King / San Diego Median Price Comparison Revisited

I thought since I’ve been on a road trip in California the last week or so, it would be appropriate to post a quick update on the San Diego / King County median price comparison I originally posted back in March.

Here’s where King and San Diego counties stand as of August:

San Diego & King County Median Home Prices
Click to enlarge

Back in March (February’s data), San Diego was still about 5% more expensive than King, but if our two assumptions (King prices stay flat, San Diego’s declines slow) were to have held, San Diego would have been 7% cheaper by December.

Well, neither assumption has held true. King has declined 4% in the last six months, and San Diego’s price declines have accelerated. However, since San Diego’s price drops have actually increased their pace, San Diego County is now nearly 10% cheaper than King County.

Will the Seattle area continue to command a premium over sunny, tech-heavy, defense-industry, world-class Southern California? Time will tell, but I’m predicting that this particular situation won’t last much more than a year, maybe two.

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About The Tim

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


  1. 1
    stephen says:

    That’s a long time out to predict but I agree it’s likely several years from now when all of this mess has been sorted out and the market starts hopefully a long inflation level yearly uptick again that SD will be priced above King Co.

    Of course if sunny SD sounds that much better to some, now may be the time for them to take a peek. I love the Seattle metro and will never leave the Northwest :-)

  2. 2

    I don’t know, Tim. We just moved up here from California because we were tired of heat and drought, both of which are getting worse in SoCal than they were in NorCal whence we came. I think that over the next decade or so, purely due to global warming, you’ll see people starting to exit California — especially southern California — as it reverts back to a desert. Especially if the Big One hits San Francisco and knocks out the Delta’s water supply to Southern California… could be serious depopulation then.

    Alright, so that’s a bit apocalyptic — my point remains: California isn’t necessarily a clear livability win over Seattle, at all.

  3. 3
    50%off says:

    Just check the income to house price ration in Seattle. Tell me again that you think it will stay this way…..?

  4. 4
    Lionel says:

    Just walking through my Bryant neighborhood, I’m noticing a lot of houses just sitting. A few in the last week have dropped prices, but they’re not very impressive houses, and my guess is they drop a lot more (they’re still above 500K). Not helping these particular home sellers, I noticed a new listing last week that is at 469K. These declines are just now beginning. I’m sensing that many now are beginning to understand that Bernanke and Paulson are not close to solving the housing decline, and prices are going to experience extraordinary downward pressure. In the mean time, I’m contentedly renting for less than half what it would cost to buy any of these properties.

  5. 5
    patient says:

    I myself just came back from a visit to SoCal. I must say that it blows my mind when people start babbling about Seattle being a more desirable place than SoCal to live. They normally mention shallow people and heat as negatives for SoCal and Seattle’s intellectual aire and climate?! as strong points. It’s bs to me. Socal is truly am amazingly desirable place to live. The climate is incredibly pleasant and the people I met seems relaxed and pleasant enough. The only reasons that makes sense to me for people to prefer Seattle would be an attachement to family, work or other social ties. I think the Tim’s estimate is very good since I can’t see Seattle staying more expensive than SoCal beyond the bubble pop. While I’m sure there are people who honestly prefer Seattle over SoCal overall ( they live here after all ) I think they are exceptions from the masses and a poll among people who live in Seattle will bias Seattle compared to a nation or world wide poll and it’s the masses that sets general desirability in terms of prices not the exceptions.

  6. 6
    Steve Tytler says:


    I was mocked early this year when I said there was no way the Seattle area housing market would follow a similar trend as the San Diego housing market.

    I said SD home values would drop MUCH more than Seattle area housing values
    and that there are no virtually no similarities between the two housing markets.

    Once again, your chart proves I’m right.

    Same goes for the recent MLS stats which show my prediction published in my newspaper column last Fall that we would see a 10-20% drop in average home values this year (depending on neighborhood) is right on track.

    So how did I know all this?

    I’ve been saying for years that this housing market is very similar to the 89-90 housing boom and early ’90’s housing bust.

    Back then, SD home values fell about 50% while Seattle area home values fell only about 10-20% (again, it varied greatly from neighborhood to neighborhood).

    So history is simply repeating itself.

    The mortgage meltdown is adding fuel to the fire, but the reality is 95% of homeowners are paying their mortgages on time, so it is not as big of a factor
    as some people would have you think.

    One advantage of being an “old” guy (I’m 52) is that I’ve seen this all before. It’s nothing new. We had a total collapse of the Savings & Loan industry in the ’80’s and we saw foreclosures increase dramatically in the Sun Belt states, while foreclosures in the Seattle are increased at a far slower rate.

    Once again, history is repeating itself.

    Based on historical trends, I expect home values to keep falling this year
    and probably bottom out some time next year after the glut of homes hits
    the market during the Spring home selling season. The sellers who have
    been holding out for higher prices will finally have to face reality and cut
    their prices to sell.

    Once that happens, we will have a few years of “flat” (little to no appreciation)
    housing markets while the excess inventory is rung out of the system.

    When the housing inventory gets low, we will swing back into a “Seller’s Market” and it will be back to the races with the next housing boom.

    It’s very predictable 7-10 year pattern.

    Steve Tytler
    Everett Herald Real Estate Columnist

  7. 7
    patient says:

    Steve, cudos to you for accepting the reality of falling prices before many of your peers but the situation we are in now is nothing like a normal repeated pattern. It’s the mother of all hosuing bubbles and thereby the pop(price fall) is likely to be the mother of all price falls as well. 10-20% is just the beginning for Seattle. I think home owners can see themselves as very lucky if it stops at 30% down.

  8. 8
    B&W Nikes says:

    It’d be interesting to see the same chart spread for all 5 of the big west coast counties – San Diego, Los Angeles, San Francisco, Multnomah, and King. Will Seattle hold over SD? Normally no, but with the “nice loan if you can get it” environment on the horizon the spread may hold it for much longer than we think it should. As the more extreme changes in SD pricing continue to shake out and and drag their sick economy back into balance, our price increase expressions were a bit less extreme, and the corrections are likely to follow a less volatile trendline here as well.

  9. 9
    rdmcabee says:

    This graph is only showing 2 years. There was an earlier graph that showed the run up in prices for San Diego and Seattle over a longer period. It showed that San Diego’s boom in housing prices happenned earlier then Seattle’s and suggested Seattle would follow the same pattern.

    In the Graph San Diego had a flat period before a drop in prices. Are we simply seeing Seattle’s ‘flat’ period before the drop? I don’t think much can be claimed based on the graph showing only 2 years of comparison, especially since the Seattle markets run up in prices significantly lagged behind San Diego’s. If two years from now Seattle housing prices were still flat, but had not dropped significantly then we can say the Seattle/San Diego comparison was not a good one. If over the next two years Seattle home prices drop over 20% then I think the comparison was apt.

    Anyone have the link to the earlier graph?

  10. 10
    Everett_Tom says:

    I was mocked early this year when I said there was no way the Seattle area housing market would follow a similar trend as the San Diego housing market.

    I said SD home values would drop MUCH more than Seattle area housing values
    and that there are no virtually no similarities between the two housing markets.

    Once again, your chart proves I’m right.

    I don’t think you can quite declare “victory” yet.. I think those that said that also subscribe to the 17 month lag theory.. and going by that (and looking at the Case-shiller graphs) we’ve not broken away from SD yet.

    ( see for declin from peaks graphs)

  11. 11
    B&W Nikes says:

    …oh and Steve this is absolutely nothing like the 80s or the 90s. Elements of the Glass-Steagall Act were still in effect then, none are now. Though the S&L was a response to peeling away some of those regulations. SD and SoCal are always more volatile than Seattle it’s true, but what is going on now with credit is a 100 year event, not a seven to ten year cycle. Any guesses on where prices will be in 2015? :)

  12. 12
    rose-colored-coolaid says:

    Steve, you are arguing from a historical perspective, so I just wanted to ask if some of the other details have closely matched the historical boom/bust cycle. If they have, then I will give your arguments more weight, and if they have not, I will give them less weight.

    Particularly, what kind of pattern did SoCal follow when crashing before? This time, San Diego prices peaked in spring 06, declined slowly for a year, and then went into all out crash mode with losses accelerating. Clearly, the story isn’t over yet, but did the crash accelerate in SoCal last time?

    Second, how long did the previous Seattle crash last? I was under the impression that it ended almost before it started (something like 6-9 mos), but I wasn’t an adult then so I don’t really have a memory of it. This series of declines has been over a year in the making already, and it does not appear to be slowing yet.

    Third, how do the macroeconomic conditions between that last crash and this one compare. We’ve seen declines for a year already (two in San Diego), and it seems like economic conditions have only worsened the entire time, coming to a head just this last week with a $700 B bailout proposal that MIGHT stall a depression.

    I’d love to use a good historical model to help me decide when the right time to buy is, but I’m a just a little concerned that there aren’t any good examples to draw from.


  13. 13
    Sniglet says:

    If we want to see how this downturn will compare to historical experience we ABSOLUTELY need to know how the percentage of home-owners with little or no equity caimpare. If there are higher numbers of equity poor home-owners today than there were in past downturns, then we really can’t draw any comparisons as to the outcome.

  14. 14

    This is shocking.

    @2 – El Centro does not count as So. Cal. I lived in San Diego. The Summers are actually cooler than Seattle, and the winters are obviously more pleasant.

    If this trend stays in tact, you’ll find me hanging 10 at Pacific Beach soon.

  15. 15
    S-Crow says:


    Care to let the world know who mocked you? I’m not talking specifics, but was it the general public or those in the business or combination? I can tell you from my perspective that I sure don’t get any more mail at home discussing, “there is no bubble,” etc….like I used to.

    I hope you are correct in your assessment of 10-20% drops. My sense is that this is a different animal and will not follow the footsteps of the last correction. And I remember the 1990 correction all to well. Except, now that I think of it, the investment firms on Wall St. were still here and we never had a massive bailout of this proportion, tied heavily to bad mortgage debt. WAMU was still a small bank and not on the brink. I opened my account at the Magnolia branch. Plus, cool Hummers for sale to the public was not in the works, at least I don’t think they were. Not that there’s anything wrong with them.

    Glenn Kelman @ Redfin was quoted in CNN Money saying that his co.’s closed sales (IIRC) were 10.7% below the last listed prices. Kelman said, “that is enormous.” I’m not sure if that is an average in our market or of every office located within the Redfin network, here and in other states.

  16. 16
    attybrian says:

    Sorry to be crass, but what in the hell are sellers and seller’s agents thinking? I’m up here in Snohomish County, waiting to buy a house. I am living with friends, so have no real hurry; I make good money, but lately all the new houses I’ve seen on the market that are acceptable are priced anywhere from 160 to 180 bucks a foot. WTF?
    These houses are just gonna sit, aren’t they?

  17. 17
    Thomas B. says:

    @13 P-Beach is a good place to live. I might start looking down there soon. Especially if there is a repeat of last winter. Ugh.

  18. 18
    Elpollopoco says:

    patient It’s the mother of all housing bubbles and thereby the pop(price fall) is likely to be the mother of all price falls as well.

    Exactly; nothing like the right-hand side of the Case-Shiller graph was in effect during the mini-crash of the early 90s. Nothing in the recorded history of US real estate looks like the climb from 2000-2006, so it wouldn’t be surprising if no historical models are helpful in predicting the graph’s behavior from 2006-2012.

    Even if $7E11 is spent on the bailout… where’s the money for Joe Sixpack and Jane Boxwine’s next house going to come from? Either lending standards have to remain fast and loose to restore and sustain the Case-Shiller peak, or home prices have to fall very far. There is no option ‘c’ as far as I’m aware.

  19. 19


    Perhaps Seattle will delay the Great Depression for a few more months/weeks?

    You’ve heard me lament before: if the bottom 80% of Seattle household incomes continue on their stagnation/degradation due to our national uncontrolled population growth and overly insane job competition; Seattle home prices will never go up again. Period. How could they?

    King Bernanke made an absurd statement today, making like American overpopulation growth is good and we must bailout the Wall Street fat cats out or “growth” will not continue. Hades, its the uncontrolled population growth that caused this debt crisis in the first place [we’re mostly all in denial].

    My blog to Dr. Roubini [it caused all his fellow bloggers to lambast even Dr. Roubini’s entity bailout HOME plan]:


    His quote today:

    “…”The intensification of financial stress in recent weeks, which will make lenders still more cautious about extending credit to households and business, could prove a significant further drag on growth,” …”

    The rest of the URL:

    Is this bailout entity like that Sci Fi horror movie about the devil demon, called “The Entity”?

    Perhaps we need to let the banks tighten their belts and raise interest rates to stay afloat; rather than slap us taxpayers with a corporate welfare bailout population “growth” bill?…”

    The whole RGE URL:

  20. 20
    TheHulk says:

    Purely anecdotal but still true.

    A large number of people in the last 3-4 years seriously overextended themselves on the houses they bought in that period (hmmm kind of like all those hedge funds who used tons of leverage). These days far more emails are circulating about “great houses for sale” and “willing to work without agents” and “price negotiable”. Such emails were never seen before.

    Methinks this is the onset of the panic stage. The time when the crowd as a whole turns and starts running for the exits.

    Steve, let us see if you have the cojones to stand behind what you have written above one year from now.

  21. 21
    los says:

    Neither nor NWS data (for example, backs up your claim that San Diego is cooler than Seattle in the summer. It’s certainly true that as long as you are lucky enough to live within a couple of miles of the coast, SoCal is not nearly as hot as it is reputed to be. But once you leave that zone, SoCal is every bit as warm as its reputation. Compare, for example, the weather data for El Cajon CA and Kent.

  22. 22
    Chipmunkbob says:

    To Rob @ #2:

    You do know that the Puget Sound region is in FAR far more danger seismically than anyplace in CA right?

    I still remember people in 3/2001 saying how relieved they were that the earthquake had happened so that they had one less thing on their mind to worry about.

    As a San Diego-born Coronado-raised “true CA native” the price declines “at home” are truly compelling. The problem is that Seattle is nice (although a different place than what we came to in ’97 from Denver) and my wife and I have meaningful employment here.

    But who knows what the next year or two will bring? Neither of us are sure that Seattle is the “one” yet.

  23. 23
    singliac says:

    los is right. I grew up in Los Angeles, and there is no truth to the idea that SoCal is cooler in the summer. Even if you live right on the coast, it’s way warmer than Seattle (averages, highs, and lows). Maybe it just seems warmer here because you don’t have an air conditioner.

  24. 24
    Paluka Ville says:

    Looking at the listings on Windermere, I’ve seen a 475k midcentury in W Sea and a 499k in Magnolia sell in under a month. While there are houses all over the place trying to sell for 700k – 1.2m,and I consider that laughable in many cases, the fact is that prices have a long way to fall before they get back to where they were before this local bubble started in 2003-2004. Somebody is still buying properties. 499k is still a lot of house for the average family to take on financially. Everybody talks about SoCal, but lots of people still want to escape the drama down there..

  25. 25
    Johny says:

    The “17 month lag theory.” does not take into account the 700 billion bailout along with the last 300 billion mortgage bailout .

    The US Government is going to throw so much money at keeping prices up – they will provide a floor to housing by signicantly reducing forclosures- The 17 month lag might prove to be a big benefit to seattle housing prices.

  26. 26
    Ray Pepper says:

    Predictions…Predictions….You know what they are worth. Here is mine……….Scoop GEMS over the next decade and enjoy your retirement. There will be thousands to choose from. No rush. I continue to place my bets on the 50% drop from the highs in the Reno area. 3 foreclosures just hit my tgt point of 150k range. Although I have a passion for mixed-use commercial I may take a bite again on 1 or 2 residential. They hit a high of 298k and new came out of the gates at 165k. But, with all the landscaping done, blinds, upgrades, only 4 years old, and a rental mkt supporting 1200 the 150k range is tough to pass up.

  27. 27
    TheHulk says:


    Yeah right, uncle same threw tons of money at Lehman and bear and AIG. Fat lot of good it did propping up those companies assets.

    Paulson and his buddies are only looking at bailing out his golfing buddies on wall st. They will buy the assets at “above-market” prices from the banks. That doesnt mean the asset is priced correctly. It just means the banks get away scot free. AND we, the taxpayers get to foot the bill.

    And just because some fool (in this case uncle sam) paid a certain amount of money for an asset doesnt mean the value of that asset is *that* amount. Housing prices are going to collapse all over the country regardless of the bailout. The only thing that is sure is the following:
    IF ballie mae succeeds, 700 billion or so gets tacked onto our nation’s debt. This means the dollar will decline. This means all commodities will be more expensive (as will be loans etc). All in all it means all the taxpayers will be hit everywhere, while wall st gets away scot free.

    Read between the lines, not just what they tell you.

  28. 28
    david losh says:

    OK Steve, I’m 55 and have been involved in the Real Estate business since high school.
    There has never been anything like this.
    Of course these charts are more useless data for your amusement.
    The San Diego market place, along with Las Vegas, has huge population swings. We might as well throw Phoenix into that mix.
    These cities harbor transient labor populations. They live there while there is work, and leave when there isn’t.
    The problem I see is that you are attmepting to present this as business as usual. It’s not. The press in general has missed the larger picture of what’s happened with the financial markets.

  29. 29
    Paluka Ville says:

    I just looked up a bunch of prime areas. If you want to buy in Reno or some other desert cesspool, or Tacoma, then fine. I have yet to see any deals in Mission Beach, La Jolla, Huntington Beach, Santa Barbara, etc that everyone knows is the prime stuff.
    In those places, the prices are still skyhigh, still at least double what they were only ten years ago.

  30. 30
    Ron says:

    Steve- Many of Have been Calling things a Lot better than you- and we don’t have jobs that are based on our predictions. Maybe most your focus is really in Just Selling yourself.

    You might leave what might actually be the real professionals alone & spend a little more time getting your facts, before coming back into the Snake Pit.

    Steve how much actual time you spend? on real data- Betcha can’t come even close to the 20-30 hours “I spend looking at all sides.. at the same there is absolutly no way anyone can call everything as it falls.

    Sure Steve- Fannie/Freddie/AGI/Bear Sterns/almost 300 Mortgage companies and the over 100+ Banks that are on the Brink of Failture are just Normalities we have seen from past cycles.. You Actually Think Were Stupid?

    Credit is what created the Price Run ups and Credit will bring those prices down.. historic pull backs on Credit… it will be very lucky if Seattle Escapes with only a 30% price drop.

  31. 31
    Garth says:


    You can switch between Subprime and alt-A and there is a button on the right of median LTV.

  32. 32
    Sniglet says:


    The data you linked to doesn’t seem to help much. It will show the median LTV, but that doesn’t tell us what percent of people have low LTVs. Also, it doesn’t appear to offer any historical data that would allow us to compare the number of people with low LTVs today with past peaks in our region.

    I do appreciate the link though.

  33. 33
    John Smith says:

    Question for the group… If you were:
    1) currently renting,
    2) had saved enough money to put over 40% down on a house that you could see yourself retiring in and was in the location you wanted to raise your family,
    3) the mortgage payment would be 14% of your gross income (not including my wife’s income who may stop working soon for us to start a family)
    4) my wife and I are in our mid-twenties and early thirties

    Would you buy the house, or continue waiting? We have been saving since 2004 and are starting to get tired of putting our lifes on hold. If you would wait, how long would you wait?

  34. 34
    Markor says:

    Ray Pepper: But, with all the landscaping done, blinds, upgrades, only 4 years old, and a rental mkt supporting 1200 the 150k range is tough to pass up.

    Are you sure you’re not putting too many eggs in one basket? What if the rental mkt supports only $800/mo a couple years from now?

  35. 35
    jonness says:

    Here is the historical price chart of San Diego vs. Seattle using Global Insight’s data:

    Click Here

    There appear to be some similarities to the current situation, but I would argue things are very different now than they were then.

  36. 36
    Ray Pepper says:

    Could happen Markor but these are all newer homes and the property taxes are just so much less in Nevada then here. I hedge my risk by purchasing these homes with partners and usually owning just 50% of each house. Reno/Carson is dependent upon the bay area. Since many can’t sell their homes in silicon valley the Reno mkt is dead. For 150k I just find nothing in Washington that yields 1000+ in rent. Even here in Tacoma the crapper homes bring 125k plus. We may wait till Nov-Dec and hopefully get 130-150k but thats really pushing it. There are just far less buyers to compete with. We shall see. The joy is there is just no rush.

  37. 37
    AMS says:

    How about a new graph to show actual results?

  38. 38
    Harley Lever says:

    You can try to beat Steve up all you want, but there are some major differences from King County to San Diego.

    1. San Diego’s real estate run up started much earlier and peaked much higher, Seattle run up started later and saw half the run up.
    2. Their default notice rate is roughly 3300/month in 2008, King County’s is roughly 800/ month.
    3. San Diego has 50 miles of waterfront property, King County has 2000 miles of waterfront property.
    4. San Diego county has 4261 square miles, to King County’s 2126.
    5. San Diego’ median household income is $59771 and King County’s is $71,420 (so much for San Diego so being tech heavy and all that defense money)

    You need to look more deeply than comparing home prices, “weather”, and what you think the job market is and what it might pay. The run up inspired many San Diego residents to leverage their newly found equity and take cash out or buy other homes (Arizona, Vegas). With twice the run up of King County residents, yet earning 20% less than King County residents you can see why they are in major trouble. Pile all of California’s taxes, higher gas prices, water shortages, higher utility costs and crime and you can easily get a sense that the grass might not be as green.

    The reason why the Tim’s comparison is departing his predicted trend is because the two counties were a poor comparison to begin with. Most importantly he forgot real estate’s biggest rule, IT IS LOCAL.

    From this point on, the government’s actions will determine how the market does. With credit frozen all markets will see large decreases. If the government takes over the loans and creates workouts with home owners and makes credit more easily available then housing prices will level off. For evidence of the effect of the credit freeze and how banks are not working with customers look at the percentage of houses being foreclosed on and sold it’s almost double from the previous year

  39. 39
    Joaco Tejas says:

    I have been reading this blog for a while… this is my first post… I have two questions that have been lingering for a while…

    1) Do you have any logical explanation for the lag-time between the “bubble burst” in Seattle vs other markets? Is it that news take so long to reach Seattle? I cant think of any obvious reason for such a long lag time (several months).

    2) What do you think will be the role of inflation or hyperinflation. If the dollar plunges much further or quicker and you don’t plan to move for a while, it may be a very wise investment to buy a house.

    I am curious to see your opinions… Sorry if either one has been addressed before.

  40. 40
    MisterBubble says:


    One thing I’ve learned in life: if everyone is mocking you, then it’s probably because you’re being an idiot.

    Tonight the president got on TV, and announced to the world that “our entire economy is in danger,” if we don’t bail out our banks to the tune of over $700,000,000,000. Boy…I remember when that happened in 1990, don’t you?

    Point is, Steve, is that this time, it’s a little different. We may be 20% down today, but that says absolutely nothing about tomorrow. And the fact that we were only down by 20% a decade ago? That’s totally irrelevant. If next year, we experience a 30% drop, are you going to argue that it’ll be just like 1976?

    Yeah, you probably will. Enjoy your bellbottoms, Steve.

  41. 41
    darth_s says:


    I srongly disagree with with your prediction. I don’t think we will have another housing boom for a very, very, very long time. Remember that “the generals are always good at fighting the old wars”. Now, everyone understands the mess we are in is created by a housing boom based on un-regulated financial innovations – NINJA loans, CDS/CDO, Option ARMs, etc. After we go through this mess, I don’t think the banks will ever dare to make loans to people who cannot pay back. Loans now have to based on the good old 3 Cs: Credit worthiness, Capability to pay, and Collateral down payment. So, in order to have a housing boom, we have to have a wage/income boom. With the current global landscape today, I don’t see any of this will arrive soon.

  42. 42
    wombat says:

    I live in the Bay Area but I spend a lot of time up in the Seattle area.
    I was visiting one woman here in Fremont who lamented that a short sale had gone down on a Condo in her complex for 240K. At one point these same Condos were selling for 420K. These are fairly modern 2 bedroom condos. So I do believe that there is a trend that nobody ever thought they would see of the Bay Area selling for less than Bellevue.

  43. 43
    Angie says:

    I visited southern California for the first time a few weeks ago. (I went to college in the Bay Area, so I’m familiar with northern California.) Took the kids to Disneyland. We didn’t get as far down as San Diego during our stay, but from what I saw of LA and environs, including toodling along the coast for a while near Santa Monica, there is NO way on God’s green earth that I would live down there.

    Nice to see palm trees again, and we had a fun time at Disneyland, but that wasn’t enough to make up for all the negatives. Too sprawling, too many strip malls, too dirty, too much graffiti, too hot, too expensive. Not much to recommend it. And the water out of the tap tastes like sh*t! It was gross.


  44. 44
    JC_Returns says:

    All of you optimists still don’t see the glaring red light. Banks currently are not loaning MOST people money. The financial markets have come to a screeching halt this week which some say could send this entire country into a tailspin. You could ask 500k for your house or 200k for your house, but unless the buyer has that kinda cash in-hand, most likely they won’t become new homeowners anytime soon. Even with 20% down and an outstanding credit score, lenders just aren’t willing to take on these risks in today’s housing market. Especially if there is a great chance that the market has the potential to drop another 20% which in turn voids the 20% down security that they had. A bailout may be required whether we like it or not, but it won’t necessarily mean the end of the declining housing market.

  45. 45
    DaveP says:

    [quote= Steve Tytler ] One advantage of being an “old” guy (I’m 52) is that I’ve seen this all before. It’s nothing new. [/quote]

    Wow, you actually played the “I’m older than you, so I know better” card. Cool :D

  46. 46
    Steve Tytler says:

    As some of you know, I own a mortgage company. So I am VERY familiar with the credit crunch because I deal with it every day.

    The days of “liar loans” and zero down loans (other than VA) are gone — thank goodness! We are now back to the kind of common sense lending we had in the 1990’s when I started in the mortgage business. Actually, lending standards today are still much more lenient than they were back in the ’90s, but now you at least have to verify your income and credit before you can get a loan and you have to make at least a small down payment (3-5%) unless you’re a veteran.

    If you have a steady income and decent credit, you can buy a home.

    We literally have clients buying homes almost every day. Today alone I had two different clients make offers on homes.

    So if you think people are not buying houses today just because of the “credit crunch” you are wrong.

    The tighter loan standards have had SOME effect, of course, but I would estimate that they have reduced the overall buyer pool by only about 10%. The rest of the population can afford homes and they will buy when they get around to it.

    Real estate prices are simply a function of supply and demand. The reason home prices are falling is because there are more sellers than buyers. It’s really that simple.

    Buyers know that they are now in charge, so they are not in a hurry to buy. Housing booms happen when the inventory of homes for sale shrinks and buyers start to think “I better buy NOW becuase prices are going up!”

    Trust me, that WILL happen again sometime within the next 10 years.

    Now, if we enter a new “Great Depression” as some people are predicting, all bets are off.

    But barring a total collapse of the U.S. financial system, I am confident that any house you buy today will be worth more money 10 years from now than it is today — but in the short-run home values are likely to continuing dropping for another year or two.

    I tell my clients that they should never buy a house unless they plan to live in it for AT LEAST 7-10 years because that is the length of the typical real estate cycle.

    If you buy a house and have to sell in the first 5 years, you are almost guaranteed to lose money unless you happen to luck out and sell during a housing boom. That’s just “Real Estate 101.”

    Unfortunately, many people get caught up in the “get rich quick” atmosphere that surrounds every housing boom and they start to think that it’s “normal” to buy a house and sell it for a 30% profit in less than 2 years. It can happen — IF you get in and out at just the right time — but in most cases you are going to lose a lot of money. Even if you sell the house for the same price you paid for it, real estate commissions, excise tax and other selling expenses will take a big bite out of you.

    I know that some readers of this blog are hoping for a collaps of housing prices in the Puget Sound region so that they can buy houses for pennies on the dollar.

    Sorry, but it’s not going to happen. I know we have a VERY serious financial crisis facing the US today, but we will survive. The Boeing Bust of 1970 was a very serious economic blow to the Puget Sound region but home prices didn’t collapse then. There has never been a time when our home prices have fallen 50% like those in San Diego, Las Vegas, Phoenix and other boom-bust housing markets. Yes, we really are “different.”

    I see nothing on the economic horrizon (other than the new “Great Depression” that probably won’t happen) that would indicate that we will break from our historic norms and suddenly follow San Diego’s real estate market down a rat hole.

    My weekly real estate column has been published in the Everett Herald and other Seattle area newspapers every Sunday since 1990. I will continue writing it over the next 10 years, and at some point I’ll be able to say “I told you so” when the next housing boom comes along.

    And if I’m wrong, you can write in and say “neener neener!”

    Steve Tytler
    Everett Herald Real Estate Columnist

  47. 47
    Alan says:

    But barring a total collapse of the U.S. financial system, I am confident that any house you buy today will be worth more money 10 years from now than it is today…

    In inflation adjusted dollars?

  48. 48
    Matthew says:

    San Diego is completely different than Anaheim…

  49. 49
    shawn says:

    Patient, you “visited” SoCal. I lived in Los Angeles, Valley Village, to be specific. I can tell you that you must live there for a while to do a real comparison. I had my car broken into, police would not come out to take a report, my neighbor got burglarized, they came and made a report, but told him later that there would be no investigation. So, you got crime, and you got police that will not do anything about it. Next, check the air quality. Ever drive north over the Santa Monica mountains? I did everyday, and that smog hanging over the valley did not look healthy to me, and what could I do? I had to breathe it. I drove about 15 miles to work, and 15 miles back, everyday. Took about an hour each way. Every day I was either road raged against or had to watch others road raging against each other. In eight years there I was rear ended on the freeway three times. It was common to be in line at the bank, or grocery store and have someone walk up to the front of the line, where I was, and just stand in front of me. I had to ask myself “am I going to again have to argue with a rude nut job?” Housing prices were insane * 1000 compared to Seattle. In eight years there I never smelled flowers or nature, here in Seattle it is so nice smelling, esp. just after a rain. And if traffic is not bad enough, no school buses. Yes you get to drive your kid to school, and pick them up by car. Also, do a Megan’s law search, check 91607 and compare it to 98006. 400 in 91607, and 67 for 98006.

    So, to sum it up in LA you get crime, horrible traffic, putrid air, rude people, overpriced homes, but, yes, you do get a lot of sun. In fact last May we had many days around 100.

    Now forget me, how about AAA, they had LA in the top 5 of the most rudest drivers, and Seattle in the top 3 most polite, so it was not all in my head.

  50. 50
    Matthew says:

    No one has seen this before unless you were alive in 1929.

  51. 51
  52. 52
    Steve Tytler says:

    Mr. Bubble,

    Regarding your comment “Tonight the president got on TV, and announced to the world that “our entire economy is in danger,” if we don’t bail out our banks to the tune of over $700,000,000,000. Boy…I remember when that happened in 1990, don’t you?”

    Yes I do, actually.

    Here is the opening paragraph of the Wikipedia entry on the S&L Bailout:

    “The savings and loan crisis of the 1980s and 1990s (commonly referred to as the S&L crisis) was the failure of 747 savings and loan associations (S&Ls) in the United States. The ultimate cost of the crisis is estimated to have totaled around USD$160.1 billion, about $124.6 billion of which was directly paid for by the U.S. government—that is, the U.S. taxpayer, either directly or through charges on their savings and loan accounts[1]—which contributed to the large budget deficits of the early 1990s.”

    $160 billion in 1989 (peak of the S&L crisis) is roughly equivalent to $300 billion in today’s dollars. Not $700 billion, but not “chump change” either.

    And, oh by the way, 1989-90 also happened to be the last major housing boom here in the Seattle area, before the housing boom at the beginning of this decade.


    Massive bank failures and a housing boom at the same time … with mortgage rates at 10% !!

    How could that be?

  53. 53
    Andy says:


    I believe Real Estate prices have to fall about another 30-40% in this market. Remember, homes are effectively manufactured good (over dirt) that depreciate over the course of time. Any GAAP statement will tell you this. Real Estate should track GDP growth – perhaps 2% a year.

    Unless you buy investment acerage (20+ acres) or extremely hard to get (waterfront, luxury “medina”); you’re going to take a bath. No one can afford homes anymore,

    My wife and I earn about 500K/yr combined. We recently relocated from New York and are looking in Gig Harbor. Let me tell you. People here are not exactly New York Hedge Fund managers, yet the prices in Gig Harbor are similar to Tribeca New York!!! What is going on!!!!!

    Let me tell you, the 200% appreciation we have seen over the past 3 years (in that market) is unrealistic. Someone needs to tighten monetary policy so banks are forced to eat what they sell. Remember the three C’s of Credit. CHARACTER, COLLATERAL, CASHFLOW.

    I’m finding out that most of the people that live in over-priced Gig Harbor cannot afford to live in their homes. $500K average home price and $50k household income (10/1 ratio).

    I wish our government would let the market just correct. I don’t want to bailout the mudkicker in Puyallup that cannot afford his home, or the “Wall Street CEO – aka political window dressing to appease the masses Let the deflationary pressure KO home prices, tighten lending standards, so that character-worthy responsible people can afford homes again.


  54. 54
    LUC says:

    If outstanding home mortgages are about $14 Trillion (not withstanding Fed’s table L.100 shows $10.7 Trillion) and about $5.3 Trillion relate to the GSEs which leaves $8.7 Trillion not already backed by the government, how does 5% even make a dent in the problem? Numbers do matter just not to these guys. Which yet again, provides evidence of a typical ponzi scheme. I know why they can not value the problem but will not say it which shows how disingenuous they are.

  55. 55
    Sniglet says:

    Steve wrote: “Now, if we enter a new “Great Depression” as some people are predicting, all bets are off.”

    How convenient… I suspect that most of the bullish prognosticators will proclaim innocence as their perpetual calls for a mild real-estate cycle prove to be illusory. How could they have predicted a “depression”?

    Well, some of us DID predict such an event, and realized that housing prices, and the economy in general, were WAY out of wack.

    My wife was beside herself last night after listening to Bush’s speech. She couldn’t believe that the nation’s leaders were actually sounding more dire than her tin-foil hat wearing partner! It says something when the Fed Chairman, Treasury Secretary, and even President are all proclaiming us to be on the cusp of something terrible…

    For the record, I am actually NOT as pessimistic as Paulson and Bernanke profess to be (which isn’t to say I don’t believe our economy is still in for a world of hurt, and that housing prices will drop 80% +).

  56. 56
    Matthew says:


    The initial estimate for the S&L crisis was 20 billion. It ended up being 160 billion. We have already spent:

    300 billion on Freddie and Fannie
    85 billion on AIG
    50 billion on money market accounts
    700 billion (ESTIMATE) to bail out the banks.

    This is much worse than S&L. None of these options have even come close to working at this point. The entire commercial paper market is frozen and housing has seen its worse declines since the Great Depression. Find another analogy.

  57. 57
    Ray Pepper says:

    Andy…I also have lived in Gig Harbor in what I consider the best city in the State. However, I have not bought yet either. The Harbor will continue to suffer huge declines in value. It was just way over built way too fast and all the builders just paid way too much for the land. It all must go back to the banks in the coming years. It will be very interesting to watch the foreclosures mount. Not to mention the 4.00 a day bridge tolls. You can look at my old home which is back on the mkt..MLS # 27045198..Bought it for 283k in 10/01..dumped it in 3/2005 for 469k…Its a great home and I have been watching it. I will buy it back for 350k but after many price declines it sits at 499k………The price will continue to drop.

    Steve Tytler your 10 year call will make many happy. They can dump their home they are buried in (remember non-recourse state and foreclose) and in 7 years their credit will be easily repaired and just in time to buy another home to catch the next run. You will make many happy for now they have an option….

  58. 58
    david losh says:

    I want to thank the Seattle Bubble for this forum and information.

    You were so right about the cheer leading aspects of the Real Estate industry.

    Today is far different from the Savings and Loan scandal. It’s hard to know where to begin.

    Unsecured consumer credit got mixed in with secured loans by consumers refinancing and rolling in, consolidating, debt. It went on for years until there was no more credit to be had.
    Consumers stopped paying credit cards so the government made bankruptcy harder. People began losing homes to foreclosure and the government encouraged FHA lending programs.
    It was when builders had a problem selling units that there was a problem. Consumers stopped buying. When they stopped buying homes, or thought homes were over priced, it rippled into the entire durable goods market.
    The problem is the core value of consumer goods. The price of everything is sky rocketing. Gas, food, housing, clothing, and entertainment have all gone up in price. The truth is that nothing is worth what we are paying for it.
    The family home is a heart tug issue. Assets have no emotions.
    They may keep the family home, so that is the very least of the concern. It’s a hot button.
    The problem is Wal Mart, Berkshire, cars, Microsoft, airplanes, Chinese products. Consumers faced with the cash they can get from a shrinking jobs market will only buy what they need, when they need it.
    To compete price becomes an issue. As prices go down so does the price of the assets that secure loans. Houses worth only say $250K with a $500K mortgage become precarious. People may keep them, or not, as they choose.
    It’s much different today.

  59. 59
    James Moore says:

    @Steve Tytler – “you have to make at least a small down payment (3-5%) unless you’re a veteran.”

    Wow – if that’s your standard of new and tough, the world is still insane. 10% is way too low, 20% is reasonable. 3% is banking stupidity – there’s nowhere near enough equity to make that a sane deal for a bank.

    And I don’t think it’s useful to compare San Diego County to up here. San Diego County is huge, with much more economic variety than King County. You’d be much better off talking about something like the city of San Diego vs Seattle + Tacoma + Bellevue + Kirkland.

    And PB is great place – I grew up there. Go Bucs!

    – James

  60. 60


    For someone who comes on the site and talks down to everyone, you sure don’t have a clue, do you?

    You’re right…its all about supply and demand, but along with that comes the implicit notion that demand exists. At current prices, the average American simply can’t afford the average home, thus there is no demand. Why can’t they afford it it? you surely know, the easy credit drove up prices. Now we need to see a pull back to see income/ prices re-allign to a respective ration (3 or 4-1)That’s the hear of the matter.

    So until we see either 1) a huge increase in wages, or 2) easy credit again(neither of which will be seen for a long time), we will certainly not see another Real Estate Boom.

  61. 61
    waitingforseattletocool says:


    I would be useful to compare the absorption rate of King County vs. San Diego County.

    I am pretty confident that the MOS in San Diego reached a peak in excess of 12 months. By the way, the MOS in San Diego is probably somewhere in the range of 5 to 6 months at this point.

  62. 62
  63. 63
    Bits_of_Real_Panther says:

    “the average American simply can’t afford the average home”

    When have they ever and why should they?

    My income is roughly median for the Bay Area and I sure as hell can’t afford any house let alone the median

  64. 64
    Bits_of_Real_Panther says:

    I ran out of time on the editor, but I would have changed “any house” to “any house in a reasonably safe neighborhood” and added that I don’t expect to be able to afford a house on a median salary nor do I feel entitled

  65. 65
    Thomas B. says:

    Well… once WAMU gets sold off and all the well paying jobs from that corporation goes poof… housing prices will come down since there is no one left with the money to buy a house. Amazon and Microsoft won’t be hiring since the Christmas season is already expected to be terrible and consumer spending is down.

  66. 66
    Robert H says:

    SD Native just has to comment:

    Daughter lives in Issaquah and we are up often. Lived in Portland area for 25 years. Now back in SD for 10 years. So I think I know both areas very well.

    1. Anyone trying to bring any part of the LA area into this discussion is daft. Thankfully Pendelton ( Marine base ) is the buffer protection SD from the corrosion of LA.
    2. Comment about comparing SD to Seattle, Bellevue, Kirkland, Issaquah and other areas as a whole is very relevant. SD has so many diverse areas a fair comparison is entire area to entire area
    3. Lag factor of 18 months is valid. You might not want to believe it, or question why, but the slide in Seattle is just starting. Also look at low 650 market levels. High end has been flat for about 4 months now where as low end still declining. So one must dig deeper. Alot of our decline has been in condo’s ( overbuilt ) especially high rise. Seattle is only now going to start seeing that affect.
    4. Each area has it pluses and minuses – so no real use to argue about bananas and oranges on these issues. Also alot of similarities that many die hard NW people do not want to admit. SD has way more transplants who have lived somewhere else and can see the comparisons more easily.

    The future – affect of Peak Oil on each city

    Seattle I believe is going to be severely affected as oil prices climb, shortages, restrictions and economics of oil change. Freeway system is a constantly congested disaster, lack of extensive public transportation alternatives, long comuting distances. This might add a whole new dimension to this discussion.

  67. 67
    johnnybigspenda says:

    alan at 47… 300K in debt in today’s dollars is worth LESS to you in 10 years… therefore, you actually come out ahead by being able to pay 300K more easily in the future.

  68. 68
    Thomas B. says:

    J… @67
    Huh? $300K may be worth less in the future, but banks know this and lend money at a rate that will cover their inflation risks. So $300K today is worth the same in the future to the bank. Additionally, inflation erodes value in property. So a $300K house is worth less 10 years from now, assuming the house value doesn’t beat the inflation rate.

    To all the realtors who thing there is a bottom… think again.
    WAMU just went bust. That’s about 5,000 high paying jobs in the Seattle area gone. Chase may give jobs to the tellers and local bank managers, but the $100K jobs just went bye-bye. Not too many tellers that can afford $400K or even $250K condos. 5,000 people without jobs. That’s brutal to the real estate market. There isn’t going to be a recovery anytime soon. So, to all the realtors and real estate writers out there… suck it up, stop lying, and face the truth. The housing market crash was caused by mad speculation egged on by realtors.

  69. 69
    mikal says:

    Thomas B, you are all over the place with that comment. If inflation takes off every dollar you have will be worth less. The only good thing to that is that every debt you have is also worth less. Deflation is what you are trying to talk about.

  70. 70
    Thomas B. says:

    Amortize a loan over the lifetime of the loan. It’s more than $300K.

  71. 71
    mikal says:

    Inflation will make that loan way cheaper in today’s dollars.

  72. 72
    MisterBubble says:


    Matthew said nearly everything I was going to say. David Losh piled on with a few more decent points. The only thing I’d add at this point, is that the S&L crisis primarily involved local and regional institutions. Now we’re down to the titans, and they’re falling down hard.

    And for the record? The president did NOT appear on television in 1989 to beg US citizens to bail out the financial industry in order to prevent financial collapse. Your memory is flawed. This is different.

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