenix, Vegas, or LA have anything at all to do with the answer to that question?

    He could have made the same point by saying that in his opinion we didn’t overbuild too much. You can disagree with that, but I don’t see how his mentioning other cities takes away from that point.

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  8. Ira Sacharoff

    It’s kind of sad that Hagar made these remarks. The Peter Principle in effect?
    I try to refrain from pontificating on things I know nothing about.
    Hagar knows a lot about real estate fraud. He’s truly one of this country’s foremost experts on the subject. I took his class on RE fraud at North Seattle and it was awesome. In person, the guy is pretty hilarious and highly entertaining. No doubt he’s also a good appraiser.
    But it’s pretty common in the industry for professionals to spout off numbers that are not based in reality, just a little sad to see Hagar join that group.

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  9. David Losh

    RE: The Tim @ 10

    His point is we are not like Phoenix, Las Vegas, or Miami, in terms of foreclosures.

    Over the week end i went to the south tip of Lake Washington in Renton, behind the little air port. That is a classic example of development that took place all over the country, if not the world. It’s a contrived little community. Those types of developments bankrupt all the time, and are foreclosed upon.

    We are a different market place, the discussion was about foreclosure, and he made the point, maybe with bad information, but he is correct.

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  10. softwarengineer

    Growth Management in Seattle Metro?

    LOL….these buffoons in our King, Snohomish and Pierce Counties are clueless to growth managment. If they were managing growth they would not build cul-de-sac home developments off already over-crowded and clogged mainstreets to the freeeways. I know there’s no room, but in growth managment areas, like the NE coast of America, they would not allow homes to be built unless they also built their own new road to the freeways.

    The growth managment buffoons in King County don’t care, as long as the overbuilding of new homes they approve don’t further clog their main road freeway accesses [a lot of them live in the city limits of Seattle]. Thank God the repression has thinned the traffic down, or it would be a lot worse.

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  11. deejayoh

    I’m going to give him the benefit of the doubt and guess he meant 120k immigration per year. That said, I haven’t listened to the piece. Nor do I plan to. But people make mistakes like that all the time in interviews. And it looks like from your transcription he referred to the same number again in what looks like a more annualized context.

    Find where he’s said the same thing in writing and I’d make a big deal of it. This seems like a mountain from a molehill.

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  12. Scotsman

    One dimensional analysis. Let’s give full benefit of the doubt for his statements and assume there are 120,000 people a year moving into the area. So what? What kinds of jobs are they getting? Can they afford the median house? Maybe they’re coming for the generous welfare benefits- that should help. How much of that inventory is set up for section 8? Just looking at one factor isn’t going to lead to an accurate conclusion, especially when the data is completely inaccurate. What a waste of time and credibility.

    As an aside when reading Craigslist ads it seems I’m seeing a huge increase in goods for sale because folks are moving out of the area and leaving assets like extra cars, boats, electronics, etc. behind. While its anecdotal, it makes me question whether Tim’s corrected data is even capturing the most recent trends.

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  13. HappyRenter

    “But when we start seeing interest rates at four percent and less …”

    To me, this sounds like conditions for a new bubble.

    As a comparison, Switzerland is headed towards a real estate bubble with its 2% interest rates.

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  14. Dave the Appraiser

    I’m a practicing RE Appraiser, working Snohomish, Skagit, Island and Whatcom counties.

    Mr. Hagar said this in the interview: “So what we are seeing is—in fact, we’re already seeing it as we’re doing appraisals—certain neighborhoods have already started a recovery. What that means is that their prices aren’t going down. In fact, we’re starting to see some price increases in some select neighborhoods moving up. So that’s a good news there.”

    In my work I research and plot on a regression graph 5 year median prices for similar properties to the subject assignment, and include that in my report. What I have been finding lately is more stability in prices, rather than a decline as happened quite dramatically since 2007 through early 2010. In some cases, the price trends are actually turning up.

    So in that sense Mr. Hagar is correct.

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  15. deejayoh

    By The Tim @ 16:

    RE: deejayoh @ 14 – Um, even if he meant annually, he’s still off by a factor of 4.6. Statewide net migration was just 26k in the last year.

    That’s an order of magnitude less than a 22x or 55x error. Which is what I’d call the difference between a mountain and molehill.

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  16. Kary L. Krismer

    By deejayoh @ 19:

    By The Tim @ 16:
    RE: deejayoh @ 14 – Um, even if he meant annually, he’s still off by a factor of 4.6. Statewide net migration was just 26k in the last year.

    That’s an order of magnitude less than a 22x or 55x error. Which is what I’d call the difference between a mountain and molehill.

    One other possibility is that the appraiser has a more recent data source than last year, and/or that he’s applying an annual rate to a more recent shorter period.

    I would agree the per month was probably a mis-statement.

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  17. Lurker

    I’ve had a few RE agents tell me similar stories so it’s nice to see some real numbers on it.

    Funny how Hagar becomes more incorrect every year on his claim. Only off now by 460% – not too bad!

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  18. Kary L. Krismer

    RE: The Tim @ 21 – Well that’s a problem, or at least an amazing coincidence! ;-)

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  19. joe dirt

    Of course we didn’t overbuild as much here, its wet and dismal for much of the year, unlike Phoenix and Vegas, where its sunny. They didn’t overbuild in North Dakota either, so what.

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  20. Charles

    Well, the latest stories I heard from my friends saying price will go up again is because people in Canada are coming down to buy properties in Seattle, since the US dollar is very cheap to them now and the property market in Vancouver is very expensive already ….

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  21. Richard

    Afternoon,

    Regarding the population growth figure, I misspoke when I said that population was at a growth rate of 120,000 per month…. I meant per year. AND I was talking about a growth rate, not absolute figures. The Blog’s figures are based on April stats from the Gov. My figures are from the stats. supplied by the DOL “Net Drivers License” for September, which is why we have different figures. The State and PSCG uses the DOL numbers as an interim between the population update supplied by the Budget Office.

    Net drivers licenses are nice since they are reported on a monthly basis and are usually only 60 days behind reality. The bad side is they don’t count the population, only people obtaining drivers licenses (add for kids, subtract for illegals). However, they are good at indicating the direction in growth and over the years have been reasonably accurate.

    Drivers licenses increased by:
    > 14,209 in July,
    > 11,010 in Aug and
    > 12,100 in September.

    These three months indicate a growth RATE of approximately 120,000 (ish) for the year. The year to date stats. indicate Washington has grown by approximately 65,544 ending in Sept. That’s a healthy growth. Very similar to growth in the mid 90′s and 2004/2005. My comparison against Phoenix… was just that an example of another State/City with similar population. Their population has decreased while ours has had reasonable growth. Again a good reason not to use Phoenix as an example of where our housing prices are headed.

    We have proof that sales rates and prices, in select neighborhoods, usually close in, are stable to slightly increasing on a year over year basis. Overall prices and sales numbers for the state or county are different than specific neighborhoods; Which is why they pay us for our pin-point data and not generalizations.

    Geeezz!! The show wasn’t about population and growth rates, we were there talking about foreclosures.

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  22. NumberMonkey

    RE: Richard @ 26

    Using drivers licenses as a seasonal proxy is pretty awful because registration is highly seasonal. Both immigrants and new driver residents prefer to register in summer. So your growth rate figure is going to be badly overstated in summer because of your poor data selection.

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  23. Kary L. Krismer

    RE: NumberMonkey @ 28 – I don’t see why new residents would have a preference for summer, since they’d have to be breaking the law to remain unlicensed in Washington.

    What’s the status of Washington state regarding needing to prove legal resident status to get a license? What I’m thinking is that if other states have cracked down (e.g. Arizona), then there might be people getting licenses where they haven’t cracked down (maybe Washington).

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  24. Richard

    I understand both warnings and of course Summer has higher figures. I’ve been tracking population growth for quite a while. Chart the DOL figures over the past 10 years. Overlay that with Census figures of actual growth. You will note a correlation. It’s not exact and that was not the direction I was going. I think…. that while people are trying to nit-pick a figure, they are missing the point….. The Seattle area is growing and the figures are looking nice, especially after what was going on last year.

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  25. NumberMonkey

    RE: Kary L. Krismer @ 29
    It’s not really a “preference” as much as a “when they get around to it”.

    I took five minutes and compiled the monthly data by year:
    http://i33.photobucket.com/albums/d75/Markasouth/DriversLicense.png

    I suspect there are two big problems with inferring seasonal migratory in these data:
    1. The data are based on self selected months of drivers license registration. Not all months were created equal in this regard.
    2. I expect these are representative of the State’s issue of a drivers license, not the application for a drivers license (I assume this is why Richard notes that they would be 60 days out of date).

    Just thinking back to undergrad demography we were warned about the limitations of these data in examining seasonal trends.

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  26. NumberMonkey

    RE: Richard @ 30
    I’m not aware of any monthly census figures, even back when we had a City of Seattle demographer.

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  27. deejayoh

    Well, I give kudos to Richard for coming here to shed more light on his comments. That said – there may not be seasonality to people getting licenses, but there sure is seasonality to moving. People move disproprotionately in the summer. For the same reason that home sales typically peak in the summer. Between school years. So you can’t average the summer quarter and multiply by 4x.

    But in any case, based on my look at this, there appears to be very little corrleation between immigration and home prices

    http://seattlebubble.com/blog/2007/07/08/the-mythical-equity-locust/

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  28. EconE

    How many of those Jul, Aug, Sept iicenses are just college students looking for cheaper in-state tuition?

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  29. Kary L. Krismer

    The bigger question to me is how about people moving out or dying. Does DOL have a handle on that at all, or is it just expiring licenses?

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  30. Scotsman

    Kudos, Richard, for defending your position.

    As a potential home owner I follow this market closely. It can be confusing at times, that’s for sure. Do you think this would be a good time to buy?

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  31. mukoh

    Tim,
    In South Snohomish County, North King the amount of new homes sold outpaces the amount of picked up permits by a pretty good range. New home trends might give redfin a bone with some stats, as off as new home trends has been it might show you a different picture.

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  32. mukoh

    RE: softwarengineer @ 13 – SWE, you sure you know exactly what you are talking about? Every developer pays X multipled by amount of trips generated from each project. A project with 50 lots for example with $800 per trip with two average trips generated gets 50X800X2 range for traffic fees which go directly into the fund to improve those roads it affects. Some projects generate as much as $3k per trip.

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  33. wreckingbull

    Sadly, many listeners of the public radio program probably do not read this blog and will take what the ‘experts’ said at face value. That is really too bad. Nit-picking was what saved many of our collective asses over the last 5 years, in spite of ridiculous, ambiguous statements like:

    The Seattle area is growing and the figures are looking nice, especially after what was going on last year.

    Wow.

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  34. ex-WA

    By Kary L. Krismer @ 29:

    RE: NumberMonkey @ 28
    What’s the status of Washington state regarding needing to prove legal resident status to get a license? What I’m thinking is that if other states have cracked down (e.g. Arizona), then there might be people getting licenses where they haven’t cracked down (maybe Washington).

    Yes WA has fewer requirements; Arizona will not accept a WA license as ID. (Also not accepted: IL, NM, UT; other states OK.)

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  35. anonymous

    RE: ex-WA @ 42
    http://www.tri-cityherald.com/2010/11/08/1243344/immigration-washington-getting.html

    “Washington has seen a sharp increase in the number of people applying for a driver’s license without a Social Security number.
    ….snip…
    Recently, the Department of Licensing began to notice that while the use of declaration forms has gone up, the number of people moving to Washington from other states has remained relatively flat, Benfield said.”

    Sounds like driver licenses are no longer a good indication of future growth;)

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  36. Macro Investor

    By deejayoh @ 14:

    I’m going to give him the benefit of the doubt and guess he meant 120k immigration per year. That said, I haven’t listened to the piece. Nor do I plan to. But people make mistakes like that all the time in interviews. And it looks like from your transcription he referred to the same number again in what looks like a more annualized context.

    Find where he’s said the same thing in writing and I’d make a big deal of it. This seems like a mountain from a molehill.

    C’mon. Really? His whole talk is a fraud. How about the part about how everything is great, except for some really far out places like Maryville? And even Maryville is showing recovery.

    You are more than bending over backwards. I’m only reading the transcript… There isn’t one balanced, honest remark.

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  37. Macro Investor

    deleted

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  38. AWhiteHorse

    Wreckingbull, that’s the real bottom line. Well said. I wish everyone did read this blog. I liked the point about area salaries; if that many people did move here, how many of them could earn Boeing salaries? Microsoft salaries? More likely, they’d be getting help paying their rent by the Governor – otherwise – they’d be selling from a more affordable market in order to move here. That simply doesn’t make sense.

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  39. Macro Investor

    By deejayoh @ 19:

    By The Tim @ 16:
    RE: deejayoh @ 14 – Um, even if he meant annually, he’s still off by a factor of 4.6. Statewide net migration was just 26k in the last year.

    That’s an order of magnitude less than a 22x or 55x error. Which is what I’d call the difference between a mountain and molehill.

    Sorry to disagree. Honest mistakes are evenly distributed between over and under estimation. When someone is constantly wrong in the same direction, it’s not accidental.

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  40. BillE

    That’s it. I’m buying a house ASAP.

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  41. Jonness

    “Maynard: So, if I understand what you’re saying, you’re saying prices are going up, and will continue to do so?

    Hagar: At a much slower rate than they have over the last five years, yes.”

    Nice 2007 bottom call. Too bad it turned out to be the peak. Got any more house buying advice to give out? Can I get a glass of Kool-aid to go with that please? :)

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  42. GrizzlyBear

    By The Tim @ 31:

    RE: Richard @ 30 – Richard, the problem is you used the same exact argument (net yearly migration of 120k) back in late 2007 to forecast that Seattle-area home prices would not go down, but would in fact continue to go up (just at a slower pace) after a brief pause in late ’07 / early ’08.

    “…for the rest of the year, and maybe into the first month or two of 2008, our property values are going to remain fairly neutral.”

    You’re saying prices are going up, and will continue to do so?

    “At a much slower rate than they have over the last five years, yes.”

    Why should we believe you now, when you’re using the same argument to forecast an imminent recovery in 2011, following a pause in late ’10 / early ’11?

    “Itâ’s going to be a cold winter… but… spring will be good.”

    Crickets…nothing but crickets. These shills always disappear when confronted with their own lies. I think it’s absolutely disgusting that people like him are given a platform from which to spew their BS as fact. How he can look in the mirror each morning is beyond me.

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  43. Cheap South

    By AWhiteHorse @ 45:

    …. otherwise – they’d be selling from a more affordable market in order to move here. That simply doesn’t make sense.

    I experienced it in the mid-90s. Our company relocated 5 Texans that sold their Texas size ranches to move here. Boy, were they ever pissed off!! Last count, all 5 were gone from WA. I imagine this happens quite often.

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  44. Maya

    RE: Cheap South @ 51

    That’s right! Seattle metro is a horribly over priced place!! Not sure why we think it’s such a hot commodity… Get out and compare and then of course get on out! See ya Wa State DOR!

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  45. Hagar: Never Mind the Bogus Data, Recovery is Here! • Seattle Bubble

    [...] experiencing net migration of 125,000 people per year.Mr. Hagar dropped by the comments to defend his statments:I was talking about a growth rate, not absolute figures. The Blog’s figures are based on April [...]

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  46. SOBERBYSATURDAY

    The population of Washington’s cities and towns totaled 4,196,962 on April 1, 2010, a growth of 677,400 people since the 2000 census count.

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  47. SOBERBYSATURDAY

    WOOPS; SOURCE OFM http://www.ofm.wa.gov/news/release/2010/100630.asp

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  48. passingby

    RE: SOBERBYSATURDAY @ 54

    hmmm I wonder how many babies are in that number…

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  49. MK

    Wow..
    I’m pretty happy having recently closed on a bank owned 900 sq ft 2bd condo that sold in 2003 for $135000. I paid $74000 @ 4.5% interest. Zillow valued it at $ 205,000 in 07. Itsnpth in lynnwood, but it $200 less than my apartment was..and I have a mortgage deduction.

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