April Stats Preview: Supply Increasing, Demand Decreasing

With April behind us, let’s have a look at our monthly stats preview. First up, here’s the snapshot of all the data as far back as my historical information goes, with the latest, high, and low values highlighted for each series:

King & Snohomish County Stats Preview

Inventory is still extremely low, but in King County the month-over-month increase was the largest (in percentage terms) that we have ever seen. Snohomish also saw a good sized month-over-month gain, but both counties are still below last year’s inventory level. Meanwhile sales were down from a year earlier in both counties, and foreclosures continued to be near their historic lows.

Next, let’s look at total home sales as measured by the number of “Warranty Deeds” filed with King County:

King County Warranty Deeds

Sales in King County increased 7 percent between March and April (a year ago they rose 14 percent over the same period), and were down 5 percent year-over-year. Are we beginning to reach a saturation point on home prices? Perhaps buyers are starting to balk, which would manifest in decreased sales and increasing standing inventory…

Here’s a look at Snohomish County Deeds, but keep in mind that Snohomish County files Warranty Deeds (regular sales) and Trustee Deeds (bank foreclosure repossessions) together under the category of “Deeds (except QCDS),” so this chart is not as good a measure of plain vanilla sales as the Warranty Deed only data we have in King County.

Snohomish County Deeds

Deeds in Snohomish rose 4 percent month-over-month (vs. a 20 percent increase in the same period last year) and were down 8 percent from April 2015.

Next, here’s Notices of Trustee Sale, which are an indication of the number of homes currently in the foreclosure process:

King County Notices of Trustee Sale

Snohomish County Notices of Trustee Sale

Foreclosure notices in King County were down 24 percent from a year ago and Snohomish County foreclosure notices were down 23 percent from last year.

Here’s another measure of foreclosures for King County, looking at Trustee Deeds, which is the type of document filed with the county when the bank actually repossesses a house through the trustee auction process. Note that there are other ways for the bank to repossess a house that result in different documents being filed, such as when a borrower “turns in the keys” and files a “Deed in Lieu of Foreclosure.”

King County Trustee Deeds

Trustee Deeds were down 2 percent from a year ago.

Lastly, here’s an update of the inventory charts, updated with previous months’ inventory data from the NWMLS.

King County SFH Active Listings

Snohomish County SFH Active Listings

Inventory shot up 19 percent between March and April in King County, the largest month-over-month percentage increase on record (since 2000). We’re still down 14 percent from a year ago, but this is a big change from being down 21 percent just a month earlier. In Snohomish County it’s a similar story: Listings were up 14 percent from March, but still down 22 percent from a year ago.

Note that most of the charts above are based on broad county-wide data that is available through a simple search of King County and Snohomish County public records. If you have additional stats you’d like to see in the preview, drop a line in the comments and I’ll see what I can do.

Stay tuned later this month a for more detailed look at each of these metrics as the “official” data is released from various sources.


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.

134 comments:

  1. 1
    sleepless says:

    What keeps builder from building more? Other than local gubmit? If the demand is so high, why wont builders build more?

  2. 2

    The more likely reason for slightly decreased sales is the low inventory. It’s harder to buy houses that are not for sale!

  3. 3

    RE: sleepless @ 1 – Assuming the land needs to be platted and is not just a vacant lot (which likely is undesirable), that can take well over a year. Someone involved with contractors could give better insight than what I could what’s involved in getting a project approved and utilities put in.

    Even once they get to that point, it takes quite some time to build out an entire project, even for a large national builder.

    One thing that is likely though–because of the long delay between buying land and selling houses, the builders will likely over-build at some point.

  4. 4
    ESS says:

    Maybe we will see some of that pent up demand everyone is talking about now that inventory is higher. Or maybe there will be five bids per house rather than eight in the trendy areas. It will be an interesting spring and summer.

  5. 5
    Justme says:

    Tim, does your inventory data include “pending” properties?

  6. 6
    Marc says:

    Sorry Tim but I think you’ve missed the boat on this one. Supply is not increasing in a meaningful way and demand has gone full on ape-sh!t. You point to the MoM change from March to April but that doesn’t even begin to tell the real story.

    The real problem is that active inventory for April was horrendous. Per your chart, April at 2,571 houses was 4% worse than any January on record (save this year) and January is historically the worst or second worst month of the year (it happened to be 3rd lowest in 2015 but only because this past November and December were beyond terrible). It should be no surprise that sales volume fell or that it will continue to fall in the coming months on a YoY basis due to not enough homes for sale.

    I thought I saw some bidding wars back in 2006-2007 but they had nothing on what we saw in 2015. And 2015 seems like a pleasant childhood memory to what I’ve seen over the last 90 days. People are bidding stuff up like crazy right now and it feels like a whole new level of wtf? If there’s any doubt about whether we are well on our way into another bubble I offer the following from an email I received last Friday from a loan officer with a reputable local lender:

    1) Borrowers were requesting an owner occupied, 7% down, single family home purchase. Borrower was a nail technician and the co-borrower was in food services. Borrower was saving checks that she had not cashed so she would have money for the down payment and the reserves. Borrowers had good credit and decent debt ratios. NO MORTGAGE INSURANCE. – CLOSED

    4) Borrower wanted an owner occupied, purchase, bridge loan with no funds out of pocket. In fact, she was requesting additional funds to make improvements into the new home purchase. Borrower had good income and reserves. We gave her a purchase loan WITH cashback!!! – CLOSED

    I’m not saying it’s time to sell yet because I think this bubble’s got room to run. However, if you think you might want to sell a house in the near future, your trigger finger should be itching like a son of a b___ . And if you’ve got a fixer upper type house or one with something funky going on, I’ll full on say it: put lipstick on that pig and SELL IT NOW. Those are the first homes to feel it when the worm turns so you want to unload before the peak.

  7. 7
    sleepless says:

    By Kary L. Krismer @ 3:

    RE: sleepless @ 1 – Assuming the land needs to be platted and is not just a vacant lot (which likely is undesirable), that can take well over a year. Someone involved with contractors could give better insight than what I could what’s involved in getting a project approved and utilities put in.

    Even once they get to that point, it takes quite some time to build out an entire project, even for a large national builder.

    One thing that is likely though–because of the long delay between buying land and selling houses, the builders will likely over-build at some point.

    So, why it was not the case in 2007? The land is plentiful, i agree, it is limited in DT Seattle or DT Bellevue, but Redmond, Issaquah, Woodinville, Lynwood, Bothell, etc have plenty of land… All you need to do is change some zoning and problem solved. The luck of buildable land is a myth!

  8. 8
    sleepless says:

    BTW, Bellevue, not sure about other cities, has plenty of uninhabitable dumpsters / crap shack – the potential new constructions. I live in Clyde Hill and i can find a handful of “abandoned” home in 10 min walk radius. I see no lack of land in any way, all i see is artificial lack of permits. So, is the problem of low supply manufactured by the local gubmint, or we indeed have a problem of supply of buildable land?

  9. 9
    Steve says:

    amazing article and maps that show what is going on..with disparity in the housing recovery…

    https://www.washingtonpost.com/graphics/business/wonk/housing/overview/

  10. 10

    By sleepless @ 7:

    By Kary L. Krismer @ 3:

    RE: sleepless @ 1 – Assuming the land needs to be platted and is not just a vacant lot (which likely is undesirable), that can take well over a year. Someone involved with contractors could give better insight than what I could what’s involved in getting a project approved and utilities put in.

    Even once they get to that point, it takes quite some time to build out an entire project, even for a large national builder.

    One thing that is likely though–because of the long delay between buying land and selling houses, the builders will likely over-build at some point.

    So, why it was not the case in 2007?

    Yes, but the market had been good for years, and really good for a couple of years. That’s why they overshot badly. Everything was going full speed ahead based on decisions made a couple of years earlier.

    In 2008-2009 there were a lot of developments where the land was platted, utilities put in, a few houses completed and some that the foundation had been poured but not completed from there. It wasn’t until about 2010 or so that contractors came in and started finishing those projects.

  11. 11
    redmondjp says:

    On the Eastside, there are hundreds upon hundreds of residential housing projects underway right now. Check out this site at the City of Redmond where you can see every project underway within city limits (site seems to be very finicky about browser type and version):

    http://gis.redmond.gov/cpv/

  12. 12
    Doug says:

    By Marc @ 6:

    I’m not saying it’s time to sell yet because I think this bubble’s got room to run. However, if you think you might want to sell a house in the near future, your trigger finger should be itching like a son of a b___ . And if you’ve got a fixer upper type house or one with something funky going on, I’ll full on say it: put lipstick on that pig and SELL IT NOW. Those are the first homes to feel it when the worm turns so you want to unload before the peak.

    Might be posting a “make me move” on Zillow if $1.2mm isn’t too unreasonable for my 3bd / 1.75bth sfh in Madison Park come January.

  13. 13
    Erik says:

    Tim, you’ve been getting buyer’s hopes up for years that inventory could be headed up soon and it never happens. This is just another teaser. Tell them the truth… this is a small bump that happens in the summer when people decide to move for whatever reason. I am sure this winter will be super low inventory again and prices will go up.

    Someone has to tell them and it may as well be me. Bite the bullet and overpay now or overpay next year because inventory will remain low. Sorry buyers, but this is the truth.

  14. 14
    Mike says:

    By Steve @ 9:

    amazing article and maps that show what is going on..with disparity in the housing recovery…

    https://www.washingtonpost.com/graphics/business/wonk/housing/overview/

    Not too bad for those of us that paid 2004 prices in 2011-2012, not so good for people now looking to get a modest starter home for $700K.

  15. 15
    Kmac says:

    RE: sleepless @ 1

    Many factors….
    GMA
    Excessive fees and costs to get permits
    Small builders finding it extremely difficult for new construction spec loans
    Most small builders I talk to are extremely cautious about this recent exuberance in real estate

    If you want a cookie cutter home in a new small lot subdivision with homeowner associations, there seems to be plenty of big builders putting Wall Street capital to work.

    Spot lots are pretty scarce just about everywhere.
    Also, most lots are just too expensive for what they are. It may be because real estate agents go around telling sellers to market at 1/3 of house price. Doesn’t work in my world…too much risk and not enough reward.
    I get beat out all the time on land that an ill informed buyer swoops in and doesn’t even perform a feasibility study before plunking down the cash. (Funny thing is that many of these end up back on the market in a year or two so some other sucker can make an “investment” in it only to find out it doesn’t work)

  16. 16
    bingo says:

    RE: redmondjp @ 11

    Great website! Using the filters available, I selected Property Type “Property Permits” and Property Subtype “Residential and Status “Construction”. The results returned 159 parcels under construction, some Townhouses near Redmond Town Center plus a lot of “one and done” permits issued. It looks like most of the new construction is centered on the 5 new home plats on the north end of Redmond, just south of 124th. Assuming some of these homes are pending, it doesn’t look like there are “hundreds upon hundreds of residential housing projects” that are going to impact the supply side in the near term. The key near term would be how many vacant lots the builders have at their current plats that haven’t been listed. That is the near term supply. Projects just starting the design phase are 1 year away from approval. Then the ground needs to be developed into finished lots. Then houses need to be built. Figure at least 2 years until those new homes will be move in ready.

  17. 17
    Mike says:

    By Marc @ 6:

    Sorry Tim but I think you’ve missed the boat on this one. Supply is not increasing in a meaningful way and demand has gone full on ape-sh!t. You point to the MoM change from March to April but that doesn’t even begin to tell the real story.

    The real problem is that active inventory for April was horrendous. Per your chart, April at 2,571 houses was 4% worse than any January on record (save this year) and January is historically the worst or second worst month of the year (it happened to be 3rd lowest in 2015 but only because this past November and December were beyond terrible). It should be no surprise that sales volume fell or that it will continue to fall in the coming months on a YoY basis due to not enough homes for sale.

    I thought I saw some bidding wars back in 2006-2007 but they had nothing on what we saw in 2015. And 2015 seems like a pleasant childhood memory to what I’ve seen over the last 90 days. People are bidding stuff up like crazy right now and it feels like a whole new level of wtf? If there’s any doubt about whether we are well on our way into another bubble I offer the following from an email I received last Friday from a loan officer with a reputable local lender:

    1) Borrowers were requesting an owner occupied, 7% down, single family home purchase. Borrower was a nail technician and the co-borrower was in food services. Borrower was saving checks that she had not cashed so she would have money for the down payment and the reserves. Borrowers had good credit and decent debt ratios. NO MORTGAGE INSURANCE. – CLOSED

    4) Borrower wanted an owner occupied, purchase, bridge loan with no funds out of pocket. In fact, she was requesting additional funds to make improvements into the new home purchase. Borrower had good income and reserves. We gave her a purchase loan WITH cashback!!! – CLOSED

    I’m not saying it’s time to sell yet because I think this bubble’s got room to run. However, if you think you might want to sell a house in the near future, your trigger finger should be itching like a son of a b___ . And if you’ve got a fixer upper type house or one with something funky going on, I’ll full on say it: put lipstick on that pig and SELL IT NOW. Those are the first homes to feel it when the worm turns so you want to unload before the peak.

    What kind of rates are these loans offering? If I read this right, it’s borrowers that have good credit, capacity to pay but are somewhat lacking in collateral aside from the property itself. That isn’t perfect, but it’s a far cry from the bubble loans that lacked all 3 C’s.

  18. 18
    Blurtman says:

    Renters and buyers on the sidelines will be swept away by the tsunami of rising prices. They are tomorrow’s RV residents and servants to the landed gentry.

  19. 19
    Erik says:

    RE: Blurtman @ 18
    Hahaha!! That was hilarious. Buyers sitting on the sidelines today are tomorrow’s RV residents. What makes it so funny is that it’s true. These buyers that complain about inventory and wait for prices to go down are gonna be shacked up in a trailer in north Everett soon if they don’t buy something soon.

  20. 20
    ESS says:

    By Erik @ 19:

    RE: Blurtman @ 18
    Hahaha!! That was hilarious. Buyers sitting on the sidelines today are tomorrow’s RV residents. What makes it so funny is that it’s true. These buyers that complain about inventory and wait for prices to go down are gonna be shacked up in a trailer in north Everett soon if they don’t buy something soon.

    ______________________________________________________________________________________________________________

    Until the trailer park land is sold for another development

  21. 21
    Mike says:

    By ESS @ 20:

    By Erik @ 19:

    RE: Blurtman @ 18
    Hahaha!! That was hilarious. Buyers sitting on the sidelines today are tomorrow’s RV residents. What makes it so funny is that it’s true. These buyers that complain about inventory and wait for prices to go down are gonna be shacked up in a trailer in north Everett soon if they don’t buy something soon.

    ______________________________________________________________________________________________________________

    Until the trailer park land is sold for another development

    I don’t think the streets of Seattle are going to be sold. Trailer parking in the city conveys Protected Class Status. If anything, the development will be forced to work around the trailers, leaving them undisturbed. Also possibly limiting construction to times when someone in the trailer isn’t sleeping off a week long meth bender or recovering from a heroin overdose.

    Trailer dwellers are at the peak of the civic food chain in Seattle – the only class with more status are the heroin dealers.

  22. 22
    redmondjp says:

    RE: bingo @ 16 – I was not counting just Redmond, but the entire Eastside. The Redmond website was given as an example. And if you add houses in the design review stage, the numbers go up by quite a bit.

  23. 23
    Buyer says:

    By Erik @ 13:

    Tim, you’ve been getting buyer’s hopes up for years that inventory could be headed up soon and it never happens. This is just another teaser. Tell them the truth… this is a small bump that happens in the summer when people decide to move for whatever reason. I am sure this winter will be super low inventory again and prices will go up.

    Someone has to tell them and it may as well be me. Bite the bullet and overpay now or overpay next year because inventory will remain low. Sorry buyers, but this is the truth.

    All what Tim did is presenting the current stats. He didn’t make any claims about the future as you are doing.

    What you are telling is your opinion or your gut feeling of how the near future will look like without supporting your claims with numbers.

    As a buyer who is actively looking for a SFH, I can say the following: if you asked me three months ago, I would tell you that prices will continue to go up for several years (based on all the severe bidding wars that I have seen during the winter time), but if you ask me today, my guess will be different. I now think that the market is slowing down. I know people who decided to stop looking until the market becomes better for buyers. I see lesser people at open houses. I see people becoming more conservative in their bidding because they think we are close to the peak and it’s not smart to overpay much at this point of the cycle. I know current home owners who decided to sell now and not wait because they think it’s risky to wait more.

    I feel that the market is slowing down and will probably peak soon driven by exponentially increasing supply and decreasing demand. Not sure, but that’s my feeling based on the past month observations.

    Add to this the news about the layoffs that Boeing and Intel announced recently, and the decline in tech stocks, and the upcoming elections. All these factors make buyers more hesitant to buy now and make sellers more hesitant to wait more.

    That’s just an opinion. What do other people think?

  24. 24
    Doug says:

    By Erik @ 19:

    RE: Blurtman @ 18
    Hahaha!! That was hilarious. Buyers sitting on the sidelines today are tomorrow’s RV residents. What makes it so funny is that it’s true. These buyers that complain about inventory and wait for prices to go down are gonna be shacked up in a trailer in north Everett soon if they don’t buy something soon.

    The peak is usually just around the corner when you start to see this kind of unbridled cheerleading. I do hope you’re right though, Erik.

  25. 25
    Anonymous says:

    Did inventory increase because homes are sitting longer and thus demand is slowing. Or just more people want to get into selling right now?

  26. 26
    Buyer says:

    By Doug @ 24:

    By Erik @ 19:

    RE: Blurtman @ 18
    Hahaha!! That was hilarious. Buyers sitting on the sidelines today are tomorrow’s RV residents. What makes it so funny is that it’s true. These buyers that complain about inventory and wait for prices to go down are gonna be shacked up in a trailer in north Everett soon if they don’t buy something soon.

    The peak is usually just around the corner when you start to see this kind of unbridled cheerleading. I do hope you’re right though, Erik.

    Eric owns investment properties and it’s absolutely his interest to keep the prices going up for as long as possible. He knows that many buyers and sellers who are researching the market will definitely come across this blog and some of them will read his comments. I have a feeling that Eric deliberately keeps over emphasizing that the market will continue to go up for several years in order to scare buyers and make them continue the price escalation and also encourage sellers to hold off from selling their properties. He knows that buyers/sellers sentiment is one of the major drivers of the housing market.

    I am not saying that the prices will not continue to go up for some time … it may will and it may will not … no one knows for sure (probably except Eric and some other RE investors on this site!).

  27. 27
    ESS says:

    By Buyer @ 23:

    By Erik @ 13:

    Tim, you’ve been getting buyer’s hopes up for years that inventory could be headed up soon and it never happens. This is just another teaser. Tell them the truth… this is a small bump that happens in the summer when people decide to move for whatever reason. I am sure this winter will be super low inventory again and prices will go up.

    Someone has to tell them and it may as well be me. Bite the bullet and overpay now or overpay next year because inventory will remain low. Sorry buyers, but this is the truth.

    All what Tim did is presenting the current stats. He didn’t make any claims about the future as you are doing.

    What you are telling is your opinion or your gut feeling of how the near future will look like without supporting your claims with numbers.

    As a buyer who is actively looking for a SFH, I can say the following: if you asked me three months ago, I would tell you that prices will continue to go up for several years (based on all the severe bidding wars that I have seen during the winter time), but if you ask me today, my guess will be different. I now think that the market is slowing down. I know people who decided to stop looking until the market becomes better for buyers. I see lesser people at open houses. I see people becoming more conservative in their bidding because they think we are close to the peak and it’s not smart to overpay much at this point of the cycle. I know current home owners who decided to sell now and not wait because they think it’s risky to wait more.

    I feel that the market is slowing down and will probably peak soon driven by exponentially increasing supply and decreasing demand. Not sure, but that’s my feeling based on the past month observations.

    Add to this the news about the layoffs that Boeing and Intel announced recently, and the decline in tech stocks, and the upcoming elections. All these factors make buyers more hesitant to buy now and make sellers more hesitant to wait more.

    That’s just an opinion. What do other people think?

    ———————————————————————————————————

    Not what I am hearing and seeing in South Snohomish County. Of course housing is less expensive, and some buyers who have been priced out of the central King County market are looking up north. It is amazing what a few miles can mean in terms of prices, and one still has access to the entire Puget Sound area and all it offers.

    Furthermore, if some of the predictions in the following are correct, there will be long term growth in the area, especially in established cities:

    http://blog.psrc.org/tag/population/

  28. 28
    Erik says:

    RE: Mike @ 21
    We ship those people up north to Everett with the child predators.

  29. 29
    Erik says:

    RE: Buyer @ 23
    I started laughing when I read this. You told me this was my gut feeling and then extrapolated your sample size of yourself and the people you have seen the last few weeks to make a decision.

    Firstly, I don’t make gut decisions. I don’t know how to. I’m a numbers person and the data says what it says. Inventory is at record lows still for the month of April.

    Let me post this again:
    http://www.dce.harvard.edu/professional/blog/how-use-real-estate-trends-predict-next-housing-bubble

    We are at record low inventory!!!! Read the graph!!!!

  30. 30
    Erik says:

    RE: Doug @ 24
    Well, I’ve been right every other time on this site. It is very unlikely that will change this time.

  31. 31
    Erik says:

    RE: Buyer @ 26
    This site will not change the market. I tell people on here because I truly believe it and I know that I’m right. It took me a longtime to understand the market, but now that I do somewhat I want to share with people on this site.

    I told my brother it is a good time to buy. I told my dad to wait atleast until 2020 to even think about selling his house. My plan is to get him to sell and then rent until this bubble bursts again. Then we can all rebuy and do it again. I plan to wait until 2023 because I’m more of a risk taker. I wouldn’t be giving this advice to family and myself if I wasn’t sure.

    The point is that I’m sure right now is a certain time to buy. Talk to the people the last few years that on this site that didn’t take my advice to buy. They are paying the price now.

  32. 32
    Eile says:

    RE: sleepless @ 1

    They want to keep the price high. Just like SF Bay area, they can build more. They don’t want atomic because it will kill the house market. They created many laws to prevent builders to build more.

  33. 33
    [troll] says:

    By < hrf='#cmmnt-254999' rl="nfllw">Dg @ 24:By < hrf='#cmmnt-254994' rl="nfllw">rk @ 19:R: < hrf='#cmmnt-254993' rl="nfllw">Blrtmn @ 18 –
    Hhh!! Tht ws hlrs. Byrs sttng n th sdlns tdy r tmrrw’s RV rsdnts. Wht mks t s fnny s tht t’s tr. Ths byrs tht cmpln bt nvntry nd wt fr prcs t g dwn r gnn b shckd p n trlr n nrth vrtt sn f thy dn’t by smthng sn.

    Th pk s slly jst rnd th crnr whn y strt t s ths knd f nbrdld chrldng. d hp y’r rght thgh, rk.

    Th nbrdld chrldng s cmng frm ll th “xprncd” nvstrs wh kp cllng bbbl. ts fnny hw thy mssd th 2007-08 crsh nd nw thy r scrd sh!tlss whn th trms r cmpltly dffrnt ths tm rnd. Vry sd hw Tm spns th prl nmbrs s spply ncrsng nd dmnd dcrsng… rl sd mn! Dm nd glm ncmng, wrld ndng, nd f dys!!

  34. 34
    Erik says:

    RE: Sam Hunter @ 33
    I had a crazy idea… This may blow your mind, but we could learn from the past on order to make the right decision in the future.

  35. 35
    Doug says:

    By Erik @ 31:

    RE: Buyer @ 26
    I plan to wait until 2023 because I’m more of a risk taker. I wouldn’t be giving this advice to family and myself if I wasn’t sure.

    Just curious, how do you come up with 2023? 7 years is a long time from now.

  36. 36
    Erik says:

    RE: Doug @ 35
    Sure. I read about the 4 stages of a bubble in the article I posted above. After that, I used real estate data to estimate where we are in the bubble. I then watched it for a while and to see how the bubble progressed. Everything is about where it is suppose to be. I determined that the Mueller 4 stage real estate bubble is a robust curve for our current situation. According to this curve we should crash in 2024.

    So to summarize… Validate model, spot check using known data, extrapolate

  37. 37
    Mike says:

    By Erik @ 28:

    RE: Mike @ 21
    We ship those people up north to Everett with the child predators.

    Not any more. Now they’re being dumped in Ballard. The amount of criminals, and homeless addicts showing up here in District 6 is completely insane. An elderly man who was a neighbor of mine was killed at the grocery store I often shop at. I was over in Lake City two weeks ago and I couldn’t believe how clean and problem free it is compared to Ballard. We literally have people openly selling heroin 3 blocks from Loyal Heights Elementary. For long term readers, Meshugy’s house in Sunset Hill is now surrounded by dozens of drug/thief camps and piles of trash.

    What’s interesting about this is as bad as the problems have become in this part of Seattle it doesn’t yet seem to be affecting property values – although I do personally know several people that were planning on buying here that ended up going to Magnolia or Columbia City, in part because of the crime is so out of control.

    So yeah, if you missed your opportunity to buy in Ballard it may be coming again, the only question is whether you’ll want to live here.

  38. 38
    Action says:

    Another article highlighting the lack of condo construction in Seattle due to the liability for builders under state law:

    http://www.seattletimes.com/business/economy/condo-conundrum-dealing-with-shortage-might-ease-pressures-on-all-homebuyers/

  39. 39
    Erik says:

    RE: Mike @ 37
    Yeah, I was bar hopping in ballard a couple years ago and it was super nice. I thought how nice it would be to live there, but I couldn’t justify the cost. I bought a condo over the water on Alki beach for half the price as Ballard. Sorry to hear they are moving those people up there from North Everett.

    *Update* I went to visit an old friend in North Everett. Him and 2 other guys walked out of his garage with tracks on their arms and skin was peeling off their faces. I had the girlfriend with me and she quickly said “we have to go, we are late!” and gave me a glare. I said “see ya” and took off. Then we talked about the struggle of chasing drug addicts out of my yard in north Everett. I very much appreciate the bubble, which gave me the opportunity to get out of there. The crash was unfortunate for some, but it made my life so much better.

  40. 40
    Blake says:

    By Doug @ 35:

    By Erik @ 31:

    RE: Buyer @ 26
    I plan to wait until 2023 because I’m more of a risk taker. I wouldn’t be giving this advice to family and myself if I wasn’t sure.

    Just curious, how do you come up with 2023? 7 years is a long time from now.

    Ahhhh… the past is such an easy guide to the future! ‘Cuz we all know that the market conditions today are just like they were in 1953… 1974… 1991… 2004! Regardless of what happens in the European Union (remember the EU back in the 50s and 70s??) or China (remember them back int he 50s and 70s?), the Seattle housing market and US market fluctuates like clockwork! tick, tick, tick… can’t you hear it ticking? Erik can.
    LMFAO… Erik: If markets were that regular, market timers (and mathematicians) would be making fortunes! I’m a statistician/math geek and I find the various Kondratiev wave theories to be fun reading… but not very good at predictions. (I prefer Fisher and Minsky’s Debt-Deflation theories to explain cycles… it’s not deterministic, but more stochastic.)
    https://en.wikipedia.org/wiki/Debt_deflation
    Note: The central banks have not been passive actors in this drama, but now their hands are tied.

  41. 41

    By Action @ 38:

    Another article highlighting the lack of condo construction in Seattle due to the liability for builders under state law:

    http://www.seattletimes.com/business/economy/condo-conundrum-dealing-with-shortage-might-ease-pressures-on-all-homebuyers/

    Yes, it’s such a burden to avoid building buildings which are not so defective that relatively new cash strapped condo associations are not inclined to sue you for building the defective building. /sarc

  42. 42
    sleepless says:

    By Buyer @ 26:

    Eric owns investment properties and it’s absolutely his interest to keep the prices going up for as long as possible. He knows that many buyers and sellers who are researching the market will definitely come across this blog and some of them will read his comments. I have a feeling that Eric deliberately keeps over emphasizing that the market will continue to go up for several years in order to scare buyers and make them continue the price escalation and also encourage sellers to hold off from selling their properties. He knows that buyers/sellers sentiment is one of the major drivers of the housing market.

    Erik is a troll

  43. 43
    sleepless says:

    Just like the last bubble, the current bubble is driven by the monetary policies. The last one burst, so will do the current one. I don’t know the exact timing, but i will doubt it will take another couple of years, unless the FED will unleash another round of QE with NIRP. Even if the FED keeps the rates where they are, the markets go down the toilet. If the FED raises rates, it will prick the bubble even faster. All the buyers need is patience. It is hard to see the “train leaving” the platform, but it will be back, don’t you worry about it, the “train” always comes back. Got extra cash – buy precious metals and wait, or don’t wait, just keep living the live and go about your routine. When time comes to buy, the houses will be there, they are not going anywhere. Look around how many rentals are being built. most of the new offices and apartments are half empty. When the rents start dropping, the demand will carter even more because lots of current buyers are driven by high rental prices. Lower rents – less demand for SFHs. Lower rents – the “black rocks” will run for exist dumping all their recently acquired residences. People, look at the fundamentals, don’t follow the trolls like Erik. The fundamentals tell you not to buy and keep on the sidelines.

  44. 44
    Action says:

    By sleepless @ 42:

    Just like the last bubble, the current bubble is driven by the monetary policies. The last one burst, so will do the current one. I don’t know the exact timing, but i will doubt it will take another couple of years, unless the FED will unleash another round of QE with NIRP. Even if the FED keeps the rates where they are, the markets go down the toilet. If the FED raises rates, it will prick the bubble even faster. All the buyers need is patience. It is hard to see the “train leaving” the platform, but it will be back, don’t you worry about it, the “train” always comes back. Got extra cash – buy precious metals and wait, or don’t wait, just keep living the live and go about your routine. When time comes to buy, the houses will be there, they are not going anywhere. Look around how many rentals are being built. most of the new offices and apartments are half empty. When the rents start dropping, the demand will carter even more because lots of current buyers are driven by high rental prices. Lower rents – less demand for SFHs. Lower rents – the “black rocks” will run for exist dumping all their recently acquired residences. People, look at the fundamentals, don’t follow the trolls like Erik. The fundamentals tell you not to buy and keep on the sidelines.

    I agree that if rents were lower, it could affect the demand side of the equation. But we still have a limited supply of SFRs. I would disagree that apartments and SFRs are perfect substitutes and that high rents drive people to purchasing SFRs. I think young professional millennials moving to Seattle typically start out renting apartments, but will eventually desire SFRs as they get older and want to put down roots. Albeit they are doing this at a later age then previous generations.

    Here is a link to a graph of census data with SFR and multi unit building permits for the area along with population change for King County. While construction of total units has caught up to pre-recession levels, SFR construction is half what it was, and population growth is higher. There would seem to be quite a bit higher levels of construction needed to make up for the crater in construction during the recession…

    https://research.stlouisfed.org/fred2/graph/fredgraph.png?g=4npd

  45. 45
    Blurtman says:

    By Eile @ 32:

    RE: sleepless @ 1

    They want to keep the price high. Just like SF Bay area, they can build more. They don’t want atomic because it will kill the house market. They created many laws to prevent builders to build more.

    We settlers demand fences. No open range!

  46. 46
    pfft says:

    By Kary L. Krismer @ 40:

    By Action @ 38:

    Another article highlighting the lack of condo construction in Seattle due to the liability for builders under state law:

    http://www.seattletimes.com/business/economy/condo-conundrum-dealing-with-shortage-might-ease-pressures-on-all-homebuyers/

    Yes, it’s such a burden to avoid building buildings which are not so defective that relatively new cash strapped condo associations are not inclined to sue you for building the defective building. /sarc

    what we need is less regulation so builders aren’t afraid of building defective buildings.(sarcasm)

  47. 47
    pfft says:

    “Just like the last bubble, the current bubble is driven by the monetary policies. The last one burst, so will do the current one. I don’t know the exact timing, ”

    dude. this is the most worthless prediction. I can be right about nearly ANYTHING. The Tim posted awhile ago that interest rates are but one part of the equation when it comes to home prices.

    When the housing bubble burst interest rates went down but so did home prices. how do you account for that?
    Mortgage rates were rising when the bubble burst.

    If it were the Fed’s fault because of interest rates inflation would be higher. Rates are not artificially low. Also rates were rising as the housing bubble was rising. Most likely it was lax lending standards that contributed to the housing bubble. Who cares what rates are when you can get a liar loan? Who cares what rates are when you can just get an interest only loan?

  48. 48
    pfft says:

    I know why home prices are going up. More buyers than sellers.

  49. 49
    whatsmyname says:

    By sleepless @ 42:

    Just like the last bubble, the current bubble is driven by the monetary policies.

    Great work. You put the fun in fundamentals. But I need just a little more detail to work with. For example, look at this link from post 14: https://www.washingtonpost.com/graphics/business/wonk/housing/overview/

    1. These charts show price changes since 2004 ranging from -10% to +40%. Over shorter periods the ranges are even bigger. If the change is driven by monetary policy, how do we get such a wide range of results? Are there different policies in Charlotte and Atlanta? Different monetaries?
    2. If people live in areas where prices are modestly up, flat, or even down; how do we help their citizens see that this is a bubble? Do they need to discount their world, and realize that reality is what we personally experience?
    3. Do long term mortgage investors really price an expected, though not enforceable 7-10 year avg. maturity off of the overnight reserve rate for commercial banks?

    I also liked your advice to buy precious metals. How long do you think before the constant dollar price of gold exceeds the 1980 highpoint? Maybe not important because you have had the opportunity to rent or live in your gold?

  50. 50
    Erik says:

    RE: sleepless @ 41
    A troll that follows his own advice and has timed the market very well the past 10 years.

    I don’t know for sure when the bubble or whether or not it will even pop at all. Based on the data I have, 2024 would be the most likely top of the next bubble if you were looking at statistical probability. When I break the cycle down based on the Mueller curve, it lines up about where it should be based on the 18 year cycle.

    I’m interested in hearing why you think I’m incorrect. I’m always willing to reconsider. That’s kinda why I’m here… to see if others can invalidate my analysis. So far I think I nailed it.

  51. 51
    ESS says:

    RE: whatsmyname @ 48

    1. These charts show price changes since 2004 ranging from -10% to +40%. Over shorter periods the ranges are even bigger. If the change is driven by monetary policy, how do we get such a wide range of results? Are there different policies in Charlotte and Atlanta? Different monetaries?

    _______________________________________________

    Great point!

    Maybe it is just good ole supply and demand after all, and not back room manipulation.

  52. 52

    By pfft @ 45:

    By Kary L. Krismer @ 40:

    By Action @ 38:

    Another article highlighting the lack of condo construction in Seattle due to the liability for builders under state law:

    http://www.seattletimes.com/business/economy/condo-conundrum-dealing-with-shortage-might-ease-pressures-on-all-homebuyers/

    Yes, it’s such a burden to avoid building buildings which are not so defective that relatively new cash strapped condo associations are not inclined to sue you for building the defective building. /sarc

    what we need is less regulation so builders aren’t afraid of building defective buildings.(sarcasm)

    5/3/16–the day pfft and I agree on something, and the day Trump wins the Republican nomination. Apparently hell has frozen over.

    Edit: OMG, I agree with post 47 too!

  53. 53
    AJT says:

    Just some food for thought. I know our “bubble” does not fit all of the criteria mentioned in the article but history may not so much repeat as rhyme.

    http://www.marketwatch.com/story/the-next-housing-crisis-is-pending-2016-05-04#:zo5OgAjQ8LZ-NA

  54. 54
    AJT says:

    To go along with my previous post. This isn’t in the US but if my memory serves me I seem to remember SF implementing a similar lending parameter.

    http://www.cnbc.com/2016/05/04/back-to-pre-crisis-days-barclays-offers-100-mortgages-for-homebuyers.html

  55. 55

    RE: AJT @ 54 – 100% loans never did go away. The VA has always been zero down, and Washington state has numerous down payment assistance programs which allow buyers to borrow the down payment on specified terms (but generally only certain buyers and using what I consider a risky second deed of trust).

    I’m not even sure that 100% conventional ever went away, but I’d not seen it done–a lender would know better. I do remember seeing 3% conventional 5 years ago. Also, of course FHA has always been either 3 or 3.5%.

  56. 56
    AJT says:

    RE: Kary L. Krismer @ 55

    Yeah the media probably hypes it up a lot and creates snappy titles as I would probably not even read the article had the title been “Lending practices in RE are pretty much the same as they always were.”

    I guess I wonder why ostensibly I am seeing more headlines with concerns on housing? May be they were always there but it just seems more prominent these days.

  57. 57

    RE: AJT @ 56 – The main change I see coming back is lenders recommending a first and second loan not connected to the state’s programs. I’m only seeing that though on the Zillow advice forum, and many of those lenders are not local (although they may be licensed here).

  58. 58
    Matt says:

    RE: Erik @ 39

    Erik –
    What advice do you have to someone in their late 20’s who graduated into the recession? When housing was low I had a mere 1000 dollars to my name. Since then I’ve paved a decent career in Aerospace (though not at Boeing – R&D subsidiary). The money is good relative to my peers but I’ll likely never see the huge incomes that your google/facebook/Amazon employees see. I gave up the search after January, although it was my fault for looking primarily in trendy North Seattle neighborhoods. Although much happier currently, I would like to re-enter the housing hunt/foray eventually, the rest of my peers seem content living this boho lifestyle of being paycheck to paycheck.
    I have enough for 20% down up to 500k, but I’ve been outbid on effectively everything and there’s no point in saving anymore as I wouldn’t be able to afford the mortgage on my own.

    Wait it out? You seem pretty keen on 2020/2023…. dunno.

  59. 59
    Weasel says:

    RE: Matt @ 58 – If your work location allows for it, look south, even better if you can make use of Sounder – its fast and traffic woes are a non event.

    I support a family of 3 on one income from a senior desktop support job in downtown Seattle, I bought a decent house in Puyallup 18 months ago in the low 200k range. I use the train and my employer offers an subsidized Orca card as a benefit.

  60. 60
    MK says:

    Here is another way to look at data.

    Inventory in King Country YoY change.

    Jan Feb March April
    -28% -29% -21% -14%

    Sales in King Country YoY change.

    Jan Feb March April
    +2% +4% +1% -5%

    Sales are down 7% is April 2016 compared to March 2016 because inventory is at ridiculously low levels.

    Even Jan 2015 had higher inventory (2681) compared to April 2016 (2571).

  61. 61
    Doug says:

    RE: Matt @ 58

    You should take your case, with more details of your overall finances, to the Mr. Money Mustache forums.

  62. 62
    greg says:

    By whatsmyname @ 49:

    By sleepless @ 42:

    Just like the last bubble, the current bubble is driven by the monetary policies.

    Great work. You put the fun in fundamentals. But I need just a little more detail to work with. For example, look at this link from post 14: https://www.washingtonpost.com/graphics/business/wonk/housing/overview/

    1. These charts show price changes since 2004 ranging from -10% to +40%. Over shorter periods the ranges are even bigger. If the change is driven by monetary policy, how do we get such a wide range of results? Are there different policies in Charlotte and Atlanta?

    They are indeed very nice charts.

    A bull might see that chart as proof the rally is organic , strong and long. A bear might see that chart and fear it shows markets spiraling out of control due to federal polices distorting the risk premium.

    neither would be wrong.

  63. 63
    Doug says:

    RE: MK @ 60

    So what’s driving the low inventory numbers? People expecting to be able to sell for more tomorrow? Or people stuck because they can’t reasonably trade up?

  64. 64
    pfft says:

    I blame the Fed for commodity prices being below their 2008 highs.

  65. 65
    pfft says:

    By Kary L. Krismer @ 52:

    By pfft @ 45:

    By Kary L. Krismer @ 40:

    By Action @ 38:

    Another article highlighting the lack of condo construction in Seattle due to the liability for builders under state law:

    http://www.seattletimes.com/business/economy/condo-conundrum-dealing-with-shortage-might-ease-pressures-on-all-homebuyers/

    Yes, it’s such a burden to avoid building buildings which are not so defective that relatively new cash strapped condo associations are not inclined to sue you for building the defective building. /sarc

    what we need is less regulation so builders aren’t afraid of building defective buildings.(sarcasm)

    5/3/16–the day pfft and I agree on something, and the day Trump wins the Republican nomination. Apparently hell has frozen over.

    Edit: OMG, I agree with post 47 too!

    We’ll celebrate this day by ordering John Kasich levels of food.

  66. 66
    pfft says:

    By greg @ 62:

    By whatsmyname @ 49:

    By sleepless @ 42:

    Just like the last bubble, the current bubble is driven by the monetary policies.

    Great work. You put the fun in fundamentals. But I need just a little more detail to work with. For example, look at this link from post 14: https://www.washingtonpost.com/graphics/business/wonk/housing/overview/

    1. These charts show price changes since 2004 ranging from -10% to +40%. Over shorter periods the ranges are even bigger. If the change is driven by monetary policy, how do we get such a wide range of results? Are there different policies in Charlotte and Atlanta?

    They are indeed very nice charts.

    A bull might see that chart as proof the rally is organic , strong and long. A bear might see that chart and fear it shows markets spiraling out of control due to federal polices distorting the risk premium.

    neither would be wrong.

    can you tell me what the risk premium is now and what it would be without the Fed distorting the market. how can you tell the Fed is distorting the market? what are your metrics? Why is inflation so low if the Fed is distorting the markets. Keep in mind that I don’t accept any inflation truther arguments. I have the bond and currency markets to confirm inflation is low as well as math and the Billion Prices Project.

    http://bpp.mit.edu/usa/

  67. 67
    ESS says:

    Watch out – another bubble is on the way.

    So wait a year, and Seattle real estate will be 40% less!! Then you can buy two properties!

    http://www.marketwatch.com/story/the-next-housing-crisis-is-pending-2016-05-04

  68. 68

    RE: ESS @ 66 – October 2002 Money Magazine had and article about the coming bubble, and they picked Seattle, San Francisco and Detroit as being the cities most prone to a bubble.

    So basically they were about 5 years premature and picked two of the better performing cities as being the worst!

  69. 69
    Doug says:

    RE: ESS @ 66

    Nice credible article. The imbedded video is from 2010 and the guy says, “we expect the 10 year UST to be around 4.25%”. I used to tell my clients on the swap desk the same thing to get them to swap to fixed.

  70. 70
    greg says:

    RE: pfft @ 66

    Pfft, how can you tell the fed is NOT distorting the market, can you show me what the numbers would be if the fed had a different policy, can you provide an accurate risk premium?

    If you want me to spend time gathering that data, I expect you to do it first.

    Now you may take umbrage at that, but you are completely unable to prove what that chart means for the future. Just as I am completely unable to prove what it means. Which is exactly what my post said. I clearly stated a bull sees it one way and a bear another.

    If you wish to prove the bulls correct or if you wish to supply proof of what the chart means, go for it. Prove to everyone how wrong the RE bears are…
    Hell you will make national news, so go ahead and prove it.

    Otherwise it is just another wishful thinking chart that works equally well for bears and bulls, which again was exactly the point of my post….

  71. 71
    ESS says:

    Predicting bubbles is like predicting stock market crashes. 75 of the last 15 stock market crashes have been predicted at one time or another. The problem is that everyone forgets when the forecasters have been wrong, and if even those predictions can be documented via the internet, no one cares. When I watch business shows, and they have a guest commentator giving their “expert” advice what the future will hold, no one even bothers to state the obvious, that their former picks were so off as compared to the various indexes that track the market, that it is an embarrassment.

    No one can predict with pinpoint accuracy any of these economic trends including real estate There are just too many unknowns. Any real estate investment just has to make financial and emotional sense, and something that one can support if the real estate market turns down for a while. Picking the top of a real estate market is like trying to time the top or bottom of the stock market – very hard to do, and those that do are more lucky than possessed with any higher form of knowledge.

  72. 72
    Action says:

    By Doug @ 63:

    RE: MK @ 60

    So what’s driving the low inventory numbers? People expecting to be able to sell for more tomorrow? Or people stuck because they can’t reasonably trade up?

    Low inventory is being driven by residential construction not keeping up with population growth.

  73. 73
    pfft says:

    By greg @ 70:

    RE: pfft @ 66

    Pfft, how can you tell the fed is NOT distorting the market, can you show me what the numbers would be if the fed had a different policy, can you provide an accurate risk premium?

    If you want me to spend time gathering that data, I expect you to do it first.

    Now you may take umbrage at that, but you are completely unable to prove what that chart means for the future. Just as I am completely unable to prove what it means. Which is exactly what my post said. I clearly stated a bull sees it one way and a bear another.

    If you wish to prove the bulls correct or if you wish to supply proof of what the chart means, go for it. Prove to everyone how wrong the RE bears are…
    Hell you will make national news, so go ahead and prove it.

    Otherwise it is just another wishful thinking chart that works equally well for bears and bulls, which again was exactly the point of my post….

    why would I prove something that you said? you said “both would be right.”

    ok, show me!

    For example, I’ve said that if the Fed had an easy money policy it would would show up in CPI rates. That is well-researched by economists. I also answered inflation truthers with alternate CPI numbers from a private group.

    Remember people, the Fed does not set mortgage rates.

  74. 74
    pfft says:

    We are bubble crazy. When home and stock prices go up it’s a bubble. Can’t rising home prices get some time in the sun?

  75. 75
    Justme says:

    RE: pfft @ 73

    >>For example, I’ve said that if the Fed had an easy money policy it would would show up in CPI rates. That is well-researched by economists.

    No it is not “well researched by economists”. WAGE increases will spill into consumer prices. No jobs, little wage increases for most ==> low CPI.

    Asset inflation (assflation for short) does NOT spill into consumer prices UNLESS there is a widespread “wealth-effect”. The current wealth-effect is just for the already wealthy. They do not consume a whole lot more daily necessities when they get richer. ZIRP causes massive asset inflation, but without a wide-based recovery in wages paid, consumer inflation is hard to create. The Fed, of course, knows this, but they pretend that ZIRP helps on jobs. But all it does is create assflation and make the rich wealthier.

    >>Remember people, the Fed does not set mortgage rates.

    When TheFed buys long-term bonds (Quantitative Easing), they increase the competition for bond purchases, and yield on all kinds of long-term bonds, including the ones that constitute most of the mortgage market, are forced down.

    How do you think mortgage funding gets created by Virgin birth? Are some kind of mortgage rate truther?

    Everything you say about monetary policy and mortages is complete balderdash.

  76. 76
    sleepless says:

    By pfft @ 46:

    what we need is less regulation so builders aren’t afraid of building defective buildings.(sarcasm)

    You are right, we need MOAR gubmint!!! Vote for Hitlary Rotten Cumton, get MOAR of what you deserve… /sarc

  77. 77
    sleepless says:

    By pfft @ 47:

    If it were the Fed’s fault because of interest rates inflation would be higher.

    Yes, it is the FEDs fault and the inflation is already too high, unless, of course, you believe the gubmint BS numbers. The CPI does not reflect the real rate of inflation, i already linked a number of topics on that.

  78. 78
    sleepless says:

    By pfft @ 48:

    I know why home prices are going up. More buyers than sellers.

    This is the same reason why stock market goes up – more buyers than sellers, except the fact the the companies pile up huge amounts of debt to buy their own shares!

  79. 79
    sleepless says:

    By Erik @ 50:

    RE: sleepless @ 41 – I’m interested in hearing why you think I’m incorrect. I’m always willing to reconsider…

    Because you don’t take into account the monetary policies of the FED and the gubmint regulations. What is wrong with the current supply / demand picture as it is not based on fundamentals, but rather expansion of the debt. Look at the student load bubble or the car loan bubble, or should i call it a car mortgage as the length of the current car loans (7+ years now) exceed the average length of mortgages (about 7 years)

  80. 80
    sleepless says:

    By Kary L. Krismer @ 55:

    RE: AJT @ 54 – 100% loans never did go away…
    I’m not even sure that 100% conventional ever went away, but I’d not seen it done–a lender would know better. I do remember seeing 3% conventional 5 years ago. Also, of course FHA has always been either 3 or 3.5%.

    There you go, no bubble here, all that demand should come from somewhere… /sarc

    Let the free market decided what the value of the housing is, lets remove all those “intensives” and lets see if the housing can walk without the FED and the gubmint crutches!

  81. 81
    sleepless says:

    By pfft @ 66:

    By greg @ 62how can you tell the Fed is distorting the market?

    How do you know that Killary is lying? She opens her mouths!
    How do you know the FED is distorting the market? The whole existence of the FED is the distortion of the market. The FED was created to “control” the market. End the FED – you will end the distortion.

    what are your metrics?

    High inflation, bubble after bubble after bubble… The whole economy is in a one gigantic bubble now and the only way to fix it is to inflate it away. This is why high inflation is here to stay…

  82. 82
    sleepless says:

    By pfft @ 74:

    We are bubble crazy. When home and stock prices go up it’s a bubble. Can’t rising home prices get some time in the sun?

    When companies borrow money at 0% interest rates to buy their shares back and drive the debt thru the roof? When the “black stones” gable up all the “distressed” properties for the pennies on the dollar with “behind door” deals? When the labor participation rate is at historic lows, home ownership at historic lows, food stamps and disabilities at historic highs and we have the stock market at historic high – yes, this is exactly what the bubble is.

  83. 83
  84. 84
    whatsmyname says:

    By greg @ 62:

    A bull might see that chart as proof the rally is organic , strong and long. A bear might see that chart and fear it shows markets spiraling out of control due to federal polices distorting the risk premium.

    No. You missed the argument. I am not arguing that the charts show the rally is organic, strong and long – or anything.

    I am saying that the argument that housing price changes are “driven” by monetary policy is not consistent with the data. The effect of a systemic environment, let’s say low interest rates, would be roughly equivalent throughout the system. It would be about the same in San Francisco as it would in Atlanta because all use the same dollars and rates. If monetary policy created a 20% increase in prices, this would occur more or less evenly across the nation with some variation for lesser factors.

    What the charts show is that there are significant variances within metro areas, but more particularly between metro areas. In fact, I grossly understated the range of difference. In the charts, DC is up 91%, while Stockton is down 40%. This magnitude of difference – and in different directions even- indicates that “other factors” blow away any commonality in terms of what has happened to real estate prices.

  85. 85
    Justme says:

    RE: Kary L. Krismer @ 83

    Speaking of more interesting indicators,

    Hong Kong retail sales plunge 13.6 per cent to record biggest slump …
    http://www.scmp.com/…/hong-kong/…/hong-kong-r
    South China Morning Post
    Mar 31, 2016 – Hong Kong retail sales plunged 13.6 per cent year on year in the first two months of 2016 – the biggest slump since 1999 – and the worst may …
    Hong Kong retail sales slump slows, but outlook remains miserable …

    Perhaps the missing customers of HK retail are instead saving up for a down payment in Eastside Seattle?

  86. 86
    Erik says:

    RE: sleepless @ 79
    House prices rising from supply and demand is fundamental. The specific issues you cited won’t cause a real estate collapse. Nothing you said changes my analysis. I thought I’d give you a shot. Get some sleep and see if you can come up with something better.

  87. 87
    Erik says:

    RE: Action @ 72
    Correct! From what I have read about other housing bubbles, this is typical.

  88. 88
    Erik says:

    RE: Matt @ 58
    If I were you, I would buy. Right now you don’t own real estate at all. Buy an easy fixer that needs paint, appliances, and flooring. Go to Vestus in Kirkland and tell them your situation so they can set your scope.

    They want 3%, to help you buy, but I would negotiate 2%. With a little luck, you can buy something with 10% instant equity. Then do your paint, appliances, flooring. In a year you should have 20% equity. Wait 1 more year for a total of 30% equity.

    Now sit on it and wait until inventory goes up to 6000 in King county. When it does, sell sell sell!!!! You will likely make a lot of money if you do it right.

  89. 89
    redmondjp says:

    RE: whatsmyname @ 84 – I see what you are trying to say, but you are omitting the fact that some places are more popular to live than others. Stockton, CA? Come on – my wife has relatives there and I have visited the place. Now I know where used tires go to die, right in a residential neighborhood stacked in columns 25 high in somebody’s front yard, with big pieces of plywood on which is spray-painted “USED TIRES” affixed to the outside of the fence. You could have negative mortgage rates and Stockton real estate prices would still be far lower than in more desirable places like Seattle and SFO.

    The loose monetary policy has not only affected housing, but the stock market, and tech companies as well. We first had the tech bubble in the 1990s, then the housing bubble in the 2000s.

    Now we have simultaneous tech, housing, and stock market bubbles! When this one pops, it is going to be like nothing anybody alive has ever seen (since most people that remember the great depression are now dead). And people like Erik will go into shock since he can’t believe that such a thing is even possible. Don’t worry, Erik, you can always pick up a cheap used RV on the List of Craig and park it pretty much anyplace you want in Seattle and live for free. You’ll no doubt have plenty of company.

    When the VC financing (ask yourselves, where does all this money come from?) runs out for the scores of local tech startups, the competition for local housing will decrease significantly. I still remember the sock puppet from last time . . .

  90. 90
    pfft says:

    By Justme @ 75:

    RE: pfft @ 73

    Everything you say about monetary policy and mortgages is complete balderdash.

    no it isn’t. you made some good points but you also said a lot of stuff you didn’t back up.

    When I talked about inflation you didn’t really answer anything. Just read this Krugman column about the natural rate of inflation- aka the Wickselian rate.

    The underlying claim in all such demands is that the low interest rates we’ve had since 2008 are “unnatural” or “artificial”. So it’s probably worth repeating that while very low rates may seem strange, they also seem fully justified by the economic situation. The original Wicksellian concept of the natural rate of interest defined that rate as the rate consistent with stable prices, with an economy that was neither too hot nor too cold. If we had had an unnaturally low rate these past 7 years, we should have seen accelerating inflation; we haven’t.

    http://krugman.blogs.nytimes.com/2015/08/25/unnatural-obsessions/?_r=0

  91. 91
    pfft says:

    By sleepless @ 77:

    By pfft @ 47:

    If it were the Fed’s fault because of interest rates inflation would be higher.

    Yes, it is the FEDs fault and the inflation is already too high, unless, of course, you believe the gubmint BS numbers. The CPI does not reflect the real rate of inflation, i already linked a number of topics on that.

    any link you can post I can just totally refute with the Billion Prices Project numbers. Or the currency and bond markets. Or math.

  92. 92
    pfft says:

    By sleepless @ 81:

    By pfft @ 66:

    By greg @ 62how can you tell the Fed is distorting the market?

    How do you know that Killary is lying? She opens her mouths!
    How do you know the FED is distorting the market? The whole existence of the FED is the distortion of the market. The FED was created to “control” the market. End the FED – you will end the distortion.

    what are your metrics?

    High inflation, bubble after bubble after bubble… The whole economy is in a one gigantic bubble now and the only way to fix it is to inflate it away. This is why high inflation is here to stay…

    Anyone remember those times when we didn’t have a central bank and everything was hunky dory? No bank panics, no bubbles and no depression!!! This is totally ignoring history. We have a central bank because we had frequent banking panics.

    It’s foolish to think that if we have no central bank we’d never have overvalued assets(or undervalued assets). Most of the time blaming the Fed for bubbles is like blaming fashion shows for fashion trends. Take away the Fed and we have no more overvalued assets? All assets will be fairly valued?

  93. 93
    pfft says:

    By sleepless @ 82:

    By pfft @ 74:

    We are bubble crazy. When home and stock prices go up it’s a bubble. Can’t rising home prices get some time in the sun?

    When companies borrow money at 0% interest rates to buy their shares back and drive the debt thru the roof? When the “black stones” gable up all the “distressed” properties for the pennies on the dollar with “behind door” deals? When the labor participation rate is at historic lows, home ownership at historic lows, food stamps and disabilities at historic highs and we have the stock market at historic high – yes, this is exactly what the bubble is.

    sorry but you need to back up all statements with links.

    “food stamps and disabilities at historic highs”

    Food stamps are off their highs and one of the reasons is income inequality. Some have money and some don’t.

    “When companies borrow money at 0% interest rates to buy their shares back and drive the debt thru the roof? ”

    Debt doesn’t necessarily matter, it’s about debt service. Companies are cash rich and they can afford to borrow at near zero.

  94. 94
    whatsmyname says:

    By redmondjp @ 89:

    RE: whatsmyname @ 84 – I see what you are trying to say, but you are omitting the fact that some places are more popular to live than others. Stockton, CA? Come on – my wife has relatives there and I have visited the place. Now I know where used tires go to die, right in a residential neighborhood stacked in columns 25 high in somebody’s front yard, with big pieces of plywood on which is spray-painted “USED TIRES” affixed to the outside of the fence. You could have negative mortgage rates and Stockton real estate prices would still be far lower than in more desirable places like Seattle and SFO..

    I’m not omitting anything. It would be my contention that individual market attractiveness is much more significant to price than monetary policy. But the above misstates even more Those charts are not comparing the price of Stockton to the price of Seattle, etc. They are comparing the price of Stockton to itself in 2004. All this loose money has supposedly “forced the price up” to negative 40%? Stockton has been under the same monetary policy as Seattle, SFO,DC,etc. What is nonsense for one, is, at best, unsupported hyperbole for the others. Not that Stockton is the only one down.

  95. 95

    By pfft @ 92:

    Anyone remember those times when we didn’t have a central bank and everything was hunky dory? No bank panics, no bubbles and no depression!!! This is totally ignoring history. We have a central bank because we had frequent banking panics.

    Okay, stop it! What have you done to the real pfft?

    Seriously, people make all sorts of arguments about how things were better when. The most similar to this are people who claim medical treatment isn’t necessary either.

  96. 96
    pfft says:

    By Kary L. Krismer @ 95:

    By pfft @ 92:

    Anyone remember those times when we didn’t have a central bank and everything was hunky dory? No bank panics, no bubbles and no depression!!! This is totally ignoring history. We have a central bank because we had frequent banking panics.

    Okay, stop it! What have you done to the real pfft?

    Seriously, people make all sorts of arguments about how things were better when. The most similar to this are people who claim medical treatment isn’t necessary either.

    The story of the last bubble was really lending standards and securitization on wall st. Alan Greenspan even admitted it. Fed haters also ignore that mortgage rates went UP from 2003-07 and DOWN during the subsequent crash. Literally the opposite of what they say. Notice you don’t hear much about commodity prices anymore?

    Greenspan Concedes Error on Regulation
    http://www.nytimes.com/2008/10/24/business/economy/24panel.html

  97. 97
    Blake says:

    whatsmyname @ @84 wrote:
    “No. You missed the argument. I am not arguing that the charts show the rally is organic, strong and long – or anything. I am saying that the argument that housing price changes are “driven” by monetary policy is not consistent with the data. ”

    Well… the Fed’s policies have helped housing, but with diminishing returns as there is a floor under interest rates and they’ve been scraping bottom for years now.

    But if you wanna see what is highly correlated with the Fed’s balance sheet… check out this chart:
    https://research.stlouisfed.org/fred2/graph/?g=4oHm

    Note that the Fed’s asset holdings (QE3) leveled off beginning in late 2014/early 2015… and the stock market has been going sideways – with great volatility (i.e. speculation) since Jan 1, 2015!??

  98. 98
    Blake says:

    RE: redmondjp @ 89 – “Now we have simultaneous tech, housing, and stock market bubbles!”

    Exactly JP! Markets are more interconnected and synchronized than ever before… nowhere to hide! This is why China, the EU, and even Greece threatens us and everything. I read lots of international econ books and this little book I read 3 or 4 years ago is still one of the best I have EVER read: The Fearful Rise of Markets: Global Bubbles, Synchronized Meltdowns, and How To Prevent Them in the Future
    http://www.amazon.com/Fearful-Rise-Markets-Synchronized-Meltdowns/dp/0137072996

    The author is no leftwing wacko, but one of the top correspondents for London’s “Financial Times!” In this short book he lays out the rise of synchronized markets and the demise of “agency” (Principal/Agent Splits… very important… this is how publicly traded companies and mutual funds are exploited), increased herding, and – of course – moral hazard. It sounds complicated, but it is beautifully written and only a graduate economics instructor could turn these concepts into gibberish (believe me… I’ve had plenty of econ instruction and they are second only to stat professors for making things incomprehensible!)
    I bought 5 copies and gave them to my father, brother and friends…

    Here’s a good review/summary:
    http://seekingalpha.com/article/237906-book-review-the-fearful-rise-of-markets-explains-how-markets-have-become-so-highly-correlated

    And an extract here:
    http://www.ft.com/intl/cms/s/2/6d6ad426-63ac-11df-a32b-00144feab49a.html

    It was written in 2010 and Auther’s makes a good case that this “fearful rise of markets” is not a good thing…
    We’re all going to learn this the hard way, believe me!

  99. 99
    Blake says:

    By Erik @ 88:

    RE: Matt @ 58
    If I were you, I would buy. Right now you don’t own real estate at all. Buy an easy fixer that needs paint, appliances, and flooring. Go to Vestus in Kirkland and tell them your situation so they can set your scope.

    They want 3%, to help you buy, but I would negotiate 2%. With a little luck, you can buy something with 10% instant equity. Then do your paint, appliances, flooring. In a year you should have 20% equity. Wait 1 more year for a total of 30% equity.

    Now sit on it and wait until inventory goes up to 6000 in King county. When it does, sell sell sell!!!! You will likely make a lot of money if you do it right.

    Hi Matt… Now is a TERRIBLE time to be a home buyer in Seattle! So little to choose from on the market, bidding wars, and – as Kary pointed out in a previous thread – you can count on a lot of unscrupulous owners putting lipstick on a pig and selling into this frenzied market… so you gotta beware of what you’re buying and NOT waive inspection! I moved to Seattle in 2005 and was told by my family and friends I had to “buy buy buy!!” or be forever priced out! It was crazy, but I waited, found seattlebubble (!!!) and watched… be cautious and identify what you want as far as neighborhoods etc. You wanna stay in that house for years, otherwise you should just rent.
    Good luck!

    ps – Erik is an idiot. He bought with little down in 2011 and made a bunch off a condo, so now he thinks he’s a genius who “knows markets.” If you’ve been on this blog long enough you’d see all the crap that Erik has posted over the years…

  100. 100
    pfft says:

    By Blake @ 98:

    RE: redmondjp @ 89 – “Now we have simultaneous tech, housing, and stock market bubbles!”

    Exactly JP! Markets are more interconnected and synchronized than ever before… nowhere to hide! This is why China, the EU, and even Greece threatens us and everything. I read lots of international econ books and this little book I read 3 or 4 years ago is still one of the best I have EVER read: The Fearful Rise of Markets: Global Bubbles, Synchronized Meltdowns, and How To Prevent Them in the Future
    http://www.amazon.com/Fearful-Rise-Markets-Synchronized-Meltdowns/dp/0137072996

    The author is no leftwing wacko, but one of the top correspondents for London’s “Financial Times!” In this short book he lays out the rise of synchronized markets and the demise of “agency” (Principal/Agent Splits… very important… this is how publicly traded companies and mutual funds are exploited), increased herding, and – of course – moral hazard. It sounds complicated, but it is beautifully written and only a graduate economics instructor could turn these concepts into gibberish (believe me… I’ve had plenty of econ instruction and they are second only to stat professors for making things incomprehensible!)
    I bought 5 copies and gave them to my father, brother and friends…

    Here’s a good review/summary:
    http://seekingalpha.com/article/237906-book-review-the-fearful-rise-of-markets-explains-how-markets-have-become-so-highly-correlated

    And an extract here:
    http://www.ft.com/intl/cms/s/2/6d6ad426-63ac-11df-a32b-00144feab49a.html

    It was written in 2010 and Auther’s makes a good case that this “fearful rise of markets” is not a good thing…
    We’re all going to learn this the hard way, believe me!

    everything is correlated during a financial panic…

    How is that commodity bubble going? The Fed haters were big on the Fed creating a commodity bubble…guess “low” rates isn’t causing a commodity bubble?

    Stocks and housing are high because before they were low and etc.

  101. 101
    Erik says:

    RE: Blake @ 99
    From 2011 til now I made $128k on a remodel, got out of $100k in bad debt, got a master of science in mechanical engineering from university of Washington which my company paid for, then got a job at the same company making twice as much as I did in 2011. Not a bad 5 years considering I was very insolvent. If I’m an idiot, then i am an extremely lucky idiot.

  102. 102
    Ross says:

    By Erik @ 100:

    RE: Blake @ 99
    From 2011 til now I made $128k on a remodel, got out of $100k in bad debt, got a master of science in mechanical engineering from university of Washington which my company paid for, then got a job at the same company making twice as much as I did in 2011. Not a bad 5 years considering I was very insolvent. If I’m an idiot, then i am an extremely lucky idiot.

    Better to be lucky than smart =P

  103. 103
    StupidLifeDecisions says:

    By Erik @ 100:

    RE: Blake @ 99
    From 2011 til now I made $128k on a remodel, got out of $100k in bad debt, got a master of science in mechanical engineering from university of Washington which my company paid for, then got a job at the same company making twice as much as I did in 2011. Not a bad 5 years considering I was very insolvent. If I’m an idiot, then i am an extremely lucky idiot.

    I don’t agree with Erik’s optimistic longer term speculation on the Seattle real estate market, but you have to admit he accomplished a lot in 5 years. It’s great that he was able to make his timing in the RE market work for him. I wish I could say the same about myself, but sadly I can not.

    Erik, you should really pay more attention to the post about corelated markets, that might end up saving you a lot of money one day.

  104. 104
    Desperate Buyer says:

    I finally decided to give up on buying a house. I made 13 offers so far and none of them got accepted. I did everything I could. I bidded 50K above asking price, waived all contingencies including inspection, appraisal, title, HOA review, and even financing. I offered ~25% down payment, offered very generous earnest money. I also tried to lower my bar and try with smaller or older homes. I did all that multiple times. Nothing worked and I don’t think it will unless I go to far away neighborhoods that I don’t like or not convenient to me.

    I wasted many many many hours over the past year browsing redfin and zillow and touring homes. I toured hundreds of homes. All of that was a total waste of my time and effort.

    Enough is enough!

    Today and after I lost the 13th offer, I decided to give up on buying a house. I’ll look for a way to invest my cash (down payment) until the situation of the market changes.

  105. 105
    Anonymous Coward says:

    RE: StupidLifeDecisions @ 103 – Erik’s timing? He defaulted on $100k. That’s some awesome timing there… Ok, I’m being unfair to Erik. He’s a pretty smart guy and seems to learn quickly from his mistakes. But, fundamentally, he’s figuring it out as he goes. His mistakes have been financial, so he’s learned a lot about how to minimize financial risks related to his real estate investments. Unfortunately, that’s without understanding that he hasn’t made the risk go away; it’s just moved into other kinds of risk: legal and tax.* Those risks, if ever realized, tend to involve a lot more pain than financial losses.

    *The really unfortunate thing is that he doesn’t seem all that interested in understanding those risks until they are realized. He’ll figure it out after it goes pear shaped, which is what he did with his real estate investments.

  106. 106

    By Anonymous Coward @ 104:

    RE: StupidLifeDecisions @ 103 – Erik’s timing? He defaulted on $100k. That’s some awesome timing there… Ok, I’m being unfair to Erik. He’s a pretty smart guy and seems to learn quickly from his mistakes. But, fundamentally, he’s figuring it out as he goes. His mistakes have been financial, so he’s learned a lot about how to minimize financial risks related to his real estate investments. Unfortunately, that’s without understanding that he hasn’t made the risk go away; it’s just moved into other kinds of risk: legal and tax.* Those risks, if ever realized, tend to involve a lot more pain than financial losses..

    Part of the problem is Erik listens to Ray Pepper, who when it comes to investing in real estate is sort of like the knight in Monty Python and the Holy Grail.

  107. 107
    Magnolia44 says:

    Just stopping in to say hi and see this place is still going strong. Stuff around here is frothy as heck, friends sold and buyers tried to get $40k in contigencies, sellers said no they still bought. Another family listed what I thought was high nearby, pending in 7 days I have to think it went over asking.

    It’s tempting to list and get out but no where to go. I think we are in this home for the long long haul, as in hand over to the kids and have fun…… Assuming nothing happens in the short term.

  108. 108
    Blurtman says:

    Lost of folks investing in improving their properties on the Eastside. Contractors say they are busy, and also that developers are using low-grade interior materials like carpeting. That would never fly in Barrington Park!

    Be a Baron, at Barrington(tm)! http://www.murrayfranklyn.com/Communities/BarringtonPark/21750-011

    Barrington was an old farm on what became very valuable acreage. I think there was one house and a barn on the property, but the farm hadn’t been active for over a decade. Folks that had a nice, quiet and scenic neighbor behind them now have megahomes with screaming kids. A lot of these old farms are going, going, almost gone, but you can still find some in Sammamish.

  109. 109
    Justme says:

    RE: pfft @ 90

    I thought it would be useful to dispel the seemingly popular myth that Fed policies do NOT affect mortgage interest rates.

    Search: fed does not affect mortgage rates . Here is a quite good article from the search results.

    http://www.investopedia.com/articles/personal-finance/050715/how-federal-reserve-affects-mortgage-rates.asp

    Here is a quote from another link, which I will not post because multiple links lands me in moderation.

    QUOTE: Mortgage rates are dictated mostly by market movements, but the Fed can have a huge influence on rates. Even though the federal funds rate is not tied to mortgage rates, it affects them indirectly because it impacts lenders’ borrowing costs.

    I think the above is pretty obvious, but a surprising amount of people disagree. Most of the people that disagree seem to be of the owner/landlord class. One can speculate about the psychology behind the ill-founded belief.

  110. 110
    sleepless says:

    This video sums is up quite well

  111. 111
    greg says:

    By Justme @ 109:

    RE: pfft @ 90

    I think the above is pretty obvious, but a surprising amount of people disagree. Most of the people that disagree seem to be of the owner/landlord class. One can speculate about the psychology behind the ill-founded belief.

    RE: Justme @ 109

    Yeah, people tend to not want to publicly acknowledge anything that can hurt their investments or undermine their publicly stated opinion. So they will pretend that interest rates and housing have virtually no linkage, and they will dig up the same tired old out of context examples….

  112. 112
    ESS says:

    By Desperate Buyer @ 104:

    I finally decided to give up on buying a house. I made 13 offers so far and none of them got accepted. I did everything I could. I bidded 50K above asking price, waived all contingencies including inspection, appraisal, title, HOA review, and even financing. I offered ~25% down payment, offered very generous earnest money. I also tried to lower my bar and try with smaller or older homes. I did all that multiple times. Nothing worked and I don’t think it will unless I go to far away neighborhoods that I don’t like or not convenient to me.

    I wasted many many many hours over the past year browsing redfin and zillow and touring homes. I toured hundreds of homes. All of that was a total waste of my time and effort.

    Enough is enough!

    Today and after I lost the 13th offer, I decided to give up on buying a house. I’ll look for a way to invest my cash (down payment) until the situation of the market changes.

    _____________________________________________________________________________________________________________

    What areas did you investigate and ultimately bid on?
    What areas did you not consider because of location, transportation issues or other matters?
    Good luck in the future – although if enough potential buyers can’t locate housing to purchase, it will only tighten the rental market.

  113. 113
    Desperate Buyer says:

    By ESS @ 112:

    By Desperate Buyer @ 104:

    I finally decided to give up on buying a house. I made 13 offers so far and none of them got accepted. I did everything I could. I bidded 50K above asking price, waived all contingencies including inspection, appraisal, title, HOA review, and even financing. I offered ~25% down payment, offered very generous earnest money. I also tried to lower my bar and try with smaller or older homes. I did all that multiple times. Nothing worked and I don’t think it will unless I go to far away neighborhoods that I don’t like or not convenient to me.

    I wasted many many many hours over the past year browsing redfin and zillow and touring homes. I toured hundreds of homes. All of that was a total waste of my time and effort.

    Enough is enough!

    Today and after I lost the 13th offer, I decided to give up on buying a house. I’ll look for a way to invest my cash (down payment) until the situation of the market changes.

    _____________________________________________________________________________________________________________

    What areas did you investigate and ultimately bid on?
    What areas did you not consider because of location, transportation issues or other matters?
    Good luck in the future – although if enough potential buyers can’t locate housing to purchase, it will only tighten the rental market.

    All offers I made were for homes in Redmond and Sammamish. I work in Bellevue so I want to be in the east side as close as possible to work. I have kids who go to elementary school so I want good schools. Most of our friends are in Redmond and Sammamish.

    I didn’t consider Kirkland and Bellevue because of schools and Bothell because of transportation.

  114. 114
    Macro Investor says:

    RE: Desperate Buyer @ 113

    Desperate, you are having the same problems I did. I worked on the east side. Yet I hate the east side culture and sprawl. I decided I’d rather have a bad commute, than live where I don’t like for insane prices. No great choices.

    You wasted your time on those bidding wars. Some of the smarter agents, who no longer post here, said just walk away from bidding wars. Consider that a learning process and start over now.

    You didn’t mention what kind of properties you were looking at. Try finding listings that have sat a while. They will likely have some issues. Make low ball offers that would pay for any repairs, plus some instant equity. You’ll find this a lot more fun than stressing out over other bidders.

    Make sure it’s a place that’s livable while you do the work. Do one small project at a time. Start with the outdoor work now that the dry season is approaching. The indoor work can be done any time.

  115. 115
    Doug says:

    RE: sleepless @ 110

    Great video – thanks for posting. Death to the boomers.

  116. 116
    Doug says:

    RE: Macro Investor @ 114

    What exactly is the east side culture? I live in the city so truly don’t know.

  117. 117
    whatsmyname says:

    RE: Justme @ 109
    I don’t think anyone says Fed policy doesn’t affect mortgage rates. Most things of financial consequence to the economy do affect them. What people object to is the idea that the FED is THE driver, the determiner. This is why your articles are so full of “typically”, “indirectly”, “not directly”, “tend to”, “likely”. Even your chosen quote de gras says that mortgage rates are dictated “mostly” by market movements.

  118. 118
    Justme says:

    RE: whatsmyname @ 117

    >>I don’t think anyone says Fed policy doesn’t affect mortgage rates

    Oh, yes, lots of people will insist that the Fed has nothing to do with mortgage rates. Just read what pfft has claimed above. He is just one of many owner-types that refuse to acknowledge that 1. Fed policies affect mortage rates, and 2. mortage rates affect purchase prices. My guess is that Fed deniers are motivated by a psychological needs to justify nosebleed high prices relative to incomes as “correct prices”, simply because they WANT the price of their asset to be that high.

    Come on, do the google search that I posted, read all the entries. Get educated. It really is very simple.

  119. 119
    Azucar says:

    By Erik @ 101:

    RE: Blake @ 99
    From 2011 til now I made $128k on a remodel, got out of $100k in bad debt, got a master of science in mechanical engineering from university of Washington which my company paid for, then got a job at the same company making twice as much as I did in 2011. Not a bad 5 years considering I was very insolvent. If I’m an idiot, then i am an extremely lucky idiot.

    I seem to recall you getting laid off, short selling a house, and moving into your parent’s basement for a while at some point during that “run of luck”… Or am I misrecalling something?

    We have a clock in our guest room that has dead batteries in it, but it is still EXACTLY correct twice per day. Not only that, it is within 3 hours of being correct 50% of the time. It’s like a miracle of science or something!

    We have another clock in our house… that has functioning batteries… that is within 3 hours of being correct a higher percentage of the time than the one with dead batteries, but it is about 5 minutes fast, so it is NEVER exactly correct. Think about that one for a minute… the clock with dead batteries is correct more often than the clock with good batteries. It almost blows your mind, doesn’t it?

  120. 120
    redmondjp says:

    By Doug @ 116:

    RE: Macro Investor @ 114

    What exactly is the east side culture? I live in the city so truly don’t know.

    It’s more a lack of any . . . read this post which pretty much sums up Redmond (I have lived here for 19 years) and to a lesser degree, other Eastside cities:

    http://redmondcity.blogspot.com/2016/05/redmond-performing-arts-is-in-dark-ages.html

    It’s a good place to raise a family though, and it’s closer to the mountains (hiking biking skiing) as well.

  121. 121
    Michael Debejos says:

    By Erik @ 36:

    RE: Doug @ 35 So to summarize… Validate model, spot check using known data, extrapolate

    Your model goes out the window if AMZN stock tanks. I’m pretty sure your model doesn’t incorporate that variable, because until recently it didn’t exist.

    Will AMZN tank? Who knows, but a long bet on Seattle real estate = a long bet on AMZN. That’s not a bad bet, necessarily. What is a bad bet is taking your entire savings and leveraging it 5-10x to bet on a single risky tech stock. Surely anyone with any financial sense would agree, and yet effectively that is what most Seattle RE buyers are doing.

    The only possible way that kind of leveraged bet could make sense is if you’re 100% committed to living in Seattle and in that house for the next 20-30 years, enough to ride out whatever happens to AMZN. How many RE buyers does that describe? Probably less than 5%.

  122. 122
    whatsmyname says:

    RE: Justme @ 118 – Pfft seems to be arguing against the pejorative, “distorts”, and gives his reasons why in that context. I think Pfft recognizes that there is active management, as he applauds what they are doing. The only thing I can see from Pfft on the mortgage subject is that the Fed “does not set mortgage rates”. And it doesn’t.

    I did your google search, but page one doesn’t come up with any foaming Fed deniers. Results are more even handed; like this one which was number 4 on the list:
    http://themortgagereports.com/17724/how-mortgage-rates-move-when-the-federal-reserve-meets

    He doesn’t discuss QE; but as active policy, that’s been done since 2014 anyway. I’ll give you this. Houses and other capital assets are dollar cheaper in a full blown depression. But so are human lives. This is a good time to reflect on your own motivations, and wants regarding the FED. Perhaps you have transferred the foundations of your own justifications to those who don’t want to ‘bring it on’. I don’t know if this is so, but they would make intuitive sense to you if they were the mirror of your own.

  123. 123
    Blurtman says:

    By redmondjp @ 120:

    By Doug @ 116:

    RE: Macro Investor @ 114

    What exactly is the east side culture? I live in the city so truly don’t know.

    It’s more a lack of any . . . read this post which pretty much sums up Redmond (I have lived here for 19 years) and to a lesser degree, other Eastside cities:

    http://redmondcity.blogspot.com/2016/05/redmond-performing-arts-is-in-dark-ages.html

    It’s a good place to raise a family though, and it’s closer to the mountains (hiking biking skiing) as well.

    No need to go out. Everyone is at home, plugged in.

  124. 124

    By Michael Debejos @ 121:

    By Erik @ 36:

    RE: Doug @ 35 So to summarize… Validate model, spot check using known data, extrapolate

    Your model goes out the window if AMZN stock tanks. I’m pretty sure your model doesn’t incorporate that variable, because until recently it didn’t exist.

    Not sure what your definition of “recently” is, but in the past I had legal clients who worked at AMZN, and I haven’t practiced law now for about 10 years. And at the time AMZN stock was rather low, without impacting the RE market or the local economy much.

  125. 125
    Michael Debejos says:

    By Kary L. Krismer @ 123:

    By Michael Debejos @ 121:

    By Erik @ 36:

    RE: Doug @ 35 So to summarize… Validate model, spot check using known data, extrapolate

    Your model goes out the window if AMZN stock tanks. I’m pretty sure your model doesn’t incorporate that variable, because until recently it didn’t exist.

    Not sure what your definition of “recently” is, but in the past I had legal clients who worked at AMZN, and I haven’t practiced law now for about 10 years. And at the time AMZN stock was rather low, without impacting the RE market or the local economy much.

    I’m referring to AMZN only recently having such an enormous impact on the local real estate market, which has only become the case in the past half decade or so:

    http://www.geekwire.com/wp-content/uploads/2015/10/amazonww-e1445553945718-620×394.png

    The numbers in that chart are worldwide, not just Seattle, but it’s reasonable to assume the growth in Seattle employees has roughly tracked the same worldwide curve, which started to go exponential around 2009 and has now gone vertical. Whatever the starting number was in 2009 for local employees, it’s now around 10x. You’ll also see that growth curve pretty much mirrored in AMZN’s stock chart.

    So basically an entire city full of people is taking its entire savings, leveraging up 5-10x with cheap borrowed money, and then essentially putting it all into one tech stock of a company that still struggles with profitability, and whose stock is inflated to such a ridiculous degree that it’s not just exploding exponentially, but it’s actually gone completely vertical.

    This will not end well. But, hey, if people want to place their bets on the stock staying vertical forever, good luck with that.

  126. 126
    Azucar says:

    By Kary L. Krismer @ 124:

    By Michael Debejos @ 121:

    By Erik @ 36:

    RE: Doug @ 35 So to summarize… Validate model, spot check using known data, extrapolate

    Your model goes out the window if AMZN stock tanks. I’m pretty sure your model doesn’t incorporate that variable, because until recently it didn’t exist.

    Not sure what your definition of “recently” is, but in the past I had legal clients who worked at AMZN, and I haven’t practiced law now for about 10 years. And at the time AMZN stock was rather low, without impacting the RE market or the local economy much.

    In the context of Eric’s 18 year cycle, I think 10 years, or even 20 or 30, qualify as “recent”… Especially considering Eric’s “sure thing 18 year cycle” was established back in the 1800’s, and it has only held true like once since 1930 or so (there were a couple of around 8 or 10 years, one that was something like 40 years, and one that was 18ish over the past 4 cycles if I recall correctly).

    What is more relevant than a company like Amazon affecting the Seattle market, though, in my opinion is the change in the way real estate is advertised/listed. I am pretty confident that the internet has drastically changed the real estate marketplace… just like it has shopping for everything else.

  127. 127
    Erik says:

    RE: Azucar @ 119
    Cool clock story sugar. I feel sorry for whoever agreed to co-habitate with you. Whoever it is, they aren’t there for your sweet personality.

  128. 128
    whatsmyname says:

    RE: Michael Debejos @ 125 – That chart is from an article which says Amazon has 24,000 employees in the State of Washington (latter half off 2015). The Seattle metro has 3.7MM people, and 1.9MM jobs. It is a little hard to see how the Seattle metro revolves around the sun of it’s fifth largest employer. But one can place their bets where they will.

  129. 129
    redmondjp says:

    By whatsmyname @ 128:

    RE: Michael Debejos @ 125 – That chart is from an article which says Amazon has 24,000 employees in the State of Washington (latter half off 2015). The Seattle metro has 3.7MM people, and 1.9MM jobs. It is a little hard to see how the Seattle metro revolves around the sun of it’s fifth largest employer. But one can place their bets where they will.

    Are you being serious?

    It is plainly obvious how Seattle Metro is impacted by Amazon in a way which cannot be overstated. You think it was bad when Boeing cut back in the early 1970s and the infamous billboard ( “Will the last person leaving Seattle — Turn out the lights”) appeared? Multiply that by 10X and that’s what you have today.

    A vast majority of the employed people in the greater Seattle area have no impact on housing prices – it is the middle-to-upper-income people (a minority of all job-holders) in the housing market who set the prices.

    And then there is the multiplier effect of course – how many other local jobs are tied to Amazon and their employees, either directly or indirectly?

  130. 130
    whatsmyname says:

    RE: redmondjp @ 129 – Amazon’s obvious potential impact is on the downtown office market. Seattle in the ’70’s was a Boeing monoculture. But you think that the 24,000 jobs of our fifth largest employer is 10X the impact of Boeing’s 80,000 jobs plus the 150,000 or so in the rest of the top four; well, OK.

  131. 131
    redmondjp says:

    By whatsmyname @ 130:

    RE: redmondjp @ 129 – Amazon’s obvious potential impact is on the downtown office market. Seattle in the ’70’s was a Boeing monoculture. But you think that the 24,000 jobs of our fifth largest employer is 10X the impact of Boeing’s 80,000 jobs plus the 150,000 or so in the rest of the top four; well, OK.

    Yes, because of their higher-than-average income levels. Last week on KIRO radio one of the hosts was telling how their neighbor recently bought a house in Seattle, with their Amazon bonus. Just with the bonus. Nobody over at the Boeing is doing that. Not even Microsoft any longer.

  132. 132
    Michael Debejos says:

    By whatsmyname @ 128:

    RE: Michael Debejos @ 125 – That chart is from an article which says Amazon has 24,000 employees in the State of Washington (latter half off 2015). The Seattle metro has 3.7MM people, and 1.9MM jobs. It is a little hard to see how the Seattle metro revolves around the sun of it’s fifth largest employer. But one can place their bets where they will.

    By redmondjp @ 131:

    By whatsmyname @ 130:

    RE: redmondjp @ 129 – Amazon’s obvious potential impact is on the downtown office market. Seattle in the ’70’s was a Boeing monoculture. But you think that the 24,000 jobs of our fifth largest employer is 10X the impact of Boeing’s 80,000 jobs plus the 150,000 or so in the rest of the top four; well, OK.

    Yes, because of their higher-than-average income levels. Last week on KIRO radio one of the hosts was telling how their neighbor recently bought a house in Seattle, with their Amazon bonus. Just with the bonus. Nobody over at the Boeing is doing that. Not even Microsoft any longer.

    Amazon’s impact hasn’t been equal on all neighborhoods. Prior to Amazon what were the big employers around the downtown area? And were any of them growing at a crazy exponential rate adding hundreds of highly-paid employees every month?

    I don’t think there were any. It was a collection of smaller and mid-sized employers whose growth was pretty steady state, in aggregate. Any crazy growth was more likely on the East Side. So there was no particularly concentrated demand for inventory within a short commute to where Amazon’s offices are today downtown.

    In those neighborhoods with nice houses and good public schools, which are a reasonable distance from the Amazon campus, Amazon’s employee growth has been an absolutely enormous percentage of post-2008 incremental demand. Still large, but not as huge, has been areas with good public schools and nice houses farther from Amazon’s campus, for those employees willing to commute more.

    Neighborhoods where the average income is below the average Amazon employees, or where schools are poorly rated, probably haven’t been as impacted as much.

    Can any of this be quantified? Who knows, and who cares to put in the work when it’s so obvious if you go around shopping for houses. Go to open houses in the neighborhoods I’m talking about and ask the realtor how many people browsing through are Amazon employees, particularly recently relocated employees. The answer is always an overwhelming percent.

    For those who don’t believe Amazon is an enormous factor in Seattle real estate, can you explain how so many thousands of highly paid people can be dropped on a relatively small city in such a relatively small time period, and somehow manage to not completely dominate the supply/demand dynamic? That’s not a rhetorical question. I’m genuinely trying to understand how that could be possible.

  133. 133
    Michael Debejos says:

    By whatsmyname @ 130:

    RE: redmondjp @ 129 – Amazon’s obvious potential impact is on the downtown office market. Seattle in the ’70’s was a Boeing monoculture. But you think that the 24,000 jobs of our fifth largest employer is 10X the impact of Boeing’s 80,000 jobs plus the 150,000 or so in the rest of the top four; well, OK.

    Post 2008 incremental job growth of highly-paid jobs per company is the only number that matters. Among Boeing, Microsoft, Expedia, etc. there’s no contest. They don’t even show up on the chart compared to Amazon.

  134. 134
    whatsmyname says:

    RE: Michael Debejos @ 132 – It sounds like you have confused a metropolitan area of 3.7MM people for the neighborhoods you like to house shop. I’ll give you demand and price pressure on select neighborhoods, but the macro market is not overwhelmed by the activities of the 6/10 of 1%, (and that’s assuming all 24,000 jobs are highly paid).

Leave a Reply

Use your email address to sign up with Gravatar for a custom avatar.
Your email address will not be published.

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

Please read the rules before posting a comment.