Buyers: Is it time to give up on 2012?

When inventory completely failed to experience the usual new year bump in January, and listings continued to decline through February, March, April, and May, I had hoped that once the “spring buying season” wore off that we might start to see inventory increase a little in the second half of the year before the usual fall drop off.

Unfortunately, according to Redfin’s region page for King County, that’s not happening:

King County Single-Family Home Listings

The number of homes on the market continues to sink to new lows almost daily. I’ve gotten almost as many emails from frustrated buyers this year as I did in 2006 and 2007. Back then their complaints were of course that there were no homes on the market that they could afford. Now, there simply aren’t any homes on the market worth buying.

Since selection does not appear to be improving, it is highly likely that the rest of this year will only be even more frustrating for buyers, which leads me to ask: Is it time to give up on 2012? If you’re trying to buy a home out there today are you ready to throw in the towel and hope for better selection in 2013?

Full disclosure: The Tim is employed by Redfin.

  

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.

78 comments:

  1. 1

    Yin and Yang

    The Graph Also Equally Applies to Sellers [i.e., Underwater]:

    2012: Sellers can’t even afford to get into the game and have already given up?

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  2. 2

    RE: softwarengineer @ 1 – Sellers could get in if banks were better at approving short sales.

    I will note that I think July was a record for approving SFR short sales in King County, but they still could do better.

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  3. 3
    Dmitry says:

    Is this really surprising? Where would the supply come from? Why do buyers think I as a seller will take a loss on the house (unless I’m forced to)? Until buyers are willing to pay more, which can happen only if overall economic sutiation improves and unemployment drops and wages go up, or monetary inflation kicks in, supply will stay low. The way economy is going, we have at least couple years of low supply ahead.

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  4. 4
    David B. says:

    I’m not really in the market for a home right now, but I may be in a year or two, so I’m keeping an eye on the things. I will agree that there doesn’t seem to be much for sale right now (mostly shopworn properties which basically nobody wants). I’ve gone to realtor.com and looked just to get an idea of what’s presently out there, so I know.

    If I were in the market, I’d keep an eye out just in case something non-sucky came up for sale (that’s easy to do, thanks to the Internet), but at the same time I wouldn’t count on it happening, and I’d be willing to wait until the selection improves. It only takes landing one good match; the odds are of course against that happening but no harm in giving it the old try, either.

    What there’s no sense in doing is settling for someplace suboptimal when waiting a year or two could give one a much better range of choices.

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  5. 5
    Pegasus says:

    I think if we could pass a law that sellers could claw back the commissions on any underwater home that was purchased since 2004 would assist more underwater homes in getting listed for sale again. That way not only would the bankers and the sellers be sharing the losses but also those that profited the most from the bubble days, the real estate agents.

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  6. 6

    RE: Pegasus @ 5 – That would make a lot of sense. Reward stupid people who thought that agents were predicting the future and could predict the future! /sarc

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  7. 7
    ChrisM says:

    Well, I haven’t exactly thrown in the towel. I still look at the new listings in the hopes a dream property will show up, but honestly I expect a significant economic downturn once the elections are over and don’t really see a reason to tie myself down.

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  8. 8
    Pegasus says:

    RE: Kary L. Krismer @ 6 – Yup. About as smart as crying about the wankers taking too long to write off their losses on a short sale so that the real estate agent can book a commission……

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  9. 9

    RE: Pegasus @ 8 – It’s in the bank’s own interest to take less time to process short sales. They’re just too stupid to realize that. Yet another thing banks are not good at.

    What I’ve said in the past is banks could make more money paying attorneys $400 an hour to process short sales. The interest lost during the delay would be less than the attorney fees. The higher prices would be more than the attorney fees. The thing is though, they don’t have to pay attorneys $400 an hour. They could probably pay someone about $20-30 an hour and they’d then really make a killing. But again, they’re too stupid to realize that. Surprisingly though, one of the worst banks has apparently realized that–BoA.

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  10. 10
    No Name Guy says:

    Or buyers could wake up to the reality that IS the market today, to wit: If you must buy something NOW [for what ever reason], it’s probably going to need work. Get off your back sides and buy the fixer….and beat the heck out of the seller on price. Put some sweat equity into the darn thing. You’ll be far closer to free and clear OWNERSHIP in a lot less time that way – get it for a song, add equity doing the fixes, pay it off.

    Or just sit back and keep whining “oh woe is me….there isn’t my dream home, already done up and available for a song”.

    Crud people, until the mess of the bubble years works through the system, painfully slowed down by the stupid policies emanating from DC and Olympia [HAMP, foreclosure relief, etc], it’ll be a cruddy market as trapped renters, er “owners”, can’t afford to sell their half way decent places. Get used to that fact.

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  11. 11
    David Losh says:

    RE: No Name Guy @ 10

    There is a lot of product for sale that needs negotiation, or work. There is a ton of product off market that people would love to get rid of.

    You have to look, strategize, and compromise, but the market place is always fertile.

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  12. 12
    HappyRenter says:

    I have been watching this home on Redfin:

    http://www.redfin.com/WA/Seattle/7759-38th-Ave-NE-98115/home/317137

    The price has been dropped from 480,000$ to 464,000$. It’s been on the market for almost 5 weeks! Nobody wants it?

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  13. 13
    wreckingbull says:

    RE: No Name Guy @ 10 – As someone who does all the work on my own properties, let me remind you that DIY projects are still expensive, especially if you want to do them right. I applaud buyers for saying NO to the crap that is on the market today. Paying too much for a turd, then declaring that ‘sweat equity’ will make everything OK, is a recipe for disaster.

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  14. 14
    drakob says:

    My wife and I have been evaluating whether it makes sense to buy for the past two years or more already. Our rent comparitive to the all-in costs of ownership is still very attractive and we feel that this will continue for some time. In the meantime, it seems apparent to us anyways that the Seattle market is by no means immune to the larger deflationary pressures in the marketplace. We have been trained to develop a Pavlovian response to a real-estate correction – that prices will rebound with vigor shortly thereafter, but this cycle seems to look and smell more like a Japanese deflationary cycle… even with record-low interest rates, there’s a hesistancy for buyers to jump in, an inability for would-be sellers to list and a severe tightening of credit and underwriting standards… none of which appears likely to change dramatically any time soon.

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  15. 15
    David B. says:

    RE: No Name Guy @ 10 – “blah blah blah OWNERSHIP blah blah”

    Ah, yes, the old myth that homeownership is always best. Reality: it’s not. It’s best for some people in some situations… that’s all. It’s not universally best.

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  16. 16

    RE: wreckingbull @ 13

    Compromise Wrecking Bull

    Become your own contractor and hire P/T skilled home construction workers….I remodeled a Bellevue home that way and it was appraised 40% higher than what I paid for it….my remodeling costs were only about 2/3s of the price increase appraised too [I made money remodeling].

    The estimates from several contractors were twice as much as the appraised increase, a HUGE LOSS in comparison.

    My risks were there though, like defective work costs later with no warranty….it did not happen on major plumbing, electrical and structural….call me lucky or very smart.

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  17. 17
    Plymster says:

    Inventory will continue to plummet as long as:

    1) Banks are allowed to continue to hide their losses with Mark to Myth accounting (thanks FASB). Banks are incented to hold a $700,000 mortgage for a $300,000 Ballard box rather than foreclose or run a short sale because they can mark it at $700,000. If they sell, they have to recognize the $400k loss.

    2) The Fed continues to hold over a trillion dollars in MBS, and then trade the proceeds for Treasuries. This is done to accumulate Federal Debt (which i think they will just forgive later in a ZIRP/NIRP environment) and to prop up the primary dealers by overpaying for treasuries.

    3) The GSEs are being covered by the Treasury Department for the MBS on their balance sheets.

    The only thing that will stop this is if these entities can no longer cash-flow the taxes, and local governments start taking over properties that should have been foreclosed upon.

    When (not if) Europe falls apart, there will be hell to pay, as the banks can’t withstand that sort of economic shock to their balance sheets. Then you might see a crack in the inventory dam.

    This is just my opinion, based on what I’ve read over the last few years, but I’ve yet to see any data that refutes it.

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  18. 18
    Peter says:

    I’ve given up looking for the time being. I shook the magic real estate 8 ball and it came up “all signs point to no” on buying. So, I will just sign a lease (was on month to month) for another year and add to my down payment for the next year or two.

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  19. 19
    David Losh says:

    I’d like to quantify the demand curve for buying housing that is over priced no matter how low the interest rate is.

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  20. 20
    David Losh says:

    RE: Plymster @ 17

    Yeah, what he, or she said.

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  21. 21
    StillRenting says:

    We were planning to wait until winter to buy but found a place we love with almost everything we wanted, so we are in contract to close next month. There really was only one other house we liked enough to buy, but we weren’t ready at that time and it sold within a week. I’m glad we had to pass it up because the house we are buying is in a better location for us and has been well cared for (the other one was a fixer). We will eventually want to remodel the kitchen, but what’s there right now is nice and fully serviceable, if slightly outdated. Everything else has been updated well and to our taste.

    I think the reason we were able to get this house is that it was initially overpriced and had been on the market over twenty days before a price drop. By that point it had become a “stale” listing and not subject to the rush of lookers you get when a house first comes on the market. Also, the listing agent didn’t market the view very well. There is a nice territorial view of the cascades from the dining room, living room, and two bedrooms, but no pictures of it in the MLS listing. Views like that need pictures because if it’s cloudy during a showing you aren’t going to notice them.

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  22. 22
    David Losh says:

    RE: StillRenting @ 21

    I go into stale listings kind of a lot where after a few weeks, or months the seller is more motivated.

    There was a period this year when the market over heated, but most of this year the selection was there, if you were ready willing, and able.

    “There really was only one other house we liked enough to buy”

    Each buyer is only looking for one house. One buyer isn’t looking at the full inventory.

    Real Estate is a snap shot in time; you just never know when that one house will become available.

    It’s a matter of negotiation.

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  23. 23
    No Name Guy says:

    RE: wreckingbull @ 13

    You seem to have skipped over the “beat the heck out of the seller on price” part of the comment. You just need to find a place that has solid “bones” to it and do your due diligence. If you can’t get it for the right price, considering what you need to do, walk and go to the next one. Only a idiot pays too much….sheese. Show some respect for the readers, don’t assume they’re fools that’ll over pay.

    I’ve also done the majority of work on my place as well. And actually, compared to paying some one else, NO, it’s NOT expensive. Contractors assault you on mark ups. Also, for those that are into OWNERSHIP, it’s down right frugal to pay for quality material up front since it’ll be a “do it once” proposition. Over the preceding 17 years, I’ve done, or in the case of the roof, had done, the kitchen, deck & tool shed. In each case it was material that will last for a very long time and quality (dovetailed and full extension slides in the kitchen, 30 year shingles, W flashing, heavier felt on the roof, synthetic decking, etc). On an amortized basis, it’s not expensive at all.

    And David @ 15….DUH! I never said ownership is best for all. Nice straw man you constructed in your mind. Note that I said “IF you must buy something now”. Ownership works for me, in my situation. Renting is better for you? Hey great, glad that for your situation it works out better.

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  24. 24
    Mike says:

    The lack of inventory – and the expectation that it isn’t going to increase in the near future – pushed me to buy a little sooner than planned.

    The 4 main factors I was looking for were location, style, price and condition. I ended up compromising a bit on the condition because I felt that it was unlikely I’d find another house that fit the other 3 any time soon.

    I suspect there are others in the same situation – rushing to buy before the market gets even more buyer unfriendly. Caveat: These observations are after shopping in 98117, which is apparently in high demand at the moment.

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  25. 25
    Think Big! says:

    The inventory is just depressing. We’ve been looking to relocate to a better neighborhood to raise our family in, to safely walk at night in, to have more parks and shopping nearby, etc. Mostly we are looking in “north of the Ship Canal” areas that tend to be popular places to live. When you combine a sought after neighborhood with very limited inventory you get the 5-12 offers within a week situations.

    It’s just stunning. I’ve been scouting those areas for 18 months and at best there were perhaps 4-5 properties that would have met our reasonable requirements (ie. we aren’t too picky and are willing to remodel if necessary) in that time frame. All sold within 10 days so if you weren’t trigger ready with a preapproval letter in hand and willing to at asking or over, forget about it. We had our funds tied up on some investment deals on a few and just weren’t fast enough on the others.

    Now, we continue to look but the inventory is getting dire. There are so few solid homes with decent lots sizes (we are looking for at least 5,000/SF which rules out many homes in those areas), not on busy arterials, etc. that it really does seem like it could take a year or two to find a decent place unless the inventory turns around.

    If you know if any properties with at least a 5,000/SF lot from Northgate south to the ship canal, east to Sandpoint and west to Wallingford/Greenlake, do share! : )

    Cheers and here’s to hoping this isn’t the beginning of a Japanese style 10-20 year deflationary environment…

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  26. 26

    RE: No Name Guy @ 23

    I Agree

    A lion’s share of the Y generation [probably younger X gens too] were spoiled by their “lax” Baby Boomer parents IMO, having parents who gave them free cars, college rooms/tuition, maid service at home, no big acerage with hard work chores, etc, etc….they want it perfect before escrow, blame the Baby Boomer parent brainwashing I suppose.

    I got a bunch of down thumbs blogging the same as you, albeit I betcha you’re older like me [I was raised on a 5 acre farm with LOTS of chores] and sweat labor with skilled house builders [BTW, I built and remodeled homes when I was 15] sounds HORRIFYING to a lion’s share of the younger adults in the housing market. I pocketed about $55K in 1990 for a couple months P/T efforts after work….a good way to richen your bank accounts folks.

    Perhaps as the Repression drags on, a new paradigm will emerge soon….all folks will take up farming, making stuff by hand, can foods, work harder and saving money [because they have to]….remember, SWE predicted this in 2012 for our future, whether we like it or not.

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  27. 27
    JoeBlow says:

    My wife and I have stopped actively looking at houses. We are going to rent for a few more months unless something that we really like comes on the market. We’ve put offers in on a number of places (including 30k over asking on one in Bellevue) and struck out on all attempts… One of my coworkers is in the same boat.

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  28. 28
    HappyRenter says:

    RE: HappyRenter @ 12
    I’m just wondering why, despite the low inventory, some houses stay on the market for several weeks and have even their price dropped.

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  29. 29
    StillRenting says:

    RE: JoeBlow @ 27

    The Bellevue market was crazy this spring/summer. We viewed a lot of houses there with serious inherent flaws (power lines across the back yard, adjacent to apartment complexes or shopping centers, etc.) that sold almost immediately for list or higher. We ended up buying further north, mostly for other reasons, but partly because we gave up hope there would be anything for us there.

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  30. 30
    StillRenting says:

    RE: HappyRenter @ 28
    I don’t know what prices are like for that neighborhood, but if it hasn’t sold in several weeks then I would suspect a problem with the price. It looks like they recently had a price drop after being on the market three weeks, so maybe they started too high and now are stale?

    Also, a cursory search of the address in the offender registry turned up a serious offender (first degree rape of a child) two blocks away. I know this particular issue has been debated ad nauseum on this blog and I don’t mean to stir that debate up again, but it might scare some folks off.

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  31. 31
    JW says:

    My wife and I checked out of this buyers market after our experience with a recent property in Phinney.

    http://www.redfin.com/WA/Seattle/112-NW-78th-St-98117/home/495523

    The condition of the house was good but the overall aesthetic of the property was not charming. The bathroom had pink tile and cheap plastic ceiling coverings with florescent lighting (ouch, yes,). Did I mention the perfectly preserved 1967 kitchen? Within 4 days it had 4 pre-inspections. It was listed at 450K. It ended up selling for 520K in 6 days.

    It makes sense on some level why it sold for 70 K over asking price – floor plan, location, yes, location not on a busy street. How do other people feel about under-pricing properties? I know it creates a perception that there’s a deal to be had. And this is a business, I know but paying $650 at the time for an inspection jsut for the “right” to bid on a home seemed preposterous. We bowed out since it would require a bidding war. After paying upwards of 520K for a house (we didn’t love to begin) we would not have funds to updater. Remind me to be rich in my next life. We are going to renting for a year and hope the inventory improves. There is a lot of competition for rentals too though and after owning my own home for 7 years until this spring makes a lot of these places look like beer rentals.

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  32. 32
    wreckingbull says:

    RE: softwarengineer @ 26 You are getting a thumbs down because you are showing you are out of touch. The problem is not a lack of desire to perform DIY projects. The problem is that Generation Y is challenging conventional wisdom about what home ownership means. They are learning it does NOT necessarily mean security. They are learning it locks you in, in a world where flexibility is becoming more and more important to ones livelihood.

    Furthermore, would you be anxious to shell out everything you make each month to the bank, knowing that the Baby Boomers have left you tens of trillions in debt? And…..not only that, you are responsible for paying for them in their final years via the SSI Ponzi scheme?

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  33. 33
    Mike says:

    RE: JW @ 31

    I stayed away from underpriced properties, luckily. That said, it wasn’t easy to know what was underpriced in this market, especially on an older home that needs an undetermined amount of work in Ballard.

    I had a few “holy cow, are people actually paying these prices for a home in this condition???” moments this year. I’m still shocked at one of the estate sales in loyal heights that went for around $420k. I left that open house saying “never, needs way too much work” but low and behold it sold in 6 days.

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  34. 34
    Mike says:

    RE: JW @ 31

    And one other thing, a perfectly preserved 1967 kitchen is LUXURY in an area built out by 1950!

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  35. 35
    ARDELL says:

    RE: JW @ 31

    One of the reasons for this is the post bubble change in home prices due to the significant change in Seattle School District Policy. For 30 years Seattle was not a geographic based school system. People had a lot more flexibility within the district as to where they could send their children to school. After 30 years of that system the City Council voted to move to a geographic based system. That passed on November 19th, 2009 or so with some weaning in period.

    That caused people who lived in the geographic zones of the best schools, or even just those who didn’t want to change schools, staying put where they were vs moving. That caused a decrease in inventory…and continues to do so. On top of that you had people wanting to leave the areas with the worst schools, since they no longer had a “school of choice” type system.

    Everyone was jockeying for position, and to some extent still are. That has negatively impacted the values beyond the norm in some areas and increased demand and decreased inventory in the best of areas way beyond the supply and demand factors before this school system change.

    If you track the stats by school boundaries you will see the shift. A lot of people notice that “some areas” are up more than others, and if you isolate the data by school boundaries you will see the correlation and impact of this change in School District Policy.

    Were you looking at homes by school at all? Were you taking any notice of which schools were associated with the houses you were considering buying?

    For those not at all interested in schools, they can play this factor in their favor if they are paying attention.

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  36. 36
    Jen says:

    I’ve stayed out of the market. I’ve been thinking the houses I see look like a good deal but haven’t tracked the final sale price. I’ve actually been “ready” to buy for about three years but have stayed in my rental because it seemed the market still wasn’t at bottom. Now I’m like many who have enough to comfortably get in, but don’t want to be caught in a bidding war. I think that breeds irrational purchase prices in many cases. I can see why it happens though. People get tired of waiting.

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  37. 37
    patient says:

    RE: ARDELL @ 35
    I think you are making too much of the schools. We can afford a home were the best public schools are but we prefer to spend the money on private schools that in our opinion is a lot better. This is shared by most parents in our school of choice, many who still live in the prime public schools.

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  38. 38
    Drone says:

    Have we given up? No. Have we given up hope? Pretty much.
    There’s so much crap out there. We’ve yet to find anything even worth putting an offer in on, and we’re willing to overlook some pretty major renovation needs. Our geographic area is a bit constrained and in-demand though, so that never helps. If we can’t find something by next spring, I think we’ll plan to just pay to rent in a nicer neighborhood for a while instead.

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  39. 39
    ricklind says:

    By wreckingbull @ 32:

    RE: softwarengineer @ 26 You are getting a thumbs down because you are showing you are out of touch. The problem is not a lack of desire to perform DIY projects. The problem is that Generation Y is challenging conventional wisdom about what home ownership means. They are learning it does NOT necessarily mean security. They are learning it locks you in, in a world where flexibility is becoming more and more important to ones livelihood.

    Furthermore, would you be anxious to shell out everything you make each month to the bank, knowing that the Baby Boomers have left you tens of trillions in debt? And…..not only that, you are responsible for paying for them in their final years via the SSI Ponzi scheme?

    Excellent post, WB. Brings the current situation into larger perspective.

    YMMV, but here are my observations.

    We all inherit the successes, and sins, of preceding generations. From your post I think you are a Gen Y. If I am wrong, my apologies. If correct, as a Boomer I suggest you strap in for the ride of your life. I am in the group that thinks it will not be pretty for any of us going forward. I hope I am wrong.
    We boomers were born, as innocent as anyone, into a life of depression era parents, and inherited their abilities as parents to raise us. They had the Great Depression, and WWII, and the GI bill, and a life of expansionist foreign policy. We had Leave it to Beaver and Vietnam, and the Weathermen, and Prairiefire, and 9-11. And the Evil Empire of the Former Soviet Union ( Hi Tat and Nat, hope you see my humor. Welcome.).
    Boomers have seen the playing field change from things like defined benefits to defined contributions. From community values and public service to Gordon Gecko’s “Greed is Good.”
    From “government is good to government is bad.” From “social security is good to social security is bad.”
    FWIW, it is a Ponzi scheme, but I think the originators of Soc. Sec. saw the previous condition of millions of former workers with absolutely nothing after working and wanted to make it better. I think they magically assumed that the number of workers would increase to support the previous generation of workers, this was a wrong assumption. So lots of Gen Y, like my own kids, and others are seemingly stuck with the bill.

    Most people shell out everything they make every month to just keep on going. Some to the bank and some to the landlord, who then pays the bank. Your case is not special in this regard.
    And the boomers are also deeply in debt, don’t feel special. I read that the average boomer savings is $30,000, most are still working, and that will not last the first year after a disabling problem. Perfect Storm.

    Good to have this forum to share stories.

    Sincere Best Wishes,

    Rick Lindquist

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  40. 40
    Jonness says:

    The WA unemployment rate shot up to 8.5% in July. Despite what those who work in the RE industry will lead you to believe, our state’s unemployment rate is downright pathetic.

    Forget about 2012, and instead wait this economic nightmare out. Europe will continue to drag on the U.S. economy, and there is a strong chance of another recession around the corner. If it happens, you will have been way better off buying then than now. And if it doesn’t happen, you will have a far larger downpayment by then and hopefully skip the PMI.

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  41. 41
    ARDELL says:

    Spring Bump must be officially over. Interest rates have been rising .125 a day. I have a closing on Friday where the client locked in 3.5% and one next Friday at 3.375%. But today rates on high balance conforming were up to 3.875%.

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  42. 42
    corndogs says:

    RE: ARDELL @ 35 – “That caused people who lived in the geographic zones of the best schools, or even just those who didn’t want to change schools, staying put where they were vs moving. That caused a decrease in inventory” …… Nailed it! Yeah that’s the ticket! The Seattle City council caused a nationwide decrease in inventory based on their decision to not let children change schools. Interestingly, I see this phenomenon is affecting San Francisco even worse resulting in a inventory of only 0.8 months… thank you for figuring this out for everyone… Maybe you could send an e-mail to President Obama…. and he could get together with his fellow Seattle Democrat folks and they can sort out this nationwide inventory problem over a pack of menthol flavored Pall Malls….you could save the country…

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  43. 43
    corndogs says:

    RE: wreckingbull @ 32 – Generation Y isn’t doing Jack! Except watching opportunity come and go. This Seattle area and the country as a whole was for sale cheap, these last 3 years. not just to the occupy Wall Street generation Y crowd but to the whole world…. Somebody told me when I was young, you only need a few good deals in your lifetime and that is very true. If you didn’t pick up some fantastic deal in the last 3 years… you missed your good deal. Generation Y will be renting for the next 20 years from some guy from China named Cho-Shau Lin because he saw the opportunity and wasn’t living in some illusion that he was gonna change the world by not participating.

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  44. 44
    wreckingbull says:

    RE: corndogs @ 43 – Funny, someone told me the same thing on March 9, 2000. Oops.

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  45. 45
    wreckingbull says:

    RE: ricklind @ 39 – Actually, Rick, I am closer to your age. I understand why you thought otherwise, as it seems none of my peers really seem to give a golly about what we are doing to our young people. Hey, we got our own, who cares about them, right corndogs? People like corndogs, who are so concerned with the value of their homes, forget that those Gen-Y’ers he mocks are the same people who will be in the market for his Pierce County Palace someday. I’d say it’s not looking good for the hope of rampant appreciation.

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  46. 46

    RE: wreckingbull @ 32

    I’m Sure Almost All of Generation Y Wants a Seattle Home

    I read this same opinion you have in MSM, sounds good, but doesn’t face class war realities today.

    I hear even the college graduates are getting like $27K/yr avg per capita pay offers [if they get any offer at all], down from $33K/yr a few years ago….hades, that won’t even pay rent in Seattle.

    But if that same low income rolled up its sleeves with sweat labor and worked harder on fixer uppers, like old fashion flippers do….even gen Y could grab the golden RE key.

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  47. 47

    RE: ARDELL @ 41

    Interest on 10 Year Bonds Rising Lately Too

    Todays:

    10-Year Bond
    1.817
    +0.012
    +0.66%

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  48. 48
    JW says:

    I know, its hard to know what is under priced. I know my agent was pretty spot on in his CMA and part of me didn’t want to hear it. And DIY work on a 500K place? The intangibles of living in an updated home to personal standards may be appealing to some. That is pervasive marketing though. For me this opinion was shaped in real dollars realized by my 60% return on real money spent in upgrades (when I sold this spring). My upgrades were very conservative Seattle craftsman not funky or artsy didn’t update my walls in all pink. I had no intention of selling at the time I did the updates. I always laugh at the HGTV show hosts of the show “Love it or List it” saying after renovation x and x house is worth this much more…

    More central is the idea that investors are the ones who can afford to snatch the fixer up places. Not a new revelation I suppose. I don’t know how to track that data. I don’t know if the Phinney house was bought by an investor. A few weeks earlier a fixer house in View Ridge listed on 5/31 and sold 9 days on 6/8 later *can you say all cash*. At the same time I was walking though it there were a group of overseas folks walking through it.

    http://www.redfin.com/WA/Seattle/7342-51st-Ave-NE-98115/home/321025

    It was in worse condition than the Phinney House a 575K place sold for 660K. The listing showed water views but they were hardly as breathtaking as the photo would lead one to believe. Again, under priced. IMHO part of a basement should not be able to be called finished if it has the cheapest vinyl flooring and 1948 wood paneling. The two bedrooms on the top floor had sliding doors between them. I have seen this in conference rooms at work.

    The other guys have infinitely deeper pockets. Next year I better to stick to looking at mostly updated places in more modest neighborhoods. I think my eyes are opened a bit that ~500K in Seattle does not go far.

    By the way I like 1967 kitchens as long as I can pay 1967 inflation adjusted (depreciated) prices for them ;) Who knows, maybe that would be more money kind of like an antique?

    By Mike @ 33:

    RE: JW @ 31

    I stayed away from underpriced properties, luckily. That said, it wasn’t easy to know what was underpriced in this market, especially on an older home that needs an undetermined amount of work in Ballard.

    I had a few “holy cow, are people actually paying these prices for a home in this condition???” moments this year. I’m still shocked at one of the estate sales in loyal heights that went for around $420k. I left that open house saying “never, needs way too much work” but low and behold it sold in 6 days.

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  49. 49
    ARDELL says:

    RE: softwarengineer @ 47

    Terrible. I’m glad I’m no longer in the business of endows trying to live off that income. Have some 7% bonds coming due for my Mom and Sister. Will have to assess the damage. I did a staggered portfolio, but still.

    I do think we should get back to 20 year fixed income securities being in the 6-7 range.

    (Note to Kary: that’s a want…not a prediction.)

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  50. 50
    ARDELL says:

    RE: corndogs @ 42

    Well then I guess a house on a busy road or one with a high tension power line running behind it should not have a price movement either…because it’s not a national movement of price. With logic like that, you may not want to be buying any real estate…ever.

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  51. 51
    corndogs says:

    RE: ARDELL @ 50 – Price movement?, power lines? We were talking about inventory weren’t we……. I can’t be rude to you like I am to Losh because you’ seem like a nice lady….. but if you’re gonna talk about logic….. I suggest you start with a coherent chain of dialog and build from that, otherwise, you’re coming across like every other female realtor I’ve met. The Avon Lady in a Century 21 jacket. My logic is sound. There are strong arguments and there are weak arguments. Poster 37 thought your argument was weak and I’m agreeing, it is. The schools have virtually nothing to do with the extremely low inventory in Seattle. The fact that inventory is decreasing in many places all across the country would indicate that there is probably something a little bigger going on here – ya’ think?….. If you don’t understand that, you shouldn’t be selling real estate….. ever.

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  52. 52
    corndogs says:

    RE: wreckingbull @ 45 – Wreckedbung, quit fishing for thumbs ups from the failure to launch crowd, you’re not the Pied Piper for the home improvement challenged. I know you wanna be the guy making sure everybody’s seat buckled in as you all ride down in a basket to hell together as fellow victims…… but, I’m sorry, there’s no difference between Gen Y, X etc. people are people.. you’ve been listening to your Leader Obama the Great Divider too long.

    I never said I expected rapid appreciation in the long run, I’ve said I expect houses to go up with inflation… It is funny however, that ‘the Tim’ mentioned his zestimate after 1 year being about the same as he paid….. the JHammy house zestimate is already 250K more than was paid… that’s more than the entire value of ‘the Tims’ house….. now that’s funny….

    The facts are this…. If you can get a house at a 1999 price with a 2012 interest rate, and you can fix some stuff, you’ve got the triple whammy. win, win, win… your little cheering section is just a bunch of people that couldn’t replace a little bit of siding or conceptualize what it would take to make anyone of those Seattle hamster cages look like that shiny pile of dung that Happy Renter linked to in post 12…. It’s ridiculous! 3 months of weekends and 25K of materials is all the difference between the turds you’re talking about and Happy Renters dream house……

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  53. 53
    David Losh says:

    RE: corndogs @ 52RE: corndogs @ 51

    You forgot to mention me in your rants, but let me congratulate you on the last part of your last comment. Yes, you can buy at 1999 prices, at today’s interest rates, and do a little fixing.

    There is a deal a day in Real Estate, it’s just not what every one wants to do.

    As for the rest of it, it’s a bunch of hooey. The economy has changed dramatically in the past ten years. You should rethink your strategy.

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  54. 54
    Jonness says:

    By corndogs @ 43:

    Generation Y will be renting for the next 20 years from some guy from China named Cho-Shau Lin because he saw the opportunity and wasn’t living in some illusion that he was gonna change the world by not participating.

    Unfortunately, Cho-Shau Lin only makes $1/hr. Therefore, Gen Y’s wage slowly eroded into the sewer as they played catch-up. Meanwhile all the Y’ers were still straddled with the debt the boomers ran up during the fat times. So Y lived in their rented shacks until their “good deal” finally arose. And on that day, they united with the echo boomers and voted to cut off the baby boomers’ medicare, government pensions, and social security payments and instead fairly distributed the savings among themselves.

    It sucked for the boomers, but they were all about to die anyways, so it wasn’t that big of a deal. An added bonus was to cremate the majority of the boomers so as to save money on funeral costs and leave more land available for developing houses for Y to live in. Before you knew it, Y was squarely rooted in the midst of the “me” generation, and their lives greatly resembled those of their parents who came before them.

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  55. 55
    Scotsman says:

    RE: Jonness @ 54

    Harsh, but funny.

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  56. 56
    whatsmyname says:

    RE: Jonness @ 54 – Interesting. The boomers have spent 40 years paying into SSI and medicare, while few are old enough to have actually drawn on them. Yet you feel victimized by them. You, who have paid so much less. They, as much as anyone, paid for your education, yet you are so much the victim, you must ghettoize them, and take what they have. This, and your fascination with cremation certainly have a familiar ring… something just before the boomers, I think.

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  57. 57
    whatsmyname says:

    With over 1500 sales closing per month in King County, we are looking at an average of over 50 houses selling per day. And for inventory to remain flat through all that means that King County must have new houses entering the inventory at a rate of about 50 per day.

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  58. 58
    Jonness says:

    By whatsmyname @ 56:

    RE: Jonness @ 54 – Interesting. The boomers have spent 40 years paying into SSI and medicare, while few are old enough to have actually drawn on them. Yet you feel victimized by them. You, who have paid so much less. They, as much as anyone, paid for your education, yet you are so much the victim, you must ghettoize them, and take what they have. This, and your fascination with cremation certainly have a familiar ring… something just before the boomers, I think.

    It’s true that the boomers put money into SSI and Medicare, but you are forgetting, they also drew all the money out and replaced it with IOU’s that they expect the next generations to come along and pay for. The boomers have already spent everything they put in. They have nothing left to draw out.

    Don’t go getting mad at me about it. You most likely voted for the crooks who looted the kitty. And most likely, even knowing they will loot it again for the next four years, you will vote in another set of crooks who continue business as usual.

    I have not been victimized by anybody. I have made my own way on this planet and have lived a highly self sufficient and fruitful life.

    It is human nature to be selfish and act according to one’s own interests. As we age, we become tired and irrelevant to those who remain vigorous, energetic, and retain the power to both run and change the world. During out prime, the older generation is all but irrelevant to us, and as we age, we are all but irrelevant to those living in their prime. It is the American dream.

    If you are fearful of the reality that I have portrayed, it is up to you and only you to take steps to protect yourself from it. Blindly paying money to a Ponzi government scheme will not protect you when you are old, frail, and vulnerable. It is imperative to take steps as early as possible to make up for the shortfall that you WILL experience at a time in your life when you are the least mentally and physically able to deal with it. We all face this burden and will be individually rewarded according to our individual actions.

    Depending upon how you look at it, God either loves or hates us all the same, as he has spared none from the oven or the ground. We are all going to meet with our just deserve.

    As yea sow, so shall yea reap.

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  59. 59
    Lo Ball Jones says:

    RE: whatsmyname @ 57

    There are 850,000 housing units in King County:
    http://quickfacts.census.gov/qfd/states/53/53033.html

    1500 a month means 2% of all units are up for sale during a year.

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  60. 60
    Lo Ball Jones says:

    By whatsmyname @ 56:

    RE: Jonness @ 54 – Interesting. The boomers have spent 40 years paying into SSI and medicare, while few are old enough to have actually drawn on them. Yet you feel victimized by them. You, who have paid so much less. They, as much as anyone, paid for your education, yet you are so much the victim, you must ghettoize them, and take what they have. This, and your fascination with cremation certainly have a familiar ring… something just before the boomers, I think.

    RE: whatsmyname @ 56

    One does not “put money into” SSI and Medicare. It is not a savings account.

    The current generation funds the older one.

    However, the GenX whinefest about now having to pay for Boomers is misguided.

    It was the Boomers who have paid maximally for GenXers parents and grandparents!

    They got the free ride, not Boomers…a ride that’s coming to an end.

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  61. 61

    By Lo Ball Jones @ 59:

    RE: whatsmyname @ 57

    There are 850,000 housing units in King County:
    http://quickfacts.census.gov/qfd/states/53/53033.html

    1500 a month means 2% of all units are up for sale during a year.

    I suspect the 850,000 includes condos, and the 1,500 doesn’t.

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  62. 62

    By Lo Ball Jones @ 60:

    By whatsmyname @ 56:
    RE: Jonness @ 54 – Interesting. The boomers have spent 40 years paying into SSI and medicare, while few are old enough to have actually drawn on them. Yet you feel victimized by them. You, who have paid so much less. They, as much as anyone, paid for your education, yet you are so much the victim, you must ghettoize them, and take what they have. This, and your fascination with cremation certainly have a familiar ring… something just before the boomers, I think.

    RE: whatsmyname @ 56

    One does not “put money into” SSI and Medicare. It is not a savings account..

    Exactly. And that’s part of the reason we need to stop giving SS money to wealthy individuals.

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  63. 63
    ; says:

    you can watch prices and see how people react:
    * during the RE boom, prices were high.
    buyers were unhappy. sellers were happy.
    * today, prices are neither high or low.
    buyers and sellers are both unhappy (buyers: no inventory, sellers: prices too low).

    you can flip it around.
    instead of looking at prices, watch buyers and sellers to gauge if prices are too high or too low:
    * if only sellers are complaining, prices are too low.
    * if only buyers are complaining, prices are too high.
    * if both are complaining, prices are neither too high or too low.

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  64. 64
    ARDELL says:

    RE: ; @ 63

    Correct. In 1990 I learned the definition of Fair Market Value is “the price at which neither party is exceedingly happy.” Looking at all of my 2012 closings I would have to say no one was exceedingly happy except the buyers of the $79,900 bank owned house in Monroe. The rest were all FMV give or take a smile or two along the way. No one dancing in the streets happy.

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  65. 65
    ARDELL says:

    RE: corndogs @ 51

    I know the school dynamics on the Eastside better than in Seattle, and mostly feel that if people are VERY concerned about schools they either send their children to private school or live in the burbs aka Eastside.

    BUT, that said, there is an influence. In Ballard, as example, I have had buyers say to me that they have to be on the “right side of 85th”. I don’t tell them to think that way…and in fact they said that to me in my listing that was on the “wrong” side of 85th. So I had no reason to want them to prefer the other side. :) Full story here: http://www.myballard.com/2009/11/19/new-school-boundary-maps-approved/

    At least half of the people buying homes are interested in School Boundary Lines and will pay prices accordingly. To suggest that is not the case because we owe money to China is not burying your head in the sand…but not a valid argument either.

    Clearly the same exact home in Lake Washington School District costs more than in Northshore School District. Just look at the exact same home built by any of the big builders like Murray Franklyn and watch how the price changes depending on where they are building it. Schools and School Districts DO play a huge role in home prices.

    That Seattle never had to deal with this issue for 30 years, and now does…is an issue, whether you want it to be or not. Many children are still grandfathered under the old rules, so this is a value changer that has yet to play out in full. Something to be aware of beyond “the comps” of today.

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  66. 66

    By ARDELL @ 65:

    That Seattle never had to deal with this issue for 30 years, and now does..

    I don’t know that they didn’t have to deal with it. They just didn’t deal with it in the same way.

    It’s not like before you could move to Seattle and be assured of the school of your choice.

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  67. 67
    ARDELL says:

    RE: Kary L. Krismer @ 66

    But you didn’t have to buy your home in strict boundary lines either.

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  68. 68
    whatsmyname says:

    By Jonness @ 58:
    It’s true that the boomers put money into SSI and Medicare, but you are forgetting, they also drew all the money out and replaced it with IOU’s that they expect the next generations to come along and pay for. The boomers have already spent everything they put in. They have nothing left to draw out.

    What? I’d love to hear what you mean by ” they took it all out and replaced it with IOU’s” The boomers have already spent everything they put in.” How did they get it out? What did they spend it on?

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  69. 69
    whatsmyname says:

    By Lo Ball Jones @ 59:

    RE: whatsmyname @ 57

    There are 850,000 housing units in King County:
    http://quickfacts.census.gov/qfd/states/53/53033.html

    1500 a month means 2% of all units are up for sale during a year.

    That 2% number (or a corrected version of it) would be relevant if you could compare it to what percent of households are seriously looking to buy this year.

    My point is this. If you are saying that there is nothing on the market, and you haven’t checked since last month; there are 1500 houses come on the market that you haven’t seen . How many can you see? How many do you need?

    If you are saying that there is nothing worth buying, well 50 people a day are finding something that they consider worth buying.

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  70. 70
    whatsmyname says:

    By Lo Ball Jones @ 60:

    By whatsmyname @ 56:
    RE: Jonness @ 54 – Interesting. The boomers have spent 40 years paying into SSI and medicare, while few are old enough to have actually drawn on them. Yet you feel victimized by them. You, who have paid so much less. They, as much as anyone, paid for your education, yet you are so much the victim, you must ghettoize them, and take what they have. This, and your fascination with cremation certainly have a familiar ring… something just before the boomers, I think.

    RE: whatsmyname @ 56

    One does not “put money into” SSI and Medicare. It is not a savings account.

    The current generation funds the older one.

    However, the GenX whinefest about now having to pay for Boomers is misguided.

    It was the Boomers who have paid maximally for GenXers parents and grandparents!

    They got the free ride, not Boomers…a ride that’s coming to an end.

    I’ll stipulate that it’s not a savings account, but why do you put “put money into” in quotes, when you have already posted my actual words – which do not say that. I use the words pay and paid. And if no one is paying into or has paid SSI, then what is there for anyone to be mad about? Anyway it wasn’t the point. My point is that when someone is unhappy about the relatively little that they have paid, it is absurd to be angry with someone whose primary difference is that they have paid a lot more. However, it is well established history that those with bad designs on others will first imagine some offense which generally won’t stand up to scrutiny.

    I largely agree with your other statements. An interesting sidelight to this issue is that SSI was partly sold as a way to get seniors to retire, and open up jobs for the younger generation (of the 1930’s). It will be interesting take on the law of unintended consequences to watch that new anti-SSI generation not pay SSI in the jobs that they will not be getting as many seniors will be unable to retire.

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  71. 71

    RE: whatsmyname @ 70 – In many ways SS is more like a term life insurance policy than a whole life policy. You pay money to both, but you only develop an interest in the latter.

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  72. 72
    whatsmyname says:

    By Kary L. Krismer @ 71:

    RE: whatsmyname @ 70 – In many ways SS is more like a term life insurance policy than a whole life policy. You pay money to both, but you only develop an interest in the latter.

    And both pay you when the insured event occurs. I don’t think that’s really where you wanted to go. :)

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  73. 73

    I had a dream last night. I don’t remember how it began, but it ended when someone I walked up to started talking to me about their choice of schools. I apparently consciously thought about how boring that was, and purposefully woke myself up, ending the dream.

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  74. 74
    lewis says:

    as one person already mentioned, it’s because the loans are hard to get or the seller may not really want to sell – e.g. living mortgage free in the pre-foreclosure slide, playing the hamster wheel game with the bank. there are tons of these in my area where people have been living free for almost three years and given how mush was paid for many of these boxes all jammed in on top of each-other, I sincerely doubt the banks will release them into the market any time soon as they would have to write 30-50% of their value. The shadow inventory is all around and its not only the prices that need to be reset, it is our expectation of what a home is and not accepting over priced, poor quality, over governed HOA’s all sitting on top of each other. Perhaps maybe this will make people re-evaluate the family size and the entire foundation of our economy.

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  75. 75
    corndogs says:

    RE: David Losh @ 53 – Thanks for the advice baby boomer janitor. Can you be my life coach?

    Rate this comment: Thumb up 0

  76. 76
    David Losh says:

    RE: corndogs @ 75

    No.

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  77. 77
    Howard says:

    RE: ARDELL @ 65
    I moved 1200 miles to get into LWSD.. Only reason that we moved here.

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  78. 78

    […] that real estate investment faces today is the shortage homes in the 2012 inventory. According to Redfin’s survey of King County listings, fewer and fewer houses are being sold, leaving potential buyers without […]

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