It starts at the bottom and works it's way up.

[Angie]

[EconE]

I'm not afraid to hang out in the south end. I used to have friends that actually lived in the warehouse of an auto body-shop on Rainier. But they were in a band...so I guess it fit them. Had plenty of great times down there.

But anyhow....the point of this thread isn't to rag on anybody. I'm just showing you the patterns.

They start at the bottom and work their way up.

repeat over and over. The exact same pattern is being followed in L.A. It spreads like a cancer finally making it to the "bestest" neighborhoods.

So....anyhow...a couple more contributions...

Purchased for 310k July 2007

Currently Listed at 169k

http://www.redfin.com/WA/Seattle/7027-D ... ome/159762

Purchased for 275k October 2006

Currently listed for a whopping $7,900 over it's 1998 purchase price of 160k at $167,900

http://www.redfin.com/WA/Seattle/11115- ... ome/178427

[ira s]

Hey Ira, what say we propose the next Bubble meetup down in the south end?

I'm all for it. You and I might be the only two in attendance. Many others will be fearing the loss of their cars and their lives. I've never been to Angie's Tavern, but have been seen in some of Skyway's finest watering holes, and lived to tell the tale.

.....On a related note, when things start to recover, where does the recovery start? On those streets that were affected less or later, or on the "worst" streets?

[EconE]

Ira...I wouldn't fear for my life...and my car is insured.

Would you like me to show you some patterns in Los Angeles WRT a bad street in a good neighborhood?

[Civil Servant]

If there's going to be a south-end meetup, I want in too. We are potential future buyers there (though probably not for at least a year); I'll feel good about our purchase if most of our higher-on-the-hog, rah-rah-north-end friends think the house and neighborhood are crummy.

But because I'd rather be wrong than make a bad investment, I am also interested in the case against the south end. So Public Enemy, please say more about the risk of buying in "the wrong area of the city" -- like, what do you think is an appropriate price differential for the theoretical same houses in Columbia City and Ballard, and why? And, EconE, I am very interested in the Los Angeles patterns. Question for you though -- couldn't it be that the credit crunch/global finance meltdown, which is hitting Seattle at a different point in the crash from other cities, is such a major input that we won't see the same bottom-up pattern here? It seems to me that we could see the top coming down at the same time simultaneously with the bottom coming up... you know, because Seattle is so special.

[Hugh Dominic]

rose colored coolaid said "Just thought I'd chime in that most people are renters. Even you Angie...at least until you do pay off your home. Probably 75% of the population are renters overall."

While it is true that many "owners" dont actually own the home they are in - the bank does until is it is paid off - there is a world of difference between people who trully rent and those who have taken out a whopping big loan and are seeing their equity/downpayment/retirement evaporate.

Just as they enjoyed rising equity on the way up, they are suffering massive wealth destruction on the way down....

[Angie]

Hey, maybe the meetup idea has legs? I wonder if that eskercurve guy who asked about Beacon Hill would be interested too.

Maybe instead of a drink on a weekday we could get coffee midmorning on a weekend. I'd be happy to clear the car seats and cracker crumbs out of the back seat of my car and take a few interested parties on a driving tour of the highlights and lowlights of SE Seattle.

[ira s]

Would you like me to show you some patterns in Los Angeles WRT a bad street in a good neighborhood?

Very much!

[rose-colored-coolaid]

[EconE]

OK. Here's what's happening in a "special" neighborhood in L.A.

First a description of the area.

Old established neighborhood (Hancock Park). The "official" boundaries of Hancock Park run from Rossmore Ave. to Highland Ave.(east to west) and Melrose Ave. to Wilshire Blvd (north to south).

The N/S arterials are Highland and Rossmore. Highland is the busier of the two and the homes and lots are smaller than the Rossmore homes.

Demographics of neighborhood....Entertainment industry A-listers, Foreign Consulates, Financial Big Wigs etc. Yes, you've all heard of them.

Now let's take a tour up Highland. I'm going to include a couple houses south of Wilshire as the area is still pretty nice *just* south of Wilshire. Go too far south and it drops off substantially. North of Melrose is commercial.

Here are the candidates.

800 S. Highland.
purchased for $1,935,000 in 2006.
knifecatcher pays $1,625,000 02/08

http://www.redfin.com/CA/Los-Angeles/80 ... me/6912251

in June 08, 812 S. Highland the seller makes out like a bandit, but now 800 will definitely comp lower.

http://www.redfin.com/CA/Los-Angeles/81 ... me/6912253

Here's a current shortsale...purchased during the 1990 bubble (yes, it was big)

http://www.redfin.com/CA/Los-Angeles/63 ... me/7091798

Here is a home that is no longer listed on the MLS....267 S. Highland. It was last listed at $1,499,000 or $1,599,000...can't remember. Last sold in Jan 06 for $2,250,000

http://www.redfin.com/CA/Los-Angeles/26 ... me/7095095

106 N. Highland.
Purchased 10/2005 for $1,430,000
Sold 02/09 for $983,400

http://www.redfin.com/CA/Los-Angeles/10 ... me/7094668

364 N. Highland
Purchased 08/07 for $1,750,000
currently listed at $1,299,000

http://www.redfin.com/CA/Los-Angeles/36 ... me/7101505

525 N. Highland
Purchased 09/05 for $1,700,000
currently listed as a shortsale for $1,490,000 (Not a chance in hell)

http://www.redfin.com/CA/Los-Angeles/52 ... me/7101277

628 N Highland
Purchased 05/06 for $1,245,000 (Bank buyback for over $1,556,363 later that year) Held by bank for a long time.
Sold 12/08 for $799,000

http://www.redfin.com/CA/Los-Angeles/62 ... me/7101126

and the most recent contestant on the "Bank Pattern Tour"

738 S. Highland
Purchased 04/2007 for $1,250,000
Now listed as REO for $634,900

http://www.redfin.com/CA/Los-Angeles/73 ... me/7091959

And just for fun...not a foreclosure...but here's a flip that Beck (The singer) is gonna lose on. (Paid $6,750,000 in 2007)

http://www.redfin.com/CA/LOS-ANGELES/Un ... e/16892586

[PublicEnemy#1]

Civil Servant,

I don't think there is ever any "wrong area" to buy in, I just think people need to be realistic about the appreciation potential of said areas when it comes time to sell.

The problem is, most buyers think, "I will stay here forever so it doesn't matter to me". Well, it doesn't matter until that plum job opportunity comes up in the city you have always wanted to live in, or the crack dealer moves in next door, or the next door neighbor buries his wife in the backyard, etc.

There is nothing wrong with South Seattle, other than what is wrong with the rest of the Seattle metro area. Seattle was and still is, extremely overvalued.

It doesn't matter if it's South Seattle, West Seattle, Greenlake, Ballard, Beacon Hill or Madison Park, prices are WAY too high compared to incomes, without even touching on the debatable "world class" aspect of Seattle.

Madison Park, which many people would consider a "desirable location", is crashing and burning heavily. How is that not going to kill the West Seattle market, the Capitol Hill market and the South Seattle market?

Most people don't buy a multi-million dollar home for their first home so Madison Park is supported by move up buyers and out of area buyers who are moving up. If they can't move up, who is going to take their place?

People like to talk about how the bubble didn't start until 2002 or 2003, when I believe it started long before that. I think we are headed for mid to late 1990's pricing in Seattle. With each month bringing more declines, each month is bringing more homeowners who bought during the run-up further into negative territory, forcing more of them to sell, give up, walk away or whatever.

Angie likes South Seattle, and more power to her. But you have to be realistic about future appreciation. There are certain aspects that many people will find distasteful about South Seattle. Those things might attract you, but you need to be realistic that you don't need to buy just for your tastes, but for the NEXT homeowner.

It's like the time I was looking at a home in Tacoma. Located right behind Hell's Kitchen. Nice place, but who wants to live behind a bar, especially on the weekends? Now, some buyers might say, "Cool, think of all the hip live music we can go and see!" That works fine until you have kids and suddenly, the broken green bottles aren't so "hip" anymore. Then you go to sell and realize that most other people don't want that "hip" aspect either. This is why I say, don't just look at your wants and desires, but at future buyers' wants and desires.

Having said that, I would say I could live in South Seattle, but I have to be compensated with a MUCH lower price point because I am aware of what the difficulties will be for reselling in the future. I think a lot of people lost sight of that during the run up and just focused on constant future appreciation to get them out of any discounting scenarios.

[davidlosh@davidlosh.com]

Location does matter.

EconE has said it perfectly:

"Now let's take a tour up Highland. I'm going to include a couple houses south of Wilshire as the area is still pretty nice *just* south of Wilshire. Go too far south and it drops off substantially. North of Melrose is commercial."

There are demarcation points in any neighborhood and that goes for a city as well.

You can't compare Green Lake to Ballard, or Ballard to Fremont. There are different economic impacts. Fremont has extremely high end office space along the canal. Ballard has the most cocktail lounges in a concentrated area of any place in the city.

Then trying to compare North of down town to South of down town is problematic. West Seattle is a separate world. Alki to South of Henderson has a variety of neighborhoods. South Seattle is commercial Industrial as you get closer to the air port.

What happened here as well as other cities is that pricing became homogeneous. Yes houses in Columbia City started selling at the same prices as Ballard. Never mind the area was run down for years, Never mind houses were torn down to be rebuilt with cheap housing units. Never mind that when you drive in any direction the neighborhood changes radically. Columbia City has problems Ballard does not share.

Now without the future appreciation Columbia City is that much less desirable and prices will go down faster and farther.

[EconE]

David...

You're right about location.

Not only does it go down to the neighborhood level...or even the street. It even depends on the quality of the house.

Hancock Park even takes it a step further. The agents don't just sell you on the Neighborhood/Street/House...they actually sell you on who your neighbors are...and for some reason...to the buyers there...that matters greatly.

Who the neighbors are?!? Idiotic...but true.

Prices are currently down about 25% on average on the interior streets based on homes currently selling...which are very few. This is based on peaking out in late 2006/early 2007.

[davidlosh@davidlosh.com]

Here in Seattle we have The Highlands, Washington Park. and Medina, you can also throw in Hunt's Point. Like along New York's Park Avenue people pay for an address.

[EconE]

And Seattle also has Laurelhurst, Madison Park, Mercer Island...and a TON of other nice yet overpriced areas. I wonder how the flip at the tip of Hunts Point is working out. They scraped the Roland Terry Mid Century Modern (big mistake) and now are selling the lot. That will be an interesting flip to follow as that particular parcel of land is probably one of the most prized lots in King County.

The greater L.A. area also has the "Platinum Triangle" (BelAir, BH, Holmby), Brentwood, Pacific Palisades, Hollywood Hills, Malibu, etc. etc. etc. and they are taking their knocks also.

Manhattan has it's prime areas and even buildings (The Dakota for example).

Problem is...there aren't enough people making the kind of money necessary to fill all these special places at the current asking prices. Far from it.

Of course, people will always pay a premium to live in certain locations. All that means is that the houses in those areas will continue to be more expensive than others. It doesn't mean that they don't/won't drop substantially in value however.

I doubt however that we will see 80-90% off on properties such as these as some claim. 50%...easy.