Ding Ding Ding... we have a winner
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deejayoh
Bubble Banter Boss
Joined: Mon Feb 26, 2007 12:14 pm
Posts: 1166
Location: Capitol Hill
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 Ding Ding Ding... we have a winner meshugy wrote: Those of you following this blog over the last several months will recall a number of readers made wagers with me regarding the housing market in Seattle. Let's review them:
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Synthetic: Synthetic bet that my house's zillow rating would drop by Dec. This wager was made in March, when my house Zillowed at $534K. Today it zillows at $550K. Dec is a long ways off and I suppose anything can happen. But it looks like Syn miscalculated this one...I'd be glad to give you the opportunity of back out of this. Do you accept? Final answer, according to the gods of randomness over at zillow... $527K
and thus concludes the long running saga of Shug's multiple bets. He was riding on the edge for months, and it finally caught up with him.
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| Mon Dec 31, 2007 12:46 am |
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mike2
Bubble Bloviator
Joined: Fri Apr 20, 2007 11:01 am
Posts: 318
Location: Not Seattle Anymore
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Like we're ever going to hear from that guy again.
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| Mon Dec 31, 2007 10:28 am |
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SeattleMoose
Bubble Bloviator
Joined: Sun May 06, 2007 7:26 am
Posts: 225
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Waiting I still have Meshugy's crow dinner ready to prepare. Geez....it's even organic. Where is that Baby Blue anyhow? How often does one get a free lunch? 
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| Mon Dec 31, 2007 11:58 am |
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biliruben
Bubble Banter Boss
Joined: Sun Feb 18, 2007 4:31 pm
Posts: 575
Location: Lake City
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I miss him. Very much.
A higher quality RE bull than the depressing conciliators and angry agents we are collecting these days.
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| Mon Dec 31, 2007 12:05 pm |
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Scotsman
Bubble Blatherer
Joined: Sun Oct 28, 2007 10:43 pm
Posts: 64
Location: Issaquah
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Can $350,000 be that far off? December 2008?
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| Tue Jan 01, 2008 1:25 am |
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The Tim
Bubble Blogging Buffoon
Joined: Sat Feb 17, 2007 6:02 pm
Posts: 827
Location: Kenmore, WA
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Thanks for posting this. I had forgotten to check up on it while I was on the road. That's hilarious. Also worth noting is that only about two weeks after the update shown on this post, as of a January 3 update the Zestimate has dropped another $2,033 to $525,500.
Let's see... $2,033 drop in 16 days extrapolated throughout 2008...
If that rate of decline keeps up (and doesn't accelerate), Meshugy's house will be "zestimated" at $480,000 by the end of the year, a whopping 11% over what he bought it for in early 2005.
_________________
For great justice.
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| Tue Jan 15, 2008 4:48 pm |
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rose-colored-coolaid
Bubble Banter Boss
Joined: Mon Jun 18, 2007 10:26 am
Posts: 1978
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The Tim wrote: If that rate of decline keeps up (and doesn't accelerate), Meshugy's house will be "zestimated" at $480,000 by the end of the year, a whopping 11% over what he bought it for in early 2005. 11% over 3+ years? Why that's fantastical. It's nearly 3.75%. I mean, official inflation is running something north of 3%, so that's real appreciation of maybe even 1% in 3 years. Wahoo!
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| Tue Jan 15, 2008 5:03 pm |
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synthetik
Bubble Bloviator
Joined: Sun Feb 18, 2007 9:39 pm
Posts: 216
Location: Happy Renting in Capitol Hill
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Nice. If Shugy pays me the $1,000, I'll buy some long term PUTs on XLF (financial sector ETF) and then maybe I can help with groceries and such.
_________________
“If fascism ever comes to America, it will come wrapped in the flag and carrying the cross.” - Sinclair Lewis
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| Wed Jan 16, 2008 10:33 am |
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kpom
Bubble Blatherer
Joined: Sun Mar 11, 2007 4:14 pm
Posts: 132
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"11% over 3+ years? Why that's fantastical. It's nearly 3.75%. I mean, official inflation is running something north of 3%, so that's real appreciation of maybe even 1% in 3 years. Wahoo!"
You forget the Magic Of Leverage - since Shug probably put up little or no money to buy the house, the return on his investment is much better than that. Of course, if the value of his house now falls by more than 11%, the Magic Of Leverage will turn on him like a snarling beast.
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| Wed Jan 16, 2008 1:07 pm |
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rose-colored-coolaid
Bubble Banter Boss
Joined: Mon Jun 18, 2007 10:26 am
Posts: 1978
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I did not forget the magic law of leverage. In fact, it is the only reason that real estate is ever a good investment.
But since I don't have a copy of the shugster's mortgage, I cannot make that calculation. Besides, to get that mortgage, you also have to pay 5% or more a year in interest. Add that in, and an 11% gain is actually a 4% loss with all the profits going to the bank.
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| Wed Jan 16, 2008 1:12 pm |
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kpom
Bubble Blatherer
Joined: Sun Mar 11, 2007 4:14 pm
Posts: 132
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"But since I don't have a copy of the shugster's mortgage, I cannot make that calculation. Besides, to get that mortgage, you also have to pay 5% or more a year in interest. Add that in, and an 11% gain is actually a 4% loss with all the profits going to the bank."
That's a good point that doesn't get picked up in calculations of real estate "profit" - if you have to pay two or three times the cost of renting to own a house, that excess carrying cost should be deducted from your "profit". If you put 10% down, and RE is going up 20% a year, the excess carrying cost is noise - but once the annual return gets into the low single digits, that additional cost becomes significant, even with leverage.
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| Wed Jan 16, 2008 1:22 pm |
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deejayoh
Bubble Banter Boss
Joined: Mon Feb 26, 2007 12:14 pm
Posts: 1166
Location: Capitol Hill
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You guys are all talking about a $480k like it's a done deal. That was Tim's extension. He's zillowing today at $525.5k, vs $431.2 acquisition.
- that's 21.9% appreciation, not 11%.
- in 2.66 yrs of ownership, that's almost 8% a year.
just to keep things on an even keel.
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| Wed Jan 16, 2008 1:52 pm |
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rose-colored-coolaid
Bubble Banter Boss
Joined: Mon Jun 18, 2007 10:26 am
Posts: 1978
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deejayoh wrote: You guys are all talking about a $480k like it's a done deal. That was Tim's extension. He's zillowing today at $525.5k, vs $431.2 acquisition.
- that's 21.9% appreciation, not 11%.
- in 2.66 yrs of ownership, that's almost 8% a year.
just to keep things on an even keel. And further, I don't think Tim believed that number exactly either. But no matter how you cut it, average gains are going to continue dropping for years as prices fall/stagnate. I think people who bought in 2005 will see total average gains of around 4% by 2010. But of course, that's a guess.
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| Wed Jan 16, 2008 5:00 pm |
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The Tim
Bubble Blogging Buffoon
Joined: Sat Feb 17, 2007 6:02 pm
Posts: 827
Location: Kenmore, WA
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How low will it go? Thought it would be amusing to update this again. Current Zestimate (updated yesterday) on our MIA friend Meshugy's house: $503,500. That's down another $22,000 since January 3, and $24,033 since December 18 (100 days ago). Let's do another extrapolation... $24,033 drop in 100 days, extrapolated through the end of 2008 would be another $67,052 drop, putting the value at $436,448 by the end of the year. Whoops, that's $43,552 lower than the extrapolation I did back in January, which means the drop is accelerating. Who would have guessed? Oh yeah, Synthetik, for one.  The Tim wrote: Thanks for posting this. I had forgotten to check up on it while I was on the road. That's hilarious. Also worth noting is that only about two weeks after the update shown on this post, as of a January 3 update the Zestimate has dropped another $2,033 to $525,500.
Let's see... $2,033 drop in 16 days extrapolated throughout 2008...
If that rate of decline keeps up (and doesn't accelerate), Meshugy's house will be "zestimated" at $480,000 by the end of the year, a whopping 11% over what he bought it for in early 2005. P.S. (I take no general pleasure in knowing that people's homes are losing value, but Meshugy is a special case since he used to come on here and brag so much about how much his house was Zillow-ing for this week.)
_________________
For great justice.
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| Thu Mar 27, 2008 10:17 am |
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perfectfire
Bubble Banter Boss
Joined: Sun May 20, 2007 11:40 pm
Posts: 540
Location: Bellevue
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Re: How low will it go? The Tim wrote: If that rate of decline keeps up (and doesn't accelerate), Meshugy's house will be "zestimated" at $480,000 by the end of the year, a whopping 11% over what he bought it for in early 2005. So he bought it for about $432k huh? That means if your current extrapolation holds, he'll be just about back to square one by year's end.
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Remember, if you rent it's not a home, it's a hovel.
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| Thu Mar 27, 2008 11:28 am |
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