Everett Development Bit by Finance Fallout

The still-tightening market for financing real estate is not only taking a bite out of individuals’ ability to buy homes. It’s also starting to affect the ability of large new construction projects to get financing to even begin building. New projects like a waterfront condo complex in Everett.

The start of condominium construction on the Everett waterfront will be delayed by at least six to nine months after a major financial backer dropped out because of the nation’s mortgage mess, developer Maritime Trust said Monday.

“They just flat out got out of the construction market and are selling the unit that was going to do our construction loan,” Maritime’s Bert Mears said Monday.

He was referring to Merrill Lynch, which fired its CEO this fall after reporting a third-quarter loss of $2.24 billion, primarily due to writing off $8.4 billion in losses in subprime loans.

Lynch had agreed to be the main lender for the $98 million project that involves 137 condominiums. That’s the first phase of a $400 million redevelopment called Port Gardner Wharf for up to 660 condos and additional retail, office and commercial space on 65 acres.

Mears said he’s still seeking a replacement lender and may have to wait because of all the publicity about problems in the national housing market.

“We’re talking to a couple of other people,” Mears said. “I don’t think anyone wants to push the button until we get some of this (problems in the nation’s housing market) off the front page.”

“It’s extremely important that this project happen,” [Port commissioner Connie] Niva said. “It’s the beginning of a lot for Everett. It signals that private investment can be successful in Everett. If it looks like we can’t get a quality development done in Everett, that’s a problem.”

I really am amused by the rationalization that people are frightened away from investing by news headlines. Of course it doesn’t have anything to do with market realities or the financial bottom line. It’s those darn scary front pages. If only the news would buck up and start reporting all the good things about the housing market, project financing would appear, a horde of individual buyers would storm the market, and the pretty pink ponies would again walk the streets in peace and harmony.

Or something like that.

But not to worry, because the Seattle area is temporarily the most driest part of the sinking ship that is the housing market.

Mears said he’s confident of financial backing for the project because the local economy is strong.

“The good news is that of all the (housing) markets in the country, this is the strongest,” Mears said. “The great news about the Seattle area is the incredible amount of jobs at places like Boeing and Microsoft.”

Ahh yes, Boeing and Microsoft. That would be the Boeing that added less than 200 jobs in Everett (half of which pay $10-$13 an hour) for the fancy new 787 Dreamliner. And the Microsoft that has what, one small office in Everett? Yeah, those two are definitely a great reason to spend 400 million dollars building hundreds of waterfront condos.

I can’t fathom why the investors aren’t falling over each other to throw money at that. I mean seriously. Boeing! Microsoft!

(Mike Benbow, Everett Herald, 12.18.2007)

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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.

77 comments:

  1. 1
    Faster says:

    There’s always those on the other side of the border to save us too.

    http://www.time.com/time/covers/0,16641,20040920,00.html

  2. 2
    deejayoh says:

    Lynch had agreed to be the main lender for the $98 million project that involves 137 condominiums. That’s the first phase of a $400 million redevelopment called Port Gardner Wharf for up to 660 condos and additional retail, office and commercial space on 65 acres.

    Seriously – who refers to Merrill Lynch as “Lynch”? Did the writer think it was someone’s last name?

  3. 3
    The Tim says:

    Heh, yeah. That struck me as a bit odd also.

    You’re a mean one, Mr. Lynch…

  4. 4
    notabull says:

    “Seriously – who refers to Merrill Lynch as “Lynch”? Did the writer think it was someone’s last name?”

    Edmund Lynch died a long time ago – in the 1930s I think. You can’t expect a bank to finance a deal that it agreed to over 70 years ago. These developers are insane.

  5. 5
    B&W NIkes says:

    The incredible amount of jobs… (cough) Boeing has over 30,000 fewer jobs in the region than they did 10 years ago, even after factoring in the few thousand they claim to have added in the last couple of years. That loss is nearly as many jobs as Microsoft offers in total locally, and neither company is predicting huge employment increases in the next couple of years. Why people don’t recall that the region is only a few short steps out from the recession of 2001-2004 is really troubling. Added that much of that recovery has been propped by speculating the will of over leveraged consumers to continue spending is making a well greased staircase to somewhere.

  6. 6

    I HEAR BOEING’S CLOSING DOWN AND/OR REMODELING MORE OF KENT SPACE CENTER’S TECHNICAL AREAS

    Those old Kent Valley buildings are obsolete anyway, with asbestos insulations, but are they building new expansion office space. Nope.

    Everett and Mill Creek are low life building areas anyway, Hades, the I-5 freeway, let alone its on ramp roads were totally clogged in the 80s and built in the 50s/60s for a population 1/10th the size its overpopulated too today.

    They haven’t built more freeways and on ramp roads for uncontrolled growth there, just more Silver Firs.

    A good housing bust would be a breath of fresh air for Everett.

  7. 7
    SeattleIAM says:

    Congratulations! SeattleIAM.com has chosen this blog article as one of the top articles in Seattle for December 18, 2007. The SeattleIAM Daily Blog Review can be found on NowPublic.com

  8. 8
    NostraDamnUs says:

    Is “driest” even a word?

    You’re looking at prices stabilizing. Similar things happened in San Diego about 3-5 years ago, prices went up quite a bit, then plateaued and have remained more or less the same over the last 3 years. Nothing drastic happened on average even with the decline.

    The people getting assreamed now are those who didn’t understand the significance of the word “ARM” (or just plain living below your freakin means!). Thankfully, this isn’t the majority – or else we’d be seeing real fallout (and your 50-90% drops might become a reality).

    Is it gloomy? Yes. Is it doomed? Hell no. But you keep on waiting for the deal of a lifetime house to fall on your lap much longer past the end of next year, and you’re in for a reaming – prices will rebound again. If I remember correct, about 7% of mortgages are subprime ARMs (and those are mostly the idiots foreclosing today anyway…).

    7% might make a dent, but nowhere near the kind of dent, and especially not here in Seattle, this blog is predicting.

    What Tim says isn’t the truth. It is his as.. I mean, opinion.

  9. 9
    The Tim says:

    Speaking of not telling the truth… Funny you should bring up San Diego. Prices there have a funny way of “plateauing”


    source


    source

  10. 10
    on topic says:

    NostraDamnUs,

    your false claims couldn’t have worse timing.

    in paper dollars, prices in San Diego today are almost exactly at their 2004 levels ($440k and free-falling, if reality is anything to go by). they hit a high of a bit north of $500k in early 2007. ignoring inflation, they are more than 10% off their peak.

    http://calculatedrisk.blogspot.com/2007/12/house-price-round-trip.html

    including inflation, prices are down about 10% from their 2004 levels.

    for reference, i don’t think anyone on this blog has claimed 90%. most think 20-30% in real price declines (perhaps largely through inflation). Eleua claimed 80% declines of real prices on the worst properties in the worst areas (condo in Tacoma, anyone?)

    also, the foreclosure rate has been seen to have more to do with LTV ratio than creditworthiness, since people with both good and bad credit ratings know to walk away when they are far enough underwater.

  11. 11
    Gary says:

    This is worth a read, quite interesting!

  12. 12
  13. 13
    b says:

    NostraDamUs,

    Actually its not really true that ARM resets are the reason people are getting assreamed. Its more about them buying homes that were far too expensive for their incomes, ARM or not. When you are depending on dual incomes and 50% of it going to mortgage for your stucco shitbox in Issaquah, any kind of minor hardship results in the loss of your house.

    Data from Countrywide Financial Corp., the nation’s largest mortgage lender, backs up this point. The No. 1 reason its customers have been defaulting on mortgage loans is because their income was cut. That accounted for almost 60 percent of its loan defaults in the first 10 months of this year; add in sickness and divorce and the total jumps to more than 80 percent.

    Way down on the causes-for-foreclosures list at Countrywide – just under 2 percent – is a payment adjustment.

    Source: AP

  14. 14
    notabull says:

    Tim,

    Please angle your head to the right by 45 degrees. That should fix your issue there.

    Yeah, nothing to see on those charts. Prices haven’t really done much over the past few years…

    For Christ’s sake – I was living in San Diego when all this started. It’s been a blood bath!

  15. 15
    notabull says:

    “Is “driest” even a word?”

    Yes, it is.

  16. 16
    Ian says:

    Boeing and Microsoft don’t have to be adding jobs to cause the region to grow. Plenty of their smaller contractors and vendors can add jobs. And their contractors and vendors in turn. And sometimes those contractors or vendors move into (slightly) different markets, which is usually a growth opportunity as well. Boeing and Microsoft are like two big planets and their gravity attracts jobs, directly or indirectly.

    But Everett? Condos? So many? Pfff.

  17. 17
    The Tim says:

    Ahh yes, the vendors.

    Seattle Times, 12.16.2007:
    Pay in aerospace is low for non-Boeing workers

    The previously unpublished wage data analyzed by The Seattle Times show that among 161 companies claiming the state tax breaks for aerospace last year, almost half the non-Boeing production workers earned no more than $15 per hour. At Boeing, just 4 percent of production workers were below that level.

    “We’ve always thought of aerospace manufacturing as being a very high-skill, high-productivity and therefore lucrative sector,” said Alan Tonelson, a research analyst with the U.S. Business and Industry Council, which lobbies nationally on behalf of small- to medium-size private manufacturing companies. Shown the data on non-Boeing aerospace jobs, he said, “These wages are mediocre at best.”

  18. 18
    B&W NIkes says:

    nothing to learn here:
    Mar04 thru Nov07 graphic from signon san diego dot com mentioned by on-topic also posted at calculated risk.
    It’s a good thing we have lots of jobs up here, unlike those poor Californians.

  19. 19
    laxtosnoco says:

    Although the Everett Port development news and ugly So Cal Dataquick release today are signs of more bad news to come, it felt like my old and new life converged today.

    The mortgage credit problems now officially extend from LAX to Sno Co…

  20. 20
    Jonny says:

    “For Christ’s sake – I was living in San Diego when all this started. It’s been a blood bath!”

    Yep. But it ain’t over. I don’t believe an 80 or 90% decline is even possible, but my guess is still 30-40%. So, even given those charts, we’re not even quite half-way there as far as I’m concerned. When we hit at least 30% decline from peak, I’ll start to casually look at the market and not before. I won’t be in a hurry.

  21. 21
    Markor says:

    When we hit at least 30% decline from peak, I’ll start to casually look at the market and not before. I won’t be in a hurry.

    I wouldn’t be so sure. Prices could decline 25% and then there be bidding wars again. What spikes down is more likely to spike up. Take a look at the loonie chart on the home page of this blog, for an instance.

  22. 22
    wreckingbull says:

    Eleua claimed 80% declines of real prices on the worst properties in the worst areas (condo in Tacoma, anyone?)”

    Exactly. When a condo is built, marketed aggresively – even with TV ads, and gets not a SINGLE bite, 80% does not seem too crazy.

    http://www.thenewstribune.com/business/story/215987.html

  23. 23
    Markor says:

    Boeing and Microsoft don’t have to be adding jobs to cause the region to grow. Plenty of their smaller contractors and vendors can add jobs. And their contractors and vendors in turn.

    I agree. For example, Microsoft is adding space for some 7,000 employees on the Eastside. Even if they used all that space just to relieve overcrowding rather than add staff (however likely or unlikely), that expansion would probably add hundreds of jobs to service the space, everything from janitors to elevator techs to managers.

  24. 24
    EconE says:

    Imagine the following quote posted neatly with that cool block next to it. (sorry Tim…I’m a slow learner…you need a “code cheat sheet link” ;o))

    “I wouldn’t be so sure. Prices could decline 25% and then there be bidding wars again. What spikes down is more likely to spike up. Take a look at the loonie chart on the home page of this blog, for an instance.”

    Comparing currency exchange rates to a housing market?

    Wow…just…Wow.

    How could the housing market suddenly “spike” up?

    Will someone be (supposedly) bidding against me be using exotic financing?

    Bidding Wars….?

    LOL!

  25. 25
    Markor says:

    How could the housing market suddenly “spike” up?

    Simple, by having gone down too far too fast.

    Will someone be (supposedly) bidding against me be using exotic financing?

    No exotic financing is needed for a spike up to correct the irrational part of a downward spike.

  26. 26
    rose-colored-coolaid says:

    Yes Markor, because housing prices have been known to fluctuate rapidly. Sometimes they move up or down over 5% a day.

    Look, during the heady days of the bubble, changes were very consistent. You cannot rationally expect behavior very much different on the way down. Of course, it will over correct, but a true spike is not terribly likely.

  27. 27
    The Tim says:

    I don’t necessarily care about buying a home at the absolute bottom (i.e. – after an “irrational downward spike”). I just want to buy at a reasonable price, which is lower than where it’s at today.

  28. 28
    Markor says:

    Bidding Wars….?

    To do that “cool block”, put “

    ” and “

    ” around it, minus the space.

  29. 29
    Markor says:

    OK, that didn’t work. Put “blockquote” and “/blockquote” around it, where each is surrounded by less-than and greater-than symbols.

  30. 30
    Angie says:

    I just want to buy at a reasonable price, which is lower than where it’s at today.

    Like 20% lower…which will be about where prices were when you started this blog? ;)

    I’m probably going to be up to my eyebrows in holidays and kids for a few weeks. Hope y’all have a good Christmas, and I’ll be back to tease you in the new year.

  31. 31
    Markor says:

    Look, during the heady days of the bubble, changes were very consistent. You cannot rationally expect behavior very much different on the way down. Of course, it will over correct, but a true spike is not terribly likely.

    In many markets behavior on the way down is much sharper than on the way up. I think we’ve seen that in the last 3 months, during which time selling prices have fallen 10 to 20%. If,say, they fell to 30% off the peak by summer, I would think a 10% or so spike up (over a few months) more likely than not, even if it’s not retained in the long run.

  32. 32
    Jonny says:

    “I don’t necessarily care about buying a home at the absolute bottom (i.e. – after an “irrational downward spike”). I just want to buy at a reasonable price, which is lower than where it’s at today.”

    yep. for me, a reasonable price is fairly close to cash flow neutral. that’s at least 30-40% again.

  33. 33
    Plymster says:

    Personally, I’m waiting until prices are about 30-35% lower, which is where they’ve traditionally been, compared to median household income. I suppose Tim could drag out another chart to support this, but what would be the point. Housing blulls like Angie, Markor, and Nostradamnus live in their own reality and are not swayed by fact, history, trends, or logical arguments.

  34. 34
    John Doe says:

    Thats because they probably have the most to lose.

  35. 35
    Markor says:

    Housing blulls like Angie, Markor, and Nostradamnus live in their own reality and are not swayed by fact, history, trends, or logical arguments.

    I would hardly label myself a housing bull given that I think a depression is a distinct possibility. A prudent investor considers all contingencies.

  36. 36
    B&W Nikes says:

    Greenspan indicated in his WSJ piece last week that rates were lowered in 2003 to protect against “the potential threat of corrosive deflation.” If that was a mistake at that time, is returning to some pre-2003 level through deflation possible or probable?

  37. 37
    Jonny says:

    What Greenspan forgot to protect against was the corrosive effect of dope smoking.

  38. 38
    Ray Pepper says:

    Over and over I read here people are going to buy 30% lower, 50%, 20%. Good Lord each transaction is its own entity. It will be the same next year, two years, five years, and 10 years later. *** The fact is many of you will NOT be able to buy now and thats the fact you must face. *** You must wait for you will have no other choice.

    If you are financially able to buy in the next couple years at prices that will be lower then I applaud your financial success. We know prices are coming down. They are ALREADY down 15-20% on every deal I have worked on. Two are down over 33%. But, to estimate that you will be better off in 3 years is foolish. You may stumble upon that seller that MUST sell next month. If he/she has to or face foreclosure you may have just nailed your bottom.

    I feel many people are making themselves “feel better” by saying they are going to wait. The best time to buy is always when you can financially afford to do so. If its now, 2008, or 2009 your timing could not be better.

    Lastly, Tim. I enjoy this site and all the opinions and rhetoric. I sign off all my posts with my name, title, and company. If this is wrong, please ask me to stop!! My company was built for the consumer and I’m very proud to offer the best deal in the Nation . But. I have never discussed my company until this post, as a reply.

    I live and breathe real estate but I do not know all the aspects of Blogging etiquette. Please correct me publicly or advise me to continue posting as I do.

    Ray Pepper
    Broker
    http://www.500Realty.net

  39. 39
    tlw says:

    I think RE agents are those that are actually getting “a$$reamed” right now :-). No wonder there’s so much anger.

  40. 40
    b says:

    The best time to buy is always when you can financially afford to do so. If its now, 2008, or 2009 your timing could not be better.

    Can you please provide the various scenarios where this investment “strategy” will work and how that aligns to now and the future?

  41. 41
    alex says:

    Something is going wrong! Houses around my neighborhood started to sell! A 1600-sqft house in Woodinville got an offer in 2 weeks! Tim, PLEASE SAVE ME! I want to buy a cheap house!

  42. 42
    EconE says:

    *** The fact is many of you will NOT be able to buy now and thats the fact you must face. *** You must wait for you will have no other choice.

    Pretty presumptuous statement coming from a Realtor trying to flip a singlewide.

    http://redfin.com/stingray/do/printable-listing?listing-id=961032

    you got rid of that trailer yet?

  43. 43
    Ray Pepper says:

    Paid 45k 5 or so years ago. Rents at about 800.00. Cash Cow. Nothing wrong with taking profits. But, hey if she doesn’t sell its still A GEM!. Thanks for the plug. I have 2 more listed as well on section 8. Are you a buyer? I rejected 110k and 115k. But, I will sell it to you for 140k!. You will like the new carpet !

    Ray Pepper
    Broker
    http://www.500Realty.net

  44. 44
    DocG says:

    “Markor said,

    Prices could decline 25% and then there be bidding wars again. What spikes down is more likely to spike up.”

    You are forgetting something. Prices spiked up to unafordable levels during the bubble because of easy credit. They are coming down now and may go quite a bit lower. In order for “bidding wars” to send them up again you will have to have buyers who QUALIFY for the loans they are getting. Given housing prices vs incomes I just don’t see that as a possibility in the near future. Throw in the restrictions that lenders are putting on themselves and those the government is proposing the age of real estate hyper inflation is over for now.

    That is the reality for the next 2 years or so. BUT

    The only thing that can cause a price spike is if overall inflation goes crazy. I happen to think that is a real possibility after the next election. Of course an inflation driven price spike means that your real estate investment will be lucky to stay even in buying power.

    On the other hand the big advantage of owning (with a fixed rate loan) before inflation takes off is that you will have a low interest loan in a high interest world and you will be paying back expensive dollars with cheap ones.

    Right now my opinion is that late 2008 or early 2009 will be the time to buy. Prices will have finally come down to where they belong (based in incomes in any given market) and interest rates won’t go much higher before the election. Anything after that will be dependent on who wins and what actions they take.

  45. 45
    whats my name says:

    “Like 20% lower…which will be about where prices were when you started this blog?”

    Is there an elephant in the living room?

  46. 46
    economist says:

    The best time to buy is always when you can financially afford to do so.

    Gee I could afford to buy Cisco in 2000. Was that the best time to buy?

    I can afford to buy a house in Detroit today! I can even pay cash! Is that a good idea?

    The best time to buy any investment (and a house is an investment whether you live in it or rent it out) is when the fundamentals are attractive. And the fundamentals for housing still look pretty ugly today. Prices have a lot farther to fall.

  47. 47
    stephen says:

    They are ALREADY down 15-20% on every deal I have worked on. Two are down over 33%.

    If this is true then the overall numbers will start reflecting this soon. I assume when the drops start showing up time/post will be spent examining the new market and advise on how to approach it….

  48. 48
    Patrick says:

    $98 million / 137 condos = @ 750K / condo
    In Everett.
    I’ll take two.

  49. 49
    Filthy Renter says:

    Ray Pepper.

    1999 called, they want their animated GIFS and clipart back.

    Serious question: Why not just use Redfin?

  50. 50
    Michael says:

    “Ray Pepper” This entire board is full of people predicting armagedon in housing. I don’t know your business but I would have to think that trying to sell these people a house as an investment might be a bit difficult.

  51. 51
    Ray Pepper says:

    Why should YOU use Red Fin instead of 500 Realty? ***** For the money!! Were talking strictly cash back to the consumer 75% or 66% Why would you use Red Fin in the first place?? The answer =$$$$$. If you are out doing all the legwork you might as well get paid the MOST. Right? Why take less pay for the same work? Red Fin just has far more overhead and will have to cut costs further to even compete at the 75% level. I doubt they will be able to do it. Its up to me to offer Agents with superior customer service that will surpass Red Fin in the coming years.

    500k home with Red you get $9900.
    With 500 Realty you get $11250.00
    If you are a seller why would you pay anyone 3500 to List?? When you can pay 500 and get the same results? We just have far less overhead !! And 0 DEBT!

    Hope that answers your question! Red Fin paved the way for many more models coming down the pipe. We Thank Allen and Scultz for helping us educate Washington State!

    Ray Pepper
    Broker
    http://www.500Realty.net

  52. 52
    Buceri says:

    Like the article that was linked on this site a couple of weeks ago said:
    One of 2 things will happen for prices to stay where they are of go up-
    1) Easy credit comes back –
    2) We all get a 100% pay raise.
    If neither one occurs, then:
    PRICES WILL COME DOWN TO HISTORIC VALUES; where people can buy with 20% down and a 30 year mortgage.

  53. 53
    rose-colored-coolaid says:

    I feel like we need to add a disclaimer to this site. “Reader accepts the risk that he/she may be Peppered at any time. Click enter if you agree”

    [If you are a seller why would you pay anyone 3500 to List?? When you can pay 500 and get the same results? We just have far less overhead !! And 0 DEBT!]
    By this same logic, I should avoid all of you and buy/sell through craigslist?

  54. 54
    Lionel says:

    Similar things happened in San Diego about 3-5 years ago, prices went up quite a bit, then plateaued and have remained more or less the same over the last 3 years. Nothing drastic happened on average even with the decline.

    I bumped into a buddy of mine at a college reunion last May. He had bought a house in San Diego the previous year and had then put $60K into a remodel. When he had it reappraised just about the time of the reunion, the price was exactly the same as when he had bought it. Oops. He’s financially secure enough to laugh at himself, but he wasn’t exactly happy about it.

  55. 55
    SteveH says:

    Speaking of prices, I drive by my old house in Maple Leaf once in a while, and watch the Zillow price for laughs. It just sold for $100,000 (20%) less than the Zillow listing. Guess that shows how accurate Zillow is. How will this affect other Zillow guesses in the neighborhood? And how will falling Zillow guesses affect the market? This was the most expensive listing for quite a few blocks.

  56. 56

    TIM: GREAT BOEING EMPLOYMENT SALARY FIGURES

    I heard verbally Boeing brought in a batch of new hires for like $10/hr [sounds like a “Welcome to Walmart” job] and didn’t pay them for the all day orientation they had to go to too. Has Boeing become a low paid service economy AL’s Auto now, they manufacture hardly nothing anymore, they just stock foreign parts?

    Its not on the MSM news.

    Hades, you can’t even access SPEEA anymore without a password to get recent salary information. I hear every time a SPEEA President signs a Boeing union contract, Boeing gives ’em a high paid management job. Coincidence? I doubt it.

    KOMO, KING and KIRO don’t tell Seattle the truth, that this present low paid service economy is killing the local real estate market.

    I’d also add, God forbid the higher paid Seattle area Baby Boomers ever retire and put all their homes on the market at once to down size. The realitors better hope the Baby Boomers work until they die, or real estate will likely take a severe and fatal blow. Am I wrong?

  57. 57
    Ray Pepper says:

    You should do both to facilitate a sale in this market. Craigslist and MLS. You will be better off hiring someone from Labor Ready at 12.00 an hour to stand up and down on your driveway with directional arrows then paying anyone 3500 or 1-3 % to List. Pay the **Buyers Agent 3%** not the Listing Agent! But, soon you will hear the same from Robert Mak if you haven’t figured it out already. John Stossel did a great job reporting the same information on his “Give me a Break.” About 3-5 more years and it will be common knowledge.

    Ray Pepper
    Broker
    http://www.500Realty.net

  58. 58
    biliruben says:

    Ray – I think discounters have place in this market.

    Your model might be sound.

    But I question whether it would be smart to hire someone who thinks spending time spamming a site where the posters generally think the market is about to tank, and everyone is screaming in a high-pitched whine not to even think of purchasing.

    If your business model was built on loyalty, referrals and repeat costumers, it might make sense to try and make a name for yourself on a site like this, as we will likely be buying down the road.

    But yours is not that kind of model.

    I have to conclude you are very likely, how should i put it…

    ..um, brain-cell challenged.

    I wouldn’t hire you if you gave me 120% back, because I’d be too worried you’d screw up the purchase.

  59. 59
    Bits of Real Panther says:

    “where people can buy with 20% down and a 30 year mortgage.”

    So is it fundamental that a median household wage earner be able to buy a house in Seattle provided they have the 20% down payment? If so is that a median price home? Who makes these decisions?

  60. 60
    NostraDamnUs says:

    b – that goes with my ‘living below your means’ – if you, as you point out, have to have 50% of your income go to your ‘stucko shithouse’ :) (I like that, don’t spare words), you _aren’t_ living below your means.

    My current mortgage is around 260k, on a 550+k home. With what we both make, the mortgage payment is a lot less than 25% of our take home, and even if the shit hit the fan and one of us lost our job or the wife had to stay with the kids at home, we could still live unimpeded.

    To top this off – I have an IO mortgage w/7 year IO and 7 year ARM period, at 6.25% from WaMu (and boy, did they want to ream me before they approved it – goes to show they were affected profoundly by the subprime fallout since I had already moved out of another home which we still owned, so I ended up paying 2 mortgages for about 2 months) , and I intend on paying it off within 7-10 years.

    So I guess San Diego’s worse off than I imagined… well, whatver – it’s still San Diego – and the climate there is in contrast to Seattle’s, so look for a rebound there (as well as here) once Hilary is in office ;)

  61. 61
    Marc says:

    I would add to the advice about using Craigslist the additional advice that no one with computer skills and free time on the weekends should pay 3% to a Buyer’s Agent in a down market. In a down market sellers are desperate for any offer and, assuming they’re rational, they should be more than happy to accept an offer from a buyer (working without an agent) that states the 3% Buyer’s Agent’s portion of the commission is to be credited to the buyer as a closing cost credit or to reduce the net purchase price (or however else it might benefit the buyer).

    The days of extremely asymetric listing information are gone and so should the 6% commission. I prepare these offers for buyers all the time for a flat fee of 800 bucks (plus handle negotiations and the buyers transaction all the way through closing). It works.

  62. 62
    Marc says:

    Bits of real panther,

    that’s how you know its good!

  63. 63
    Ray Pepper says:

    Sorry you feel that way biliruben. Over a decade in real estate and I never “screwed up purchase.” Its a shame you don’t even know me and rely on blogging to form your opinion. My vacation ends today and back to work tomorrow so my blogging will end for awhile. I’m sure you will be happy to hear that!

    But for you I’m running a special. **1 free T shirt**. Normally you have to get one at the Seattle Home Show, Tacoma Home Show, or Puyallup Fair. But, for you FREE. But theres a catch. You must come meet me in person, shake my hand, and buy me lunch. !!

    Great Board Tim. Just the right amount of statistics, titillation, and comedy acts.

    Ray Pepper
    Broker
    http://www.500Realty.net

  64. 64
    SteveH says:

    Hey Ray, do you include yourself in the latter?

  65. 65
    biliruben says:

    10 years and you still have to resort to spam and heavy discounts?

    My trepidation triples.

    Sure, I could be wrong, but your first impression and your office’s pawn-shop atmosphere make my rational brain scream “run!”

  66. 66
    Wm Swanson says:

    Ray: I give you this…..at least you arent in the same COMICAL mode of another RE agent who posts here who has the worst marketing campaign to attract new business I have seen and that would be Gene Dexter of ReMax in Issaqwa….no Issacuah….no Issaquah! I dont know how many real sellers would consider your services on the Eastside/Bellevue area as I note you are mainly working out of Tacroma.

  67. 67
    Ray Pepper says:

    Thanks Swanson ……. Please realize we do serve the whole state of Washington. But, remember just like Red Fin we want the Buyers. The 500 Selling offer is to educate. Very little profit there. Do you actually believe when people understand how Red Fin and 500 Realty works they would still hire an Agent to find them a home? We don’t think so and our statistics prove it.

    Spam and heavy discounts??? Spam? Me signing off with my name and website? I openly asked Tim if I was following proper etiquette. He has yet to reply. What discounts? I don’t consider our pricing heavy discounts. 500 is more then enough to input and service a listing. Over 70% of sellers become Buyers and when they do they have been educated about our 75% Buyer plan. We have a 100% return rate from sellers to buyers.

    So much anger toward a different model of real estate. Are you a fellow agent? Mad over my free shirt offer? Either way I apologize. You don’t have to take me to lunch! We will chat again in 2008. Bank it!

    Pawn Shop atmosphere? Do you not like our signs? Our building? Me? You will be happy to know 3 more offices are opening in 2008. Kent, Des Moines, and Vancouver.

    Merry Xmas Bubblers!

    Ray Pepper
    Broker
    http://www.500Realty.net

    1 question to the board here. Anyone have input on this Nouveau Riche University? We found a seller buried in a home through this University.

  68. 68
    Markor says:

    I would add to the advice about using Craigslist the additional advice that no one with computer skills and free time on the weekends should pay 3% to a Buyer’s Agent in a down market.

    I second that. I paid only 0.2% in agent fees to buy the house I’m in escrow on now. If the seller knows your agent didn’t get the full 3%, they’ll tend to think you are underpaying on the house and so the negotiation is harder. Best to write up the contract to show that your agent is getting the 3% and then have the agent rebate you the difference at closing.

  69. 69
    Markor says:

    You are forgetting something. Prices spiked up to unafordable levels during the bubble because of easy credit. They are coming down now and may go quite a bit lower. In order for “bidding wars” to send them up again you will have to have buyers who QUALIFY for the loans they are getting. Given housing prices vs incomes I just don’t see that as a possibility in the near future.

    There are qualified buyers at every price point, even in a bear market. Take a fairly priced house at any price point and drop its price by 20%. You’ll likely get a bidding war on that house.

    The masses waiting for a market bottom can make house prices too low, and prone to a spike up.

  70. 70
    Duplex says:

    Very interesting view point Ray! I do not believe in the doom and gloom scenario that everyone is talking about. The market is getting hit and hit bad, but unless you are an investor who looks at track houses there is no reason not to be buying in this market. Bad neighborhoods are the ones that are overvalued, but good is always good and great is always great. Those areas you always buy. I dont know anyone that was that brilliant to predict the date of recovery for half the market so I assume most of us will be sitting on the sidelines still bitching and moaning saying wow I wished I would have bought that house in Bellevue for $650,000 becuae now it is $950,000.

    Question for Ray: What is really different about your model then what Redfin offers. Also, I have used full service brokers for most of my transactions. It always burns me to pay that kind of money for a c+ average guy to put a sign up and sit around on a sunday doing an open house and using my bathroom.

  71. 71
    b says:

    Duplex said,
    I dont know anyone that was that brilliant to predict the date of recovery for half the market so I assume most of us will be sitting on the sidelines still bitching and moaning saying wow I wished I would have bought that house in Bellevue for $650,000 becuae now it is $950,000.

    Only in a bubble market. Using the 100 year average of 3% appreciation per year, its about 12.8 years to get to $950k from $650k. During that same time, the $520k mortgage will have cost you $390k. Its always a good time to buy anything for any price, right?

  72. 72
    Duplex says:

    Well in 1996 i boughta home in West Seattle for $155,000 and sold it 2 1/2 yearas later for $320,000. Since it was my first home with my wife we are always curious about the house. It has sold twice since 2002 $495,000 and again 2005 for $640,000. Its in a great area and I am positive it will not give back but maybe a few points. Again I say great will always be great

  73. 73
    what goes up comes down says:

    Of course Duplex you can NEVER lose in real estate — ever — right? It is nice of you to give an example during the “up” portion of the market.

  74. 74
    notabull says:

    “Its in a great area and I am positive it will not give back but maybe a few points. Again I say great will always be great”

    This is what everyone in every bubble area thought, before they realized it wasn’t true. Yes, it’s true that outer areas will get hit *first*, but the rot sets in everywhere. When Snoqualmie was getting hit a while back, people were saying that Issaquah and Redmond wouldn’t get hit. “It’s the schools!”, they’d exclaim. Check out Issaquah now. Prices are back to early 2006, even late 2005 in my view – I follow that market closely. Perhaps 10-15% down over there.

    West Seattle is a nice area, but it’s just another area caught up in the bubble.

    Duplex, congratulations for only ever buying and selling real estate in a market that goes up. You do realize that you’ve never been *in* a down market, right? What experience can you possibly bring to the table that can help you analyze the current situation?

  75. 75
    Duplex says:

    Well again I say unless you are buying in a track house area you will most likely be fine. I believe you said Issaquah and Redmond are down. I dont think there is anything but tract development up in Klahanie and those areas. Maybe my view pointed is skewed, but i have always stayed away from neighborhoods where there are 100+ homes that look the same. Makes it very hard to sell when each owner is lower to beat out the other guy.I have really never seen that closer in such as Bellevue, Kirkland, Seattle, lower Issaquah and Redmond

    Did everyone on this site buy at the top????

  76. 76
    notabull says:

    “Well again I say unless you are buying in a track house area you will most likely be fine. I believe you said Issaquah and Redmond are down. I dont think there is anything but tract development up in Klahanie and those areas. Maybe my view pointed is skewed, but i have always stayed away from neighborhoods where there are 100+ homes that look the same.”

    I’m not even talking about Issaquah Highlands or Klahanie. I’m talking about “old” Issaquah, Bellevue etc. Houses 1-2 miles from downtown Issaquah are either not selling, or are selling at 2005/2006 prices – about 10-15% off prices earlier this year. This isn’t “fine”, as you state.

    Your opinions of the market are not based on the current reality. I’ve actually lived out there, owned a house out there, and follow the market daily. Do you?

    “Did everyone on this site buy at the top????”

    I’m not even sure where you’re going with this one. You’re new here, right?

  77. 77
    duplex says:

    Yes I am new to this site, but not to the area. I have made many investments both in up and down markets. Honestly I dont know what half of you guys are complaining about. It must be that you bought at the top and are rather upset at yourselves.

    Where is that 500Realty guy, he is the only one that has said anything of interest.

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