- Just half a decade after the peak, "Downtown Seattle condos are finally filling up" via http://t.co/oxxTPlQP @SeattleTimes #
- From the condo article: "Escala's owner… is resigned to losing money on the project. The only question is how much." http://t.co/oxxTPlQP #
- "Mastro creditors unlikely to recoup more money in near future" http://t.co/7Wxc39VE via @SeattleTimes #
- Historic homes at risk in "Mayor Mike McGinn's vision of a dense, walkable neighborhood"? http://t.co/bc4JrsgT via @SeattleTimes #
- "Bellevue buyer purchases Kirkland’s Bel Lago condos for $4.7 million" http://t.co/yGi8mFqS via @kirklandreport #
- "Downtown building fetches $55M, thanks to Amazon effect" http://t.co/PgZBM6ig via @SeattleTimes #
- Crappy science journalism invades real estate news: "UW study ties women's weight to property values" http://t.co/poAItL9B via @SeattleTimes #
- "I look forward to bidding against you on a mediocre Seattle house some time soon." http://t.co/JPFuznWI #
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I said this in the open thread, but on the “bidding against you” post, it’s likely something other than putting only 5% down that is at issue, at least if he’s losing to people putting 20% down.
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In these articles you posted is a sub plot that says the dirt around down town Seattle is very expensive so that means we will never be able to get lower prices on things like condo units. On Capital Hill those big old mansions are historic so they are now too expensive to bull doze, and make way for housing.
It’s just all too expensive, and people here are claiming the bottom is in on the price of housing so we are stuck. Prices can only go up from here?
I keep asking why people think the price of housing will go up, and all people do is point to the sales charts.
The price of housing, and land will go down. There is no economic or financial reason for the price of housing to continue to be so expensive.
The only thing keeping the price of housing at these ridiculously high prices are these historically low interest rates. This is like the tax credit, except people don’t put money into their pockets.
Fortunately we are very close to seeing what will happen after the election. The results, whoever takes office, will put the price of housing back on a downward track. We’ve slowed the rate of decline, but there is no economic reason to think, let alone believe the price of housing will go up.
Why would it? Help me out here, because this Real Estate market makes less sense than the last three surges.
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By David Losh @ 2:
If you’re talking over a wide area, I could possibly agree to some extent. But if you’re talking about the property around downtown Seattle, then the “financial reason” is a growing population (along with Lake Washington and Puget Sound which restrict the direction of growth).
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RE: Kary L. Krismer @ 3 –
Best of luck with that.
Here’s what’s going to happen. All of this past development will be for whoever wants it. Down town can now build luxury properties to attract wealthy residents. We will continue to build all the way to the airport, now that we have built the heck out of all the way to Everett.
Bellevue, Kirkland, Redmond? I have no idea, but I know there are hundreds of acres of dirt to build on for whoever wants to live there.
What you might be saying is that higher priced, luxury properties can now be built, and apartments have hundreds of acres of property to choose from, but higher priced luxury will not translate into increased property prices over a broad area.
The simple answer is that we haven’t had high rise development in Seattle because the CAP Initiative kept large scale development out of down town. Paul Allen filled the breach with South Lake Union, but we have a lot of building to do.
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RE: David Losh @ 4 –
To add to that. I recently heard somebody saying that their retired parents sold their home in Ballard. They had been waiting for the market to stabilize. How many more baby boomers will follow? There are a lot of people on the side lines waiting to sell their home.
It’s true that population is growing but Seattle also does not offer the same type and amount of opportunities as for example the Bay Area (which is way overpriced). I know a bunch of families who have left Seattle and surroundings for the Bay Area.
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So if I buy an expensive home I will be able to attract fit women to it ? I guess it worked for Hugh Heffner.
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RE: David Losh @ 4 – So you deny that some people will pay more to live close to downtown, and the more people there are here that the more they will likely have to pay (all other things remaining equal)? And you deny that Seattle with it’s water is different than say Phoenix, where they can expand in virtually any direction?
BTW, “downtown” is one word.
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By ChefJoe @ 6:
That’s only one factor, like say how interest rates are one factor affecting real estate prices.
In the case of Hefner, however, the biggest factor in attracting “fit women” is paying them money directly. I wonder if they get 1099s or W-2s?
Connecting this up to a legitimate real estate topic, if you focus on just one factor, you’re likely to get the wrong result. Prices won’t necessarily drop with higher interest rates and you won’t necessarily attract “fit women” by spending money on an expensive house.
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RE: Kary L. Krismer @ 7 –
BTW I seperate down town diliberately, and we have the ability to build up, taller, denser, because we have so much under utilized acrage. If we want to buld out forever we can go to Bellevue, Kirkland, Redmond, and out to Issaquah, for those who like that sort of thing. We can also build out to Everett, but that seems like it’s been done.
The kicker is we have a Light Rail system that goes to the airport. We have miles to develop there, miles of acrage.
Seattle is a last frontier. We are a blue collar town who has never begun to become a city.
More to the point is we have money, old money, and new. We are close to Canada, and Vancouver. We are the gateway to China. I see a lot of dollars fleeing China.
So ten years ago this sounded like it would push the price of property up, but today, after ten years of unbridled building, we can expect people with money to move into the down town core, if they can find some luxury, or amenities.
That will leave the suburbs, like Ballard, and Fremont with even more of a glut of housing units. Queen Anne, and Capital Hill can also be developed, but why when there is so much to do down town, and out to the airport.
More clearly put we developed the heck out of the surrounding areas while down town was left to some pretty rag tag building projects. We’re set to expand.
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RE: HappyRenter @ 5 –
Yesterday morning I was sitting here minding my own business, when a person called I had talked to two years ago. He retired this year, and his wife will retire in 18 months. They own a house in Shoreline, and a duplex in Ballard they have been getting ready for sale.
His Real Estate agent is talking to him about a 1031 Exchange for the duplex. I would say they should sell the family home, maybe to thier son, or a trust, and move into the duplex for the 18 months. The son however is pretty well set, but you don’t know what emotional attachment there may be.
They also want to live somewhere other than here, some place warmer.
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By David Losh @ 10:
They should talk to someone who actually knows about taxes, rather than a real estate agent. In fact, it’s probably a licensing violation for an agent to advise doing a 1031 exchange, as opposed to advising them to consult an expert on 1031 exchanges.
1031 exchanges have really fallen out of favor, and are mainly done now by small investors who don’t know how to properly analyze a situation. The one exception where a 1031 might clearly make sense is where one of the two spouses has a short life expectancy.
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RE: David Losh @ 10 – Here’s a piece I did on 1031 exchanges, comparing continuing education courses for attorneys and real estate agents.
http://blog.seattlepi.com/realestate/2008/10/11/beware-the-clock-hour-course/
Note that piece was done before Landamerica’s 1031 disaster, although that type of situation was given as one reason not to do a 1031.
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RE: Kary L. Krismer @ 12 –
I should address this rather than the other comment.
Holy Cow!
You failed to mention in your article that the Real Estate agent refers the client to a 1031 Exchange Facilitator, or Accomodator. The agent has nothing to do with anything other than making the sale.
Clock hour classes are only broad strokes, to give an agent some idea about a process that is a part of the Real Estate business. It’s not continuing education, it’s a requirement for keeping a Real Estate license.
What bothers me is when some one outside of the profession of Real Estate tries to imply that the experiences they have in a somewhat related field applies to the profession of Real Estate Agency.
I know it all sounds good, but Real Estate Agency is a set of judgement calls. We’re not lawyers, we’re not accountants, we’re not 1031 Facilitators. We’re Real Estate agents for a client, and we refer that client out as a normal course of doing business.
The trick is to know enough to be able to make the right sets of recommendations.
In this case, the case I talked about, the 1031 was overly complicated. It didn’t fit with the over all goals. I have no problem saying so.
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By David Losh @ 13:
Correct. But when agents are given the wrong information at a bad clockhour course, they tend to think that they know what they’re talking about, and they tend to pass that bad information along to the client. That’s the whole point of my criticism of clockhour courses–that they’re taught as if the goal is to teach the agents about something, rather than to teach them when to identify that an issue might be present, and a referral either necessary or prudent.
I’m not sure why you think it’s not about continuing education. It’s called continuing education in the title of the statute. Are you relying on the rule that titles of statutes are not to be used to construe statutes? ;-)
http://apps.leg.wa.gov/rcw/default.aspx?cite=18.85.211
The problems arise though when the “broad strokes” are wrong, such as the instructor of the clock hour course not even knowing that doing a 1031 exchange affects the basis in the newly acquired property. That’s pretty basic, indicating that the instructor didn’t have a clue about the topic she was teaching.
What bothers me is when some one outside of the profession of Real Estate tries to imply that the experiences they have in a somewhat related field applies to the profession of Real Estate Agency.
I know it all sounds good, but Real Estate Agency is a set of judgement calls. We’re not lawyers, we’re not accountants, we’re not 1031 Facilitators. We’re Real Estate agents for a client, and we refer that client out as a normal course of doing business.
The trick is to know enough to be able to make the right sets of recommendations.
In this case, the case I talked about, the 1031 was overly complicated. It didn’t fit with the over all goals. I have no problem saying so.
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RE: Kary L. Krismer @ 14 –
It’s only called continuing education in the title of the statute, the rest is about license renewal.
Continuing education for an attorney is different because the law changes constantly.
I’m an instructor. I have the paper work in one of my boxes some place. It was a course I took in my license renewal process.
Real Estate is learned by doing. Short sales, taught in continuing education, is a complete joke. It is one of my pet peaves. The Brokers exam, managing Broker, or Designated Broker is a joke. Any one can be a Broker, own a Real Estate company, or manage an Real Estate office.
So how is it, the 1031 class is any different?
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RE: David Losh @ 15 – My overall theme is hardly positive of clockhour courses, so in many respects I agree with your assessment of those things mentioned (although I haven’t taken some of those topics, so I have to withhold comment on those).
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By David Losh @ 15:
Not sure what you think the purpose of the Core class is each renewal, if not to deal with new changes in the law.
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RE: Kary L. Krismer @ 12 –
Yeah, this is another comment thread where you link to an article your wrote, that said essentially nothing concrete about 1031 Exchanges, but claim the instructor was the problem.
You seem to be continually bashing the Real Estate industry, so I don’t get it.
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By David Losh @ 18:
Wow, that is dense even for you.
In October 2008 I write about 1031 exchanges, warning that one of the risks of a 1031 exchange is the exchange facilitator running off with the funds. In November 2008 Landamerica essentially does just that on almost 500 1031 exchanges transactions, leaving those people and entities with millions of dollars of tax liability and no funds to pay them.
http://www.seattlepi.com/business/article/Real-estate-market-hit-again-1292852.php
And you think I said nothing concrete about 1031 exchanges? LOL.
The difference between you and me is I understand what’s happening, sometimes even before it happens. For example, I understood why fewer REOs as a percentage of total sales has the effect of raising the median. You on the other hand don’t understand what’s happening, even after it’s explained to you over and over and over.
And when an instructor doesn’t even know that the basis of the property acquired is affected by doing a 1031 exchange, which in turn affects both depreciation and future gain, that’s a problem. Effectively the instructor at the clockhour 1031 course was just a salesperson–one ignorant of the process which she was teaching others the benefits of. That’s a problem.
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By David Losh @ 15:
On that I would agree with you. I’ve taken exactly one-half of a short sale class.
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RE: Kary L. Krismer @ 8 –
I bet the bunnies get K-1s…LLPs(Limited Liability Partnership).
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RE: Kary L. Krismer @ 19 –
I should have stopped reading here, “Wow, that is dense even for you,” but I continued on.
I get the median, it’s irrelevant, but I get it.
You make comments daily; that I don’t get. You’re cornered.
“2008 Landamerica essentially does just that on almost 500 1031 exchanges transactions”
They entered the business, closed the doors, and moved on, so what? What insight is there?
It shows that just because some one, or company, has life experiences outside of the Real Estate industry doesn’t make them equiped to deal with Real Estate issues.
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By David Losh @ 22:
You said I didn’t say anything concrete about 1031 exchanges. Ignoring the fact that the topic of the piece was about the quality of clockhour course instruction, I would say that pointing out the risk of the exchange facilitator losing your money is pretty concrete information about 1031 exchanges.
Let me get a bit more concrete in case you don’t understand. Let’s say you sell a $2,200,000 building, on which you owe $1,000,000 and would have $200,000 of tax gain if you sold it outright. You don’t want to pay the tax now, so you do a 1031 exchange, giving the exchange facilitator approximately $1,000,000 of your net proceeds. You then go to buy the exchange property and find out the exchange facilitator can no longer give you the money. You’re out $1,000,000 and you owe $200,000 in taxes. That’s not only concrete, that’s fall from 10 stories high concrete.
But again, the point of the piece wasn’t 1031 exchanges, it was the low quality of clockhour course instruction. And as I noted in my piece about Landamerica’s 1031 problems, I was hardly predicting that something like that would happen to such a huge company. You do know who Landamerica is, right?
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By David Losh @ 22:
Letting people know an increase in the median doesn’t mean as much as what it seems to indicate is hardly irrelevant.
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RE: Kary L. Krismer @ 24 – RE: Kary L. Krismer @ 23 –
Again throwing around big numbers makes you more dramatic, but you don’t have a point. A 1031 Facilitator is some one, a person, who holds the money for a 1031Exchange. It always sounds like a good gig, but you really need to have some one with experience to do it correctly.
Here, let me Google LandAmerica for your readers, http://www.reuters.com/article/2008/11/26/us-landamerica-idUSTRE4AP1W420081126
So yes, I do know who they are, and yes they went bankrupt which does put them in your area of education.
Now for the median which can mean any number of things, you are choosing to add in the idea that REOs sell for a discount which to you means they are dragging down the median.
So we can make any number of claims about the median, like higher priced properties are now selling, but it doesn’t mean anything. It’s all interpretation, and a small snap shot in time.
People who hire Real Estate agents should beware of random sales talk.
Anyone with any amount of life experiences can get a Real Estate license, and profess to be an expert. That isn’t the case, especialliy on the internet.
You can bundle Trulia, with Zillow, with redfin, and have no information about Real Estate between them. It’s all sales talk, because Real Estate agents today don’t have time for the internet, they are working.
To be more clear, because I don’t want to be obtuse, I’m here checking on my Google map placement for my blog sites. I got a call at 10AM from Google confirming my placements, again.
Originally I was told that the internet would be this great thing for lead generation for Real Estate listings, and sales. What I found was Ardell, who is probably the only source of Real Estate information I have found.
On the internet most people are here to sell you something. I’m here to sell my services. 80% of my new business comes from the internet. It’s a great tool. My price point for things like cleaning is much lower than tens of thousands of dollars in Real Estate commissions.
I’ve run the numbers, and I make more than the vast majority of Real Estate Professionals, and I haven’t even scratched the surface of what I can do with internet sales.
To buy or sell Real Estate people should be looking for working Real Estate agents rather than reading random comments on the internet.
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By David Losh @ 25:
Big numbers? I’m sorry, but there were a lot of people who lost a lot of money with Landamerica’s exchange services. It probably wiped a lot of people out. But it didn’t make as much press as Bernie Madoff, possibly because we’re only talking about $400,000,000 that was not repaid. For the total loss you’d need to subtract any recovery from the bankruptcy, and add any tax liability resulting from not being able to complete the transfer.
As to who Landamerica was, what I was looking for was more an answer like Commonwealth and Lawyers title Insurance companies.
http://www.landam.com/
Or connections to Rainier, Puget Sound and Northpointe title companies.
http://raincityguide.com/2008/11/24/fidelty-title-calls-off-the-landamerica-merger/
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RE: Kary L. Krismer @ 26 –
You’re completely lost in this.
This isn’t a quiz.
This is just random information that can be added to the billions of dollars in losses that the Real Estate industry now carries. Add it to the Duetsche Bank claim that 50% of home owners are underwater.
It’s random information.
All any one should be aware of is that Real Estate is a very complex industry, and people need professional advice from people who work in, and are involved in, the Real Estate industry. People should seek out Real Estate professionals who are working today, and get away from the computer.
The idea that some one will gather enough information from the internet to make an informed purchase is wrong. It takes legs, and years of varied Real Estate experience to know the market place.
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By David Losh @ 27:
No, that’s exactly where we started. The seller in your example should not seek out the advise of the real estate agent friend you know on the issue of 1031 exchanges. The seller should seek out the advise of a tax professional.
I would agree with you on getting advice off the Internet.
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