NWMLS: Seattle off 1.5% YoY, King County off 1.1%

Quick post, NWMLS numbers have been released for December – showing that both Seattle and King County SFH have gone negative on a year-over-year basis.

From Aubry Cohen at the PI

The median selling price in December was $455,975 in Seattle and $435,000 in King County, down 1.5 percent and 1.1 percent, respectively, from December 2006, according to the Northwest Multiple Listing Service. The city price was down 9 percent from a high of $501,000 in August, while the county price was off 9.6 percent from a peak of $481,000 in July 2007

Edit:
Here are a couple other tidbits. First number is Seattle, second is King County
– Pending sales off 23% and 34%
– Closed sales off 14% and 28%
– Inventory up a whopping 70% and 61%, respectively

It’s hard to put a positive spin on a month as dismal as this one, but based on the articles posted so far – the press release appears to try with a few “Yun-esque” Realtor quotes.

In a news release accompanying the numbers, area brokers said flooding and above-normal precipitation contributed to the typical seasonal slowdown, but expressed optimism about the market.

“Traffic at open houses between Christmas and New Year’s was the heaviest we’ve seen in a long time,” said Dick Beeson, a listing-service director and broker/owner of Windermere/Commencement Associates, in Tacoma. “I believe the bottom has arrived in the Puget Sound marketplace and from here on prices will stay level or advance slightly in 2008.”

J. Lennox Scott, chairman and chief executive of John L. Scott Real Estate, said several factors point to a market turnaround.

“Interest rates are down, sellers have adjusted their prices, apartments are full, job growth is strong and there is a pent-up demand of buyers coming into the market,” he said.

The full text of the NWMLS press release is available over at Seattle Housing Buzz.

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135 comments:

  1. 1
    Denny Retrograde says:

    Reality, please quit intruding. Pink ponies are so easily spooked.

  2. 2
    jesse says:

    Congratulations, Seattle! Join the party!

  3. 3
    AndyMiami says:

    Two highly intelligent realtors were quoted as follows..

    “Traffic at open houses between Christmas and New Year’s was the heaviest we’ve seen in a long time,” said Dick Beeson, a listing-service director and broker/owner of Windermere/Commencement Associates, in Tacoma. “I believe the bottom has arrived in the Puget Sound marketplace and from here on prices will stay level or advance slightly in 2008.”

    J. Lennox Scott, chairman and chief executive of John L. Scott Real Estate, said several factors point to a market turnaround.

    “Interest rates are down, sellers have adjusted their prices, apartments are full, job growth is strong and there is a pent-up demand of buyers coming into the market,” he said.

    Obviously, these fellows are in total denial and have NO IDEA just how bad the change in credit will prevent many from buying homes.

    Wait until next week when the major banks announce their Q4 results and Q1 guidance, and much higher than expected write-offs on their mortgages. And, you will see them express caution on credit card debt and auto loans..should be fun…

  4. 4
    brettro says:

    NOBODY PANIC!
    Windermere says this is the bottom. WHEW!

  5. 5
    Jeff says:

    bottom of what?

  6. 6
    WestSideBilly says:

    Bottom of their savings accounts since they haven’t had a sale in 3 months.

  7. 7
    Denny Retrograde says:

    As usual, the Times’ Rhodester takes the cake on this story so far. Her lead sentence:

    “Strong condominium price growth helped buoy overall housing appreciation last month…”

    Her Windermere broker “expert” is quoted too:

    “What we now have is what I like to call a normal market.”

    I’ll bet he does like to call the market normal – it sets his agents to giggling every time he does.

  8. 8
    Rebecca says:

    I don’t buy the apartments are full story. My building 3bd2ba has 3 vacancies in Sammamish/Issaquah. The management is even trying rent incentives to rent units, there are vacancies in all of thier 15+ buildings in the complex. It still doesn’t make sense to buy a house with a $3-4k mortgage when you can rent the same house for $1700-1900/mo.

  9. 9
    deeplennon says:

    Here are the breakout links.

    Overall RecapKC BreakoutsSnoCo Breakouts

    If those links don’t work then access the reports from here.

  10. 10
    condo-owner says:

    Are you wishing for prices to collaspe so you could buy a home? Then once you are an owner are you still going to wish prices to fall? Or are you going to sit on the sidelines with your money in CD’s at 3% and throwing the rest of your money into rent?

  11. 11
    patient says:

    10% decline in 5 months. I guess the Seattle realtors delusional worst case senario that prices will stay flat for a while before continuing to appreciate is proven to be just that, delusional.

  12. 12
    Corney says:

    San francisco
    Trend 12/31/2007 1 month 3 month 6 month 12month
    Median Price $529,000 -5.5% -11.5% -11.8% -14.0%
    Inventory 15,375 -14.0% -20.3% -10.3% +35.5% Seattle is supposed to follow the upper city trend.
    http://www.housingtracker.net/askingprices/California/SanFrancisco-Oakland-Fremont/

  13. 13
    TheMightyQuinn says:

    Last night I caught the tail end of a local news report about foreclosures and refinancing and they told us that Seattle IS different because house prices are STILL appreciating. Anybody else see it?

  14. 14

    FORBES 1/7/08 MAGAZINE HAS AN ARTICLE THAT HAD ME ROLLING ON THE GROUND IN LAUGHTER

    Its called Outfront Workout, and if the title seems ambiguous the real estate point it tried to make was even more obscure. It shows a cartoon of two divers bottom fishing the real estate market for defaulted homes. It exclaims that 15-20% returns are made by buying the properties for 50 cents on the dollar, then letting the old owner live there on reduced payment terms. Seeeeee…..you bubble brains living within your means are missing the bailout bus……lol

    Did I believe the article? Hades no, its like the financial magazines are totally desparate to make lemonaid from lemons….

  15. 15
    Scotsman says:

    The bottom is in! LOL!

    We haven’t even begun to sink, let alone hit bottom. I truly believe Seattle’s real estate roller coaster is just coming over the peak, half the cars sitting on top, and half hitting the downward slope. By March/April the whole mess will have accelerated, and even the experts will be holding on tight..

  16. 16
    TJ_98370 says:

    Last night I caught the tail end of a local news report about foreclosures and refinancing and they told us that Seattle IS different because house prices are STILL appreciating. Anybody else see it?

    Mr. Quinn – I did not see it last nite, but as of a few days ago I can personally confirm that the local TV news media is still saying that Seattle area real estate is still appreciating. Amazing!

  17. 17
    bob says:

    Interesting – i am waiting for tipover point for condos in Belltown. Does any one have any information?

    Not that i will be buying in the next 2 years …

  18. 18
    nitsuj says:

    I would think the above-normal precipitation would have harmed the traffic to the open houses, but apparently not….

    Does ANYBODY really take real estate agents seriously anymore?? Pent up demand? O RLY?

  19. 19
    Denny Retrograde says:

    Condos downtown YOY (area 701 from the King County breakouts):
    listings up 128.86%
    pending sales up 21.05%
    closed sales down 12.12.%
    median $ up 21.25%

  20. 20
    deeplennon says:

    “The gunshot patient is bleeding even faster now, I think he will get better soon.”

  21. 21
    declinest says:

    “I believe the bottom has arrived in the Puget Sound marketplace and from here on prices will stay level or advance slightly in 2008.”

    J. Lennox Scott, chairman and chief executive of John L. Scott Real Estate, said several factors point to a market turnaround.

    “Interest rates are down, sellers have adjusted their prices, apartments are full, job growth is strong and there is a pent-up demand of buyers coming into the market,” he said.

    AND

    “We’ve been anticipating a price correction and now it’s here. The price drop has stopped the bleeding for housing sales. We think the housing market has now hit bottom.”

    http://davidlereahwatch.blogspot.com/2006/09/lereah-housing-market-has-now-hit.html

    “The boom should continue as long as the economy and the interest rates provide a favorable backdrop. Unless interest rates head toward double-digits, which I don?t foresee over the next five years, you will have that economic comfort level.”

    -David Lereah

    http://rismedia.com/wp/2005-03-21/david-lereah-nar-chief-economist-expands-on-his-new-book/

  22. 22
    VanCon says:

    You guys are fortunate that your market has bottomed out and now you can look forward to everlasting price increase like us up in Vancouver BC. The average house price here is 73% of the average PRE-TAX income. Not sure exactly how that works, but I hear real estate prices NEVER go down, so thats comforting.

    http://vancouvercondo.info

  23. 23
    patient says:

    It took about 2 years of YoY inventory increase and sales decline before YoY prices went negative. It will be interresting to see if the same delay applies on the deflation of the bubble. I.e if there will be 2 years of YoY inventory decrease and sales increase before we return to appreciation. I guess we have to wait a while though since it looks like we are still quite a way from a YoY inventory decrease.

  24. 24
    Moe Ronn - Realitor says:

    I wouldn’t put too much stock in those downtown condo figures. Much like the median price spike we saw this summer, those numbers will come way down also. I believe the spike is due to a number of people scrambling in a panic to buy whatever the could get a mortage on before prices went even higher and/or credit dried up. But, that’s the psychology that created the bubble in the first place. I’m sorry, but a 700 sq. ft. box is not worth 1/2 Million dollars. And if I made enough to buy one at that price, I’d be pretty pissed that I made so much money yet still live in a friggin’ box. In 4 years I’ll buy a unit now prices at $400K+ for under $250K. Think it can’t happen here? Hmm, I wonder what the chearleaders were saying about our RE market 6, 9 & 12 months ago. Funny how their tunes have changed, but mine haven’t. I’ve believe this would happen for years, and it’s playing out right now schedule.

  25. 25
    David McManus says:

    I second what nitsuj said:

    “Does ANYBODY really take real estate agents seriously anymore??”

    The spin they consistently put on the numbers is hilarious. How does the old saying go? Lies, damn lies, and statistics.

    Is it valid to say that there is a possibility that November 2007 would have been a BAD time to buy for some people? Can just one realtor give me that much? That it’s not ALWAYS a good time to buy? Tell that to the poor schmuck who put no money down and is now officially upside down in his house. I understand that there’s probably not much of that going on anymore, but then again WM is still in business, so who knows?

    But hey, real estate ALWAYS goes up. What do I know?

  26. 26
    rose-colored-coolaid says:

    In related news, consumer spending during the holiday season was disappointing in 2007, but retailers were enthused by a record number of window shoppers.

    said Tom Thompson – a local cashier, “I think we’ve really hit the bottom on this global recession thing.” He later elaborated, “No I won’t give you a quarter!” to one (of many) window shopper wearing a soiled jacket with an unkempt appearance holding a sign ‘Unemployed Veteran’ sign.

  27. 27
    B&W Nikes says:

    With the our late arrival to ride the Bubbleator, new adjustments are just around the corner waiting for us in the World of Tomorrow.

  28. 28
    John says:

    Bottoming? Funny! By the time this is over, even the pessimists will be stunned by the carnage.

  29. 29
    Markor says:

    Yep, it’ll bottom at 78.4% off on March 18, 2010. Mark your calendar.

  30. 30
    david losh says:

    OK, I’ll say it. There may be times when there are not enough really desperate sellers out there to warrant a really low offer being made.

  31. 31
    Nic says:

    “flooding and above-normal precipitation contributed to the typical seasonal slowdown”

    Yes, that windstorm last December where thousands of Seattle households had no power for a week or more, really made for a booming housing market. (end sarcasm)

    If you are going to use the weather argument if anything, you’d expect there was a boost this year from that.

  32. 32
    Jonny says:

    “Does ANYBODY really take real estate agents seriously anymore?? Pent up demand? O RLY?”

    Yes, they are correct. If by that they mean “pent up” in a rental with no intention of buying for years.

  33. 33
    Jonny says:

    “Markor your calendar.”

    I would never do that to a poor, defenseless calendar!

  34. 34
    Ray Pepper says:

    As simple as I can say it. **Prices are coming down and rents are going up. 40%-50% ???? Wake up not here in the PNW. ” Take your time, Find your GEM, and make your offer. If you don’t get it, don’t worry there will surely be another deal especially in the next few years………BUT will you be able to get a loan to buy it or will you need to sell a property 1st. That is what you must ask yourself!

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

  35. 35
    Moe Ronn - Realitor says:

    Ray, you are a Goon! Rents aren’t paid through exotic financing products. If rents are going up 40 -50%, then it will lag WAGES going up a similar amount! Perhaps you could take a 100 level macro economics course at your local community college.

  36. 36
    Buceri says:

    Moe Ronn – good comments up there.

    Like Colbert says: “Facts are liberal!!; you have to go with you gut!!!”

    Unemployment is going up, and as this morning, there is talk of another tax delay (or “tax cuts” like politicians call them). I feel sorry for my two kids.

  37. 37
    what goes up comes down says:

    Condo-owner I feel for you

    —-
    condo-owner said,

    on January 7th, 2008 at 1:20 pm

    Are you wishing for prices to collaspe so you could buy a home? Then once you are an owner are you still going to wish prices to fall? Or are you going to sit on the sidelines with your money in CD’s at 3% and throwing the rest of your money into rent?

    —-

    You must have bought recently because your pain shows in your anger. Why would some one just get 3% on a CD and pay rent when they could buy now and lose 20% in the next few years. It just doesn’t seem to make sense does it? :-)

  38. 38
    condo-owner says:

    That’s for your reply. I just started reading this blog and I am trying to understand the logic of many of the writers. Yes, I does seem the realtors are cheerleaders but some of the writers on this site seem to wish prices to fall – they can’t wait for a 20% decline. Why? This makes you the opposite school of thought from realtors. So, is the answer somewhere in between? And most of you are just wrong as the realtors but in the other direction? It just seems some of you are cheerleading for a failing market and that doesn’t make sense whether you rent or own.

    what goes up comes down said,

    on January 8th, 2008 at 6:31 am

    Condo-owner I feel for you

    —-
    condo-owner said,

    on January 7th, 2008 at 1:20 pm

    Are you wishing for prices to collaspe so you could buy a home? Then once you are an owner are you still going to wish prices to fall? Or are you going to sit on the sidelines with your money in CD’s at 3% and throwing the rest of your money into rent?

    —-

    You must have bought recently because your pain shows in your anger. Why would some one just get 3% on a CD and pay rent when they could buy now and lose 20% in the next few years. It just doesn’t seem to make sense does it?

  39. 39
    Ray Pepper says:

    Moe Ronn name calling? Are you in kindergarten? Do you actually own anything? Do you understand any basiscs to real estate. I made it simple for the novice to understand. “Prices are coming down and rents are going up.” Don’t think so ? Exotic financing products. Do you even know about COSI Loans. Do you have any sense on how to cash flow a property? Owner/Lease options? There will be many opportunities in the next few years to buy and cash flow investment properties. I’m sorry you maybe losing some of yours but maybe you should have found me sooner!

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

  40. 40
    johnnybigspenda says:

    everyone here (who are mostly renters) always says that “home prices are linked to some multiple of rent… at a certain price level, no one would buy and everyone would rent”.

    I thought about that and has anyone ever considered that it might be the opposite case? IE. “Rent is some multiple of home prices?” Seems to me that at some point, all buildings are bought/owned by someone. Landlords don’t rent their units out of the goodness of their heart… they do it to make money.

    So depending on their cost basis, landlords have to charge an amount of rent that covers all of their costs and then a little profit as well.

    That cost basis has gone WAY up across the board for any landlords who bought in the last few years. On top of that, landlords are business people. They realize that rent is just a series of cashflows. MANY of the buildings that were owned by landlords for the past 20 years (with low cost basises) were valued FAR above where the landlord originally purchased them. When you look at the business case for selling the building vs. continuing to rent it out, many chose to sell it (to condo conversions ect ). (this is also due to the fact that typical landlords are baby boomers who are about to retire… why not cash out during the RE boom?)

    That said, there are several reasons why rent is tied to the actual cost basis of the buildings (as well as the property taxes that the landlords are being assessed).

    When you look at the housing market, renters make up maybe 10% of the potential homebuyer demand out there… they are typically first time home buyers, looking for an entry level house.

    I don’t see how this small demographic thinks that the rent they pay sets the market price for the other 90%+ of the housing market. Contrary to popular belief around here, renting is not a direct substitute to buying for most homeowners who have owned for 10 plus years. The mentality just isn’t there… almost nobody (except for the enlightened bubblehead renters.. seriously, can we poll the audience to see what % of people on this blog USED to own a home that are now renting??) have or would actually move out of their house that they own and into an apartment / rental house unless they lost their job or got foreclosed on.

    Can someone run the regression analyisis between rent and prices with the hypothesis that “rent is some multiple of home prices”?

  41. 41
    Jonny says:

    “Can someone run the regression analyisis between rent and prices with the hypothesis that “rent is some multiple of home prices”?”

    Well, we don’t need to do fancy math to know that rent is not some fixed multiple of home prices. Currently, it is very out of wack with the rest of history. That means the relationship is not linear.

  42. 42
    david losh says:

    That was an eloquent analysis of land lords that is so true. I have clients, myself included, who sold properties in the land rush of 2005, 2006. It was too much money to resist. Even paying capital gains of 15% it was a steal of a deal.
    A lot of cheap rent properties are gone forever.

  43. 43
    WestSideBilly says:

    It just seems some of you are cheerleading for a failing market and that doesn’t make sense whether you rent or own.

    I don’t consider a falling market to be a failing market, and a falling market makes a lot of sense after 4 years of huge increases. Seattle housing is grossly overpriced. Using traditional lending standards (and sensible personal finances), the majority of families in the Seattle area can’t afford even a basic starter home or 1BR condo. The realtors cheerleading for ever-increasing prices do so because it benefits them financially; 3% or even 1% on a million dollar home is a nice chunk of change. Those of us waiting for the decline do so because it benefits every person who wants to buy a property. Yes, it hurts the people who were foolish and bought a massively overpriced property with a bad loan, but the good in prices declining far outweighs the bad.

  44. 44
    WestSideBilly says:

    I thought about that and has anyone ever considered that it might be the opposite case? IE. “Rent is some multiple of home prices?” Seems to me that at some point, all buildings are bought/owned by someone. Landlords don’t rent their units out of the goodness of their heart… they do it to make money.

    What does it matter if you say house prices historically are 120 times the monthly rent vs rents are historically 8.3% of the home price? They’re still correlated. You seem to be arguing that home prices should drive rents, but that isn’t the case – never has been, never will be. Rents track what people can afford to pay. Charge too much, people move out.

    Any landlord who bought property in the last two years is going to lose money on it. That $400k 1BR condo is comparable to other rentals that are going for $1000/month; you can’t charge significantly more to cover your $2800/month costs. If they had bought that condo for $120k, they’d be making about $100/month on it. This is the core argument for Seattle being overpriced – you can’t make money on a rental property at these prices.

    Most career landlords are fairly bright people. They were selling off their overvalued assets the last couple of years because the sale price vastly exceeded the rent. If they had doubled the rent because the value of the property doubled, they would have lost their tenants; instead they converted their apartments to condos, and sold their condos and houses off.

  45. 45
    Chris says:

    First, to Ray Pepper at 500 Realty.net, I’d really like to see the cash flow opportunities you are referring to. I am not being sarcastic. Post some analysis with links to the listings and I will happily review them.

    Second, I actually agree with Ray Pepper that over the next few years, we will be entering a period of opportunity. The bust will be just as irrational as the boom. The same people who paid foolish prices on the upside, because they had no rational model for valuing the investment, will become irrationally fearful on the downside. Financing constraints will further constrict purchasing. Ultimately, we will enter a period where a rational investor can be ‘greedy when others are fearful.’ But I haven’t seen any evidence that we are close to that point yet. Mr Pepper, feel free to prove me wrong, but please do so with some specific examples.

    Finally, a personal story. In the fall of 2006, I was worn down by the bubble hype and started thinking ‘prices would never fall in Seattle.’ I looked around extensively, made a big spreadsheet, but couldn’t make the numbers justify a purchase. My spreadsheet showed that if prices merely flattened, or declined by 1 or 2%, it was much more advantageous to rent. My accountant told me prices would never fall in Seattle, that my flat price scenario was a pipe dream. And here we are, one year later, with a 1%+ YOY decline.

    Of course, at the time I made the calculations, the lending craziness wasn’t really public knowledge. Now that I understand what was going on with the loans, I am confident there are much bigger declines to come.

  46. 46
    brettro says:

    @condo-owner:
    I am not ashamed to say that I am wishing for prices to fall. There is absolutely nothing wrong with the desire to own (well, lease from the bank for 30years) my own home. REALTORS (R), other owners, and the media try to paint people like me as ‘doom-and-gloom’ers who would love nothing more than the entire american economy to collapse. Housing seems to be alone in this phenomenon. If the price fell on other goods like cars, tv’s, clothing, and food, people would be elated.

  47. 47
    Markor says:

    What about renter’s insurance? If you rent an apartment in a structure worth $500K (just the building, not the land) and accidentally burn it down, don’t you owe $500K? If so, you need $500K of insurance, if you don’t like the prospect of bankruptcy. Have y’all factored that in to your rent vs. buy equation? Can this make renting a house preferable to renting an apartment, since an apartment building can be worth more than a house?

  48. 48
    Markor says:

    Come to think of it you’d probably want a couple $million in insurance for an apartment building, since all the other tenants are going to sue you if you accidentally burn the place down.

  49. 49
    Chris says:

    And in response to johnnybigspenda:

    I don’t fully follow your reasoning, but I think there is an important idea in your post: In general, purchasing should be cheaper than renting.

    Why? Because landlords have no incentive to purchase (or build) unless then can rent out the property for more than they paid (their total carrying costs). In addition, purchasing (until recently) requires greater financial planning/stability than renting, which has historically limited the supply of buyers.

    Right now, renting is much cheaper than purchasing. That means that a typical potential landlord, with cash to invest, will choose to put their money elsewhere. Only when renting becomes more expensive than buying will savvy investors come in and prop up prices.

    In the meantime, the people who will purchase are:

    A. Those that don’t understand how to make the rent vs. buy trade-off rationally. They just assume buying is better at any price.

    B. Those who mistakenly believe prices will continue to appreciate, and factor that appreciation into their rent vs buy calculation. These folks, like (A), don’t understand that there is no fundamental support for current valuations. That is, a rational investor wouldn’t invest at today’s prices.

    There are a lot of people in these two categories, but I don’t think there will be nearly enough to absorb the inventory. In addition, as lending tightens, the supply of buyers will skew strongly to the saver/investor, who is more likely to make a rational calculation and hold out for a rational price.

  50. 50
    Markor says:

    OK I see that “renter’s insurance typically will only cover the contents of your apartment”, but I don’t get it: If you damage your rental, you owe. Then if you burn it down, you owe for the whole place, right? How do renters have no risk if they don’t carry insurance to cover the whole structure?

  51. 51
    Plymster says:

    johnnybigspenda – This has been addressed here ad nauseum, so I’ll chime in. Rents cannot increase beyond the renters ability to pay; cost basis can increase beyond the ability of the landlord to provide. Landlords can either rent at a level that accomodates their renters, or they can rent to no one. If you recall, vacancy rates climbed precipitously during the last recession, and Seattle saw a mass exodus. This will happen again.

    As proof I offer California, Florida, Las Vegas, Phoenix, Boston, Washington, DC. Rents have not accellerated in these markets despite housing prices becoming grossly out of whack. Instead, housing prices are dropping (and this is even before the recession is in full swing).

    Keep in mind also, that most renters tend to be younger, and much more mobile. It’s nothing for someone to leave Seattle for a job in San Diego once the cost of living is cheaper, or better yet, to Texas or North Carolina where wages are perhaps 20% lower, but the cost of living is 50% lower.

    One final point: Not enough is made of the credit crisis. You’re seeing defaults rise across the board – credit cards, auto loans, to say nothing of mortgages, HELOCs, and MEWs. A Landlord will not rent out to someone with crap credit unless they are looking for a problem tenant (and far more in losses than a couple of months of mortgage payments). As the credit crisis accellerates, landlords are more likely to drop their rental rates for a solid tenant who can actually make rent, rather than overcharge someone who won’t pay and may strip the house of all sellable materials.

  52. 52
    Ray Pepper says:

    CFC getting clocked today! 5.00 on the horizon….Chris I will address your questions as soon as I get a chance. (gotta go slide into work!)

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

  53. 53
    b says:

    Markor,
    Coverage that you are talking about (which is beyond the scope of general renters insurance, which is about $10/month) is purchased by the property itself and therefore built into your rent. Unless you get free homeowners insurance with your mortgage payment, it is not something significant to factor into the equation.

  54. 54
    rose-colored-coolaid says:

    This is for anyone out there who doesn’t understand why lower prices are beneficial.

    Lower commodity prices are ALWAYS a good thing, so long as we don’t mind having/using more of said commodity. I’m sure the same people who want housing to go up forever also want oil below $20 a barrel. Or maybe you would like to see 42″ flat panel TVs selling for $300. You jerks! Don’t you realize the pain you are wishing on TV manufacturers and Saudi princes?

    And you wish prices of these commodities to fall despite the fact you probably already own a TV and probably already have some gas in your tank. Hypocrite!

    Imagine a world where a median house costs $15,000. You might not even need a mortgage. You would have large amounts of excess money that you don’t have today, which you could spend on food, travel, electronics, entertainment, or even ridiculous hobbies. Everyone would benefit from a world like that except for realtors, mortgage lenders, and banks.

    So I’m sorry if I pine for a better world while many others wish for a worst world where 80% of incomes are paid to bankers via interest.

  55. 55
    b says:

    condo-owner,

    The only people who benefit from outrageously overpriced housing are those who are trying to sell right now. For everyone else (owners, buyers, people moving up, etc) it is a losing proposition.

  56. 56
    b says:

    johnnybigspenda said,
    So depending on their cost basis, landlords have to charge an amount of rent that covers all of their costs and then a little profit as well.

    If landlords were able to charge whatever they want and always get it then this would be true. However, since rentals are a highly competitive market that is based only on what people are able to pay, it does not work as such. Those new landlords who purchased properties for too much money will either bleed the losses, go bankrupt or both. Just because you WANT to cover your expenses and make a profit does not mean you will be able to. You cannot finance rent, so it is a much more difficult to squeeze every dime out of the customer.

  57. 57
    Plymster says:

    So I’m sorry if I pine for a better world while many others wish for a worst world where 80% of incomes are paid to bankers via interest.

    Damnit, RCC! Bankers are people too, you heartless bastard. ;-)

  58. 58
    Barb says:

    To Markor,
    Renters Insurance covers your belongings (clothes, furniture, computers). It does not cover the value of the property you live in. That is insurance that your landlord should have.

  59. 59
    Markor says:

    Coverage that you are talking about (which is beyond the scope of general renters insurance, which is about $10/month) is purchased by the property itself and therefore built into your rent.

    OK, thanks! I assume a renter is on the hook for the amount of the security deposit at a maximum, even if they accidently burn the place down.

  60. 60
    DrShort says:

    “renter’s insurance typically will only cover the contents of your apartment”

    Renter’s insurance covers liability also. Usually 100K – 500K

  61. 61
    Markor says:

    Imagine a world where a median house costs $15,000. You might not even need a mortgage. You would have large amounts of excess money that you don’t have today, which you could spend on food, travel, electronics, entertainment, or even ridiculous hobbies.

    Except for that excess money would result in greater demand that bids up the price of those other things. Houses won’t cost $15K until milk costs ten cents or so a gallon.

  62. 62
    betamax says:

    RCC: “So I’m sorry if I pine for a better world while many others wish for a worst world where 80% of incomes are paid to bankers via interest.”

    Well put; that is precisely where most of the bubble money is (was) going.

    However, flippers, realtors and mortgage brokers — the bottom feeders of the credit bubble — were also raking in amounts of cash far greater than justified by their education/intellect/abilities and so they naturally want the pyramid scheme to continue. Fortunately for the rest of us, it won’t.

  63. 63
    betamax says:

    Ray Pepper — hope you saved some money over the boom years; you’re going to need it. Seriously.

  64. 64

    condo owner,
    I’m one of those “in between” people as far as predictions, and I see the benefit of falling prices, and I’m a real estate agent. I doubt we’ll see a 40-50% reduction in prices, but I also don’t think we’ve hit bottom, and we’ll likely see another 10% decline in the median price of a local house before prices stabilize.
    Right now, not that many people around here can afford a house. They’re simply beyond the grasp of a lot of folks who, a few years ago would have been able to afford them, based on their income.
    I’ve got nothing against landlords (having been one in the past) but wouldn’t it be in the best interests of society in general if more people could afford their own homes?

  65. 65
    patient says:

    condo-owner said:
    but some of the writers on this site seem to wish prices to fall – they can’t wait for a 20% decline. Why?

    Since high home prices is detremental for the US economy. It pushes US salaries up which causes high inflation and lowers the competitevness of US companies and US workers. It will lead to expanded outsourcing. The whole thing will cause a spiral of negative developments. The higher cost of living connected to higher home prices is like a huge tax increase on current and future buyers leading to lower consumption power, leading further job losses, etc, etc.

    Here is an example to think of. A current owner bought a $600k home at the market peak for $600k with a 30y fixed 0 down loan. The monthly mortage payment is $4500. For 30y that makes a total of ~$1.6m. If this homes price would drop to $300k and the owner sold it with $300k loss and bought it back his monthly cost would be about $2300. For 30y it would be a total of ~$800k. So even if he looses $300k by the price decline he will endup with $800k more than if prices keeps increasing. So, low prices is good for most people and as the example above shows likely even for the ones that bought on the top.

  66. 66
    Ken Mott says:

    Re-officing in the news.

    http://seattletimes.nwsource.com/html/businesstechnology/2004112979_smithtower08.html

    Smith Tower only to convert top 12 floors to condos, instead of whole building.

    There no housing bubble people, you’re all so crazy, hahahaha.

  67. 67
    Matthew says:

    CFC will go bankrupt or be bought out. They are in a insolvent death spiral.

  68. 68
    nitsuj says:

    “So I’m sorry if I pine for a better world while many others wish for a worst world where 80% of incomes are paid to bankers via interest.”

    Wait….so my forced savings plan is a farce?

  69. 69
    Angie says:

    First off, thanks to DJO for posting this info. I wonder if it’d be possible for The Keeper Of The Data (DJO? Tim?) to post an update of the inventory and sales graph sometime soon. The last one I could find was put up in October, ending with September 07 NWMLS data. Now that the listing numbers seem to have come down far from the >11K max, I’d be curious to see how that spike looks in context. Thanks.

    Next, I think the discussion of rents is overlooking a critical issue. Comments like this

    If landlords were able to charge whatever they want and always get it then this would be true. However, since rentals are a highly competitive market that is based only on what people are able to pay, it does not work as such

    overlook the fact that when unit rents get too high for one income to support, people will double, triple, quadruple up to make their personal share of housing costs more affordable. Certainly this is true for white-collar professionals in NYC and San Francisco. It’s not as big a phenomenon in the Seattle area among middle-income people but you bet that’s how lower-income people still can afford to live here.

    It’s inevitable that the recent runup in housing prices are going to affect the rental market eventually. Also, even if home sales prices slump 30% from the record high, housing in general in this area is still going to be expensive—sales and rentals. I think that as commute times and prices continue to rise, more people will compromise on personal space to live in more convenient locations.

  70. 70
    B&W Nikes says:

    Angie – I think you have to look at the differences in type of housing, particularly the urban housing stock, between Sea, SF, and NYC. Due to our cultural evolution from a resource colony and a history of zoning that discouraged long-term occupancy in shared walled housing, there are a dearth of hotel room size units in Seattle and very few multi room apartments that people can share. It’s another example of how Seattle won’t follow NYC or SF in hyper expensive rents. Additionally, not many of the homes built after WW2 lend themselves very well to renting rooms or other owner/tenant situations. Our situation here isn’t really comparable to other older urban areas (that haven’t destroyed much of their vintage housing stock like we have), and it will make doubling up much less of a factor in rent pricing in the Seattle area.

  71. 71
    Marc says:

    Patient,

    Your hypothetical is preposterous. If the $600k house drops in value to $300k and he lets the bank have it back his credit will go in the toilet and no other bank will loan him the money to buy it at $300K. If you say he can pay cash since he put zero down on the original purchase, well that ain’t gonna work because the lender can and should come after him for the deficiency if he’s got $300k in the bank. Under Washington law (like most every other state’s law), a lender has the option, in the case of deed of trust financing, to either “non-judicially” foreclose on the house (i.e., without a lawsuit) and only get the house back (thus, giving up on the $300k loss on the original $600k loan) OR it can choose to file a lawsuit (and, in the case of a true “mortgage,” must file a lawsuit). By pursuing a “judicial” foreclosure, the lender can and often will go after the borrower (who undoubtedly personally guaranteed since it’s a personal residence loan) for a deficiency judgment for the $300K in decreased value.

    Mathematically your scenario might be a good idea, but practically speaking, there ain’t no way it would work for a typical home buyer.

  72. 72
    TJ_98370 says:

    …overlook the fact that when unit rents get too high for one income to support, people will double, triple, quadruple up to make their personal share of housing costs more affordable….

    Or they can move to a less expensive place. Rents will only go as high as what the market will bear. Supply and demand are influencing factors.

  73. 73
    B&W Nikes says:

    Sorry, lack of coffee this morning produced a usage error: that should read “not a dearth” or “an abundance of hotel room sized units.” Ugh. Either way, throughout most of the city apartments that people are doubling up in to cut costs, it’s likely they are sleeping together. There aren’t going to be many more sharing opportunities opening up any time soon.

  74. 74
    Marc says:

    Unlike B&W Nikes, I agree with Angie. My wife and I spent the night in Gig Harbor and drove in to downtown this morning. Holy crap!! My hat is off to anyone who has the patience and stamina to commute into Seattle. We used the carpool lane and made in about 55 minutes. I cannot even guess how much longer it would have taken as a solo driver.

    Life is too short to spend it on a freeway issuing passive-aggressive curses against fellow motorists on a daily basis.

    Man, I love Magnolia and my 8 minute commute!!

  75. 75
    b says:

    Angie,

    Rents in SF and NYC are high because their density is 3x and 5x higher than Seattle, respectively. To think about it another way, if wages were equal across those cities (which they are not) the same rent in Seattle would buy you 1/3rd the amount of space in SF and 1/5th the amount of space in NYC. Seattle is in no way comparable to those cities as far as the rental market goes because of this distortion. If you look at cities which are comparable , once you adjust for wage differences between cities the rents are generally going to be very similar for the same size/type of rental. This is because rents must track closely with wages as has been argued here before.

  76. 76
    B&W Nikes says:

    Convenience will continue to trump past notions of space and privacy for sure. I don’t disagree there at all, and have been living it for years. There just aren’t the physical structures here to support much of an increase in rents via multi-tenant situations like there are in cities that built as much of their in-city housing for families as for single occupants. It’d be difficult to squeeze the same kind of money out of the shapes we’ve built here as easily as other cities can. Rents here will remain more closely tied to single and dual income household earnings until the prevailing building styles change.

  77. 77
    SunTzu says:

    “condo-owner said,
    on January 7th, 2008 at 1:20 pm
    Are you wishing for prices to collaspe so you could buy a home? Then once you are an owner are you still going to wish prices to fall? Or are you going to sit on the sidelines with your money in CD’s at 3% and throwing the rest of your money into rent?”

    I’ll take hard cash over condos in the current environment, thank you very much.

    I locked in my CD for 5yrs at 5.25% about a year ago.

    Any bond index should pay handsomely this year as long as you keep an eye out for inflation figures.

    There is a time for everything: a time for real estate, a time for stocks, now it’s time for stuff other than those two….

  78. 78
    Chris says:

    Ray Pepper,

    Here is an update on my favorite property:

    http://seattle.craigslist.org/see/apa/530502047.html

    Hasn’t rented at $1650/month as of Jan 6th. Its been on craigstlist since mid December.

    http://www.redfin.com/stingray/do/printable-listing?listing-id=1321331

    On Redfin for 39 days at $410K (It was posted at $529K for 90+ days).

    Carrying costs for a ‘investor’:

    $410K carrying cost: $2460/month
    Dues: $339/month (didn’t see this posted previously)
    Taxes: $262/month
    Insurance: $100/month?
    Total: $3160/month

    If he gets $1650/month (he hasn’t yet), our ‘investor’ is losing $1,510/month. Not to mention that based on the fundamentals, he should expect a loss/depreciation on the property itself.

    So, I am looking for a similar calculation that shows risk-appropriate positive cash flow after expenses on an actual property in the seattle area.

  79. 79
    Chris says:

    Incidentally, the previous post is an implicit response to the question/issue above: this ‘landlord’ would like to charge something over $3160/month to cover his costs, but for several weeks he has been unable to entice a renter, even at half that. Why? There are similar places for rent at much less. Renters choose those instead.

  80. 80
    patient says:

    Marc, sure the example have practical issues but if you now find yourself facing foreclosure all is not neccessarily lost. With sharply falling home prices there could even be a chance that you will endup better off in the long-run than if you would have been able to keep your home.

  81. 81
    Erik says:

    B&W Nikes makes an interesting point. There are damn few good 2BR and 3BR apartments in town and the pricing on the few that are about doesn’t leave room for much savings from sharing.

    The condo situation in many parts of town may be even worse. There are many wee 1BR units about, but not many units being built that allow “room to grow” sell for anything remotely like an affordable price.

    Rents will have to rise to truly stratospheric levels before adults start putting up bunk beds.

  82. 82
    old timer says:

    FWIW-
    @ rose-colored-kool-aid
    “Imagine a world where a median house costs $15,000. You might not even need a mortgage.”

    Well, that was Seattle in the late 60’s to early 70’s.
    Of course, a ‘good paying’ job then paid about $1k per mo,
    and as the inflation of the 70’s took off, both wages and house prices ramped up quickly.
    Folks had mortgages then; there were auto payments, dentist bills, Nordstrom’s bills, college funding, – all the stuff we still have to deal with – only different $ amounts.

    I don’t think it’s the bubble or inventive credit that’s at fault, it’s our money that has turned to crap.
    The damn dollar just isn’t what it was.

    That’s why software jobs go to India, folks there can still live well on $1K per month.

  83. 83
    Angie says:

    Rents will have to rise to truly stratospheric levels before adults start putting up bunk beds.

    I keep an eye on 3 bedroom houses on the market in southeast Seattle. Not a few of them have a “second kitchen” in the basement, which is real-estate-agent-speak for “has been used as a nonconforming duplex”. Don’t forget also that it’s legal to have a detached ADU in this part of town as well—think, converting your garage to a studio apartment.

    There are lots of ways to shoehorn people in, in neighborhoods of single family houses.

    I grant that this still won’t achieve densities that apartment blocks or even townhouses will. But one family per parcel isn’t necessarily the way things are, or will be.

  84. 84
    WestSideBilly says:

    http://www.redfin.com/stingray/do/printable-listing?listing-id=1321331

    On Redfin for 39 days at $410K (It was posted at $529K for 90+ days).

    Carrying costs for a ‘investor’:

    $410K carrying cost: $2460/month
    Dues: $339/month (didn’t see this posted previously)

    A friend was looking at a 2BR in this building and I laughed at her when she told me the price and HOA dues. What a joke. That’s a $1200 rental, tops. Take out the HOA dues and that unit is probably 150-200% overpriced.

  85. 85
    TJ_98370 says:

    King County home prices slide below December ’06
    By Elizabeth Rhodes, Seattle Times business reporter
    .
    The housing market in King County ended 2007 on a sour note as the median single-family house price last month fell 1.1 percent from December 2006. It was the first time in recent history that prices declined year-over-year.
    .
    And the number of homes for sale rose 61 percent in King County, continuing a trend that started in April, the Northwest Multiple Listing Service reported Monday. The MLS is an association of Realtors that compiles home-sales statistics for King, Snohomish, Pierce, Kitsap and 15 other counties.
    .
    In King County — which had nearly 11,000 houses and condos for sale in December, by far the most in the four-county region — it would have taken seven months to sell off that inventory at last month’s sales rate…….

  86. 86
    Marc says:

    Patient,

    I think the only person for whom losing 50% of the value of their home is not a disaster is an insolvent person. When you essentially have nothing, losing half of that probably isn’t a big deal. You just file bankruptcy and move on. I’ll admit that it’s shockingly easy to acquire new credit after a BK these days (albeit, at stupid rates). Many real estate lenders will let you back into the game two years after your BK if you’ve managed to get your credit score up decently and can pull together a down payment. Well, at least that was once the case. After this past August I can’t say whether it still is or not.

  87. 87
    Shawn says:

    Its real simple, if the people that give you information can profit by giving you information that is going to make them money, then there is a possibility that you will be given false information, and should seek another source for your information.

  88. 88
    disbelief says:

    That Phinney Ridge condo is a great example of how rental prices will never rise enough to accommodate today’s out-of-control prices.
    Imagine paying 3 grand-plus in rent! Even two grand is unimaginable for this 1BR. Yet there is hardly a more desirable location available- at least as far as I’m concerned.

  89. 89
    disbelief says:

    Oh, I forgot: If four people rented this unit together, they would be able to pay the $3,000 required for the owner to break even:-)

  90. 90
    condo-owner says:

    Does anyone know anybody with a significant financial portfolio that is a renter? Renter’s always lose in the long run (at least since WWII). Our tax system is tilted to favor homeowners. Under the current climate, you may have to own a few more years to obtion a fair profit but in the long run it will ALWAYS pay off. And Seattle is a great place to own instead of renting without the worry of losing money because it has limited land, low speculators, low foreclosure rates, great ecomony, and a healthy immigration from other areas of the country. Seattle has all the fundamentals in place and we were the last to have prices fall (barely) and we will be the first city to have prices rise again.

    All you renters and those still living with mom and dad, this is your big chance to get a fair deal on a house and start your long journey of owning a home and realizing some finanicial gain along with your stocks and bonds and 401k’s and 5% CD’s. But don’t wait too long ’cause you may miss out again and have to watch prices lift off while your rents climb higher. Good luck renters!

  91. 91
    David McManus says:

    Wow, thanks for those profound comments, condo-owner. I will now cash out my 401k, stocks, and other liquid assets and start purchasing homes. My little sh*t box will be worth 100 million dollars by the time I retire!

    I’m rich, rich, rich, I tell you!

  92. 92
    disbelief says:

    “Does anyone know anybody with a significant financial portfolio that is a renter?”

    Do you seriously think that there are not even wealthy people who have chosen to rent in the current market and anticipate prices to drop?

    Do you think that the (tired) points you make about the Seattle market will protect recent buyers from declining prices regardless of how much prices have risen and why?

    How would you like to be the owner of that Phinney Ridge condo above?
    Next, you are wrong that home purchases always pay off in the long run. Many people who needed to sell to relocate in the early 90’s lost money in most of the U.S. market.

  93. 93
    disbelief says:

    I should add: “good luck recent condo buyers!”

  94. 94
    sf_boomerang says:

    condo-owner:

    How do you define “significant financial portfolio?”

  95. 95
    johnnybigspenda says:

    I think that example shows why rent prices are set to climb:

    Many of the people who in the past few years would have bought that condo are now going to rent (because they forsee the -10% / $40K hit they are going to take over the next year)… this represents a large portion of the ‘entry level’ / first time buyers out there today.

    So lets say usually 10% of all 28 year olds and 25% of all 31 year olds were buying their first home (on average). Then lets say 50% of these people read the news paper / internet blogs. (we can assume that because they apparently have enough money to buy a home, so they must be able to read)… Then lets say 50% of those people are scared $hitless because they heard that the market is going to drop by 10% and that would wipe out atleast half of the downpayment they had saved up…

    So what do they decide to do? Rent… That increases rent demand substantially over the next few years.

    So if the market is tanking, and the guy is set to lose $40K on his condo (lets say 10% of a 400K place), he could gamble and try to rent the place for $1600/month (reasonable for a 2BR newish condo downtow). He’s left with $1600/month cost to him.

    That means $19,200 / year or about 2 years until he has lost that $40K he would have lost instantaneously…

    So if the market bounces back within 2 years, (even a short term dead cat bounce) he’s break even (actually possibly even ahead due to tax implications of taking a loss and depreciation).

  96. 96
    michael says:

    Only a fool believes that a market always goes up. That is why it is called a market not a lottery ticket. Remember the history of sure things! Tech stocks were a sure thing. Oil stocks were a sure thing. Japanese real estate was a sure thing. Of course real estate will some day bounce back to what you paid for but I can’t think of any stock that I would buy if I wasn’t going to make a profit for the next ten years. If you see a market going down then stay out. Seattle is a great place to live but I believe in markets more than I believe in Seattle magic.

  97. 97
    David McManus says:

    I have a theory that I think applies to most of the people who think that the RE market in the Puget Sound will keep going up.

    They are people whose livelihood / paycheck depends upon homes selling (real estate “professionals”, mortgage brokers, loan underwriters).

    OR

    They are people who bought recently with little or no money down only to see their “asset” or “investment” decrease in value.

    OR

    They are people who don’t have a lot of liquidity (little in savings) and who were planning on tapping some of their equity for either improvements to their home, paying off other debt, or just to spend, spend, spend.

    I think the negative posters and real estate cheerleaders fall into one of those 3 groups.

    Just a theory….

  98. 98
    disbelief says:

    I’ll second that theory :-)

  99. 99
    Angie says:

    Earlier today in response to my post about people sharing living space, TJ-# countered that when rents get too high,

    Or they can move to a less expensive place. Rents will only go as high as what the market will bear. Supply and demand are influencing factors.

    Supply and demand, in deed. I just read an article from the Chicago Tribune that addresses some of the reasons why housing in the Midwest is so cheap. Check it out yourself, and contrast Seattle’s economy with the factors that the author says are contributing to Midwestern towns’ demise.

    Still want to go live someplace cheap? Knock yourself out…and write if you find work.

  100. 100
    nitsuj says:

    “And Seattle is a great place to own instead of renting without the worry of losing money because it has limited land, low speculators, low foreclosure rates, great ecomony, and a healthy immigration from other areas of the country. Seattle has all the fundamentals in place and we were the last to have prices fall (barely) and we will be the first city to have prices rise again.”

    PUFF PUFF PIZAAAASSSSS!!!!

  101. 101
    nitsuj says:

    “Does anyone know anybody with a significant financial portfolio that is a renter? ”

    Define significant.

  102. 102
    wreckingbull says:

    That means $19,200 / year or about 2 years until he has lost that $40K he would have lost instantaneously…

    Right…you really think the owners of these little poo-boxes, many of whom used kinky financing to purchase them, can afford to bleed cash like this for years on end? I like your PMA, but this notion is truly laughable.

  103. 103
    nitsuj says:

    I’d 3rd David’s theory

  104. 104
    mc lovin my popcorn ceilings says:

    great points condo owner! I am looking on buying a condo n the Capital Hill area. Is there any blog sites without so many renters and people living at home with mom and dad. I am looking for a site with better information about the housing market from people who actually have been through the buying process and are not so angry about being priced out. Thanks.

  105. 105
    b says:

    mc lovin my popcorn ceilings,

    I suggest you check out marketwatch.com, or ft.com, or economist.com, or wsj.com. They should all have multiple, daily, very helpful articles that let you know how great your decision to purchase a condo in a trendy area right after the peak of the worlds largest asset bubble. I am sure most of those writers are dirty, hippy renters who cry themselves to sleep, so its safe (and brilliant) to do the exact opposite of what you read. Nobody realizes that if you catch a knife, you can sell your blood easier!

  106. 106
    economist says:

    Since high home prices is detremental for the US economy. It pushes US salaries up which causes high inflation and lowers the competitevness of US companies and US workers.

    Really now? I thought salaries in the US have gone nowhere in the last 5 years, while house prices have doubled.

    Employers don’t care how much it costs their employees to buy a house. They care about making a profit, and pay their employees accordingly. If house prices rise above the level that wage earners can afford, they have to come DOWN.

  107. 107
    michael says:

    “mc lovin my popcorn ceilings”

    So you are looking for positive information about the housing market on a site called Seattle Bubble? What sounds odd about this buyer? Could your well hidden secret be that you are actually a real estate agent because you are certainly not a rocket scientist.

    I found a great way to make money off Seattle real estate. I sell short. Check out ticker – SRS. I made 7% on my investments since this mourning. Hey maybe Seattle Real Estate is making someone rich.

  108. 108
    disbelief says:

    Oh boy here we go again….a troll posting under multiple names to boost his previous posts (sounds like “what’s my name is back). Also, nothing says desperation more than when they start with the brainless insults.

  109. 109
    disbelief says:

    Mclovin’ my McMortgage reset :-)

  110. 110
    whats my name says:

    “Also, nothing says desperation more than when they start with the brainless insults.”

    Except that they finish without more than brainless insults.

  111. 111
    disbelief says:

    No argument from me there

  112. 112
    whats my name says:

    “No argument from me there”

    I would have argued that you reexamine the post which prompted it, except that I see the brainless insults are accompanied by an unsupported (and incorrect) assumption.

  113. 113
    disbelief says:

    Which post are you referring to?

  114. 114
    whats my name says:

    Yours

  115. 115
    disbelief says:

    Was the assumption that you were the person posting as “McLovin my popcorn ceiling” incorrect?

  116. 116
    whats my name says:

    “Was the assumption that you were the person posting as “McLovin my popcorn ceiling” incorrect?

    Correct. (I am a big fan though)

    Also, the multiple names were not to boost previous posts. That was simply word play for the post at hand. Unfortunately, Tim apparently needs to vet each new name, so I promised not to do it anymore.

  117. 117
    disbelief says:

    :-)

  118. 118
    deejayoh says:

    mclovin my popcorn ceilings = condo owner.

  119. 119
    patient says:

    Economist, it’s one or the other. Either prices go down or salaries wil be pushed up. This is why a wish for lower home prices is a good thing. Prices has gone up the last years due to loose lending standards that has temporarily “made up” for lack of salary increases.

  120. 120
    Tom says:

    condo-owner:

    My Father in-law does very well for himself, and he rents (and has for as long as I’ve know him.. more then 15 years..). His income is 6 figures (about 1/3 of the way to 7 figures). He also has quite a bit in the bank, another good sized chunk invested, and still has money left over for trips around the world and his “toys” (cars, home theater, etc)… (Is more then several million considered significant?)

    What I suspect is more telling is that I know quite a few people who own homes who are barely making it… putting almost everything they own into their home (though mortgages as well as upkeep and renovations).

    I myself sold our home in CA about 6 months ago, and I can tell you for both my finances, and my state of mind, renting has been great. I also looked at where I would have been finanically if I’d rented during the 4 1/2 years I owned.. I would have been MUCH better off..

    Even with all that we’re planning on buying again.. but I’m in no rush to get into a mortgage until some of the housing crazyness straightens itself out.

  121. 121
    TJ_98370 says:

    Tom-

    What does your father-in-law do fo a living? I’m just curious.

  122. 122
    WestSideBilly says:

    All you renters and those still living with mom and dad, this is your big chance to get a fair deal on a house and start your long journey of owning a home and realizing some finanicial gain along with your stocks and bonds and 401k’s and 5% CD’s. But don’t wait too long ’cause you may miss out again and have to watch prices lift off while your rents climb higher. Good luck renters!

    Fair deal? What’s fair about buying something for twice the price? $1500 rent (split) allows me to contribute heavily to my 401(k) and savings while still having a life; buying the exact same unit at close to $3000/mo pretty much rules out everything except eating.

    Yeah, sign me up. Do you work for John L Scott or Windermere?

  123. 123
    Tom says:

    He’s in alternative medicine now.. He writes most of the text books used in his area of expertise, as well as gives lectures and classes. He’s still getting some money from videos and books he did on martial arts years ago as well.

  124. 124
    TJ_98370 says:

    Angie said:

    Supply and demand, in deed. I just read an article from the Chicago Tribune that addresses some of the reasons why housing in the Midwest is so cheap. Check it out yourself, and contrast Seattle’s economy with the factors that the author says are contributing to Midwestern towns’ demise.

    Angie- I couldn’t read the article, apparently you have to be a subscriber.

    So, you’re saying that increased inventory of homes for sale has no effect on rental supply?

  125. 125
    WestSideBilly says:

    great points condo owner! I am looking on buying a condo n the Capital Hill area. Is there any blog sites without so many renters and people living at home with mom and dad. I am looking for a site with better information about the housing market from people who actually have been through the buying process and are not so angry about being priced out. Thanks.

    I’m sure you could get some excellent, completely unbiased information from any starving realtor. Maybe condo-owner can help you out.

    If you’re just looking for information on the process of buying, Google is probably a better starting point. If you want info on specific homes/comps/recent sales, RedFin, Zillow, or something similar will have that info (to a limited degree). If you want to know what the market is doing, this is your best bet – the people posting here don’t have a financial interest in your decisions.

    Good luck.

  126. 126
    The Bruce says:

    Having just moved from Phoenix a year ago – I can tell you that there are *bargains* available to rent from desperate investors who have their own credit on the line and just want to cut some of their losses and cover some of their mortgages every month, and hope they can sell down the road. South Chandler, one of the newest, nicest areas of PHX metro, 3800 sq’, brand new, very nice upgrades, for $1500 / mo, nothing down, 2-3 year lease/option (will sell for appraisal anyway, so who cares about the option price in this market).. Almost makes me want to move back…

  127. 127
    The Bruce says:

    My point is, there will be rental bargains here as well. Period. This much inventory = plenty of rentals. I don’t see rent going up, if anything, the competition will pay off for the smart renter willing to sniff out the desperate landlord / average joe investor who got in over his/her head.

  128. 128
    deejayoh says:

    I’m sure you could get some excellent, completely unbiased information from any starving realtor. Maybe condo-owner can help you out.

    I will repeat myself here, “Condo-owner” IS “mc lovin my popcorn ceilings”. Same IP address, same email. PLEASE stop feeding the troll.

  129. 129
    Erik says:

    Johnnybigspenda –

    I disagree with your analysis of the situation, but that’s a subjective matter. What’s not subjective is the number of bedrooms in the condo in question: it has one bedroom, not two.

    $1,600 sounds a little spendy for a 1-bedroom apartment in Phinney Ridge, but I guess it was about five years ago that I spent $620/month for the same.

  130. 130
    NotaBull says:

    “$1,600 sounds a little spendy for a 1-bedroom apartment in Phinney Ridge, but I guess it was about five years ago that I spent $620/month for the same.”

    A friend just moved into an apartment on Phinney Ridge just before Christmas. It’s a 1 bedroom, about 750 sq ft, quite nice (not fancy, not crap) and it’s 1050 a month. FWIW…

  131. 131
    sf_boomerang says:

    You know, I used to think some people here were a little harsh on the more bullish posters. It’s one thing to think another person is wrong, but another to resort to insults and name-calling.

    But, after reading Deejayoh’s Troll-Warning post above… I guess some people just deserve it. Swing away, Merrill!

  132. 132
    James says:

    Ray… “January 8th, 2008 at 2:41 pm

    http://www.redfin.com/stingray/do/printable-listing?listing-id=1321331

    On Redfin for 39 days at $410K (It was posted at $529K for 90+ days).

    Carrying costs for a ‘investor’:

    $410K carrying cost: $2460/month
    Dues: $339/month (didn’t see this posted previously)”

    You can’t base the carrying costs on what he has it for sale for. If you look up the property, it shows that he bought it on August ’05 for $324K. So you need to base your analysis off that. He’s still listing for 90K over what he paid 2 1/2 years ago.

    I’m in the market for a house now and this is what i see every week. Prices are still way over 2005/2006 levels. They are just not the insane prices that hit in spring of 07.

    – james

  133. 133
    TJ_98370 says:

    Angie,

    I registered and read the article Can the Midwest regain its economic clout?

    I do not disagree that the economy of the Seattle area is different from that of the Midwest. And yes, real estate values will always be worth more in areas where there are jobs to be had than areas that are economically depressed.
    .

    I am guessing your point to be that upward pressure on Seattle rents will be a result of increased demand due to increased immigration and the increased immigration is due to the fact that cities like Seattle are where the jobs are, right?

  134. 134
    WestSideBilly says:

    I will repeat myself here, “Condo-owner” IS “mc lovin my popcorn ceilings”. Same IP address, same email. PLEASE stop feeding the troll.

    When you posted that above, I read it as “mc lovin my popcorn ceilings” was a condo owner, as in “poor bastard bought a $750k 1BR condo in Belltown”. I was actually thinking “I shouldn’t be feeding the troll, but what the hell…”

    Now, where’d I put my pink pony… :(

  135. 135
    rvaira says:

    Realtors continue to try and push the market up, but the bottom line is in the Bellevue & Seattle area crazy financing schemes were used to push prices up. Home purchasers thought that prices are going up so fast so they had to buy even if they had to use an arm which lenders pushed. Heres the reality: income did not rise anywhere near the increase of home prices. Finance companies can try to push all the crazy products, but it only works short-term before the bubble bursts and were seeing that nation-wide now.

    I think that arms for investors and interest only no down loans shouln’t have been allowed in the first place, but then people would chant oh our freedom is being restricted.. That is a bunch of you know what.. To me freedom is not the ability to buy a property which you will be stressed out in for the rest of your life because prices were pushed up with poor financing programs offered by banks and finance companies. And if lenders keep pushing these products it will come back to bite them again in the long-term.

    My peice of advice: Don’t give in to the pressure to buy what you can’t afford. Look at what happened to Japan in the past. As buyers we hold the cards even when prices were going up, we don’t have to buy into this inflated market.

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