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.

9 responses to “October Home Prices Dip Most in Low Tier Neighborhoods”

  1. No Name Guy

    “The high end regions have quickly gone from the smallest share of sales to the largest share, while the low end regions have flipped the other way.”

    Don’t contagions always seem to start at the periphery and / or the low end, then spread to the core / rest of the market?

    Could the low end prices dropping off, plus weakness in low end market share be an indication of the future? After all, how can the overall market be healthy in the long term if the entry level isn’t healthy. Are first time buyers invading the Eastside and Queen Anne? Or is this low end weakness merely a seasonal trend, set to be washed away in a new wave of buying come spring.

    Inquiring minds are watching, waiting to see how things unfold.

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  2. mike

    RE: No Name Guy @ 1 – I think a large part of what we’re seeing is that the low tier is more affected by the the increase in interest rates.

    During the bubble though, the low tier suffered because it was the first to see a drastic pullback in financing. The reduced investment caused by higher rates is a bit more subtle and certainly less catastrophic than the collapse of the entire subprime mortgage market. This time around, I don’t expect a minor pullback to lead to a protracted downturn mostly because the buyers are less leveraged and less dependent on refinancing in order to stay afloat. This slowdown *could* however push a few of the remaining bubble era buyers to jump ship.

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  3. Kary L. Krismer

    By mike @ 2:

    RE: No Name Guy @ 1 During the bubble though, the low tier suffered because it was the first to see a drastic pullback in financing.

    Correct, although the situation was over-reported (or poorly reported) such that people who could get financing thought they couldn’t due to press reports. That didn’t impact higher income people as much. Higher income people had never had trouble getting financing and in 2007 and the first half of 2008 didn’t expect to have trouble getting financing.

    This time around, I don’t expect a minor pullback to lead to a protracted downturn mostly because the buyers are less leveraged and less dependent on refinancing in order to stay afloat.

    Correct again, but I wouldn’t assume smooth sailing for the overall economy. The US economy is still fairly weak and the economies of many other countries are even worse. Stated differently, real estate may be local, but it is affected by national and international events.

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  4. Real Estate Round Up | We Are ALL PRO Real Estate

    […] and track those changes on a regular basis. However, Tim Ellis at the Seattle Bubble put together a great overview on sales in King County last month. He breaks the area down into three regions and provides stats for each region. Definitely worth […]

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  5. mike

    RE: Kary L. Krismer @ 3 – Kary, if you recall, mortgage application volume surged as financing dried up. This was largely attributed to people making multiple applications and getting denied financing. Did the media convince a handful of borrowers that they were unqualified? Maybe. Was it a significant trend? I see no empirical evidence of that. What we do know is that the entire subprime finance market ceased to function by March 2007 – and there was no other private or government program available to step in and replace what was lost. There still isn’t.

    As for King County low tier sales being a barometer of the national economy, sure, it’s possible – but it still looks to me that those areas are suffering from an excess of distressed inventory, a pull back in ‘investment’ money now that prices are less favorable, and higher interest rates. Definitely not unique to King County – but there’s no necessary connection between these three trends and the upper tiers either.

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  6. softwarengineer

    RE: No Name Guy @ 1

    Many Factors to Consider

    One thing is for certain; and this applies to San Francisco, New York and any high priced real estate city [like Seattle] in America too….without first time home buyers entering the lower tiers, this “house of cards” game is over.

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  7. Corndogs

    RE: softwarengineer @ 6 – “without first time home buyers entering the lower tiers, this “house of cards” game is over.”

    I know I’ve made jokes at your expense before, but this is serious. You should try renting an oxygen concentrator. It’s only like $19.95/month and comes with a free nasal tube set-up. I think it might help you a lot. It would be the opposite of putting a plastic bag over your head. All you have to lose is $19.95, it could change your life.

    http://www.oxygenrevive.com/products/oxygen-concentrator-rental?utm_source=googlepla&utm_medium=cpc&gclid=COnnmP2Z4roCFcU5QgodyGsASg

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  8. softwarengineer

    RE: Corndogs @ 7

    Watch It Corndogs

    Your defamation of my character just makes you look undocumented without a clue. Its poor quality blogging too. Its illegal too, I’d add.

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  9. Erik

    RE: softwarengineer @ 8
    SWE is making threats to sue! This is the first threat to sue I have seen on this site. What will you sue for? Don’t you have to be at a financial loss of some sort to sue? If I could sue everyone that has taken jabs at me on this site, I would be a rich rich man. Let me know how it goes because this could be a huge money making opportunity for me.

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