Seattle Bubble Glossary

I’ve been working on a glossary to help newcomers (and old-timers) that may be confused by some of the terms, people, or places we frequently refer to here on Seattle Bubble. Once this page is refined somewhat, it will become a permanent link at the top, alongside the forum and the library.

With that in mind, please take a few moments to look through the terms below and give us some feedback. If we left anything important out or got something wrong, please let us know in the comments below. Also, if you have any suggestions on ways to format it to make things easier to find, feel free to share that as well.

Please limit discussion on this thread to comments specifically related to the glossary. If you would like to discuss other topics, use the forum. Thanks!

80/20: A home loan arrangement that was common during the housing boom, in which two loans were taken out by a home buyer: one for 80% of the value of the home, and another for the remaining 20%. While the terms on the 20% loan were generally not very favorable, this arrangement allowed the borrower to pay loan interest rather than PMI, which was not tax deductible.
affordability: A way of looking at home prices relative to incomes and interest rates. Housing is generally said to be “affordable” if the monthly PITI payments do not exceed 30% of one’s gross monthly income.As an aggregate statistic for an area, affordability is calculated by comparing the median income to the median home price. An affordability of 100 or greater indicates that the median home is affordable to a family with the median income. The affordability of every region tends to vary inversely based on the desirability of the locale. For instance, Seattle’s affordability will be lower than Topeka, but higher than San Francisco.
adjustable rate mortgage: A type of home loan in which the interest rate may change or “adjust” after some period of time, usually in the upward direction. ARM rates usually start off at a lower point than fixed-rate loans.
ARM: See adjustable rate mortgage.
Aubrey Cohen: The Seattle P-I real estate reporter. Mr. Cohen’s articles generally tend to be less biased than those penned by Elizabeth Rhodes of the Times.
bailout: Refers to the possibility of the government intervening in the collapse of the housing bubble by providing financial assistance to distressed home buyers and/or financial institutions.
Ballard: A north Seattle neighborhood that received a lot of media attention at the height of Seattle’s real estate boom throughout 2006. On Seattle Bubble, Ballard frequently was referred to in a sarcastic sense as a sort of mystically special place where the laws of real estate do not apply.
See also: Pink Ponies
behind the cycle: The observation that the real estate market in Seattle (and most of the Northwest) tends to lag the rest of the country by about a year. This phenomenon has been discussed at length on Seattle Bubble but no specific cause has been found.
Bill Virgin: An opinion columnist for the Seattle P-I who occasionally addresses the local real estate market, generally agreeing with the sentiments expressed at Seattle Bubble.
Boeing: As a major Seattle-area employer, airline manufacturer Boeing often comes up in discussions about the real estate market. Generally they are used as an example of the Seattle-area’s strong economy, and reason that the real estate market will not weaken.
See also: Microsoft
bubble: In general terms, an economic bubble is when the price of a commodity rises to a price much higher than what would be supported by the underlying fundamentals. For housing, these fundamentals would be things such as incomes, historic price-to-rent ratios, and mortgage payments.In terms of this site, the “bubble” can be seen as having dual meaning, also referring to an imaginary “bubble” of protection that separates the Seattle housing market from the rest of the nation.
Case-Shiller: Karl Case and Robert Shiller have devised a way of tracking home prices by looking only at repeat sales of the same homes. Their index is referred to as the S&P / Case-Shiller Home Price Index, often CSI for short. The index is tracked for twenty cities across the country, of which Seattle is one. More information about the Case-Shiller Home Price Index can be found here.
CSI: See Case-Shiller.
Devona Wells: A writer for the Tacoma News-Tribune that frequently reports on the real estate market. She also maintains a real estate blog about the market in Tacoma.
Distressed Seller’s Index: An arbitrary, non-scientific index invented by Seattle Bubble to track the general direction of the level of urgency in home listings.
DSI: See Distressed Seller’s Index.
Elizabeth Rhodes: The Seattle Times business reporter who writes most of their articles on the real estate market. Her articles generally cast the real estate market in as positive a light as possible, though she has frequently denied being biased by the fact that the clear majority of the Times’ income (and therefore her salary) is derived from real estate advertising (most often home and condo developers).
FB: An abbreviation for F***ed Borrower. Presumably comes from a housing-specific re-application of the term popularized by the dot-com bust website F***ed Company.
FSBO: For Sale By Owner – The process of selling one’s house without the assistance of a paid real estate agent. Also used to refer to the house itself that is for sale by owner.
Glenn Crellin: As the Director of the WCRER, Glenn is frequently quoted in local articles about the housing market in Seattle and Washington State. Usually expresses a positive outlook on the market.
liar loans: Usually refers to a type of home loan called a “no-doc loan” that was common during the real estate boom. “No-doc” refers to the fact that no documentation is required to verify income. The widespread misused of no-doc loans allowed people like Casey Serin to buy homes they clearly could not afford.
Mark Trahant: An opinion columnist for the Seattle P-I who occasionally addresses the local real estate market, generally agreeing with the sentiments expressed at Seattle Bubble.
Matthew Gardner: Seattle-area “land-use economist” who is frequently quoted in local articles relating to the real estate market. Generally has a positive outlook on housing.
Microsoft: As a major Seattle-area employer, software and hardware maker Microsoft often comes up in discussions about the real estate market. Generally they are used as an example of the Seattle-area’s strong economy, and reason that the real estate market will not weaken.
See also: Boeing
Mike Benbow: A writer for the Everett Herald that frequently reports on the real estate market.
MLS: See Multiple Listing Service
MOM (or M2M): Stands for month-over-month, referring to looking at a data point in contrast to the same data for the previous month. Susceptible to seasonal fluctuations.
Moody’s: A private data-crunching company that is frequently quoted in real estate articles by CNN, Forbes, and Fortune. Often provides predictions about the future direction of real estate markets, which may vary wildly from month to month.
Multiple Listing Service: A privately-run fee-based database of real estate listings. Full access to the database is granted only to licensed real estate professionals who pay a regular fee for membership. The public can generally view the basic information about home listings within the MLS through individual brokerage (e.g. – Windermere or John L. Scott) or compilation (e.g. – Ziprealty, Estately) websites.
Northwest Multiple Listing Service: The MLS which covers most of Western Washington State.
NWMLS: See Northwest Multiple Listing Service
Office of Federal Housing Enterprise Oversight: A federal entity that studies housing and releases their own home price index, similar to the CSI. Their stated mission is to “promote housing and a strong national housing finance system.”
OFHEO: See Office of Federal Housing Enterprise Oversight
pink ponies: A running gag / inside joke on Seattle Bubble that refers to the mistaken belief of many Seattle residents that the Seattle area is somehow special, unique, and immune to any of the woes that may effect the rest of the housing markets across the nation. The origin of the joke is a series of comments by an individual posting under the name Chris. The first of such posts was this:

Remember, if there is a downturn in the nation’s economy, it will not affect Seattle. This is because Seattle is special, a magical place where all homeowners ride pretty pink ponies on streets made of crystal, and gumdrops fall from the sky…

More information can be found on the forum here.
See also: Seattle is special

PITI: Principal, Interest, Taxes, and Insurance. Refers to the total payment one generally makes each month on their home loan.
PMI: See Private Mortgage Insurance
priced out forever: Refers to the faulty belief that home price increases will indefinitely outpace wage increases, thus leading individuals to become permanently unable to afford to buy a home. This concept is discussed in depth at the Seattle Bubble sister site Priced Out Forever.
Private Mortgage Insurance: When a home loan is written for more than 80% of the value of the home (i.e. – the down payment was less than 20%), the lender generally requires the borrower to pay private mortgage insurance. The cost of this insurance varies based on a Risk Index calculated for individual cities by a company called The PMI Group, Inc..
Rain City Guide: A Seattle-area blog focused on the local real estate market, written by a cooperative group consisting primarily of people directly employed in the real estate industry (e.g. – real estate agents, mortgage professionals, etc.). As of the most recent statistics available, Rain City Guide is Seattle’s second most-popular real estate blog, after Seattle Bubble.
real estate agent: An individual that sells the service of assisting buyers and/or sellers of homes.
See also: Realtor™.
real estate professional: An individual whose occupation is in some way related to the buying and selling of real estate. Examples include real estate agents, mortgage brokers, real estate lawyers, escrow officers, etc.
Realtor™: Technically, the term Realtor™ is only properly used to describe a real estate agent who is a member of the trade group known as the National Association of Realtors™. However, in common language, much like the words Kleenex™ or Band-Aid™, Realtor™ has come to be used in a more generic sense to refer to anyone acting as a real estate agent.
Redfin: A web-based company that started in Seattle and offers discounted services to home sellers and buyers. Generally looked down upon and derided by traditional real estate professionals, often to the point that they will not even refer to it by name.
repartmenting: The act of a condo project reverting to apartments. Usually referring to a building that was originally apartments, was being converted to condos, then went back to apartments. Also sometimes used to refer to new construction condos switching to apartments.
Seattle is special: A running gag / inside joke on Seattle Bubble that refers to the mistaken belief of many Seattle residents that the Seattle area is somehow special, unique, and immune to any of the woes that may effect the rest of the housing markets across the nation.
See also: Pink Ponies
Steve Tytler: Occasional real estate columnist for the Everett Herald, also the owner of Best Mortgage. Steve is the most bearish regularly-printed real estate professional in the Seattle area, and has frequently predicted that prices will drop up to 20% off the peak, level off for “a few years,” then begin rising again.
Suzanne researched this: A now-famous line uttered in a Century 21 commercial titled “The Debate” that has become the poster-child of the housing bubble. See the commercial on YouTube here. Also be sure to check out this related post.
Urbnlivn: A Seattle-area blog focused on the condo market, specifically in Seattle proper. Urbnlivn proprietor Matt Goyer is presently an employee of Redfin.
Washington Center for Real Estate Research: A group based in Pullman, WA at Washington State University that, as the name implies, researches the Washington State housing market. Portions of their funding for specific studies come from industry associations such as the Washington Realtors™. Generally their outlook on housing is positive.
WCRER: See Washington Center for Real Estate Research
Williams Marketing: A condo marketing company that is frequently quoted by the Seattle P-I in articles about the local housing market.
YOY (or Y2Y): Stands for year-over-year, referring to looking at a data point in contrast to the same data for the same month in the previous year. Factors out any potential seasonal effects that are common in looking at real estate statistics, but is slower to show change than MOM.
Zillow: A free online real estate valuation estimate tool. Also a Seattle-based company.
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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.

65 comments:

  1. 1
    Ray Pepper says:

    It appears you missed 500 Realty. One cannot mention Red Fin without commenting on 500 Realty. Opening our 1st office in Tacoma and 2 additional in Kent and Renton in 2008 I’m sure Devona Wells will shed some insight into us considering she has already written 5 articles on us. We opened on Aug 12, 2007 and offer the best rebate in the nation for helping us find your home. **75%** .

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

  2. 2
    Buceri says:

    Tim;
    You missed inventory and how to read the columns that come up when one clicks on the numbers on the sidebar.
    Thank you

  3. 3

    How about some discussion of absorbtion rates? This seems important to the whole supply/ demand part of the debate.

    Otherwise, quite a well put together glossary. (Very civil I might add.)

  4. 4
    AndySeattle says:

    Tim-
    Great addition to the site and something that just about all of us will value.

    You might add Ninja Loans (No Income, No Job no Assets.)

  5. 5
    AndySeattle says:

    One other addition: MSM (MainStream Media)

    I see that one used rather frequently around these parts.

  6. 6

    This is outstanding! Thanks for putting this together.

    You may want to add more terms for real newbies (now that the story is hitting the MSM, and I second AndySeattle on including that) – things like “upside-down”, “subprime”, and “option ARM”. Some of the more arcane financial terms, like “SIV”, could be useful as well.

    Thanks again – this is just great.

  7. 7

    Thought of one more: “flip”.

  8. 8
    Grape Ape says:

    How about:

    Flop lord: A flipper who cannot sell and is renting out his flip at a loss.

    Also under Elizabeth Rhodes, I think you typed case where you meant cast.

  9. 9
    Faster says:

    PITI has “interest” twice

  10. 10
    Joel says:

    500 Realty: A discount real estate agency whose agents constantly spam the comments trying to get inbound links to their site.

  11. 11
    Joel says:

    Also need (maybe): MEW, HELOC, piggy-back loan, HOA, closing costs, cash back at close, reversion to the mean, comps.

  12. 12
    michael says:

    The inbound link thing isn’t working – 500realty has a Google PR of 3. Redfin has a Google PR of 6.

    The inbound link thing works a lot better if you do two things.

    1. Very the text in the links. I would worry about getting black listed in Google – Read Google’s SEO policy.
    2. Include your keyword inside the link so Google understands how you want your site to be listed.

    A lot of blogging software allows for a nofollow attribute on anchor tags. You might want to implement it before Google sees you linking into a “bad neighborhood”.

  13. 13
    Lake Hills Renter says:

    RA: What Ardell doesn’t give about banks. ;) I kid!

    “RCG” is used here a bit, might want to include that.

  14. 14
    B&W Nikes says:

    When complete this will make a great entry in the Library. I know some of these may seem like no brainiers, but can someone more knowledgeable and clear spoken than myself add some definitions for: Equity; Median Price; Average Price; REFI or Re-Fi; SFH, Condo, & Townhome (as defined locally); GMA; and (one of my favorites) California Equity Locusts?

  15. 15
    EconE says:

    Obviously it’s not just me as Joel pointed out above…but is anybody else getting sick of Ray Pepper and his sidekick ESL Sandhu spamming the threads?

    If I click on their links enough times will it cost them anything?

  16. 16

    Great list, The Tim…but I would clarify the term “liar loan”. IMO if a borrower did a no-doc loan or no income verifed meaning that they did not state any income on their loan application, they did not lie.

    Stated income is the liar loan if the borrower stated income they do not have or that does not pencil out. (Leaving one to ask, why did they have to do a stated income loan?)

    No doc/No income = No Lies.

    Stating income that cannot be proved = Liar Loan

  17. 17
    Lake Hills Renter says:

    I don’t mind any of their posts, but I’m getting a bit tired of the signature advertising their site on every post.

  18. 18
    Tom says:

    I agree with EconE and Joel.. I don’t mind Ray and his co-worker sharing their options on the bubble, but I’m tired of the emphases on his business here, where it isn’t wanted.

  19. 19
    disbelief says:

    Maybe:
    Cheerleader- as in RE Cheerleader
    Doom and Gloom(er) – As a misnomer applied to those who believe a housing correction is desireable / eminent
    and my favorite: REIC ( Real Estate Industrial Complex) which was possibly coined here?

  20. 20
    Wm Swanson says:

    When is that marketing film expert who cant spell Klahanie or Issaquah right Gene Dexter of ReMax INTEGRITY in Issaquah going to indulge us with more morsels of brilliance?? He is just as bad as Pepper and Sandhu.

  21. 21
    Normandy says:

    Great glossary. I would have a special note on top of the home page to direct newcomers to read it first before proceeding.

  22. 22

    I too love this list…But where’s my buddy Price-Schiller?

  23. 23
    AndySeattle says:

    Hey Joel… Forgive the ignorance, but was is ‘MEW’?

    (If ever the was a reason for a glossary!)

  24. 24
    Moe Ronn - Realitor says:

    Well, at least Ray’s business model breaks down the commission model for RE agents. We know, they know, everyone knows they’re over-paid dolts. It’s always a good time to buy!

  25. 25
    Runs With Scissors says:

    FEMA: The inept federal agency you will most likely be dealing with in Puget Sound after the next flood, windstorm, or earthquake, or eventual rise in sea level prior to payoff of a 30 year mortgage ;-)

  26. 26
    sash says:

    I wanted your opinion on the situation I am in: My hardwood floor (in a new home, constructed by large local builder, 6 months old) seems to have some quality issues. The floor boards are either cracked or have been installed defectively. The builder and his hardwood floor contractor came out an identified the number of defective boards, and the total count came upto 50. However I was able to find 100 more boards bringing the total to 150+. When I communicated this to the builder and the contractor, they scheduled an inspection of the hardwood floor with a representative from the manufacturer. The inspection report however is not available to me to view per builder directive. Builder wants to keep the report between them-contractor and propose a solution by mid next week.

    I want to know the following:

    1) Am I eligible to view the report as owners of the home? I.e. do I have a legal right here?

    2) Should I be worried that the builder/contractor is not being transparent?

    3) What would be an acceptable solution? Replacement of entire floor? Or just defective boards? I am worried because what is to say more boards won’t show up defective in time.

    4) What should be my best course of action – hire a lawyer? Get a hardwood floor inspector? Can you share your advice please?

  27. 27
    RG says:

    New term: Dr Pepper

    Obnoxious poster who peppers comments with links and upbeat cheers that now is a great time to buy with bargains abound.

  28. 28
    S-crow says:

    Escrow: describes a neutral third party, similar to that of a referee or gatekeeper, in a real estate transaction in which the collection of transaction documents (purchase & sale agreements) and earnest money deposits are placed and held. Generally, it is the duty of escrow to make sure specific instructions, terms and conditions of a purchase & sale agreement are carried out by the principals of the transaction (buyer & seller & lender) culminating the closing of the transaction.

    Escrow is a highly technical field in which escrow staff are dealing with title issues, contracts and lending institutions. In Washington State, escrow offices typically are staffed with Attorneys or licensed employees/managers such as Limited Practice Officers (LPO’s), a designation given to those who have passed an exam administered by the Washington State Bar Assn.

  29. 29
    Joel says:

    MEW is Mortgage Equity Withdrawal. Alternatively it can mean the cravings and sick feelings you get when your HELOC is completely tapped out and you have no means to live like a $30k millionaire. (I made that one up)

  30. 30
    disbelief says:

    “dead cat bounce”

    “falling knife”

    I was just revisiting HP

  31. 31
    david losh says:

    Thank you for a great glossary. It’s another of the reasons I monitor this blog more seriously than any other Real Estate blogs. For some one not in the Real Estate business you guys, all of you, contribute a lot of solid Real Estate information that most “Professionals” don’t.
    But… Here we go. It is always a great time to buy Real Estate. It had to be said to correct a comment. True professionals in the Real Estate business know how to buy Real Estate. The Dr. Pepper Guy or rodfun offer the consumer nothing but a rebate for a fee they did nothing to earn.
    In my return to Real Estate marketing and sales I agree Real Estate Professionals have done a lot of damage. There is very little credibility left in the Real Estate business.
    However let me assure you that there are a couple of hundred Real Estate agents in the Seattle area who can guide you in the buying process. Some people want to buy, some have to buy. It’s all a part of creating wealth, security, and a freedom to live like you want to.
    Please, a bubble for some, oportunity for others. You have to know what to buy, when to buy, and how to buy.

  32. 32
    george says:

    David Losh…uh…don’t you also have to know when NOT to buy real estate?

  33. 33
    Ray Pepper says:

    “Dr. Pepper and Rod Fun do nothing to offer the consumer.” David Losh that post alone shows how inept you are of what is going on around you. Post a list of ” the couple 100″ Agents in the Seattle area that you back. Heck, give me 10. Let me look them up and see what they bring to the table.

    “Guide” you through the buying process. WAKE UP MY FRIEND Buyers are very saavy and teaming up with 500 Realty or a Red Fin to purchase a home is the start. “You must know what to buy, when to buy, and how to buy.” —500 Realty trains the consumer on that each and every transaction.

    The BUFFET is slowly coming to an end David Losh. Read what happened in Phoenix to Remax. It will take time but the public is becoming very educated. I’m eagerly awaiting on your list and some very specific names. Please advise everyone how EXACTLY these “REAL ESTATE PROFESSIONALS” WILL GUIDE YOU THROUGH THE REAL ESTATE PROCESS AND BRING YOU MORE WEALTH THEN 500 REALTY.

    Ray Pepper
    Broker
    ww.500Realty.net

  34. 34
    Lake Hills Renter says:

    First political mudslinging, now pissing matches. Is it just me, or are the real estate agents bringing the quality of this blog down lately? Ira excluded.

  35. 35
    Patio says:

    Good forum Tim. Lots of good information. Since their is a lot of discontent, I think you should do a topic on discount realty, redfin, ziprealty and/or 500realty. Are they good for Real Estate, economy, jobs, consumers?

  36. 36
    Warren Bubble says:

    I second all posts regarding RE marketing from “Cheerleading” agents.

    I’m happy to try increasing their costs, i.e., clicking on their links ad nauseum.

  37. 37
    Ray Pepper says:

    I specifically asked Tim if my signing off with my name and website address was appropriate. **I’m new to blogging and it probably shows.** I asked Tim if I’m against blogging etiquette and he never responded so I’m assuming it is OK. If YOU keep on clicking on the company link could it possibly be that you are interested? I never click on any links..

    Tim please advise. Or do these “bloggers” just complain and cry to amuse us?

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

  38. 38
    james says:

    Heres a couple of missing ones…
    “Negative Amortization”
    “Ardel”
    “Eastside”
    “Peak Idiot”

  39. 39
    Ubersalad says:

    We’re just trying to figure out what monkey is making the mockery of himself.

    Btw, good luck surviving 2008.

    Redneck Broker: David Losh.

  40. 40
    disbelief says:

    Ray,

    Just read the Tim’s post to this thread. He asks that posters limit their posts to the subject matter of the thread, which is the building of a glossary for the site.
    Even when posts get a little off topic due to lack of things to contribute to the main topic, it should be clear that any type of sales pitches for RE are ill-placed on this blog.
    Ira is a realtor, and is open about this on the forum. He does however understand this basic concept ( that this is a bubble forum-pro or con- and not a RE forum), and does not “spam” this forum – i.e. post promotional material for his own interests that don’t relate to either the thread topic, or the general debate of bubble vs no bubble. This shouldn’t be a hard concept to understand. In any case it should be clear that posts promoting your RE company will have no effect here but to put people off.

  41. 41
    disbelief says:

    I meant to say that Ira is open about that on this site-not just the forum.

  42. 42
    economist says:

    MEW is Mortgage Equity Withdrawal.

    Which is isn’t, of course. You withdraw equity from an asset, be it a house, stock, or whatever, by selling it.

    It’s just increasing your debt load by using your house as security. Your exposure to RE remains unchanged, and the effect on your balance sheet would be the same whether you used the house for security or not.

  43. 43
    David Losh says:

    Dr. Pepper, thanks for the plugs.
    Yes there are times not to buy. We won’t buy again probably until September 2008. Things may change. After all Real Estate is a commodity.

  44. 44
    deejayoh says:

    **I’m new to blogging and it probably shows.**

    actually, you’re just commenting on someone elses blog, and you are treading pretty finely on the spammer line…

  45. 45

    I don’t pitch myself here for a couple of reasons. One is that it would diminish my credibility, and really, real estate agents don’t have much to begin with, and second, the vast majority of people here believe, and I believe also that now is not a good time to buy, that prices here will fall further..So it would be an incredible waste of time for me to try to persuade people otherwise, especially since I’d have to convince myself to.
    Also, I had an idea for a reality TV show. I’m not sure what the premise would be, but the players would be an attorney, a used car salesman, a mortgage originator, a real estate agent, and a politician. Players would be eliminated as soon as they did something less than honest.
    i guess the show could have a very short run.

  46. 46
    AndyMiami says:

    Tim,

    Have not read the comments, but maybe a definition for Washington Mutual…as the example of financial institutions that generated toxic mortgages while acting as FDIC institutions..and will ultimately fail or be bought for pennies on the dollar…next up is Wells Fargo..

  47. 47
    sdfasdf says:

    this market is just getting crazier and crazier.

    Check this out: http://www.flixya.com/photo/173755/housing_market_RIP

  48. 48
    Ray Pepper says:

    “now is NOT a good time to buy, and prices will fall further.”

    I will say it again. Each deal is its own entity. I dont care if its Jan 2008 or Jan 2010. Wait and wait but Always look. Sure prices are coming down. But, nailing a short sale now, foreclosure, or that property that has been sitting 9 months for 250k and getting a deal signed around for 170k is happening. In the next 12 months there will be many more sellers that must sell. In this PNW economy 25%-40% off is one heck of a starting point. Find the GEMS friends and educate yourself!

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

  49. 49
    economist says:

    In the next 12 months there will be many more sellers that must sell.

    But there won’t be many, if any, more people who are able to buy. Which means you’ll be able to get a better deal in a year’s time than now.

    Right?

  50. 50
    david losh says:

    Holy Cow! There are people who need to buy. There are people who are buying bargains. There are a lot of bargains. Lots and Lots of bargains.
    The thing is, why would I buy into a market place that I have to spend money to hold a property when some one else can hold it for me? I’m just saying that if I buy a house today can I rent it for the payment or will I be feeding the negative? Will there be appreciation enough to cover the negative or should I wait for the over all economy to turn around? Is today the bottom of the market?
    I’m in the Real Estate business. There are many people who need to sell in the realty of today’s market place. My wife and I sold our properties over the past three years. What’s interesting to me is that this Tim guy isn’t in the Real Estate business yet saw things the way I did two years ago. What’s more interesting to me is the vast number of Real Estate Professionals who never saw the market change coming.

  51. 51
    Ray Pepper says:

    Economist my contention is that in a years time the deal that you find in March 2008 most likely will not be available in March 2009. But, I do agree if you let 1 go there will surely be another. I’m the KING of letting 1 go because I couldn’t come to an agreement over 2000 or 3000 bucks. Over the years I kicked myself for not pulling the trigger. Remember the Dayton Foreclosure I discussed last week that was signed around at 190k? by myself. Someone else stepped up and paid 193k. I’m out. Am I upset?? NO! Was I willing to pay 194k? NO WAY! The Agent was upset who represented me for he lost his commission. Ah well. He knew from the beginning I would NOT pay any more. There are too many more deals coming down the Pike.

    The difficulty in obtaining loans will make it even better for the saavy investor. .But, you must find the GEM!!

    Currently my targets are Dayton Nv, Silver Springs Nv, Albany Oregon, and Puyallup Wa. Many Many small builders have too much stock on hand and these homes will have to be sold in 2008. TGT prices in Oregon and Nv are 120-140k Puyallup 170k. I tend to buy homes less then 3 years old and immediately Craigs List them out on Rent to Own. When you lease option the homes you get large deposits, tenant does repairs, and you get cashed out in 3 years.

    But, finding the GEM is what takes persistence. There will be ALOT of these GEMS coming.

    Educate Yourself Washington. there is ALOT of $$ to be made now and in the next 3 years.

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

  52. 52
    David McManus says:

    “What’s more interesting to me is the vast number of Real Estate Professionals who never saw the market change coming.”

    What’s even more interesting to me are the “professionals” who are still denying that the market has changed and are still saying “BUY, BUY, BUY! It’s ALWAYS a GREAT time to BUY!”

    “REAL ESTATE NEVER GOES DOWN!”

    -D

  53. 53
    bitterowner says:

    Ray,
    I will ask what many have already asked on this site. After the largest RE bubble in history, prices here in the Seattle area have corrected to arguably 2005 vs 2006 levels (or not even that far yet). That is truly a miniscule correction at this point. What could possibly make you believe that the correction will not be much greater and continue well into 2009?
    It seems more likely that prices will dwindle over a much longer time period for many of the very reasons you have mentioned.
    Good luck with your business model. A change in the RE commission structure was/is definitely needed and is in the cards. We can probably do without the cheerleading and used car sales pitch, though.

  54. 54
    david losh says:

    Double Cow Holy!
    WTF!
    Dayton Nevada!!!! Silver Springs!!!!
    $190K!!!!
    We have a saying in our family that there is a sucker born every minute. Please, rural America may be a bargain, but for who?
    Can we get the Butte Montana video out for the next post? I’ve been working on a deal in Boulder Wyoming for the past week. The Real Estate agent is telling me $6000 per acre, I have data saying closer to $2000. On two hundred and forty acres that seems like a big difference.
    Now we have the State of Nevada booster. $190K for Henderson maybe, I mean maybe.

  55. 55
    bitterowner says:

    Losh, RE professionals could not see the market turn for the same reason they cannot admit the obvious at this point – because they see their livelihood as being at stake.(the same was true with bankers and asset-backed securities). I think there is a misconception that by spewing positively inclined fallacies on blogs such as RCG RE professionals can reverse negative psychology and artificially prop up a falling market, which is obviously a ridiculous notion. Psychology is an important component to asset bubbles but at this point financial reality will overwhelm psychology. The impending real estate bust has been obvious to those who can divorce themselves from self-interest.

  56. 56
    Ray Pepper says:

    Oh my goodness gentleman. Real Estate Boom/Bust. Theres always diamonds in the rough. Its all about timing, and buying when theres blood on the street. For me its about #’s Only #’s. If I buy for 120-150k it must rent for 1000. The rental mkt must support the price. Personally, I tend to buy just commercial but I’m again starting to dabble back in the residential mkt in areas where I know the builders are buried. I never bought a condo for I could never make them cash flow. I bought many single wide mobiles on their own land for 35-45k for they all rent for 800.00. Their cash flow is just too great. To each his own. I know what works for my portfolio. I had a high of 33 properties in 2004. Feb 2007 I sold my last property and my entire portfolio was trimmed to 17 properties. Mostly commercial. Its time to start getting the toes wet again in residential. Don’t be blind to areas outside Washington State. I jump on a plane to see the carnage in Phoenix next week. Mostly for titillation for I’m just travelling with a group of investors who want homes. I never bought in AZ nor will I. It takes alot of time to get to know a market. No one is more conservative then myself.

    **As for tooting my own horn**

    I encourage you to List with who you want and buy with who you want. If you have a close relationship with someone in real estate USE THEM!! They are bleeding as well.

    I’m an investor at heart. Thats all I know. Other then 10 years as an RN. But, nursing was a means for me to buy real estate.

    500 Realty and many after it are changing real estate for the better!. I adore Red Fin and MLS 4 Owners. Just be smart and always do DD.

    Go Hawks. Whew what a 4th Qtr…. Anyone going to Green Bay? Tickets? I want to skip Phoenix and go to Green Bay but I doubt I can talk the group into searching for RE in GB.

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

  57. 57

    I don’t disagree with Ray that there are bargains out there. What I am saying is that I think the vast majority of homes in the Seattle area are still overpriced and will still see further price declines.
    And Bitterowner is right about Real Estate professionals. But I also think that a lot of them actually believe what they’re spewing. They’re good salesmen and convince themselves of the nonsense they’re spreading.
    I’ve never been able to do that. If I really believe something, I’m very persuasive. Otherwise, not so much.
    That said, some people here believe that if you bought a house now it would be the dumbest thing you could ever do and that you wouldn’t see any equity for 10 years or more. I don’t believe that. I think most people would be wise to hold off buying for at least 6 months to 2 years unless they found a screaming deal.

  58. 58
    Matthew says:

    Are there diamonds in the rough out there? Possibly. Is that chance that the “diamond” will be worth much less in the immediate future? Absolutely.

  59. 59
    Matthew says:

    BTW Ray,

    Still don’t agree with immediate stagflation as a transition to deflation? How’s that 100 dollar a barrel oil treating you? How’s record high wheat and corn prices treating you along with a record low dollar?

    Open your eyes dude. This isn’t your traditional economic slowdown at the end of a traditional cycle. We are on the precipice of disaster.

  60. 60
    Ray Pepper says:

    Yes, Gas will hit 4.00-5.00 a gallon. Were already in a recession…”Precipice of disaster.” Good Lord! Is their a plague breaking out? Terrorism? Earthquake? …..come on Matt. PNW my friend. PORT, MSFT, BOEING…..50%-70% declines in home prices are you calling for ??…Go try and Peddle your high wheat prices somewhere else. Many Many jobs up here. Sure were coming down but by all means this is no “Precipice of Disaster.” Find your GEMS in the coming years. There will be many!

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

  61. 61
    Matthew says:

    Yes there is a plague, its called great depression 2.0, coming to a neighborhood near you!

  62. 62
    Ben says:

    We are nowhere near 2005 price levels yet. At least, not in terms of what people are trying to get for what they bought in 2005.

    Case in point:

    http://www.cbbain.com/PropertyDetail.aspx?GroupID=32574346&ListingID=30685099

    This was selling for about 600k in 2005 (when it was new).

    I am interested to see if it sells for anywhere near the current asking price of $874k. Even selling it for $700k right now would be better than 5% appreciation per year, if I have my numbers right.

  63. 63
    economist says:

    Holy Cow! There are people who need to buy.

    No Dave, nobody needs to buy. Ever.

    But somebody always needs to sell.

  64. 64
  65. 65
    Tom says:

    How about MOS? I saw it on Tim’s Charts, and can’t quite guess at the meaning..

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