Ardell couldn't give an "RA" about banking and rea

[synthetik]

I feel it should be pointed out that on February 27, 2007, over on the RCG blog, Eleua eloquently stated in comment #7 "I too have a feeling in my bones. I smell a banking crisis. Do you have any friends in the industry, and what are they telling you?"

What was Ardell's response?
about how banking and Real Estate.

I wonder if she sees things differently now, or is she still lost in her p-funkadelic psychotrophic mixture of REIC cool-aid?

Is anyone else enjoying this?

[Alan]

On Rhonda's recent post, Ardell says that she does not think the tightening lending standards will affect the area with which she is familiar -- namely Bellevue, Kirkland, Redmond. I think I agree with her to a point. One of the oddest things I observed after moving to this area was that moving away from the core does not buy you much of a discount. Prices are currently flat geographically. I think all of the normal home prices have been compressed to a narrow range. As prices fall, this range will expand. I think Bellevue/Redmond/Kirkland will be the last to see this effect.

[Lake Hills Renter]

There's been a whole lot of $500k-$1M houses selling in Bellevue/Redmond in the last two years. I find it hard to believe there are that many people making that much money on the eastside.

[Alan]

I think they were purchased by trading up from other houses.

Someone at work talked about how they purchased a home for around $200k several years ago. Last year they sold it for $700k and purchased an $800k home. He said they had to move to reset their principal for tax reasons. If your home sale has less than $500k of capital gains (and you have lived in it for the past N years) then you pay no taxes. He would not have been able to afford an $800k home starting from scratch, but buying $100k more than what he had was affordable.

I am assuming that someone traded up to buy his house (or moved from CA).

I agree that when all is said and done there will not be the support for as many $500k-$1M homes in Bellevue as there currently are, but the prices are going to fall in the outskirts first and Bellevue will be the last to drop.

[kpom]

A. is a never-ending source of amusement. I have learned from her that:

Japan's decade-long experience with declining real estate prices is irrelevant - just because

House prices may melt down in South Seattle due to foreclosures, but that meltdown will have no effect whatsoever on prices in Greenlake or the Eastside

If credit standards really really tighten, buyers may have to put 3% down

The current meltdown in the mortgage markets just means that we will go back to FHA and VA loans - left unexplained is what happens to the high end of the market, given that the maximum VA loan in King County is $417K, and the maximum FHA loan is $363K

If somebody on the Eastside buys a house with a neg-am zero down loan, it's probably because they are sophisticated financial professionals optimizing their massive portfolio of assets; not because they have completely stretched to finance the house, and are utterly dependent on being able to refinance before the loan resets

Median incomes DO NOT have to keep pace with median housing prices

By March of 2007 the opportunity to get any bargains in the entry level single family home markets, will likely be gone for good (act quickly - only twenty days left in March!)

And, if you are not a Real Estate Professional, you should not be opining on the state of the Seattle housing market, because you are then practicing Real Estate without a license, or something

Pure Entertainment!

[kpom]

I should add that reading the RCG does give the impression that A. is a highly competent real estate agent - I just wouldn't rely on her advice on where the housing market is going.

[Lake Hills Renter]

Or take financial advice from her, which she seems to enjoy giving out.

[Matthew]

People are so short sighted in real estate. If they can't see what is happening immediately in front of them, they think they are going to immune from the rest of the implosion.

How are people buying houses on the east side? Chances are most of them are previous home owners. So either they own a house in the Seattle area, or they own a house in another state and plan on moving to the east side (aka California). So in order to be able to purchase a house on the east side, chances are you are going to have to sell a house. Therefore, the tightening of lending standards will eventually effect even people on the east side, because the second time home owner will not be able to sell to the first time home owner due to tightening.

So what if the east side homes are financed less with subprime loans. They are also some of the most overpriced houses in the country, and those tend to fare the worse come bubble pop time.

[The Tim]

[hesotriflin]

[kpom]

[synthetik]