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.

16 responses to “Around the Sound: Prices Falling Outside King & Snohomish”

  1. Jack Aragon

    It would be very interesting to see this drilled down to neighborhoods. SFR in Ballard, Fremont, Ravenna, Sand Point, and even West Seattle have been selling for up to 138k over the asking price. When tracking these homes, I’ve noticed all took the typical closing time which leads me to believe they were conventional loans not cash. How the heck do the appraisals come out supporting loans on these properties? I’m happy to send specific MLS numbers to support my comments. Seems market is being very skewed (manipulated perhaps?) by extreme low inventories in any neighborhood within 5 miles of downtown Seattle.

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  2. Scotsman

    RE: Jack Aragon @ 1

    I don’t think markets are being manipulated. Prices are strongest where the jobs are, more specifically job growth. The exception is Island county- home of the retirement buyer from Ca, etc. Seattle/Everett has the job growth.

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  3. softwarengineer

    RE: Scotsman @ 2

    Job Growth Scotsman?

    The Cooked Book U3 Unemployment Rate went UP in the latest Seattle/Bellevue/Everett Bureau of Labor Statistics data base from 5.6% to 5.9% from Nov 2013 to March 2014.

    I imagine the real U6 BLS unemployment rate is like 12%…..come to Seattle/Everett where the jobs are? LOL

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  4. softwarengineer

    RE: softwarengineer @ 3

    My URL Proving My Comment Above

    http://www.bls.gov/eag/eag.wa_seattle_msa.htm

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  5. jack

    RE: softwarengineer @ 4

    I think the “wage” factor relates to the increase in high paying tech based jobs and access to cheap monies. We might well have less jobs, and higher % unemployed and higher % of bad jobs/working poor. But at the same time we have people earning so much they simply don’t know what to do with the money, so they buy a big house, or might invest in some cheaper houses hoping for a gain.

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  6. Ardell DellaLoggia

    RE: Jack Aragon @ 1

    The lender gives 80% of the purchase price or appraised value, whichever is less. The difference is the down payment. Usually when a house bids up a lot, the “must appraise” clause is removed and the “appreciation”, difference between 80% of purchase price and 20% down is funded by cash from the buyer.

    Appreciation can never happen in a market that relies entirely on the lender funding 80% of purchase price vs 80% of appraised value. That is why areas where buyers have little or no extra cash do not appreciate as well as those where the buyers have more than 20% down.

    If a buyer is putting 30% down as example, and the property doesn’t appraise, the lender simply calls that “30%” of purchase price “28%” of purchase price with no need for additional cash at all. It then becomes semantics when the buyer is paying more than 20% down.

    Cash funds appreciation…the buyer’s cash, not the lender’s cash. That is the difference between a rising market and a “bubble”. The bubble is filled with lender money at the top 20% of purchase price. A growing market is filled with buyer’s cash at the top 20% of appraised value and extra cash for more than that.

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  7. softwarengineer

    RE: jack @ 5

    URL Proof for Your Allegation Please

    All the URL proof links I don’t have to use the term “I think” refute your allegation and show high paying jobs losing ground and at an equal pace “low and P/T” wage jobs replacing them.

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  8. Scotsman

    RE: softwarengineer @ 4RE: softwarengineer @ 3

    Sorry, but your link proves my point. Look at the first line- the total number of people employed. That has increased every month for the period covered. True enough, the unemployment number, a fraction, is subject to manipulation of the denominator. But the numerator, the number of bodies actually working, is a hard statistic.

    More people working, at the same or higher wages, equals more demand for housing and rising prices.

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  9. mike

    RE: Jack Aragon @ 1 – You have to keep in mind a lot of people that bought in neighborhoods that held or recovered their value quickly are sitting on quite a bit of cash right now from the sale. My MIL downsized and paid cash for a house in a slightly less expensive part of 98117 – and significantly renovated it. Based on recent resales, if my wife and I decided to upgrade right now we’d have about $200K in equity after sales fees to put down, which is more than double what we could afford put down 2 years ago! Not that I’d necessarily be one of the ones bidding up well above asking, but if we found the perfect ~$700K fixer that didn’t appraise we *could* make up the difference. I suspect this is a lot of what’s driving the bidding wars in high demand neighborhoods.

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  10. softwarengineer

    RE: Scotsman @ 8

    Yes, Scotsman, It Appears Positive on Total Labor With Unemployment Increasing During the Same Time Frame

    Until you scroll down and discover the total “non-farm” employment in the Seattle area was flat during the approx 40K uptake in total employment. The employment increases you point at in farm employment may likely be occurring in the North Everett river valley [it floods, no homes there]….they’re probably getting the strawberries ready to pick this June. I’m sure the increases in farm workers will be buying up real estate at dollars per hour or even worse [green carded or illegal farm workers living on slave wages]….LOL

    BTW, look further and you’ll see construction [home construction?] jobs decreased and are higher paying but downtrending.

    Look at the history of employment and you’ll notice a similar seasonal blip up in total employment [strawberry pickers too?] in the first half of 2013….followed by a blip down to 1.9M again as the probable farm workers are laid off…

    http://data.bls.gov/timeseries/LAUMT534266000000006?data_tool=XGtable

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  11. softwarengineer

    RE: softwarengineer @ 10

    Maybe a Portion of the Farm Labor Increase

    Is the gearing up for packaging marijuana to sell next month. I think they’re growing it indoors for security; but the outdoor blends are stronger and eventually it will all be harvested on outdoor farms IMO….both types can be catagorized farm labor.

    What are the wages for marijuana workers? I’m guessing like $10/hr…

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  12. mike

    RE: softwarengineer @ 11 – I don’t have any recent data, but a friend of mine moved to California to do harvesting and earned around $4,000/month.

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  13. Lo Ball Jones

    Wow…there are actually 3 counties around here whose median price is close to the US average of $221,000.

    http://www.census.gov/const/uspriceann.pdf

    Seems like reality is finally impinging on this fantastic little bubble of ours..at least in the hinterland.

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  14. Kary L. Krismer

    RE: Lo Ball Jones @ 13 – I wouldn’t read too much into those numbers without further analysis (which I don’t intend to do). Those outlying areas might still be suffering from a more significant percentage of short sales and REOs, lowering the numbers more than indicated for non-distressed properties.

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  15. Lo Ball Jones

    RE: Kary L. Krismer @ 14

    I just did a HotPads.com search for rentals in Thurston County for under $1000 a month and found some mesmerizing stuff! Some brand new homes, 2 bedrooms…one nice one had come down from $1000 to $800 a month!

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  16. Esol Esek

    This isn’t particularly news. Anyone not employed by the majors or running agribusiness in EWA is not making much in this state. How can anyone wonder why Thurston country is low? Noone wants to live there. Where are you going to drive for entertainment? Tacoma? Pierce County is variable. Snohomish county can be ok (minus traffic to do anything), but look at the increase in listings. Anyplace can be nice, but the traffic in Puget Sound has become intolerable, and made navigating the sprawl close to impossible. Even Shoreline to downtown or farther is becoming a miserable commute. This changes the equation a lot.

    Demographics have to play a tremendous role going forward. Boomers will be selling soon. Stats say most have no retirement but their home. Younger boomers and Gen Xers have already bought. Young Gen X and Millenials have an EXTREME bias to being close in town, Many also don’t care about having a lot of space though who wouldn’t want a house in central Seattle? Too bad they don’t have the money to buy one, and are the most indebted generation yet. The ones that have jobs are probably the ones getting shafted in this overpriced market taking on mortgages they won’t be able to handle. The national economy is on the edge of a precipice, at best a slowdown.

    From what I’ve seen, this current tech bubble is nothing like the gravy train in the late 90s. The wages are same or lower, and there is much more competition from imported talent. Of course the imports can do the buying. Still, Amazon is not known for the cushy salaries that MSFT was. On a beautiful day like today, it can seem like all roses, but if anyone can get top dollar for their house today, I would take it and run immediately. The entire concept of real estate as an investment is going to be shaken to the core.

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