Case-Shiller Tiers: Seattle’s Low Tier Still Losing Big

Let’s check out the three price tiers for the Seattle area, as measured by Case-Shiller. Remember, Case-Shiller’s “Seattle” data is based on single-family home repeat sales in King, Pierce, and Snohomish counties.

Note that the tiers are determined by sale volume. In other words, 1/3 of all sales fall into each tier. For more details on the tier methodologies, hit the full methodology pdf. Here are the current tier breakpoints:

  • Low Tier: < $235,142 (down 1.3%)
  • Mid Tier: $235,142 – $380,225
  • Hi Tier: > $380,225 (down 1.3%)

First up is the straight graph of the index from January 2000 through November 2011.

Case-Shiller Tiered Index - Seattle

Here’s a zoom-in, showing just the last year:

Case-Shiller Tiered Index - Seattle

All three tiers continued to fall in November, with the low tier taking the biggest hit. The low tier fell 2.3% MOM, the middle tier dropped 1.8%, and the high tier lost 0.4%.

Here’s a chart of the year-over-year change in the index from January 2003 through November 2011.

Case-Shiller HPI - YOY Change in Seattle Tiers

The high and low tiers seem to be diverging fairly sharply here over the last few months, with the high tier improving one point while the low tier lost a point. Here’s where the tiers sit YOY as of November – Low: -13.7%, Med: -9.3%, Hi: -3.7%.

Lastly, here’s a decline-from-peak graph like the one posted yesterday, but looking only at the Seattle tiers.

Case-Shiller: Decline from Peak - Seattle Tiers

Current standing is 41.4% off peak for the low tier, 34.4% off peak for the middle tier, and 27.2% off peak for the high tier. The middle tier joined the low tier in setting a new post-peak low point in November.

(Home Price Indices, Standard & Poor’s, 01.31.2012)

  

About 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.

105 comments:

  1. 1

    Where’s All the Investors Grabbing Up Low Tier to Rent?

    With Vacancy Rates WAY Down and rents all going up, you’d think this was a no-brainer?

    Perhaps there’s something else going on in Seattle ya can’t Google either….like are rental tennant eviction rates way up in 2011?

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  2. 2

    RE: softwarengineer @ 1 – I suspect a big part of it is C-S having issues with short sales and foreclosures. They dominate the low tier.

    The other thing would be a lot of those are probably 1.5- bath homes, which are effectively functionally obsolete in the 21st century. With 1.75+ bath homes now being cheaper, more buyers can afford and will opt for them, leaving the 1.5- bath homes wanting for buyers.

    Finally, also note that they were run up more in the peak. As I’ve been saying a lot this week, the more something goes up in a short time, the more you expect it to fall.

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  3. 3
    David Losh says:

    This is kind of like the credit score argument.

    The low tier got run up the most in the bubble. Properties that were $100K got run up to $200K. A property I looked at for $125K was purchased, then resold for $225K within like a year. This is where people blame “flipper” for the run up in housing prices.

    It was idiot agents, and buyers who bought in, or be priced out for ever. It’s simple, this house sold for $125K a year ago, and got $10K worth of work, it’s now worth $135K, at best.

    The higher tiers didn’t have those luxuries.

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  4. 4
    MacroInvestor says:

    The low inventory indicates few people are selling unless forced to. As prices spiral lower, fewer and fewer have the ability to sell and make out okay. That tells me this could go on for a very long time — years and years. Enough buyers seem to be willing to jump on the lower prices, but owners still have those hopes and dreams of making their fortune in real estate. Perhaps that expectation has been ratcheted down to hoping for break even.

    That’s the most surprising thing to me about the bubble unwind. I thought sellers would face reality much faster. Perhaps those myths we’ve been sold all our lives was a lot stronger that I thought. Congrats to the REIC and media for that one.

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  5. 5

    RE: Kary L. Krismer @ 2
    Correct Me If I’m Reading You Wrong

    Are you saying the impact of foreclosures, in the future too, is hanging heavy on the Lower Tier shoulders….thus causing buyers to shy away unless the price is lowered more?

    It would be interesting data to see the foreclosure and short sell spread % for all tiers, to get a better handle on that assumption.

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  6. 6
    Xizor says:

    A 42% drop from the peak in the low tier is amazing. It is interesting to note that the divergence began 22 month ago between the tiers and before that they moved in tandem. Notably, the low tier didn’t get any bump over the last year unlike the other two tiers.

    I agree that this is shows the low tier being more susceptible to price declines for REO properties in foreclosure. It is the first time home buyer, mostly young folks, who are walking away from their mortgages, and thus the price declines are greater in the entry home segment. However, that will ultimately work its way through the entire ecosystem and pull down the higher tiers, but on a lagging basis.

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  7. 7

    By softwarengineer @ 5:

    Correct Me If I’m Reading You Wrong

    Are you saying the impact of foreclosures, in the future too, is hanging heavy on the Lower Tier shoulders….thus causing buyers to shy away unless the price is lowered more?

    I’m only talking about current REO and short sale closings. Those are dragging down the low tier, IMHO.

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  8. 8

    By Xizor @ 6:

    However, that will ultimately work its way through the entire ecosystem and pull down the higher tiers, but on a lagging basis.

    That’s a possibility. That happened in 2007, with the first mortgage crisis. The low tier people believed what they were saying in the newspapers, and that resulted in fewer move up buyers, working its way up the chain.

    There’s a difference though. The 2007 incident affected demand. This is just a matter of endurance, and the mid and upper tier probably have more endurance (excluding those upper tier who are only there due to borrowing in excess of $500,000).

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  9. 9

    RE: Kary L. Krismer @ 8
    I agree. A much higher percentage of low tier buyers bought with little or nothing down, and a much higher percentage of the short sales and bank owned sales have been the lower tier homes. I’d venture a guess and suggest that lower tier homeowners also have a higher unemployment rate, so they have been more in a position where they had to sell( or get foreclosed on.) And yes, during the run up the lower tier homes went up the most, were speculated on the most, flipped the most, etc. What this portends for the future I do not know. It’s definitely possible that the upper tier folks are not immune and will join the party. It doesn’t strike me that there are enough people around with high enough incomes to support the sheer number of high tier homes out there. It’s also possible that the low tier market will stabilize, as prices fall to levels where mortgage payments are the same or lower than rents. Softwarengineer wondered in Post #1 what impact buyers of low tier homes to rent were having. They’re out there and doing just that, but the sheer number of low tier homes sold as bank owneds and short sales just kind of dwarfs that impact.

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  10. 10

    RE: MacroInvestor @ 4
    We’ve Blogged This Before

    But its well worth re-emphasizing too….during the Savings and Loan Crisis of the late 80s and early 90s, the Seattle area sellers refused to unload at the price devaluation then and guess what [The same thing is happenning now IMO], new homes got much cheaper than older/remodeled stock per SF [albeit, the lot sizes were smaller, like today].

    Add to the “hope for the bottom to ever swing back up mentality” in Seattle is something SWE has never seen in Seattle [I was born here and lived here almost all my life, it was assumed real estate would eventually swing back up in price after the recession ended, but IMO, today’s depressionary(?) mess isn’t my dad’s Oldsmobile] home prices; putting it blunt, sellers can’t afford to sell underwater [that wsn’t the case during the S & L crisis recession]. It appears from the bloggers, that its mainly a lower tier problem with unemployment and foreclosures, but I’d add a caveat to that too; upper incomes and experienced professionals are getting butcher axed too.

    Bankruptcies Chronically Increasing With No End in King County:

    “….In July 2011, there were 1,271 bankruptcies filed in Seattle courts and 703 bankruptcies
    filed in King County courts. The total number of bankruptcies so far in 2011 has
    increased just 1.6 percent for Seattle, and increased just 0.4 percent for King County
    compared to the same period last year. This is an improvement from the years
    immediately following the beginning of the recession, when King County and Seattle
    experienced double‐digit percent increases in bankruptcies….”

    http://www.communitiescount.org/uploads/pdf/Data%20Updates/July%202011%20CC%20Data%20Update.pdf

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  11. 11

    RE: softwarengineer @ 10 – First, an under 2% increase doesn’t sound like a chronic rise.

    Second, that site doesn’t know what it’s talking about. There are no bankruptcy courts in King county beside the Seattle court. The only other bankruptcy court in Western Washington is at Tacoma (although they do have hearings in Everett, Vancouver and a few other places).

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  12. 12
    Jon says:

    Hi The Tim. I would really like to see how the price boundaries of the case shiller tiers in Seattle have changed over time. (like, the top of the lowest price tier was $X in 2007 and is $Y in 2012.) Do you have that information available?

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  13. 13
    Jon says:

    Oh also, the methodology pdf link is broken!

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  14. 14
    No Name Guy says:

    By MacroInvestor @ 4:

    I thought sellers would face reality much faster.

    Agreed. It’s denial, full blown denial. “All is well, go on back to your cabins. This ship is unsinkable”.

    Wait until fear hits and the full on panic to get out while the getting is good strikes.

    Patience. Keep the powder dry. Wait until there is (figurative) blood in the street to snap up a rental or two.

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  15. 15

    By No Name Guy @ 14:

    By MacroInvestor @ 4:
    I thought sellers would face reality much faster.

    Agreed. It’s denial, full blown denial. “All is well, go on back to your cabins. This ship is unsinkable”. .

    What are you basing that statement on? All of the data we’re discussing is about sellers who successfully sold their properties. Do you think that they should have sold them for less for some reason?

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  16. 16

    A huge contributing factor to the futher price erosion in the lower tier is due to the condition of the homes. Since these homeowners are the ones struggling the most, there is no money for home repairs. We are now seeing many homes that are not habitable and barely livable. That didn’t happen so much during the bubble, when it was easy to get a home improvement loan.

    This is actually setting up an interesting scenario – the flippers are back. I’m seeing many homes picked up cheap or really cheap at foreclosure sales and they are rehabbing new life into them and selling for good profits. (At least in my end of town – Snohomish County)

    I’m keeping a list of them.

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  17. 17
    Ray Pepper says:

    RE: Julie Lyda, RE/MAX Northwest Realtors @ 16

    Julie the flippers have been back for the last 15 months BIG TIME…EXCELLENT profits they are rendering due to low inventory…Your LIST will continue to grow and Grow!

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  18. 18

    RE: Ray Pepper @ 17

    Have You Ever Heard That Kenny Rogers’ Country Song

    “You got to know when to hold ‘em, when to fold ‘em…”

    Same thing with Flippers [not landlords],

    “You got to know when to remodel, when to bull doze…”

    I think bidding at the court house for distressed properties [without all the realtor fees attached] has no less risk, IMO. Comments?

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  19. 19

    By softwarengineer @ 18:

    I think bidding at the court house for distressed properties [without all the realtor fees attached] has no less risk, IMO. Comments?

    It has more risk. There’s no inspection, although if it was listed before you could possibly have done a quickie. There might be title issues.

    It’s not for those who don’t know what they’re doing.

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  20. 20
    Ise says:

    RE: MacroInvestor @ 4
    They would have faced reality faster had the gov’t–BS Bernanke and “one term” Obummer not keep on floating HAMP, principle reduction, refinancing, bail-out plans one after another. Right on cue, the bail-out-in-chief just floated another one today to the tune of 10B.

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  21. 21

    RE: Kary L. Krismer @ 19

    Inspections?

    We went into long blogs before on how inspections can totally miss cracks and rot if its coverred up….it looks nice and pristine for inspection, unti you tear the sheet rock and ceilings apart….they can’t see through building material.

    Even new homes, same conundrum….albeit, I bet the real old ones that were remodeled several times can be real potential Money Pits….but look wonderful on the outside.

    Perhaps its less risk to buy cheap, tear it apart and remodel it from the structure….like you did?

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  22. 22

    By softwarengineer @ 20:

    Perhaps its less risk to buy cheap, tear it apart and remodel it from the structure….like you did?

    If you’re referring to the house in Skyway, my wife owned and lived in that property long before we did the to the studs remodel.

    Inspections aren’t perfect by any means, but it’s better to do one than not.

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  23. 23
    No Name Guy says:

    RE: Kary L. Krismer @ 15

    You’re missing it Kary – it’s the want to be sellers that aren’t selling, waiting for the market to “come back”.

    See Macro’s comment @ 4.
    “The low inventory indicates few people are selling unless forced to. As prices spiral lower, fewer and fewer have the ability to sell and make out okay.”

    And as stated above, those that are selling today, are doing so because they must. (Anecdote on the matter) I sit next to a gal here in Large Aerospace company who just last year build a new place with her hubby. She’s in total denial about selling the existing place – “oh, we’ll wait a year or two and the market will improve, then we’ll sell the old place”. In my mind, its one of those nervous laughs that I dare not let out – it’s tragi-comic that they think it’ll get better in a year or two. They’re in total denial that the real estate market is going to keep going down for an extended period.

    As noted above, yourself at 8, about the middle and upper tiers having more resilience – it’s only a matter of time until it catches up with these tiers as well – once their resilience is gone (or enough of them are worn out), watch out. (Continue anecdote) My co-worker and her hubby are both middle career engineers – combined they pull down a LOT of dough. But, the expense of carrying both places, plus trucks, boats, etc WILL wear them down – when it comes time to unload the old place, they’ll do it, not from a position of having chosen when to do it, while having their current large financial reserves, but from being forced to do it because they can see the financial abyss they’re rapidly approaching. And at that point, they’ll be in fear – they’ll want out….quick, in a desperate bid to preserve their high cost gotta have the toy now way of life. As more and more people are in this situation, it’ll be a feedback loop – those with a bit of equity to preserve will try and get out before it’s all gone and they go underwater, cascading even more sellers with a bit of equity to preserve into the market. Forget those that are currently underwater, they’re stuck – watch out for those that aren’t underwater when they try and salvage what they can. That’s what I’m talking about – the whole denial / fear thing.

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  24. 24
    patient says:

    I’d be surprised if we don’t reach 50% off peak on pretty much all homes before this is over and many will get to the mythical 80% off predicted by sniglet and Eleua. I wish they were still commenting here. I miss them.

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  25. 25

    By No Name Guy @ 23:

    RE: Kary L. Krismer @ 15 – You’re missing it Kary – it’s the want to be sellers that aren’t selling, waiting for the market to “come back”..

    Okay, I’ll give you that.

    IMHO, waiting to sell only to try to get a higher price makes about as much sense as buying only to sell for a higher price. Yes the prices could go up, but they could also go down. If you want to buy, then buy. If you want to sell, then sell. Don’t do either because you think prices will change in a certain direction.

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  26. 26
    Ross Jordan says:

    By Kary L. Krismer @ 19:

    By softwarengineer @ 18:
    I think bidding at the court house for distressed properties [without all the realtor fees attached] has no less risk, IMO. Comments?

    It has more risk. There’s no inspection, although if it was listed before you could possibly have done a quickie. There might be title issues.

    It’s not for those who don’t know what they’re doing.

    But that risk gets priced in (or out, depending how you see it). That is, due to the risks, as well as a more limited buying pool, court house auction pricing should be lower than retail. And a lower price reduces risk.

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  27. 27
    Drone says:

    By No Name Guy @ 23:

    As more and more people are in this situation, it’ll be a feedback loop – those with a bit of equity to preserve will try and get out before it’s all gone and they go underwater, cascading even more sellers with a bit of equity to preserve into the market. Forget those that are currently underwater, they’re stuck – watch out for those that aren’t underwater when they try and salvage what they can. That’s what I’m talking about – the whole denial / fear thing.

    I think you’re overestimating the level of equity in the market that’s available to be protected. Most folks I talk to are at zero or negative equity today. Further declines will simply increase the number of people who desperately want to sell in a blind panic, but can’t.

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  28. 28
    Tatiana Kalashnikov says:

    RE: Xizor @ 6

    A 42% drop from the peak in the low tier is amazing..

    While Sacramento is not Seattle it’s worth watching what happened south of us. All tiers finally plunged 60+% off peak, and huge losses are still happening there, from the low end to the high end. Buying real estate in Seattle right now is a dangerous game. With 1/3 of Americans upside down on their mortgage, many bad things can still happen.

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  29. 29

    By Ross Jordan @ 26:

    By Kary L. Krismer @ 19:
    By softwarengineer @ 18:
    I think bidding at the court house for distressed properties [without all the realtor fees attached] has no less risk, IMO. Comments?

    It has more risk. There’s no inspection, although if it was listed before you could possibly have done a quickie. There might be title issues.

    It’s not for those who don’t know what they’re doing.

    But that risk gets priced in (or out, depending how you see it). That is, due to the risks, as well as a more limited buying pool, court house auction pricing should be lower than retail. And a lower price reduces risk.

    I had one client buy an REO for less money than an adjacent nearly identical property bought the same week at foreclosure. About 30% less.

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  30. 30
    whatsmyname says:

    RE: No Name Guy @ 23
    Great anecdote. If all the people who built a house in the last year put their old home on the market tomorrow, would the inventory spiral up to, say, the level it was at 60 days ago?

    Everyone has to live somewhere. If you’re relocating or too broke for your house you need to sell and move. Other homeowners (you call them sellers) have already adjusted to reality. Incentives have changed. A stagnant market in houses and jobs doubly undermines the incentive for a person to become a “move up” buyer. Likewise, with low prices and low interest rates, there isn’t much benefit to downsizing either. Most people I know figured the most effective thing to do was put a little money into their existing homes and get comfortable. A surprising number of people are buying 2nd homes in AZ.

    RE: Drone @ 27 –
    “Most folks I talk to are at zero or negative equity today.”
    You should talk to people over 40. We’re actually very nice.

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  31. 31
    Scotsman says:

    RE: whatsmyname @ 30

    “Everyone has to live somewhere.”

    That’s what far too many miss. Has a lot of equity disappeared- you bet. But most, a clear majority, of the people making mortgage payments today can handle them and will continue to make them because the cost delta between dumping the current home and moving into a rental house just isn’t that great. The vast majority of home owners won’t be willing to take the credit hit that comes from default. They need that credit rating for future cars, credit cards, etc. The supposed benefit of dumping a negative equity position isn’t enough of an incentive when countered by the hassle of moving, the credit hit, and the equal or higher cost of renting.

    I think we’re much closer to a bottom than many are willing to admit. We’ve reached an equilibrium of sorts that will hold until unemployment starts going up or the government is seriously compromised by it’s debts. California is a state that may have real government funding problems going forward and a further correction in real estate pricers. Washington, most of the central U.S., etc. may not be hit as hard.

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  32. 32
    Ross Jordan says:

    By Kary L. Krismer @ 29:

    By Ross Jordan @ 26:
    By Kary L. Krismer @ 19:
    By softwarengineer @ 18:
    I think bidding at the court house for distressed properties [without all the realtor fees attached] has no less risk, IMO. Comments?

    It has more risk. There’s no inspection, although if it was listed before you could possibly have done a quickie. There might be title issues.

    It’s not for those who don’t know what they’re doing.

    But that risk gets priced in (or out, depending how you see it). That is, due to the risks, as well as a more limited buying pool, court house auction pricing should be lower than retail. And a lower price reduces risk.

    I had one client buy an REO for less money than an adjacent nearly identical property bought the same week at foreclosure. About 30% less.

    Are you claiming that this is normal? Of course there can be one-offs, but on average, auction pricing should be lower than retail because the buying market is limited to all cash or hard-money loan buyers and because buyers should be factoring in the risks.

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  33. 33
    Ross Jordan says:

    By Scotsman @ 31:

    RE: whatsmyname @ 30

    “Everyone has to live somewhere.”

    That’s what far too many miss. Has a lot of equity disappeared- you bet. But most, a clear majority, of the people making mortgage payments today can handle them and will continue to make them because the cost delta between dumping the current home and moving into a rental house just isn’t that great. The vast majority of home owners won’t be willing to take the credit hit that comes from default. They need that credit rating for future cars, credit cards, etc. The supposed benefit of dumping a negative equity position isn’t enough of an incentive when countered by the hassle of moving, the credit hit, and the equal or higher cost of renting.

    I think we’re much closer to a bottom than many are willing to admit. We’ve reached an equilibrium of sorts that will hold until unemployment starts going up or the government is seriously compromised by it’s debts. California is a state that may have real government funding problems going forward and a further correction in real estate pricers. Washington, most of the central U.S., etc. may not be hit as hard.

    Wow, that almost sounds bullish =)

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  34. 34
    whatsmyname says:

    RE: Scotsman @ 31
    I think that’s one of your best posts ever.

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  35. 35
    Jonness says:

    RE agent in 2007: “Seattle will appreciate forever because it’s surrounded by water and has a lot of tech companies.”

    Jonness: “Have you been smoking crack again? Sell now while you have a chance to get out with a profit!”

    RE agent in 2008: “Prices have dropped ever so slightly. But we’ve reached the bottom. There’s never been a better time to buy. You better buy now before mortgage rates skyrocket.”

    Jonness: “Have you been smoking crack again? Sell now while you have a chance to break even!”

    RE agent in 2009: “We are definitely at the bottom now. Buy now before you miss out on the tax credit, and you are priced out forever.”

    Jonness: “Have you been smoking crack again? Stop making payments immediately so you can afford to feed your kids again!”

    RE agent in 2010: “House prices are on the verge of a massive appreciation. Better buy now. This is the bottom.”

    Jonness: “Not even crack can delude you this bad. What are you smoking?”

    RE agent in 2011: “OK. I admit, prices fell pretty far. But it’s all REO’s and short sales. Non-distressed inventory is worth as much as it was in 2007. This is definitely the bottom. Remember, Seattle is surrounded by water.”

    Jonness: “Is it possible you believe these things and didn’t even smoke anything to whack you out?”

    RE agent in 2012: “The Case-Shiller is a flawed indicator. Only the low end is getting hit. What’s that? Yes, I’ve had my house listed since 2010 when I stopped making payments. Currently I’m short selling it at $200K below what I paid. This is the bottom. When rates go up, this house will be worth double what it is now. BTW, my home is just slightly south of I-90. If I’d have only bought a mile north, my house would be worth double what I paid. Hey, have you got any crack I can smoke? I’ll pay you back next week!”

    http://static6.businessinsider.com/image/4cf7b3a0cadcbbca540e0000-590/example-japans-home-prices-have-fallen-for-19-years-in-a-row.jpg

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  36. 36
    Scotsman says:

    RE: Ross Jordan @ 32

    Wow, that almost sounds bullish =)

    Nah. Just because prices stop falling (or fall much more slowly) doesn’t mean they’ll be going up anytime soon. But it does mean buying may not be a total bomb if you’re looking at a 4-7 year time frame.

    At some point the federal government is going to have to both shut off the free sh#t spigot and figure out a way to pay for what it’s already bought. That will cause not only an economic contraction but a great deal of social unrest. Guess we’ll cross that bridge when we get there. The solution (printing and/or selective default) may prove to be quite inflationary- a win for home buyers/owners. Or it could be revolution with the outcome unknown..

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  37. 37
    Ray Pepper says:

    RE: Scotsman @ 31

    “The supposed benefit of dumping a negative equity position isn’t enough of an incentive when countered by the hassle of moving, the credit hit, and the equal or higher cost of renting. ”

    This is where you don’t get it. Your assuming everyone decides they want to dump because they are upside down..WRONG WRONG WRONG.. We are a mobile society and people move for a great many reasons…Because 1/3 are upside down it will leave a decade of short sales, foreclosures, and deed in lieu’s in their wake. People cannot be TRAPPED in their home so your assumption that we are reaching an equillibrium is as bright as statement as your assumption about “Millionnaire Mike” thinking he got the land and old house for FREE before he spent his 1.2 on construction. Did you take the time to look up what he paid for the house/land? I think not….When you do you will see why you both share the same financial ingenuity!

    Wake up Scotsman..Not everyone is a strategic defaulter nor does everyone DESIRE what will happen to them over the next 10+ years. Americans do NOT have enough money to “cover” NOW nor will they have it in 5-10 years. Write downs will continue seemingly forever UNTIL it ALL comes back one way or ANOTHER!……………………..

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  38. 38
    patient says:

    RE: whatsmyname @ 33

    Sounds like Scotsman is getting ready to buy.

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  39. 39
    David Losh says:

    RE: Ray Pepper @ 17RE: Julie Lyda, RE/MAX Northwest Realtors @ 16

    The flippers are back !!!!

    They have been back for the past 15 months!!!!

    OK, let’s start with the Real Estate agents who make a living convincing people that the flippers are back. You can’t have it both ways. They can’t All be Coming Back!!! and say the flippers are making excellent profits.

    You can’t spend countless hours tracking distressed properties, then turn around, and say that with a little Fixing those properties are now flipper fodder.

    It’s true that with the low inventory buyers are being mercilessly convinced to buy what ever looks OK. People shop online, then booooooom anything that has decent pictures, and a plausible seller story sells with multiple offers.

    This Real Estate transparency thingy seems to be working for those that sell Real Estate much more than for the people who buy it.

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  40. 40
    Scotsman says:

    RE: Jonness @ 34

    ” BTW, my home is just slightly south of I-90.”

    You’re hosed. Just burn it and be done. ;-)

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  41. 41
    Jonness says:

    By patient @ 37:

    RE: whatsmyname @ 33

    Sounds like Scotsman is getting ready to buy.

    First Tim got bullish on us, and now Scotsman has turned. Yet, we are continuing to hit new record post-peak lows.

    What’s the first investment lesson we all learn? Never try to catch a falling knife.

    Seriously Scotsman. What’s up with you these days? Your comments don’t match the macro picture? What’s changed? Is there something tangible you can point to?

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  42. 42
    Scotsman says:

    RE: Ray Pepper @ 36

    “Because 1/3 are upside down it will leave a decade of short sales, foreclosures, and deed in lieu’s in their wake”

    I don’t think so. Assuming you’re correct that 1/3 of mortaged properties are upside down that’s only about 20% of all properties. What percentage of those are under pressure to sell because of financial stress, job transfers, etc? I’d wager it’s a much smaller number than you assume. I have several neighbors who are “under water” and yet it just isn’t an issue. they can handle the payments- in many cases more easily than when they originally bought. They have no intention of moving. In a least one case the home could be rented for a positive cash flow. That’s the supply side.

    On the demand side we have people looking for rentals, investors looking for rentals, foreigners looking to buy and preserve capital (with more coming), money potentially moving out of peaked equities and into real property, regular buyers, etc. And the government is looking to save housing. It’s not the force or tidal wave you imagine.

    Just because everybody finally got on the bus doesn’t mean the bus is still going where they thought it was.

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  43. 43
    Ray Pepper says:

    RE: David Losh @ 38

    This statement is so wrong on so many levels I had to read it 3x:

    “You can’t have it both ways. They can’t All be Coming Back!!! and say the flippers are making excellent profits. ”

    Well Yes, David I can say that. Flippers are doing quite well while others are stuck with their “bad flip.” You gotta get your money in good Dave.. and Yes, They are ALL coming back…When its all said and done the VALUE of ALL these homes will be set to their current market value. It will take many years and the sorrow from upside down homeowners will be heard from ” renter nation” seemingly forever..

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  44. 44
    Scotsman says:

    RE: Ray Pepper @ 36

    As for Mike and A House By The Park I did go back and look at the figures. You are correct, and I was wrong- only the construction costs were included. My apologies.

    Just because you won the battle doesn’t mean you’ve won the war- or you would be living in Mike’s house. And like him, think nothing of whatever the “loss” might be.

    Times change, and so must our analysis. 2012 is five years beyond the 2007 peak and presents a very different political and economic environment, both here and in the rest of the world. It never hurts to pull out a fresh piece of paper and start over in analyzing future expectations. Not everything that was operative 3 years ago is important now. And there’s plenty of new factors to consider.

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  45. 45
    Ray Pepper says:

    “What percentage of those are under pressure to sell because of financial stress, job transfers, etc? I’d wager it’s a much smaller number than you assume. I have several neighbors who are “under water” and yet it just isn’t an issue. they can handle the payments- in many cases more easily than when they originally bought. They have no intention of moving.”

    Again Scotsman you don’t get it..Your friends are fine now…But, how about in 2014, 2016, 2018…Do you think they will still be able to sell their upside down turd and STILL cover the 10% it costs to unload in this State? I don’t think so….At least a decade of write downs are upon us making any possibility of home appreciation a sheer wet dream…You can fantasize about further Fed Stimulus to help but in the end it will be futile…All that will work is mortgage principle cramdown to current market value on a BROAD SCALE..Not just the regional independents doing this we need the big boys..But, alas the problem with this is sheer anarchy from those who PLOPPED alot of money down or have a paid off home….

    So with the absence of massive fed intervention Scotsman your friends up and down the street maybe smiling now but in 7 or so years the crying will rear its ugly face because…………life happens.

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  46. 46
    David Losh says:

    RE: Ray Pepper @ 42

    No you can’t. You have to pick a side. Property is either going down in value, or it is going up. I recognize there are crooks, and swindlers in any market place, but you shouldn’t be promoting them. Most, well all, of the people I know who work on properties are finding moderate returns.

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  47. 47
    Jonness says:

    By Scotsman @ 41:

    Just because everybody finally got on the bus doesn’t mean the bus is still going where they thought it was.

    My 35-year-old single mother coworker put it best about a year ago. “Owning your own home is highly overrated.”

    Psychology moves markets, and people are getting really, really sick and tired of losing money on their homes.

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  48. 48
    David Losh says:

    RE: Scotsman @ 43

    What happened to you?

    You’re correct though, times have changed.

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  49. 49
    Ray Pepper says:

    RE: Scotsman @ 43

    I would NEVER live in a box like that packed in by neighbors on both sides nor did I win any war….The facts set you FREE….Hiding and lying does nothing nor does living in denial… My 5 acres in Gig Harbor renders me just enough room for everything I need and the privacy I desire.. To be in that home 2.5 mill is honestly just a laugh and I truly hope he will stay there a lifetime but I know he won’t..Mobile Society Scotsman…We are mobile.

    I hope Millionnaire Mike enjoys his mill + upside down property and countless hours of documentation/videos/pats on the back by all you buffoons…He can review his videos each and everyday and possibly write a book called…..” HOW TO BLOW 1 MILLION on a house and Try Not to think about it.”….or some title like that.

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  50. 50
    Scotsman says:

    RE: Ray Pepper @ 44

    “how about in 2014, 2016, 2018…Do you think they will still be able to sell their upside down turd and STILL cover the 10% it costs to unload in this State? ”

    I guess you have a reading comprehension problem. Who said they are going to want to sell? Everybody has to have a place to live. The options may change- perhaps more folks pass on the promotion, or don’t move south for retirement They just stay where they are and keep paying.

    And Ray- here’s a shocker: not everybody is broke. If I were to buy a house I would finance it with the least possible down. I’d probably be underwater the day I signed. But that doesn’t mean I couldn’t pay it off the next month, or over 5 years, or rent it for a positive cash flow. It would likely never “come back.”

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  51. 51
    Jonness says:

    By Scotsman @ 43:

    It never hurts to pull out a fresh piece of paper and start over in analyzing future expectations. Not everything that was operative 3 years ago is important now. And there’s plenty of new factors to consider.

    You needn’t go any further than historical house prices compared to incomes. Seattle as a whole is still about 23% overpriced compared to incomes. Add in the psychology of losses compared to gains, and the stage is set for history to simply repeat what it does on the falling side of asset bubbles–return to or even overshoot the norm.

    http://housingcorrection.com/images/seattlepricestudy.jpg

    Where are the jobs that are going to sustain house prices at 23% above historical relationship to incomes? People thought they bought steak, and instead they got turkey. Five years later, they are eating Top Ramen. Where are the move up buyers in this market?

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  52. 52
    Scotsman says:

    RE: Ray Pepper @ 48

    One of the biggest struggles I’ve faced was coming to terms with the idea that not everybody thought the way I do. What a shame- but it’s true. :-) Products that have no interest to me soar to success, etc. The trick is to look at the big picture through data and analysis, not the lens of personal values. I would never live in a development with CC and Rs, but many prefer them. I would never put a majority of my wealth into a home, but many find the bulk of their pleasure in being “house proud.” Mike is as much of the market as you and I- and David, Kary, etc. That’s a lot of variety in terms of taste and purchasing ability. Don’t try to narrow the world down to double-wides and spec homes in Gig Harbor. It’s a bigger place.

    Both Bill Gates and my newest neighbor are upside down. Neither knows by how much- or cares. Not everybody has the investor mentality.

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  53. 53
    David Losh says:

    RE: Ray Pepper @ 48

    He’s in it $2.7 Million Dollars, and you were correct is may be worth $2 Million Dollars, so he has a loss of $700K out of the gate.

    His web site is impressive, the best I have ever seen about the process. It’s one big ad, if he chooses, but he doesn’t. It may become something because people are intrigued about new construction, and the box that Mike built is getting to be very popular.

    You have a wetlands property, so do I. It may be hard to unload, so I mortgaged mine to the hilt. Now however, five years later, with a balloon in ten more years, I think I’ll keep it, and pay it off.

    My business is a boomin’ boy! I’ve had this little business for over twenty years, and this is the best year I could have hoped for. I put a number up on my board, and hit it.

    Something is up. I don’t know what it is, but the economy has a lot of promise.

    So I don’t care if I lose money on my property, as long as I can afford it. It’s just a cost of doing business. You win some, and lose some, as long it fits into the over all plan.

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  54. 54
    Ray Pepper says:

    RE: Scotsman @ 51

    and once again I agree 100%…never had a problem with the guy…..never knew the guy…..until……………..HE LIED!…..He said he had no clue…He said he had no idea……but even Millionnaire Mike caught on and finally said ” Should I have said I don’t care? Would that have made it better?” I responded YES!!! Absolutely!!! But, instead he LIED….continued the farce……….and I was simply the Sheriff there to call him out on it……I was the narcissistic ass! Its OK!…I think we all learned something from all that BS.

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  55. 55
    Scotsman says:

    RE: Jonness @ 50

    This is really two issues- the local housing market and the national/world economy.

    Seattle has always been over-priced relative to incomes for a variety of reasons. One is that the income figure misses wealth, foreign money, inheritance, etc. A new one I’ve seen lately is families (Indian, Asian) getting together to buy. But the biggest impact is the current rent/buy cost analysis. Until rents move down we’ve hit a bit of a floor for entry level housing and even some mid tier stuff in more desirable areas. Probably not the bottom, but close- until factors in the macro environment change.

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  56. 56
    David Losh says:

    RE: Scotsman @ 44

    Thank God for Obama!

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  57. 57
    Scotsman says:

    RE: Jonness @ 51

    Here’s my take on the longer term macro environment. Governments are in debt up to their eyeballs so interest rates won’t rise. Rising rates would bankrupt and topple governments. They can’t just take away the “treats” given to the people or there will be blood in the streets. So they will selectively default (the Greece 50% “haircut”) while quietly “printing” in novel ways. Both approaches are inflationary. Living standards overall will fall, but select items will take off. I’d bet real property in the world’s most powerful nation will be on that list.

    Where will the money come from? has been the question to answer for some time. I’m betting it eventually comes from foreign interests seeking security and shelter along with monetary inflation as all other prospects for reducing debt are blocked by social and political realities.

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  58. 58
    Jonness says:

    By Scotsman @ 55:

    Seattle has always been over-priced relative to incomes for a variety of reasons.

    My chart compares Seattle now to Seattle then, so this is a non-issue. It’s 23% overpriced compared to having been overpriced for years.

    Maybe some foreign money is pouring in, but not enough to sustain these prices at a time of extraordinarily high unemployment and an imploding Europe.

    If Seattle is nearing a bottom, we will know soon. It’s important to keep risk in mind and invest accordingly. But most of all, never try to catch a falling knife unless losing money is worth it to own a house.

    I’m not saying don’t buy. I’m just saying, if you do, don’t go getting whacked out if you lose some money for a while. The risk of this occurring is extremely high.

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  59. 59
    Jonness says:

    By Tatiana Kalashnikov @ 28:

    While Sacramento is not Seattle it’s worth watching what happened south of us.

    I agree. But it’s important to also keep in mind Seattle has a lower percentage of high risk loans and a lower unemployment rate than Sacramento. I think this provides it some protection from the downside. But if you are claiming Seattle will continue to fall, and the high end is not immune to the price drops, we are on the same page.

    BTW. Sorry for linking the bad photo in the other thread. I meant nothing personal by it. My sense of humor is not so great at times. Here’s a picture of me if you are interested. :)

    http://www.weirdthings.org.uk/wp-content/uploads/2008/04/mr-bean-has-had-a-baby-man-its-ugly.jpg

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  60. 60
    Azucar says:

    By Ray Pepper @ 54:

    RE: Scotsman @ 51

    and once again I agree 100%…never had a problem with the guy…..never knew the guy…..until……………..HE LIED!…..He said he had no clue…He said he had no idea……but even Millionnaire Mike caught on and finally said ” Should I have said I don’t care? Would that have made it better?” I responded YES!!! Absolutely!!! But, instead he LIED….continued the farce……….and I was simply the Sheriff there to call him out on it……I was the narcissistic ass! Its OK!…I think we all learned something from all that BS.

    You seem more like a lynch mob than a sherriff to me. IMO, people don’t know what their house (especially if it has unique features like a view, waterfront, custom build, next to a nice park, etc) is worth until they sell it. If he had an appraisal for 1.5 million to get a 1 million loan, it doesn’t mean that there’s no chance that the house is worth over 2 million. If he checked zillow and the zestimate was 900k, that doesn’t mean that there’s no chance that the house is worth over 2 million. If he put it on the market for 1.5 million and had no interest for a while, that’s a good indication that the house is not worth 1.5 million. But he never did that and has no interest in doing it. So asking him what a maybe conservative appraisal a year ago… or what a zestimate is… is a lot different than asking what the house is worth. You asked what it was worth, and I think that unless he’s explored the market for selling it some neither zillow nor a conservative appraisal over a year ago qualifies him to say that he knows what it is worth. It is worth what the market will bear, and since he has no interest in selling the dream house that he just built I can see why he would say he has no idea what it’s worth.

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  61. 61

    By Ross Jordan @ 32:

    By Kary L. Krismer @ 29
    I had one client buy an REO for less money than an adjacent nearly identical property bought the same week at foreclosure. About 30% less.

    Are you claiming that this is normal? Of course there can be one-offs, but on average, auction pricing should be lower than retail because the buying market is limited to all cash or hard-money loan buyers and because buyers should be factoring in the risks.

    I don’t track foreclosure sales, so I don’t know. It really though speaks more to the risk of buying at a foreclosure sale if you don’t know what you’re doing.

    I can tell you that quite frequently a REO property will come on the market and then be reduced in price over time. Assuming the bank did their price analysis before the foreclosure sale (likely), then to be able to outbid them at the sale you’d need to bid that higher price at the foreclosure sale. Contrary to popular belief, the banks don’t always just bid in the amount they’re owed.

    I’m sure there are some great deals out there at foreclosure sales, even after adjusting for the risk factors. I’m just pointing out that there is risk, and sometimes the deals are not great.

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  62. 62

    RE: Jonness @ 35 – With the exception of Ardell, what agent has been making bottom calls so frequently?

    Seems like you’re just trying to prove you were right in arguments that happened only in your imagination.

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  63. 63

    By Ray Pepper @ 45:

    “What percentage of those are under pressure to sell because of financial stress, job transfers, etc? Iâ��d wager itâ��s a much smaller number than you assume. I have several neighbors who are â��under waterâ�� and yet it just isnâ��t an issue. they can handle the payments- in many cases more easily than when they originally bought. They have no intention of moving.”

    Again Scotsman you don’t get it..Your friends are fine now…But, how about in 2014, 2016, 2018…Do you think they will still be able to sell their upside down turd and STILL cover the 10% it costs to unload in this State? I don’t think so…

    You’re assuming that you have the ability to predict the future two, four and six years out. The one thing you have in common with Ardell is you don’t.

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  64. 64
    Ray Pepper says:

    RE: Kary L. Krismer @ 63

    agreed..nobody can…but for 1/3 of people with mortgages to be upside down PLUS THE COST TO SELL in this State of an additional 10% I can safely predict that without MASSIVE FED intervention- short sales, deed in lieus, and foreclosures will continue on for many years to come Kary keeping a LID like a storm drain on any type of home appreciation that is measureable…………

    We all love our homes but life forces us to move and we do not or will not have enough to cover. “Short Sale” and “deed in lieu” will be as popular as tech stocks were in 2000..Everyone will be talking about it and as for any SIGNIFICANT home appreciation here in the PNW this decade?….R U SERIOUS?…….You would have a better chance at asking Ardell for a trip together to Vegas at Bellagio, on her dime, then having your property or Millionnaire Mike’s appreciate in any type of substantive value..

    Pray Kary for a flat market with home values to cease dropping…Pray hard and daily…….If this occurs be very happy..I say its trend line down down down until further notice…We remain grossly overpriced here still in the PNW and the sales I see logged at the Courts each Friday support my opinion..

    Lastly, Kary I know you said repeatedly you do not follow the Trustee Sales…Here is where you are doing yourself and your clients a disservice…When you truly see what the banks are accepting on their properties you will only begin then to understand what the “value” is of these properties you are out there peddling. Every Buyer should attend…not necessarily BUY but just attend and get educated if they are choosing to buy in this declining asset environment of 2012….It only takes a few hours of an Agents time along with their client……………But will Agents take their clients????????????…………………..NEVER!…….

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  65. 65

    By Ray Pepper @ 64:

    Lastly, Kary I know you said repeatedly you do not follow the Trustee Sales…Here is where you are doing yourself and your clients a disservice…When you truly see what the banks are accepting on their properties you will only begin then to understand what the “value” is of these properties you are out there peddling. .

    How would seeing what a house goes for at foreclosure give me any indication of anything where I don’t know anything about the house, and have never seen it?

    But again, there should be a huge difference in price due to risk factors, so what something goes for at foreclosure has little to do with the value of listed properties. Foreclosures have always sold for much less on average.

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  66. 66

    By Ray Pepper @ 64:

    agreed..nobody can…but for 1/3 of people with mortgages to be upside down PLUS THE COST TO SELL in this State of an additional 10% I can safely predict that without MASSIVE FED intervention- short sales, deed in lieus, and foreclosures will continue on for many years to come Kary keeping a LID like a storm drain on any type of home appreciation that is measureable…………

    As to the future I continue to believe that the government will want inflation. Whether they can create it is another matter. That’s why I’m still split on whether there will be inflation or deflation in the future two to four years out.

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  67. 67
    MacroInvestor says:

    RE: Scotsman @ 31

    I get what you’re saying. You want to be a buyer this year. It’s time to convince yourself that it’s okay ;)

    Seriously. The problem was never a mismatch between supply and demand. There was some of that but not a lot. The problem was massive expansion of credit and the subsequent unwind. With all due respect, you don’t seem to get that. Prices can stay low and grind lower regardless of how many people “have to live here” and want to buy. That is because almost nobody can buy out of their checking account. They need a big, fat loan… and it takes more than just being able to fog a mirror now.

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  68. 68
    MacroInvestor says:

    By Jonness @ 47:

    By Scotsman @ 41:
    Just because everybody finally got on the bus doesn’t mean the bus is still going where they thought it was.

    My 35-year-old single mother coworker put it best about a year ago. “Owning your own home is highly overrated.”

    Psychology moves markets, and people are getting really, really sick and tired of losing money on their homes.

    Scotsman has anecdotes about neighbors bearing their debt slavery well. All my friends are the opposite.

    Since 2007 they all tried to convince me to buy. Now — only in the last year — they have switched to advising me to NEVER BUY. They all wish they could sell and move, just because they have ants in their pants and are bored. I should never buy because it’s such a hassle to maintain the place. You see, it was all fun and worthwhile when they thought they were gonna get rich off their home appreciation. But now, I should rent my whole life and live the easy life ;)

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  69. 69
    Tatiana Kalashnikov says:

    RE: Jonness @ 59

    Oh my goodness! I’m not sure that you should have children Mr. Jonness..

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  70. 70
    Sweet Pea says:

    By Scotsman @ 50:

    RE: Ray Pepper @ 44

    “how about in 2014, 2016, 2018â�¦Do you think they will still be able to sell their upside down turd and STILL cover the 10% it costs to unload in this State? ”

    I guess you have a reading comprehension problem. Who said they are going to want to sell? Everybody has to have a place to live. The options may change- perhaps more folks pass on the promotion, or don’t move south for retirement They just stay where they are and keep paying.

    Life is awfully short to spend it tied to a house, and letting that ball and chain dictate major life choices. People don’t have job security, for the most part. Maybe their pension is underfunded, maybe they planned on moving up and hate their neighborhood now. After several years of a big mortgage payment, stagnant wages, and maybe missed opportunities, how long will people put up with that? Maybe their in love with their house and location, but I’m not sure if that’s the norm these days.

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  71. 72

    RE: Scotsman @ 71
    And even if you’re looking for the cheapest 5 year cost for shelter, the options are reduced as the Alaskan Way viaduct is coming down.
    Buying a home is a personal thing. And we don’t live in a one size fits all world. Scotsman wants to buy a home because it will reduce his housing costs. Others want to buy a home because they have three large dogsand can’t find a rental, or they want a large garden space. To suggest that anybody who wants to buy a house now is either crazy or stupid is not accurate. Perfectly intelligent, sane people are buying houses because they want to. Yes, neither crazy people nor stupid people are on the endangered species list. And there are plenty of good reasons not to buy a house, there are still plenty of very overpriced houses on the market. Still, people ask me about which neighborhood’s houses will appreciate in value more. ” Heck if I know” is my standard answer, and go on to suggest if they’re looking for something that’s going to appreciate in value, perhaps they ought to consider investing in artwork or stocks. That doesn’t mean they shouldn’t buy a house. A few years ago people were looking at me like I was crazy when I was suggesting that prices were about to fall off the cliff, that it was clearly not a good time to buy, and they should wait if possible. It’s a little more murky now. I don’t see prices rising anytime soon, maybe not for a long time. But it doesn’t look like we’re about to fall off a cliff. Maybe wallow here near the bottom and hang out with the catfish.

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  72. 73

    RE: Scotsman @ 71 – I’d redo your calculations on rent versus buy on a fixed rate loan. You don’t want to be facing a mandatory refinance in 5 years.

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  73. 74
    Ray Pepper says:

    hmmmm…back when Ray said BUY BUY BUY???????????????????….Don’t remember EVER saying that unless your talking a GEM and those I say BUY BUY BUY everyday. They do pop up from time to time on the MLS and Trustee Sales…

    When the cost to buy far out weighs the cost to rent when factoring in initial repairs, taxes, insurance, and the cost of YOUR money to extract it from where ever you hold it for your down payment. Adding these all into a potential purchase you can see if you have a GEM and should BUY BUY BUY………There are 2 this week I see in King County and 1 in Puyallup…Probably get some good bidding. BECU seems to have GEMS as of late at the Trustee Sales…Nice and juicy low bids that are very gem-like!

    Yes, Scotsman it does seem like your time has come to take the dip for whatever your justification…Maybe a little too much Millionnaire Mike jealousy and fantasizing at watching his home construction on time lapse……Lord Knows this State needs another round of excise tax so please do BUY…Fix up the house..Shop at Lowes and Home Depot…Do your little part to help correct this Wall Street crime on humanity but never think you are at or near a bottom in 2012….

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  74. 75
    Scotsman says:

    RE: Kary L. Krismer @ 73

    Surprisingly fixed is only about 1% higher, agreed the best choice for most people. If the adjustable goes up to its max- about 8%, it’s still a wash with current rental rates. For me worst case is in 5 years I just pay it off and live there. I have other considerations involved, feel I might as well save the $100+ a month.

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  75. 76

    RE: Scotsman @ 75 – If you can pay it off, and it’s just about liquidity, that’s entirely different.

    I just don’t like ARMs because I lived through the 80s.

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  76. 77
    Sweet Pea says:

    RE: Sweet Pea @ 70

    Gah, they’re not their. My own pet peeve !

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  77. 78
    MacroInvestor says:

    By Sweet Pea @ 77:

    RE: Sweet Pea @ 70

    Gah, they’re not their. My own pet peeve !

    We were being nice and not noticing ;)

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  78. 79
    MacroInvestor says:

    RE: Scotsman @ 71

    My friend, something’s wrong with that math. According to C-S, Seattle went down 6.4% year over year. Let’s call that 0.5% per month. On a $400k house, you are losing $2000 PER MONTH off your down payment (or resale value). Add that to your monthly payments and no way it compares to renting. And no way renting to someone else is economic.

    My advice is don’t rent from a wanna be seller, and consider tying up the property with either a long term lease or lease/buy or option.

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  79. 80
    Scotsman says:

    RE: MacroInvestor @ 79

    “My friend, something’s wrong with that math”

    I doubt it. Something is wrong with your assumptions about the value of the house (almost low tier), the price discount already built in (almost exactly 1/2 off peak), its condition (easily flipped now based on similar recent sales) and my overall financial health (6 sources of income, any one of which could make the payment, which is less than 10% of my income. . . ) and much else. But keep on beating that drum.

    In fiscal matters I define conservative- hence the Scotsman tag. My momma taught me how to pinch a nickle so hard it screams. It provides a stange contrast with the fact that I really don’t give a rat’s asss about money or many material things. Bottom line- maybe you’re right, and I do lose. From my perspective- so what? Others may be in different situations, and should adjust their thinking. I’ve lost more money on boats and cars than I ever will on this purchase, so it all seems quite reasonable to me. YMMV.

    The trick is to be ahead of the crowd, not just to follow it.

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  80. 81
    MacroInvestor says:

    RE: Scotsman @ 80

    All true. But completely unrelated to losing $2k per month and forgetting to add that to the total cost. Sorry — big fail.

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  81. 82
    Scotsman says:

    RE: MacroInvestor @ 81

    “Sorry — big fail.”

    Um, no- not on my part. Go back and read the original post. I’ve figured in an additional 20% decline over the next 5 years. That’s in “as is” condition without repairs/updates that could significantly increase the value either now or in 5 years. And I’m already buying REO at a distressed price.

    Not everything is black and white in today’s economic world. Sometimes you have to think, not just keep belting out the same old tune. But carry on- it’s your life, not mine.

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  82. 83

    By MacroInvestor @ 81:

    RE: Scotsman @ 80

    All true. But completely unrelated to losing $2k per month and forgetting to add that to the total cost. Sorry — big fail.

    Why didn’t you buy in the first half of 2007? Using that analysis you could been thinking you could live for free, even with an 80/20 loan package! ;-)

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  83. 84
    Jonness says:

    By Kary L. Krismer @ 62:

    RE: Jonness @ 35 – With the exception of Ardell, what agent has been making bottom calls so frequently?

    Seems like you’re just trying to prove you were right in arguments that happened only in your imagination.

    Well, we have your hero that you pay money to over at the NAR. Then we have your good friend J. Scott. There’s your alter ego, pffft. And then there’s your own inept notion that “now is as good of a time to buy as any because it’s impossible to time the market.” I could go on for about an hour, but Tim doesn’t have enough storage on this website to list all the charlatans. It’s good enough just to name you as one of them.

    Time and time again, I’ve stuck my neck out and accurately predicted the overall future trend. I’ve done this through countless government support programs and countless claims to the contrary by expert RE professionals and housing market analysts.” Ive done it through bottom call after endless bottom call in every major media outlet in America. Ive done it through countless counter-claims by expert economists, Fed chairmen, bank presidents, and professional investors. Meanwhile you’ve continued to repeat your non-fact-based mantra that it’s impossible to predict future price direction so now is as good of time to buy a house as any. (spoken like a true RE agent!)

    How did that advice work out for you and your clients back in 2007 when you paid several hundred thousand dollars too much for you current home? How did it work out for Mike, who lost a million dollars so far and counting?

    You are a snake oil salesman Kary. You and I know you are totally abstracting and stretching the truth in an attempt to escape fault and hype the market in which you make your living. Yes, it’s impossible to perfectly predict the future with 100% accuracy at all times. But the art of investing involves probability theory, logic, data analysis, and right brain big picture thinking coupled with life’s experience. It’s something you must be born with as well as work extremely hard to develop. Why don’t you go ask Warren Buffet for his opinion on whether it’s possible to time the market. After all, his mantra is, “sell when people are greedy, and buy when people are fearful.” If that’s not market-timing advice, then what is it? Do you think his success is just “blind luck?”

    Some people are just better at what they do than others. Watch American Idol sometime, and you will learn some people are born with gifts that allow them to be better singers at 15 than other people can ever dream of being at 45. That’s how the game works. It works in music, mathematics, painting, data analysis, basketball, race car driving, ballet, and you name it.

    When it comes to predicting future price trends, It’s not enough to talk the talk. It’s not enough to simply shrug your shoulders, deem it impossible, and tell your clients, “now is as good of time to buy as any.” You have to work hard and study in order to be able to walk the walk. Past performance says it all. So let’s compare my past performance to yours.

    The people who listened to my advice are WAY ahead of the financial game, and the people who listened to your advice absolutely demolished their financial futures and will spend countless years suffering and grieving over it. Then again, I analyze data for a living, and you sell real estate. It makes sense that I might be slightly better at predictive data analysis than you are.

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  84. 85
    Jonness says:

    By MacroInvestor @ 67:

    RE: Scotsman @ 31

    I get what you’re saying. You want to be a buyer this year. It’s time to convince yourself that it’s okay ;)

    Scotsman is a very bright guy with a keen insight on the big picture. But I think he has become too familiar with his own situation and the realization that it pencils out for him to buy right now instead of rent.

    He has pointed out that not everyone who makes your salary thinks about money like you do. He is very right about this. But I fear he might be overlooking, not everybody who makes his salary thinks like he does.

    It’s made sense to buy as opposed to rent in Vegas for some time now. Yet, prices continue to go down. In short, rent:price is not a silver bullet. It’s just part of the story.

    The truth is, the rent:buy ratio in Seattle has diverged from the price:income ratio (as it has in Vegas and elsewhere). If history is any judge, this deviation will eventually right itself according to how much money and credit is available in the system.

    The homeownership rate is still too high in Seattle, and this is putting upward pressure on rents and downward pressure on prices as the homeowership rate adjusts down to match the amount of money and credit in the system. The deviation in rent:buy to price:income is a sign of housing market distress and should not be taken as a sign of stabilization and support. This market still has much to work out before things stabilize. Keep your eye on the jobs numbers tomorrow morning and ever there after, as they are a leading indicator. :)

    As Scotsman well knows, the Fed continues to print money; yet, the banks remain too afraid to lend. Since MV=PQ, and M=MB/r, once this turns around, all heck will break lose, and you better have your money and investment wits in order when this begins or you will lose your shorts. However, that’s most likely quite a ways into the future.

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  85. 86

    By Jonness @ 84:

    Time and time again, I’ve stuck my neck out and accurately predicted the overall future trend.

    Stuck your neck out? LOL. Maybe you didn’t hear the news about the “Great Recession” but predicting future declines in prices during such an event hardly seems like going out on a limb.

    Don’t hurt yourself patting yourself on the back.

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  86. 87

    By Jonness @ 84:

    How did that advice work out for you and your clients back in 2007 when you paid several hundred thousand dollars too much for you current home?

    It worked out fine. As I’ve explained before, renting is not an option. Our old house has probably declined in value just as much, if not more than the new house, because it’s in that lower tier of C-S. Also, assuming I had sold, I would have almost spent at much on rent as what this house has declined in value.

    Also, I did not pay “several hundred thousand” too much at the time and it has almost certainly not even gone down in value $100,000 since then.

    Anything else you don’t understand? Pretty funny that you’re going on about your ability to predict things when you have little or no understanding of issues and in reality are just the proverbial broken clock.

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  87. 88

    By Jonness @ 84:

    The people who listened to my advice are WAY ahead of the financial game, and the people who listened to your advice absolutely demolished their financial futures and will spend countless years suffering and grieving over it.

    The people who would have listened to you and acted based on your advice are by definition fools. Shall we start calling you King of the Fools?

    I have not given anyone here advice to buy or sell. I have said repeatedly to buy or sell based on other factors than what you think the market will do.

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  88. 89

    By Jonness @ 85:

    It’s made sense to buy as opposed to rent in Vegas for some time now. Yet, prices continue to go down. In short, rent:price is not a silver bullet. It’s just part of the story.

    I agree rents are only part of the story, but the other part is Las Vegas was going up for no apparent reason. Back when it was happening, and Trump was building there, It baffled me why that city would have rapidly rising prices.

    http://www.jparsons.net/housingbubble/las_vegas.html

    That price increase undoubtedly lead to more supply. It’s amazing it hasn’t collapsed more.

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  89. 90
    David Losh says:

    RE: Scotsman @ 71

    Rent. If you can stand it, rent. There is a leg after the next election that will either be good or bad. Right now there is a lack of inventory, and a stubborn holding to pricing at the 2004 level. It’s kind of a hope, and change thing all over again.

    I understand what you are saying, but you would be buying into the interest rate rather than the property. If you can afford to beat the bank, and pay the property off in seven years great, if not, then don’t buy.

    It isn’t the 20% decline in pricing to be concerned about, it’s the price of property. Oh heck, as long as I’m at it. Tim bought in Everett, probably a bigger drop than some one who bought in Ballard, depending on the price. The equilibrium will be in value. It’s what you buy, where you buy.

    After the election, after the next policy change, you’ll see more clearly where the values will be. It’s a year away.

    Last is that this holding as a rental is got to be one of the biggest myths going today. The rental market is being decimated by construction of rental units that hasn’t happened in over five years. Comparing today’s rental market to the rental market of five years from now is a false impression of value.

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  90. 91
    ARDELL says:

    RE: MacroInvestor @ 79

    Bears repeating: “…My advice is don’t rent from a wanna be seller…”, I will add or upside down owner whose “nut” including taxes, insurance, maintenance and repairs is not covered by the rent you are paying.

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  91. 92

    RE: ARDELL @ 91 – Unless of course you don’t mind moving and want to try for a small chance of getting free rent!

    The free rent comment is based on some speculation from when the tenant protection acts were enacted that banks would not want to collect rent because they didn’t want to be the landlord. I don’t know whether any banks ever took that position.

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  92. 93
    David S says:

    By ARDELL @ 91:

    RE: MacroInvestor @ 79

    Bears repeating: “…My advice is donâ��t rent from a wanna be seller…”, I will add or upside down owner whose “nut” including taxes, insurance, maintenance and repairs is not covered by the rent you are paying.

    Strongly agree. The Accidental Landlord is to be avoided at all costs. We are just moving away this weekend from one that had their property listed for the last half of a one year lease. We haven’t really been inconvenienced by the nine showings it has had during this time though. Although they own this house, they are not of the mentality to act in a business type manner with regards to customer service and the property manager they chose has not been effective.

    We’ve found another lease now with an investor class landlord. Wonderful situation now. We have been told in no uncertain terms do whatever you want to the house to make it more comfortable to us, just don’t damage it. “We would like for your family to stay here long term.” What a blessing.

    My calculations of lease expense beat the 10 year hold pants off of buy sans significant appreciation.

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  93. 94

    By David S @ 93:

    The Accidental Landlord is to be avoided at all costs. We are just moving away this weekend from one that had their property listed for the last half of a one year lease. We haven’t really been inconvenienced by the nine showings it has had during this time though.

    That’s another disadvantage to renting–not controlling when your property is listed for sale!

    BTW, an investor SFR landlord isn’t necessarily safe. A number have ended up in bankruptcy, probably depending largely on when they started buying.

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  94. 95
    David S says:

    RE: Kary L. Krismer @ 94 – Ok. But far less common I’m certain. Chances are probably better finding a clueless nube than a defaulting investor as a landlord. My new landlord’s county records show it’s owned. Another blessing. The nube’s, who we’re moving away from, also owned but that didn’t stop them from being,,,

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  95. 96
    wreckingbull says:

    RE: Scotsman @ 80 – As a fellow, non-PC Scotsman, allow me to bring back a relic of the past for your enjoyment.

    http://beercansrus.com/mcart/images/scotchbuy.jpg

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  96. 97

    RE: wreckingbull @ 96 – If I recall correctly, only available at Safeway.

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  97. 98
    Scotsman says:

    RE: Ira Sacharoff @ 97RE: wreckingbull @ 96

    Ah yes- cheap but effective. From the 1970’s? High school?

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  98. 99

    RE: Scotsman @ 98
    And why didn’t the Scottish community take offense? You just know that if the bottom of the barrel pisswater beer at Safeway was called ” Jew Buy”, the Anti Defamation league would be out there protesting.

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  99. 100
    Jonness says:

    By Kary L. Krismer @ 86:

    By Jonness @ 84:
    Time and time again, I’ve stuck my neck out and accurately predicted the overall future trend.

    Stuck your neck out? LOL. Maybe you didn’t hear the news about the “Great Recession” but predicting future declines in prices during such an event hardly seems like going out on a limb.

    Don’t hurt yourself patting yourself on the back.

    After all the crap you gave me in the past when I predicted the overall price trend remained down, and now you have the nerve (after the fact) to claim this was easy to foresee and everybody knew it all along. You are so far in denial I’m surprised you can function on a daily basis.

    Your an expert at foretelling what has already occurred, and you are great at denying your past poor performance, but that albatross you overpaid for in 2007 tells the real story.

    Don’t worry about me physically hurting myself patting my own back. I’ve watched you do it for years now, and I learned the only thing it injures is your reputation and the amount of respect others have for you. But if you are in denial, even that don’t hurt.

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  100. 101
    Jonness says:

    By Kary L. Krismer @ 88:

    By Jonness @ 84:
    The people who listened to my advice are WAY ahead of the financial game, and the people who listened to your advice absolutely demolished their financial futures and will spend countless years suffering and grieving over it.

    The people who would have listened to you and acted based on your advice are by definition fools. Shall we start calling you King of the Fools?

    Nah, you should save that title for Warren Buffet.

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  101. 102
    whatsmyname says:

    By Sweet Pea @ 70:

    “Life is awfully short to spend it tied to a house, and letting that ball and chain dictate major life choices. People don’t have job security, for the most part. Maybe their pension is underfunded, maybe they planned on moving up and hate their neighborhood now. After several years of a big mortgage payment, stagnant wages, and maybe missed opportunities, how long will people put up with that? Maybe their in love with their house and location, but I’m not sure if that’s the norm these days.”

    Excellent points all. Does this mean you have committed to never getting yourself in that position?

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  102. 103
    MichaelB says:

    By Tatiana Kalashnikov @ 69:

    RE: Jonness @ 59

    Oh my goodness! I’m not sure that you should have children Mr. Jonness..

    If this is your real picture – you are much hotter than Jonness! Is it true you are actually software engineer?

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  103. 104

    By Jonness @ 100:

    By Kary L. Krismer @ 86:
    By Jonness @ 84:
    Time and time again, I’ve stuck my neck out and accurately predicted the overall future trend.

    Stuck your neck out? LOL. Maybe you didn’t hear the news about the “Great Recession” but predicting future declines in prices during such an event hardly seems like going out on a limb.

    Don’t hurt yourself patting yourself on the back.

    After all the crap you gave me in the past when I predicted the overall price trend remained down, and now you have the nerve (after the fact) to claim this was easy to foresee and everybody knew it all along. You are so far in denial I’m surprised you can function on a daily basis.

    Read again. What I’ve always said is that real estate prices are dependent on many different factors, and you can’t just focus on one or even a handful of factors. I’ve never denied, and often admitted, that many factors were negative. The economy almost collapsed in 2008-early 2009.

    What I’m saying is you made the safe prediction back then, and now you’re patting yourself on the back claiming that you made some far out prediction.

    Stated differently, you’re one of the many sheep in this country, not a ground-breaker. You hold the opinion of the common person.

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  104. 105

    […] of the Office of Economic and Financial Analysis is a Seattle Bubble reader, citing my chart of the decline from peak in Seattle’s Case-Shiller tiers in a recent presentation to the Regional Policy Committee (be patient, the video takes a little […]

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