$100,000+ Price Cuts in Suburbs Around Seattle

Aubrey Cohen is on a roll lately, doing a great job of reporting what’s really going on with the Seattle-area real estate market, instead of just painting the rosy picture that agents and builders would like to see printed. Here is Cohen’s latest, on the drastic price-cutting measures that builders just outside Seattle are taking to clear their stagnant inventory.

Karen Waters thought she got a good deal last March when she paid $425,000 for a new house in the SouthRidge at Silver Creek development near Puyallup.

After all, the price was about $100,000 less than buyers had paid builder Centex Homes for similar houses on the block the previous fall. By February, however, neighboring homes were selling for about $350,000.

“I totally wished I would have waited,” Waters said last month.

The Seattle-area housing market has held up better than many, largely because it did not have as much overbuilding as places such as Las Vegas and Phoenix. Still, the local market has slowed and builders are taking dramatic steps to clear out housing inventory in suburban areas.

“The reality is, our real estate market is in the tank,” said Don Dutton, managing broker of Windermere Real Estate’s Puyallup Office.

Overbuilding deserves the biggest share of the blame, he said.

Read the whole thing. This is exactly the kind of thing that was happening in Florida and California 1-2 years ago. This is great news for those of us that don’t care to live in Seattle or Bellevue proper. No, it hasn’t hit downtown Seattle yet, and I don’t expect things to get as drastic in Seattle proper as they are and will further out.

This article demonstrates that the “running out of land” and “we didn’t overbuild” arguments really only make sense if you are talking about Seattle proper. Even then, it’s debatable whether we’ve overbuilt the condo market or not. I suppose in a year or two we’ll find out.

(Aubrey Cohen, Seattle P-I, 04.16.2008)

Update: A reader pointed out a similar article in the Everett Herald this weekend: Why Snohomish County builders aren’t building.

Drive through newer residential areas in Marysville and witness what happens when buyers stop buying houses and developers keep developing.

Empty lots line roads and the edges of cul-de-sacs. Many have sidewalks, utilities and roads, but no houses.

The supply of buildable lots and new homes ready to be sold in Snohomish County has ballooned to nearly a three-year supply, according to New Home Trends, a real estate research and consulting firm.

That means headaches for developers who bought land at sky-high prices a few years ago and now can’t sell it. It means builders are applying the brakes on new-home construction and off-loading what they’ve already built.

Of course the Herald article goes on to quote various “experts” (such as real estate agents), who say that it’s just a “breather,” a “normal market,” and that “the market is coming back.”

Sure it is. Any day now.

(Debra Smith, Everett Herald, 04.16.2008)

0.00 avg. rating (0% score) - 0 votes

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.

66 comments:

  1. 1
    Markor says:

    From http://seattlepi.nwsource.com/local/355253_newhomes17.html?source=mypi:

    “The reality is, our real estate market is in the tank,” said Don Dutton, managing broker of Windermere Real Estate’s Puyallup Office.

    Waaaa? Surely that’s only in Puyallup!

  2. 2
    Peter says:

    hey tim,

    i would love to hear you interact with the everett herald’s housing column on snoco builders. keep it up.

    http://heraldnet.com/article/20080316/BIZ/517149117/1012/BIZ03#Why.Snohomish.County.builders.arent.building

  3. 3
    vboring says:

    as for the question of overbuilt condos in Seattle proper, it seems pretty clear to me that it is a question of how overbuilt, rather than whether.

    walk through market street in Ballard sometime. it is an ok area, but really nothing special as far as i can tell. yet there are 5 new condo buildings with units advertised starting in the low $400s. and freshly built foundations for a few more of the same.

  4. 4
    deejayoh says:

    Ah, but according to Don Dutton, REALTOR®, this story has a happy ending

    As gloomy as he sounds, Dutton thinks it’s time to buy, because the new-home glut isn’t going to get any worse.

    “Everybody is stopping production down here,” he said. “Everything is focused on getting rid of standing inventory.”

    Now, where have I heard that before?

  5. 5
    melonleftcoast says:

    Here’s an excerpt from the article that highlights why it takes so long for prices to fall:

    =====
    Elaine Nordgaard bought her SouthRidge house for $350,000 last month, benefiting from a weekend Centex promotion.

    “The one I bought was listed for $510,000 back in September of ’06,” she said. “They actually sold it twice (before), but the buyers couldn’t complete their financing for some reason.”

    Now she lives next to Waters and Marschell Lockwood, who paid $464,000 for her house in January 2007.

    “It’s frustrating because when we moved in they had dropped the prices,” Lockwood said. “We thought we got a deal, but now there’s people coming in paying almost $100,000 less.”
    =====

    Essentially, people keep on buying houses at what they perceive to be good discounts, which often slows the price correction from months to years.

  6. 6
    Ben says:

    As overpriced as things are around here, the stories I heard about San Diego and Phoenix make it sound like the bubble was much worse there. So people saying “It is not as bad as other places” might be right, while still being in denial.

  7. 7
    Peter says:

    Hello Tim and Everyone,

    I am renting a house in the silver firs development in everett. I just renewed my lease last week. My landlord raised my rates because she said the “comp” rates have gone up in the area. It wasn’t much of a raise, just 20 bucks a month (I dickered down from 30 just out of sheer principle:) Does anyone know anything about “comp” rates? Can I get my hands on these?

    Tim, I have lurked on your blog for at least 2 years. I don’t fully understand all the charts and everything, but it does make sense that we are headed into a slowdown. (Has anyone driven from Everett to Bothell on 35th avenue and seen all the construction and for sale stuff? Wow.)

    One thing that I would find helpful Tim is if you had a little sidebar on your front page that gave your perception of where we are at in the market. Specifically, when you are GUESSING the market bottoms out and what you see the bottom being. I realize that this is not an exact science and it is like throwing a blind dart, but it would be a little helpful for an amateur like me to hear where you think things are at and going to be at in seattle, snoco, kingco etc.

    As of right now, my wife and I will be renting for at least another year or two. We enjoy living in the Seattle area, but are finding it increasingly difficult to justify the cost of living vs. the quality of life.

    Thanks for everyone’s input.

  8. 8
    Brian says:

    The housing slide will play out very poorly. WaMu continues to get downgraded by every major rating firm and I doubt WaMu has provided the true details of how bad things are with them (stock below $9 now). If WaMu goes down, you are looking at 5,000 white collar jobs gone in a heartbeat. We are at the very beginning of what may be a prolonged recession. The wait and see game with real estate should be pretty fun and sad all at the same time.

  9. 9
  10. 10
    nitsuj says:

    Ugh. I’m in Puyallup this week visiting my family, it’s amazing how overbuilt it is! Apparently there are no growth regs here, just crappy lookalike house after crappy lookalike house as far as the eye can see. I miss the farms.

  11. 11
    WestSideBilly says:

    walk through market street in Ballard sometime. it is an ok area, but really nothing special as far as i can tell. yet there are 5 new condo buildings with units advertised starting in the low $400s. and freshly built foundations for a few more of the same.

    I couldn’t believe it when I saw a condo going up across the street from Hjarta (which is still mostly empty and about 6 months behind), and a huge hole at 24th/57th across the street from the half empty condo building there.

    Ballard is a decent place, Market/Ballard has a decent number of restaurants, bars, etc… but there can’t be THAT many people eager to spend half a mil or more to live there.

  12. 12
    Markor says:

    As of right now, my wife and I will be renting for at least another year or two. We enjoy living in the Seattle area, but are finding it increasingly difficult to justify the cost of living vs. the quality of life.

    Don’t worry, your standard of living is improving to the tune of $thousands per month right now.

    If WaMu goes down, you are looking at 5,000 white collar jobs gone in a heartbeat.

    Not gonna happen. Some other company would buy them out, if only via a fed deal, a la Bear Stearns.

    Here’s a good video on CNN about a foreclosure: http://www.cnn.com/video/#/video/us/2008/03/17/gutierrez.campground.living.cnn?iref=mpvideosview

  13. 13
    vboring says:

    sure, so maybe WaMu would get bought. that doesn’t mean any of the jobs will exist a year later.

    JPM is talking about firing half of the Bear Stearns staff.

    in Wamu’s case, the people who kept their jobs might be moved out of the city.

    i don’t have any opinion on the stability of WaMu, just pointing out that being bought doesn’t ensure anyone’s job will continue to exist.

  14. 14
    magnolia44 says:

    can we consider Orting as “arround Seattle” as well lol throw em all in the mix.

  15. 15

    ASSUMING THEY STILL BUILD NEW HOMES ON A 70% LEARNING CURVE

    This means everytime the lot of new homes built doubles the costs per home goes down 30%. Unit #1 is like a custom home, it gets built for like $500K, but you build #2 for $350K, #4 for like $250K, #8 for….etc, etc…..

    That’s why during the last 1990 housing bubble you had builders selling new homes for like 50% off and laughing all the way to the bank…also, even during bad recessions, slapping the last cheap units together on a learning curve is profitable business.

    Now, ya guys trying to sell lower unit built used house in the same complex….lol

    Ohhhh…you say, but material limits the price drops…..not really, from what I’ve been hearing, there’s trucks full of glueboard driving around with no one to deliver it to….eventually materials plummet in price too, until the sawmills go bankrupt….

  16. 16
    b says:

    Markor –

    The majority of Bear’s 14k employees will be gone by the end of the year according to many reports. If WaMu were to be bought out by the Fed something similar would certainly happen. I think the only reason they are keeping more than a handful at Bear is that they are in NYC and therefore much easier for JPM to move in managers and keep things running. No bank is going to decide a satellite office in Seattle is necessary, unless its quite small. I would expect they fire most of the staff, move the good people to where ever the new HQ is and keep a minimal presence in the state.

  17. 17
    b says:

    vboring –

    Starting in the low 400k for Ballard condos? Seattle is further behind the curve than I thought (or the builders up there are morons). They finally completed a couple of new towers here in downtown San Jose. These units would’ve been low 600k about 2 years ago, due to being right downtown and “luxury” high rises. They are both now starting at low 400ks and not moving at all. I drive by one every night and there are usually about 5 lights on out of 15 stories of condos. I can’t imagine anyone buying a 400k place in Ballard unless their plan was to flip it right after the building completed.

  18. 18
    Markor says:

    The majority of Bear’s 14k employees will be gone by the end of the year according to many reports. If WaMu were to be bought out by the Fed something similar would certainly happen.

    I don’t doubt that. I was only disagreeing that the jobs would be “be gone in a heartbeat”, as in the employees come to work one day and the doors are locked.

  19. 19
    Buceri says:

    I agree. When you think Seattle, Banking is not what comes to mind.

    Wamu jobs will be “consolidated”; branch peons will stay with different name tags (anyone remember “Seafirst”?) and the fat cats that stick around will be offered a move to Denver, SF, or an east coast city. They will be absorbed; there is too much money to be made from the existing customers. The creditors and stock holders will be given the finger. Good ol’ capitalism.

  20. 20
    deejayoh says:

    WaMu jobs won’t disappear like BSC’s will. They are a retail bank. Anyone who buys them does so to pick up their branch network. Tellers. Phone banks. Account management. That’s 80% of their employee base.

    If you are saying most of the jobs in seattle (which are HQ jobs) that is probably more accurate

  21. 21
    Markor says:

    I can’t imagine anyone buying a 400k place in Ballard unless their plan was to flip it right after the building completed.

    Those days are over here too. I think it’s just momentum that’s building all the condos/townhouses in the Seattle area now. The builders have to finish processes they started during the good ol’ days, or else lose even more money.

  22. 22
    Ray Pepper says:

    Hey V Boring. Tim emailed me that people are pumping us here on Bubble. Can you please tell me what home I (we) sold you 3 years ago. Since I spent the last 45 minutes trying to dissect this I saw you posting so I wanted to address this with you. Tim told me to correct this problem

    **While you are here.** We had no sales in Kirkland for 500 Realty for we were NOT open yet!!

    If you wish to stay silent then please stop. Its painting a bad picture of myself per Tim. We do NOT need your assistance.

    Ray Pepper

  23. 23
    Lake Hills Renter says:

    I haven’t been to Puyallip in quite a while, but the Sumner/Orting area is absolutely atrocious. All the farmland has been turned into row after row of the same house over and over, with hardly any room between houses. I shudder to think of actually buying there.

  24. 24
    Sniglet says:

    Sorry, but I don’t think that Seattle (or Bellevue) proper will remain relatively immune to the real-estate downturn. Just look at what has happened in California: the remote suburbs were hit the first, but the disease kept creeping towards the major metro areas.

    A couple years ago people could say that the real-estate problems were just a “central valley”, or “inland” issue. Then, it was “just an East Bay” problem. Now, I hear people saying, “well San Mateo and San Jose might see declines, but San Francisco proper will be fine”.

    It’s just timing, that’s all. Seattle and Bellevue will get a major hair-cut, it just might take a little longer.

  25. 25
    Ubersalad says:

    Bellevue has slowed down drastically, but I still see houses being moved here and there. But on my normal daily path to work, I haven’t seen one house being sold…and they’re all 1 million+

  26. 26
    Alan says:

    Just to put the Bear Stearns buyout into perspective…

    This would be like a house that could have sold for $600k last week selling for $20k this week.

  27. 27
    Ubersalad says:

    or…$600k last year for $6k today.

  28. 28
    patient says:

    It will be interresting to see if the banks get the message that they need to try much harder to add transparancy. BSCs extremely quick collapse was due to a bank run based on fears of liquidity issues. To me that means that if you as a bank consider yourself as safe you better prove it with more than statements like “don’t worry we have enough cash”. And you need to do it now otherwise the next rumour might be about you and in matter of days you can be history.

  29. 29
    TheHulk says:

    People (meaning realtors and nervous sellers) who insist price markdowns wont hit the “real seattle” area (meaning seattle, bellevue, redmond and eastside) are just deluding themselves of reality.

    I like to think of the whole real estate run-up as a fancy leveraged pyramid scheme. The 200K condo guy relies on some new idiot (most likely some poor soul who has been told, look how much you are losing in rent, home prices never ever fall, plus you can buy this with 0 down etc.) to buy his condo for 230K. The condo guy has 30K more so he buys the formerly 400K townhouse for 450K (I made 30K on a condo, ooooh I can make so much more on a townhouse). The townhouse guy gets the formerly 600K house for 700K and so on and so forth.

    Now, the condo guy cant get the loan (not that he would want to in this market) and thus the whole scheme collapses. Now that the music has stopped its time to return to reality. I wouldnt be surprised to see bigger markdowns on pricier houses simply because people cannot afford to get loans the way they did before. After this collapse who is going to think that someone earning 50K can afford a 500K house?

    People here are still pricing houses thinking hmmm it grew so much from 06 to 07, This is a bad market, the economy has tanked, it will only grow 50% as much this year. Believe it or not, you guys missed the boat. In Seattle it sailed away mid 07. If you really want to sell your house, start pricing it near the figure in that locality around the start of 07, or gasp even lower. Someone might actually buy it (even at that exorbitant price). Most likely you will have to go lower.

    Long term prices will return back to that fine balance between annual salary, rent and house monthly payment on a fixed mortgage. I dont know what that exact amount would be, but I am sure Tim with his wonderful charts would be able to let us know.

  30. 30
    Silver9 says:

    The relevant question for the condos and homes in this area are whether or not people have the income to PAY OFF a property at a given price. Do you REALLY want to spend 1/2 your income for that house… for years and years?

    the assumption was that people would “flip” a property before the ARM expired is gone. bankers are finally starting to look more closely at whether people can actually afford the debt they are taking on – buyers ought to be looking at this too.

    a national media consensus is forming that the American public and the American government have been living beyond their means for a long time and short-term thinking (and financing) is ending. but as others have pointed out, changing expectations is a slow thing (as is austerity).

    I am expecting prices to drop across the board because there just arent that many rich people that can afford $3 to $5,000/mo for housing. Incomes here are just not that high even without a significant recession.

    There are a few millionaires but not nearly enough to support the “luxury condo” boom. I have my doubts there are enough people to support the “$650k Greenlake fixer” either…

  31. 31
    S-Crow says:

    From the Seattle Post Intelligencer:

    “Vincent Healy, owner of Clearpoint Appraisal in Seattle, said he started to notice trouble signs, such as longer market times and some price drops, in summer 2006.”

    I sensed a real changing of the winds in Fall of 2006 and while most people feel that sometime in mid to late 2007 was our crest, I feel it was earlier. This is based upon closings in our office, longer market times for housing and what I deem to be the bell-ringer, the first time we viewed the start of list price reductions taking place—something that just didn’t happen for months and months and months.

  32. 32
    Ubersalad says:

    I felt the same way in Summer of 2006 and exited out of mortgage industry in January of ’07. I strongly advised everyone to sell and rent for few years before re-buying…but surely few listened.

  33. 33
    WestSideBilly says:

    Starting in the low 400k for Ballard condos? Seattle is further behind the curve than I thought (or the builders up there are morons). They finally completed a couple of new towers here in downtown San Jose. These units would’ve been low 600k about 2 years ago, due to being right downtown and “luxury” high rises. They are both now starting at low 400ks and not moving at all. I drive by one every night and there are usually about 5 lights on out of 15 stories of condos. I can’t imagine anyone buying a 400k place in Ballard unless their plan was to flip it right after the building completed.

    Based on the lack of activity in/around them, I suspect most of the properties listed as “SOLD” are not being lived in. So yes, lots of speculation going on in those Ballard condos – same with Belltown, Bellevue, Pioneer Sq, etc.

  34. 34
    mike2 says:

    Ah, yes. Puyallup was one of the outlying areas I expected to see mind bending drops in as the bubble popped. It’s nowhere near over though. Years from now, people will say with disbelief “you paid $300K to live in Puyallup??? Why?”

  35. 35
    mike2 says:

    Drive through newer residential areas in Marysville and witness what happens when buyers stop buying houses and developers keep developing.

    Empty lots line roads and the edges of cul-de-sacs. Many have sidewalks, utilities and roads, but no houses.

    Sounds like Bothell in the early 80’s.

  36. 36
    LeftOverpricedSeattle says:

    Now then, why do you all think I SOLD my house in Puyallup in January of 2007? I could see that the market was topping out in the summer of ’06. I almost left it too late. I waited almost six months to get the price I wanted.

    I feel very, very lucky to have seen the signs early enough to get out while the getting out was good.

  37. 37
    Brian says:

    Markor – I wasn’t being literal about jobs being gone in one second or a heartbeat as I stated. The point is though, that WaMu is in serious trouble right now. It only took a weekend for Bear Stearns to go away. If the same happens to WaMu, do you think the 5,000 white collared professionals downtown are going to think, “Thank God, I will have my job until the end of the year” or do you think they will be thinking, “Oh crap, I have a huge mortgage payment, the economy is starting to suck pretty bad, and 5,000 other people are going to be looking for jobs at the same places I am all at the same time”?

  38. 38
    Jonny says:

    What is reasonable depends on context. My belief is that the entire context of our economic system is in the process of changing. The days of easy money are over. The days of hyper-inflation in commodities and every day goods is here. The days of unemployment are coming. The days of deflation in assets are here and will probably last minimum of 5 years. It’s only a matter of time before people start to recognize that the last 20 years were the anomaly and not the norm. We /will/ return to a sane economic system, no matter how painful or drawn out. Japan has been bucking the problem. Ask them how that’s going. It’s been 20 years over there. I see no reason to believe our fed is any smarter and several reasons to believe they are full of hubris that might make our increasingly-likely depression worse than Japan’s.

  39. 39
    Markus says:

    There is good news about all this: when I start building my house this summer, quotes for materials and contractors should be less than I’m currently budgeting. Cheers!

  40. 40
    david losh says:

    I have two listings North of Seattle both owned by relatives of mine. I told to sell last year. Both could have sold for twenty thousand more than current asking price at that time. Today we will need to cut another twenty thousand to get an offer.
    I want to know who told anybody that a house in Skyway would be the same price as a house in Ballard, or Lake City? It was crazy to see $500K houses in Puyallup; I don’t care what the lot size. Wait until the in city town homes start to tank, then you’ll hear some bitching.
    At 85th and Aurora I’ve been told there is enough dirt for another thousand units.

  41. 41
    disbelief says:

    I was down Puyallup-way recently. Actually, it was just east of Tacoma in a recently developed area- so probably just adjacent to Puyallup.

    I drove past many recently built neighborhoods. You could tell the houses where cheaply built, even approaching them from a good distance.

    Couldn’t believe how close they were together, a few feet at most! Everything seemed flimsy and crowded about them-even the fences where erected right up against the sidewalks, as if having a three foot strip of green-belt was too much of an infringement on the profits of the developer.

    Many of the fences where covered with graffiti, as were a few areas of sidewalk.

    I imagine these homes where not long ago selling around $300K, perhaps a bit more. I couldn’t help but put myself in the shoes of a homeowner couple who has to pay $2500 or so a month for the privilege of coming home to that every day (and probably after an hour commute).

    Wasn’t exactly worthy of a commercial for the bliss of homeownership.

  42. 42
    disbelief says:

    “There is good news about all this: when I start building my house this summer, quotes for materials and contractors should be less than I’m currently budgeting. Cheers!”

    Don’t bet on it Markus. For one, many of these materials come from Asia, and with the continuing slide of the dollar…..

    Also, I wouldn’t be surprised that when both suppliers and retailers like Lowes / HD see themselves getting squeezed, they will raise prices further.

    Hopefully you didn’t budget this too long ago either, as prices on goods have been rising steadily for a while.

  43. 43
    disbelief says:

    “At 85th and Aurora I’ve been told there is enough dirt for another thousand units.”

    and a good supply youngster gang members ready to provide some graffiti art gratis!

  44. 44
    Markus says:

    Hi Disbelief,

    I thought the wholesale price of wood and materials are falling? I think that has been said in previous postings. I’m planning subcontracting 80% the work out. I’ll be building a small home by todays standard (2,200 SF). My plan is to have the least expensive house on the street.

    Has anybody looked at the actual price of construction verses sale price? I see previous posts that a new home sells for $X00,000, but what did the house actually cost to build and how is that build price affected by the bubble?

  45. 45
    Michael says:

    Hey Tim,

    I want to have a pole on the next bank to fail. I have my money on Lehman but WAMU is looking none too healthy. Wells Fargo boasts a AAA credit rating but so did a lot of those Mortgage backed securities that killed Bear. It’s a tough call but I’ll put my (rapidly depreciating) dollar on Lehman.

  46. 46
    matthew says:

    LEH, MS, MER, WAMU, C

    are all prime contenders.. take your pick

  47. 47
    Locust says:

    Markus–

    We are in construction now on a new house. Lumber prices are down substantially, and subcontractors are less busy than before so pricing there may benefit some. However, there is a lot of commercial work going on in Bellevue and Seattle, so concrete work and other trades like that are not going down in price. I think the serious slowdown in new residential building makes this time as good as it is ever going to be anymore for building your own home.

    That said, it’s still pretty expensive because you are never going to achieve the economy of scale that the mass production homebuilders like Quadrant achieve in their subdivisions, nor will you want to settle for that level of quality and generic finishes if you have a choice financially. I would expect to pay $250 per square foot for construction cost of something nice, if you work through a general contractor.

  48. 48
    Buceri says:

    Locust – $250 per sq.ft.??? OUCHH!!! That better be very nice!!

    Markus – have you considered waiting a few more months (one more summer)? It gives you 12 more months to save, and contractors should be fighting for business.

    So Puyallup is getting hit? – well during our yearly Seattle pilgrimage, we’ll spend a week with family there. I’ll drive around and stop at “info tubes”.

  49. 49
    Mike2 says:

    However, there is a lot of commercial work going on in Bellevue and Seattle,

    Give it a year. Commercial is slowing sharply.

  50. 50
    Dan M says:

    So where is pepper? the only brains here has been chased off?

  51. 51
    The Tim says:

    Dan M:

    I can tell that you are commenting from within Ray Pepper’s office network. That means that you are most likely an employee of 500 Realty. Please stop trying to pretend that you’re just some Average Joe that enjoys Ray’s comments.

    If you and others insist on continuing this charade, I will have to ban your office IP from commenting.

  52. 52
    David McManus says:

    pOwned by The Tim.

  53. 53
    WestSideBilly says:

    “At 85th and Aurora I’ve been told there is enough dirt for another thousand units.”

    and a good supply youngster gang members ready to provide some graffiti art gratis!

    Don’t forget about all of the women with dubious morals to occupy you at night…

  54. 54
    Ubersalad says:

    Damn it Tim, you should just rename his nick to something like Pepper’s biatch…

  55. 55
    Michael says:

    I’m beginning to think that 500 reality some kind of cult. Ray’s “employees” are so devoted to him that they will go to any length to continue praising his profound genius. It is like North Korea! Ray can threaten them with unemployment even torture but they demand to praise the great leader of Tacoma real estate on random message boards. V

    iva La Ray. Viva La Ray.

  56. 56
    Ubersalad says:

    I should start $495 Realty and perhaps I can steal his followers…

  57. 57
    disbelief says:

    “Ray’s “employees” are so devoted to him that they will go to any length to continue praising his profound genius. It is like North Korea!”

    Somebody should pull Ray’s image off of 500Realty’s site and provide him with some gaudy Kim Jong-il-worthy photo-shopped sunglasses!

  58. 58
    Ubersalad says:

    Or…300Escrow to compete against S-crow.

  59. 59
    disbelief says:

    Markus,

    Perhaps I spoke to soon regarding material costs, but I was under the impression that lumber had had it’s own “bubble” recently, and that any savings would come down to whether your initial estimate was done recently or not.

    Researching it though, I see that (wholesale)lumber rices have been falling steadily from their peak in about 2005 to early 2006- by about 30-40% (?)

    But I do think Locusts point about economies of scale, i.e purchasing power of the larger developers comes into play, and you probably won’t be able to see the full benefit of that slide in prices.

    I know some folks who built a home in Auburn just last year (as an investment-to sell) Cant’ remember the exact final cost but it wasn’t much under the current market price of such a home (slim profits).

    I think the idea of holding off a while longer or so to allow contractors to become more competitive is a good idea. Same goes for the price of the parcel-I imagine chances are that will go down some as well.

  60. 60
    MacAttack says:

    That said, it’s still pretty expensive because you are never going to achieve the economy of scale that the mass production homebuilders like Quadrant achieve in their subdivisions, nor will you want to settle for that level of quality and generic finishes if you have a choice financially. I would expect to pay $250 per square foot for construction cost of something nice, if you work through a general contractor.

    That’s funny! I was getting quotes of $125-150 a SF back in 2002 for our five-acre lot. Ya know what I did? I put a nice Karsten 2000 SF three-section MF house on it – for $90K, set on a 42’x50′ slab. We figured it was about paying off the debt rather than impressing somebody – and it’s a nice house too.

  61. 61
    Alan says:

    I’m beginning to think that 500 reality some kind of cult. Ray’s “employees” are so devoted to him that they will go to any length to continue praising his profound genius.

    I had the same thought. Many of the RE professionals seem to express amazement that Ray is able to do what he does for only $500. If he runs the business like a cult (and many small businesses are run like a cult) that might explain how he can keep costs down.

  62. 62
    Ray Pepper says:

    Too funny. I have yet to find the “culprit”. I suspect its all these WFG Mtg reps in here. We share 2000 sq feet with these guys and share our Comcast Business routing system. We normally keep them well fed with loan leads but the last 2 weeks its been slower then average.

    I think they are pumping 500 Realty in between lead generation calls. And Yes, you nailed it. 500 Realty is a cult. It seems to have gotten a following like the movie Rocky Horror. Everyone wants to bring down the Realtor profession and they see 500 Realty and Red Fin as the drivers.

    I suggest Tim block the entire 500 Realty office(were only there 3 more weeks anyway). Tukwila here we come!

  63. 63
    Ubersalad says:

    Tacoma to Tukwila to….bankrupt!

  64. 64
    Ubersalad says:

    oops, I meant to post here. “I am joking of course, best of luck to you!”

  65. 65
    Ray Pepper says:

    Bankrupt? We have no debt. Good Lord! The advertisers alone keep us cash flow positive month after month. The listings and buyers are just sugar . its a relatively simple model as long as we don’t enter into a 10k a month lease.

  66. 66

Leave a Reply

Use your email address to sign up with Gravatar for a custom avatar.
Your email address will not be published.

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

Please read the rules before posting a comment.