High Seattle Home Prices Now The Subject Of Tasteless Bus Ads

This bus ad was spotted by Redditor /u/moroccahamed on /r/SeattleWA:

Tasteless Codefellows Bus Ad
You know who can afford a house in Seattle? SOFTWARE DEVELOPERS.

I feel like an ad with this kind of message is more likely to add to the already high level of animosity toward software developers than it is to get people to sign up for a coding academy.

Also, learning to code at a code academy isn’t likely to be a magic wand that allows you to afford a home in Seattle. The median price of a house (i.e. single-family) in Seattle last month was $722,250. In order to afford a home that expensive at today’s interest rates you would need to earn about $140,000. According to Code Fellows’ own website (screenshot), the “average starting salary” of their customers is “$70K+,” only about half of what you would need to earn to afford the median-priced home.

Even in the cheapest part of Seattle—NWMLS area 385, Central Seattle SW / Beacon Hill—the median price was $559,950. If we take a more generous salary estimate of $97,000—the average software developer salary across Seattle according to Glassdoor (screenshot)—we still come up short of the $109,000 needed to make a home in SW Seattle affordable.

According to the third-party site Course Report, about 69 percent of Code Fellows graduates earned less than $80,000 after completing their courses. Six percent of their graduates did report earning $110,000 or more, so there is at least a slim chance that you might be able to afford to buy a home in the cheapest parts of south Seattle after completing the Code Fellows courses. More likely though, you’re not part of the lucky few and both you and your significant other are going to need to become software developers to afford a modest house in Seattle.

And of course that’s not even considering the question of how these newly-minted software developers are going to come up with over $100,000 to make a 20 percent down payment. It might be a bit difficult after spending over $20,000 on coding courses.

While the ad may be totally tasteless, at least Code Fellows was responsive to feedback. According to GeekWire, they have already pulled the ads.


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.

257 comments:

  1. 1
    Erik says:

    I thought code monkeys were paid a lot more? Average engineers in aerospace are paid more than that. Is that what software engineers make on average?

    I know how those struggling code monkeys can afford a house… Buy inexpensive Seattle rentals and let them sit a few years. Then exchange the cheap rentals for a respectable house in a decent area of Seattle.

  2. 2
    jon says:

    RE: Erik @ 1 – Not all software developers are what you would compare to a engineer in another field. There are plenty of people that just write code to meet some detailed specification. That said, I like the bluntness of the ad. It’s a good message to get out to kids that these things are within their reach, provided they put in the work. Sure, maybe some fine print about past returns do not indicate future results, yadda yadda.

  3. 3
    Erik says:

    RE: Erik @ 1
    Google says average aerospace engineer makes 82k. Average software engineer makes 110k. Guess I was incorrect. I was using average published for union aerospace engineers salary.

  4. 4
    Erik says:

    RE: jon @ 2
    Yeah, software is still a growing industry. My industry is probably shrinking.

  5. 5

    RE: Erik @ 3 – Interesting. I would have suspected that physical engineering fields would still make more on average than software engineers. Of course, code monkeys need to make money while they can, as it is one of the few fields where long term experience can actually be a detriment.

  6. 6
    Sea says:

    And this piece by Tim shows perfectly how a path to much higher prices going forward is full of risk. Already rents are starting to drag a bit. $140k to buy a medium home, essentially only the top 10% of households can afford a medium home.

    Was looking at rentals in West Seattle and saw one in Arbor Heights that the owner just purchased in April for 475k (56k over ask). They initially asked 2,095 and had already lowered the rent to $1,995. Even with 20%+ down they will be cash flow negative by a few hundred dollars in the best case scenario, plus since they are using property management that will cost them likely another $200 month + 1 month rent initially so essentially $366 month in fees. Clearly its a bet that the gains will outsize the $500-600 month loss plus down payment they invested.

  7. 7
    Minnie says:

    RE: Sea @ 6

    Interesting observation!
    Sometimes with rentals I think it’s hard to say what they buyers intention was….for example, in my neighborhood I saw a home sell and then put on the market but I looked a little closer and realized they wanted someone for a 6 month lease because they weren’t relocating for 6 months. They were trying to be smart and rent it out before they got here.

    Plus, you don’t know how much a buyer put down and if they paid all cash then they can lower the rent to get good tenants and be fine.
    All cash offers are happening quite a bit, at least in my area.
    But yah, they’re likely not making their nut if they put standard 20% down ……

  8. 8
    Sea says:

    By Minnie @ 7:

    RE: Sea @ 6

    Interesting observation!
    Sometimes with rentals I think it’s hard to say what they buyers intention was….for example, in my neighborhood I saw a home sell and then put on the market but I looked a little closer and realized they wanted someone for a 6 month lease because they weren’t relocating for 6 months. They were trying to be smart and rent it out before they got here.

    Plus, you don’t know how much a buyer put down and if they paid all cash then they can lower the rent to get good tenants and be fine.
    All cash offers are happening quite a bit, at least in my area.
    But yah, they’re likely not making their nut if they put standard 20% down ……

    Absolutely, lots of potential variables, but even if all cash it still means the CAP rate is very low (4%, 3% after fees maybe?) and you can question is it really a good investment UNLESS the gravy train keeps on going. Those are really low returns for the risk/repairs/vacancy etc that goes with rentals.

    Reminds me so much of 2006 now. Cash flow is no longer king and barely matters to people when you expect to gain $100k a year in increased values.

  9. 9
    Brendan says:

    Yes, some people seem to imagine that software developers make far more money than they do. Most developers are probably making between 80k and 150k. That’s excellent money in most parts of the country… except the areas that software developers actually live (SF Bay area, Seattle, NYC). The areas where it’s cheaper to live have lower salaries.

    I’m very suspicious of these coding camps. They charge a LOT of money for several months of instruction and promise high salaries. All the people I know who actually have good jobs in tech either studied computer science or a related science discipline at a major university. Occasionally you meet people who are self taught, usually working at it for years before breaking into the industry. I think it’s actually harder for self taught people to break into the industry now that there are so many computer science grads. Never have I met anyone who took a 3 month course and went directly to making 6 figures.

  10. 10
    Highlands says:

    RE: Erik @ 1 – The reason their salary is lower than the average is because the candidates that come out of these bootcamps are below average in quality. Most people attend these so they can make developer salaries. They have no interest in the field itself.

  11. 11

    I wouldn’t call this tasteless. Divisive maybe, pitting those easily offended against those who aren’t. But it’s clearly not as bad as the local VW dealer’s billboard ads back in the 80s that had a WWII themed background and said: “Surrender to the Germans!” (Or some such thing.)

  12. 12
    Erik says:

    RE: LessonIsNeverTry @ 5
    It’s cause aerospace engineers have a union and we have been pushing the rate up for a long time. This is changing. The new union contract has much smaller raises.

  13. 13
    whatsmyname says:

    You know who can afford to buy a house in Moscow?

    Apparently not Trump University graduates.
    Not even in Moscow, ID.

  14. 14
    Weasel says:

    By Erik @ 3:

    RE: Erik @ 1
    Google says average aerospace engineer makes 82k. Average software engineer makes 110k. Guess I was incorrect. I was using average published for union aerospace engineers salary.

    Depends if they are any good or not. Company I work for likes to employ software engineers that know what they’re doing because we’re into selling a quality product and have deep pockets. Good coders with experience are paid around 100k, mid career team leads 150k+. Some kid fresh out of college that comes whinging to corporate IT every time they run into a coding issue and try to blame the network or their laptop we issued them, or cant perform basic trouble shooting of their tools is not going to make that kind of coin :-)

  15. 15
    Blurtman says:

    RE: Erik @ 3 – How much do the imported H1b coders make?

  16. 16
    GoHawks says:

    Holy cow, MLS ## 915592. Are we San Francisco yet?!?!

  17. 17

    [Topic: Siding]

    As long as we’re going to talk about other topics now, I’ve come to the conclusion that most buyers/agents don’t know anything about siding. There seems to be zero correlation to the siding type/condition and price asked/obtained. If you have a house with questionable/defective siding, now is the time to sell! Not only will it sell, but it might not even sell at a discount.

    I haven’t been checking Form 17 on some of the worst ones. I wonder if they have been disclosing the siding as a defect?

  18. 18

    RE: Kary L. Krismer @ 17

    Usually if the siding is not currently defective, vs the type more prone to be defective without significant proper care and maintenance, it is not a disclosure item. Same as potential future wood rot is not a disclosure, potential future LP rot is also not a disclosure. I have seen two other brands have similar issues, but LP is the most common here.

    The discount for most all defects has been diminished if not entirely erased in this market. Not limited to siding issues.

  19. 19

    RE: Ardell DellaLoggia @ 18 – But by “worst” I mean where it is already failing. I looked at two houses yesterday with LP and one was seemingly fine, but for a couple of very minor issues on one side of the house. I wouldn’t expect to see any disclosure there (although the house was listed as cement planked when it isn’t such). The other had siding in very bad condition. I just checked Form 17 and no disclosure. Maybe they always enter the house through the garage? ;-)

    I agree with your last paragraph. Buyers are willing to overlook a lot! They need to think more about when they’ll want to sell and the likelihood that the market won’t be the same.

  20. 20

    I was surprised by this in The Economist article the other day. “…the fact that Seattle and its suburbs are less than a fifth the size of Silicon Valley…” Are they using the same geographic distance?

    http://www.economist.com/news/business/21721950-more-ever-seattle-and-silicon-valley-are-joined-hip-how-americas-two-tech-hubs-are?fsrc=scn%2Ftw%2Fte%2Fbl%2Fed%2Fsiliconvalleynorthhowamericastwotechhubsareconverging

  21. 21
    wreckingbull says:

    RE: Ardell DellaLoggia @ 20 – That is poor writing on their part. I guess they are using some arbitrary geographical boundary they concocted.

    I’d say MSA population is far better metric, and the areas are rather similar in size.

    https://en.wikipedia.org/wiki/List_of_Metropolitan_Statistical_Areas

  22. 22
    D.C. says:

    The ad underscores how Seattle has become one of the top ten least diverse major cities in the U.S.

  23. 23

    RE: wreckingbull @ 21 – I would agree with the poor writing part. But the areas you suggest are rather large areas. I don’t think you would typically consider San Jose to be part of San Francisco or Tacoma to be part of Seattle.

    Getting back to the article though, I was thinking maybe they were discussing physical size (square miles). Seattle is much more affected by water than San Jose.

  24. 24
    Blurtman says:

    In my dog walking treks is the very nice Greenbriar development. The school bus discharges lots of kids, and appears to be completely full. 80% are what the liberal media would call “people of color'” the offspring of H1b’s who, it can be argued, are taking jobs that can go to citizens, as well as homes, which many citizens cannot afford. Bravo to these folks for being able to afford the area and persevering in getting here. This general part of Sammamish is very nice. Good schools.

  25. 25

    RE: Blurtman @ 23

    Many of my clients who fit that description back when they bought their homes are now citizens. Just an
    FYI. You can’t tell a citizen by the shade of their skin tone. Also many of my Hb1 visa clients are whiter than I am and are European.

  26. 26

    RE: wreckingbull @ 21

    Thanks for the link. Very useful. Am sending it to someone who just asked me a question about home price increases in North Texas. The rate of change explains more, to some degree, than the overall population. A smaller percentage of a higher population can cause the same supply and demand issues.

    Assuming each area had housing sufficient to meet the needs of the population back in 2010, the added number of people vs % should represent the need for more housing units.

    Also the definition of “the burbs” seems to expand with each new housing starts surge. For instance it seems to me that Snoqualmie is recently considered part of the I-90 Corridor commute area to SLU than it was in the last boom. Especially as to the availability and price point of new construction. Though it’s possible I just wasn’t paying much attention to Snoqualmie back then.

    To Kary as a follow up to our siding discussion, I worry more about people stretching distance to get “new” than a siding issue. The siding fix is a number we can easily incorporate into a bid up such that you would not notice “the discount”, but that does not mean it isn’t there or that agents overlooked the issue. Often the cost of all new siding is only 20% or so of the bid up. So it’s still not going to sell for less than asking. But what will happen to home prices far out when closer in becomes more affordable and the homes are no longer “new”? Is Snoqualmie the new Monroe?

  27. 27

    RE: wreckingbull @ 21

    While we are on the topic of census and population changes:

    http://time.com/4774288/census-bureau-john-thompson-resigned/

    “The Head of the Census Resigned. It Could Be as Serious as James Comey”

  28. 28

    [Topic: Form 35E–Escalation Clause.]

    This is the latest of the Overconfident Seller/Desperate Buyer videos, but I’m not really sure it’s just limited to this market. The overall message though is that Form 35E isn’t a very good form and only exists because firms were creating their own escalation forms. So we basically have the same situation as Form 22AD–lousy form but at least it’s a standard form.

    Annie is correct that calculating the proper escalated price can be difficult in some scenarios, and that if it’s calculated wrong on the face of the form the issue can linger until closing. Agents, buyers and sellers all need to understand that. Anyway, here’s the link.

    https://www.youtube.com/watch?v=tnAxLO0mJXE&feature=youtu.be&list=PLsU-Dcv-PIXZ1SxR0yfh1mwOIoNN3V9ah&_cldee=a2FyeUBraG91c2VhZ2VudC5jb20%3D&recipientid=contact-a6d36679d15c480c931b053fb3232503-84a8c63bece848c5b7890ac172169ea8&utm_source=ClickDimensions&utm_medium=email&utm_campaign=Friday%20Video%202016&esid=e4381c6d-6d37-e711-83f7-00155d24b711

    Note the video doesn’t deal at all with the issue of whether a buyer would want to use an escalation clause. I think I’ve only used one twice, although I’ve probably suggested using one more than that.

  29. 29
    Umka says:

    RE: Blurtman @ 24

    Same thing here. When a school bus opens it’s doors I barely see a “white” child anymore.
    Go and visit any baby clothing store around you. The only “white” people you are going to see in there are the cashier girls.

  30. 30
    Blurtman says:

    RE: Ardell DellaLoggia @ 25 – You are politically incorrect. The homebuyers up thisaway are from India and China. And yes, they may ultimately become citizens, but current citizens are competing for jobs and houses with these folks. Haven’t noticed too many Russians, French, Belgians, etc. And I actually do chat with people in a wide dog walking radius.

  31. 31
    Blurtman says:

    RE: Ardell DellaLoggia @ 25 – You are politically incorrect. The homebuyers up thisaway are from India and China. And yes, they may ultimately become citizens, but current citizens are competing for jobs and houses with these folks. Haven’t noticed too many Russians, French, Belgians, etc. And I actually do chat with people in a wide dog walking radius.

  32. 32
    Eastsider says:

    By Ardell DellaLoggia @ 27:

    RE: wreckingbull @ 21

    While we are on the topic of census and population changes:

    http://time.com/4774288/census-bureau-john-thompson-resigned/

    “The Head of the Census Resigned. It Could Be as Serious as James Comey”

    Are you kidding? “The director’s fixed, five-year term had been extended through 2017 and his exit was a surprise.” Yeah, it must be a surprise to some that he is near the end of his term. Btw, I have no idea who this guy is but making a molehill out of a mountain seems to be in fashion after the Trump election. SICK!

  33. 33

    [Topic: Fear and Loathing at the Census Bureau.]

    RE: Eastsider @ 32 – No, no, no! You don’t understand. His leaving earlier than expected will make the transition issues much harder because there will be more time to get someone in place by the same time or earlier as if he had stayed his full term. And of course, don’t forget that to assume it will be bad you need to assume that no one will be nominated this year, even though they knew the person was leaving and he left earlier.

    In other words, I agree with you. There was so much scaremongering in that article I thought I was reading Zerohedge.

  34. 34
    Eastsider says:

    RE: Kary L. Krismer @ 33

    “There was so much scaremongering…” Yeah, including today’s front page Seattle Times article about a dead tree due to……….. CLIMATE CHANGE. Now explain why anyone should take Seattle Times seriously. The editor should be FIRED.

  35. 35
    Blurtman says:

    Insourcing: American Lose Jobs to H-1B Visa Workers
    Corporations such as Toys ‘R Us, Xerox, Molina Medical, Pfizer, and Microsoft used H-1B “guest” workers to reduce their payroll costs. Utility company Southern California Edison laid off 500 employees, warning SCE workers to train their replacements in 90 days or they wouldn’t receive severance.

    The Numbers of Replaced American Workers are Staggering

    In 2015, the number of visas issued to all immigrants crossing the borders legally was almost 11 million, according to statistics collected at Foreign Service Posts.

    Supposedly, the government has set a cap of 85,000 new H-1B’s each year for the entire country. But many workers come in using other types of visas such as:

    OPT: Optional Practical Training
    F-1: student
    B-1: business
    J-1: exchange visitor
    CPT: (Curricular Practical Training) interns who are recruited later
    Q: Special Disney-invented visa for workers who are “authentic to the Epcot experience”

    Workers then switch to an H-1B. Switches are not recorded as part of the 85,000 cap and there are no checks and balances in place to reign in visa clearances.

    The Department of State, who issues worker visas, reports figures for all 16 different types of work-eligible visas, showing that 70 million have been issued since 2007.

    When the Government Accountability Office studied the H-1B visa program in 2011, they reported reasons why the numbers of guest workers are impossible to track:

    The total number of H-1B workers in the U.S. at any one time—and information about the length of their stay—is unknown, because (1) data systems among the various agencies that process such individuals are not linked so individuals cannot be readily tracked, and (2) H-1B workers are not assigned a unique identifier that would allow for tracking them over time—particularly if and when their visa status changes.

    The AFL-CIO reported in 2009 that as many as 25% of imported workers have fraudulent visas. Today, this translates to as many as 17.5 million foreign employees gaming the system.

    http://www.huffingtonpost.com/judy-frankel/insourcing-american-lose-_b_11173074.html

  36. 36

    [Topic: Climate change.]

    RE: Eastsider @ 34

    The dry/hot summer a year or two ago was very hard on some trees. I wonder how that year compared to the drought in 1976? I remember that as being much worse as far as concern over electricity and water, but the demand side and infrastructure was much different then too. Every flush was probably 5 gallons of water.

    But yes, pine trees are hardly the most hardy of trees.

  37. 37

    The Bubble Blogs are All Interesting Reads

    Thanks for my coffee reads this morning Bubbleheads.

    Kary, you’re right about house siding….the stuff cracks in a few a years from what I’ve seen and everyone that had their house siding recently installed sold in a year [because of the mildew odor]…

    Another waste of money is replacing exterior rotted bottom glueboard panels without sealing the seams….fixing the root cause of their rot IOWs.

  38. 38

    [Topic: Siding.]

    By softwarengineer @ 37:

    The Bubble Blogs are All Interesting Reads

    Thanks for my coffee reads this morning Bubbleheads.

    Kary, you’re right about house siding….the stuff cracks in a few a years from what I’ve seen

    Cracks are usually due to improper installation. But I did see a house recently where the cracks were evidence of settling. There a siding other than wood might have been an advantage (for a buyer) because I don’t think wood would have given that issue away. That, BTW, is one of the houses I was thinking of when I said houses were selling without regard to the condition of the siding.

  39. 39

    RE: Erik @ 1
    Software Developers Do Not Need an Engineering Degree

    To do like arithmetic on computers or specialized programming [needing on-the-job experience] to do IT jobs on a computer. That’s why experience doesn’t matter….a high school diploma is all ya need, ask Bill Gates…

    Engineering Colleges don’t teach these skills….they teach automotive, manufacturing and rocket, etc,etc design though…real manufacturing high paying jobs we mostly outsourced to Japan and such….ask Boeing Fabrication….LOL

  40. 40
    redmondjp says:

    By Eastsider @ 34:

    RE: Kary L. Krismer @ 33

    “There was so much scaremongering…” Yeah, including today’s front page Seattle Times article about a dead tree due to……….. CLIMATE CHANGE. Now explain why anyone should take Seattle Times seriously. The editor should be FIRED.

    That’s the genius of their rebranding of global warming to climate change. You can now blame anything that happens in nature or the environment on it. All the more reason for that tax on carbon so Al Gore can build another mansion (google “chicago carbon exchange”).

    Speaking of trees, what drives me crazy is that our tree-worshipping government stooges have no discernment between ‘good’ trees and bad ones. I have 40-year-old poplar trees right behind my house that are now at end-of-life. Five were removed two years ago, and another two are mostly dead now. Yet on the new short-plat nearby, the city required the developer to keep several poplar trees of the same age.

    Down in Renton, they did a similar thing, fencing off “protected” poplar trees (that were planted back when the Longacres racetrack was still in operation) at a new commercial building development. What makes this doubly funny is that the roots of these same trees are clearly growing into adjacent city storm sewer drains (which can clog them – my city paid to have one of the poplars behind my house removed because the same thing was happening).

    You just can’t fix stupid. It’s even worse when we all have to pay taxes to support it.

  41. 41
    Erik says:

    RE: Blurtman @ 15
    Just got back from hiking/caming on the peninsula. Been unable to respond.

    $80 to $90k from what I heard. My friend at work is from India and he plays cricket with others from his country. I told him I was considering jumping to software. He said they only make $80k to $90l per year and the employment isn’t secure and long term. I told him neither is our company since I already got laid off once. He said yeah, but you came back in a better position because of your experience. I had to agree.

    I’m sure there are exceptions, but there just isn’t enough of a lure to leave my current field yet.

  42. 42
    Erik says:

    RE: softwarengineer @ 39
    Not emergent work. Outsourcing emergent work is more costly.

  43. 43
    jon says:

    The current H1-B system is lottery based, so contracting companies flood the pool with whoever they can find to apply. That drives down the quality and hence salary of those employees. Trump’s plan is to give priority for H1-B’s to higher paid employees. That’s great for companies like Amazon and Microsoft, because it will improve the overall quality of job applicants. It remains to be seen if it will help native born American citizens, who will find stiffer competition. That could drive down their salaries, unless there really is unmet demand for top quality engineers (which does appear to be the case). If Trump’s plan does get implemented, then it will be more upward pressure on Seattle housing prices.

  44. 44
    Erik says:

    RE: jon @ 43
    I don’t mind getting paid less as a subpar engineer if I can pull $2M out of this real estate market to offset my skills. Really want to see prices explode and then tank into the Pacific Ocean. Looks like it’s about to happen. Note to builders: please slow your pace down and then dump thousands of homes on the market. This gradual increase mentality will only drive down housing price and therefore your profits. We need hungry buyers that will pay top dollar. Collaborate with other builders so everyone profits except the buyers.

  45. 45
    Macro Investor says:

    By Erik @ 1:

    I thought code monkeys were paid a lot more? Average engineers in aerospace are paid more than that. Is that what software engineers make on average?

    I know how those struggling code monkeys can afford a house… Buy inexpensive Seattle rentals and let them sit a few years. Then exchange the cheap rentals for a respectable house in a decent area of Seattle.

    That site Tim cited is pretty deceptive about the salary data. Most likely they are hiding experience level.

    I’ve talked to hiring managers at microsoft who WILL NOT hire someone without a CS degree. Someone from one of these quickie for profit schools will start at around $25 an hour (if someone will give them a chance). If they do well in 5 years they can be making 80k plus.

  46. 46
    Macro Investor says:

    By Sea @ 6:

    And this piece by Tim shows perfectly how a path to much higher prices going forward is full of risk. Already rents are starting to drag a bit. $140k to buy a medium home, essentially only the top 10% of households can afford a medium home.

    Was looking at rentals in West Seattle and saw one in Arbor Heights that the owner just purchased in April for 475k (56k over ask). They initially asked 2,095 and had already lowered the rent to $1,995. Even with 20%+ down they will be cash flow negative by a few hundred dollars in the best case scenario, plus since they are using property management that will cost them likely another $200 month + 1 month rent initially so essentially $366 month in fees. Clearly its a bet that the gains will outsize the $500-600 month loss plus down payment they invested.

    I put some numbers in a mortgage calculator just to spitball this. Figuring a 400k loan, with a $400/month HOA comes to $3000 per month. So if you rent it for 2000 you are paying someone 12,000 per year to rent your house. Much much worse if you have a property manager and assume some level of maintenance/vacancy (which you must).

    Disastrous investment. You house has to appreciate 3% a year just to break even. You are essentially in business to enrich your renter, the bank, the agents and the tax man.

  47. 47
    Sid says:

    By Erik @ 41:

    RE: Blurtman @ 15
    Just got back from hiking/caming on the peninsula. Been unable to respond.

    $80 to $90k from what I heard. My friend at work is from India and he plays cricket with others from his country. I told him I was considering jumping to software. He said they only make $80k to $90l per year and the employment isn’t secure and long term. …

    I’m sure there are exceptions, but there just isn’t enough of a lure to leave my current field yet.

    Wow. That is very low. Kids just starting out at the major companies with an undergraduate degree in CS earn around double that amount (this includes bonus+stock).

  48. 48
    Erik says:

    RE: Sid @ 47
    Now that’s a lot of money. I had a lead engineer at my work that was about to retire, so about 65. He said his son got his first job at Google making more than he was making in aerospace and he was a top paid engineer. He told me to either be an executive or go to software because the future looks bleak for engineers in aerospace.

  49. 49

    RE: Macro Investor @ 46

    I happen to be running numbers for someone right now. The principal and interest at 4.25% would be $1,575 on a 30 year at $400,000. The price on the one I’m doing is $100k more than that and taxes plus condo fees are $1,000 in a building with a pool. So more like $2,500 or less than $3,000.

  50. 50
    Hugh Dominic says:

    By Blurtman @ 24:

    In my dog walking treks is the very nice Greenbriar development. The school bus discharges lots of kids, and appears to be completely full. 80% are what the liberal media would call “people of color'” the offspring of H1b’s who, it can be argued, are taking jobs that can go to citizens, as well as homes, which many citizens cannot afford. Bravo to these folks for being able to afford the area and persevering in getting here. This general part of Sammamish is very nice. Good schools.

    The progressive definition of “people of color” or “immigrant” does not include Asians (Chinese, Indian, etc.). They may have dark skin but they don’t count in the progressive agenda. They are too successful and it ruins the narrative.

  51. 51
    Matt says:

    I think more so than any other engineering profession, software engineers have a huge variance in pay. The vast majority of software engineers don’t work in tech specific companies and those engineers rarely fetch exorbitant pay. There are a couple cities in the US currently, one of which is Seattle, where there is such competition for workers at the “elite” tech firms that pay has really ballooned and it has especially ballooned in the last year or two. An engineer with 5 years of experience at Amazon, Google, Facebook, Apple, and similar companies in Seattle will be making about $175K-$250K/year between stock vesting, cash bonus, and salary. At Microsoft, it is likely $160K-$200K for the same amount of experience. When the market is going well, as it is now, the equity portion of their earnings can add a significant amount to those sums. Last year, it wasn’t uncommon (though not the norm) for someone with only 5 years of experience to have made close to $300K thanks to the appreciation of vested shares.

    Whether or not this type of income is sustainable for software engineers at the “elite” companies in Seattle is up for debate. Depending on one’s perspective, this can be fuel for a housing bubble that will pop spectacularly or it can be proof that there is a groundswell of money to support the rising housing prices.

  52. 52
    John says:

    So is it good time to buy a house or not in east side ?

  53. 53

    [Topic: Builders/Supply]

    By Erik @ 44:

    Note to builders: please slow your pace down and then dump thousands of homes on the market. This gradual increase mentality will only drive down housing price and therefore your profits. We need hungry buyers that will pay top dollar. Collaborate with other builders so everyone profits except the buyers.

    That’s the problem with capitalism–there is no central planning. And the type of collusion you’re conceiving is most likely illegal under anti-trust laws. So we do tend to end up with boom and bust cycles.

    But beyond that, what you’re contemplating isn’t to the advantage of the individual builder. They don’t impact the market by themselves, so it’s in their individual interest to build as much as possible as fast as possible. On the flip side, that’s why most cartels fail (OPEC being probably one of the longest running exceptions, but even it has not done well lately). Individual interests are to cheat on cartel limits.

  54. 54

    [Topic: Macro Investor’s Numbers]

    By Ardell DellaLoggia @ 49:

    RE: Macro Investor @ 46

    I happen to be running numbers for someone right now. The principal and interest at 4.25% would be $1,575 on a 30 year at $400,000. The price on the one I’m doing is $100k more than that and taxes plus condo fees are $1,000 in a building with a pool. So more like $2,500 or less than $3,000.

    I was running some numbers, but at a lower loan amount since I think it would be difficult to borrow $400,000 on non-owner occupied. Using your 4.25% rate on $356,000 I would come up to about $2,650, including the $400 HOA (which I guess we’re assuming the landlord is paying, but may not be the case). I’m excluding the management fee because I think the depreciation expense would probably offset that pretty close. Then there would be the tax loss which might shelter other income.

    But that’s sort of the nature of RE investing in income producing property. It often doesn’t cash flow, with the goal being future appreciation and/or tax benefits.

  55. 55
    GoHawks says:

    RE: John @ 52 – Yes, buy now or be priced out forever. It’s different here, this is real this time.

  56. 56
    jon says:

    By John @ 52:

    So is it good time to buy a house or not in east side ?

    If you think that your income is stable and you found a house that you will enjoy living in regardless of the ups and downs around you, then yes.

  57. 57

    RE: Weasel @ 14
    Exactly

    College don’t teach ambiguous higher level technical S/W experience to students….and apparently the few with work experience ain’t sharing senior knowledge either….I bet the S/W developers ALL don’t have college degrees as a general rule. Why would they need a degree?

    If I ran those high tech companies I’d incorporate mandatory I’d make them share through mandatory firing if they don’t….its that simple. I’d also hire mostly NW high school students that are strong in math. Ya don’t need a college degree.

  58. 58
    Deerhawke says:

    Another contributing factor to low inventory and high prices.

    https://www.nytimes.com/2017/05/14/business/economy/home-ownership-turnover.html?_r=0

    People refinanced as rates fell and refinanced again as they bottomed out. Who is going to try to move up to a nicer bigger house if it also means giving up that 3.25% interest rate for 4.25%? It is probably not an enormous factor now, but what about if rates rise another point. Or two points.

    Interesting term– interest rate “lock in”.

    At this point, part of the problem may be more psychological than financial. Before the bottom fell out, everybody was taking on leverage to move up to the nicer bigger house. Now a lot of people are half expecting another bubble to pop and are holding some financial dry powder in case we see a return of 2008.

  59. 59
    Ross says:

    By Deerhawke @ 58:

    Another contributing factor to low inventory and high prices.

    https://www.nytimes.com/2017/05/14/business/economy/home-ownership-turnover.html?_r=0

    People refinanced as rates fell and refinanced again as they bottomed out. Who is going to try to move up to a nicer bigger house if it also means giving up that 3.25% interest rate for 4.25%? It is probably not an enormous factor now, but what about if rates rise another point. Or two points.

    Interesting term– interest rate “lock in”.

    At this point, part of the problem may be more psychological than financial. Before the bottom fell out, everybody was taking on leverage to move up to the nicer bigger house. Now a lot of people are half expecting another bubble to pop and are holding some financial dry powder in case we see a return of 2008.

    Or, if they can afford it, convert that cheap 3.25% mortgage to a rental and buy a new one at 4.25%. With the increase in rent, most folks would be cash flow positive. Whether they want or are suited to be landlords is another story.

  60. 60

    [Topic: Rentals/Involuntary Landlords]

    By Ross @ 59:

    Or, if they can afford it, convert that cheap 3.25% mortgage to a rental and buy a new one at 4.25%. With the increase in rent, most folks would be cash flow positive. Whether they want or are suited to be landlords is another story.

    I’ve often wondered how many of the “involuntary landlords” who couldn’t sell in 2009-2012 now find that they don’t really mind being landlords. It undoubtedly turns largely on what their luck has been finding good tenants, but I wouldn’t be at all surprised that a lot of them don’t find it as bad as what they expected. Also, at this point they’re past the time they could sell without a tax consequence.

  61. 61
    Minnie says:

    [Off topic – High End Appliances]

    Hello everyone, and thanks Tim for providing great content and essentially a forum for us to discuss and share information! I have a question, it may have been asked before so please forgive me.

    I am wondering what “value” installing high end appliances has on a home resale. I’m looking to sell soon, my home is in Seattle, list probably just below $850K. My kitchen is high quality but I was always waiting to replace the appliances “when the fridge died”. I’m frugal like that. They don’t make fridges like that anymore and my local Albert Lee guy told me it would last forever. So I lived with it. But now it’s time to sell. The fridge has been refaced with cabinetry so it doesn’t look as old as it is….until you open it up …its very clean, but obviously not new. I figure I could install a wolf range for 4K (been looking for awhile) and then install a new stainless dishwasher and probably one of those stainless kitchenaid fridges (Albert Lee guy knows whats up)

    It seems like folks salivate when they see wolf appliances and I see it all the time in listings “wolf range! high end appliances!” so does it matter? SO I wanted to ask the experts and also because I know you all will give me your honest opinion you don’t really seem to hold back :-)

    Any advice or discussion is appreciated! PS – yes I have discussed with my agent, googled, etc but I’m really curious as to what my Seattle Bubble friends think.

  62. 62
    Jasper says:

    RE: Minnie @ 61 – I suspect that my appliance buying habits have more in common with the average homeowner, rather than a flipper’s stereotype of a high-end homebuyer.

    My wife and I like white major appliances, not stainless steel. White appliances go well with our baseboards, window trim, and doors.

    We like appliances that are durable, easy-to-clean, and quiet. A gas stovetop is nice, as is a through-the-door ice-and-water dispenser in the refrigerator. We spent almost as much on a very quiet range hood as we did on our kitchen range.

  63. 63
    Minnie says:

    RE: Jasper @ 62

    Thanks Jasper, that’s insightful. Appliances DO tend to be a very personal decision, depending on tastes and customization. Thanks for reminding me of that.

  64. 64
    Erik says:

    RE: Minnie @ 61
    US Appliance contractor package is the best deal. They deliver, you install. Don’t get a cheap package. I did once and regretted it. Spend like $6k and you’ll get something nice.

  65. 65
    Hugh Dominic says:

    RE: John @ 52 – it’s always a good time to pay a real estate commission.

  66. 66
    Hugh Dominic says:

    RE: Minnie @ 61 – my opinion is don’t overspend what the rest of the house will support. Try to have an even finish quality throughout the house. If one room is great, the rest will look like garbage.

  67. 67
    Minnie says:

    RE: Erik @ 64

    Thanks Erik for that link, I didn’t know that site existed! There’s lot of customer reviews on there which are helpful to me. There’s a nice Viking package that I”m going to consider for my new home :-)
    I looked around Albert Lee last night (and they don’t carry much cheaper stuff) but the “cheap stuff” looked straight up cheap. You’re right about ordering the nicer stuff.

  68. 68
    Minnie says:

    RE: Hugh Dominic @ 66
    That’s good advice. I think I’m being to critical of my appliances. My home is well maintained and completely finished. My appliances are “nice” but they aren’t brand new….but they are actually quality stuff. If I were to replace them I’d either have to spend quite a chunk of change or actually downgrade. Are people really wooo’d by new appliances or can they tell they are cheap like I can? :-)

  69. 69
    herrbrahms says:

    RE: Minnie @ 61 – Minnie, for an $850K house, I think you could either go Wolf/Subzero or the premium lines of the major brands, such as Kenmore Elite.

    Given the listing price you targeted, I imagine we’re looking at a well-maintained, lived-in home, rather than a reno. You’re probably attracting somewhat of a value buyer rather than the sort of person who wants brand new and outlandish finishes.

    Personally, I’d go with the higher end of the normal appliance lines to stay within the character of the property you’re offering. LG makes a bloody good fridge, and my advice is to avoid the door ice dispensers since they all fail eventually irrespective of brand.

    However, only you know your house. If you have a galley kitchen that doesn’t impress, stick with the safe bet. But if you have a fully remodeled kitchen with island where a chef would feel right at home, then splurge for the Wolf/Fischer & Paykel to complete the picture. Your decision should feel natural and conform to the home, rather than seeming out of place.

  70. 70
    redmondjp says:

    RE: herrbrahms @ 69 – Excellent advice!

  71. 71
    Macro Investor says:

    By Jasper @ 62:

    RE: Minnie @ 61 – I suspect that my appliance buying habits have more in common with the average homeowner, rather than a flipper’s stereotype of a high-end homebuyer.

    My wife and I like white major appliances, not stainless steel. White appliances go well with our baseboards, window trim, and doors.

    We like appliances that are durable, easy-to-clean, and quiet. A gas stovetop is nice, as is a through-the-door ice-and-water dispenser in the refrigerator. We spent almost as much on a very quiet range hood as we did on our kitchen range.

    I would probably LOWER my offer or walk away from a house with overly fancy appliances, or brand new stuff designed to jack up the price. I want a smooth top that’s easy to keep clean. Same for the fridge. No water/ice dispensers that have cleaning/filter issues, or else you can have bacteria in your water. Ughhh.

    My advice is, if your kitchen is not an eyesore, leave it alone. Some people will want to buy showcase appliances, but unlikely exactly what you would choose. Most just want functional and normal. Good luck.

  72. 72

    RE: Minnie @ 68

    While people can be turned off by appliances that obviously need replacing such as “white” that is now yellow, they are not usually “wooed” by better than good ones. The primary issue is aesthetics. They count the dollars they “have to” spend after closing if they can’t live with what is there for at least 1 to 3 years. A cracked cooktop. Insufficient venting for the cooking area. Something they have to spend money on right away is almost always a consideration.

    In this market the pluses and minuses of defects and upgrades is marginalized given the “bid ups” only consider what other buyers are offering and not at all what the house has in features or negatives, for the most part.

    There are markets where you want upgraded appliances to “woo” buyers from other homes they might buy instead of yours. But this market isn’t one of them unless $850,000 where your house is, is more than top dollar for a similar home in that area or homes generally in that area. If it is $850,000 where most homes sell for $650,000…you might need that Wolf. But if it is $850,000 where most homes sell for $1M or more and most sales at $850,000 are being bid up from $750,000 or $800,000, then the appliances will not get you a dime more or less.

  73. 73

    How much could they have saved by not putting a new foundation? If everyone knew the 3 x Lot Rule of Thumb, $427,000 ending up at $1.2M would not be a surprise…but I do think it should have had a new foundation vs re-using the old one.

    http://www.seattletimes.com/business/real-estate/toxic-west-seattle-home-that-sparked-insane-bidding-war-replaced-with-12m-box-house/

  74. 74

    [Topic: Appliances]

    By Ardell DellaLoggia @ 72:

    But if it is $850,000 where most homes sell for $1M or more and most sales at $850,000 are being bid up from $750,000 or $800,000, then the appliances will not get you a dime more or less.

    I wouldn’t say that with such certainty. In this market that might get you an extra two or three bidders and given the market it’s hard to say how much that might return you. It could be some multiple of the cost of the appliances, but it’s clearly a gamble. The highest/best bigger might still have been in play for the same amount with the original appliances.

  75. 75
    Erik says:

    RE: Macro Investor @ 71
    The easy things that raise selling prices are paint, flooring, appliances, and granite countertops in the kitchen. Thats the rule of thumb. That’s where you get the most bang for your buck in a remodel. I’ve never remodeled a high tier property, but I imagine the buyer wants nice appliances if they are shoveling over that much money. If I was looking to sell high tier, I’d get nice appliances.

  76. 76
    Erik says:

    RE: Minnie @ 68
    Get nice shiny appliances. People pay for beauty.

  77. 77
    Deerhawke says:

    Unless the appliances are truly hideous 1970’s Avocado Green, Harvest Gold or Burnt Orange, I would focus on other things that add perceived value at lower cost.

    1) Clean up the landscaping and put down black fine mulch (not chunky brown beauty bark)
    2) Paint– light neutral tones with a white ceiling. Pay a couple of hundred bucks for an interior designer to act as a color consultant.

    I saw a place that was bought by a flipper in Ballard two years ago. They redid the landscaping (it had good bones but was totally overgrown) and then repainted inside and out, including the dark oak cabinets. They replaced the hideous carpet and old vinyl flooring. No appliances in the kitchen or laundry! I was convinced this was a huge mistake. But they put in no more than $30K and it sold immediately and they walked away with $200K after 2 months work.

  78. 78

    [Topic: Appliances]

    RE: Deerhawke @ 77 – But that doesn’t mean they wouldn’t have made more with at least a refrigerator, stove and dishwasher (if so equipped). As it was they probably excluded all FHA buyers, although maybe in Ballard that might not be as important. And in any location they excluded buyers who were very close to their desired down payment limit. It’s similar to the discussion earlier of requiring buyers to pay real estate excise tax or their own real estate commision, etc. Not a way to maximize your net recovery.

    I’m not sure if it’s changed recently, but FHA used to require a stove but not a refrigerator. Seemed very out of date–a refrigerator and microwave would be a much more modern requirement.

    But back to the topic, the first time I ever went to Longacres I did well picking horses just by the name. Those good results don’t mean that was a good practice or that I couldn’t have done better some other way (although with my experience then the latter was probably unlikely).

  79. 79
    Erik says:

    RE: Deerhawke @ 77
    They would have walked away with $250k if they invested $10k in appliances.

  80. 80
    Deerhawke says:

    I got to talk to the flippers and to the young tech couple who bought the house (the flippees, if you will).

    The flippers were using hard money and so therefore were really focused on how long that money was being used. They were only approved for one loan from the hard money lender, so the faster they moved their money on, the better. (This is similar to the way retailers calculate “turns” on shelf space.) When they calculated what it would cost them to do all that the house really needed (new roof, new windows, tile floors, quartz counters on new cabinets, new gas line, new appliances, etc. ) it would take them 6-7 months and $120K. It would have put that house at the time toward the top of that sub-market and cost them more in interest. They would also be paying real estate commissions on all of the materials and labor that was added in the process. It would also have put them into the early summer selling season rather than early spring. All in all, they saw that it was more risk and that the moderate amount of extra return wouldn’t really compensate them for it. These folks were not that educated or sophisticated but they could run an Excel spreadsheet. They know that it is not what you make but what you keep. Sometimes less can be more.

    The folks who bought felt like the flippers did enough so that they could really see the spaces. They could move into a clean freshly-painted house within their budget and then they planned to do all the other upgrades over time as they lived there. They felt happy to find a place that was in their budget — and it definitely would not have been in their budget if it was fully finished. They got a bunch of used appliances from Goodwill to get them started for less than $1000.

    Long story short, landscaping, paint and other fast & easy surface treatments (carpet and linoleum) really helped the place to show and sell. They are the low hanging fruit that adds the most perceived value.

    There is a reason this is called a lipstick flip, but the lessons learned can be applied to most people getting a house ready for sale.

  81. 81
    Deerhawke says:

    By Erik @ 79:

    RE: Deerhawke @ 77
    They would have walked away with $250k if they invested $10k in appliances.

    With flips and remodels, the problem is always knowing where to draw the line. It is really easy to spend way more time and money than you expect.

    I thought these 2 guys were cheaping out, but their numbers are hard to argue with. They bought the property in November, listed it in February, closed in March and walked away with a six figure paychecks. They started another project with the same lender in early April. They did so well on this one that the lender was going to back them on another project starting in June.

  82. 82
    jon says:

    By Kary L. Krismer @ 78:

    [Topic: Appliances]

    I’m not sure if it’s changed recently, but FHA used to require a stove but not a refrigerator. Seemed very out of date–a refrigerator and microwave would be a much more modern requirement.

    All you need for a microwave and a small refrigerator are standard electrical outlets. A stove will need either gas or special wiring, so it has to be built in.

  83. 83
    Minnie says:

    RE: Deerhawke @ 81

    Thanks for sharing your thoughts. Your story reminded me that we bought our place without a washer/dryer and I didn’t think twice about it! :-)
    It’s definitely not a flip, I’m just looking to see if I can make a little extra on it. Maybe its just me being greedy. It’s in great condition, fully landscaped yard (unfortunately we will not get out what we put in…but we did enjoy it while we lived there). I’ve still got about a week to think about it, we’re listing 2nd week of June and other than the appliance conundrum we are ready to go!

  84. 84
    Erik says:

    RE: Deerhawke @ 81
    Who is the lender? I would like a lender that will back me at the auction as opposed to using hard money lenders that have high fees and rates.

  85. 85
    John says:

    Is it good idea to buy short sale houses in east side. New and old homes are same price and its skyrocket in past 3 month

  86. 86
    Erik says:

    RE: Ardell DellaLoggia @ 73
    Remodelers aren’t selling to people that scrutinize such things. Top prices come from those that buy beauty over utility, so remodelers target that demographic.

  87. 87

    By jon @ 82:

    By Kary L. Krismer @ 78:

    [Topic: Appliances]

    I’m not sure if it’s changed recently, but FHA used to require a stove but not a refrigerator. Seemed very out of date–a refrigerator and microwave would be a much more modern requirement.

    All you need for a microwave and a small refrigerator are standard electrical outlets. A stove will need either gas or special wiring, so it has to be built in.

    I was not talking about connections, I was talking about the appliances FHA required to be in place.

  88. 88

    [Topic: Short sale pricing.]

    By John @ 85:

    Is it good idea to buy short sale houses in east side. New and old homes are same price and its skyrocket in past 3 month

    That would have been great advice over three years ago. Quite frankly I don’t know what the pricing is on short sales anymore because there are so few of them. There are only 24 active short sale SFR listings in all of King County, and as far as the eastside is considered, there are only three that are not a long way out.

    Another reason I question short sale pricing is because REO pricing was no longer a bargain several years ago, so it wouldn’t surprise me that short sale pricing has followed suit. I actually miss all the bank owned listings–the short sales not so much.

    The number 24 is brought to you from NWMLS sources but not compiled by or guaranteed by the NWMLS.

  89. 89
    Eastsider says:

    RE: John @ 85 – I would advise against buying short sale in this market. You are not going to get any special deal, but will be responsible for any (undisclosed) defect.

  90. 90

    RE: John @ 85

    You have to determine why in this market the owners are still underwater and can’t sell it not “short”. Often it’s not a house worth having for the same reason.

  91. 91
    Blurtman says:

    The H1b scam

    The federal H1b program is intended to allow foreign workers into the US to do high-skill jobs for which employers can’t find qualified domestic workers. In reality, it’s a way for US employers to lower their labor costs, ignoring the large pool of fully qualified (but more expensive) US workers in favor of cheap foreign labor.

    This isn’t a small program, either; in 2014 there were 124,326 new applications approved and 191,531 renewed. Since this is a three-year program with one possible renewal, the total number of H1b foreign workers in the US is triple that, or close to a million lower-wage workers in positions that should otherwise go to US workers at much higher wages.

    Where are those workers coming from? According to a recent report to Congress, in 2012 most – 64% – come from India, with no other country sending anywhere close to that many (China came closest at 7.6%).

    Given that so many come from India, and that they’re coming under the pretense that they are significantly more qualified than their American counterparts, you may be stunned to learn just how poor the Indian training system when it comes to computer programming.

    According to a 2017 skills assessment of graduating Indian software engineers conducted by Aspiring Minds, an Indian skills assessment company:

    Out of the 2 problems given per candidate, only 14% engineers are able to write compilable codes for both and only 22% write compilable code for exactly one problem.

    Only 14.67% of engineers are employable for IT Services company, while a worryingly low percentage of 2.47% are observed to be employable in IT Product company.

    Amazingly, just 2.21% of candidates are able to write functionally and logically correct code.

    This is the labor pool from which we’re pulling the majority of overseas workers, who our US staff supposedly cannot compete with.

    If you want to learn more about how we’re being played by the H1b program, see this recent 60 Minutes story, or spend some time on the Protect US Workers site. It’s an outrage, and it needs to be stopped.

    https://defiantthinking.wordpress.com/2017/05/15/the-h1b-scam/

  92. 92
    northender says:

    RE: Ardell DellaLoggia @ 73
    Seattle DCI would have required a structural engineer to evaluate the existing foundation and state that it is capable of supporting the increased loading of the taller house. Removing the foundation and basement retaining walls would also require making the basement excavation safe for worker access and might have required shoring. All that would be costly and there’s no corresponding increase in sale price. Plus – reusing the old foundation is green!

  93. 93
    LT says:

    RE: Minnie @ 61

    As someone who just lost (another) bidding war… I don’t think you need to even try to sell your home above asking.

  94. 94
    jon says:

    RE: Blurtman @ 91 – The Aspiring Minds study was of students in India, not specifically the ones that are being sponsored for H1B visas. Either way, that is a pretty bad news for people in India seeking an education.

    Shutting down the visas would mean engineers who would otherwise be qualified enough to get sponsorship would be staying in India, and they would be either competing with US companies from India or providing a better education for the future engineers in India. Trump’s plan to give priority to the more highly qualified engineers would be bad news for India by worsening their brain drain, although the contracting companies would like it in the short term.

  95. 95
    Manamanah says:

    By herrbrahms @ 69:

    RE: Minnie @ 61

    Given the listing price you targeted, I imagine we’re looking at a well-maintained, lived-in home, rather than a reno. You’re probably attracting somewhat of a value buyer rather than the sort of person who wants brand new and outlandish finishes.

    I am purchasing in this range, and this is spot-on. I’m more concerned about floor plan, build quality, etc. If it was crap, it might turn me off, and at $1M would for sure, but appliances are somewhat fungible over time.

  96. 96
    Matt the Engineer says:

    (sigh) Tim – you do realize that there’s a difference between *affording a house* and *affording a median price house* especially on a starting wage, right?

    You aren’t alone here – it seems like a daily mistake made by the media around here *to afford a median house, the minimum wage would have to be…*. I just hold you to a higher standard.

    The bar to affording *any* house is much lower. And they didn’t guarantee you’d be able to afford a house on day one.

  97. 97

    [Topic–Prior post]RE: Matt the Engineer @ 96

    I really wish someone would kill off the nonsense that median price and earnings are strongly correlated. If anything proves they are not it is what has happened to the median over the past 2-3 years. Either that or I’ve totally missed the news articles covering rising incomes.

  98. 98

    [Topic: Trump Tax Proposal and Mortgage Interest Deduction,]

    Here’s an article from the Seattle Times today: http://www.seattletimes.com/business/real-estate/trump-tax-proposal-would-make-mortgage-deduction-useless-for-most-homeowners/

    Two things are striking.

    1. The bias in coverage. It’s covered as so many people losing an deduction, when it should be covered as more people getting the same benefit without having to spend money to get it. Which is better, having to spend a dollar to save 25 cents on your taxes or just getting a 25 cent reduction in your taxes without spending the dollar?

    2. The data they post that only 30% of “households” itemize deductions on their tax returns. Given that the percentage ownership of houses is much higher than that, and that there can be other reasons to itemize besides home ownership, apparently a lot of homeowners already don’t pay enough in interest and taxes to itemize.

  99. 99
    Saffy The Pook says:

    By Deerhawke @ 77:

    Unless the appliances are truly hideous 1970’s Avocado Green, Harvest Gold or Burnt Orange, I would focus on other things that add perceived value at lower cost.

    1) Clean up the landscaping and put down black fine mulch (not chunky brown beauty bark)
    2) Paint– light neutral tones with a white ceiling. Pay a couple of hundred bucks for an interior designer to act as a color consultant.

    I saw a place that was bought by a flipper in Ballard two years ago. They redid the landscaping (it had good bones but was totally overgrown) and then repainted inside and out, including the dark oak cabinets. They replaced the hideous carpet and old vinyl flooring. No appliances in the kitchen or laundry! I was convinced this was a huge mistake. But they put in no more than $30K and it sold immediately and they walked away with $200K after 2 months work.

    I think I know the place you’re talking about, as well as the previous owners. The appliances were practically new when the flippers moved in, so no credit there. On the demerit side, that house had some beautiful mahogany trim throughout that, in their zeal, the flippers painted white along with everything else. It was so egregious that when the sewer backed up into the basement, the guy who cleared it for them told the former owners that it was God’s punishment for what they’d done to the mahogany trim.

    The former owners were well aware that they could’ve gotten more for the place with some moderate investment in flooring, etc but they were up to their chins with the remodel of their new property (which they’d bought in advance, the lot is that special). Bottom line, the flippers took advantage of a hot market but may have destroyed as much value as they added.

  100. 100
    Anonymous Coward says:

    RE: Manamanah @ 95 – Do, do, do!

  101. 101

    [Topic: New house/old foundation.]

    By northender @ 92:

    RE: Ardell DellaLoggia @ 73
    Seattle DCI would have required a structural engineer to evaluate the existing foundation and state that it is capable of supporting the increased loading of the taller house. Removing the foundation and basement retaining walls would also require making the basement excavation safe for worker access and might have required shoring. All that would be costly and there’s no corresponding increase in sale price. Plus – reusing the old foundation is green!

    I vaguely recall some sort of permitting advantage to using the old foundation. I seen a few examples of that in Seattle proper, one of which was a much older foundation than the house in the article.

  102. 102

    RE: Erik @ 42
    Erik, It Wasn’t On the News the Last Couple Decades

    And our lazy Washington State Congressmen, Governors and Senators did nothing to stop it and told us nothing about it too….it should horrify a Mechanical Engineer like yourself…..the outsourcing of Boeing Auburn Fabrication to Japan [mostly]….replacing American engineers with higher paying Japanese engineers. Erik….cutting aluminum for parts is 90% of the life cycle cost of a 737 or other aerospace system. We lost it all.

    That’s exactly why I’ll never own a foreign engineered [even assembled in America]…..ya don’t respect my profession, I don’t respect your’s either…

  103. 103
    Jasper says:

    RE: Kary L. Krismer @ 101 – Depending on the lot, there can be several major advantages to re-using the foundation:

    The Seattle drainage code requires that various measures be taken to mitigate potential run-off from “new or replaced” hard surfaces, such as foundations, driveways, and sidewalks. I don’t know whether re-using a foundation causes the foundation’s area to be excluded from these calculations. Re-using a foundation avoids digging up the area around the house, so it avoids replacing hard surfaces and re-landscaping around the house.

    The city requires that houses be “set back” various distances from the property lines. Some older houses happen to be closer to the property lines than current zoning allows for new houses. Doing a “whole-house remodel” that preserves one wall and the foundation can make it easier to get an exemption from the setback rules. (It is also sometimes possible to get an easement from a neighbor, promising to keep at least ten feet between the properties’ primary structures.)

    In recent decades, the city has established “maximum lot coverage” rules. Again, a “whole-house remodel” that preserves one wall and the foundation can allow grandfathering the old house’s lot coverage.

    The city strongly encourages preserving trees. Replacing a foundation requires digging a huge hole, which may conflict with trees’ root zones.

    The typical process for tearing out and replacing a foundation requires digging out a huge amount of soil, storing or hauling it away, and replacing it. Typically, there needs to be two feet of walking room around the bottom of the foundation wall, with a slope up-and-out toward ground level. Most in-city homes do not have enough side-yard to have all of this slope up-and-out for a half-sunk basement, let alone a full basement. Even if there is room for such a huge hole, the dirt moving costs about two dollars per cubic foot, takes time, and aggravates neighbors.

    The city requires that a licensed structural or geotechnical engineer design and monitor the excavation, and verify that the excavation does not cause any settling damage to nearby structures on adjacent properties. The city has extra permitting requirements for the excavation and hauling (possibly including street use permits and/or sidewalk reconstruction).

    If the builder uses a standard poured-on-site reinforced concrete foundation, there will be weeks of delay while the foundation cures. There can also be weather-related delays, waiting for good times to dig dirt and place concrete.

  104. 104
    Sea says:

    By Kary L. Krismer @ 54:

    But that’s sort of the nature of RE investing in income producing property. It often doesn’t cash flow, with the goal being future appreciation and/or tax benefits.

    That might be the goal for newer investors in today’s market here but the long time landlords that have done this generally would steer away from properties that don’t cash flow and also usually wouldn’t want to pay retail prices for the properties. Many of us tried buying properties mid last decade based on future appreciation + tax benefit rather than cash flow and it turned out inflation was super low and things got really rough.

    If you can scale cash flow positive properties appreciation is just a nice bonus but not required as you will still have an income and your tenants will pay your properties off over the years.

  105. 105
    Jasper says:

    By Jasper @ 103:

    RE: Kary L. Krismer @ 101 – Depending on the lot, there can be several major advantages to re-using the foundation:

    The Seattle drainage code requires that various measures be taken to mitigate potential run-off from “new or replaced” hard surfaces, such as foundations, driveways, and sidewalks. I don’t know whether re-using a foundation causes the foundation’s area to be excluded from these calculations. Re-using a foundation avoids digging up the area around the house, so it avoids replacing hard surfaces and re-landscaping around the house.

    I checked with Seattle’s Department of Construction and Inspections’ Drainage desk. Re-using the foundation does cause the foundation’s area to be excluded from the “new or replaced” hard surface area calculations. Combined with the 1,500 square foot exemption, this often allows the project to avoid needing to install artificial swamps or low-durability “permeable concrete” driveways.

    The DCI interprets a “replaced” hard surface as being replacement of everything from the sky to the bare dirt. A project that just replaces a basement slab and floor does not count, and a project that just replaces a skylight does not count. But a project that replaces a driveway does count. And a project that re-uses the foundation still has to count the replaced eave areas and bumpout areas.

  106. 106
    Deerhawke says:

    RE: Saffy The Pook @ 99

    Not the same flippers. This house was a 50’s split level with skinny trim. It mostly had 1970’s Harvest Gold or Hotpoint bottom-of-the-line appliances when they bought it. It had been a long-term rental to crappy tenants and was pretty hashed. They may not have brought the place up to its full potential before they sold it, but they left the house and neighborhood looking better.

  107. 107
    Manamanah says:

    By Anonymous Coward @ 100:

    RE: Manamanah @ 95 – Do, do, do!

    ?

  108. 108
    herrbrahms says:

    RE: Saffy #99

    “On the demerit side, that house had some beautiful mahogany trim throughout that, in their zeal, the flippers painted white along with everything else. It was so egregious that when the sewer backed up into the basement, the guy who cleared it for them told the former owners that it was God’s punishment for what they’d done to the mahogany trim.”

    Anyone who paints over beautifully stained mahogany, particularly flame/crotch/bookmatched mahogany, just because the surface is a little scuffed or because they want to go for a new “look” — they deserve far worse than a mere sewer backup.

    If any of you strongly lust after antique stained mahogany, you should take a trip to Rosario Resort on Orcas Island. There you’ll find wonderful mahogany cabinetry and paneling in an informal museum, courtesy of the late Seattle mayor and shipbuilding magnate Robert Moran.

  109. 109
    Anonymous Coward says:

    RE: Manamanah @ 107 – Your screen name is a reference to and old muppets skit: https://m.youtube.com/watch?v=8N_tupPBtWQ

  110. 110
    Erik says:

    RE: LT @ 93
    Quit being a cheapskate! Buy now or be priced out forever.

    I’ve been telling people on this site to buy for years. They told me there is no inventory. Excuse after excuse. Those people are either priced or having to live in an undesirable area. I’m telling you, buy now and sell in 5 years. You’ll walk away with a stack of cash so you can buy your dream home when this thing pops. If it doesn’t pop, you have a few hundred k to rent something nice with.

  111. 111
    Saffy The Pook says:

    By Deerhawke @ 106:

    RE: Saffy The Pook @ 99

    Not the same flippers. This house was a 50’s split level with skinny trim. It mostly had 1970’s Harvest Gold or Hotpoint bottom-of-the-line appliances when they bought it. It had been a long-term rental to crappy tenants and was pretty hashed. They may not have brought the place up to its full potential before they sold it, but they left the house and neighborhood looking better.

    Okay, thanks.

  112. 112

    RE: Erik @ 110
    Erik….I Made Money On My Real Estate Investment in a Horrifying Depressed Market, Kansas

    So the open border rich elite foreign slanted doom sayers have no ultimate control on the real estate market….no one does….

  113. 113
    LT says:

    RE: Erik @ 110
    lol, we are not cheapskates. We saw something we liked and could live in for awhile, went to the max we are pre-approved for, offered 120k over asking, and waived all the contingencies! Someone else offered 250k over asking or something ridiculous like that.

  114. 114
    Erik says:

    RE: LT @ 113
    How about a condo? I’ll sell you one of my condos at fair market value.

  115. 115
    Minnie says:

    RE: Erik @ 114

    LOL Erik, I see what you did there ;-) Call LT a cheapskate then try and make a sale! (j/k)
    Well, LT I too have a home to offer (single family, not condo)…..and I didn’t call you a cheapskate :-)

  116. 116
    Manamanah says:

    By Anonymous Coward @ 109:

    RE: Manamanah @ 107 – Your screen name is a reference to and old muppets skit: https://m.youtube.com/watch?v=8N_tupPBtWQ

    It is :) sorry I didn’t recall that detail !

    Unrelated, some SB-relevant info in a WSJ article today on household debt:

    Mortgage lending to subprime borrowers has dwindled since the housing crisis in favor of loans to consumers considered more likely to repay. In the first quarter, borrowers with credit scores under 620 accounted for less than 4% of mortgage originations, compared with more than 15% a decade earlier. Borrowers with credit scores of 760 or higher had about 61% of originations last quarter, versus about 24% in the first quarter of 2007.

    https://www.wsj.com/articles/u-s-household-debts-hit-record-high-in-first-quarter-1495033206?mod=trending_now_3

  117. 117

    By LT @ 113:

    We saw something we liked and could live in for awhile, went to the max we are pre-approved for, offered 120k over asking, and waived all the contingencies! Someone else offered 250k over asking or something ridiculous like that.

    Don’t assume waiving all contingencies is going to be attractive to a seller. I’ve gone over Douglas v. Visser a number of times on waiving the inspection contingencies, but a lot of the other contingencies being waived are also not necessarily attractive to sellers. But just so that you understand what you’re waiving, check out this video: https://www.youtube.com/watch?v=yDRHzj7gOuc&index=4&list=PLsU-Dcv-PIXZ1SxR0yfh1mwOIoNN3V9ah

    As to that, some of them are not really that important to a buyer. For example a title contingency is typically only necessary for people with special uses of the property (e.g. chickens, business, parking business trucks, etc.). HOA review can sometimes be largely done off an HOA’s website. And it may also be possible to check out the insurance issues during the inspection period, assuming you have an inspection period (gets back to Douglas v. Visser). And some of them I don’t believe can be totally waived (septic in King County).

    There’s one she doesn’t mention, which is striking all or part of Paragraph X of the purchase and sale agreement, which is information verification and property condition disclaimer provisions. Those benefit the seller and their agent! While shortening the time from 10 days to something shorter might be beneficial, it is beyond me how buyers’ agents think eliminating that language would somehow be appreciated by sellers or listing agents. That it’s become a somewhat common practice is just more evidence of a lot of agents practicing “monkey see, monkey do” rather than thinking.

    Waiving the right to get a condo resale cert or even sometimes a Form 17 disclosure statement can also be bad for sellers, because they can give the buyer an out from the contract.

    Finally, assuming you don’t have cash and don’t have a financing contingency, don’t forget you need to use 22EF (evidence of funds). Not doing that will make your offer seem suspect if not downright fraudulent.

    I would suggest perhaps looking at some of the other videos in that series, but don’t assume listing brokers have.

  118. 118
    Andy says:

    I think a lot of people are becoming more educated on the value of a good credit score. Average scores have gone up from 690 in 2007 to 695 today. I’m doubtful real money management skills have improved, just more importance placed on playing the credit games.

    Buying seasoned tradelines was not a thing back in 2007. Nowadays, instead of getting a subprime loan, you buy a seasoned tradeline to boost your credit score out of that Subprime catergory while you close on your home.

    Combine that with the real estate investor programs where someone else fronts the downpayment and anyone can afford a home.

  119. 119

    By Kary L. Krismer @ 117:

    Finally, assuming you don’t have cash and don’t have a financing contingency, don’t forget you need to use 22EF (evidence of funds). Not doing that will make your offer seem suspect if not downright fraudulent.

    I added that at the last minute, and it was hardly complete. Disclosing the loan in Form 22EF will not necessarily accomplish all 22A does, by itself. You will also need to look at what else the form 22A does to allow a loan to take place, and address those things somehow. My original point was more that if you’re not using a financing contingency but still getting a loan, not disclosing that to a seller will make them very skeptical of you as a buyer, because you’ll be giving the appearance of being a cash buyer when you’re not such.

  120. 120
    sleepless says:

    You know who can afford house in Seattle?
    Chinese oligarchs. Most software developers cannot afford house in Seattle.

  121. 121
    sleepless says:

    By Erik @ 3:

    RE: Erik @ 1
    Google says average aerospace engineer makes 82k. Average software engineer makes 110k. Guess I was incorrect. I was using average published for union aerospace engineers salary.

    You cannot but a lot of decent (i mean decent, not a crap shack) on $110K salary. Keep also in mind, a lot of Seattle SWEs are H1Bs and have second halves who don’t work.

  122. 122
    sleepless says:

    By LessonIsNeverTry @ 5:

    RE: Erik @ 3 as it is one of the few fields where long term experience can actually be a detriment.

    SWE is just like any other field, you have to keep learning if you want to stay on edge. If you think that getting your BS in CS is all that’s required, think again. Years of experience combined with learning of the new technologies is what keep you i business and grows your income. SWE is one of the most rapidly evolving fields. You just have to keep grinding or, otherwise, you will be replaced quickly by H1B pal or a new “graduate”

  123. 123
    Erik says:

    RE: Minnie @ 115
    Haha, good one. Seems like a bad time to sell. I’d rather hold on to the properties to be honest.

  124. 124
    sleepless says:

    By Ardell DellaLoggia @ 25:

    RE: Blurtman @ 23
    Also many of my Hb1 visa clients are whiter than I am and are European.

    70%+ of H1Bs are Indians. you should check your “facts” first https://www.statista.com/chart/9008/india-china-accounted-for-82-of-h-1b-visas-in-2016/

  125. 125
    sleepless says:

    By Kary L. Krismer @ 53:

    [Topic: Builders/Supply]

    By Erik @ 44:
    That’s the problem with capitalism–there is no central planning. And the type of collusion you’re conceiving is most likely illegal under anti-trust laws. So we do tend to end up with boom and bust cycles.

    You are not talking about the US, are you? Because i have not seen capitalism in this country for quite a few decades now. It is all corporatism combined with bankstertism and oligarchy.

  126. 126

    RE: sleepless @ 124

    Yes, many, and many are whiter than I am as well. :) In summer anyway.

  127. 127
  128. 128

    Here’s a Harney article going over the possible changes to the exclusion of gain from the sale of a residence. The possibilities go from no change at all, to total elimination, with extending the time deadlines being in the middle.

    http://www.telegram.com/news/20170518/kenneth-harney-future-unclear-for-capital-gains-exclusion

    Hopefully they won’t make the exclusion totally go away, because with houses over the long term they’re basically taxing inflation. But I would agree that the current 2 year/5 year system is too lax. It is though better than the old system of rolling over gain from house to house until you were old enough to take a one time exclusion. That really screwed over a lot of people, leaving them with no house and a lot of tax debt. In some cases they were taxed even if they didn’t get any money from the sale (although many of those were using their house as an ATM).

  129. 129

    By sleepless @ 124:

    By Ardell DellaLoggia @ 25:

    RE: Blurtman @ 23
    Also many of my Hb1 visa clients are whiter than I am and are European.

    70%+ of H1Bs are Indians. you should check your “facts” first https://www.statista.com/chart/9008/india-china-accounted-for-82-of-h-1b-visas-in-2016/

    You might want to Google the term “many.” It’s not a synonym for “most.”

    I will say though that you can carry this over into a lot of what you read in the newspaper about real estate. They’ll quote one of more brokers as to what they are seeing in the market, but it’s sort of like the three blind men and the elephant. No broker sees enough of the broader market to really understand what is going on with buyers/sellers/agents, beyond what the stats show. And more specifically, you could carry it over to statements about where a lot of buyers’ national origin/citizenship are based on agent comments or even comments here by people who look out their windows or go to open houses.

  130. 130
    Eastsider says:

    This may be WA in a couple decade…

    Connecticut May be Tapped Out on Taxing the Rich
    https://www.wsj.com/articles/connecticut-nations-wealthiest-state-may-be-tapped-out-on-taxing-the-rich-1495186203

    The wealthiest state in the U.S. is having trouble collecting enough money to pay its bills, and the Democratic governor doesn’t think taxing the rich is the answer anymore.

    In its recent downgrade, which landed Connecticut with the third-lowest rating for a state, Moody’s Investors Service flagged the state’s shrinking population since 2013 — the current population is 3.58 million — as contributing to an underperforming housing market and weak labor-force growth.

    Connecticut introduced its income tax in the early 1990s, and income-tax growth averaged 9% a year from 1993 through 2008. Since then, the average has been 2% a year. Gov. Malloy put through two tax income increases, in 2011 and 2015, raising the top rate to 6.99%.

    Opponents of the past tax hikes have said yet another one would scare away the very people the state relies on. The number of tax filers leaving Connecticut have exceeded the number of filers moving into the Nutmeg state since at least 2010, according to the Internal Revenue Service.

  131. 131

    RE: Erik @ 114
    Tell Us How Much the HOA Monthly Dues Is

    Come on Erik….is it close to $1000+/mo??? $2000+/mo perhaps???

    Sellers must DISCLOSE these buyer costs before sale.

  132. 132

    By softwarengineer @ 131:

    RE: Erik @ 114
    Tell Us How Much the HOA Monthly Dues Is

    Come on Erik….is it close to $1000+/mo??? $2000+/mo perhaps???

    Sellers must DISCLOSE these buyer costs before sale.

    What level of condo do you think Erik is buying? Something in Washington Square?

    But in any case, the dues do affect the FMV of the unit. Buyers take that and the cost of taxes into account when they buy.

  133. 133
    wreckingbull says:

    RE: Eastsider @ 130 – It’s me now. I am going to be voting with my feet in the next year or so, heading to another area of the PNW. When monthly taxes hit four figures is when I throw in the towel. I suppose I could make it work, but at this point, it just feels like renting. This of course does not even include the B&O tax my business pays.

  134. 134
    sleepless says:

    By N @ 127:

    https://moneyish.com/hoard/rents-in-san-francisco-and-these-4-other-cities-are-getting-slashed-like-crazy/

    Seattle is next in line. We currently have at least a 1/2 a dozen new apartment complexes being complete in DT (and close to DT, like Spring District) Bellevue with thousands of units coming online. As well as 1/2 a dozen of other residential construction projects in different stages of completeness. Bellevue / Redmond is booming around Cross Roads, new townhomes, apartments… I don’t go to Seattle much, but the last time i was there (about 6 months ago), new high rises were everywhere…

  135. 135
    sleepless says:

    RE: Eastsider @ 130

    The wealthiest state in the U.S. is having trouble collecting enough money to pay its bills, and the Democratic governor doesn’t think taxing the rich is the answer anymore.

    This is what happens when the government becomes out of control and grows exponentially. Sooner or later you run out of other peoples money. So much for Kary’s “capitalism”, indeed…

  136. 136

    By sleepless @ 134:

    By N @ 127:

    https://moneyish.com/hoard/rents-in-san-francisco-and-these-4-other-cities-are-getting-slashed-like-crazy/

    Down 2.9% YOY=”Slashed like crazy”? I realize the headline is sometimes not written by the author of the article, but that’s a bit over the top.

    I’m sorry, but most of the press here didn’t even figure out why our median went up 25% in three months, so I really wouldn’t put too much faith in that report. But one reason Seattle might see declining rent stats would be building owners offering incentives use to fill up a new building.

  137. 137
    Ross says:

    By Kary L. Krismer @ 132:

    By softwarengineer @ 131:

    RE: Erik @ 114
    Tell Us How Much the HOA Monthly Dues Is

    Come on Erik….is it close to $1000+/mo??? $2000+/mo perhaps???

    Sellers must DISCLOSE these buyer costs before sale.

    What level of condo do you think Erik is buying? Something in Washington Square?

    But in any case, the dues do affect the FMV of the unit. Buyers take that and the cost of taxes into account when they buy.

    That’s true, but the logic is often backwards. Low dues often imply a special assessment or significant dues inflation when the finances are competently reviewed. Medium/High dues are probably the best bet, as the unit price may be depressed, and dues may be more stable (unless it’s in reaction to decades of underfunding and undermaintaining).

  138. 138
    sleepless says:

    By Kary L. Krismer @ 136:

    But one reason Seattle might see declining rent stats would be building owners offering incentives use to fill up a new building.

    But it is a closed cycle. The new apartments need tenants alright, but where would the tenants come from? Most probably other apartments who would be losing tenants now. More vacancies = lower prices, more choices of rentals. I was able to negotiate a nice deal on my current apartment 5 months ago. The landlord was asking $2450, i negotiated it down to $2250, which is not bad for a nice 3br 2bth 1300sq ft apartment, two blocks from DT Bellevue and one of the best schools (and districts) in the state. The previous tenant paid the same amount and rented the place for 2 years. After our lease expires, it means the landlord hasn’t raised his rent in 3.5 years, considering the fact that HOA dues went up two times during the same period by at least $150 per month. So, the current landlord is already $150 short to what he collected 2+ years ago for the same unit. How is that for the price decline? Add higher property taxes on top of that, now we are talking about 10% loss in rent revenue for the landlord over 2 years.

  139. 139
    redmondjp says:

    RE: wreckingbull @ 133 – You and a lot of other people. It’s a real wakeup call when one first becomes a property or small-business owner and finds out how much one has to pay the man. My friend ran his own auto repair business and was shocked that the county wanted an annual cut, based upon the value of all of his shop equipment. It’s worse than the Mafia because they have the law on their side!

  140. 140
    N says:

    Kary@136:

    I took slashed to mean the number of rental listings that had a price reduction which they pegged at 13% for Seattle and much higher for SF. Numerous data sets point to a softening rental market, whether that keeps up is up for debate, certainly it isn’t affecting the for sale market at this time. Things would have to be pretty hot for 23,000 new housing units over the next two years not to impact rents in some way.

  141. 141
    John says:

    RE: sleepless @ 137

    Then why people are investing in 3 or 4th houses for rental in east side mainly Bothell area. If rental declines then houses are not good investment THO.

    I saw this week couple guys are buying 750K , 2006 build house for rental..not sure he get ROI.

  142. 142
    N says:

    By John @ 140:

    RE: sleepless @ 137

    Then why people are investing in 3 or 4th houses for rental in east side mainly Bothell area. If rental declines then houses are not good investment THO.

    I saw this week couple guys are buying 750K , 2006 build house for rental..not sure he get ROI.

    They are betting on appreciation. Any guys who have been in the biz for a long time and seek cash flow would never play in the 500k, 700k or 900k homes. They just don’t pencil no matter what rule you use (the old 1% rule, CAP rates etc) But cash flow may not be their game and of course it’s been proven over and over again not everyone investing in property knows what they are doing. Are they even accounting for repairs/vacancies etc (its hard to pencil them even before you account for that). Lots of smart people have made bad decisions because of greed and when you look at appreciation in the last 12-24 months that is exactly what can happen.

    It can be hard to accurately estimate what rent you will be able to collect, especially if the market is changing with more rent reductions (easier to over estimate potential rental income when relying on what other landlords are over asking for).

  143. 143
    justme says:

    RE: redmondjp @ 138
    RE: wreckingbull @ 133

    I looked up the Seattle and Washington State tax rates for Business and Occupation taxes. It is hardly a matter of huge sums of money, less than 1% of gross receipts altogether in almost all cases, I think. For retail it is 0.471% (state) and 0.215% (Seattle) or 0.686% total.

    Methinks the business owners doth protest too much. How about 6% for real estate commissions. Now that IS highway robbery!

    References:

    http://dor.wa.gov/Content/FindTaxesAndRates/BAndOTax/BandOrates.aspx
    https://www.seattle.gov/business-license-tax/before-you-file/tax-rates-and-classifications

  144. 144
    whatsmyname says:

    RE: sleepless @ 137
    Closed cycle? With the King County population increasing about 35,000 per year?

    When you say the “HOA dues went up two times during the same period by at least $150 per month.”, do you mean each time, or do you mean in aggregate? Let’s assume it’s each time. Add in some tax increases and your landlord has seen a decline in income of, say $6,000 per year. On the other hand, maybe one of the realtors here can guesstimate how much “a nice 3br 2bth 1300sq ft apartment, (condo) two blocks from DT Bellevue and one of the best schools (and districts) in the state” has increased in price over those same 3 1/2 years . I’ll bet your landlord sleeps pretty well.

  145. 145
    Brian says:

    Wow, +400 SFH units (20% increase) since Wednesday.

  146. 146
    Eastsider says:

    RE: justme @ 143 – You can’t just pick B&O and claim everything is fine. I patronize a restaurant regularly. The owner has not increased prices for 7 years – he probably couldn’t without losing customers. I’m sure he is paying higher rent, wages, etc today. When his price was ‘increased’ recently, it was due to the higher sales tax!

    I have observed that eating at comparable restaurants in other cities is a lot cheaper than here.

  147. 147
    Eastsider says:

    RE: whatsmyname @ 144 – If the landlord is sleeping pretty well, it just proves that he is an accidental/amateur landlord. The big nationwide landlords we read about during the housing downturn are not acquiring new properties in this market. They have been busy disposing rental properties or selling shares to investors (or suckers?).

  148. 148
    Eastsider says:

    By John @ 141:

    RE: sleepless @ 137

    Then why people are investing in 3 or 4th houses for rental in east side mainly Bothell area. If rental declines then houses are not good investment THO.

    I saw this week couple guys are buying 750K , 2006 build house for rental..not sure he get ROI.

    You are probably new to this. In the last housing crash, many Koreans were short selling multiple investment/rental properties. Perhaps the next crash will involve Chinese short sales?

  149. 149

    By Kary L. Krismer @ 129:

    I will say though that you can carry this over into a lot of what you read in the newspaper about real estate. They’ll quote one of more brokers as to what they are seeing in the market, but it’s sort of like the three blind men and the elephant. No broker sees enough of the broader market to really understand what is going on with buyers/sellers/agents, beyond what the stats show. And more specifically, you could carry it over to statements about where a lot of buyers’ national origin/citizenship are based on agent comments or even comments here by people who look out their windows or go to open houses.

    Or this more recent example.

    By Eastsider @ 148:

    You are probably new to this. In the last housing crash, many Koreans were short selling multiple investment/rental properties. Perhaps the next crash will involve Chinese short sales?

    Good Christ! [Wow, I found something that doesn’t get converted!] Narrowing it down to a particular country? Do you want to refine it further–can we assume they were from South Korea? Did you check their naturalization papers? Were they citizens?

    Honestly I can’t even say I even noticed a disproportionate number of Asian short sellers (based on last name and/or family pictures in a house–I don’t necessarily see the seller when I view houses). But you really need to remember the racist narrative on this site. The Chinese are cash buyers! They won’t be doing short sales. /sarc

  150. 150

    RE: Kary L. Krismer @ 132
    Cheap Renton Condos Can Have $600/mo HOA Dues

    Renton is not upscale at all…

  151. 151

    [Topic: Condo Dues]

    RE: softwarengineer @ 150 – $600 would be rare for cheap Renton condos, but you were using $1,000 and $2,000 HOA amounts.

    But on the topic of condos, years ago I wrote a blog piece titled something like: “Don’t let your condo turn into a dump.” It was a cautionary piece about HOA maintenance practices, and the impact of poor maintenance on value/ability to sell. Just yesterday I previewed a property and both my wife and I remembered it as having been poorly maintained several years ago. Fast-forward to yesterday, and it’s still bad. We did not show the unit to the clients and they will be making an offer on another unit this weekend. And that other unit is one we had helped other buyers buy into several years ago. It’s still well kept, as is another complex we showed them which they also liked where we also helped other clients buy into. Both those properties had dues under $350.

    That’s the biggest issue with condos–the HOA has to be well run.

  152. 152
    whatsmyname says:

    RE: Eastsider @ 147 – One-off condos and SFR’s are the traditional purview of mom and pop landlords. Large real estate investors look for more efficiency. The national landlords you reference aren’t even real estate investors; they’re hedge funds. If you are only comfortable holding real estate when they are buying, then 2012-2014 is the only period in your life where you could be comfortable owning real estate. And it is likely to remain that way.

    Back to the point, a guy who’s been holding nice, independently salable, residential unit two blocks from DT Bellevue has made a lot more than $6,000 per year in appreciation since 2013. And could sell that property in a heartbeat -even with too many rentals in the complex. Location.

  153. 153
    N says:

    By Brian @ 145:

    Wow, +400 SFH units (20% increase) since Wednesday.

    Saw that, hit 2300 SFH for King county, the most since at least December,

  154. 154
    wreckingbull says:

    By justme @ 143:

    RE: redmondjp @ 138
    RE: wreckingbull @ 133

    I looked up the Seattle and Washington State tax rates for Business and Occupation taxes. It is hardly a matter of huge sums of money, less than 1% of gross receipts altogether in almost all cases, I think. For retail it is 0.471% (state) and 0.215% (Seattle) or 0.686% total.

    Methinks the business owners doth protest too much. How about 6% for real estate commissions. Now that IS highway robbery!

    References:

    http://dor.wa.gov/Content/FindTaxesAndRates/BAndOTax/BandOrates.aspx
    https://www.seattle.gov/business-license-tax/before-you-file/tax-rates-and-classifications

    Taxing on gross receipts is idiotic. In fact, it is so idiotic that we are the state in the nation that taxes businesses this way. It is a running joke to most policy makers.

    The B&O tax is just another cut in the death by a thousand cuts. I worked for corporations most of my life. It was not until I started a small business that I truly gained respect for the headwinds small business owners face.

  155. 155
    justme says:

    RE: Eastsider @ 146

    >>You can’t just pick B&O and claim everything is fine

    Huh? It was not I that brought up the Business and Occupation tax as a burden. I just questioned the size of the claimed burden by posting the 0.686% of gross as an example.

    >>I’m sure he is paying higher rent, wages, etc today.

    The rent is too damn high (TM)! I bet the rent is a LOT higher percentage of gross receipts than 0.686%. But somehow the gubbermint always gets the blame for everything.

  156. 156
    sleepless says:

    By John @ 141:

    RE: sleepless @ 137

    Then why people are investing in 3 or 4th houses for rental in east side mainly Bothell area. If rental declines then houses are not good investment THO.

    I saw this week couple guys are buying 750K , 2006 build house for rental..not sure he get ROI.

    The condos in our community sell for high $400s (we currently have one listed for $490K), they rent for $2250 per month (this is my lease signed 5 months ago). Now, using the mortgage calculator with 20% DP, $500 HOA dues, 1.1% taxes, 4% interest gives me $2,870 monthly payments. It is more than $500 /month cash-flow negative. We currently have 70% condos rented as we are heavily rented community and most of the sales go to investors who rent the condos next day they buy them.

  157. 157
    sleepless says:

    RE: whatsmyname @ 144 – $150 is the total increase ($50 the first year, $100 more the second year)

  158. 158

    [Topic: B&O Tax]RE: justme @ 154

    I think the reason for the dislike of B&O taxes is that it’s based on gross income (with fairly decent minimal levels before taxation kicks in for most businesses), not profit. So if you have a profitable business, not a big deal, but if you don’t . . ..

  159. 159
    John says:

    RE: sleepless @ 155

    So people buying for investment or long term gain correct?

  160. 160
    John says:

    RE: Kary L. Krismer @ 149 – also Indians.
    I saw lot of indians buying investment properties in Bothell area even price is higher and its 700K , I don’t think so will get ROI

  161. 161
    Cap''n says:

    RE: N @ 153

    Listings in the prime selling season finally hitting the high of last December? Maybe that means we will only see + 9 % YOY for May. Not a harbinger of a buyers market in my mind.

  162. 162

    Does anyone know what’s going on over at Zillow/Trulia/Realestate.com? Zillow seems to have somehow cut off it’s consumer questions forum, while Trulia’s has gone rather nuts with silly/stupid questions. How and why did they accomplish that?

    And then there’s Realestate.com, apparently designed to capture the Millennials, but if this is article is representative, it’s just filled with a bunch of incomplete information apparently written by someone who doesn’t even have a basic understanding of the topic. Is that attractive to Millennials?

    https://www.realestate.com/first-time-home-buyers/buying-step-by-step/what-is-title-insurance-why-do-i-need-it/

  163. 163

    RE: Kary L. Krismer @ 151
    I Agree

    Most HOAs are not well run….uneducated retired idiots volunteer for those jobs.

    They hire relatives and friends to do maintenance too at high prices with no bids…..

  164. 164

    [Topic: HOA Management.]RE: softwarengineer @ 161

    I wouldn’t say most are poorly run, but there are certainly more than a few.

    As to volunteers, years ago I ran into one where the community did maintain the grounds using volunteers. They did a great job!

  165. 165
    Macro Investor says:

    By softwarengineer @ 131:

    RE: Erik @ 114
    Tell Us How Much the HOA Monthly Dues Is

    Come on Erik….is it close to $1000+/mo??? $2000+/mo perhaps???

    Sellers must DISCLOSE these buyer costs before sale.

    My grandfather made millions in real estate. His advice was to never buy a condo because you are not in control of your own fate. After reading dozens of investment books I have found his advice to be far more relevant than the superficial rubbish you get from so-called experts.

    Many of my friends complain about the work involved in lawn care and routine maintenance. They wish they had a condo.. I point out they can do the same thing for far FAR less. Call a landscaper and bank a set amount each month for that eventual roof job or new water heater.

    Only rich people who are too lazy to make a phone call should ever buy a condo.

  166. 166
    wreckingbull says:

    By redmondjp @ 139:

    RE: wreckingbull @ 133 – You and a lot of other people. It’s a real wakeup call when one first becomes a property or small-business owner and finds out how much one has to pay the man. My friend ran his own auto repair business and was shocked that the county wanted an annual cut, based upon the value of all of his shop equipment. It’s worse than the Mafia because they have the law on their side!

    You are right. One might think that our B&O tax, based on gross revenue, is the pinnacle of idiocy, but no, let’s also tax the machinery, furniture, and electronics at the business. Shame on that equipment for existing!

    http://www.kingcounty.gov/services/business/licenses/property-tax.aspx

  167. 167

    [Topic: Taxes]
    By wreckingbull @ 164:

    You are right. One might think that our B&O tax, based on gross revenue, is the pinnacle of idiocy, but no, let’s also tax the machinery, furniture, and electronics at the business. Shame on that equipment for existing!

    http://www.kingcounty.gov/services/business/licenses/property-tax.aspx

    It’s called a personal property tax. I don’t know why you think real property should be taxed but that it’s totally okay to ignore personal property. That does tend to be the practice here for non-business entities (consumers/workers/etc.) as to most things that are not vehicles, but there’s not theoretical reason for such a distinction.

  168. 168

    [Topic: Condos]

    By Macro Investor @ 163:

    My grandfather made millions in real estate. His advice was to never buy a condo because you are not in control of your own fate. After reading dozens of investment books I have found his advice to be far more relevant than the superficial rubbish you get from so-called experts.

    Many of my friends complain about the work involved in lawn care and routine maintenance. They wish they had a condo.. I point out they can do the same thing for far FAR less. Call a landscaper and bank a set amount each month for that eventual roof job or new water heater.

    Only rich people who are too lazy to make a phone call should ever buy a condo.

    Well my family member who made millions in real estate had no problem at all with my buying a condo. And plenty of people who have made millions in real estate actually own condos themselves.

    What you mention is a disadvantage of condo ownership, but it’s not necessarily a reason to never buy a condo. That’s the difference between experts in their field and anonymous amateurs who don’t have a clue what they are talking about. The former are worth listening to, and the latter should be ignored.

    But as to your opinion, let’s say for example that you want to own a residence in a downtown high rise. If so, you’re only choice is condo or co-op, unless maybe you can afford to buy an entire apartment building and live in just one unit. Not practical for most people.

    But a less extreme example. Let’s say you want to live in a townhouse in Seattle. You can either go for one that has fee ownership or a condo association. Each has advantages and disadvantages. I’ve mentioned them before and won’t repeat them again, but to say that no one should go the condo route is just ignorant and naive.

  169. 169
  170. 170
    Erik says:

    RE: Macro Investor @ 165
    Right, there is no money to be made in condos. Rich lazy people buy them or complete morons like myself buy only condos. My entire real estate portfolio is condos in fact. I wish you would have told me this 7 years ago before I started buying only condos.

  171. 171
    Erik says:

    RE: Kary L. Krismer @ 168
    I like condos because they generally cost less to fix up. Most hoa’s won’t let plumbing and electrical get too bad. In addition, all the outside stuff is split between all the owners making things less expensive. I know im a couple of condos I have, the hoa watches owners like a hawk. Makes me feel better knowing the hoa will inform me of any disturbances.
    People are scared of condos when they don’t understand them. I have been a board member at 2 different condominiums, so I have an idea how the association works. Be polite and respectful always to others. That will get you through most problems. If that doesn’t work, contact a lawyer.

  172. 172

    [Topic: Condos]RE: Erik @ 171 – As I said, there are advantages and disadvantages. Being cheap to fix and maintain is certainly an advantage. When I owned my condo I think all I did over 10+ years was paint the interior, change the carpet and install a shower door. But that ignores the projects the association took on.

    The biggest disadvantage is probably for very small complexes–under 8 units, and particularly 4 and under. There the management issues can be difficult/expensive. On the other hand, the fee simple units have maintenance issues which are necessary for connected units, but not easy to resolve, particularly roofs and exterior paint. Then there are the detached condos, which have their own advantages/disadvantages.

    But the thing is, there is no one right answer. It’s not that some people are right and some people wrong. It’s that some people have different concerns and are willing to accept certain risks.

  173. 173
    Ross says:

    By Erik @ 171:

    RE: Kary L. Krismer @ 168
    I like condos because they generally cost less to fix up. Most hoa’s won’t let plumbing and electrical get too bad. In addition, all the outside stuff is split between all the owners making things less expensive. I know im a couple of condos I have, the hoa watches owners like a hawk. Makes me feel better knowing the hoa will inform me of any disturbances.
    People are scared of condos when they don’t understand them. I have been a board member at 2 different condominiums, so I have an idea how the association works. Be polite and respectful always to others. That will get you through most problems. If that doesn’t work, contact a lawyer.

    When condos are efficiently and well run, they work great. On the other hand, you can have mismanaged condos where the board does not have the experience or knowledge to properly execute repairs; boards with pet projects; boards that overpay; corrupt boards that send jobs to friends or family; infighting leading to expensive lawsuits (that all members pay).

    Some condos are great; others are awful, most are somewhat in between.,

  174. 174

    Tim has a new car! https://www.geekwire.com/2017/chevrolet-bolt-ev-review-200-miles-juice-spare-affordable-electric-car-beat/

    (I don’t usually get excited about people getting new cars, figuring they are just a burden, but this car is different tech.)

  175. 175

    RE: Kary L. Krismer @ 168
    What’s the Monthly HOA Bill at Shaq’s Condo Retirement Village?

    Another $1000-2000/mo? LOL

    Fleese the elderly.

  176. 176
    Erik says:

    http://www.king5.com/news/local/everett/everett-a-fast-growing-alternative-to-seattle/441748338

    People are getting desperate and moving to Everett, WA because “It’s a less expensive alternative.” Bubble readers, if you make this same mistake as I did in 2004, you will surely regret it. On the outside, Everett is a city and it is not that far from Seattle. When you actually live there, you will soon realize that Everett is a dirty city full of a lot criminals. Like Auburn, Everett is where criminals are placed when they get out of prison. If you want to feel like a big fish in a small pond it’s a good place to be since some neighbors will be unemployed drug users. Buy a condo in a progressive area like Seattle or the East side. Don’t settle and make the same mistake I made in 2004, you can do better. You may not get the yard and the house of your dreams, but you will be safer and happier not living in Everett.

  177. 177

    RE: Erik @ 176 – An ad for an apartment complex disguised as news. 40,000 more people in Everett by 2035 is not news.

  178. 178
    jon says:

    RE: Erik @ 176 – That sounds like a buying opportunity, to get in and benefit from the transition to a more upscale area. As the population grows with more families, it will get better policing etc.

  179. 179
    Erik says:

    RE: Kary L. Krismer @ 177
    Cats! See, I am gullible Kary. You are right, probably an advertisement.

  180. 180
    Erik says:

    RE: jon @ 178
    That was the talk when I moved there in 2004. After doing 6 years of hard time in North Everett, I finally got out. Best move I ever made, getting out of that dump. You can take the bait, but you’ve been warned. You will wake up in 5 years hungover, look in the mirror and realize you should have listened to that commenter on Seattlebubble.

    When I served time in ever-rot, they said they are just about to revitalize the industrial area down by the water. Then they were just about to put a large uw campus in north Everett. Lies, lies, lies. I think these lies are told by agents to sell crap houses in bad areas(north e). Then they try to make these “vintage” homes sound appealing. Theses homes need new sewers and electrical and probably a lot more. Don’t be fooled by the lies. This will always be the area to pickup drugs or prostitutes. Even if you like to pick up drugs and prostitutes, you don’t want to live in that area.

    The company I work for is located in Everett. When the company attracts new young talent, they are told to move to Seattle or the eastside. Everett “the all American city” is plagued with child predators, criminals, and construction workers struggling with painkiller addiction.

  181. 181
    The Tim says:

    RE: Erik @ 176 – Overall crime rate is actually lower in Everett than in Seattle, especially the violent crime rate.

    2014 data from the Uniform Crime Reporting Statistics tool:

    stat Seattle Everett
    violent crime rate 603.7 343.7
    murder / manslaughter rate 3.9 1.9
    robbery rate 236.2 127.5
    aggravated assault rate 340.4 173.7
    property crime rate 6,145.7 6,559.3
    burglary rate 1,073.7 1,131.1
    larceny-theft rate 4,240.8 4,399.9
    motor vehicle theft rate 831.2 1,028.2

  182. 182
    Erik says:

    RE: The Tim @ 181
    I can see the data, but my experience there tells a much different story. I lived near 22nd and Oakes. Maybe that was just a really bad street? I mentioned previously that I went over there in the last couple years and it hadn’t changed. A couple friends on the street turned into meth addicts and were stealing things.

    I don’t know Tim, the data tells one story, but when I go there it’s a totally different story. I think Seattle has known bad areas like under the west Seattle bridge, pioneer square, north aurora, south Seattle, etc. In Everett, those people are mingled throughout the neighborhoods because the city houses those people. I hope you are doing well there, but that wasn’t my experience.

  183. 183
    N says:

    Risky Mortgages Mounting In Vancouver
    http://vancitycondoguide.com/risky-mortgages-mounting-vancouver/

    High-ratio mortgages with low income levels continues to grow. With home prices surging, Vancouverites are leveraging up. High ratio mortgages with loan to incomes greater than 450% are up 25% over the past two years. Risky mortgage debt now sits at 39% in Vancouver.

  184. 184
    Oy vey says:

    By Erik @ 182:

    Erik said
    I can see the data, but my experience there tells a much different story.

    So, do you base ALL your decisions on invented anecdotal evidence, or do you just go full-on derp for the important financial stuff?

  185. 185

    In the event inventory levels don’t fluctuate (rise) as much this week as recent weeks I wouldn’t read too much into that. The Memorial Day weekend may cause a lot of agents to delay listings a week. For most listings area/types that would probably be a good idea.

  186. 186
  187. 187
    N says:

    Interesting contrarian view

    http://www.marketwatch.com/story/the-contrarian-investors-best-bet-is-coming-down-the-pike-2017-05-24

    First, consider the recent signs that consumers are having a harder time paying back debt.

    • Shares of Synchrony Financial SYF, -0.11% just blew up, plunging over 15% in late April. The credit card company announced that its first-quarter provision for loan losses climbed 21%, or $403 million, to $1.31 billion, year over year. Synchrony also reported net charge-offs of 5.33% compared to 4.74%. Loans past due by 30 days or more climbed to 4.25% from 3.85%. The company also cautioned loan-loss reserves will continue mounting.

    • Net charge-offs at Capital One Financial Corp. COF, -0.41% have been steadily rising for three quarters to 5.14% in the first quarter from 3.74% in the third quarter of last year. Provisions for losses rose 30% in the first quarter to $1.7 billion.

    These are not isolated stories. “Across the consumer credit spectrum, we’ve witnessed sharply higher provisioning for higher losses,” says McDonald. He thinks a lot of economists can’t believe their eyes because they think consumer credit problems arise only after employment starts to soften. But this is wrong. Back in 2006-2007, the credit cycle turned 11 months before the job market started to weaken.

    In Canada, a housing bubble is starting to blow up. If this continues, it could hurt banks and bring down the economy. McDonald predicts a 12-month recession for this major U.S. trading partner, which could shave a third to a half a percentage point off U.S. GDP during the coming six quarters.

  188. 188
    Sid says:

    AMZN to cross $1000 this week. Should put a smile on many faces in the region.

  189. 189
    redmondjp says:

    RE: Sid @ 187 – Personally, I’m waiting for the sock puppet to show up on a TV ad any day now.

    Party like it’s nine . . . . teen . . . ninety-nine!

  190. 190
    noogakl says:

    I have been renting for the past 4 years in Seattle. Fed up with high home prices, I just bought a 3 br, 2 bath, 1600 s.f. house in East Bremerton, about a 10-15 minute bus ride from the ferry dock. Total cost: $271,000. We had to bid 20K over asking price; there were 3 other offers. But we were able to keep the inspection and appraisal contingencies which usually go out the window in Seattle.

    How am I going to handle the commute? I work as a data scientist in downtown Seattle; my boss is paying for me to get a laptop with data so that I can work on the ferry.

    But what struck me throughout the home buying process is how few people know about what is happening in Kitsap County regarding public transportation to Seattle.

    They are introducing fast passenger-only ferries for commuting to downtown Seattle. The Bremerton fast ferry is starting in July, and it will take 28 minutes dock to dock. Kingston will have a fast ferry which starts next year, and it will take 33 minutes. In 2019 or 2020, Southworth will have a fast ferry which takes 23 minutes. Check it out at http://kitsapferries.com/ .

    Using the fast ferry, I can reasonably get to the office within an hour. That would be faster than my colleagues in the office who bus in from Bothell, or someone taking the train from Puyallup. But the houses in Bremerton are at least 50-100K cheaper than these areas. And which place would you rather live? Cheaper taxes, less traffic, easy access to the water, and a much more affordable cost of living are all found in Bremerton. Schools aren’t the best, but we homeschool so that isn’t a huge issue for us.

    A big question will be how they decide who gets a spot on the fast ferry; there are hundreds of walk-on commuters who take the slow ferry every day and they won’t all fit on the fast ferry.

    Another interesting thing that I found is that the FHA or some governmental organization sets special limits on how much you can borrow with a down payment of 20 percent or less. The national value is $424K or something like that. That is the current limit in Kitsap County. In Seattle, last year it was something like $540K, whereas this year it is $592K. It made me wonder how much this value affects the rising price of homes. If every year, the government says that you can borrow more money with a 5 percent down payment since home prices are going up, that must contribute to the seemingly unfettered increase in the prices of homes in the city. Seems like a positive feedback loop to me.

    We saw home prices in Pierce and Snohomish County jump significantly over the last two years, in part due to people being displaced from Seattle. Kitsap County, especially the non-expensive parts near Bremerton, Manchester and Southworth are next.

  191. 191
    Erik says:

    RE: noogakl @ 189
    You should ask to work from home. That’s what I would do if I were you.

    Bremerton annual rainfall: 51 inches
    Seattle annual rainfall: 37 inches
    Sequim annual rainfall: 16 inches

    If I were to take the ferry everyday, I’d try to live in the Olympic rain shadow. I’m not a big fan of bad weather.

    When you buy in areas like Bremerton, you are speculating on housing prices going up. When you buy near the job center like Seattle, housing prices are more predictable. I think we all pretty much know Seattle prices are very likely to go up over the next 5 years. Bremerton could boom, but that is speculation.

  192. 192
    noogakl says:

    RE: Erik @ 190

    I do have the option from working from home.

    I don’t see this as speculation. I see it as affordability. I will be paying less than what I currently pay in rent, while building equity and gaining a tax deduction from mortgage interest and property taxes. Now I can seriously think about retiring in 20 years; in Seattle, I would have to work much longer than that.

    I disagree with your assertion that “we all pretty much know Seattle prices are very likely to go up overthe next 5 years”. That sounds like speculation to me.

    Right now all the tech jobs are located here. But as more and more millenials like myself get fed up with the high cost of housing here, they will start companies in other places. Part of their sales pitch will be, ” Come work for us here and you can afford to buy a house!”.

  193. 193

    [Topic: Loan limits.]

    By noogakl @ 189:

    Another interesting thing that I found is that the FHA or some governmental organization sets special limits on how much you can borrow with a down payment of 20 percent or less. The national value is $424K or something like that. That is the current limit in Kitsap County. In Seattle, last year it was something like $540K, whereas this year it is $592K. It made me wonder how much this value affects the rising price of homes. If every year, the government says that you can borrow more money with a 5 percent down payment since home prices are going up, that must contribute to the seemingly unfettered increase in the prices of homes in the city. Seems like a positive feedback loop to me.

    I don’t think you see that many high amount FHA loans, but there are also limits on conventional loans. The idea behind the different levels is that a $450,000 house out in the middle of nowhere might be considered a mansion in the area and difficult to sell/liquidate. I’ve wondered if the limits work the opposite way too, such that there would be lower limits in particularly cheap areas. But anyway, it’s more about the quality/level of the house than the nominal price.

  194. 194
    piggyshooz says:

    .RE: noogakl @ 191
    In my experience working at tech companies, its unlikely there will be many that accommodate offices outside the central areas like Seattle, Bellevue and Redmond. The large companies have a difficult time moving or setting up drop in offices; example was MSFT south lake union office or Expedia goat rodeo of splitting campuses. The smaller companies are located based on the wants and desires of the executives who often afford and already live in the more expensive and close in neighborhoods. Startups could pop up and grow in places outside of the central business corridors , but as they grow they will start to need more experienced mgmt and executives, who already live closer to the major job centers, putting pressure on a move

  195. 195
    Sid says:

    By Sid @ 187:

    AMZN to cross $1000 this week. Should put a smile on many faces in the region.

    Any moment now. Have a sell order at $1000.01

  196. 196

    RE: Erik @ 176
    Actually Erik Overpopulation Destroyed the Whole Seattle Area

    Homeless beggars at almost every major road corner, police sirens at Pioneer Square, destroyed sidewalks at the Seattle waterfront, strip malls replacing green belts, clogged freeways, etc, etc….

    Crime is everywhere ya look….its overpopulation.

  197. 197

    RE: Sid @ 194
    The Trump High Tech Stock Boom

    Has arrived n 2017, and Amazon is a sly company too. When stupid Progressive Companies like Macys cancelled Ivanka Trump’s clothing line…..Amazon sells it now instead. Trump logo sales are sizzling now too. So much for a hopeless Progressive sales attack on Trump.

    Macys stock is doing terrible now.

    https://www.fool.com/investing/2017/01/07/macys-stock-plunges-on-weak-sales-forecast-but-inv.aspx

  198. 198
    Minnie says:

    RE: piggyshooz @ 193

    It’s so interesting to read this because I was just talking last night with a Redfin Agent about Bainbridge and Bremerton….we were discussing how it just stands to reason that Bremerton is going to become much much more popular because the ferry commute is a fixed commute…rather than say, commuting from Lynnwood and battling traffic that may be unpredictable. The agent said that a lot of new buyers (perhaps Millennials?) are a lot more savvy and are more interested in a Ferry than a long commute from Lynnwood, for example (not hating on Lynnwood….the agent used this as an example).

    Congrats on your new home! :-)

  199. 199
    Anonymous Coward says:

    Remember when we were thinking that housing prices were sure to fall because something like 22,000 apartments in the Puget Sound region were planned for completion in 2017 and 2018? Yeah, I don’t see that happening with 18,000 people moving into Seattle alone in the last 12 mo. (I do think apartment rents may come down because I suspect a disconnect between what’s being built and what the new residents can pay…)

    http://www.seattletimes.com/seattle-news/data/seattle-once-again-nations-fastest-growing-big-city-population-exceeds-700000/

  200. 200
    ess says:

    By Minnie @ 198:

    RE: piggyshooz @ 193

    It’s so interesting to read this because I was just talking last night with a Redfin Agent about Bainbridge and Bremerton….we were discussing how it just stands to reason that Bremerton is going to become much much more popular because the ferry commute is a fixed commute…rather than say, commuting from Lynnwood and battling traffic that may be unpredictable. The agent said that a lot of new buyers (perhaps Millennials?) are a lot more savvy and are more interested in a Ferry than a long commute from Lynnwood, for example (not hating on Lynnwood….the agent used this as an example).

    Congrats on your new home! :-)

    Interesting, because I talked to an agent three weeks ago that indicated that he thought that Lynnwood was the next real estate hot spot. Why? Light rail is coming to town. In six years, the commute from Lynnwood to downtown Seattle will be a guaranteed 20-25 minutes. It will be faster to get from Lynnwood to downtown Seattle than many parts of Seattle to other Seattle areas by public transportation.

    As per the ad above – some may consider the ad tasteless, but it was also effective. Proof? It is being discussed here and elsewhere. How many ads become part of the public discourse?

    An article that appeared today arguing that housing prices should continue to rise. From his pen to my retirement plans………..

    http://www.marketwatch.com/story/9-signs-the-housing-market-will-only-get-hotter-in-2017-2017-05-25

  201. 201
    justme says:

    RE: Anonymous Coward @ 199

    >>Yeah, I don’t see that happening with 18,000 people moving into Seattle alone in the last 12 mo.

    Where is that number 18,000 coming from? I cannot find it in the linked article. What the article does say is

    “From July 1, 2015, to July 1, 2016, Seattle had a net gain of nearly 21,000 people — 57 a day, on average.”

    Note that the numbers 21,000 are for a period that ended almost 1 yr ago. It is NOT for the last 12 months. Also, the number is NET GAIN, meaning it is

    netgain=populationchange=births-deaths+netmigration

    That is, the 21k number from 2015-2016 period includes children born. As I have pointed out, children do not rent apartments and buy houses. Taking a step back, I invite the reader to read previous threads where I take various bubble-booster posters to task for making claims that are not supported by the data. For example, I may refer everyone to the threads

    http://seattlebubble.com/blog/2016/06/07/nwmls-strong-demand-pending-sales-hit-time-high/

    http://seattlebubble.com/blog/2017/01/31/case-shiller-seattle-home-price-growth-barely-slowed-november

    Enjoy.

  202. 202
    jon says:

    By Erik @ 191:

    RE: noogakl @ 189

    When you buy in areas like Bremerton, you are speculating on housing prices going up. When you buy near the job center like Seattle, housing prices are more predictable. I think we all pretty much know Seattle prices are very likely to go up over the next 5 years. Bremerton could boom, but that is speculation.

    If he can afford his payments and enjoy the lifestyle, then appreciation is not an issue, because he will never have to sell. That’s the way it used to work long ago, anyway. Telecomuting will only continue to get better as the hardware and software come down in price. Of course when it does get acceptable to work remotely all the time, then even Bremerton will seem overpriced in comparison to say, Kansas.

  203. 203
    Anonymous Coward says:

    RE: justme @ 201 – You’re right. The 18,000 number was from several years ago (~2013). So the data shows it’s even less likely than I thought that there will be downward pressure on housing prices due to a rental glut.
    Change in demand for housing is population size changes combined with household size changes. The linked article is relevant to the discussion in that it shows that the most recent census data shows an acceleration of population increase. If you have data somewhere showing changing household sizes, by all means, link it here. Because while you can argue that the net change is impacted by childbirths, the appropriate way to track its impact on housing demand is by looking at household sizes. The careful reader will note that changes in household size includes not just childbirths, but divorces, marriages, deaths, children moving out, etc. etc.

  204. 204
    justme says:

    RE: Anonymous Coward @ 203

    >>You’re right. The 18,000 number was from several years ago (~2013). So the data shows it’s even less likely than I thought that there will be downward pressure on housing prices due to a rental glut.

    Yes, I am right, and you continue to post yet another wrong premise followed by an unsupported conclusion. Again, dear readers, do not trust anything that AC says.

  205. 205
    justme says:

    On another but related topic, it looks like the Toronto housing bubble is bursting. Coming soon also to a city near you.

    http://wolfstreet.com/2017/05/24/toronto-house-price-bubble-pops/

    “During the first two weeks in May, according to preliminary data from Toronto Real Estate Board, home listings surged 47% from the same period last year even as sales plunged 16%. “

  206. 206
    Anonymous Coward says:

    RE: justme @ 204 – What’s the wrong premise? That an increase in net population with constant household sizes results in increased demand for housing?

  207. 207
    justme says:

    San Francisco metro area has also peaked. But “Seattle is special”, no doubt.

    In fact, SF metro has just had its first YOY price decline since 2011Q2. That probably means that a whole year of price gains just went up in smoke. Poof.

    http://wolfstreet.com/2017/05/25/2-forces-crush-san-francisco-house-price-bubble/

  208. 208
    justme says:

    RE: Anonymous Coward @ 206

    >>What’s the wrong premise? That an increase in net population with constant household sizes results in increased demand for housing? <—– BIG FAT HUGE STRAWMAN ARGUMENT

    Dear reader, the wrong premise is that AC does not HAVE any up-to-date netmigration data to begin with, he is just making prognostications based on rectal extraction or rectal extrapolation.

    Can AC get any more dishonest? The question was whether netmigration outpaced new housing supply. He cannot claim that without data that supports it.

  209. 209

    By justme @ 207:

    San Francisco metro area has also peaked. But “Seattle is special”, no doubt.

    This might not apply to Seattle proper, but clearly we are different–in a good way!

    http://www.seattletimes.com/seattle-news/data/voters-in-washington-hated-both-trump-and-clinton-more-than-in-any-other-state/

  210. 210
    whatsmyname says:

    RE: justme @ 208 – No, there is more to the story than net migration. The component where births exceed deaths may not mean that babies are renting apartments. But the babies born 18-20 years ago do rent apartments, and the older ones do buy houses. They are not counted in the growth numbers, but in a growing natural population (births exceed deaths), they are very likely consuming some increased number of housing units.

    Good point about lack of more current data, but it’s a bit of a two edged sword. In the same way AC can’t prove last year’s growth to have maintained its level, you can not prove that it hasn’t exceeded that level. One piece of data we do have is that available listings are fewer this year than last year.

  211. 211
    Eastsider says:

    RE: whatsmyname @ 210 – Seriously, the current trend in apartment rent tells us everything we need to know. I believe apartment rent is stalled if not declining in Seattle.

  212. 212
    Eastsider says:

    By jon @ 202:

    By Erik @ 191:

    RE: noogakl @ 189

    When you buy in areas like Bremerton, you are speculating on housing prices going up. When you buy near the job center like Seattle, housing prices are more predictable. I think we all pretty much know Seattle prices are very likely to go up over the next 5 years. Bremerton could boom, but that is speculation.

    If he can afford his payments and enjoy the lifestyle, then appreciation is not an issue, because he will never have to sell.

    In addition, he is going to save tens of thousands of dollars in property tax bills over his lifetime. Many long time residents are being forced out of their homes because they can no longer afford the high cost of living here. Or their homes will be sold to pay off property tax owed when they pass away.

  213. 213
    Eastsider says:

    By whatsmyname @ 152:

    Back to the point, a guy who’s been holding nice, independently salable, residential unit two blocks from DT Bellevue has made a lot more than $6,000 per year in appreciation since 2013. And could sell that property in a heartbeat -even with too many rentals in the complex. Location.

    I guess you missed the last crash and it hasn’t been 10 years! Following the crash, countless condos were sold for under 50% of the previous sale price. Not saying this will happen again soon but you are clearly speculating in this market if you are a real estate / rental property investor.

  214. 214
    whatsmyname says:

    By Eastsider @ 213:

    By whatsmyname @ 152:

    Back to the point, a guy who’s been holding nice, independently salable, residential unit two blocks from DT Bellevue has made a lot more than $6,000 per year in appreciation since 2013. And could sell that property in a heartbeat -even with too many rentals in the complex. Location.

    I guess you missed the last crash and it hasn’t been 10 years! Following the crash, countless condos were sold for under 50% of the previous sale price. Not saying this will happen again soon but you are clearly speculating in this market if you are a real estate / rental property investor.

    The guy in question is not me, and he bought at 2013 prices. My guess and my argument is that he has done too well on that property to wet himself over $6,000. We don’t all see life the same way. It’s a good thing.

  215. 215

    By Eastsider @ 213:

    By whatsmyname @ 152:

    Back to the point, a guy who’s been holding nice, independently salable, residential unit two blocks from DT Bellevue has made a lot more than $6,000 per year in appreciation since 2013. And could sell that property in a heartbeat -even with too many rentals in the complex. Location.

    I guess you missed the last crash and it hasn’t been 10 years! Following the crash, countless condos were sold for under 50% of the previous sale price.

    Huh? While I’m sure some condos were (particularly those in associations hard hit by defaulting owners), the condo market did reasonably well. I kept expecting it to do worse, but it was surprisingly resilient. Condos did much worse in the crash before that–the one in about 1980 or so.

  216. 216
    whatsmyname says:

    By Eastsider @ 211:

    RE: whatsmyname @ 210 – Seriously, the current trend in apartment rent tells us everything we need to know. I believe apartment rent is stalled if not declining in Seattle.

    I think the aggregates may look bad for a while because there is too much crowding of new supply in the higher end and tinier products. But supply demand balance is a lumpy thing. One thing for sure – the supply/demand growth is working against those who favor but don’t have a single family residence.

  217. 217
    Eastsider says:

    By whatsmyname @ 216:

    I think the aggregates may look bad for a while because there is too much crowding of new supply in the higher end and tinier products. But supply demand balance is a lumpy thing. One thing for sure – the supply/demand growth is working against those who favor but don’t have a single family residence.

    One interesting thing about SFR supply/demand, it has got to be balanced at any given time! If the demand is high, which it has been, it pushes prices higher. At the current price, however, I am not at all surprised if supply has finally ‘outstripped’ demand, that is when prices moderate, stall or even decline LOL.

  218. 218
    Eastsider says:

    By Kary L. Krismer @ 215:

    Huh? While I’m sure some condos were (particularly those in associations hard hit by defaulting owners), the condo market did reasonably well. I kept expecting it to do worse, but it was surprisingly resilient. Condos did much worse in the crash before that–the one in about 1980 or so.

    Of course you didn’t see the condo market tanked. Didn’t you pay good money for your current home at market top? …just sayin ;)

  219. 219
    Joe says:

    5% down VS 20% down which is good advice 750K homes in bothell area

  220. 220
    whatsmyname says:

    By Eastsider @ 217:

    One interesting thing about SFR supply/demand, it has got to be balanced at any given time! If the demand is high, which it has been, it pushes prices higher. At the current price, however, I am not at all surprised if supply has finally ‘outstripped’ demand, that is when prices moderate, stall or even decline LOL.

    I think the bidding wars and the serial bidders indicate a lack of balance. There is more demand at these prices than product. Whats declining is inventory., but of course, eventually that will change.

  221. 221
    Erik says:

    RE: Eastsider @ 211
    This is not a robust analysis method to predict future housing prices.

  222. 222
    noogakl says:

    By ess @ 200:

    Interesting, because I talked to an agent three weeks ago that indicated that he thought that Lynnwood was the next real estate hot spot. Why? Light rail is coming to town. In six years, the commute from Lynnwood to downtown Seattle will be a guaranteed 20-25 minutes. It will be faster to get from Lynnwood to downtown Seattle than many parts of Seattle to other Seattle areas by public transportation.

    I don’t know if you have ridden the Link Light Rail lately, but I can assure you that it is not a pleasant experience. The folks at Sound Transit portray time on the train as a leisurely time where you can read a newspaper and drink your latte. Most of the time during rush hour, there is standing room only and barely any room to breathe. It isn’t a great experience.

    No problem, you say? Just add more train cars? On average there are 2.5 cars per train right now during busy weekday rush hour. The 2 car trains are jam packed; sometimes, the 3 car trains still have a little room for standing. But the maximum number of train cars you can fit per station is 4. And with the service expanding north, even more people will be riding the train. They can send the the trains more frequently, but I think their capacity will be saturated sooner rather than later.

    There are also, I should say, some interesting characters that ride the train. Yesterday, there was an individual who was riding during rush hour and was extremely violent when anyone brushed his clothes when passing by or sitting next to him. He threw a punch at one individual, kicked my bag (causing damage to my laptop) and kicked out at me, before cursing me out, threatening me and leaving the train. I hope he gets the help he needs.

    Buying near the light rail was a good idea 5 years ago. Not so much today because in limiting the size of the stations to only fit 4 train cars, they did not design the system to provide adequate supply for the demand that will occur as the system expands.

    On the ferry there is a lot more space, so people who have mental health issues like this individual can ride the ferry and not be concerned about people touching them. Furthermore, there are WSF workers walking all around the ferry, so if a situation like this occurs, there is someone there who can in theory intervene and deal with the situation.

    Also I should mention that Kitsap County is not on the hook for ST3, so not only will I save tens of thousands of dollars in property taxes during my time living there, but also thousands of dollars in car tab fees.

  223. 223

    By Eastsider @ 218:

    By Kary L. Krismer @ 215:

    Huh? While I’m sure some condos were (particularly those in associations hard hit by defaulting owners), the condo market did reasonably well. I kept expecting it to do worse, but it was surprisingly resilient. Condos did much worse in the crash before that–the one in about 1980 or so.

    Of course you didn’t see the condo market tanked. Didn’t you pay good money for your current home at market top? …just sayin ;)

    Yes, that decision has worked out to be horrible! The house is now worth much more than when I bought it, and in the interim I basically got back roughly 50% of it’s cost in tax free rent. Oh, and I’m not living within the Seattle city limits anymore, which is worth a lot!

    But ignoring that, the idea that the market would go down wasn’t totally outside my focus, and in fact the market had already peaked. That there could have been further declines was the second biggest factor in why we sold our old house (capturing tax free gain being the biggest).

    So let’s see, roughly $200,000 of tax free income twice. That’s just horrible! I really need to change my financial practices and start listening to anonymous people on the Internet for financial advice.

    But in any case, that’s rather off the topic of whether condos did badly after 2007. As I said, some with particular issues did (mainly ones where a large proportion of their owners bought in 2005-2008), but many held up incredibly well. Much better than what I expected based on the prior cycle.

  224. 224

    RE: Anonymous Coward @ 199
    The Open Border Progressives Want Their New Confederate Type America With Foreign Cheap Slaves Replacing Americans, Just Like the Last Civil War

    Their rich elite flock to Seattle to get slaves for cheap for their house cleaners, nannies, healthcare workers, gardeners, etc…..tax evasion IOWs…

    They laugh at the workers getting dinky wages and no real health care….paying $2000-3000 to share an apartment with 2-3 poverty stricken bunk buddies…

  225. 225
    Eastsider says:

    RE: Kary L. Krismer @ 223 – I’m not sure why you are so brilliant to be sitting on a $200k gain in your home. Many long time homeowners in the area are sitting on hundreds of thousands of dollars in capital gain. Many ‘brilliant’ investors during the Internet bubble years are still working today… LOL.

    Back to the condos. Here is just one of many posts that shows the extent of condo crash. In fact, picking up a condo at 1/3 of its peak value is not uncommon following the crash.

    http://seattlebubble.com/blog/2011/09/30/friday-flashback-half-million-dollar-condos-in-puyallup/

  226. 226

    By Eastsider @ 225:

    RE: Kary L. Krismer @ 223 – I’m not sure why you are so brilliant to be sitting on a $200k gain in your home. Many long time homeowners in the area are sitting on hundreds of thousands of dollars in capital gain. Many ‘brilliant’ investors during the Internet bubble years are still working today… LOL.llup/

    I’m not sitting on a $200,000 gain. We took that gain (approximately) when we sold our old house.

    The other $200,000 is from what I haven’t had to pay in rent because I own a house free and clear.

    The point is I’ve owned my residential real estate that I’ve lived a long time, and at this point could have my existing house wiped out in an uninsured loss and still be ahead of the game. And I’m gaining more each month, even ignoring change in market valuation.

    But some naive ignorant people like to focus on the time I purchased one piece of property, totally ignoring the fact that I sold another piece at the same time. If you can handle being a tenant, good for you. I can’t. And while I have been an owner I have basically had enough benefits of ownership to more than pay for the house I currently live in. Not a terrible result–but that’s the situation you described.

  227. 227

    RE: Eastsider @ 225 – As to the condos, that’s Puyallup. Earlier today I checked the condo building I used to own in, and around the time of the peak the most common sales price of the 1 bedroom non-corner units above the 3rd floor was $250,000-265,000, although there were two units (including on the third floor) that sold for $297-305k shortly after the peak. Ignoring another outlier on the other side which sold in 2012 for only $184,827 for some unexplained reason, the low point for such units was $230,000 in December 2008. Everything else after that sold for at least $250,000.

    BTW, I also excluded short sales and REOs. Also, numbers from NWMLS sources but not compiled by or guaranteed by the NWMLS.

  228. 228

    Was just reading the newest info on New Construction Single Family Home size trending down.

    http://eyeonhousing.org/2017/05/new-single-family-size-continues-to-trend-down/

    They note that “townhomes” as Single Family Homes are contributing significantly to this trend.

    That “townhomes” are sometimes “condos” and sometimes “single family homes” is impacting the data more and more. So much so that I have started to consider 3+ bedroom condos over 1,200 sf with single family data vs along with tiny 450 sf one bedroom condo data.

    Just posting the link because it is a recent article on a national trend of sizing down.

  229. 229
    sleepless says:

    Why the home prices are so high? The government is to blame, business as usual. $200K for a building permit

  230. 230
    sleepless says:

    By Kary L. Krismer @ 209:

    This might not apply to Seattle proper, but clearly we are different–in a good way!

    http://www.seattletimes.com/seattle-news/data/voters-in-washington-hated-both-trump-and-clinton-more-than-in-any-other-state/

    And still voted for Killary. This is what never ceases to amaze me is the level of stupidity of the American voter. And before libtards jump in with accusations, i hated both of them (i despise the both GOP and DEM parties), this is why i don’t vote because it doesn’t matter. You just cannot outvote the brainwashed masses. And no, i am not “conservative” either, at least in the current GOP representation that has nothing to do with conservatism.

  231. 231
    Macro Investor says:

    By justme @ 205:

    On another but related topic, it looks like the Toronto housing bubble is bursting. Coming soon also to a city near you.

    http://wolfstreet.com/2017/05/24/toronto-house-price-bubble-pops/

    “During the first two weeks in May, according to preliminary data from Toronto Real Estate Board, home listings surged 47% from the same period last year even as sales plunged 16%. “

    This is what I was saying a few threads back. When owners detect even the slightest whiff of price declines, there will be a RUSH TO SELL. So if you are hoping to offset your bad purchase decision with years of appreciation — it can all go south faster than you can hit the sell button.

    This is what we saw in 2008. For sale signs everywhere. Buyers switched from bidding wars to sitting and waiting for more reductions. I’m not saying when this will happen, but it will happen. It did happen. It always happens that way. You can study the history of markets going back centuries.

    If you can afford to live in your house for 10 years, you should do okay. Personally, I never had a job last that long. Either their business changed, or I got sick of the commute or the environment there.

    The accidental landlords and the newbie flippers will be the first to panic out. Over the long term they cannot afford their negative cash flows… and they know it, despite the overconfidence displayed on blogs.

  232. 232
    ess says:

    By noogakl @ 222:

    By ess @ 200:

    Interesting, because I talked to an agent three weeks ago that indicated that he thought that Lynnwood was the next real estate hot spot. Why? Light rail is coming to town. In six years, the commute from Lynnwood to downtown Seattle will be a guaranteed 20-25 minutes. It will be faster to get from Lynnwood to downtown Seattle than many parts of Seattle to other Seattle areas by public transportation.

    I don’t know if you have ridden the Link Light Rail lately, but I can assure you that it is not a pleasant experience. The folks at Sound Transit portray time on the train as a leisurely time where you can read a newspaper and drink your latte. Most of the time during rush hour, there is standing room only and barely any room to breathe. It isn’t a great experience.

    No problem, you say? Just add more train cars? On average there are 2.5 cars per train right now during busy weekday rush hour. The 2 car trains are jam packed; sometimes, the 3 car trains still have a little room for standing. But the maximum number of train cars you can fit per station is 4. And with the service expanding north, even more people will be riding the train. They can send the the trains more frequently, but I think their capacity will be saturated sooner rather than later.

    There are also, I should say, some interesting characters that ride the train. Yesterday, there was an individual who was riding during rush hour and was extremely violent when anyone brushed his clothes when passing by or sitting next to him. He threw a punch at one individual, kicked my bag (causing damage to my laptop) and kicked out at me, before cursing me out, threatening me and leaving the train. I hope he gets the help he needs.

    Buying near the light rail was a good idea 5 years ago. Not so much today because in limiting the size of the stations to only fit 4 train cars, they did not design the system to provide adequate supply for the demand that will occur as the system expands.

    On the ferry there is a lot more space, so people who have mental health issues like this individual can ride the ferry and not be concerned about people touching them. Furthermore, there are WSF workers walking all around the ferry, so if a situation like this occurs, there is someone there who can in theory intervene and deal with the situation.

    Also I should mention that Kitsap County is not on the hook for ST3, so not only will I save tens of thousands of dollars in property taxes during my time living there, but also thousands of dollars in car tab fees.

    All of the above are valid points.

    As a matter of fact, the anti ST3 people tried to alert voters that the actual maximum capacity of light rail that was presented by the pro ST3 people could only be achieved with something like 200 people per light rail car packed in like the proverbial sardines. Or in other words, most people standing for a long ride on light rail won’t be much fun for many. I have taken those kind of rides in cities in the US and abroad – they are tiring and unpleasant.

    But one must consider the following:

    -The Lynnwood station will be the last station that will be built in the next phase for many years to come. Thus most commuters aligning the light rail at the Lynnwood station will be able to secure seats for their ride heading to Seattle or beyond.

    -Lynnwood to downtown Seattle will be a trip of less than half an hour, while the ferry ride from Bremerton to Seattle is at least an hour. And that is just for the time of the actual ferry ride, usually for ferry rides one must arrive earlier to insure they actually catch their ferry, or face a long delay until the next ferry arrives, which increases the time for the travel.

    -Light rail trips will leave much more frequently than ferry trips, thus avoiding the necessity of planning one’s arrival at exactly the correct time at the transportation facility. Miss a train – catch the next one in a few minutes. Miss your ferry – you have to wait at least an hour if not more.

    -Light rail when its next phase is completed, even in its limited destination capacity will allow direct trips to various locations such as the U District, Capitol Hill, Downtown, the stadiums and the airport or to the east side with one in station transfer. Furthermore, the light rail traveler will be able to transfer to another bus if required to continue their destination away from the light rail station with minimal transfer costs. A ferry traveler will only have access to one area, and unless their destination is within walking area of the ferry dock, they will have to pay another full fare to continue their destination. Not to mention that they will have to walk some blocks to where most of the buses arrive and depart, adding even more time to their travels. So everyone ends up paying if they come to the Seattle area by public transportation one way or another.

    As to the various characters that roam the light rail system, that is more the fault of poor Seattle mental health and homeless policy than the fault of the light rail. Resolve the homeless/mental health issues and the carte blanche open invitation and welcome those individuals are provided by Seattle, and the number of distressed/destressing individuals who ride light rail will also decrease.

    In my opinion. light rail is a poorly thought out and inadequate expensive non solution to the explosive population growth the area is experiencing. But that is the direction the powers that be with permission of the voters are going. But a few towns in the Puget Sound area, such as Lynnwood are going to benefit from limited light rail service that just happens to serve that community. While it is not a perfect solution for all, others will put up with the crowds and occasional colorful personalities that they encounter on a direct light rail trip rather than have a 3hour RT commute from Kitsap Peninsula via the Bremerton Ferry if downtown Seattle is not their final destination.

    And note, Lynnwood has a good stock of those “starter” homes that more first time buyers are concentrating on as they are priced out of the Seattle and East Side markets. So it should become a more attractive market to those buyers the closer light rail becomes a reality in that part of Puget Sound.

  233. 233
    sleepless says:

    Keep also in mind – high home prices is what get politicians elected even though high home prices are bad for the economy (just like any other ever increasing prices are bad). Housing is a utility (except commercial that is), not an investment. Housing is a shelter and it was throughout the US history until the “braves” Greenspans and Bernankies had “Courage to act” and inflate the bubble to ginormous proportions making everyone “rich”. And nowadays government tries to convince everyone that you have to buy a house and everyone is initialed to a piece of the American dream. You cannot afford a house because it is too damn expensive? – here you go, low interest rates, loose lending requirements because requiring good income and high credit scores is “rasis”. Lets also invite more Chinese, so they can drive housing prices even higher turning Chinese housing bubble into American (Australian, UK, Canadian, etc) housing bubble. Lets make more laws that don’t allow any construction or make it impossible to construct affordable homes. Lets give “black stones” $Bills in low interest mortgages (close to zero) and let them buy up the housing and then sell the MBSs to the FED and and let put taxpayer on the hook for RBSs and the FED’s MBSa.
    When someone asks why the rents are so high, why the housing is so expensive, i would tell them – ask the politicians you keep electing every year (DemoCRIPS and ReBLOODlicans).

    You can blame “jobs”, for high home prices, millennial, baby boomers, whatever. I only blame the government policies, including the fiscal ones and the FED (which is not the government) monetary policies.

    Everything the government touches turns into turd. Healthcare has never been more unaffordable – courtesy of the government (aka Obamacare and other regulations), education has never been more unaffordable – courtesy of the government (Student loans), cars have never been more unaffordable – courtesy of the government sub-prime car loans, homes have never been more unaffordable – courtesy of the government, low interest rates, government backed mortgages, local zoning and environmental regulations, visas/GCs for home programs for Chinese buyers, etc. Just like food and clothing, housing is a necessity and should be affordable!

    https://www.usnews.com/opinion/economic-intelligence/2015/10/22/50-years-of-failure-how-our-housing-polices-make-homes-unaffordable
    http://wolfstreet.com/2017/01/24/us-government-fannie-mae-guarantees-rental-home-mortgage-backed-securities-blackstone-invitation-homes-win/

  234. 234
    sleepless says:

    RE: Macro Investor @ 231 – Again, courtesy of Canadian government stupidity. Did you know that 89% of the land in Canada belongs to the government (the Queen) and you cannot build there? Meaning only 11% of land is available for residential and commercial construction? Now, you have the “they don’t make that land no more” myth, which is the artificial creation of the government. And of course, they don’t have enuf of Chinese buying up Vancouver and Toronto. 70% of Vancouver speaks Chinese now.

  235. 235
    David B. says:

    RE: sleepless @ 234 – Canada is huge and sparsely-populated (density about 9 people per square mile overall). USA’s population density is 86 per square mile. Even assuming 0% public land in the USA (not remotely true), the amount of private land per capita would be comparable in Canada.

  236. 236
    David B. says:

    By sleepless @ 229:

    Why the home prices are so high? The government is to blame, business as usual. $200K for a building permit

    Building permits cost $200K a pop now? Link?

  237. 237
    sleepless says:

    RE: David B. @ 236 – Link is in the comment

  238. 238
    David B. says:

    RE: sleepless @ 237 – There are no links in your post #229.

  239. 239
    noogakl says:

    RE: ess @ 232

    Totally agree with you on ST3 not being a well thought out solution for the transportation needs of the city.

    The difference I see between commuting from Bremerton and commuting from Lynnwood is that on the ferry, I can sit in a seat by myself with reasonable privacy and work on my laptop using a company-provided hotspot. So I don’t see it as a 3 hour commute, because for at least 2 out of those 3 hours, I can be working. It doesn’t work for everyone, but for people who work in the downtown core and do lots of work on the computer, it is a good option to consider.

    If you get a seat on the Light Rail at the Lynnwood station during rush hour, you might have 5-10 minutes of privacy before the train gets too crowded. And Lynnwood has many of the same disadvantages as Seattle compared with Bremerton: higher home prices, worse traffic, higher property taxes, higher car tabs, etc. And I would have to put up with 6 years of commuting on very long bus rides in bad traffic before the light rail service starts. So that is why I didn’t consider Lynnwood.

    There is the disadvantage of having my personal schedule strongly dependent on the ferry schedule. But I am not out and about too much in the evenings anyways with two young kids at home to take care of, so that isn’t as big of a factor for my lifestyle.

  240. 240
    sleepless says:

    By David B. @ 238:

    RE: sleepless @ 237 – There are no links in your post #229.

    Click on “$200K for a building permit” and watch miracle happen :)

  241. 241

    By sleepless @ 240:

    Click on “$200K for a building permit” and watch miracle happen :)

    Rather bizarre to create a link that doesn’t appear to be such unless you hover, but whatever.

    As to the property, clearly plans and permits have value. Different situation, but I once came across an owner who had sold a larger parcel of land subject to feasibility, and then later the buyer assigned their rights to a new buyer for over a million dollars more than the purchase price. The seller learned of the higher price, got upset and breached the contract. Later a large judgment against them. But the point is a lot of design work and permitting had been done, and that made the property much more valuable. Or in another context, sometimes tearing down a house will increase the value of the property more than the cost of tearing down the house because the buyer will know that there will be no issues getting permission to tear down the house.

    As to this specific property it’s not clear how much of the increase was due to the permits and how much just due to change in market. Also you don’t know if there was some other agreement with the seller to actually build a house, and perhaps that price was discounted for a higher price on the lot.

  242. 242

    By noogakl @ 239:

    There is the disadvantage of having my personal schedule strongly dependent on the ferry schedule.

    This is a disadvantage. I grew up over in Bremerton and hate the ferries. The last time I rode one was probably 1984. It’s probably not as bad now with computers and Internet, and the passenger ferry being a faster trip would help. That would also avoid the issues of damage to your car from inconsiderate people (the reason I haven’t been on a ferry since 1984).

    Overall it’s a nice area, but if I were planning on commuting to Seattle by ferry I’d probably want to live walking distance to the ferry dock in Bremerton and work in downtown Seattle.

  243. 243
    noogakl says:

    RE: Kary L. Krismer @ 242

    The first house we bid on in Bremerton was within walking distance of the ferry. Unfortunately we lost out on that one.

    I think the extent that the ferry schedule is an issue depends on how frequently you want to be doing things in Seattle in the evening. I you really like the amenities of the city that keep you in the city late in the evening: sports teams, theater, festivals, fine dining, clubs, etc. Bremerton is not a great place to be, because the ferry schedule is not set up for these things.

    If on the other hand, you like more outdoors activities (hiking, kayaking, backpacking, fishing), Bremerton is a great place to be. Seattle has all of these things as well, but unless you are driving early on a weekend morning or late in the evening, you will always be fighting traffic and there will be a lot more people doing these things.

  244. 244

    RE: noogakl @ 243 – I don’t know if it’s changed, but owning a boat you launch from a trailer used to be a much better experience over there than on this side of Puget Sound, where launching a boat typically involves long lines.

  245. 245
    sleepless says:

    By Kary L. Krismer @ 241:

    By sleepless @ 240:

    Click on “$200K for a building permit” and watch miracle happen :)

    Rather bizarre to create a link that doesn’t appear to be such unless you hover, but whatever.

    Kary, you are well known for addressing the problems to the wrong people. A simple CSS check on this site (style.css) reveals that hyperlinks are set not to show as such – a { text-decoration: none; } which can be changed to a { text-decoration: underline; } to show the links underlined. But, I guess, The Tim would be the right person to address the concern :)

  246. 246
    sleepless says:

    By softwarengineer @ 197:

    RE: Sid @ 194
    The Trump High Tech Stock Boom

    Has arrived n 2017, and Amazon is a sly company too. When stupid Progressive Companies like Macys cancelled Ivanka Trump’s clothing line…..Amazon sells it now instead. Trump logo sales are sizzling now too. So much for a hopeless Progressive sales attack on Trump.

    Macys stock is doing terrible now.

    https://www.fool.com/investing/2017/01/07/macys-stock-plunges-on-weak-sales-forecast-but-inv.aspx

    So, the private business cannot decided what they want or don’t want to sell? I don’t care about Macys, never shopped never, never will (you can include Walmart, Target, Starbucks, McDonalds and many others to the list). Macys stocks crashes not because Macys doesn’t sell Trumpware, it crashes because Amazon eats retail alive. American Apparel, Sears, many others going out of business because they have obsolete dinosaur business model and failed to adopt. Walmart is trying to compete with Amazon, but good luck with that, it doesn’t have a chance since it doesn’t pay remotely what Amazon pays to their engineers meaning all good ones will run to Amazon (Microsoft, Google, Facebook, etc).
    BTW, how is the Trumponomic working out for you (the Trump candidate ugly fat bubble is a good “bull” market now), still happy you pulled for Trump? No regrets after he turned out a complete scum who BS’ed his way to presidency? How is the the Trumposwamp, hasn’t drowned in it yet? Trump achievements so far: more wars and more spending on military industrial complex, more spending on prison industrial complex, gave all key government agencies/cabinet positions to Goldman’s and Soros buddies, no obamacare repeal in sight, no border wall, at least Mexico will never pay for it, more government spending and deficit, no pulling out of NATO, continuing Obama / Bush surveillance state, more wars – Syria, Yemen, Afghanistan, and others, more money for Israel, more weapons for Saudies (so much for 9/11 BS), more tax breaks for banksters, more drug wars…. I can go on… I guess, i have to give him a credit on global warming consensus when he pissed everyone off by not supporting it, but otherwise as i said many time, Trump is just a republican Obama, no different…

  247. 247

    RE: sleepless @ 245 – Thank you for the explanation, but I was actually thinking about the person creating the link. My thought was more that the person creating the link in that manner would see the result then hit the edit button and create a regular link so that the link was more obvious.

  248. 248
    Eastsider says:

    RE: sleepless @ 246 – Wow sleepless! ROFL

  249. 249
    MGSpiffy says:

    A Beautiful day, and I’m batching it for the weekend. So I decided on the way home from the store to take the ‘scenic route’ – about 11 miles around the area. It’s been a while since I’ve done that.

    Holy Snackcakes is the Inventory Out There! I swear there was a ‘For Sale’ or ‘Open House’ Sign every 100 yards the entire way. Waaay more than I’ve remember seeing since I’ve moved to the area a few years ago.

    I’ll be curious to see the numbers that include Memorial Day Weekend when they come out.

  250. 250
    Minnie says:

    I’m curious which area you are referring to…in King County we are at historic lows of inventory, and especially so since it’s Memorial Day weekend.
    I have noticed that *more* agents seem to be advertising Open Houses with signs nowadays, but I don’t think that represents more inventory, just better marketing skills.

    RE: MGSpiffy @ 249

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