Posted by: 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.

41 responses to “Reporting Roundup: Seller’s Market Edition”

  1. Marc

    “Nothing like “just a good feeling” to drive the market. Or something.”

    Animal spirits Tim. It’s gotta start somewhere.

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  2. Lo Ball Jones

    With all this “rising frustration” are there any people, couples, families that have simply picked up and left saying “the homes in Seattle are priced double the national average, it rains all the time and unemployment rate is going down in places like Michigan, which also have coffee houses”.

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  3. Howard

    By Lo Ball Jones @ 2:

    With all this “rising frustration” are there any people, couples, families that have simply picked up and left saying “the homes in Seattle are priced double the national average, it rains all the time and unemployment rate is going down in places like Michigan, which also have coffee houses”.

    Probably not. The exact same position I have now working for a government agency here in Seattle pays HALF as much working for the State of Michigan. My wife would make 1/3 less working as a teacher. My benefits are FAR better here as well.

    Schools are better here and the future opportunities for my kids are better here as well.

    The rains sucks, The lack of sunshine sucks. And the housing market (as a buyer) sucks right now. Ask me in July/August when I spend almost every weekend in the San Juans, and I will say the weather is GREAT!

    Other than that, it sis well. I am glad we moved here!~

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  4. Benjamin Lukoff

    The Herald just got sold to Black Press/Sound Publishing (which just bought the Seattle Weekly), so they probably have other things on their mind this week, unfortuately…

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  5. Lo Ball Jones

    RE: Howard @ 3

    Yeah I was reading the GS federal pay scale and within each level they have grades that adjust to the area the person in which the person works.

    Which sort of makes sense, but at the same time, it is kind of a self fulfilling economy. Why should the taxpayer have to spend more for the same job in one city than it does in another?

    Then too with all the Government workers you’re establishing a command economy that affects and maintains housing prices. Not trying to break your rice bowl, but just something I wondered about…

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  6. Ira Sacharoff

    By Benjamin Lukoff @ 4:

    The Herald just got sold to Black Press/Sound Publishing (which just bought the Seattle Weekly), so they probably have other things on their mind this week, unfortuately…

    The Herald was a good newspaper for a long time. But being sold by the Washington Post to the people who publish The Little Nickel can’t be a good sign.

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  7. Blurtman

    Strolling around the neighborhood, in particular the seemingly booming Greenbriar (anything but) Estates in Sammamish, listening to the sound of hammers on wood, one could imagine that good times have returned again. Avast! The distant narwhal! Can it be?

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  8. McGrath

    The Tim: “While it’s become a fairly lousy time to try to buy a home, it is currently a pretty great time to sell. We haven’t seen a market with supply and demand this skewed toward sellers in a long time, if ever, and it won’t last forever.”

    Certainly this seems true in Seattle and pockets of King County, but would you say the same for outlying areas like Vashon Island or Kitsap?

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  9. Howard

    By Lo Ball Jones @ 5:

    RE: Howard @ 3

    Yeah I was reading the GS federal pay scale and within each level they have grades that adjust to the area the person in which the person works.

    Which sort of makes sense, but at the same time, it is kind of a self fulfilling economy. Why should the taxpayer have to spend more for the same job in one city than it does in another?

    Then too with all the Government workers you’re establishing a command economy that affects and maintains housing prices. Not trying to break your rice bowl, but just something I wondered about…

    Not hurting my feelings at all.. I figure if you can’t beat em’ join em!

    My job pays (Exact same responsibilities and SAME equipment to be maintained)
    State of Wyoming $34k annual
    State of Colorado $58k
    State of Michigan $42k
    San Mateo County CA $95k-105K
    Washington State $60k
    King County $68k
    New York City $60k
    State of Connecticut $60k
    Fairfax County VA $55k
    City of Seattle $90k
    Western Area Power Authority (Federal Agency) $85k

    Some of those are “exempt” and some are not. The pay does not necessarily reflect the cost of living (NYC?!) This is not taking into consideration benefits as well. The job in Colorado has crappy health insurance and a fair pension plan. The job working for King County has a great pension, take home vehicle, and as much overtime as you can stand.

    My wife is paid 75% more here as a school teacher than she was in Colorado.

    As this relates to real estate prices… I think a 1960s split level for $400k+ on the east side is silly stupid. It is a desirable place to live for a lot of people. I take the 545 bus. The commute to downtown is less than 30 minutes by bus with no one being on 520 any more with the tolls. I figure I save at least $5k a year by taking the bus, and my employer pays for the pass. My health insurance is valued at over $16k a year. 50% of my income after 25 years.

    There are silly inefficiencies in government. But I have seen the same crap in private industry as well. I truly like what I do for work. I just figured out that I was going to maximize my results by picking and choosing where to work.

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  10. whatsmyname

    While it’s become a fairly lousy time to try to buy a home, it is currently a pretty great time to sell.

    Maybe. I’ll bet next year will be better. I mean, you know, if you like money.

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  11. ARDELL

    RE: Lo Ball Jones @ 2

    I’ll take 48 degrees and “spritzy” over 25 degrees and snow and ice driving any day.

    People forget when it is in the mid to high 40’s and raining here that is so much better than freezing temperatures elsewhere. I hate the cold and it’s rarely ever cold here.

    You couldn’t pay me to live in Michigan.

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  12. ARDELL

    Someone at Home Depot told me the other day that WA has the highest minimum wage in the Country and that translates to higher wages overall for Home Depot employees. She said she makes much more than minimum wage, but based on the pay scale differences she would lose 40% of her salary if she transferred to a Home Depot, same job same Company, in another State with a lower cost of living.

    http://www.ncsl.org/issues-research/labor/state-minimum-wage-chart.aspx

    I was surprised WA’s minimum wage was so much higher than every other State including California.

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  13. Ira Sacharoff

    RE: ARDELL @ 12
    It was a result of a voter initiative, which also spelled out that the minimum wage would rise with inflation. It’s also the reason that some waitstaff in restaurants do really well(minimum wage plus tips).

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  14. Jonness

    RE: McGrath @ 8 – One of my homes is in South Kitsap, the price has dropped like a rock, and I’m not sure there is an end in sight. In my opinion the outlying areas are still bleeding their guts out.

    The inner areas lead the trend. The outlying areas will only be able to catch up if Bernanke can continue to print and and Obama can continue to borrow. Otherwise the entire house of cards will collapse. That being said, both of the crooks are heII bent on continuing to print and spend our way to inflation. Whether it works or not is another story, but they will give it 100% effort. In the meantime we are still in Japan.

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  15. Kary L. Krismer

    By Lo Ball Jones @ 5:

    Which sort of makes sense, but at the same time, it is kind of a self fulfilling economy. Why should the taxpayer have to spend more for the same job in one city than it does in another? …

    It’s supply and demand. For the government to get qualified people they need to offer more in areas where wages are higher.

    That doesn’t mean though that they are not paying more than they need to, or getting the quality employees that they should be at the prices paid. We are, after all, talking about government.

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  16. softwarengineer

    RE: Howard @ 3

    I Do Agree With You Howard

    Thank God you’ve got a two income family, many single income families in Seattle have given up looking for work [BTW, the 14% BLS U6 unemployment is double the U3 unemployment you reference as rosy for Seattle; it includes severely underemployed, but not giveups], they are gladly moving out of our shrinking “Total Labor Force” Seattle area to North Dakota for oil boom jobs BTW….

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  17. softwarengineer

    RE: Howard @ 9

    Thankyou

    Some bloggers wildly shoot from the hips, you provide evidence and references for your facts.

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  18. Howard

    By softwarengineer @ 16:

    RE: Howard @ 3

    I Do Agree With You Howard

    Thank God you’ve got a two income family, many single income families in Seattle have given up looking for work [BTW, the 14% BLS U6 unemployment is double the U3 unemployment you reference as rosy for Seattle; it includes severely underemployed, but not giveups], they are gladly moving out of our shrinking “Total Labor Force” Seattle area to North Dakota for oil boom jobs BTW….

    Honestly, I do feel really lucky. We dropped everything to move out here. Sold a lot of our stuff, gave up friends and a lot of sunshine to come out here. The first two years were extremely nerve racking with both of our work situations. It has settled down to better than I could have imagined.

    The last “issue” is finding a house that we like and can afford.

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  19. Ira Sacharoff

    By Howard @ 18:

    By softwarengineer @ 16:
    RE: Howard @ 3

    I Do Agree With You Howard

    Thank God you’ve got a two income family, many single income families in Seattle have given up looking for work [BTW, the 14% BLS U6 unemployment is double the U3 unemployment you reference as rosy for Seattle; it includes severely underemployed, but not giveups], they are gladly moving out of our shrinking “Total Labor Force” Seattle area to North Dakota for oil boom jobs BTW….

    Honestly, I do feel really lucky. We dropped everything to move out here. Sold a lot of our stuff, gave up friends and a lot of sunshine to come out here. The first two years were extremely nerve racking with both of our work situations. It has settled down to better than I could have imagined.

    The last “issue” is finding a house that we like and can afford.

    And that last “issue” will be resolved also. It is very unlikely that inventory will remain this low. At some point, something’s got to give. Six years ago, it was very clear to some of us that prices couldn’t remain that high. But a lot of people are stuck in the belief that what is in the present is also what is in the future. People have different reasons and different levels of urgency when buying a house. Would it kill you to keep renting? You might end up paying a little more for a house six months, one year, two years down the road, but the selection is likely to be better. Or if circumstances lead you to wanting to buy right now, are you considering different kinds of houses than you originally wanted, or different neighborhoods?

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  20. David Losh

    RE: Ira Sacharoff @ 19RE: Howard @ 18

    I spent some time yesterday reading about the International Real Estate bubble of speculators using these low interest rates to buy properties for resale, especially in the commercial markets.

    The people who are being squeezed are in the middle class. These are the people paying the higher prices once the speculators are done.

    Banks have also caught on to this trend and have opened more properties to smaller investor groups who will pay more, then rent properties out to recoup the sales price.

    It could go on forever, because we are still at 3.5% interest, that could go lower, but I’m reminded that we had a 1%? drop in mortgage rates in a very short amount of time already.

    As the middle class continues to get priced out of housing there is less chance of an economic recovery. There’s no wealth effect for those who are unable to participate in the speculation end of the Real Estate market, there’s only debt.

    The only way to buy property is as a speculator. If you are buying a property it should be one you can pay off quickly, and use the cash as a hefty down payment on the next one.

    It’s the way the market is.

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  21. Howard

    By Ira Sacharoff @ 19:

    By Howard @ 18:
    By softwarengineer @ 16:
    RE: Howard @ 3

    I Do Agree With You Howard

    Thank God you’ve got a two income family, many single income families in Seattle have given up looking for work [BTW, the 14% BLS U6 unemployment is double the U3 unemployment you reference as rosy for Seattle; it includes severely underemployed, but not giveups], they are gladly moving out of our shrinking “Total Labor Force” Seattle area to North Dakota for oil boom jobs BTW….

    Honestly, I do feel really lucky. We dropped everything to move out here. Sold a lot of our stuff, gave up friends and a lot of sunshine to come out here. The first two years were extremely nerve racking with both of our work situations. It has settled down to better than I could have imagined.

    The last “issue” is finding a house that we like and can afford.

    And that last “issue” will be resolved also. It is very unlikely that inventory will remain this low. At some point, something’s got to give. Six years ago, it was very clear to some of us that prices couldn’t remain that high. But a lot of people are stuck in the belief that what is in the present is also what is in the future. People have different reasons and different levels of urgency when buying a house. Would it kill you to keep renting? You might end up paying a little more for a house six months, one year, two years down the road, but the selection is likely to be better. Or if circumstances lead you to wanting to buy right now, are you considering different kinds of houses than you originally wanted, or different neighborhoods?

    We have widened our search. And need more patience. We absolutely need to be in Lake Washington School District. and prefer not to be south of Redmond (Eastlake High School) as it is a tough commute.

    4 bedrooms 1.75 baths 1750 sqft. Priced for condition. We are seeing run down short sales, HUD disasters going pending in the last few weeks. Things that are move in ready are commanding 10% more than what they were going for 6 months ago. Houses going pending in 2-3 days on the market (after the weekend)

    We can rent… The rent vs buy calculator indicates we would save money buying after 2-3 years.

    I need more patience and more inventory.

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  22. Ira Sacharoff

    RE: David Losh @ 20
    I don’t disagree with you over the long term about real estate. It seems to me that the stability of the economy us resting on a house of cards, and that there’s a lot of speculation and manipulation going on. And that’s where we disagree. I don’t see the current low inventory and rising prices as something that can be sustained. There’s a lot of things that can put the kibosh on this so called “recovery”, and I think a lot of these investors who are buying single family as rentals will either cash in for a small profit or decide that they can’t continue to sustain operating losses. So, yes, the underlying fundamentals still suck, and will result in another downturn in the market at some point, but it’s hard to predict how long the current sucker’s rally will last. It could go on a lot longer than we expect.

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  23. Kary L. Krismer

    By Howard @ 21:

    We are seeing run down short sales, HUD disasters going pending in the last few weeks.

    I’m going to call BS on this. We all know there are no distressed properties north of I-90. ;-) :-D

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  24. Blurtman

    RE: David Losh @ 20 – Your perpsective is quite dated, from the days of the Bailey Building and Loan Association. Nowadays, homes are priced according to ability to pay. Why, you could be living next door to your neighbor who has the same identical house as yours, and due to the wonder of principal reductions, his can cost him $100k less than yours. The bank still gets the money however, as the taxpayers make good on the prinipal reduction. Da, comrad.

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  25. corndogs

    RE: David Losh @ 20 – “The only way to buy property is as a speculator. If you are buying a property it should be one you can pay off quickly, and use the cash as a hefty down payment on the next one.”

    How does paying something off quickly provide cash for another purchase, you left over nut? Your brain is like a random sentence generator.

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  26. Scrawny Kayaker

    By ARDELL @ 11:

    RE:
    People forget when it is in the mid to high 40’s and raining here that is so much better than freezing temperatures elsewhere.

    I don’t forget. I grew up in Denver, and prefer the winter weather there (and the spring, summer and fall weather). “Better” is totally subjective!

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  27. Kary L. Krismer

    RE: Scrawny Kayaker @ 26 – In the fall of 1976 and winter of 76-77 we had a drought. I really missed the rain.

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  28. David Losh

    RE: Blurtman @ 24

    Geez, I haven’t seen that principal reduction come down the pike yet, but know a lot of people expect it.

    I offered to pay off my first position loan at a discount. The company listened to me, then sold my loan to Duestch Bank instead. I’m going to guess they paid more than I was offering.

    We’re in Seattle Washington, one of the golden spots in the country, if not the world. So I don’t expect a lot of principal reduction coming our way.

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  29. David Losh

    RE: corndogs @ 25RE: corndogs @ 25

    The only way to build equity quickly is to pay down the principal.

    If you are an investor expecting a long term return by rental income it makes sense to use “cheap” money. If you are a home buyer and are trading a mortgage payment for your rent, it’s better to build equity.

    A Buyer should buy way below what they can afford, and double up on the payments to pay the house off in seven years or less.

    In seven years time the price of property will be less, and the home buyer will have cash to play with.

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  30. ARDELL

    RE: Scrawny Kayaker @ 26

    I grew up in Philly and lived in Jersey and had to go to work in more than my fair share of 3 foot storms and even higher drifts. My kids had to make a tunnel into the front door once because of a 10 foot snow drift up against the house.

    I’ll take rain any day and mostly it is “spritzy” and not a downpour.

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  31. corndogs

    RE: David Losh @ 29 – “A Buyer should buy way below what they can afford, and double up on the payments to pay the house off in seven years or less.”

    I’m always looking for wealth building advice from old dudes without a pot to piss in. Thank you for your selfless contribution toward my quest for knowledge.

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  32. corndogs

    RE: Howard @ 21 – “I need more patience and more inventory.” you forgot the “and more money” part. You already left 50K on the table by not buying last year. Next year will cost you another chunk of change. That’s a lot of bus tokens Howie!

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  33. Howard

    By Corndogs @ 32:

    RE: Howard @ 21 – “I need more patience and more inventory.” you forgot the “and more money” part. You already left 50K on the table by not buying last year. Next year will cost you another chunk of change. That’s a lot of bus tokens Howie!

    Hey dumbass

    Neither my wife’s job nor mine were very secure last year. It would have been a stupid financial mistake to buy last year.

    BTW, if you want to have an intelligent and respectful conversation I would appreciate it.

    Never once in my life have I said my name is Howie

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  34. Kary L. Krismer

    By Corndogs @ 31:

    RE: David Losh @ 29 – “A Buyer should buy way below what they can afford, and double up on the payments to pay the house off in seven years or less.”

    I’m always looking for wealth building advice from old dudes without a pot to piss in. Thank you for your selfless contribution toward my quest for knowledge.

    Okay, harsh, but I do have to say: Now that’s funny.

    Think about that next time you’re reading advise from anonymous posters here. They too could be totally FOS.

    Also, a minor point, but going from 30 years to 7 years would require about 3x the P&I payment.

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  35. Kary L. Krismer

    RE: Howard @ 33 – I would add it’s unlikely you’re necessarily in a situation where you’d have to pay $50,000 more, and in any event a year ago it was not clear we’d be in this situation today. And I say that having told my own contacts way back in July 2011 about a changing inventory situation.

    http://www.trulia.com/blog/kary_l_krismer/2012/04/significant_market_shift

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  36. Howard

    By Kary L. Krismer @ 35:

    RE: Howard @ 33 – I would add it’s unlikely you’re necessarily in a situation where you’d have to pay $50,000 more, and in any event a year ago it was not clear we’d be in this situation today. And I say that having told my own contacts way back in July 2011 about a changing inventory situation.

    http://www.trulia.com/blog/kary_l_krismer/2012/04/significant_market_shift

    Is $20-50k pleasant, no. But it was not the right time last year for us. The rent vs buy calculator is splitting hairs for us. Just moving renovation costs a little this or that way and keeping interest rates and rent increases at 3% make the difference between 4-5 years and 12-15 years.

    Right now, we think we need 4 bedrooms for a variety of reasons. In two years we will need only three. The selection of 3 bedrooms is much larger than 4 bedrooms. I have not spoken to my wife, but I was awake last night thinking we should just wait out the next two years till we have a better idea of 3-4 bedrooms.

    Who knows?

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  37. Kary L. Krismer

    By Howard @ 36:

    I have not spoken to my wife, but I was awake last night thinking we should just wait out the next two years till we have a better idea of 3-4 bedrooms.

    Unless perhaps that additional bedroom could be used as an office or entertainment room, waiting probably would be a good idea. A number of houses have a layout with a large 4th bedroom located above a garage, that would make a great entertainment room or office.

    That said, having a guest room isn’t the worst thing in the world, depending of course upon your friends and family. ;-)

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  38. David Losh

    Good point, people should buy way below their means and triple up on the payments to get to cash.

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  39. Kary L. Krismer

    By David Losh @ 38:

    Good point, people should buy way below their means and triple up on the payments to get to cash.

    How does making 3x the payments generate cash? It will build equity, and reduce interest paid over the term of the loan, but doing that consumes cash.

    I don’t have a problem at all with buying below your means. That’s part of the reason I say that if you need to borrow over $1M to buy a property you should buy another property.

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  40. David Losh

    Because the big Real Estate agent selling point is that you have to live some place. You either pay rent, or pay a mortgage.

    So the home buyer is living some place, saving that rent payment, and paying off the mortgage to build equity.

    Equity is the only wealth effect.

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  41. Julie

    Tim, or anyone else,

    Do you have the breakdown of sales for condos and apartments? I am wondering if the supply/demand dynamic is the same for condos and apartments, especially with all of the new condos and apartments they are building in Seattle right now. That is, are there more buyers or sellers of condos right now? And has there been a steady increase or decrease in median condo/apartment prices? I’ve read that rents have gone up, spurring an increase in SFH, but am wondering if that translates into more sales of condos/apartments as well.

    Thanks!

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