Friday Flashback: “Homeownership in Jeopardy”

It’s been a couple of months since our last Friday Flashback. Here’s one from an April 2006 Seattle Times article written by our old friend Elizabeth Rhodes: $405,000 Median house price in King County

Ann Dickhoff’s house purchase typifies a milestone in more ways than one.

Like many other parents of adult children, Dickhoff was afraid her son would be priced out of homeownership in his hometown.

So last month she helped him buy a North Seattle rambler, gulping as she paid $409,000 — or $89,000 more than she shelled out a year earlier for a nicer house half a block away.

Dickhoff and her husband, Walton, an administrator for the National Oceanic and Atmospheric Administration, had to pay $320,000 last year to snag a small Greenwood-area bungalow for her mother. “That was our wake-up call,” she said, to climbing prices and the possibility that homeownership for her kids was in jeopardy.

Indeed that’s a serious possibility for many residents, according to Washington State University’s Center for Real Estate Research. Average-wage workers, in particular, are susceptible to the double whammy of rising house prices and rising interest rates.

In the past year, the average interest rate on a 30-year, fixed-rate loan has climbed half a percentage point to 6.5 percent.

Can you imagine how shrill the media frenzy would be if rates today were anywhere near 6.5 percent?

In January, Ann Dickhoff, a nurse at Swedish Medical Center, began hunting for a house to buy for son Paul, 21, a cheese maker at Pike Place Market, to live in with roommates. A real-estate agent warned her the first one she bid on would sell for more than its $400,000 list price.

So the Dickhoffs bid $416,000 — and added a $30,000 escalator clause in case a bidding war broke out.

It did, and they lost that house to a $450,000 all-cash offer.

That made clear to her that “the market was taking off, and if we were ever going to buy something for the kids to live in, we’d better make a move.”

They quickly did, landing for $409,000 a newly refurbished 1950s three-bedroom with a spacious new garage.

Still, if the market weren’t so hot, “we wouldn’t even have looked at it,” Dickhoff confided. The house is on busy Greenwood Avenue North, and the street noise is significant. Plus a newer townhouse development has consumed its entire backyard.

Good thing those buyers jumped in when they did, or they never would have had another chance!

Jill Jacobi WoodIronically, as buyers like the Dickhoffs scramble to find a house, the number of King County home sales has been slipping. That usually indicates a cooling market.

That is the case in California and Florida, where sales are slowing down, according to the National Association of Realtors.

But not here, said Jill Jacobi Wood, owner of Windermere Real Estate.

King County’s median for single-family homes “will stay over $400,000,” she predicted. “There are too many good jobs; it’s too desirable a place to live for high-income people.”

Except for four and a half years between 2008 and 2013. Also note that $400,000 in 2006 dollars is roughly equivalent to $462,000 now. The latest median price for King County was $417,500 in May.

Here’s what I had to say about this particular nonsense when it was originally posted: Perplexing March Reporting

The purpose of our Friday Flashback series is to remind people why it’s never a good idea to base your home purchase decisions on the word of someone with a vested financial interest in selling as many homes as possible for as much as possible, no matter what. If you’ve got a good example of local home salespeople or other industry shills on record making fools of themselves in the years before the bubble burst, shoot me an email.
  

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.

18 comments:

  1. 1
    3rd Generation says:

    ‘Ann Dickhoff’s ……’

    Now there’s a name that just rolls off your tongue. . .

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  2. 2
    whatsmyname says:

    “Also note that $400,000 in 2006 dollars is roughly equivalent to $462,000 now. The latest median price for King County was $417,500 in May.”

    Whoa, is this the inflation adjusted number? I know I’ve asked several times to see the inflation line in the price charts. Inflation was obviously a lot higher in the early years. It would be a lot more informative in that context than just as a “ha ha, in real dollars your $400,000 house is worth less than it was”.

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  3. 3
    Feedback says:

    Tim, you’re very smart. Thank you for writing intelligently in a world in which so many are fools.

    Rate this comment: Thumb up 0

  4. 4
    mike says:

    Tim’s reporting style has definitely mellowed out since 2006!

    Interestingly, the subjects of the article recently purchased a sub $300K home in Greenwood according to KCR. Apparently they’re jumping back in the game after making a few bubble-era purchases. Peat bog be-darned, Greenwood SFH/TH’s haven’t done all that bad lately price wise.

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  5. 5
    corndogs says:

    “So last month she helped him buy a North Seattle rambler, gulping as she paid $409,000 — or $89,000 more than she shelled out a year earlier for a nicer house half a block away.

    Dickhoff and her husband, Walton, an administrator for the National Oceanic and Atmospheric Administration, had to pay $320,000 last year to snag a small Greenwood-area bungalow for her mother. “That was our wake-up call,” she said, to climbing prices and the possibility that homeownership for her kids was in jeopardy.”

    Perfect, an administrator for NOAA, Another dumba$$ overpaid democrat sucking up and wasting my tax dollars…..not only a global warming alarmist but a real estate alarmist. In real estate however you don’t get to be wrong for decades, your stupidity is made obvious in real time. Outstanding, i love it.

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  6. 6

    RE: corndogs @ 5
    If you want to interject politics, there’s a separate thread for that. Besides, Democrats have not cornered the market on stupidity. If you look at the highest rates of foreclosure by states, I think you’ll see more red states than blue states.

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  7. 7
    ChefJoe says:

    And the current zestimate for 13701 N 137th St is…. Zestimate: $432,332 . The AV is only $336k

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  8. 8

    Thanks for these Flashbacks…good reminder.

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  9. 9
    Lo Ball Jones says:

    Time for a little feature we call Realty Reality…in which we step outside the bubble to see how the ROW (Rest of World) is doing.

    Today we visit, Cleveland, OH. Guess what you can buy for under $100,000 there.

    Well…take a look. Or don’t. Your heart might drop!

    http://www.zillow.com/homedetails/13810-Southington-Rd-Cleveland-OH-44120/33446025_zpid/

    For Sale: $99,900
    $390/mo

    Bedrooms:4 beds
    Bathrooms:2.5 baths
    Single Family:2,287 sq ft
    Lot:10,018 sq ft
    Year Built:1957

    Geez Louise…this place has a living room that looks like a bowling alley…look:

    http://photos1.zillow.com/p_d/IS-149gacz8pjlnh.jpg

    What are we waiting for?

    Why suffer?

    Get out…get out…nooooowwwwww.

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  10. 10
    Erik says:

    RE: Lo Ball Jones @ 9
    Show this to the blogger SWE. This is something he would be interested in.

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  11. 11
    whatsmyname says:

    RE: Lo Ball Jones @ 9
    Write if you get work.

    Awesome link though. I like the zestimate chart. Look how you can trace the effects of loose national financing into a massive bubble during the early 2000’s. No? Only the deterioration of the massive recession later in the decade?

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  12. 12
    Erik says:

    RE: corndogs @ 5
    You use people’s performance in the past to judge how they will do in the future. I have seen you use this approach before. Makes a lot of sense. I wouldn’t trust this person with the responsibility of our environment either.

    You threw the slam in on democrats as a bonus, which has no correlation in my mind. But the first point is valid all the same.

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  13. 13
    Lo Ball Jones says:

    RE: whatsmyname @ 11

    Work? With a $300 a month mortgage, I can panhandle, or sell used tires from my (gargantuan) garage!

    I love that as cheap as it is…Zillow is predicting a -2.3% fall in value ! I can actually still negotiate.

    And for all of Cleveland…

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  14. 14
    Jay says:

    http://www.zillow.com/homedetails/6004-Whittier-Ave-Cleveland-OH-44103/33382457_zpid/ For Sale: $65,000
    Zestimate®: $43,005
    Est. Mortgage:$254/month
    Wow, what a bargain!

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  15. 15
    mmmarvel says:

    Here in Houston (a suburb outside it actually) they’ve jumped on the ‘housing market is on an upwards climb’ bandwagon. There are neighbors selling for $20 – $50K more than similar properties were selling 4 months ago. However, another trend that I’m seeing (at least in my area) – there are as many, if not more foreclosed homes being sold. Is this part of the ‘shadow’ inventory that I’ve heard about? And since the prices are increasing the banks have decided to push the sales, or what? Also not seeing those homes with the inflated asking prices being snatched off the market. The next few months should prove interesting.

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  16. 16
    Lo Ball Jones says:

    RE: Jay @ 14

    I thought you were being sarcastic…but this looks like a legitimate bargain!

    “Over $150,000. in improvements! Charming home with BRAND NEW carpeting, kitchen cabinets, dishwasher, siding and modern light fixutres. Freshly painted and neutral colors throughout. Move right in.”

    This guy is selling $150,000 in improvements…for a cost of $45,000 !!

    And five…FIVE…bedrooms.

    For $150,000 around here buys you a former meth lab in Covington with all the copper pipes stripped by junkies.

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  17. 17
    ChrisM says:

    RE: Lo Ball Jones @ 9 – 1. It is a short sale, so the asking price is meaningless unless all the banks agree

    2. It is Cleveland

    Who cares what prices are in the Rust Belt and other completely undesirable locales?.

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  18. 18
    whatsmyname says:

    By Lo Ball Jones @ 13:

    RE: whatsmyname @ 11

    Work? With a $300 a month mortgage, I can panhandle, or sell used tires from my (gargantuan) garage!

    I love that as cheap as it is…Zillow is predicting a -2.3% fall in value ! I can actually still negotiate.

    And for all of Cleveland…

    I don’t think you can get all of Cleveland for $300 a month, but I do like your approach. It’s out of the box, and it just might work; a kind of slacker homestead plan. You could be the new Horace Greeley, “Go East young man”.

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