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.

88 responses to “Friday Flashback: “Kendra Todd agrees with Lar””

  1. redmondjp

    And it came to pass, that he left the land of the Lamanites and disappeareth behind the Zion Curtain . . .

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  2. Tom

    Larry Cragun was not a good guy. He was impossibly dishonest and often resorted to the type of childish BS that The Tim highlighted in the earlier piece. On top of that, he was foreclosed out of AT LEAST one preposterously over-priced condo (http://www.trulia.com/property/3035919265-1880-25th-Ave-NE-207-Issaquah-WA-98029) up in the Issaquah Highlands that he did not disclose to his clients. That’s always my favorite – your “agent friend” who doesn’t know squat about investing in value in real estate.

    Also, in contrast to The Tim, Larry would delete entire blog posts from his “undressed” blogs if the commenters revealed truths that he didn’t want his clients knowing about.

    He ALSO attempted to reposition himself as the guy who saw the bubble coming, so he started making posts that ridiculed and belittled those “greedy” people who were responsible for the bubble. Particularly laughable in light of that condo foreclosure of his.

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  3. Kary L. Krismer

    RE: Tom @ 2 – Apparently no one ever told him: Don’t get high on your own supply.

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  4. wreckingbull

    My only question is, “Why?” Why risk alienating future customers? Why risk destroying your reputation? I don’t think I will ever understand the way a substantial percentage of RE agents acted during the bubble. I can name ten or so agents that could barely contain their rage at us back in the 2006-2007 time frame.

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  5. Kary L. Krismer

    RE: wreckingbull @ 4 – I wasn’t too happy with many of you, but I didn’t really differentiate between people based on whether their predictions were positive or negative. I didn’t buy the contrary argument that real estate would always go up either. If I had I wouldn’t have been one of the few people advising clients to avoid 80/20 loans back then, and I would still own our old house in early 2008.

    Most peoples’ analysis on either side was rather simplistic or focused only on one or two factors. As I’ve said before, of all the bears I read, Eleua was the one who was right for the reason which was closest to being the right analysis. When your choices are up, down or flat, being right picking one of the three isn’t exactly impressive.

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  6. Carl

    In hindsight, Mt. Cragun was wrong on his market calls. I share that in common with him on a variety of stocks and the real estate market as well on more than one occasion. He was perhaps a bit too overzealous and colorful in his calls. Seen more than one salesman in my time do that also. You can’t criticize a spider for killing flies – it’s simply in their nature. So a salesman overpuffing is not shocking.

    He’s moved on – let us as well.

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  7. David Losh

    RE: wreckingbull @ 4

    Because you are not future customers. Ardell does well, and I suspect Ray does well, but most people buying internet hype don’t want to hear anything.

    People commenting on this blog made some of the most outlandish statements as though they were fact when in hind sight there were still bargains in even 2007. It depends on how you do the deal.

    No one wants to hear that. No one wants to hear that in Real Estate you look for deals, not the pink pony of it’s my dream house that I will live in forever.

    Was Cragun an idiot? sure, but fold him in with all the other idiots who make uninformed Real Estate comments.

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  8. wreckingbull

    RE: David Losh @ 7 I have no idea what you just tried to say, so I can’t really respond.

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  9. David Losh

    RE: wreckingbull @ 8

    You’re asking some commentors, I’ll include myself, “Why risk alienating future customers?”

    I’m saying that this is the internet, and there are no future Real Estate cusomers here. This is the place where people tell everybody that they have an opinion of the way things ought to be. These are people who want to express opinions, and find people who will tell them what they want to hear. The people here want to be sold a load of crap.

    In Real Estate a deal is a deal, that doesn’t change. You either know a deal when you see it, or don’t. All the blog reading in the world won’t get you a deal. You need to get up, find some one to help you get a deal, and do the best deal you can.

    The people who are here, on the internet “shopping” for homes, want to be sold. I don’t sell.

    So for me, i’d rather tell you the truth, then cozy up to a bunch of people who have insulted me for, what? seven years?

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  10. ChrisM

    RE: wreckingbull @ 4 – “Why risk alienating future customers? Why risk destroying your reputation?”

    Could it be that many agents don’t have significant business from repeat customers? Could it be that they extract the maximum amount of money from an existing customer and then move on, never expecting to do repeat business?

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  11. David Losh

    RE: ChrisM @ 10

    Oh, brother, yeah, that’s the ticket.

    See, this is what bothers me about this continued back slapping about the bubble. It just created another round of Real Estate experts.

    The Donald seems to be doing well enough to direct Republican politics, so that there bubble thingy didn’t seem to hurt him. Kendra Todd is making another fortune.

    Real Estate agents aren’t blogging. I’m here to build my own internet business, or businesses. When I go to these WordPress development meetings, I’m the only one who can monetize his time on the internet. Real Estate agents? not so much.

    The bubble meant that Real Estate changed. The economy changed. The money is in the financing of ventures, Hey! like a Mitt Romney kind of thing.

    The very fact people are still talking about buying a house for the security shows how gullible the consumers are. Your home purchase is debt. I think a better use of our time would be to discuss how to mitigate the liability of a home purchase.

    We should be looking at the future of the economy, because it has chnaged dramatically from the past.

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  12. Feedback

    Thank you, Tim, for defeating Lar and driving him all the way to Utah! All that you’ve said and done is right.

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  13. corndogs

    RE: wreckingbull @ 4 – Wreckedbung, you’re just as pig-headed as the dumbass realtors you’re criticizing. At the beginning of the year a few of us called the bottom and you were just as outraged and pissy. You said that after the Spring bounce prices would plummet again… you were dead ass wrong…. so what’s your point?… Mr. Wreckedbung… I knew Nostradamus…… Nostradamus was my friend…. you sir are no Nostradamus!

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  14. ARDELL

    RE: ChrisM @ 10

    My first thought was relying on repeat business primarily would not be a good business plan if you work primarily with people buying homes to live in for a long time vs investors who might buy a lot of houses in one year. But I double checked that against my own reality looking at the most recent 24 homes sold and here are the results

    Repeat Clients 10 of 24
    Referred to me by a past client 6 of 24
    New Clients from blog 7 of 24
    New Client from twitter 1 of 24.

    So 16 of 24 or 66% are directly related to past clients and 33% are new from blogging and social media and general internet activities. Comparing that to my earlier career some 20 years ago, online activities have replaced “getting clients at an Open House” since I only do Open Houses to represent my seller client, and not to acquire new clients. I used to get 33% from Open Houses back in 1990 to 2001 or so. In the last decade with buyer representation in play and due to technological advances, the internet buyer has replaced the acquired via an Open House buyer for me personally. Not sure if that is generally true.

    To David @7, and I am pretty sure I have mentioned this to you before, the majority of people who read blogs and hire an agent as a result DO NOT TALK on the blogs. They read them. You are limiting your viewpoint to who you see talking, and the talkers are rarely the people who are doing the hiring as a result of reading what the talkers are saying. Also most of the people who hire me from blogging have been reading me for 2 to 4 years (according to what they say when I meet them) and so new blog posts become less important the longer you are blogging.

    The out of town new clients access me and blogging via google, and so the shelf life of the post is irrelevant as well. Whether or not someone blogs every day or even often is not important to the manner in which people hire agents. What they find via google and their reason to hire can be a post from years ago that causes them to read through a few years of content. Blogging is not a “what have you done lately” proposition once you have established a solid and reliable content base.

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  15. David Losh

    Uh, oh, the comment section went whacky, and for the most part is unreadable.

    I’m going to respond to Ardell on the assumtion you’ll change this to get rid of the social media links.

    At the height of the internet craze of Real Estate sales people hiring agents from the internet was 3%, with an estimate that went up. Even though 90% of the people atart a home search on the internet, they end up hiring feet on the street agents.

    The vast majority of agents who are doing business today are feet on the street, and most have no idea about the internet, or how it works.

    You use the internet, and provide Real Estate information, but you are one person in a sea of Real Estate sales hype that most people have no time for.

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  16. Jonness

    By wreckingbull @ 4:

    My only question is, “Why?” Why risk alienating future customers? Why risk destroying your reputation? I don’t think I will ever understand the way a substantial percentage of RE agents acted during the bubble. I can name ten or so agents that could barely contain their rage at us back in the 2006-2007 time frame.

    Sociopaths and psychopaths are often very intelligent and clever manipulators when attempting to realize short-term gains. However, one of the trademarks of this type of individual is “an inability or persistent failure to develop and execute long-term plans and goals.”

    Not that all enraged agents were sociopaths. Some of them were enraged because of the enormous threat to their livelihood. Unfortunately, many of them attempted to mitigate this risk by acting in their own best interests as opposed to that of their clients’.

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  17. Jonness

    By Corndogs @ 13:

    At the beginning of the year a few of us called the bottom

    Simply jumping on the consensus bandwagon doesn’t make you an accurate predictor of future market trends. And you sir, are no Nostradamus. This economic mess is far from being over.

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  18. wreckingbull

    RE: Corndogs @ 13 – You don’t have a very good memory cornie, as I said no such thing. Seriously, use the googles.

    You seem like the type of guy that would enjoy hanging out with Lucky Lar. You should look him up and hang out. Maybe you both could go grab some Old Country Buffet together.

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  19. corndogs

    RE: Jonness @ 18 – Noooo. the consensus bandwagon on Seattle bubble was that prices weren’t going up…. that’s the wagon you were on and still are on… Prices did go up and you got your pee pee slapped…. despite all your long winded and worthless posts…. you’re kinda like a Losh… that’s not a compliment.

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  20. David Losh

    RE: Corndogs @ 20

    The price of Real Estate went up a whopping 2% along with the false sense of inflation we have.

    It’s just debt with no upside.

    There is no discusssion there. Historically low interest rates with historically low inventory, what could go wrong?

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  21. corndogs

    RE: David Losh @ 21 – Typical retard response…. 2% doesn’t mean anything unless you tell us the time period does it Dufus?…. which time period are you talking? Which geographical region?

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  22. corndogs

    RE: David Losh @ 21 – I won’t have time to abuse you tonite Losh, cuz I’m going out but 2 or 3% growth is all I’m expecting…. so you made my point …. take ‘er easy be-otch.

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  23. David Losh

    RE: Corndogs @ 23RE: Corndogs @ 22

    Yeah, 2% National average, but your expenses went up without a wage increase.

    You also got the abuse part right. Those that have no information to make an argument attempt to bully.

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  24. Chuck Marunde

    Talking heads have been predicting the market bottom for five years. Reminds me of the stock market. Remember in the spring of 2001 when so many Wall Street gurus were predicting the further ascension of the market into the Heavens. The market crashed while they were telling us to invest with them. Larry Cragun came and went. The market has yet to prove we are in recovery, so I’ll work hard and be patient.

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  25. Kary L. Krismer

    By David Losh @ 24:

    Yeah, 2% National average, but your expenses went up without a wage increase.

    In the past I’ve been critical of citing national data for closed and pending sales (particularly the latter) because we don’t necessarily know how that data is compiled. For example, just locally, Tim when reporting our sales figures is still reporting that the methodology changed a few years back, and that the change affects the yearly comparisons. There’s no reason to think similar change don’t occur elsewhere, and no reason to think a pending sale here is ever the same thing as a pending sale elsewhere. It’s basically data without knowing what the underlying units measured are!

    The same thing could be said for looking at national price changes, but there we also have the change of mix issue which makes the data completely irrelevant, unless they also report the percent of short sales, REOs, and how the sales volumes changed around the country from one period to another, and those numbers show no change. Since last year locally we have rising total volume but declining REO volume, and relatively steady short sale volume. That change causes an increase in our median. There could be other areas with declining total volume, increasing REO volume and increasing short sale volume. That would likely cause a decline in their median. Combine their data with our data and the resulting YOY change in median would be a completely pointless piece of information.

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  26. David Losh

    RE: Kary L. Krismer @ 25

    It appears you’ve gone off on multiple tangents.

    The point is that even if prices increase anywhere for any reason we have prices rising with high unemployment and stagnant wages.

    Higher prices are unsustainable without the consumer’s ability to pay, or promise to pay, as the case may be.

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  27. Kary L. Krismer

    By David Losh @ 26:

    The point is that even if prices increase anywhere for any reason we have prices rising with high unemployment and stagnant wages.

    My point was we don’t even know we have rising prices. You’re reading data and not understanding its limitations. The data you’re reading is useless. It should not be cited for anything.

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  28. ARDELL

    Anything within 5% this way or that is flat. So it’s not worth arguing about guys.

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  29. David Losh

    RE: Kary L. Krismer @ 27

    You can, I guess, direct your point to your good buddy corndogs.

    You’ve missed my point completely.

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  30. Azucar

    By David Losh @ 24:

    RE: Corndogs @ 23RE: Corndogs @ 22

    Yeah, 2% National average, but your expenses went up without a wage increase.

    You also got the abuse part right. Those that have no information to make an argument attempt to bully.

    I think you miss the point of people who “buy for the stability of the mortgage payment”. One benefit of purchasing a house with a fixed mortgage rate is that you know what the payments will be for the rest of the time that you choose to live there (and you also know that in 15 or 20 or 30 years, those payments will go way down). I believe you missed this point because of your statement “…your expenses went up without a wage increase”.

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  31. David Losh

    RE: Azucar @ 31

    The point is that the payment is on a 30 year debt. It takes 15 years to begin real amortization of the loan.

    Would you sign a 30 year lease knowing this is the place you have to live because if you move there is a financial penalty?

    That is also to say that we now know that the economy can contract. The illusion that prices go up forever is gone.

    So, I get the point, but it is still debt. You get what you paid for.

    Do you believe that we will recover economically in seven years? I don’t.

    The only way to make this purchase of a home work is to pay it off before the interest payments eat up all of your equity position. That means paying off the loan in seven years.

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  32. corndogs

    RE: David Losh @ 27 – Affordability is at an all time high dummy…. so the consumers have the ability to pay….. and they are…. thus the historic low inventory

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  33. corndogs

    RE: David Losh @ 24 – We’re talking about Seattle knucklehead… and specifically median house prices…… prices are up 15% since February 2012… and not trending back down after the ‘Spring Bump’… there’s about 4 months left till the next Spring Bump starts taking effect… no new shadow inventory in the immediate future, inventories still very low, employment is stable, sales activity is still high. inflation is normal… affordability is still high…

    So, Losh, do you think prices are going to drop back below Feb 2012 levels in the next 4 months before the next Spring Bump? I don’t…. let’s take baby steps… you can commit to little things as we go along here so we can prove you wrong every few months… What’s your answer, yes or no?.

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  34. corndogs

    RE: David Losh @ 32 – “The point is that the payment is on a 30 year debt. It takes 15 years to begin real amortization of the loan”.

    I know this is over your head Losh…. but if you were a smart person, which we know you’re not, but IF… you would print out a few amortization scenarios and see that it DOES NOT take 15 years to begin “real amortization” when the the interest rate is extremely low….. at interest rates of 7% or more your statement becomes more true but at 3.5% interest rate the paydown happens right away and is quite substantial….

    These are the types of things you should understand before you shoot your mouth off… The chances of getting upside down on a house 5 to 10 years down the road is less today than it has been in my lifetime….

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  35. corndogs

    RE: Chuck Marunde @ 25 – It’s easy to act like you’re full of wisdom when you don’t take the chance to express an opinion Jean Luc Picard…. Express an opinion one way or the other or close your pie hole… We’ve got enough old sages of Wisdom here…

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  36. Howard

    Tim, I know that this is your blog and you pretty much allow free speech.

    The school yard talk is getting tiresome.

    Down with internet bullies.

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  37. Azucar

    By David Losh @ 32:

    RE: Azucar @ 31

    The point is that the payment is on a 30 year debt. It takes 15 years to begin real amortization of the loan.

    Would you sign a 30 year lease knowing this is the place you have to live because if you move there is a financial penalty?

    That is also to say that we now know that the economy can contract. The illusion that prices go up forever is gone.

    So, I get the point, but it is still debt. You get what you paid for.

    Do you believe that we will recover economically in seven years? I don’t.

    The only way to make this purchase of a home work is to pay it off before the interest payments eat up all of your equity position. That means paying off the loan in seven years.

    The trouble with all of your assertions about low interest rates just “being a trap” are that you take as a given that housing prices will go down and the person that signed the mortgage will need to move. Also, you always assume the lower interest rate just gives people the ability to take a bigger 30 year mortgage with a given monthly payment. Low interest rates also make it easier for people to take shorter term mortgages (10, 15, 20 years).

    In response to your question, I wouldn’t take a 30 year mortgage on a place because again you neglect one of the benefits of the purchase/mortgage option – the fact that you own the place at the end of the 30 years. With a 30 year lease, you have the same committment but at the end of that 30 years you have nothing, and you’ll have to figure out where to live at the inflation adjusted prices that will be around 30 years from now. I definitely think that monthly rent will be more 30 years from now than it is now… do you disagree with that? If so, can you name a time in the history of the US where inflation over a 30 year period was zero or less than zero? If you’re answer to that is that now is different and you DO know that we won’t have any inflation between now and 30 years from now, that’s a BIG part of the argument which supports what you’re defending (and is a pretty big assumption).

    Also, I don’t understand what your statement about the term of the loan needing to be less than 7 years means… how do interest payments “eat up all of my equity” if someone is paying on a 15 or 20 or even 30 year mortgage? Every month they pay the interest and some principle… in the early years they’re paying mostly interest, but they’re still paying SOME principle. It’s not like the amount owed is getting larger every month (unless you’re talking about negative amortization loans, which we are not). In my opinion, if you can get a loan with an interest rate that is lower than what you can safely make with the money (say, with bonds, CD’s, or a money market fund), you’re better off taking as long to pay the loan off as you can, and bank the money and pay the interest on the loan with the interest you’re making from the investment. I know you can’t get a CD that makes it worth it right now, but I do believe that 5 year CD rates will be higher than 3 percent at some point in the next 5 to 10 years (they were up there about 5 years ago and will go back up if/when inflation makes the government decide it’s time to raise rates).

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  38. Azucar

    By David Losh @ 32:

    RE: Azucar @ 31

    The point is that the payment is on a 30 year debt. It takes 15 years to begin real amortization of the loan.

    Would you sign a 30 year lease knowing this is the place you have to live because if you move there is a financial penalty?

    That is also to say that we now know that the economy can contract. The illusion that prices go up forever is gone.

    So, I get the point, but it is still debt. You get what you paid for.

    Do you believe that we will recover economically in seven years? I don’t.

    The only way to make this purchase of a home work is to pay it off before the interest payments eat up all of your equity position. That means paying off the loan in seven years.

    The trouble with all of your assertions about low interest rates just “being a trap” are that you take as a given that housing prices will go down and the person that signed the mortgage will need to move. Also, you always assume the lower interest rate just gives people the ability to take a bigger 30 year mortgage with a given monthly payment. Low interest rates also make it easier for people to take shorter term mortgages (10, 15, 20 years).

    In response to your question, I wouldn’t take a 30 year mortgage on a place because again you neglect one of the benefits of the purchase/mortgage option – the fact that you own the place at the end of the 30 years. With a 30 year lease, you have the same committment but at the end of that 30 years you have nothing, and you’ll have to figure out where to live at the inflation adjusted prices that will be around 30 years from now. I definitely think that monthly rent will be more 30 years from now than it is now… do you disagree with that? If so, can you name a time in the history of the US where inflation over a 30 year period was zero or less than zero? If you’re answer to that is that now is different and you DO know that we won’t have any inflation between now and 30 years from now, that’s a BIG part of the argument which supports what you’re defending (and is a pretty big assumption).

    Also, I don’t understand what your statement about the term of the loan needing to be less than 7 years means… how do interest payments “eat up all of my equity” if someone is paying on a 15 or 20 or even 30 year mortgage? Every month they pay the interest and some principle… in the early years they’re paying mostly interest, but they’re still paying SOME principle. It’s not like the amount owed is getting larger every month (unless you’re talking about negative amortization loans, which we are not). In my opinion, if you can get a loan with an interest rate that is lower than what you can safely make with the money (say, with bonds, CD’s, or a money market fund), you’re better off taking as long to pay the loan off as you can, and bank the money and pay the interest on the loan with the interest you’re making from the investment. I know you can’t get a CD that makes it worth it right now, but I do believe that 5 year CD rates will be higher than 3 percent at some point in the next 5 to 10 years (they were up there about 5 years ago and will go back up if/when inflation makes the government decide it’s time to raise rates).

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  39. Kary L. Krismer

    By ARDELL @ 29:

    Anything within 5% this way or that is flat. So it’s not worth arguing about guys.

    It could be even a wider margin than that which is flat. Locally we had almost certainly had more than a 5% move that could be attributed to the change in the mix. If you went national it could be over 10% and still be flat. There’s no way of knowing.

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  40. Kary L. Krismer

    By Corndogs @ 34:

    RE: David Losh @ 24 – We’re talking about Seattle knucklehead… and specifically median house prices…… prices are up 15% since February 2012…

    Largely because of a change in mix–fewer REOs as an absolute number and a percentage, and fewer short sales as a percentage. That causes the median to rise without any increase in the value of houses overall.

    That’s what I was talking about with the national numbers. We had that type of movement here, and we can discuss it. But we don’t know what’s going on in each local market in the U.S., or even the percentage of sales which come from each market. National data is largely a waste of ink/pixels.

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  41. Kary L. Krismer

    RE: Azucar @ 38 – You could also pay a 30 year with 15 year payments, or make an extra payment every so often in the early years. When I bought my truck I got a 5 year loan but paid it off in about 30 months. I was never planning on going 5 years making payments.

    I would also again note that having a low interest FHA loan could be a benefit if interest rates rise, because they are assumable loans. And if interest rates rise by a very significant amount, that would likely mean inflation, which again would mean it would be good to have debt.

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  42. David Losh

    RE: Corndogs @ 34

    15%? Really?

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  43. Kary L. Krismer

    By David Losh @ 43:

    RE: Corndogs @ 34

    15%? Really?

    Wow. You have been here making all the claims you make about what you know about real estate, and you don’t even follow the market? More specifically, we had those prior discussions about how short sales and REOs affected the median, and you don’t even know what’s been happening with the median?

    The median in February was $308,000 (King County SFR)
    The median in September was $375,000 (King County SFR).

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  44. David Losh

    RE: Azucar @ 39

    The problem is the term inflation.

    These historically low interest rates apply across the board. What some people, myself icluded, think is that speculators borrow money to buy up commodities, like oil, for sale at future profits. You could say it’s the same for Real Estate, but it’s not. Real Estate is a long term, very long term, hold.

    The part about speculation is an in, and out thing. You buy, and sell for a profit. You could do that with Real Estate, but it is getting harder to do.

    At some point you have to address the consumers over all debt level. There is a point where the consumer, can not, or will not be able to pay, or promise to pay on more debt. These low interest rates then become that trap to add more, and more debt.

    You individually may feel good about the home purchase, but you also have to include an exit strategy. So what if you own the home? There are millions of homes, millions more are being built. How many homes will there be in thirty years?

    On the other hand I do think prices will come down. I think we are a long ways from equilibrium, and that the consumer should be prepared for that, because I don’t see the currency being devalued, for the United States, any time soon. Consumers should be much more interested in getting rid of debt than taking more on.

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  45. David Losh

    RE: Kary L. Krismer @ 44

    Funny. Yeah the median is a great indicator. I did notice my house went up in value, maybe I can take that to the bank?

    Seriously, if you are talking about people dumping property, that is exactly what they should do.

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  46. Kary L. Krismer

    By David Losh @ 46:

    RE: Kary L. Krismer @ 44

    Funny. Yeah the median is a great indicator. I did notice my house went up in value, maybe I can take that to the bank?.

    My point here has been the median is not a great indicator. I was dealing with that on your national data by pointing out its defects on a local level. But what’s interesting is you seemingly didn’t know what was happening with the local median, despite Tim reporting it here every month.

    BTW, I have an alternative service which compiles NWMLS data, and they indicate that in February the non-distressed King County SFR median was $382,000, and that it was $418,000 in September. Even with that number though there can be a change in mix, primarily different areas selling more.

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  47. David Losh

    RE: Kary L. Krismer @ 47

    so you don’t have a point, because even if the median, or national, or any indicator says we have double digit appreciation, we had that before, in 2007, about the time Larry was advocating buying Real Estate.

    My point is that we just had a period where Real Estate prices collapsed. So it looks to me that looking at sales data isn’t the best indicator of what the trend will be.

    It seems to me that this is one of those times we need to look at the over all economy rather than what some idiot paid for a property last week, or last month, or last year.

    If we keep looking at sales data we are the same as our very good buddy Larry Cragun here.

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  48. corndogs

    RE: David Losh @ 46 – You won’t be able to take that to the bank because your house is a dump and you haven’t kept up the maintenance. If your house was in top condition, then yes you could take it to the bank….

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  49. corndogs

    RE: David Losh @ 43 – actually 17.8%..

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  50. corndogs

    RE: Kary L. Krismer @ 41 – Yes, I’m aware of the mix issue, and yes I know you were one of the first to bring it up… and yes, I realize Tim’s median price charts mislead a lot of people on here to think prices were plummeting… we can still use the charts as long as we are knowledgeable regarding the factor that affect it..

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  51. corndogs

    RE: David Losh @ 48 – “My point is that we just had a period where Real Estate prices collapsed. So it looks to me that looking at sales data isn’t the best indicator of what the trend will be.

    It seems to me that this is one of those times we need to look at the over all economy rather than what some idiot paid for a property last week, or last month, or last year.”

    You should move to Hoquiam or Aberdeen where the housing market is more inline with your opinions and the median income is closer to your own.

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  52. Kary L. Krismer

    By corndogs @ 51:

    RE: Kary L. Krismer @ 41 – Yes, I’m aware of the mix issue, and yes I know you were one of the first to bring it up… and yes, I realize Tim’s median price charts mislead a lot of people on here to think prices were plummeting… we can still use the charts as long as we are knowledgeable regarding the factor that affect it..

    Correct, the mix affecting the median works both ways. Some here (not you) were unwilling to accept the concept of mix affecting median, until the change started the median going up! ;-)

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  53. corndogs

    RE: Kary L. Krismer @ 47 – “BTW, I have an alternative service which compiles NWMLS data, and they indicate that in February the non-distressed King County SFR median was $382,000, and that it was $418,000 in September. Even with that number though there can be a change in mix, primarily different areas selling more”.

    The houses for sale in Seattle built in 2012 are about 500 sq ft smaller on average, than the ones built 2000-2005. In Gig Harbor we have tracts of very small new houses that are selling very well…. the trend to go smaller will also affect the mix….

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  54. David Losh

    RE: corndogs @ 54

    Here is a fact of life; the Real Estate market was never allowed to fully correct, and we now have banks that are too big to fail.

    Well banks will need to fail in order to correct the over all economy.

    Propping up banks was a bad idea, and you should be watching Europe rather than Gig Harbor.

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  55. corndogs

    RE: David Losh @ 55 – “Well banks will need to fail in order to correct the over all economy”.

    Please elaborate as to how that improves the economy.

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  56. David Losh

    RE: corndogs @ 56

    This is like 2006, 2007 all over again.

    You say the price of property has risen 17%, I say the bank loan has gone up 17%.

    Banks are only one segment of the economy. The economy can, and has, functioned on cash.

    The housing market is now based on how much a bank will lend on a property rather than how much some one is willing to pay.

    People are already struggling with the 20% down payment. How would the market be if it were based on cash pricing?

    The housing market has always been closer to cash pricing than it is today.

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  57. Kary L. Krismer

    By David Losh @ 57:

    You say the price of property has risen 17%, I say the bank loan has gone up 17%. .

    The median has gone up 17%. That’s not the price or value of property going up by that amount.

    If you look at the data I put in post 47 it’s under 10%, but even that isn’t the price or value going up by that amount. It does not mean that if you bought two similar houses in Ballard in February and September that you would have had to have paid almost 10% more in September. It might be more or less depending on the type of house, and it might be more or less depending on price level (Ballard isn’t really what I think of when I think of median priced houses.)

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  58. corndogs

    RE: David Losh @ 57 – so when things were cash 100 yearss ago people were living in shacks… people are still paying cash for shacks… I got a couple myself…. there never was and never will be society where people buy 2700 sq ft luxury homes for cash… outside of the puget sound job center houses are selling for close to build cost… as long as there is growth in this area that will be about the bottom line…. Aberdeen where there is no growth… yeah… it can drop to zero…. not gonna happen here in seattle.

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  59. David Losh

    RE: corndogs @ 59RE: Kary L. Krismer @ 58

    Real Estate changed in 1998, and in 1998 I could buy a house for cash. It was by North Seattle Community College, and less than $100K. Come to think of it I could buy that little house in Greenwood for cash, for $100K.

    Here’s a Zillow chart for you that shows where price compared to income is in 2011: http://www.zillow.com/blog/research/2011/08/17/what-goes-up-must-come-down-comparing-price-to-income-ratios-across-markets/ but the spike still needs to be corrected for.

    That is about a ten year period of home prices that far exceed incomes.

    Banks will need to figure out how to get an equilibrium from those loans, or people will simply default. Why wouldn’t they?

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  60. Azucar

    RE: Azucar @ 38

    I just re-read my diatribe, and noticed I misspoke… “In response to your question, I wouldn’t take a 30 year mortgage on a place because again you neglect one of the benefits of the purchase/mortgage option – the fact that you own the place at the end of the 30 years. ” should have really been “In response to your question, I wouldn’t take a 30 year LEASE on a place…”

    I WOULD take a 30 year mortgage on a place because, as Kary points out, you can always make extra or larger payments in the early years to effectively turn it into a 15 year mortgage. It also gives the flexibility of making the smaller payment if circumstances dictate. And, if it’s an assumable mortgage, if overall rates go up then a longer term mortgage is more beneficial (i.e. if I can keep the extra payments and make 5 percent on that money in a risk free CD instead of paying off a 3.5% mortgage early, it’s better to have a longer term mortgage).

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  61. David Losh

    RE: Azucar @ 61

    That thinking is more than ten years old. Ten, or fifteen years ago that may have been constructive thinking, but today there are sever economic factors that make paying off a property a risky venture.

    So what if you own a house? Housing is getting to be a dime a dozen.

    We have so much disposable housing today that we can’t unload it fast enough.

    It’s kind of like a car. So what if your Hyundai is paid off, or even your Chevy Malibu, unless it’s a classic some one would pay cash for?

    In thirty years having a house will be like owning a boat. It’s a money pit you pay for time, and time again.

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  62. Buy My House, Idiot Renters!

    Don’t forget, the sixth anniversary of Sarah McCormic’s opus is coming up!

    “But with friends who have not yet “squeezed in” to the housing market, I am reminded of how I felt when I got accepted by my first choice for college and my best friend got nothing but rejections. What do you say to each other? I try to offer soothing assurances: “I hear there are still some great deals up north.” “600 square feet is plenty of room!”

    But no matter what I say, I know we all feel like they have probably missed their chance, like they didn’t buy their ticket on the last spaceship flight off a planet that’s about to explode. I fear they’re doomed to move back to Missouri in order to afford more than a studio condo on the fringes of the city.”

    http://www.seattlepi.com/local/opinion/article/Home-ownership-delineates-today-s-economic-divide-1217673.php

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  63. Azucar

    Oops bad edit… I’ll retry!

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  64. Azucar

    RE: David Losh @ 62

    “It’s kind of like a car. So what if your Hyundai is paid off, or even your Chevy Malibu, unless it’s a classic some one would pay cash for? ”

    Uh, because I can drive it every day to do the things that I bought it to do… just like if I bought a house to live in, I’d live in it?

    I’ve never leased a car and I don’t plan to. Since I do feel a need to use one pretty much every day, though, I have bought one. For the most part, cars that I’ve bought I generally hang on to for long enough so they end up being less expensive overall than a lease would have been. When deciding whether or not to buy a house, the overall cost of purchase vs. renting needs to be compared (including the fact that purchasing ends in outright ownership, while leasing ends in lack of ownership at the end of the term). As do the other factors, such as the stability of owning a place, the freedom to modfify that comes with owning, the lack of freedom to easily move, the long term committment, the tax benefits, and many other things.

    On your boat tangent…

    I don’t “need” a boat very often, and in 30 years I still probably won’t “need” a boat. As such, I don’t own one (other than a canoe that I’ve had for so long that I don’t remember how much I paid for it… but I do remember that it wasn’t much). The times that I feel I do “need” a boat (like a houseboat or a ski boat for a vacation at a lake), I’ll rent one. If that ever becomes frequent enough that it is more expensive… or roughly the same expense as but with less convenience than… purchasing and maintaining one, I’ll consider buying one. However, I DO need someplace to live, so I don’t really see where you’re coming from with the comparison of houses to boats. Other than a few very well maintained classsic boats, they are almost always a depreciating asset with a fixed life. I would venture to guess that the majority of boats that were built in the 70′s and 80′s are either out of service or worth only a tiny fraction of what they cost when new.. like on the order of 10 percent of their purchase price. On the other hand, the vast majority of houses built 30 years ago can be sold for more now than they cost when they were built. My bet is that a house will not depreciate as much as a typical boat over the coming 30 years… do you disagree with that? If so, please confirm that you’re saying that you think that a house that is bought now for say 500,000 (2012 dollars) will be worth roughly 50,000 (2042 dollars) in 2042. If you really think that, then I can see where you’re coming from with your recommendations and predictions… but that kind of projection is pretty drastic in my opinion.

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  65. Kary L. Krismer

    By Azucar @ 61:

    And, if it’s an assumable mortgage, if overall rates go up then a longer term mortgage is more beneficial (i.e. if I can keep the extra payments and make 5 percent on that money in a risk free CD instead of paying off a 3.5% mortgage early, it’s better to have a longer term mortgage).

    The real benefit of an assumable loan is you will likely get more for your property when you sell, and your house will be easier to sell–if interest rates rise significantly. I wrote a blog piece on that back when 5% interest seemed low.

    http://blog.seattlepi.com/realestate/2010/06/02/should-a-buyer-with-20-down-get-an-fha-loan/

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  66. Kary L. Krismer

    By David Losh @ 62:

    <So what if you own a house? Housing is getting to be a dime a dozen..

    Which is it? Are prices rising at 2% a year as you claimed earlier, or plummeting to nearly nothing, as you claimed here.

    If you want to make compelling arguments you have to stick to one scenario as to what you think is happening.

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  67. Kary L. Krismer

    By David Losh @ 62:

    It’s kind of like a car. So what if your Hyundai is paid off, or even your Chevy Malibu, unless it’s a classic some one would pay cash for? .

    I’ve explained this to you before. Vehicles are productive assets. If you have a paid off car it is essentially earning you money, assuming you need to use a car. At that point what it’s costs each year is depreciation, maintenance and insurance. If the value of the use of the car is greater than that, than the car is valuable to you. If it just sits in your garage but for a few days a month, then you’re out depreciation and insurance.

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  68. David Losh

    RE: Azucar @ 65

    My best examples are South Everett, Ballard, and Fremont. Thousands of housing units have been built, kind of like in Nevada, and Arizona. The cost of construction is one thing people point to as way the price of the property has to remain high, but in another ten years those properties will be worth less.

    We have the ability through land use, and building code to build higher density. In many cases what we build is better, and cheaper than renovating some of those classic homes.

    As neighborhoods fill in with new construction those classic homes will lose the allure they once had.

    The economy has changed since Larry Cragun. We aren’t going back to normal. If we ignore the fact that banks have over lent on millions of properties, or that personal debt has eaten up most of our discretionary spending dollars, the fact remains housing units have become more disposable.

    Codes have changed the way our neighborhoods handle density. You can move further out, but our job centers have shrunk. The economy has changed.

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  69. Kary L. Krismer

    By David Losh @ 69:

    The cost of construction is one thing people point to as way the price of the property has to remain high, but in another ten years those properties will be worth less..

    David, you don’t even know how to value properties today. But despite that you think you know what values in Ballard will be ten years out? You’re just pulling facts out of your ass now.

    I can hardly wait until tomorrow when you say prices in Ballard will rise 2% a year for the next ten years. /sarc

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  70. David Losh

    RE: Kary L. Krismer @ 70

    The 2% comment was in response to your friend corndogs, but you know that.

    I do know the future value of Ballard, Fremont, and South Everett. You don’t seem to care about the value of property as long as you can point to sales data to make your sale.

    It’s Larry Cragun all over again: don’t pay attention to broader market forces, just buy something.

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  71. Kary L. Krismer

    By David Losh @ 71:

    I do know the future value of Ballard, Fremont, and South Everett. You don’t seem to care about the value of property as long as you can point to sales data to make your sale. .

    David, you don’t understand squat, but the last thing you understand is what I do. I understand sales data. You don’t. You’ve demonstrated that repeatedly here. They’re just meaningless numbers to you.

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  72. David Losh

    RE: Kary L. Krismer @ 72

    I do understand you are new to the Real Estate business and are attempting to make sales. That is as far as you have explored this business.

    Current sales data is what showed Larry Cragun that in his day it was a great time to buy.

    Remember, Real Estate always goes up, except that isn’t what sales dtata shows us any more.

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  73. Azucar

    By David Losh @ 69:

    RE: Azucar @ 65

    My best examples are South Everett, Ballard, and Fremont. Thousands of housing units have been built, kind of like in Nevada, and Arizona. The cost of construction is one thing people point to as way the price of the property has to remain high, but in another ten years those properties will be worth less.

    We have the ability through land use, and building code to build higher density. In many cases what we build is better, and cheaper than renovating some of those classic homes.

    As neighborhoods fill in with new construction those classic homes will lose the allure they once had.

    The economy has changed since Larry Cragun. We aren’t going back to normal. If we ignore the fact that banks have over lent on millions of properties, or that personal debt has eaten up most of our discretionary spending dollars, the fact remains housing units have become more disposable.

    Codes have changed the way our neighborhoods handle density. You can move further out, but our job centers have shrunk. The economy has changed.

    I don’t see a lot of new construction of single family homes in Ballard/Fremont. Maybe there’s some in south Everett, but I don’t really want to live there. Maybe codes will allow higher density and more condo’s, but it won’t increase the supply of single family homes in “close in” neighborhoods where I’d want to buy one. What makes you think that there’s an oversupply of homes in and coming into the market over the next 10 years? The currently available inventory out there does not support that theory.

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  74. David Losh

    RE: Azucar @ 74

    The value of speculation is predicting the future. Well to be more precise it’s to know the future. In housing which has a seven-year cycle we should be able to see the future clearly.

    There are prime neighborhoods that will hold value. They may never see the amount of appreciation they had in the past fourteen years, but they will hold value.

    Ballard, and Fremont, on the other hand, or places like South Lake Union will have more, and more apartments. They will cater to a more transitory work force. Loyal Heights may hold value, but it will cost you to maintain it.

    I don’t see the nest egg in the family home that I used to. It seems far fetched that a cracker box North of Ballard that sells for $450K will be worth $600K seven years from now.

    If you aren’t getting appreciation then you should be making choices in how to invest, or how to get to your property paid off, quickly.

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  75. Jonness

    By Corndogs @ 20:

    RE: Jonness @ 18 – Noooo. the consensus bandwagon on Seattle bubble was that prices weren’t going up…. that’s the wagon you were on and still are on… Prices did go up and you got your pee pee slapped…. despite all your long winded and worthless posts…. you’re kinda like a Losh… that’s not a compliment.

    During the “tax credit” era, the government and Fed stimulated the economy causing house prices to temporarily go up. During that period, you claimed we hit the bottom and went on a tear insulting anybody who disagreed with your incorrect mainstream consensus opinion. But your euphoria was temporary, as as soon as the tax credit (sugar) expired, prices once again turned down.

    So here we are in 2012 with $1 trillion+ in Fiscal support, 1 $trillion in magic Fed money, printed out of thin air, while shadow inventory continues to hide behind the curtains. Peak selling season comes along, and like clockwork, you once again jump on the mainstream consensus bandwagon and claim we are at the bottom.

    Meanwhile Bernanke is purchasing 100% of the mortgage backed securities out there and has become the world’s largest holder of U.S. treasuries (printing money out of thin air). The government and Fed represent 100% of the housing market, interest rates are in the sewer, and GDP is growing at 1.3%. Given U.S. population growth equates to 1% of that figure, the $2 trillion/yr in government sugar is holding up an economy with a 0.3% growth rate. And here you are claiming everything has healed, and we are back in Wonderland. Yet, private sector lending is nowhere to be found.

    In truth, the above conditions are exactly what a massive and unprecedented liquidity trap looks like. In such conditions, it’s impossible to pull the sugar out of the economy, because doing so would cause a world-wide depression. So we continue to kick the can and borrow and print this once great nation into oblivion. Meanwhile, you continue to fall victim to the media and perpetuate the nightmare by voting for who you are told to vote for and chastising anybody who doesn’t believe the mainstream media-fueled economic consensus.

    Time will sort out who is right and who is wrong, just as it did in 2007, 2008, 2009, 2010, and 2011. So far you are batting 0 for 5, and I am batting 5 out of 5. Your strategy is, if you call the bottom enough times in a row, you will eventually be correct. Unfortunately, even if you are finally right (which you are not), that would only make you 1 out of 6.

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  76. Azucar

    By David Losh @ 75:

    RE: Azucar @ 74

    The value of speculation is predicting the future. Well to be more precise it’s to know the future. In housing which has a seven-year cycle we should be able to see the future clearly.

    There are prime neighborhoods that will hold value. They may never see the amount of appreciation they had in the past fourteen years, but they will hold value.

    Ballard, and Fremont, on the other hand, or places like South Lake Union will have more, and more apartments. They will cater to a more transitory work force. Loyal Heights may hold value, but it will cost you to maintain it.

    I don’t see the nest egg in the family home that I used to. It seems far fetched that a cracker box North of Ballard that sells for $450K will be worth $600K seven years from now.

    If you aren’t getting appreciation then you should be making choices in how to invest, or how to get to your property paid off, quickly.

    So you’re saying that it’s a bad idea to buy a house unless you expect appreciation of over 4% per year (appreciation of a 450K cracker box to 600K in 7 years)? Even if when you can get a mortgage for under 4% per year? Appreciation at that level would make buying a house a no brainer… the person would get to live in a place for the 7 years and only pay the transaction costs. You completely neglect the fact that the person would otherwise be paying rent to live somewhere. The fact that the housing purchase also provides the purchaser with a place to live… thus saving them monthly rent payments… needs to be a part of the decision of whether renting or buying is a better deal. The fact that you totally leave that out of your “analysis” by saying that you shouldn’t buy unless you expect appreciation to be higher than the mortgage rate shows how skewed your analysis is.

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  77. David Losh

    RE: Azucar @ 77

    No, I expect to take a loss on my home. It would be smarter for me to invest my money elsewhere.

    The family home is a luxury we provide our children.

    In the past there was money to be made in both amortization, and appreciation of the home while you lived there.

    Housing units have lost the investment quality they once had.

    I just don’t see people paying more, and more for a place to live, or more, and more for rents. I think people will get smarter, work more, save more, and stop adding debt.

    I would encourage people to buy a home. It’s a great thing to have for the security of your children, or your business.

    What I object to is this constant rehash of the investment aspects. It doesn’t pencil, and hasn’t for a decade. It’s pure rationalization for a family decision.

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  78. David Losh

    RE: Jonness @ 76

    The bottom calling only has to stretch out the housing market long enough for pricing to catch up to the inflation we see in all goods, and services. If the price of everything rises enough then the high price of housing doesn’t look so bad.

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  79. Kary L. Krismer

    By David Losh @ 73:

    RE: Kary L. Krismer @ 72
    I do understand you are new to the Real Estate business and are attempting to make sales. That is as far as you have explored this business.

    David, you don’t understand squat about me or the world around you. And BTW, I know you were a failure as a real estate agent. No big surprise there. An agent who can’t understand even basic real estate data or have any abillity to value properties isn’t likely to be very successful, now are they?

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  80. Kary L. Krismer

    By David Losh @ 75:

    RE: Azucar @ 74 – In housing which has a seven-year cycle we should be able to see the future clearly. .

    That’s almost as useful as saying Seattle is 18 months behind San Diego.

    http://seattlebubble.com/blog/wp-content/uploads/2008/02/kc-home-prices_1946-2007-tn.png

    Except for possibly 68-75, I’m not seeing any seven year cycle. Where do you get your information?

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  81. David Losh

    RE: Kary L. Krismer @ 81RE: Kary L. Krismer @ 80

    You are a funny guy.

    I am a lousy Real Estate agent. I’ve said that repeatedly. Listening to people tell me theories about how the Real Estate business ought to be is a waste of my time. There is no money in it.

    Does any of that sound familiar to you?

    You just posted an incomplete graph, I don’t know why, the graph just shows the tip of a housing price decline from 2005? 2006?

    This is your source of information to prove what?

    Insult the next guy, because you have nothing to say to me. You are here all day every day making the same random comments about your opinions. I also have opinions, and my opinions, are better than yours.

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  82. Kary L. Krismer

    By David Losh @ 82:

    You just posted an incomplete graph, I don’t know why, the graph just shows the tip of a housing price decline from 2005? 2006?

    This is your source of information to prove what?

    You’re the one who said real estate goes in 7 year cycles. That graph covers the period 1945 to 2007, or over almost 8 periods of 7 years. There is no apparent 7 year cycle pattern present in the data.

    You’re right the graph is stale, but the peak was in 2007 and this is 2012. That is 5 years. So updating the graph would not prove your point about 7 year cycles.

    So I’ll ask again, why do you think real estate moves in 7 year cycles?

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  83. David Losh

    RE: Kary L. Krismer @ 83

    Posting a graph that has nothing to do with anything, then seizing on a point doesn’t give you any credibility.

    Google seven year cycle of real estate, this one is up first:
    http://www.pdx.edu/sites/www.pdx.edu.realestate/files/02%20Lee%20Quarterly%20201105.pdf

    If you really need to you could say it’s a ten year cycle, but the pdf covers it well.

    However the crash of 2007 destroyed the tried and true, but we did recover. That risk is what gives me a sever pause in recommending Real Estate as an investment.

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  84. Kary L. Krismer

    By David Losh @ 84:

    RE: Kary L. Krismer @ 83
    Posting a graph that has nothing to do with anything, then seizing on a point doesn’t give you any credibility.

    Google seven year cycle of real estate, this one is up first:
    http://www.pdx.edu/sites/www.pdx.edu.realestate/files/02%20Lee%20Quarterly%20201105.pdf

    ROTFLMAO. Facts don’t give rise to credibility. Having Google return some search results does!

    David, you made up a claim trying to prove a point. The claim was false. Seattle went something like 20 years in a row without the year end median being lower than the prior year (I’d have to look up the exact time). Your 7 year claim is completely fictitious and yet another fact just pulled out of your ass to make a claim.

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  85. David Losh

    RE: Kary L. Krismer @ 85

    Learn a little bit about your business, and then get back to me.

    You have nothing here to discuss. You pulled up another chart that I have posted a hundred times to show the run up in prices.

    You did squat the same as you always do.

    You got caught again, and are now complaining. It’s the same as always. Move it along to your next victim, I’m not it.

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  86. corndogs

    RE: Jonness @ 76 – “Time will sort out who is right and who is wrong, just as it did in 2007, 2008, 2009, 2010, and 2011. So far you are batting 0 for 5, and I am batting 5 out of 5. Your strategy is, if you call the bottom enough times in a row, you will eventually be correct. Unfortunately, even if you are finally right (which you are not), that would only make you 1 out of 6.”

    I’ve called the bottom once…. Feb 2012. Bought Feb 2012… 1st purchase since 2003. I put the money where the mouth is. I am 1 for 1.

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  87. Notorious ART

    Tim, one of my favorites – Big Lar. HAHAHAHA. What a joke. I remember Lar and MAC daddy laughing at that stupid rap about bubble head scrubs. Who is the scrub now? Big Lar was blinded like so many of the greater fools. Given hindsight – why didn’t more people listen to us scrubs? I bet more people wish they did!

    Hopefully, Big Lar has learned that bubbles always burst. And, that bubbles have been happening over and over for many generations. Same story different asset class – See Extraordinary Popular Delusions by Mackey. Perhaps, Big Lar learning a lesson is wishful thinking on my part since people like him never learn from history, they simply say it’s different this time……

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