REALTOR® vs. Reality

Continuing The Tim’s trend of quick posts, I thought I would add this to the flurry of news today. King5 ran a news piece last night that is summarized in this article, entitled Home sellers upping incentives in crowded market

The piece quotes Reba Haas, one of the contributors over at Rain City Guide. She is quoted as saying:

“There’s too many people coming here for us not to have it continue to be strong,” said Haas.

Let’s see how that statement stands up to reality. Here is the most recent report on immigration from the Washington Department of Licensing.

DOL - Washington Immigration

Wow. Looks like the number of people coming to Washington is actually off 21.6% year over year. Perhaps some fact checking is in order?

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  1. 1
    on topic says:

    well, 150k net people did move into the state in the last 12 months, according to the stats. it does point to an increase in demand, it is just a decreasing rate of demand growth.

    i’m a bit suspect of the # of licenses turned in, though. i’ve lived out of the state for 5 of the 7 years i’ve had a Wa state license. it seems some number college students and people doing military service would be in a similar situation. but maybe this is an ignorable consideration.

  2. 2
    patient says:

    It’s really beyond my understanding how anyone who’s business relies to any extent on reputation can knowingly and willingly totally destroy their credibility over and over again. It’s really quite amazing.

  3. 3
    on topic says:

    sorry, that looks like it is 150k gross, 75k net.

    not 150k net as I stated above.

  4. 4
    Nude says:

    On a recent trip to Disneyland, my wife and I spent an evening with the folks at Irvine Housing Blog. One of the topics of conversation was the local RE “myths”. I told them about Pink Ponies and the Great California Equity Migration, which made them chuckle. It seems they also have similar myths, namely the Sunshine Premium and the Rich Chinese Investor. While the state as a whole might be ganing folks from California, I have seen zero evidence that they are all moving into King County and that they all are buying homes with large amounts of equity.

    Realtor scare tactics are kinda funny.

  5. 5
    WestSideBilly says:

    What good are 40k new people in the Seattle area (figure slightly over half end up in the Seattle MSA) if none of them can afford the entry requirements? These transplants are not all making the $150k salary needed to truly afford a Seattle starter home.

  6. 6
  7. 7
  8. 8
    econ101 says:

    Nude, gotta hang on to these lows before it goes back up… Keep holding your breath, you might just see a 80% house value drop.

  9. 9
    on topic says:


    only Eleua (sp?) talks about 80% drop and that is only for Bainbridge Island.

    Most people here seem to expect something between a large correction and a small crisis in real dollars over the next several years, maybe flat prices in paper dollars. (probably a good poll subject).

    even if MSFT and Boeing went under tomorrow and interest rates doubled, we wouldn’t see 80% drops in median paper dollar prices.

  10. 10
    notabull says:

    Econ001 wrote: “Nude, gotta hang on to these lows before it goes back up… Keep holding your breath, you might just see a 80% house value drop.”

    If it’s impossible for a house to drop 80%, is it also impossible for it to drop 20%? That’s what most people on this blog seem to be expecting, over the next few years or so, +- 10%.

    But I suppose if you were to accept that, then you’d also have to accept the fact that most people on this blog are pretty level headed and reasonable people. And *then* you’d actually have to consider the arguments and conclusions, rather than brushing them aside.

  11. 11
    casey1167 says:

    I think this begs for a pole…

    I for one am one of the unleved headed, unreasonable people… I am expecting a good 20% drop (as adjusted for inflation) over the next two years. Actually, I think it will happen faster for Seattle than other parts of the country because Seattle has the 20/20 vision of seeing what has happenned in “like” places in the country.

    And I still have my ECON101 book from college… I am pretty old, back when I was in college they stressed fundamentals. I never got to take a class on Pink Ponies…

  12. 12
    econ101 says:

    notabull – I was exaggarating a bit..

    I sold my last home in San Diego for 500k – it was a townhome. 3 years later it’s moved up to 550k. Seattle typically lags San Diego in ‘corrections’ – so you’re looking at a market that’s flat, rather than going down by the month…

    I won’t pretend to know the future like some here… but I think a flattening of the prices is probably in order.

  13. 13
    explorer says:

    The DOL stats are as good a measure as any, but you have to wonder if Reba is thinking about the numbers of illegal aliens too, and not overtly stating that.

    Not that as indivduals, they would have 100K + laying around doing nothing. You could build 4 or 5 houses in Mexico for that. Just a thought.

  14. 14


    Home prices are collapsing as Bubblebrains predicted.

    Now, our buffoon King County Executive Ron Sims wants substantially higher 2008 property taxes with substantially collapsed property values forecasted for 2008. What’s he smoking?

    See the proof Bubblebrains:


    Its time to contest any 2008 property tax increases next summer in masses, this is total anarchy by King County politicians, to even suggest this.

    See the proof

  15. 15
    redmondjp says:


    This is par for the course for King Ron, the man who never met a new tax that he didn’t like. He uses any excuse that he thinks he can get away with to raise taxes.

    If we left things up to him, he would tax us at a 100% rate and then dole out (a tiny fraction of) the money back to us as he pleased.

    So there are less people than before moving here. Good! Bad for King Ron, however, as that means less new serfs in his fiefdom.

  16. 16
    Shawn says:

    Higher taxes is just one of the ways that those who had nothing to do with the craziness get hurt. Those who did not play with the bubble are going to pay just the same.

  17. 17
    MacAttack says:

    MSFT isn’t helping the realtors today… a whole raft of don’t-buy-just-yet articles!


  18. 18
    MacAttack says:

    “This is par for the course for King Ron, the man who never met a new tax that he didn’t like.”

    I thought you meant Ronald Reagan, who as Governor of Cailfornia, raised taxes more than any previous California Governor.

  19. 19
    Teacher Greg says:

    Wow, maybe I should move quickly to buy a house so I am not priced out forever.

  20. 20
    A says:

    Well, this is the moment you have been waiting for. Grab the popcorn and enjoy the show. I am curious how many will guess the bottom and will buy.

  21. 21
    bitterowner says:

    I am wondering what Ronald Reagan’s 1970’s CA tax increases have to do with Ron Sims’ plan to increase my taxes today in King County.

  22. 22
    faginafinda says:

    Hand check of authors on this blog who own a house, townhouse or condo in Seattle area!

  23. 23
    lou says:

    Owning a townhouse or a condo is just plain dumb!

  24. 24
    The clizz says:

    Has anyone noticed that the inventory levels seem to have peaked and are gradually falling?

  25. 25
    Olaf says:

    of course inventory has peaked — it’s October. It’s getting cold. The sellers who can are taking their houses off the market in fervent hope that things will pick up again in the spring. Usually, this time of year, the inventory level is sitting at the bottom of its annual trough.

  26. 26
    notabull says:

    “Has anyone noticed that the inventory levels seem to have peaked and are gradually falling?”

    It certainly seems that way, although I know the inventory measure used changed recently. But still, it appears to be going down.

    This ties in with what I’m seeing out there. Places are coming off the market, but not because of sales, just because people are pulling them off for winter or their listings are expiring. Sales still appear to be very weak. It’s a seasonal thing, although we’ll have to wait a little bit to see if it follows the standard seasonal variation.

  27. 27
    notabull says:

    “Usually, this time of year, the inventory level is sitting at the bottom of its annual trough.”

    Are you sure? My understanding was that Sep/Oct was when inventory peaks, not when it troughs. I agree with your assessment of why it’s decreasing right now, just not when the annual bottom is. I thought that was usually Jan/Feb. Someone has a list of inventory % for each month – I’ve seen it before.

  28. 28
    notabull says:

    OK, here we go, from deejayoh, 2000-2006 averages:

    January 87.1%
    February 89.5%
    March 94.0%
    April 100.8%
    May 107.2%
    June 107.8%
    July 108.7%
    August 105.8%
    September 109.1%
    October 106.7%
    November 99.8%
    December 83.6%

    It looks like September is the end of the peak season and although October is also pretty high (usually), it is indeed normal to see inventory decline this month by a few %. December is the month with the least inventory. It’s raining, it’s the holidays, and who wants to buy let alone sell a house in December?!

    IMO, I think we’ll see a similar decline this year but given that the averages are from “normal” years, I think it’s hard to tell what will happen this year. I think that there will be a higher percentage of “must sells” than usual (due to lack luster sales Aug onwards) and so inventory will decline, but not as much as usual.

    If peak King country SFR was at about 11500, then we could expect a decline, according to averages, to take us down to about 9000. I happen to think that we’ll get down somewhere in the 9000s, but I think it will be closer to 10000 due to the increased amounts of “must sells” that are likely in higher percentage in December.

  29. 29
    Ubersalad says:

    There’s a very simple explanation to this, people came for open houses, they bought and they leave!

    Damn bubbleheads…

  30. 30
    nitsuj says:

    Don’t listen to the real estate agents! They are trying to use jedi mind tricks!

  31. 31
    Eleua says:

    Regarding my prediction for an 80% reduction…

    I still stand by that. In no way will the entire region take an 80% hit, or even all of Bainbridge. I am saying that the frothiest markets in the area will see 80% reductions in some of the showcase examples. These will make news.

    I am saying that the meat of the bust will hit in the 50-70% range. Prices will roll back to the 90s era pricing.

    Back in ’02, when the market was relatively soft, but still “up” from the previous year, there were only two homes on Bainbridge that listed for a million bucks or more. Now pull up a MLS search on BI and count all the POS homes that someone thinks are worth at least $1M. What is the median on BI? $700K? $750K? How about median incomes? $75K. What happens if BI has their entire stock valued at 4X median income (which is still almost 70% overvalued during a RE bust)? $300K homes, and that assumes that incomes don’t drop or interest rates hike.

    How about down payments? Does anyone think that after a huge banking crisis and worldwide margin call on MBS that any lender that is still in business will loan money without at least a 20-33% down payment? I’m not talking PMI, or some creative second…I’m talking real cash. Genuine savings.

    How many Bainbridge Islanders (or any other semi-well to do neighborhood) have $150K in free cash sloshing around? How about $75K? Do I hear $20K? Take out equity, how much savings do people have? Just for fun, go through a BI neighborhood and pull their TDs. Look at all the refis, seconds, thirds, and cash-outs. If people are doing so well, why do they need to hit the housing ATM so often?

    Look at all the option-ARMs, zany estimates, overspeculation, and absurdly low cap rates on SFHs. Look at the leverage needed to buy a house at the 70th percentile. How about 90th?

    It will happen. Right now, the lending industry is eating itself to keep things at these levels. Once the bank failures start (and Citi is certainly looking very insolvent), and people view homes as loser investments, the rout will be on.

    My timing has always been ephemeral. It will happen.

    It’s the “Britney Spears” market: you know something bad will happen, it’s just a matter of “when.”

    (BTW, I stole that from someone else.)

  32. 32
    uptown says:

    For those complaining about the King County budget, it might help to read it first…

    King County receives the vast majority of its revenues from property taxes. With the voter approved Initiative 747 capping property tax growth at 1 percent, the county is not able to keep up with inflation, population growth and demand for services that are causing the annual budget to grow by 4 to 5 percent. The budget office projects a $25 million deficit in 2009 even with the conservative approach to the 2008 budget.
    The proposed 2008 budget of $4.8 billion includes, for the first time, a biennial budget for Metro Transit Division. This biennial budget, which allows improved planning and delivery of service, accounts for a majority of the 25 percent increase in the county’s 2008 budget over the 2007 adopted budget of $3.86 billion.
    The current expense budget is $660.5 million. Over 71 percent of the Current Expense Fund goes to the law, safety and justice system including, courts, prosecutor’s office, public defense, jails and law enforcement.

  33. 33
    redmondjp says:

    A bit off-topic, but anybody else ever noticed that the letters ‘RCG’ also happen to be an abbreviation for Rose-Colored Glasses?


    And as far as the King Kountry budget goes, it sounds like it’s time for government to contract in order to match the income it has coming in. With all of the new homes built that are EACH generating thousands of dollars in annual revenue for the county, I find it simply impossible to believe that they can’t live within their means, like private citizens and industry have to do. If King Ron was a true leader (like Lee Iacocca was at Chrysler during the 1980s), he’d be the first to volunteer to take a pay cut.

  34. 34
    on topic says:

    welcome back, Eleua

    is that an 80% drop in real or paper prices?

    it is inevitable that the marginal communities with long commutes and a larger proportion of RE related incomes will fall the most, especially with increasing fuel prices and congestions, but 80% on even a single property would be hard to swallow.

    i mean, you’re talking about a worldwide depression or recession (depending on the time frame) as trillions of dollars worth of “wealth” disappears

    as a population we need to learn to take risk a lot more seriously, but 80%. come on.

  35. 35
    deejayoh says:

    One addendum to my post – my big issue is with the press, not with what Reba said. I can understand her goals here. I’ve done tons of press interviews and its often about trying to influence the story. My issue is more that the press just regurgitates what they are told, without any attempt to validate the facts.

  36. 36
    TJ_98370 says:


    You’re not dead after all! Welcome back! We miss your cautious, restrained style of expressing your opinions! :)

  37. 37
    Brian says:


    I’m all for fiscal responsibility, but let’s not link the words “Lee Iacocca” and “true leader” in the same sentence. That dude stole the credit for the Mustang even though there were a lot of design guys with much more to do with the Mustang’s birth. He also had the benefit of a huge bailout from the U.S. government to keep his company afloat when he left Ford (it’s easy to cut your pay when you get stock and a ton of free money that will indirectly make you more money). I’ll give him the minivan though.

  38. 38
    TJ_98370 says:

    Off topic –

    Seattle and parts Northwest are mentioned in the HBB today.

    Buyers Have The Benefit

    King 5.com reports from Washington. “Selling a home in the Seattle area has become trickier. What used to sell in one week can now take months. Home sellers are going to more and more extremes, offering enticing incentives to hook a buyer. Those boom days when homes in Seattle could be sold in a matter of hours are for the most part over.”….

  39. 39
    greenthum says:

    King County Libs wake-up before idiot Sims taxes you out of house and home! Vote this criminal out of office.

  40. 40
    johnnybigspenda says:

    … and as the bubbleheads basked in the warm glow of finally being right… they forgot to ask themselves, “ok, now what?”

    Lets hear it… when is the bottom? what is the capitulation point?

    I think we’ve heard enough of the ‘I told you so’s’… please, dispense your obviously infinite wisdom upon us.

  41. 41
    just_checking says:

    3451234653276 seconds from NOW !! :)

  42. 42
    what goes up comes down says:

    Johnny, johnny, oh johnny

    I amazed that you can finally admit (I guess that is what you are doing) that there is a bubble — incredible and just to think a few months ago all you were talking about is price increases.

  43. 43
    Dave0 says:

    Wow, if just_checking is right real estate is going to be declining for the next 109,438 years! Better cash out and put that money under your mattress!

  44. 44
    Dave0 says:

    The bottom will come just as you least expect it. Right after you stop paying attention to real estate. :)

  45. 45
    Eleua says:

    On Topic,

    That’s 80% off the peak to the trough, on posterchild speculative properties in the most bubbly areas.

    It will be a very bitter pill to swallow, but these properties had no problem tacking that on in a three year span. Easy come, easy go…

    Yes, we need to manage risk better, save more, consume less. A worldwide recession/depression will bring that about.

    This is what happens when you think you have conquered the business cycle and blow three consecutive bubbles in an economy that believes it can consume, borrow, and outsource its way to prosperity.

  46. 46
    notabull says:


    The bottom will be:

    -October 2009 in King County in general
    -April 2010 in Seattle proper
    -March 2010 according the Case-Shiller index for the Seattle metro area.

    Send me a ZIP code and I’ll give you a more precise figure for your street.

    Best of luck.

  47. 47
    johnnybigspenda says:

    I never denied that prices were coming down… my contention is that real estate is cyclical. The last cycle obviously went overboard… just trying to see what the future holds. As I’ve said before, I’m always looking for a deal and its obvious that while 5 newly wed couples are bidding on a $600K 1200sqft in Ballard, that those aren’t deals…

    I’m still in denial (if you will) about the fact that we will see more than a 20% correction. what we are seeing now is 98% of the discretionary buyers sitting on the sideline waiting for the ‘bottom’. Some people say the bottom is NOW… before the discretionary sellers pull their places off the market. Its been mentioned, but its true… most people will wait too long and only realize by looking backwards that the bottom had already occured… just like its now easy to see that the ‘top’ was 2005ish.

    If 98% of the buyers are waiting it out NOW, then i’d say we might end up looking back at Oct-Dec of this year as the bottom…. who knows though. The other side of the coin is that this becomes a perpetual spiral down to new depths that only the Bubbliest of the Bubbleheads have envisioned.

  48. 48
    Alan says:

    It doesn’t matter to me if this is the bottom or not. I would still rather rent at my current price or move somewhere else than buy at these prices. I’ll buy when I can afford something I could stand living in for twenty years.

    I think the bottom will be when MOS crosses back below three.

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