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.

96 responses to “KUOW on Low Inventory and Over-the-Top Anecdotes”

  1. softwarengineer

    The 2 BDRM in my HOA in SE King County Won’t Sell for $119K To Date

    The owner and I are friends, I suggested reducing the price 20%, as YOY, the prices have collapsed that fast in the Covington area. He can’t afford it, another listing removed from the books.

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  2. ray pepper

    400,000-plus for a 2-bedroom, 1-bath house ………….http://www.youtube.com/watch?v=KHhJDQNibwY

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  3. Kary L. Krismer

    RE: softwarengineer @ 1 – Is it a short sale?

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  4. Scotsman

    It’s Baaaaaack! The $500K Ballard chocolate box!

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  5. Kary L. Krismer

    $400,000-plus for a 2-bedroom, 1-bath house in that location? Seven offers, two all-cash?!? Who are these people?

    I don’t know, but that’s a sign the neighborhood is not in decline! ;-)

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  6. bd

    I wonder how much of this is driven by Seattle switching over from choice to neighborhood schools.

    Loyal Heights is the neighboring elementary and they are considered to be a good school.

    I know more than one family that has gotten drawn into a reference area with an undesirable local school and is now considering moving as a rememdy.

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  7. BelNotRender

    … yeow.

    When I bought my house on the Eastside in Aug 2011, I figured I was leaving about the last 10% of decline on the table, but the house was super affordable for us, literally 5 minutes from work, and we loved it. So I made peace with losing that last 10%, after sitting out the market for 8 years.

    Now I am not so sure I did. I use Redfin to monitor listings in our area and nothing comparable has sold within about 7.5% of our purchase price. (It was a short sale.)

    We’ll see. This is mostly an exercise in curiosity since we plan to live in our home a long time.

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  8. softwarengineer

    RE: Kary L. Krismer @ 3

    Nope, Regular Listing

    I assume it has a mortgage payment from current owner though. Its apparently underwater.

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  9. softwarengineer

    RE: bd @ 6
    Possibly

    But I’d bet money the cash buyers are DINKS. Most neighborhoods in this price range have no kids, believe me, I owned in kidless high priced Lake Hills Bellevue and it was almost barren of children.

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  10. kellus

    I remember hearing/reading news stories last year at this time about people encountering multiple offer situations.

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  11. webbish6

    This story about Ballard is similar to my seaches in the Bellevue/Redmond/Woodinville/Kirkland neighborhoods – everything good (or even some stuff I don’t consider good) has been snatched up within days, with very little available under 400K. I’ve had houses sold before I even get to look at them, and I usually try to get to a new listing I like in a day or so. I’ve been looking since December, and inventory has been non-existent or really shabby in that 300-400K range on all of the East side.

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  12. softwarengineer

    RE: Kary L. Krismer @ 5
    With the Low Inventory

    A few examples does not make a trend, not at all mathematically. Most folks with a half a million in the bank still have a half a million in the bank. There’s a few in the top 1% of Seattle household incomes that would part with that much cash but its meaningless:

    1. It does not even begin to support a real estate market in Seattle, its too dinky and meaningless data.
    2. It means you folks wanting it with down payments and a bank loan are dinosaurs as the inventory sinks underwater.
    3. It means its way out of line as a rental investment too, without renting it out for a huge loss.

    Keep friendly with your landlord.

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  13. softwarengineer

    RE: webbish6 @ 9

    Burn a Little More $4/gal Gas

    And come live in SE King County, my neighbor across the street works at MSFT. You’ll save a truckload of cash.

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  14. george lake

    I think the buyer is counting on it being close to the Monorail stop….

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  15. Kary L. Krismer

    By kellus @ 10:

    I remember hearing/reading news stories last year at this time about people encountering multiple offer situations.

    Last year it was mainly REOs getting multiple offers.

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  16. softwarengineer

    RE: Kary L. Krismer @ 15

    As the Listrings Dry Up

    Let’s put it this way, I bought a $20K base sticker newer used car [3 yrs old with 28K on the odometer] for $7800 when we were buying lots of new cars; about 2007. That 3 yr old used low milage same brand still sold base for about $20K, but they want $13K for an equivalent now.

    The reason, there’s a used car shortage, we stopped buying new ones and the inventory dried up. I bought a new car for about 30% more than that overpriced used one. The dealer had practically no stock too and the color selection is horrifying too….sound familiar? The dealer had a very low volume of buyers [empty] and BTW, I’m very happy with my purchase too…..albeit the equivalent REOs out there are a better deal than new….got my daughter an auction car for $5600, that goes for $10-12K on the used car lots now. I kind of wish I’d did the same for me too, but its my first brand new car and its marvelous :-)

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  17. Dweezil

    I’d say there has been a waiting game between sellers and buyers. Sellers waiting for recovery and buyers waiting for prices to drop further. Some buyers have probably run out of patience.

    If someone was starting to think about becoming a homeowner near the peak, they’ve been putting plans on hold for 5+ years. I hope those of us with the longer patience are rewarded when the foreclosure spigot is opened again. I suppose the banks are part of that waiting game as well. Can the banks afford to sit on houses indefinitely?

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  18. webbish6

    Dear SoftwareEngineer,
    My poor husband has commuted to MS for twelve years from places as remote as Bainbridge Island, Port Townsend, and even a year in CA when I taught there – I’d love him to finally have a reasonable commute! Otherwise, I’d buy out in Snoqualmie Falls area, which I think is really beautiful.

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  19. softwarengineer

    RE: Dweezil @ 17

    No They Can’t

    Ask ‘em. Another problem with Shadow Inventory [Mass, I'd assume, there's absolutely no Shadow Inventory Seattle area data for us to analyze] in Seattle, is the places get “ram shacked” fast, like Detroit and Las Vegas, Stockton, etc, etc,…..ohhhhh, that’s right Seattle’s different, LOL

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  20. softwarengineer

    RE: webbish6 @ 18

    The Light Rail Was Supposed to Remedy This

    It didn’t for most of us. How about the Boeing workers in Kent that get transferred to Everett in masses for the Tanker program?

    Oh, BTW, try I-5 North [or South] in South Everett on rush hour….your Prius will be getting 0 mpg for an hour and a half to drive like 5-10 miles…..

    We’re way too overpopulated for our freeway systems at rush hour. Let’s face it.

    Do I have an answer? Yes, depopulate.

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  21. joe dirt

    Tim did you add something new to your website? It is crashing my firefox now.

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  22. joe dirt

    Using 3.0.18 on Centos OS. Guess I should upgrade, since other sites cause problems too.
    Thanks

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  23. Julie Lyda RE/MAX Northwest Realtors

    There is a good presentation available on the National Association of Realtor’s website that has a breakdown of “shadow” inventory State by State.

    http://www.realtor.org/research/research/presentations_use
    (Foreclosure Inventory)

    This was presented November 2011, so the data is a few months old. It shows that “shadow inventory” for Washington State is about 4 months worth of supply. Washington is pretty low on the list and is fairing quite well.

    Currently, there is about a 2 month supply of REO listings. With the huge drop in foreclosures over the last couple of months, this could very well squeeze the inventory even more later this summer.

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  24. Scrawny Kayaker

    RE: softwarengineer @ 9

    Most neighborhoods in this price range have no kids, believe me,

    I don’t. Been to any NW Seattle neighborhoods lately? North Seattle elementary schools are generally in a capacity crunch. My kid goes to an adjacent school, North Beach, which now has three classrooms in portables, up from zero when we started there, and has larger average class sizes now. It’s in the middle of Blue Ridge: pricey Sound view RE. Loyal Heights also has three portables. Not sure if all are used as classrooms, but they didn’t have that many 5 years ago.

    Almost everyone I know in the area was a DINK when they bought, but promptly squeezed out one or more rug rats. The first year we lived there, Halloween was DEAD on our block. We had two pairs of kids come up to our door the entire night (a few more passed it by ’cause our front walk is kinda dark and shrubby), and the weather wasn’t even a factor. The last few years have been completely different, with a half-dozen groups of kids on the sidewalks of each block at any moment.

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  25. Mike

    RE: webbish6 @ 11

    We are having the exact same experience. Anything good under $500 even is going crazy fast.

    On a side note it is amazing how many of the overpriced listings in that area seem to be ones where people bought well before the bubble, like in the late 90s and have done absolutely no meaningful work on their 60s or 70s home, which probably needed work when they bought it in the 90s, and still expect to take out a bunch of appreciation. Home prices may have gone up $100k over that period even after the recent decline, but it’s not like a buyer should pay that when there is $150k in deferred maintenance to re-roof, re-side and gut the interior. When those homes start selling in a week again is when I’ll get scared as a potential buyer.

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  26. JoshDayley

    RE: Dweezil @ 17

    You hit the nail on the head. It is a waiting game. Banks can wait as long as they want. They will continue to drip the inventory because that’s what makes most financial sense to them. Home buyers can wait too.
    But…
    I think people forget about the shadow consumer inventory of Generation Y (60million). These guys aren’t waiting for home prices to drop. They’re waiting for the economy to boost their salaries. When they enter the market it’s sayonara housing “crisis.”

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  27. Jon

    I have seen a lot of data, and it appears that 60% of the homes that are selling are selling with multiple offers.

    35-45% of homes are purchased without financing. (all cash).

    Inventory remains low…

    With 20% down, You can purchase a lot of homes and rent them that weekend for more than your mortgage payment is.

    Short sales are closing within 90 days.

    REO’s inventory is way down.

    Interest rates still are under 4%.

    520 tolls have the brige at, what, 65% of the pre-tolls?

    Consumer Confidence, while not high, is rising.

    Prices aren’t dropping, as short sales and REO’s are selling closer to asking price or higher, eliminating the spiraling effect we see in SE King County.

    Jobs are being created, Boeing is hiring, MSFT is hiring, Amazon is hiring, and the unemployment (a faulty metric) number s lowering.

    So, the question is… in certain markets, have we seen bottom? I suspect so for Seattle and the Eastside… thoughts?

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  28. MichaelB

    $400,000+ Home – $80K down and earning $130k/year…to afford that POS home in Ballard – “Ya Sure – You Betcha!” Just when you think there are no more “Greater Fools”!

    The bubble ends when you run out of “greater fools”….

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  29. bd

    By Scrawny Kayaker @ 25:

    Been to any NW Seattle neighborhoods lately? North Seattle elementary schools are generally in a capacity crunch. My kid goes to an adjacent school, North Beach, which now has three classrooms in portables, up from zero when we started there, and has larger average class sizes now.

    Actually, despite the capacity crunch in the schools, North Seattle does have a relatively low percentage of kids compared to most areas locally and around the country – 2010 census data

    That said, looking at the census data the media, income for families with kids in this locality was greater than $120,000. The median for DINKs was closer to $80,000.

    I’m still betting families with kids is a driving force for high prices.

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  30. Matt the Engineer

    I think it’s a reasonable theory that we’ve finally hit bottom (feel free to mock). With a recovering economy job market, all it takes is enough people to be convinced prices are on their way back up, and it will be a self-fulfilling prophecy.

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  31. Sorin

    A few anecdotal observations:
    (1) Rents are rising rapidly in places like South Lake Union as vacancies plummet and new buildings are still months away.
    (2) Any decently nice under $450k house in a neighborhood like ballard or magnolia goes pending in a couple days.
    (3) Amazon and other tech companies continue hiring like crazy. I know several people that have recently moved here from out of state for well paying jobs in tech.

    #1 made me look at buying. #2 is making me consider renewing my lease. #3 seems to be a contributing factor to both 1 and 2.

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  32. Pegasus

    RE: Matt the Engineer @ 31 – Spread the word….green shoots everywhere…..pssst the water is warm, c’mon in. Funny how every year at this time the baloney starts. I thought maybe the hype machine automatically started when we pushed our clocks forward an hour but now I am thinking it starts on Groundhog Day.

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  33. Pegasus

    RE: The Tim @ 34 – I think the low mortgage rates are finally having an impact. Unfortunately their indicator, the ten year treasury, took a big hit this week.

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  34. Scotsman

    RE: Pegasus @ 33

    Happy Days are here again!

    Come on, you’re talking to a true bear here. Look at the stats- things have changed. We’re going to skate sideways here for probably 5-7 years (or not) until the macro picture resolves. Then it’s either crash or heavy inflation, and I think inflation will be the winning play. But I don’t think we’re going to see housing crash anytime soon. There are too many people and institutions with the ability to forestall such working very hard right now- in their own self interest. When in doubt, remember this IS NOT a market economy, here or abroad. Everything you thought you leanrned in college about econ is out the window, at least for now.

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  35. phil

    The house last sold in Sept. 2003 for $300,000. That basement looks like about 7′ and a bit (5′ shovel & long handled broom about 6′) to the bottom of the joists, perfect for a rainy day play room for the kids and an office for the parents. Nice flat yard for expansion or just add a second floor. Possible MIL over the garage?

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  36. Pegasus

    RE: Scotsman @ 36 – If the rubes figure out that the economy is not recovering it may create a pretty good downdraft once again. Lots of info that does not jive. California tax revenues have fallen off a cliff and the job market numbers are out of wack. Lower employment , less buyers and more distressed sales could push us over the edge again for a new leg down.

    http://globaleconomicanalysis.blogspot.com/2012/03/california-tax-revenues-plunge.html

    http://globaleconomicanalysis.blogspot.com/2012/03/gallup-struggles-to-explain-bls-jobs.html

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  37. ARDELL

    RE: Jon @ 28

    Where did you see data that 35% to 45% of homes are being bought all cash? I find that hard to believe. Source?

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  38. eastsidecoug

    I think I smell an official bottom calling this year, although I don’t want to jinx it. We bought our home in Sammamish in late 09′ because we could afford it and inventory was great for low-balling. From an inventory perspective, I’m happy we bought when we did and was willing to yield some short term losses. I probably could have done a litle better if I was more patient with some short sales. The last 2 years have held reasonably well in my neck of the woods. There seems to be an established price where homes will be on the market, have an open house, and be sold in 1-2 weeks. Now there’s very little inventory except for some new construction that is picking up and also selling well. I’m also seeing lots and lots of new open house signs on the weekends. Definitely some movement happening in the market finally.

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  39. wreckingbull

    By JoshDayley @ 27:

    I think people forget about the shadow consumer inventory of Generation Y (60million). These guys aren’t waiting for home prices to drop. They’re waiting for the economy to boost their salaries. When they enter the market it’s sayonara housing “crisis.”

    Seriously? Between six-figure student debt, a new renter/mobile mentality, lack of jobs, lack of job prospects, and declining wages, you think they will save us all? Yes, they all need homes, but they are unwilling and/or unable to pay Boomer-style prices. I assure you the market will reflect this.

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  40. Keith

    The general attitude has turned bullish on real estate in close in neighborhoods. – people think we are near or at bottom and that if they don’t act, that will be over. I tend to think their attitude alone will make it true… but not so true anyone should rush into anything.

    Re: Ballard. I’m not sure why you wouldn’t buy there… transporation is one weak spot. But the neighborhood itself is great and getting better. Once in Ballard, most people up here don’t really see a reason to venture to other neighborhoods when everything (make that 5 versions of everything) is happening right here. Its become the primary target address for DINKs and upwardly mobile young families. I have lived in 98117 for 12 years and have never seen this few listings for single family homes in “Ballard.” — I’m looking for a step up house and I wouldnt live more than 25 blocks from where I’m at.

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  41. Scotsman

    RE: wreckingbull @ 41 -

    I read somewhere the other day that almost 30% of adults under the age of 25 (?) are living with their parents. Wish I could find the link. Anyway, unemplyment is very high for that age group, at least nationally. And with average student loan debt in the high $20s they already have a knock against them. However, if the economy does pick up substantially they certainly will represent a lot of pent up demand.

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  42. mmmarvel

    “…2-bed, 1-bath, 1,180 square foot home …” for $400K – are you KIDDING ME????

    If either I or my wife seriously suggested making such a purchase – the other person would seriously smack the one who suggested it along side-the-head with a snow shovel. I’m sorry, you can tell me all sorts of wonderful nonsense about the house and area, but the bottom line is the folks ready to purchase this house have lost all semblance of sense. Flipping hard to believe. People stupid enough to put up this kind of money for this POS need to lose it in the biggest, worst way. Flipping hard to believe, wake up people.

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  43. StillRenting

    By JoshDayley @ 27:

    I think people forget about the shadow consumer inventory of Generation Y (60million). These guys aren’t waiting for home prices to drop. They’re waiting for the economy to boost their salaries. When they enter the market it’s sayonara housing “crisis.”

    It’s quite possible any future influx of gen Y buyers will be more than offset by new inventory hitting the market as boomers retire and downsize to condos and assisted living.

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  44. Tom

    Other Ballard examples (My asking price may be a bit off)

    7031 21st Ave NW Asking price $429,000 / Sold for $464,000

    2855 NW 65th St Asking price $450,00/ Sold $476,000

    7004 19th Ave NW Asking price $409,00/ Sold for $430,000

    The houses to watch this week are 8314 19th Ave NW and 7559 23rd Ave NW. They will be pending with multiple offers by Wednesday.

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  45. David Losh

    RE: The Tim @ 34

    Every year I make the same comment. Parents need to pick the school the kids will go to next year in February, and March. Smart sellers target that demographic each year starting in January.

    Sellers with kids pick April, and May so they can move, and get settled before the start of the school year.

    Mom, Dad, and the kids are the biggest buyer pool.

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  46. David Losh

    RE: bd @ 6

    Excellent comment, and exactly to the point.

    My wife, and I moved to Meadowbrook so our kids could go to Eckstien, and have a choice of Roosevelt, or Nathan Hale. We lived in Maple Leaf, and I didn’t want my kids going to Ingraham.

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  47. nwbackpacker

    Agree with post #6 & #48: anything we purchase must be in a good/great school district because we won’t be sending them to a private school but we will pay a ‘neighborhood premium’. Having our own home is a goal but when we have kids, their education/development will be way more important so we may end up renting indefinitely.

    We were on the hunt for homes the last few weekends but now I’m cooling off after seeing what’s out there and hearing the news about the feeding frenzy. Maybe this year will yield a mini spike in home prices before the continuation of a long flatline? Should probably sit this year out anyway since I’m getting married in June…

    @45 I agree, demographics changes would seem to push prices down if anything. As a Gen Y member, I wouldn’t expect them suddenly get amazing jobs/income and start buying lots of houses. It’s hard enough to get a decent raise without changing employers ;-) The last decade hasn’t exactly been helpful for getting a leg up in this country. I feel lucky because I found my niche but unemployment/underemployment is a much bigger problem than is reported.

    Finally…

    Buy now or you’ll be priced out forever!
    (I always love that one. Will probably be saying this in 50 years)

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  48. gardener1

    Another granny shack with repasted siding. Another worn-out ratty Seattle shanty. But it’s in Ballard?! Oooohhh, Ballard! Ballard, the….uh…..golden, dogwash, organic laundry, Miracle Mile of moldy Seatte burbs….

    *yawn*

    When will it sell and for what price? Who knows? Whoever buys this place is going to spend the next 30 years kicking themselves in the butt wondering why they mortgaged all their paychecks to the sharkfest financial industry for the rest of their lifetimes, to be stuck in this craphole 1927 postage stamp 2/1—till the year….2042!?!

    I’ll be dead by then.
    So will they.

    But the financial industry will live on. The house will get another coating of new siding, maybe a new bathroom sink. Money will change hands. The game will go on. Till it doesn’t.

    Meanwhile I’m renting and putting cash under the mattress. Not a Ballard mattress mind you, but my cash talks and your Ballard real estate squawks. I’ll be drinking beer in Rio long before your Ballard crapfest is half paid off.

    Bon apetit, Seattle!

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  49. gardener1

    P.S.

    I have generation X or Y or zero whatever kids. They could not be less interested in Ballard granny home real estate. You people need to get out in the real world more often…..

    None of them would give $20 for that house. Whoever buys it this time is going to be stuck with it forever. There will be no resale market for great grandma’s re-sided Seattle home.

    It’s over.

    (Kary L. Krismer, step out of the office, smell the air, look around. Kids don’t want this junk and they’re not mortgage their futures till they’re 50 for such garbage. You’re toast. Retire NOW while the gettin’s good.)

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  50. Kary L. Krismer

    By gardener1 @ 51:

    P.S.

    I have generation X or Y or zero whatever kids. They could not be less interested in Ballard granny home real estate. You people need to get out in the real world more often…..

    None of them would give $20 for that house.

    Wow, one family determines what the entire world will do. That’s a convincing argument. It only ignores what is actually going on in the world outside of that one family (that apparently has poor taste in houses).

    Seriously, complaining about houses in Ballard? I’m sorry but not everyone likes the stuff they’ve been building the past 20+ years. Different styles for different people.

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  51. KC

    FYI: Maple Leaf is squarely in the Nathan Hale assignment area. Also, last time I heard, you don’t have a “choice” between Roosevelt or Nathan Hale – you can apply for Roosevelt and hope for the best. RE: David Losh @ 48 -

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  52. David Losh

    RE: KC @ 53

    Whitman was the middle school, and it makes no difference what the choices are today, as opposed to then, and where the bounderies are.

    The point is the same, we moved to be closer to the schools we chose.

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  53. CMDCMF

    Another listing where inhabitable or marginally habitable basement square footage is listed as real living space. This is not a permissible practice where I have purchased real property before – NC, NJ, CO… Are there any legal guidelines in Seattle?

    Anecdotally – here in West Seattle (Admiral, Alaska Junction) there is far less property for sale than last year when we bought our home. I’ve seen some properties go pending shortly after listing, probably the good ones that are priced correctly.

    The basement square footage issue drove us nuts last year when we bought our home, and it made us drop several otherwise nice homes from consideration. At best it is misleading and at worst downright deceptive, but in Seattle at least, it does not appear to be illegal.

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  54. Kary L. Krismer

    RE: CMDCMF @ 55 – I don’t know what you mean by illegal. Is someone going to go to jail, or even lose their license? Probably not. Are there rules against including an unfinished basement in the square footage? Yes.

    As a practical matter those agents that incorrectly list the square footage without excuse (e.g. Realist did not have it right) are not doing their clients any favors. It’s better to favorably impress people when they go into and look at a property than it is to disappoint them. Actually, it’s better to not disappoint them even if you can’t impress them. That’s the reason for some listing photos where is shows a mess, etc.

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  55. Ira Sacharoff

    “Are there rules against including an unfinished basement in the square footage? Yes.”
    Are there really? From my reading of the NWMLS rules, heated basement spaces, whether finished or unfinished, can be counted in the ASF ( approximate square footage), and that’s not the case in other places. I think the intent is to count ” potentially livable” space, so a basement with five foot ceilings should not be counted.
    Still, I’ve seen unfinished basements counted a million times,according to the rules, and it sucks. It’s one thing to see a nice, finished daylight basement, it’s another to see a dark, musty space with pillars, moisture issues, and fairly low ceilings, and count that as part of the square footage.
    Sure, it might be potentially livable, but you might have to spend 100 thousand plus to make it livable.

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  56. esker

    RE: JoshDayley @ 27

    Gen Y has already hit the job market. I fall into that age range (borderline youngest Gen X / oldest Gen Y, I’m 31).

    Many in Gen Y got disillusioned with the whole mystique of “buying a home / having kids / selling at a profit” bubble concept and are much more happy to rent than buying, especially in hyperinflated markets like Seattle. Why pay a PITI of ~$2500 a month when you can rent a similar house or property in a similar neighborhood with the same schools at 65% of what it costs to buy? It makes zero sense. Henceforth, I think with yet more jobs coming to the area and out-of-towners coming in too, we’re going to see a population explosion and it will cause stresses on the housing market to the point where nobody with families and a normal job can afford to do anything but rent unless they live in the suburbs.

    So for city living, a shift in values has happened. Renting is no longer considered “throwing your money away.” Instead it’s seen as a balance of priorities. Why spend all your waking free time maintaining a home? Why do you want to maintain a lawn and garden? Why do you need a two car garage taking up valuable real estate? Why do you want to put yourself through needing to update your home just to sell it and you NEVER enjoy the benefits of that update that cost $5-10,000? Hooey to all that BS is what A LOT of my generation are saying. We’ve got better things to do with our time and want to waste it in different ways that contribute to our happiness.

    But there will always be people who want homes, like myself. So it’s more of a balance now I think.

    There’s a reason why over 70% of the growth of the Puget Sound region is OUTSIDE of Seattle city proper. Oh, and businesses are leaving the city in droves, for the high growth and more prosperous and lower cost area of the Eastside. Mark my words, in 20 years, this area will have a ring of prospering satellite cities and a despondent Seattle. People won’t want to commute to the city. Too much of a hassle and too many city leaders willing to let the infrastructure crumble.

    I think Tim hit the nail on the head in the radio interview. There’s so many houses that sold in the bubble years of 2004-2008 that many cannot afford to sell, so they’re holding until they can pay off the mortgage and get a little equity. I also agree with what Warren Buffet said. You can forestall a family and a move for a little while, but not forever. Eventually biology takes over.

    My advice to anyone with the means to buy a house who works in the city is to consider one of the suburbs that has a bus line if you dread commutes. Shortly public buses will have the capability to connect wirelessly to the internet so people can work on their commute.

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  57. JoshDayley

    RE: wreckingbull @ 41

    Yes, that’s what I’m saying. Student debt isn’t going to stop them. Low salaries, “declining wages,” will which is why it’s contingent on an improved economy.

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  58. kfhoz

    By David Losh @ 47:

    RE: The Tim @ 34
    Mom, Dad, and the kids are the biggest buyer pool.

    Is that really true? The vast majority of the folks I know looking for a house, or who have bought in the last few years are either retired, or planning on being retired soon, or single and not planning on getting married or without kids and claiming that they are not trying for kids.

    Many of the retired or nearly retired folks that I know are also cash buyers. That group would correspond with the anecdotal story in Tim’s blog about there being many cash offers on the Ballard house.

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  59. JoshDayley

    RE: esker @ 58

    Esker,

    I agree with virtually everything you said. I too am a Gen Yer and prefer home ownership to renting – so there’s two of us… And my post was a little too general taking into consideration the greater region of Seattle rather than Seattle proper. Most of my friends live in Seattle “proper,” are starting their first jobs, and renting. They don’t have the money, the salary, nor the life stability to commit to a mortgage. Plus, they like the city life. They’re engaged, single, married without children, etc… They’ve put off a lot of “major” life decisions like having kids because they’re not in the financial position to do so. All of these factors lead to a generation of renters because renting makes sense for them in the meantime. It makes sense for them to spend more time working on their career than their lawn. But I don’t know a single one of them who wants to spend the rest of their lives in an apartment. I haven’t met one who sees themselves 10 years from now raising their children in a cramped condo.

    I agree with Buffet: biology takes over and hormones kick in….

    Gen Y isn’t a small cohort of future buyers. They are just as large, if not larger, than the baby boomers.

    It may not affect Seattle city “proper’s” housing dynamic but I suspect it has to influence the suburbs.

    And I love your last paragraph.

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  60. kfhoz

    By gardener1 @ 51:

    P.S.
    I have generation X or Y or zero whatever kids. They could not be less interested in Ballard granny home real estate. You people need to get out in the real world more often…..

    None of them would give $20 for that house.

    Are you saying they are too good to live in a “granny” house, or that they have not fallen under the mystical spell of Ballard?

    Sounds like somebody might have spoiled these kids if they think they are too good to live in housing that many people in the US (not to mention the world) accept as adequate and comfortable. No reason to live moderately. If they can afford more, then good for them! Live big, pay big. Work hard, work long.

    Unfortunately I know too many people with big debts who still think that they are full entitled to a big life, where “big life” means buying more stuff. Some just will not make hard decisions and then find out doing nothing meant making a decision. My dad’s friends (of nearly the same age) with a lovely Bellevue house overlooking Lake Sammamish are still working over a decade after my father (who lives in a modest townhouse) retired. Deciding not to live in a “granny” house may later mean working for many more years. Deciding that you must pay extra to live in Ballard and not Everett/Kent/Lynwood/whatever-place-is-not-cool-to-you also may mean that you are working in Seattle in January years from now while I am mountain biking in AZ.

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  61. Scotsman

    RE: JoshDayley @ 61

    “Gen Y isn’t a small cohort of future buyers. They are just as large, if not larger, than the baby boomers.”

    Too many forget this or didn’t know it in the first place. The much talked about retirement sell-off of the boomers will more than be absorbed by gen y and population growth- if the economy doesn’t crash and burn.

    Gazing into my crystal ball I see a world of ifs and buts . . . ;-)

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  62. Steve Kourkoutas

    What I see in the photo is that dirt and or bark is piled up against the siding. I’ve seen this in a lot of house and what it leads to is wood rot… through the siding and the framing. Better dig all that junk away from the house and inspect the sill plate, framing, etc on this house. Moister leads to wood rot, insect infestations…and places for rodents to dig into. There should be a minimum of 6 inches between your siding and the ground level…. 6 inches of cement foundation showing between the soil and/or bark and the siding/framing.

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  63. David Losh

    RE: kfhoz @ 60

    Statisticly, or I should say historically, people finish college, and buy a home to raise a family. They move as they out grow the starter home, then may move again to retire, or down size.

    That may have changed in the past fifteen years.

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  64. Macro Investor

    By The Tim @ 34:

    By Pegasus @ 33:
    Funny how every year at this time the baloney starts.

    Actually, the baloney normally doesn’t start until late April / early May. Recall this post from last year: Claim: Seattle Real Estate Market Suddenly Heating Up Date: April 29th

    And note that even though I was working for Redfin then, I was wary of the claim (since duh, it happens every year):

    I haven�t seen any particularly strong uptick in any of the stats I watch on a regular basis.

    This year it started in February. And it is showing up in the stats, particularly the lack of listings, which I have been harping on since January.

    Wrong, Tim. You wrote about it in late April, but the comments section looked just like this in March. I remember it well, because I was the one mocking it like Pegasus is now.

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  65. Macro Investor

    By David Losh @ 47:

    RE: The Tim @ 34

    Every year I make the same comment. Parents need to pick the school the kids will go to next year in February, and March. Smart sellers target that demographic each year starting in January.

    Sellers with kids pick April, and May so they can move, and get settled before the start of the school year.

    Mom, Dad, and the kids are the biggest buyer pool.

    Good comment.

    Monday morning… Mom and Dad getting ready for work. The kids getting ready for school. Ooops — ONE BATHROOM! Did Mr. and Mrs. Einstein think of that one?

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  66. David S

    RE: Macro Investor @ 67 – The Tim, you are the major statistician type. Doesn’t Seattle have more households with pets than with children? So single bath SFH’s are no problem for the DINKs.

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  67. David S

    http://www.statjump.com/lists/family-households-dp1c145tc.html

    Found this link, I guess 44th of 100 is not that kidless.

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  68. Sweet Pea

    By Scotsman @ 63:

    RE: JoshDayley @ 61

    “Gen Y isnâ��t a small cohort of future buyers. They are just as large, if not larger, than the baby boomers.”

    Too many forget this or didn’t know it in the first place. The much talked about retirement sell-off of the boomers will more than be absorbed by gen y and population growth- if the economy doesn’t crash and burn.

    Gazing into my crystal ball I see a world of ifs and buts . . . ;-)

    Gen Y is projected to be 26.7% of the U.S. population in 2015. 50%+ of the U.S. population will still be older than they are; baby boomers and up will still be 33% of the population in 2015. When the oldest Gen Xers are 50, the youngest Gen Yers will only be 15. I’m too lazy right now to spend more brain cells on the comparison over time in terms of housing, but I think it would require a more detailed analysis than Gen Y > Baby boomers.

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  69. gardener1

    I haven’t expressed myself well. I’ll try again for anyone who reads the tail end response on a three day old thread.

    Karey–it has nothing to do with my children being spoiled and want more up-to-date housing. The fact is, they don’t care about housing at all. Zip. And none of them are rip roaring ready to dump decades of wages into a derelict property, when they are not supported by jobs which can be depended on for those decades of mortgage payments.

    The same way that globalism has turned the supply chain upside down, my children see themselves as a part of that globalism. They speak foreign languages, They are ready and willing to move and work internationally. Here, there, anywhere. Buying a vintage 1927 or 1940 house for which their great-grandparents paid a few thousand $$ for the very.same.property 70 years ago, is not in the cards. It is not going to happen.

    Great grandmas house is not part of Gen X, Y, or Z’s American Dream. At any price. Picket fence, new siding, gazebo, or no.

    The kids see what you all do not. You are in the real estate business and have been for years, it your life, your business, your reality. The kids see real estate as a liability and a ball and chain which inhibit their global mobility to make a living.

    This is why whatever last remnants 20th century economy buyers who fork over for the Ballard property will be the ones stuck with the prize. The generation coming up front and center see a roof as a roof and a toilet as a toilet and know the world is full of washer/dryers, and they don’t much care who owns it, or which neighborhood or country it’s in. It’s a roof. It’s a toilet. Washers are everywhere.

    I know it is really difficult for all of you who live and breathe real estate and mortgages and price-to-income-ratios and school district ratings to grasp this. That which we have lived by all of our American lives is crumbling. Globalization is more than just products, it is people too. And the new generation of people are not interested in making 30 year deals on worn out houses in aged neighborhoods in declining countries. That paradigm is just pretty dead.

    Stuff is on the move, people are on the move, everybody is shuffling everywhere trying to make a living.

    It’s not just my kids, they’re not exceptional. It’s a lot of people. Young people, old people (like me) who know we need to be ready to shove on at a moment’s notice as the world shifts under our feet.

    All of your discussions here are based on past pretense. How things used to work, how you’ve always understood them to function. But those experiences and expectations are becoming less functional by the day and are disappearing before our eyes. The 21st century America is NOT a replay of the last century, housing will never revert back to what normal was before, and anybody who is still in the real estate business should probably get out now while there are a few bucks still trickling down the pipeline.

    Better?

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  70. McBrinn

    By gardener1 @ 72:

    I haven’t expressed myself well. I’ll try again for anyone who reads the tail end response on a three day old thread.

    Karey–it has nothing to do with my children being spoiled and want more up-to-date housing. The fact is, they don’t care about housing at all. Zip. And none of them are rip roaring ready to dump decades of wages into a derelict property, when they are not supported by jobs which can be depended on for those decades of mortgage payments.

    The same way that globalism has turned the supply chain upside down, my children see themselves as a part of that globalism. They speak foreign languages, They are ready and willing to move and work internationally. Here, there, anywhere. Buying a vintage 1927 or 1940 house for which their great-grandparents paid a few thousand $$ for the very.same.property 70 years ago, is not in the cards. It is not going to happen.

    Great grandmas house is not part of Gen X, Y, or Z’s American Dream. At any price. Picket fence, new siding, gazebo, or no.

    The kids see what you all do not. You are in the real estate business and have been for years, it your life, your business, your reality. The kids see real estate as a liability and a ball and chain which inhibit their global mobility to make a living.

    This is why whatever last remnants 20th century economy buyers who fork over for the Ballard property will be the ones stuck with the prize. The generation coming up front and center see a roof as a roof and a toilet as a toilet and know the world is full of washer/dryers, and they don’t much care who owns it, or which neighborhood or country it’s in. It’s a roof. It’s a toilet. Washers are everywhere.

    I know it is really difficult for all of you who live and breathe real estate and mortgages and price-to-income-ratios and school district ratings to grasp this. That which we have lived by all of our American lives is crumbling. Globalization is more than just products, it is people too. And the new generation of people are not interested in making 30 year deals on worn out houses in aged neighborhoods in declining countries. That paradigm is just pretty dead.

    Stuff is on the move, people are on the move, everybody is shuffling everywhere trying to make a living.

    It’s not just my kids, they’re not exceptional. It’s a lot of people. Young people, old people (like me) who know we need to be ready to shove on at a moment’s notice as the world shifts under our feet.

    All of your discussions here are based on past pretense. How things used to work, how you’ve always understood them to function. But those experiences and expectations are becoming less functional by the day and are disappearing before our eyes. The 21st century America is NOT a replay of the last century, housing will never revert back to what normal was before, and anybody who is still in the real estate business should probably get out now while there are a few bucks still trickling down the pipeline.

    Better?

    Not really. Those kids will still need a roof over their head. And roofs aren’t free.

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  71. McBrinn

    “Great grandmas house is not part of Gen X, Y, or Z’s American Dream. At any price. Picket fence, new siding, gazebo, or no.”

    And this bit in particular is especially incorrect. I’m solidly Gen X (born 1972) and I’d kill for my great grandmother’s house. It’s a 7 bedroom brownstone in Gramercy Park (Manhattan) and it’s worth about 23 million dollars.

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  72. wreckingbull

    RE: Scotsman @ 63 – Look, all I am trying to say is if you want all these ‘Gen Y’ buyers to absorb the housing stock, prices are going to have to fall quite a bit more. Again, I am not arguing that this population segment does not exist and does not need to live in homes.

    Really, I find the generation segmentation a little silly to begin with. When you look at the overall numbers, Gen Y, Gen X, and the Boomers are only marginally different in size.

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  73. Kary L. Krismer

    By gardener1 @ 72:

    I haven’t expressed myself well. I’ll try again for anyone who reads the tail end response on a three day old thread.

    Karey–it has nothing to do with my children being spoiled and want more up-to-date housing. The fact is, they don’t care about housing at all. Zip. And none of them are rip roaring ready to dump decades of wages into a derelict property, when they are not supported by jobs which can be depended on for those decades of mortgage payments.

    My point was more one family doesn’t prove anything. If everyone in your family is a big fan of Santorum, that doesn’t mean that we’ll see President Santorum in January, 2013.

    What your family thinks of houses in Ballard doesn’t mean anything in comparison to what the market is saying.

    Another example. I don’t think iPhones are worth a plugged nickel, and think the people that buy them are those who do not like either choice or doing research. Which is more important to Apple? My opinion or the market?

    BTW, I’m not a big fan of Ballard, but it’s more due to location than the houses or the neighborhood.

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  74. kfhoz

    By gardener1 @ 72:

    I haven’t expressed myself well. I’ll try again for anyone who reads the tail end response on a three day old thread.

    Karey–it has nothing to do with my children being spoiled and want more up-to-date housing. The fact is, they don’t care about housing at all. Zip. …

    kfhoz is not Kary!

    Your original post said that your kids would not pay $20 for that house. I am an engineer and I tend to take things a bit literal. Perhaps you meant something different, but if one does not care about housing, and you have to live somewhere, then $20 seems like a good choice, even if you had to live there (perhaps with renovations) for a very long time.

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  75. kfhoz

    By Macro Investor @ 67:

    Monday morning… Mom and Dad getting ready for work. The kids getting ready for school. Ooops — ONE BATHROOM! Did Mr. and Mrs. Einstein think of that one?

    How horrible is that? I’ll bet Albert Einstein’s family had only one bathroom, it might have been just an outhouse.

    My mother grew up in a house with 4 children and one bathroom. All went to good colleges. A long term ex-boyfriend of mine grew up in a home in Canada with 5 children and one bathroom. He has a PhD in Computer Science from Carnegie-Mellon and heads up a large research section of JPL in California.

    Multiple bathrooms are very nice, and are very much worthy of trying to acquire. But they are neither an entitlement nor an absolute necessity for happiness and success in life.

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  76. David Losh

    RE: gardener1 @ 72

    My kids were born in Barcelona, and and have Peruvian Passports, now expired. They are Americans. The world has changed a lot in those years. Peru, and South America are doing well, but I have pretty much given up on Europe.

    OK? Global enough?

    We could talk about Asia, but my oldest brother has done business there for thirty years, spent six months of every year there, and what I have learned is he isn’t Asian, no matter how hard he tries. As an American I can do business in a lot of countries, but not in Asia, any where in Asia, without a partner.

    So the world comes down to where you can do business, and business is coming back to the United States, unless you would want your money in South America.

    In the United States there are some choice areas, like Seattle, New York, San Fransisco, Washington DC, and Dallas. In those cities there are districts that are worth owning, and in those districts there are properties worth owning.

    I picked a property in West Seattle for $440K that you didn’t like, but I know it is a good purchase, because of the way it was built, and maintained. West Seattle isn’t my first, second, third, or fourth choice for a district to live, but the house more than made up for that.

    Ballard is one district that is worth owning, along with Fremont. They are also not my first, second, third, or fourth choices, but they are solid communities.

    Your kids will buy. No one is going to want to pay rent. By the way the rental market is also controlled by Real Estate professionals, no one talks about that.

    So it makes no difference whether you think buying is a good idea, it’s just a fact of life. You can rent from a Real Estate professional, or play the game of some day paying off the mortgage, or better yet buying for cash. Either way, you will be ahead of the curve by working within the system of Real Estate, rather than wishing it was some how different.

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  77. Scotsman

    RE: gardener1 @ 72

    Interesting point, but not true for all. My kids are more like yours- global perspective, willing to move around while young, multi-lingual (Spanish and German for one, French and Arabic for the second), but also very much into the idea of family and eventually settling down. Time and biology will have their say in everyone’s life. And everyone needs a roof over their head so housing and its value isn’t just going to vanish. The Ballard chocolate box will always have value, probably above what most would be willing to pay just because of . . .

    LOCATION< LOCATION< LOCATION!

    Seattle and its more desirable neighborhoods will always be here, and the list of desirable spots will probably expand with time and population growth. Close in, along I-90, I-5, or 520
    will always be the first on people's lists. Unlike Detroit or some of the other cities we joke about Seattle is a port that can serve China, close to a huge amount of food production and timber, etc. Will we see another bubble in housing? Not likely. But we will eventually see an inflated rebound in nominal prices paid and that will be an advantage to mortgage holders.

    Just like I love to say the federal budget games will continue until the checks bounce, reality is that all of us need to live somewhere. The real question isn't much deeper than cost to rent verses cost to buy with adjustments for the soft costs- stability, control, freedom to move, etc.

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  78. Scotsman

    RE: kfhoz @ 78

    It must be a sign of my age but the whole idea of palatial bathrooms, one with every bedroom and a few down the hall just for the heck of it escapes me. For what it’s worth, the same debate rages on in the boating community. When space is tight, say a 40′ sailboat, do you really need two bathrooms 18′ from each other? How much time are we really going to spend there?

    As the father of two daughters I will add that while one works, two small might have advantages. And as I get ready to remodel my home another bathroom is in the plans.

    Bathroom survey, Tim?

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  79. Jonness

    By JoshDayley @ 59:

    Low salaries, “declining wages,” will which is why it’s contingent on an improved economy.

    Where is that going to happen? China?

    When Obama took office, we had less than $10 trillion in debt. After 3 years, we are at $15 trillion. Can we continue to borrow 40 cents on every dollar we spend? No. At some point, someone has to pay back the money we’ve borrowed. And here’s the catch? When we borrowed it, we did so with the intention that Generation Y will be the generation that has to begin paying it back. So while we all got a free ride on massive amounts of borrowed money, GenY will not see that money, nor the money spent paying it back (hello GDP). What a deal for these guys huh?

    But it gets better than that, GenY is supposedly also going to rush in and bail us out on our underwater homes, which will provide us with golden parachute retirement packages. We live happily ever after, and GenY’ers get overpriced granny shacks and lead the lives of permanent mindless slaves.

    More likely, when the great inflation hits, your house payment will go to $0, and that will provide you with the boon you seek.

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  80. Jonness

    By Scotsman @ 81:

    Bathroom survey, Tim?

    In the old days, there weren’t nearly as many people around with irritable bowel syndrome. These days, you need one bathroom every 15′ or so for those inconvenient times when you eat at Claim Jumper and seriously need to run.

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  81. wreckingbull

    RE: Jonness @ 83 – I think 1.5 is the perfect number. A nice full bathroom for the family, and a half-bath so the guests can use it, but not have the opportunity to rifle through your medicine cabinet or see your leopard-print unitard hanging up to dry on the shower curtain rod.

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  82. Julie Lyda RE/MAX Northwest Realtors

    Rising Share of Young Adults Living in Multi Generationsl Households.
    At their highest levels since the 1950′s.

    http://pewresearch.org/pubs/2219/boomerang-kids-young-adults-multigenrational-families-parents

    “More than three-quarters of young adults ages 25 to 34 who have moved back home with their families during the Great Recession and the troubled economic years that followed say they’re satisfied with their living arrangements and upbeat about their future finances.”

    Full report here and more stats:
    http://www.pewsocialtrends.org/2012/03/15/the-boomerang-generation/?src=prc-headline

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  83. Kary L. Krismer

    By Julie Lyda RE/MAX Northwest Realtors @ 85:

    http://pewresearch.org/pubs/2219/boomerang-kids-young-adults-multigenrational-families-parents

    “More than three-quarters of young adults ages 25 to 34 who have moved back home with their families during the Great Recession and the troubled economic years that followed say they’re satisfied with their living arrangements and upbeat about their future finances.”

    LOL. The kids might be happy with their living arrangements, but I doubt the parents are!

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  84. JoshDayley

    RE: Jonness @ 82

    Jonness,

    I am 26 and appreciate your inspiring optimism. Thanks for passing on 15 trillion dollars of debt and a doomsday attitude ; )

    Now you know why so many of my fellow Gen Yers want to elect Ron Paul.

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  85. Scotsman

    RE: JoshDayley @ 87

    You have time to visit this site? Shouldn’t you have a second job-? Someone is going to have to pay this mess off, and us oldsters have voted- it’s you. ;-)

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  86. David S

    RE: The Tim @ 71 – Thank you.

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  87. CMDCMF

    RE: Ira Sacharoff @ 57
    Therein lies the problem… Listing square footage as livable when in fact it is at best marginally so. So why not erect 12′x12′ tent adjacent to the side of the house, and call that living space, too.

    I have similar problems with “view” homes, those that might offer a sliver’s view of the Sound or downtown Seattle or Mt. Rainier if you lean out way out an upstairs window, crane your neck, hold on for dear life and catch a fleeting view through leafless trees on a bright sunny January day. You get my point.

    The issue here is credibility, honesty and ethics. A few agents I discussed these points with seemed to have no concerns, “All information contained within is not guaranteed and to be verified by the buyer.” When encountering one of these listings, I wonder what other pertinent information is exaggerated or omitted.

    Don’t push back too hard, I know most agents are honest and ethical people.

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  88. Chris

    So everyone seems to agree that the real estate paradigm has changed but this group seems to be split into two basic groups. The first could be described as urbanists, who think the location matters more than ever before, arguing dynamic urban nodes off the best growth prospects and therefore are attracting the most interest from the younger generation. The second groups believes that the new paradigm is so fraught with “black swan” economic, system event risk that no real estate is worth owning. Fair?

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  89. jeff

    My friends put a very similar house on the market in Montlake a few weeks back. 100K more and so far no takers. That said single family homes in close in neighborhoods have defied the rest of the market.

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  90. mmmarvel

    By David Losh @ 48:

    RE: bd @ 6

    Excellent comment, and exactly to the point.

    My wife, and I moved to Meadowbrook so our kids could go to Eckstien, and have a choice of Roosevelt, or Nathan Hale. We lived in Maple Leaf, and I didn’t want my kids going to Ingraham.

    You want real choice and a real good education for your kids? Then don’t pay this inflated price (and with a 2 bedroom where are you really going to put the kids?) instead buy a good home, with some room for a lesser price and spend the money that you saved to send the kid to a private school. You get a better home (probably newer and certainly more room) and the kids get twice the education. But I’m old and that is the way I did things. I just thank GOD that I don’t live in the Seattle area if this house is a ‘find’.

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  91. Bd

    I don’t know what the economics are where you live, but I do know a few families in the city that send their kids to private school, and a low ball estimate makes the cost of private school at least a few thousand more than the cost of this house over 13 years of schooling.

    People pay for private in Seattle, but I think you’d be hard pressed to find anyone who does it because the financials enable them to live in a better house at a lower price and save money in the process, not if they have more than one kid.

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  92. David Losh

    RE: mmmarvel @ 93

    We did look at private schools, and there was no comparison. Of course it was just luck that we owned a block away from Olympic View elementary, and it was very new at the time. There was no comparison for what our kids got. They had the best of everything, and great parent support.

    Actually we bought into a community, as much as a school. When I was going to Catholic high school my friend lived across from Nathan Hale. It was the coolest school. They have a radio station, football field, track, two soccer fields, before I knew what soccer was. Aside from that there were always people around. It’s still the same today. People walk, take the dogs out, see each other, and kind of stay around the neighborhood. Nathan Hale boosters, the alums? You can see sixty year olds at the games yelling, and shouting.

    You buy a community as much as a house. That’s a big part of location, location, location.

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  93. Esol Esek

    Baby BOomer retirement on no money but housing assets, and the sketchiest economy in history will turn this market back down, even in special Seattle, which has had some of the most atrocious weather in the nation lately.

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