To buy or not to buy????

[Lake Hills Renter]

I'm no MS cheerleader in the least, even though I work for them, and their business practices can leave a lot to be desired for sure. But the constant "vista sucks, MS is doomed" lines get as old as "buy now or be priced out forever," and is backed up with just as little data. Vista has some problems to be sure, but the verdict from the market is still out IMO. And anyone (not necesarily you) who thinks that the OS market is Microsoft's only income stream has apparently never heard of their other billion dollar businesses like Office and Exchange.

But as far as MS salaries affording even starter homes in the current market, you are absolutely correct -- a vast majarity (myself included) either can't afford it or are unwilling to pay that much.

[Puget Sounder]

One anecdote of an MSFT friend in the real estate market.

A friend who works at MSFT spent 6x his annual salary to buy a new home in Redmond.

That kind of income duplication is reckless (imo), but he views his house as a place to live -- and isn't trying to flip it any time soon.

[synthetik]

We have some data to support Vista's problems.

Balmer came out the other day and said the companies projections were a bit "too high"

And some early reporting by way of Fleck:

"...accounts of reporters who chose to cover the story. My favorite quote comes from a New York Times story titled "Vista Arrives with Limited Fanfare" -- in which reporters Jeremy W. Peters and Thomas Crampton offer this description of the post-debut scene: "About nine hours later at the Best Buy in Midtown, several Microsoft employees, store clerks and journalists on hand heavily outnumbered actual customers at a promotional event featuring Microsoft's chief executive, Steven A. Ballmer, who appeared with two Vista beta testers."

All of this hype about how Vista was going to drive demand has it exactly backwards -- Vista is going to freeze demand. Vista isn't exactly bug-free yet. Plus, it's not an upgrade but a conversion, and even tech neophytes have sensed this. (An upgrade is simple. A conversion is hard work. Successfully implementing it takes lots of planning, and gobs of resources.)

--- and as far as speed, it appears that Vista is actually slower even on machines built to run it. There are marginal increases in speed when heavy multithreading applications are used.

Sorry to be off topic, but I think Microsoft has an uphill climb over the next few years.

[Lake Hills Renter]

[joetheconsumer]

Now that Vista is done, MSFT is turning its focus to Google. Balmer was asked what the company's priorities would be now that Vista has launched. His answer? Search, search, search.

Google has a very vulnerable underbelly...it's the dissatisfaction of its advertisers. Google is where MSFT was in the early days of Windows. Arrogant, product/technology focused, product driven. Microsoft is heavily investing in fine tuning the technology to bring parity in its search algorithms to those of Googles.

Currently, MSFT is spending little to no money on marketing its search product, as that it's fine tuning the message. Once that is done, the marketing spigot will open up.

Additionally, on the advertising sales and service side, there is a hyper focus on the customer/advertiser. The advertising market would welcome warmly a competitor to Google. Advertisers don't like the arrogance and poor client service that Google offers.

As for software, the OS just isn't sexy anymore. Office is doing much better than Vista. Moreover, as the transition to Vista inevitably occurs over the next 3 years, query share for search will also increase.

Services are the future of MSFT, and they have fat margins.

[EastSider]

[EastSider]

[Lake Hills Renter]

[Erik]

Eastsider, I think that Stephen captured my feelings best over on the blog.

It is of course a calculated risk that prices will go up another 5-10% this season (which is why we started looking in January) but many of the properties out there now seem to be the end of the party folks really going for it. They are asking just massive appreciation to what many of them paid in the past year or so.

The folks that you see selling ordinary houses for 3/4 of a million will run out of other (highly leveraged) "end of the party folks" to buy from shortly.

[T, V & Mr. B.]

There are approximately 400 more listings over there than this time last year. Yes the price has gone up by 7% but listing will increase and INHO, prices will begin to come down. Keep in mind as well, none of those prices take concessions into consideration. People ARE bargaining for closing costs etc....

[EastSider]

[synthetik]

[meshugy]

[Lake Hills Renter]

Why would someone need to buy?

It seems to me you're taking the wrong approach. You're asking people to give you reasons not to buy, when the question I would be asking is reasons to buy. If the arguments already posted here and on the blog, in addition to the state of the national housing market, don't give you serious pause, then I don't see anything anyone says changing your mind. Sounds to me like it's already made up. If it's what you want to do, do it. Just be sure you can live with the outcome.

[EconE]

Meshuguy...as much as I like to rib you a bit I do agree that being that you have a SFR vs one of the multitudes of cookie cutter townhomes you will actually fare better in my opinion. I do however feel that the people that are buying into the $600-800+/sf condo units in Seattle in general are going to be in for a rude awakening.

I understand that most of the people on this blog are more interested in SFH vs condos however due to my personal situation, condo life is a better choice for me.

I have followed the Seattle condo market like a hawk. Primarily the mid end units at places such as 2200Westlake and the Cosmopolitan. The rate that the resales are selling at or the rentals being rented is alarmingly slow and this is from an economists point of view. There also seems to be concern about just *how many people were investors that claimed to be purchasing for a residence...I think that somehow affects the interest rate on the mortgage but I'm not sure. With the number of units that come on line if there is too high of a proportion of investors it will push prices down. How far is a guess but as we can see the news hasn't been getting better lately but rather worse. The owner of the cosmo blog who is a resident has been quite candid about the situation as it truly is an area of concern.

I'm not asking for your validation because I can see it with my own eyes and have been keeping multiple spreadsheets since the beginning of January when inventory started to rise after the winter holidays season. It is a much easier market to follow and within a building that has 50+ units for resale or rent it is easier to compare apples to apples. That is admittedly harder to do with a SFR.

My concern...aside from the fact that condos are supposedly a leading indicator...is that the price of condos has escalated beyond belief and there seem to be quite a few people that are "holding" an extra condo. Even though I feel that the SFR won't necessarily go down as much I am concerned that with the way that many of these condos were financed and that condos in general are priced in the stratosphere when it comes to $/sf there is alot of potential equity that could be wiped out that would have adverse effects on the economy. People are already having trouble reselling units at the $650/sf range yet there are multitudes of buildings that are really no different and cater to the same crowd yet people already reserved their units there at more than 700/sf. The "pre-sale" situation creates a problem that is more unique to condos than a SFR however there are alot of $'s tied up in condos right now and the global economy is teetering (for lack of a better word) and has been reflected in the market volatility as of late.

I'm not going to try to convince you to sell your house or anything like that. That is an entirely personal situation and everybody's situation is different. You may very well have a large safety net...who knows. I would however recommend that you not look at the equity in your house as money earned and then tap into your "equity" because in essence, all you are doing is borrowing more money and going further in to debt. Let that equity grow over time...make larger than necessary payments if possible...and look at it as a nest egg...you have plenty of years ahead of you as most of us on this blog hopefully have.