Seattle Bubble

Last Wednesday there was some great conversation about what people are experiencing as they are out there right now trying to find a home. I think it’s worth re-posting these comments on the front page, since they give a good feel for what the housing market is really like right now that you can’t get just by looking at graphs and spreadsheets.

Peter:

I’ve actually started looking seriously at homes in the $400k-$500k range and have toured probably at least a dozen from the Kennydale Area up to Juanita/Kirkland. Here’s what I’ve noticed:

1) Pretty much everything you’ve heard about flipper renovations is true. These people are morons. I’ve seen some work so shoddy that it would blow your mind. We toured a home in Newport Hills and the owners were still there – he pointed at the electrical plates and said, “we upgraded to the latest style!” Um, yeah. You went to Home Depot and dropped a hundred bucks and spent the afternoon with a flathead screwdriver. No.

2) The $400k-$500k unrenovated properties are bottom of the barrel garbage. Borderline unliveable. Most of these are in such a state of disrepair they will probably need to be torn down. We saw a house in Finn Hill that had been vacant for quite some time. It smelled like death. My wife said, “this place is haunted!” I saw something – I’m not sure what – but it was brown, papery, and slightly organic looking in the fireplace. I asked our agent what it was and she just said, “let’s get out of here!” And a steal at only $450k.

3) Prices are all over the board and don’t appear to be based on recent nearby sales or appraised value + whatever. People are just asking whatever they feel like and seeing if they can get any bites.

4) The increase of inventory is definitely accelerating. It’s all crap though.

5) Most builders are idiots. They will shoehorn a house into just about any space, regardless if the front door of one house is directly facing the house next door. Yeah, I want to look out of my living room window and see my neighbor reading the newspaper in his bathroom. Most are still not offering concessions.

6) I’m not seeing any of these houses move. No one is buying them. However, if a decent house at a decent price does get listed, it is snapped up immediately. The crap is sitting forever though.

7) This has been one of the worst and most depressing experiences of my life. I’ve seen more than one house that *could* have been nice but had been ravaged by a flipper and had the price jacked up $100k from the purchase price a year ago. It seems every flipper runs out of money and you can tell exactly where they did – 4 out of 5 rooms will have hardwood floors, for example. The last one will have 30 year old filthy carpeting in it. 3 out of 5 closets will have been redone – the last two look like something like the meat locker from Texas Chainsaw Massacre.

Anyone who thinks this is a “healthy market” is certifiably insane.

Alan:

I know what you mean, Peter. My wife and I went to an open house a few weekends ago. We could tell that the owner had done some shoddy renovations, but we thought we would have to redo it and so we would have wanted a discount *because* of the renovations (if we had even wanted the house — which we didn’t because the floorplan was horrible).

I enjoy messing with the realtors. They ask if I am in the market and I say, “No, I’m currently priced out of this market. I only make $X per year.” (where X is significantly above the mean income for the area). The last realtor I said this too got excited and started telling me that the owners would probably sell for less than the asking price and that he could get me a good deal on the house.

B:

Peter:

Wow, I haven’t been looking as hard at as many properties as you have, but your observations exactly parallel my own. What a strange twilight-zone of inventory and comps we’re looking at right now.

I came back from the last place we walked through (SFH in Greenlake listed at $699, which was absolute junk inside) with a resolve to renew my apartment lease through 2007 – let the flippers flop.

The only thing worth less than a “fixer” is a house where someone did a crappy remodel/flip on a fixer. Now I have to tear out all your shoddy garbage and re-do it. Honestly!

stephen:

If you are going to buy (like we are) it is extremely important to do loads of homework and tons of driving. We’ve been looking since the first and still haven’t set foot in a house. One passed the drive by sniff test but fell out due to the flood report.

So have any other readers been out there looking at homes? What have you experienced? Is the market as strong as local real estate agents would have us believe? Let’s hear your tales.