Crellin: Keep Homes Off the Market—Return “Balance”

If you’ve been reading this site for more than a few weeks, you’ve probably heard of the Washington Center for Real Estate Research at WSU and its spokesman Glenn Crellin. Mr. Crellin is frequently quoted as an authority on local real estate markets across Washington State. With a neutral-sounding name like “Center” and its existence as part of a state university, the WCRER would seem to be a logical place to look for unbiased information about the real estate market. Indeed, the description of the Center on their front page is quite lofty:

The WCRER was created in 1989 by the WSU Board of Regents to achieve the university’s tripartite mission of education, research and service in real estate. The ultimate goal of the Center is to provide a wide range of useful and understandable information, analysis and knowledge using academic methods in practical context while reporting findings in common language.

However, there is a problem. It’s not that they are not acheiving their stated goal. It’s that they seem to have an additional, unstated goal: to encourage and protect the real estate sales industry. Given that their board of trustees consists almost entirely of realtors and developers, I guess it shouldn’t come as much of a surprise. Still, when Glenn Crellin comes out and encourages agents to stifle a housing market that is good for potential home buyers, it grates on me.

Yes, the local real estate market has softened. But let’s not call it dire. That was the message Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University, delivered last week to those gathered for the annual meeting of the Tacoma-Pierce County Association of Realtors.

Crellin told the group that Pierce County’s housing market contained a nine-month supply of houses for sale as of Sept. 30, making it a buyer’s market. Counsel clients, he told the agents, to keep their homes off the market, if they can, to help return balance to the market.

He also said homeowners should shift their outlook on the true purpose of the purchase of a home.

“Owners need to focus on why we’re dealing with housing in the first place. It’s shelter. They need to focus on the shelter and potential tax breaks … and not worry so much about whether in a year a house is worth $5,000 more or $50,000 more.”

Heaven forbid we have a couple of years of a buyer’s market. It’s not like a multi-year, over-the-top seller’s market should be followed by a buyer’s market of similar magnitiude and length. No, we need a “balanced market,” so agents, tell your sellers to quit flooding the market already!

Where do you see sales activity going in 2008?

In 2008, we’re going to see a moderate reduction in sales, particularly in the first half and hopefully a recovery in the second half.

What will be the major forces guiding that one way or another?

Consumer confidence. If buyers believe these are satisfactory times in which to make a purchase, the market will recover. If consumers have been convinced home values are going to drop, they’re going to stay on the sidelines and the market will stay soft.

Do you see home values dropping in the near future?

I don’t think there’s any reason to think we’re going to see a sharp decline. Median prices have leveled off in recent months. I think we’ll see limited price increases through the middle of next year.

So here he basically outright admits his true purpose: to manipulate the market by giving consumers a false confidence. Good luck with that. I love the circular reasoning here. Sales will increase, because buyers will be more confident, because they won’t think values will keep dropping, because sales will increase. Personally, I don’t think positive (or negative) spin one way or the other is going to effect the direction of the market. Thinking otherwise seems to me like believing that if everyone on a roller coaster just wishes hard enough, maybe instead of falling down that next big drop, it will somehow level off, then keep going up.

(Devona Wells, Tacoma News Tribune, 11.12.2007)

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About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market. Tim also hosts the weekly improv comedy sci-fi podcast Dispatches from the Multiverse.


  1. 1
    melonleftcoast says:

    Something similar happened in Boston in early 2006. Large brokerages, like Coldwell Banker, started refusing listings if buyers wouldn’t list within the current market price range. Consequently, there were a bunch of over-priced FSBO listings that year.

    Now, sellers seem to understand that they are no longer in charge, and the inventory levels have come down from the fall 2005 and 2006 highs.

  2. 2
    deejayoh says:

    I wish him luck in discouraging new listings. It is much easier to be a listing agent than a buyer’s agent as one agent can scale to multiple listings much more easily than they can drive multiple buyers around to shop for homes. And from what I have seen, the most successful agents focus primarily on getting listings because they can make the most money that way.

    So given there seems to be a dominant strategy amongst agents to pursue listings, what (short of changing the fee structure) is going to change the game now? The system is rigged to encourage adding listings above all else. Glenn Crellin’s wishes will amount to nothing.

  3. 3
    50% Off says:

    Pathetic! Anything to keep those sales and (large) commissions coming in. Absolutely NO regard for the good of the prospective buyer! In normal times, folks generally moved every 5-7 years. That’s what’s called ‘repeat business’. It seems that these days, it’s all about making the fast buck now. Buyers today won’t be repeat customers for a long time. They’ll either be trapped upside down or have a lousy credit rating after missed payments, BK’s, and short sales.

    Way to go Professional Realtors!!

  4. 4
    Pegasus says:

    What do David Lereah, Lawrence Yun and Glenn Crellen have in common?

    They will say anything to promote real estate even if it will economically destroy their listeners. Just another sign of how morally corrupt these three are. I would not buy a used car from these buffoons.

  5. 5
    patient says:

    I think Mr Crellin have got it totally wrong. Buyers are not on the sidelines due to high inventory. They are on the sidelines due to unaffordability. To strangle supply is counter productive for what he wants to achieve. There is no turning back now. The only medicine to reach a healthy balanced housing market is via relative lower home prices ( price declines and/or income inflation ). His strategy will likely achieve even lower sales numbers leading to more industry pain than ever before since it’s mainly the number of transactions that fuels the industry.

  6. 6
    Mike2 says:

    I fail to see what negative effect non-serious sellers have on market price levels. If they aren’t going to cut their price, they’re not going to sell and it won’t affect comps.

    Yeah, they’re wasting comissioned Realtors time, but how the heck does that have a negative effect on market prices?

    If anything, it makes it easier for buyers to identify who the serious and motivated sellers are.

  7. 7
    James says:

    It doesn’t seem there is any balance in the reporting of the housing market either… did you see the Robert Mak piece with the president of John L Scott on King 5 the other day… it was like an infomercial for buying a house…. when asked what he thought of the Fortune piece on the 20% 5 year decline in prices his response was “I don’t believe it”…. Tim… I’m curious to hear your take on this:

  8. 8
    The Clizz says:

    That robert Mak is always trying to be “fair” and tell both sides of the story. I think that The pres of John L Scott got his foot in the door to counter the King 5 showing of this blog and what is really going on. The same special also interviewed the President of the NW Realtors assoc. Suprisingly, Lennox Scott was fairly honest and admitted that it’s a buyers market and that homes are falling back from the 2006 highs.

  9. 9
    John says:

    Don’t worry about the biased reporting. When the Dow drops 3000 points a day, this all will be hard to ignore even for the cheerleaders. People have no idea how fragile the financial system is. Last week is WaMu, this week is E-Trade. Both are big names taken out back.

  10. 10
    Alan says:

    Let’s modify a quote from that article a little bit.

    Buyers need to focus on the shelter and potential tax breaks … and not worry so much about whether in a few years a house is worth $50,000 less or $250,000 less.”

    And what about the agents who need to make their commission todya? Their mortgage isn’t going to wait for supply to drop so they can list some more houses. The more there is to sell, the more will sell. It is in each agent’s best interest to list more houses. What the WCRER is suggestiong is cartel behaivor. Cartels can only operate when members of the cartelwho defect can be punished. I don’t think that is the case with RE agents. The ones who cooperate with the WCRER will be worse off than the ones who go their own way.

    The cynical conspiracy nut in me says that the WCRER members are trying to unload their own properties before prices fall and don’t want the extra competition.

  11. 11
    melonleftcoast says:

    Um, I could be wrong, but I believe that a system was put in place after the crash in ’87 to prevent such a large fall in a single day.

    I’m pretty sure I remember trading was halted in 1998 when Wall Street took a big plunge.

    Anyone know for a fact?

  12. 12
    wreckingbull says:

    I wonder if Glenn Crellin and Nicolas Retsinas hang out together at REIC-funded conferences. My guess is that they would have quite a bit in common, most notably their lack of shame.

  13. 13
    PDX Guy says:

    Portland State University has a similar organization, the Center for Real Estate that is still cheerleading for the bubble though with the appearance of providing lofty data and “studies”. Scratch the surface and you find they are sponsored by the Oregon Association of Realtors and the development community.

    They are shills, whores and totally discredited.

  14. 14
    patient says:

    Homes were bought with an investment psychology where the gains were perceived to be guaranteed. This lead to that buyers were not paying attention to prices but just bought for as much as they could get funding for. The value was determined by the trading value and not by the commodity itself.

    Now we are in a situation were the trading value is potentially zero or negative. This brings buyers back to evaluating the commodity value and it shouldn’t be a shock to anyone that buyers finds it to be extremely overvalued.

    To make an analogy you could pay $100k for a Kia Rio if you knew you would get $120k for it next year. But if you can’t it’s just a Kia Rio with it’s commodity value of less than $10k.

    And once the “guaranteed gain” spell is broken it can’t be mended. It can be forgotten but it will probably take a decade or two. This is why I think Lennox Scott and his alikes are desperately defending it even now when it’s already lost

  15. 15
    WestSideBilly says:

    I’m not certain, but I think John meant 300 points a day, which has been a semi regular occurrence lately.

    The NYSE has a slow-down system which halts trading for 1 hour at a 10% drop, 2 more hours at 20%, and the rest of the day for 30% (which, with 3 hours already lost, would almost never happen).

  16. 16
    deejayoh says:

    Um, I could be wrong, but I believe that a system was put in place after the crash in ‘87 to prevent such a large fall in a single day.

    I’m pretty sure I remember trading was halted in 1998 when Wall Street took a big plunge.

    Anyone know for a fact?

    not any more… computer trading curbs were removed about 2 weeks ago

  17. 17
    melonleftcoast says:

    Thanks WestSideBilly!

    My Google searches had turned up interesting info on the stock market, but not the info I wanted.

  18. 18
    johnnybigspenda says:

    slightly off topic, but still a cool find:

    it gives census data for every ZIP code… might be useful for people who are looking for FACTS in the future…

  19. 19
    John says:

    I did mean 3000 points. The mortgage loan losses are serious. These banks are chest deep in these things. All you need is one of the major banks to disclose a massive loss suddenly to trigger a panic. In the mean time, foreign countries, China in particular, can’t be too happy holding US dollar which is dropping every day. The Fed is caught in an impossible position. Drop rates and dollar falls further, do nothing and the credit market will do who knows what but it won’t be good.

  20. 20
    deejayoh says:

    MLC – Trading collars are gone…

    The proposed rule change will remove current buying and selling curbs — called “trading collars” — on brokerages using computer-assisted program trading when the NYSE Composite Index moves up or down more than 2 percent, the exchange said in a note to member firms.

    The exchange defines computer-assisted program trades as the buying or selling of a basket of at least 15 stocks from the S&P 500 Index valued at $1 million or more.

    “Volatility is neither restrained nor enhanced by the imposition of the collars,” the exchange said in a filing with the U.S. Securities and Exchange Commission.

    “The exchange is making this change since it does not appear that the approach to market volatility envisioned by the use of these collars is as meaningful today as when the rule was formalized in the late 1980s,” the filing said.

    The current rule, Rule 80A, addresses only one type of trading strategy, known as index arbitrage, but trading strategies have multiplied in the past several years, according to the filing.

    These collars, which were used 366 times in 1998, have been invoked only 15 times so far this year.

  21. 21
    nitsuj says:

    IMO the RE industry needs to just encourage their members to STOP speaking altogether as they lose credibility every time one of them talks. They are making used car salesmen look credible.

    /broad generalization

  22. 22
    melonleftcoast says:


    wow! thanks! i figured my Google search wasn’t working because I didn’t know the correct terminology.

    we’ll see if the banks new “superfund” to bail each other out works. and if not, then I’ll be watching for that 3000 pt drop.

  23. 23
    Andy says:

    I’ll come right out and say I’m a real estate broker with the hopes of not being attacked too hard for no reason but I also think differently than most brokers. I want to firstly state that I do agree with some of the items and concerns raised here. I do want to state though that while others bring evidence and state them as FACTS, they indeed are not facts just as higher ups at JLScott or wherever can not bring in facts. The only fact for now is that the market is going to be depressed for the next 2 months. It may not be great next year either but it could level a little. I would say a rebound is out of the question.

    Secondly I am a broker with a little different opinion than most and I run my brokerage very differently but I wont give any marketing remarks. A question I will pose though is: If a real estate bubble is bursting and renting is the way to go, does it stand to reason that purchasing rental property would be a great investment or does that fall into your bubble theory as well? My thoughts are prices may continue to fall but rents continue to climb thus making it an even better cash generator and when the market returns which history shows it someday will, the added appreciation that I feel our area brings will make it even that much better since someone purchased now, (meaning in the next 6 months). Just curious on others thoughts since all that is really discussed here appears to be residential home owning.

    John I agree with your comments and the Fed is caught in an impossible situation. The rates made their dramatic fall after 9/11 to spur the economy. The trouble is, many of the mortgages acquired during that time were tied to the extremely low rates. I’ve been saying for the past 2 years or so that the FED can not return rates to where they were and that was something Bernanke said was a rookie error on his part. While the dollar may continue to drop, it’s my contention that massive foreclosure and 20% drops in home values will create a bigger economic impact for the entire US though. A good side effect to the devaluing dollar is a decrease in the trade deficit as US goods are becoming cheaper than European products. We’ll see what happens though.

  24. 24
    Alan says:

    Thanks for that link, johnnybigspenda. I’ve been looking for data like that for a long time. The US Census web site does not break it down very well.

    From ZipSkinny:
    98007 — right at the heart of Microsoft territory
    Median Household Income: $48,606
    $35,000-$49,999 18.1%
    $50,000-$74,999 21.2%
    $75,000-$99,999 12.5%
    $100,000-$149,999 9.3%
    $150,000-$199,999 2.6%
    $200,000+ 2.8%

    So approximately 6% of the people living in 2007 make enough to buy a $450k house following the 3x income rule. The rest are stretching.

  25. 25
    Markor says:

    Whether they are stretching depends on how long ago they bought the house.

    A lady I recently talked to on Queen Anne bought her large house for $27K. She said she & her husband thought they overpaid originally.

  26. 26
    Shawn says:

    “keep their homes off the market, if they can, to help return balance to the market.”

    Let me get this straight, REs are now going to tell a home owner that instead of selling right now, that the seller should wait till later when the house will sell for less. More great advice from REs.

    I am happy that my job does not ask me to tell lies, and absurd ones at that.

  27. 27
    tlw says:

    Looks like the data on zipskinny might not be up-to-date:
    “This site was created as a Web development “hobby” project using Census 2000 data obtained from the Census website.”
    (scroll down to the bottom of the page)

  28. 28
    Scotsman says:

    The house across the street from us just came off the market after 6 months and no interest, despite a couple of price reductions. I guess he’s going to wait for the “Spring Bounce”. Good luck…

    Re: Andy- is this a good time to buy a rental? No, it’s not. The disparity between rents and purchasing costs is too great, by a factor of almost 2. It can only resolve in one of two ways- rents go up, or home values come down. Since rents are tightly bound by wages/incomes, unless you see people suddenly getting wage increases that markedly outstrip inflation, rents will not be going up nearly enough to close any gap. People will move first- to other cities, etc. where they can afford to live. Plus increasing foreclosures and other forced moves/sales will continue to increase the supply of rentals. The house across from me that came off the market is now rented. There’s one more for the supply side. I know for a fact that the rent doesn’t come close to covering the hoped for selling price, even with a large down payment.

    When a real bubble exists, the only thing to do is sit on the sidelines until the correction is over. There is no way to “invest” in a depreciating asset and make money. Non of this is too hard to understand, it’s just that people don’t want to acknowledge it. The truth hurts sometimes.

  29. 29
    Andy says:

    Scotsman- I see some of your points but it’s your truth and doesn’t reflect the situation in its entirety. I would counter to say that rents and rental rates will increase as people will need to live somewhere and if they’re too scared to buy or don’t feel the time is right then they will rent. If occupancy rates hold high, which they are then business in an attempt to make money will increase and the rental rates because they can. Why did home values continue to go up? Because they could. I agree the total dollar needed to purchase and have it pencil out was tremendous but I have seen rental property buyers get very healthy decreases off listing prices in the past few months and have rents pencil out in the positive because of the declining market we’re in. Using the home across the street as 1 example is far from the thousands of domiciles needed to house the community in whole. To your point, that’s one more home rented which creates a shortage in home rental supply which drives up demand. The same reason that now the home demand has decreased, the supply has increased. I acknowledge the truth that the market is in decline. That doesn’t mean the market as a whole is in chaos. I just mean to question others and point out that there are other possibilities. A buyer doesn’t need to start out with a 10-unit apartment building either. Even when looking for housing, while the 4 bed 2.5 bath home may not be available, there are other options. It may not be nirvana as far as living is concerned but one must learn to crawl before they can walk.

  30. 30
    Brian says:

    I think your argument is a little convenient. Your assumption is that occupancy rates will remain high (not sure that is going to happen with the inventory numbers going up). Your assumption is that the market will be depressed only for the next 2 months and potentially level out in the next year (not sure that is possible with the state of the economy and the higher potential of recession within the next year). Your statement that prices went up “Because they could” is an oversimplification. Because they could = loose lending standards and practices, irresponsibly low interest rates, derivatives, etc. You have as many assumptions as anyone else on this board as to what the future holds. I have to agree with Scotsman that now is not the right time to buy a rental/investment property. We are on the cusp of a recession, lending standards and requirements have tightened, and without a large down payment, it would be difficult for most to pencil out the investment. Moreover, even if an investor were able to pencil out the investment, why would they want to put their cash into an asset that will most likely cost them less in a year than it would today? I’m all for real estate long term, but in my opinion, it’s going to get much worse before there are any signs of stabilization.

  31. 31

    I don’t think investing in rental homes right now is a good idea because the prices are still way too high. I agree with you that rents will likely rise as home prices fall. But right now for most rental homes the rents just don’t come near the mortgage, taxes and insurance. People who have been buying rentals the last year or so have been doing it in the belief that these properties will appreciate. In the old days rental homes and other commercial properties were purchased for their positive cash flow, and any appreciation was icing on the cake.
    I saw a listing today for a duplex in Madison Park for 1.625 million. The total rental income is 2700 dollars per month. Even if you could raise the rents 50% you’d still be hemorrhaging a lot of money per month. I’ve made a lot of stupid purchases in my life. That house wouldn’t be one of them.

  32. 32
    Jon says:

    “not any more… computer trading curbs were removed about 2 weeks ago”

    we don’t need no reg-u-la-tion. bah da-dah. bum bum. bah da-dah. bum bum. no dark sarcasm on the pit floor… we don’t need no re-gu-la-tion. hey, traders, leave those stops alone!

    how soon we forget.

    the fallout is going to be… hillarious!

  33. 33
    Scotsman says:

    Andy- I’m game. As one of my favorite economic commentators is fond of saying, ” if you’re so sure that’s the trade to make, bring your checkbook and come down to the trading floor”.

    Show me a single family home that can be purchsed in King county with 20% down and offers a positive cash flow with market standard allowances for maintenance, taxes, etc. and I’ll look at buying it. Post the MLS number here, and lots of folks will help with the analysis. If you can’t, I rest my case. Fair enough?

  34. 34
    Jon says:

    all in all, it’s time to go short… good luck with those calls.

    we don’t need no regulation… bah da-dah-dah.

  35. 35
    Jon says:

    hey it stripped out my greenspan guitar solo note because i put it in angle brackets! ;-)

  36. 36
    Jon says:

    “we’ll see if the banks new “superfund” to bail each other out works. and if not, then I’ll be watching for that 3000 pt drop.”

    hey, i’ve got an idea that will get us out of this! let’s just print more money and add more financial instruments until the problem goes away!

  37. 37

    Interesting! The Washington State University wants to lead a conspiracy to restrain trade. Can anyone say “Sherman Act?” What an outrageous action. WSU and its so-called “Center for Real Estate Research” are a band of criminals.

  38. 38

    A question I will pose though is: If a real estate bubble is bursting and renting is the way to go, does it stand to reason that purchasing rental property would be a great investment or does that fall into your bubble theory as well?

    Do you know of some high-quality dwellings that are selling for 100 or so times their monthly rental income? If so, then let’s talk.

  39. 39
    Perplexed says:

    Re PDX Guy’s comment, I found a link to the PSU report here:

    If you end up on page 19 it will be because I was stunned at their analysis of parking for condo owners. Note the suggestion that a condo be sold with the right to rent a parking spot for $165/mo. to make the condo affordable. WTH?? If I were in the market for a condo I wouldn’t buy one without a deeded parking space. The report says that such a space is worth $50,000 in Portland. My analysis is that for comparable units maybe $25,000. The problem is that many are like myself, the condo is worth nothing without a deeded parking space.

    There is a good discussion of the condo glut in down town Portland.

  40. 40
    melonleftcoast says:


    There is a thread that discusses this in the Forum titled “Trends of Rentals in a Down Selling Market” … or something like that:

  41. 41
    Andy says:

    Just to address a few posts-

    Ira- Buying a 1.6 million duplex is completely off base and I would never suggest a client do it. I would say use it to purchase a 10+ unit apartment building or something that would pencil a little better.

    Brian- I am not assuming the market will only be depressed for the next 2 months. It will be horrid the next 2 months and I’m sure will be in a state of leveling or decline over 2008. If the market prices drop 4% but you were able to obtain a price on the home from 2004-2005 pricing then that would outweigh the 4% decline. This is of course a blanket statement though as many statements here by me and others are general assumptions as pulling out the abacus and running the full economic scope would be tough. One thing that is not an assumption though is the next 2 months will be very bad and that’s what I’m passing along.

    Scotsman- MLS# 27193541 is priced at $332,000. It has 15 days of market time and due to market conditions, who knows what the seller would accept. There may not be a lot of motivation with only 15 days of market time but the price is what it is. They represent a rental income from 2 3 bed, 1.5 bath units as $2,400/month at $1,200 a piece. At 332,000 with 20% down the mortgage amount is $265,600 and P&I would be about $1,680 with a 6.5% rate. Taxes and interest would run another roughly $200/month with insurance needing to be factored in but I can’t see for more than another $200 per month.
    Location, condition and other factors need to be considered and the monthly rental needs to be figured but since you get to write off depreciation for taxes and other tax benefits which I’m not completely aware of as I’m so not a tax professional, I think this pencils out and could be considered as a good investment. There are 91 other multiplex’s in King county between 200K and 500K and there was another 4-plex in Federal Way that looked workable to with over $3,200/ month of advertised income. Yes I said advertised and it would need to be verified but usually what’s advertised is fairly close to what the true matter is. Also Scots, single family homes are great investments in standard markets but are not great investments as rental property. Multiplex’s pencil out quicker than single family homes. Buy a mulitplex if at all possible, live in one unit and rent out the others. The home will be far from what you want but it’s a stepping stone to moving on up to the deeeeelux apartment in the skies.
    BTW- I consulted with a medium range apartment provider and in Seattle alone, they’re running at 96% occupancy. Those are awesome numbers for property management firms.

  42. 42
    Andy says:

    There were some interesting posts melon-
    I think there will be more rentals coming to the market but the glut will also be with those desiring to rent. I “feel” there will be more than enough sustainable renters to handle the situation as people are scared, prognosticating, forecasting, whatever to buy. Also, markets are different as our market is far from other cities and states. There is too much positive migration to the area and rentals as well as homes are still going to be needed. The areas most effected in my opinion will be fringe cities to the eastside.
    As prices drop and interest rates continue to decline over time the market will return but who really knows when. Take my comments with a grain of salt but remember to do that with others too. In that thread as well as this post I see comments being made that are horrible investment decisions.

  43. 43
    Scotsman says:

    Andy- yup, that works, will probably give you a positive return of 8-10% if the rents hold and the building is in decent shape to start. We really haven’t looked at maintenance costs, including common spaces, the yard, the structure its self, tenet quality, vacancy, etc.

    HOWEVER, and it’s a huge difference- we were talking about single family homes and their price structures. A duplex/quad/etc. is a very different living experience from most people’s perspective, and while interesting, in no way comparable to SFH.

    Like single family homes, I think the expectation for relatively low rates of appreciation over the next several years has got to change the attractiveness of investing in any housing. Without appreciation to provide cover for poor due diligence and bad management strategies, the perceived risk of this kind of investment has had to increase. Otherwise, why would such a “certain” winner as the example you cited still be on the market? I don’t pretend to know, but there is obviously more going on than I (we) know.
    You’ve provided an interesting twist on our questions here though!

  44. 44
    what goes up comes down says:

    Hey Andy,

    Quick question for you, why not pickup a rental a year for now for less? Any time you can buy lower — you will make more over the long run — this really isn’t rocket science. I mean why would you suggest to anyone to buy a depreciating asset now? Unless you don’t think it will depreciate — so basically that is what you should say — the market will be sideways to up.

  45. 45
    economist says:

    “I would counter to say that rents and rental rates will increase as people will need to live somewhere and if they’re too scared to buy or don’t feel the time is right then they will rent.”

    Hey Andy, if a house doesn’t get sold to an owner-occupier, what happens to it? It gets rented to someone. Get it? There is not a fixed division of housing stock between rentals and owner-occupants. The idea that people holding off buying puts pressure on rents is riduculous. All that really matters is total housing stock versus total number of households.

    “Counsel clients, he told the agents, to keep their homes off the market, if they can, to help return balance to the market.”

    My stockbroker told me to keep my Cisco shares off the market in 2000 to help return balance, but it didn’t work for some reason.

  46. 46
    Alan says:

    Buy a mulitplex if at all possible, live in one unit and rent out the others.

    That is the advice I’ve always heard for people interested in building real estate investments. Specifically a quadplex to help smooth out the income from occassional lack of occupancy.

  47. 47
    Mike2 says:

    What I was noticing with apartment complex sales during the last 2 years of massive transaction volume was that the prices had a significant premium built in to them. Calculated capitalization rates plunged dramatically during this time to the point where 3 to 4% was common.

    Presumably this was due to either the expectation of future rent increases, that the building could be re-sold later at a profit, or that it could be re-sold as condos. Whatever the case, the values weren’t based on current rental yields.

    (I’m referring to multi-unit properties sold in King County, Seattle in particular.)

    Given that the condo conversion value of most buildings has dropped in the past few months, and that commercial lending is starting to see some serious weakness it seem logical that for most buildings the only remaining justification for buying a building with a low cap rate is the expectation of future rent increases.

    Whether the potential rent increases are going to be large enough to counter the risk of a falling assett value due to tight lending or inability to condo-convert is really questionable.

    With every other bubble market seeing rising apartment vacancies as sellers give up and rent out empty homes and condos, betting that increased rents will make up for higher vacancies (and be sustainable in face of higher vacancies!) is doubtful.

  48. 48
    Kime says:


    You have not figured in lost income from the 66K down payment, which would come to over $200 a month, assuming US Treasuries. It has already been mentioned, but the maintenance costs are nothing to sneeze at either. Considering the time needed to manage the property on top of the other considerations, I really don’t believe that this property would show a positive cash flow great enough to make it worth buying especially if the value of the property were going to drop, as you appear to think it will. Everyone says that the depreciation deductions are a significant added gain, but taxes will have to be paid on whatever is deducted when the owner sells the property again, (assuming that the owner sells at a profit) so that gain is canceled out to a great degree in the end. Of course, if he never sells it then he won’t have to pay taxes on it. The fact is that rental ownership has been dependent, in the last 30 years at least, upon inflation and rents going up so people have been willing to buy properties with minimal or no cash flow and figure that rents and land values would go up to make it worth while. But if we are entering a period of RE deflation, then the old methods will not work until this period of deflation is over or nearly over.

  49. 49
    rentfornow says:

    RE – trading curbs, etc.

    Just to clarify: circuit breakers are set up as follows. Rules on curbs are different.

  50. 50
    Andy says:

    You are all correct that values will continue to decrease over the coming months and maybe years. Nobody can say for certain how long it will be or what the effects will be. I agree with many assessments and opinions here but it’s like the movie Risky Business, “sometimes you gotta say what the —- (explative)”. Even with the purchase of a multiplex there are some inherent risks involved and unknowns but I am aware of people who live off the monthly generated income of the rental properties. Now this takes time. It doesn’t happen overnight and it’s a process. Immediate returns on the investment should not be a major consideration too but of course should be a thought. Yes to the other poster maybe wait a year from now. That could work. I also heard from other who thought they should do that even in the late 90’s and early 2000’s who completely missed the boat. Besides, if you’re not attached to the outcome today, there are homes be it single family or multifamily that are being sold for far less than their asking price; in many cases 5-10+% off the asking price. The reoccurring theme with offers today that come in low is who knows where the market will be. I agree with them and I agree with many here but sometimes you’ve got to get off the bench and just get into the game since as I’ve stated my contention of buying a multiplex could be a complete wash with rental income, maybe even generate $100 or so per month with better positives in the future. The value if you buy it at the asking price and if the asking price is a fair market value for today may go down some but multiplex’s are long term strategies so even though the bubble has burst on Seattle real estate, now is still a great time to get in on the right property. I’ll be truthful enough to say I can’t take my own advice though for a myriad of personal reasons and it kills me.
    Buying multiplex’s as a first investment and living in one to rent the others is not the stellar quality of life many would hope for as they are far from the joy single family detached homes have given me. Look at the big picture though to use it as a short term strategy. Many home prices have dropped dramatically which I’ll use to say that the marketing programs that other brokerages use to justify a charge 6% is a crock. Homes sell EVERY TIME because of price and condition. This is precisely why I started my own because I feel the real estate industry on many levels is a sham. When my credit returns to normal though I will be taking my own advice though, keep liquid assets liquid as sinking lots of personal money into a home is not a great idea, leverage with others money as a mortgage is the right kind of debt (not all debt is bad) and start at square one whatever square one will be, a small home as close to Seattle or Bellevue as humanly possible, a condo or townhome or a multiplex if that can work. Truth be told again, agents make the WORST clients.

  51. 51
    John says:

    I don’t want to harp on Andy (he seems to be interested in a good exchange of ideas”, but I think he just provided the new Realtor motto:

    “Somtimes you gotta say what the —-“

  52. 52
    nitsuj says:

    “Also, markets are different as our market is far from other cities and states. There is too much positive migration to the area and rentals as well as homes are still going to be needed.”

    *garage door opens, pink ponies make a break for freedom*

  53. 53
    Andy says:


    I’m saying to not be scared to get off the fence and invest in real estate and not get caught up in the finite minutia of the total dollars and cents. For me whether I would stand to make $50,000 in 3 years or wait a year and buy later so I could make $55,000 is not a factor to do something or not because I can not predict whether that would be the case or not. There is not an economist or Nostradamus here that can do that. If there are way better investment strategies in other areas that have made you or others 100’s of thousands of dollars then let me know. I just want to provide a different perspective. BTW- I am a broker but not a Realtor. I’m not a fan of the NAR and feel they put out opinions that do make us look like car sales people. Yes I need money too so I can live as well but I am far from your standard agent. You’re right John, I am interested in the exchange of ideas and maybe am like many others here, just out to prove a point and trying to win the almighty argument, but I do believe in what I say. If you bought a home today and planned to sell it in 2 years…horrible mistake. Because of the market, there are vasts amounts of money to be obtained off the listing price if the seller will give it and if they don’t, as a buyer it should be off to the next home. But I did want to pose the issue that even if someone bought today, or tomorrow or next March, at the end of the day nobody can predict the amount of gain. I just feel there will be gain and especially if one has the proper strategies. I feel multiplex’s while always good investments may be better ones at this particular time of the market. Are there risks…yes. There’s risks in everyday life and everything we do even breathing. With this next breath am I going to inhale TB or something like that? What is the risk reward though and that’s why I said sometimes you just have to get off the bench and get into the game. Timing is an issue that’s for sure as those looking to sell now are seeing. This chicken little just doesn’t quite see the sky is completely falling.

  54. 54
    old timer says:

    “sometimes you just have to get off the bench and get into the game.”

    Maybe the problem is that some folks aren’t especially interested in ‘the game’.
    They want to buy a house, raise their kids, and have a life filled with interests and hobbies other than real estate.

    I understand that you have chosen your profession, but when you start looking for a pickup team for the game, you start to limit your dues paying pool.

    On top of all the issues with the property itself,
    rental property ownership means dealing with tenants. Many folks do not have the personality or skills to be successful in dealing with the general public.

    IMO, when real estate starts becoming a gamers turf, I just want to walk away.

  55. 55
    Affluent Bitter Renter says:

    “sometimes you just have to get off the bench and get into the game.”

    I’ll put everything on black 17, croupier…

  56. 56
    Andy says:

    and that’s great old timer. It isn’t for everyone and I don’t feel everybody has to own a home or property to be happy. I don’t care what people do as long as they don’t hurt others, themselves and are happy doing it. I just mean to offer differing opinions to what people see and hear in the media. I haven’t even marketed in here and I will say today that I will never give out an email or website address to anyone on this site. I have agreed with a lot of what has been posted here and some I don’t and that’s OK. It’s a market place of opinions and I’m creating dialogue for others to think about. I’m not saying people are not smart if they don’t listen to me at all. It’s dialogue, differing opinions and presenting ideas in a different manner to what many are used to by real estate agents and media jamming items down people throats. I realize the hassle of tenants. There are horror stories and success stories. The same can be said with the stoke market and any other form of investing though…it’s risky. Life is risky but again, do what makes you happy. Also don’t look at analogies I have made to twist them around like games and teams and such. They’re just comments and just analogies to explain a situation that has created tremendous wealth and success for others. Again I’m just presenting the other side and hopefully in a little more of a professional manner. Some may pause to think and others will not and that’s OK. Whether people own or rent I just hope they have a roof over their head. That’s what counts in the end.

  57. 57
    Lake Hills Renter says:

    PNW piece on HBB today:

    Part Of A Natural Cooling Following The Boom

  58. 58
    Sun Baked says:

    Mr Crellin’s call for seller to counsel their clients “to keep their homes off the market, if they can, to help return balance to the market” amounts to collusion. Since the event was sponsored by the “Tacoma-Pierce County Association of Realtors” they *should/would* have to notify their members to not take this seriously. Usually a non-profit consumer-marketing association has to agree to federal/state quidelines on collusion. I work in the tech industry and many many “technology and marketing” associations must sign a non-collusion agreement. You are not allowed to talk (at any association function) about pricing or manipulating supply to control market prices.

  59. 59
    NostraDamnUs says:

    Rather than bitch about the market – can someone here enlighten us with:

    1) which property on the MLS you want to buy
    2) your statement of price – “overpriced”, “underpriced” or “in range”
    3) a ballpark figure of what you earn

    so that we can actually have a discussion that relates to facts, not fiction?

    I’d love to participate – but between mofos plagued with unrealistic expectations, people predicting doomsday prices (80-90% drops), and curryloving technogeeks who want a free one – I really don’t know where to begin.

    I will reply to anyone who shares what they look for, what they make and what they think of the property they want to buy.

    If you want to rent for the rest of your life, do not bother replying.

  60. 60
    Jonathan says:

    “Crellin told the group that Pierce County’s housing market contained a nine-month supply of houses for sale as of Sept. 30, making it a buyer’s market. Counsel clients, he told the agents, to keep their homes off the market [so we can dump our inventory before they do], if they can, to help return balance to the market [and, more importantly, our bank accounts].

    He also said homeowners should shift their outlook on the true purpose of the purchase of a home [being stuck with a life-crushing mortgage on a stagnant or depreciating asset so you can keep us happy for years].”

  61. 61


    Although this is a blog atmosphere, I forgot, we’re all millionaires… [forget the government statistics I quoted]….

    Seriously, I own a Seattle home and yes, I expect it to plummet in value. Do I care? Not at all.

    One of the bloggers made a great/unique comment and I quote somewhat incorrect, “we complain when gasoline and food goes up, why not housing too?” What future hopes do our kids and the American adult youth that are renting have with higher and higher housing prices [rents too], especially with stagnating incomes lately?

    No, lower home prices is good for America, just like $1.99/gal milk and $1.50/gal gas. Have you noticed an 18 pack of eggs is $5 now?

    I appreciated the mortgage professional’s pragmatic opinion indicating Seattle Real Estate would just stagnate and not plummet in value, in his opinion, but I beg to differ. This is not a crisis I see Seattle ever climbing out of in the far future too, if we don’t see the 70% household income sector (about $60K/YR) see wage increases. Since out sourcing and globalization has killed that hope; my prediction is a plummetting in Seattle real estate prices, likely in the -20% area within a year or two. There will be no comeback ever, unless the 70% sector [first time home buyers] has an income increase and unfortunately, I predict not ever.

    Miraculously, with world depopulation over the next several decades, this could possibly turn around. Most of us will be dead by then, but perhaps, if this miracle occurs, our kids or grandkids may eventually see Seattle real estate increases and wage increases again in the future.

  62. 62
    biliruben says:

    Okay. I’ll bite.

    1) I’ll take this one:
    2) It’s over-priced for this market, and the market itself is over-priced. I’d be willing to pay 750K for it, which is more than what he could have gotten in 2004, I would guess.
    3) We have a household income comfortably in 6 figures, and maybe 400K to out down, depending on what we can get for our current house.

    I would guess you classify me as an unrealistic mofo.

    I would disagree. I think that house is priced about 200K over the current market, and current market is 20-30% higher than it should be due to the bubble.

    If you can swing that, you can have your full 3%, and I’ll even hire you to sell my current house for full commission.

  63. 63
    NostraDamnUs says:

    softwareeng – the flipside of your argument is to lower prices into a zone where everyone feels comfortable buying anything they want. Is that what you think is going to make this “bubble” come around?

  64. 64
    Kirk says:

    Mr. Crellin’s comments are based on knowledge of the current marketplace and are directed at a group of realtors who may not understand that it may not be in their client’s best interest to put a house on the market. In fact it may only serve the agent. (a sad statement on the real estate community) I have given my clients the same advice to those trying to sell. Hold off if you can…. What is wrong with that? Buyers get different advice right now. This market will not go down much…development costs too much here…I suppose you could call that manipulative, but I work for clients.

    Secondly- Mr. Crellin realizes that like irrational exuberance creates an overpriced market. Fear can create an under priced market…I think it is best to have knowledgeable buyers and seller’s in both cases and a balanced market. I really think that anybody who is taking these comments as manipulative really should look at the costs of having an unstable and declining real estate market. It really has the potential to cause great harm to the economy and society as a whole.

  65. 65
    Jonathan says:

    “I really think that anybody who is taking these comments as manipulative really should look at the costs of having an unstable and declining real estate market. It really has the potential to cause great harm to the economy and society as a whole.”

    It’s too late now. We’ve had the greed stage now. The biggest monetary inflation in modern history is working its way though the system. The whole financial world is out of balance. This will bring us inexorabley to the final and unavoidable winter of the cycle: fear. What anyone has to say about this has no real impact. Individuals, even Alan Greenspan, have no capacity to salvage a manipulated financial system. History has shown this many, many times. Trouble is, people only live 70 years. Which is enough time for the next bunch of idiots to think they’re smarter than the last bunch.

  66. 66
    patient says:

    Kirk, you make the following assumption which I think is flawed:

    – Strangling supply will keep the prices raising and demand to increase.

    I think it is flawed since I think the demand is down mainly due to unaffordability. Lowering supply will not changed that. What you will likely achieve instead is a bubble of homes waiting to come to market. When that bubble bursts and floods the market you will have a pop of the price bubble that will be heard in outer space.

    So, I don’t think you will prevent harm to the economy and the society by lowering supply at this point instead you could very well make it worse.

    Not that I think strangling supply of homes in a meaningful volume is possible so it’s kind of a mute point anyway.

  67. 67
    NostraDamnUs says:

    bili – there’s a lithmus test to find out whether the price is over market value – since he’s been on the market for slightly over 6+ months, and we know homes like that sometimes take longer to sell – I’d wait until at least 6 months to 12 months from now, to see if anyone else offers him what he thinks the house is worth. If nothing happens, lowball at 950-990k, and I’m guessing he’ll give in or counter exactly where you want, which is 200k less.

    I mock the people here (those who want to buy and expect 80% drops) about being unrealistic, but I never said sellers should be legends in their own mind either, about their property.

    My house sold recently for under 600k, whereas the guy NEXT to me, last year in November, sold for 640k. I treated HIS sale as my _starting_ point in the price (which is what this dude at 1.2M is doing on his prop), and saw it didn’t pan out after 8 months, so I did some manipulation, dropped a few times, and it sold “magically”.

    The lithmus test for lowballing is based on how long is the CDOM, recent comps (

  68. 68
    NostraDamnUs says:

    this blog cuts off comments.

  69. 69
    NostraDamnUs says:


    The lithmus test for lowballing is based on how long is the CDOM, recent comps (

  70. 70
    NostraDamnUs says:

    The lithmus test for lowballing is based on how long is the CDOM, recent comps – less than 6 mos., and a desire on _BOTH_ ends – buyer and seller – to please, compunded with any additional pressures that might put the seller in distress – to which you aren’t aware of, unless you prance around the neighborhood fishing for personal information about the seller – not unheard of if you’re really sharking for a deal.

    My assh–pardon ‘advice’ :) – is wait a bit more. You’re not a typical buyer. I think a lot of these curryeaters have NEVER owned a home and think the world should bow to them on their first home.

    You are in a different category.. so don’t be greedy, nor an idiot – wait it out, and lowball. Higher priced properties will ALWAYS drop significantly more than prices closer to the median…

    Now watch everyone pretend they knew EVERYTHING I said :).

  71. 71
    Affluent Bitter Renter says:

    “NostraDamnUs said,

    ON NOVEMBER 13TH, 2007 AT 4:44 PM
    The lithmus test for lowballing…”


  72. 72
    NostraDamnUs says:

    By the way – and this is what I keep reiterating – stop pretending to KNOW about where prices ought to be – vote with your freakin wallet. See what works. Despairing and verbal onanism on a blog by someone who admittedly WISH he had a home but allegedly can not afford one (too many latte’s? unfounded fears? no spouse/mate/partner? Tim?).

    S&P netted 1500% over the last 25-30 years. Housing 450-500% in the PNW. Do you really think inflation will stop, people will not want a home anymore or want to give one away for virtually no money or according to what YOU think is a good deal??!?

    For Christ’ sake people….

  73. 73
    NostraDamnUs says:

    Affluent Wannabe – come on man – give me a break. I’m straight & married !

  74. 74
    biliruben says:

    Thanks, Nostra.

    I’ve been watching this house for a long time. It went contingent and then back on the market spring/early summer. It would be great to know what he accepted contingent.

    That said, I think I’m destined for another house. There is no way that particular house would come down enough for us to comfortably afford it. The seller wouldn’t be able to take that big a psychological “loss”, I don’t think.

    But I agree on the waiting. I’m in no hurry, though we are a bit tight in our current cottage. I’ll bide my time and wait for sellers to come to the conclusion on their own that the market no longer supports 10% over the last sale in the neighborhood, and things are moving in the other direction.

    My plan is to save a bit more, keep my finger on the pulse of the market following houses I like as potential low-ball opps if they don’t sell, and start looking in earnest in a year or three, depending on how fast the market gets rational.

    My estimate is average 5-10% declines per year over the next 3-8 years, but if we see bigger declines early on, I don’t mind riding a house I like down in value for a few years after I buy, as long as I’m not buying at the tippy-top, and I have leverage to negotiate reasonable terms.

  75. 75
    explorer says:

    Re: the stock market collar rule elimination.
    This is a major concern, but note that it is NOT a done deal. I noted that this is PROPOSED, and it still must be cleared by the SEC. When it is approved posted on the SEC website, you will know it is a done deal. It may very well be, but it’s effect is not immediate.

    I also noted on the NYSE’s site that they have also still published their trade collar ceilings for the remainder of the year. This was after the proposed trade collar rule elimination was published.

    Come January 1, things MAY change. This would be very worrisome if it is elminiated. I would think that anyone with 401k’s or IRA mutual funds would have serious concerns about their viability.

    Even Henry Ford believed in paying his workers enough to be able to afford one of the cars they bulid. Wages are way out of line with productivity, and have been for many years. You can work hard, still be poor, one step away from the street, and still not own a house. If you are talking outright cash, subsidizing the middle-class for BUYING housing actually subsidizes those wealthy multiple property owners in the end, and keeps their unearned capital gains high. It does nothing for society as a whole, or for the middle class in particular.

  76. 76
    Scott G. says:

    “Housing 450-500% in the PNW. Do you really think inflation will stop, people will not want a home anymore or want to give one away for virtually no money or according to what YOU think is a good deal??!?”

    No, but they better account for those 30 years, where their property is, and about a 10m rise in sea level:


  77. 77
    Tsuru says:

    What the heck is a “curryeater”? Is that a racist code word for someone of East Indian origin?

  78. 78
    TJ_98370 says:

    Tsuru –

    I can’t read the text (see link), but I think it’s a brand name for delicious and nutritious prepackaged meals – like hamburger helper.


    So Nostra must be commenting about the eating habits of readers of this blog.

  79. 79
    Jon says:

    “S&P netted 1500% over the last 25-30 years. Housing 450-500% in the PNW. Do you really think inflation will stop, people will not want a home anymore or want to give one away for virtually no money or according to what YOU think is a good deal??!?

    For Christ’ sake people….?”

    No. I think people will sell to me at a price I think is a good deal /because they will have to/. They are over-leveraged into loans they cannot afford to the point that even a small recession will cause them to become insolvent. But actually, what is coming is a monster recession the likes of which we have not seen since the 70’s.

  80. 80
    nitsuj says:

    “By the way – and this is what I keep reiterating – stop pretending to KNOW about where prices ought to be – vote with your freakin wallet.”

    Maybe I missed the point in your multiple misposts, but Isn’t that what NOT purchasing is doing, voting with your wallet?

  81. 81
    Kirk says:

    Well patient- it is not flawed to think that supply is limited…and creating more costs money. Have you ever developed a piece of property? Look at the costs…the mitagation is high. By limiting it and taxing it…it continues to lift prices.

    I think that anybody who is selling now should wait this little hicup out…yes this will return to a normal market…soon people who missed out on buying a home becuasue they cannot read market signals will realize the market will go back to 2-3% appreciation per year. It is just nuts to think that because renting appears cheaper than owning…Houses are over priced. Rents are allows low before housing becomes constrained..then they are the first to get jacked then comes real estate prices…

    Affordability means nothing either…we live in a two family income world. the median house in not unaffordable to those who are educated and work hard. New York, Toyko, San Fran…are they affordable? They would have to drop a long way to get to the level of “Seattle affordabilty”

    The facts are that pricies are not dropping a ton here…sorry…yea you can get a better deal relative to the past but this talk of 20% over 3-5 years is just not looking at the cost to devolop a unit of housing…it is a rent only study…one flawed study.

    9.3 months of supply wow..let’s be real here…

  82. 82
    NostraDamnUs says:

    Jon – then when you see the news reporting for a prolonged period of time that recession has bitten us in the ass, it would be wise to buy then… I dont know, you may have to hold out a bit more for that to happen tho.

    But it is precisely the overleveraged ones that start to crack _now_. Someone who can do math a little and isn’t purely heart/emotion driven when buying a house, has probably averaged in a s**tcycle in the RE market and doesn’t intend to sell anyway…

    Flippers are another story, but I’m not talking about those here… Most people don’t buy to flip (at least not the ones that I know, I should qualify that).

  83. 83
    NostraDamnUs says:

    nitsuj -stop being a nitpicker – I said if you are really into buying and not jerkin off to a blog, then you should attempt an offer that YOU like as opposed to what the seller thinks he should get, in this ‘down’ market, meaning, in a market that hasn’t moved the median price an inch for over a year now…

  84. 84
    Angie says:

    I find the “curryeater” epithet to be bizarre and mystifying, myself, though it’s kind of interesting to think of identifying yourself on the basis of what you eat. I had pho for lunch, so I guess that must make me a phohead.

    I’ve been watching this house for a long time. It went contingent and then back on the market spring/early summer. It would be great to know what he accepted contingent.”

    At the risk of being pelted with rocks and garbage, a RE agent with access to the MLS database should be able to find that out and tell you. If you don’t have one you like and trust, maybe Ira who posts here can tell you?

  85. 85
    The clizz says:

    As an object observer and someone with unbiased opinion (actually, I’m in the market for my first home and would like the doomsayers to be right) my education is in construction management so I can tell you that the average new quadrant home that is built that retails for 420K costs about 195-210k in materials. Most of the parcels that these homes are built on are cheap to buy (or are already owned by weyerhauser) but require large amounts of civil engineering, planning, permitting and earthwork to build on and remember the cost of the roads and neighborhood parks factored in the home price. In my guess and experience each home requires about 90-120k in this department (especially on sloped lots with large retaining walls).
    That would only leave about 80-120k in profit to split with marketing, realtors and other construction admin. I would guess in lean years they were looking at 20-30% margin and in today’s market and the next few years maybe only 8-15% margin. Because of this, I can only see home prices dip 10% at most unless we see large de-flation in construction materials. Does china or new orleans ring a bell?
    I think that anyone who waits past next summer will be foolish.

  86. 86
    The clizz says:

    To add to my previous post, I agree that the numbers in the upper left of this blog are eye catching – especially if you look at the historical data. But we are looking at only one part of the supply and demand chart. Yes there are double the homes on the market and yes, there are less sales, but, are the prices of homes only driven by the amount of homes for sale divided by the amount of sales?

  87. 87
    tlw says:

    The clizz,

    From Oregon’s Mail Tribute:
    “We’re seeing lumber at or below prices we’ve seen at any time in 50 years, when you factor in inflation,” Schott said. “A year and a half ago, studs were running $320 to $340 per thousand board feet for green Doug fir. It’s averaging $150 to $160 now. It’s the most ugly pricing I’ve seen since 1980-81.”

    How are construction material costs compared to last year’s prices?

  88. 88
  89. 89
    tlw says:

    The clizz,

    Are you working for some contractor or construction company? May I ask to your knowledge, what is the average price/sqft (excluding land cost but including everything else) for houses from Quadrant? And in term build grade (as on King County records) what grade are these Quandrant houses?

  90. 90
    The clizz says:

    I would not know those numbers unless I worked for quadrant and to be honest, if somebody from quadrant were to disclose that info, I’m sure the numbers they post to this site would be questionable.
    The numbers I gave you are based on historical averages.

    price/sf of a quadrant home is probably lower that most since I can attest to their hiring of framers/roofers who probably are paid min. wage and the fact that quadrant is owned by weyerhauser who produces the siding, framing, doors, woodwork, and can bring in free fill from other locations – all major costs in construction of a home.
    So in writing this, I realize used a bad example, but it was just that.
    Yes, I work for a large Mechanical contractor so I’m not in the residential business anymore. I did work for a company that did a majority of the earthwork and utilities for Quadrant so I happen to know more than most about quality, price, ect.

  91. 91
    The clizz says:

    Of course lumber is cheaper this year, look at what has happened to the dollar, this has made our exports lower. Last year, and 2005 we felt the grunt of Katrina and other hurricanes, partially due to market econ. partially due to greedy suppliers trying to make a buck after several years of devistating weather.
    Another thing to think about….look at how many job ads there are for skilled labor in building trades such as ironworkers, steelworkers, plumbers, fitters, HVAC technicians, electricians. My company has sent a foreman to florida and nevada to find people to work for us, go to a union hall and see how many workers are in need of a job…NONE. Labor has and will become very expensive in the seattle area due to it’s shortage. So while we may or may not see building materials decline (4$ GAS) labor is sure to continue to drive the cost up.

  92. 92
    Jon says:

    “Jon – then when you see the news reporting for a prolonged period of time that recession has bitten us in the ass, it would be wise to buy then… I dont know, you may have to hold out a bit more for that to happen tho.”

    Most people don’t remember what a real recession is like anymore. The news media won’t be reporting that a recession has bitten us in the ass. They will be reporting that our economy is hopeless. We will see what happens, of course, but the environment looks a lot more like the late 60’s right now than the late 80’s.

  93. 93
    Sun Baked says:

    Just wondering when it became okay to use terms like “curry-eaters.” Nostra needs to focus on rational arguments and tone down the racial epithets.
    PS: Think he’s bitter about something?

  94. 94
    NotaBull says:

    “Look at the costs…the mitagation is high. By limiting it and taxing it…it continues to lift prices.”

    This whole argument about construction prices is a little odd for me. On the one hand, I see posts with reasonable looking information that seems to highlight that prices really aren’t out of whack here.

    Then we get the posts like a comment above about how higher construction prices lifts prices overall.

    Then I look at Boston, Miami, San Diego, etc. Are construction prices dropping in Boston and Miami, while going up in Seattle? Maybe there’s just a little bit more to it than the cost to build a home?

    Also, if home prices have doubled in the last decade or so, is it also the case that construction prices have doubled?

    What seems likely to me is that certain things got more expensive due to the bubble in credit:


    I would guess that a lot of things that got more expensive for new construction were driven by the general bubble, and not something that was *separate* and therefore immune to the deflating bubble.

    We’re already seeing materials falls in price.
    We’re bound to see land fall in price too, as demand for new houses continues to weaken.
    Labor will also be less stressed, although commercial real estate is still fairly strong, and I think a lot of the “take our jobs” illegal immigrants will likely go home before there is a large glut of construction workers.

    So, for those out there in residential construction, please tell me – and the blog – why the costs of new construction can *not* go down while market heads down. Seriously, I’d like to know and I’m open to the facts.

  95. 95

    […] Crellin: Keep Homes Off the Market—Return “Balance” Seattle Bubble Tip Jar […]

  96. 96

    […] that Crellin is the guy that last November said this: “Owners need to focus on why we’re dealing with housing in the first place. It’s shelter. […]

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