Seattle Bubble

News & discussion about real estate & the housing bubble in the Seattle area.

Seattle Bubble - News & discussion about real estate & the housing bubble in the Seattle area.

Entries Tagged as 'investment'

KUOW Seeking Stories from Commercial Real Estate Investors

By The Tim on October 20th, 2009 at 6:00 AM · 12 Comments

I received the following request from a KUOW reporter that I thought was worth forwarding on to the general reading audience:

Another of our reporters is working on a story on commercial real estate investment. I recognize that your blog follows residential real estate more closely, but I know many of the people reading it are doing so for investment purposes.

I would be thrilled if you would once again publish our question form.

I do have something to offer as some sort of a way to square things: our reporter Phyllis Fletcher did a 10-minute feature piece the other day on the fallout when people are evicted in order to make way for new development that never happens.

For those that do not remember, back in June I posted a similar request, which resulted in an interesting story about downtown office space.

This month’s questionnaire concerns commercial real estate investment decisions.

Just a few years ago an investment in commercial real estate looked like a sure thing. Now it’s a different story. What decisions are you making now because of the market downturn?

If you’ve got any recent experience in commercial real estate investment, head over to the KUOW question form and drop them a line. When the story is posted (presumably in a few weeks), I’ll be sure to post an update.

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2008 Pop Quiz

By The Tim on January 1st, 2009 at 1:14 PM · 35 Comments

Pop quiz, hotshot. Let’s say you had $100,000 on January 1st 2008.

Which of the following “investment” methods took the largest loss in 2008:

  1. 20% down payment on a $500,000 SFH in King County.
  2. S&P 500 index fund.
  3. Cash under the mattress.

…

And the answer is… A!

According to the NWMLS, the median price of single-family homes in King County dropped 9.2% from January to November (the latest data available). When your $500,000 house lost 9.2% of its value you lost $45,978, or 46% of your $100,000 “investment.”

Had you put the money into an S&P 500 index fund, you would have lost $37,585, or 38% over the course of the year.

Also keep in mind that the loss for the home purchase is generously not taking into consideration all the money that was thrown away every month in mortgage interest. At January’s prevailing rate of 5.76%, that is another $22,900 down the drain.

Cash under the mattress wins as the safest investment of 2008. ;^)

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Forbes: Seattle 5th Best Market to Invest In

By The Tim on July 15th, 2008 at 1:32 PM · 113 Comments

Believe it or not, Matt Woolsey is still writing bullish real estate pieces for Forbes (some of his previous work). His latest gem: Top U.S. Real Estate Markets For Investment

Encouraged by a weak dollar and a belief in the resiliency of the U.S. economy, individuals like [Australian dentist Rahul] Reddy, along with institutional investors such as pension funds and private equity groups, are seeking investment properties and development opportunities in the United States.

Their markets of choice include New York City, Los Angeles, Washington, D.C., Seattle and San Francisco.

The bullishness of the article was at least somewhat moderated this time around:

“The U.S. is good for speculative higher-risk investments from our perspective because the strong Australian dollar will enable us to gain hold of properties at prices we will probably not see for a long time,” says Reddy. “The U.S. is an economic powerhouse that I think will recover, and if the exchange rate goes back to figures from a few years ago, that will benefit us.”

Key word there: Risk. With every passing month, a few pieces of conventional wisdom fall by the wayside.

Since Forbes is so fond of the top 10 list format, here are their top 10 US markets for real estate “investment.”

  1. New York, NY
  2. Washington, DC
  3. Los Angeles, CA
  4. San Francisco, CA
  5. Seattle, WA
  6. Boston, MA
  7. Chicago, IL
  8. Las Vegas, NV
  9. Phoenix, AZ
  10. Orlando, FL

Here’s what he has to say about Seattle on that list:

American investors have been a little ahead of the curve on the opportunities available in Seattle. While the residential real estate market has cooled, Seattle has so far bucked the unemployment trends plaguing much of the national economy. According to the Bureau of Labor Statistics, metro area unemployment has remained flat in year-over-year terms at 3.7%, something that bodes well for commercial and retail investment opportunities.

I thought we had heard the last of the “bucking the trend” clichés, but apparently not. It also seems that Mr. Woolsey is using rather dated information, since the latest unemployment statistics for the Seattle area showed a sharp increase, which throws the trend-bucking idea out the window.

But don’t let the facts deter you if you want to throw your money at a real estate “investment” in Seattle. We are the fifth best market according to Forbes, after all.

(Matt Woolsey, Forbes, 07.10.2008)

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