Puget Sound Counties October NWMLS Update

Let’s check in on the NWMLS statistics from around the sound.

Here’s where the YOY stats stand for each of the six counties as of October 2008:

King – Price: -11.7% | Listings: +2.7% | Sales: -22.4% | MOS: 8.3
Snohomish – Price: -10.8% | Listings: -6.0% | Sales: -28.0% | MOS: 10.9
Pierce – Price: -9.2% | Listings: -12.1% | Sales: -12.3% | MOS: 9.4
Kitsap – Price: -11.4% | Listings: -6.8% | Sales: -19.7% | MOS: 9.3
Thurston – Price: -0.3% | Listings: -7.5% | Sales: -20.9% | MOS: 7.7
Island – Price: -3.4% | Listings: +1.7% | Sales: -27.1% | MOS: 17.5
Skagit – Price: -0.6% | Listings: +2.0% | Sales: -48.1% | MOS: 16.2

These graphs only represent the market action since January 2006. If you want to see the long-term trends, feel free to download the spreadsheet (or in Excel 2003 format) that all of these graphs come from, and adjust the x-axis to your liking. Also included in the spreadsheet is data for Whatcom County, for anyone up north that might be interested.

First up, it’s raw median prices.

Puget Sound Median SFH Prices
Click to enlarge

Median prices actually increased month-to-month in Snohomish, Pierce, Thurston and Skagit counties, while declining in King, Kitsap, and Island. King’s drop was the largest, falling $23,000 in one month.

Here’s how each of the counties look compared to their peak:

King – Peak: July 2007 | Down 18.5%
Snohomish – Peak: March 2007 | Down 12.7%
Pierce – Peak: August 2007 | Down 14.6%
Kitsap – Peak: September 2007 | Down 17.3%
Thurston – Peak: July 2007 | Down 6.9%
Island – Peak: August 2007 | Down 20.0%
Skagit – Peak: June 2007 | Down 14.0%

Island County has taken the lead with the largest total drop right at 20%, with King not far behind at 18.5% Much in the same way that the Seattle area did not rise as much as other parts of the country, and will likely not fall as far, the outlying Seattle-area counties also did not rise as much, and are so far tending not to fall as much. Note that the spreadsheet also contains a “drop from peak” graph, similar to the one posted with the monthly Case-Shiller update.

Here’s another take on Median Prices, looking at the year-to-year changes over the last two years.

Puget Sound Median SFH YOY Price Changes
Click to enlarge

The ever-volitile Skagit County actually bumped back into slightly positive YOY territory in October, registering a 0.6% gain. Drops in the remaining Puget Sound counties ranged from just 0.3% in Thurston to 11.7% in King.

Here’s the graph of listings for each county, indexed to January 2006.

Puget Sound SFH Listings
Click to enlarge

Nothing too surprising here, with King County still separated from the bunch, having over 220% as many homes on the market at the end of October 2008 than in January 2006. No other county registered above 200%.

Here’s a look at the YOY change in listings.

Puget Sound SFH Listings YOY
Click to enlarge

King, Island, and Skagit counties all registered very slight year-over-year inventory growth, while Snohomish, Pierce, Kitsap, and Thurston dipped between 6% and 12%.

Pending sales, also indexed to January 2006:

Puget Sound SFH Pending Sales
Click to enlarge

After the unusual boost in September sales, every county experienced a sharp decline in October. The drop in Snohomish County put their October sales at barely over half as many sales as January 2006.

Lastly, here’s the YOY graph of sales:

Puget Sound SFH Pending Sales YOY
Click to enlarge

The September to October drop in sales is even more dramatic on the year-to-year graph, making it abundently clear that September’s sales spike was nothing more than an aberration.

None of the counties look particularly strong heading into what is typically the slow season for real estate. It seems likely at this point that before the spring “sales season” hits, price declines from peak may reach 25% across the board.

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.


  1. 1


    Irrespective of the election promises, its slam dunk that almost all Seattle households are gonna see big local/federal tax increases reducing net pay in 2009. The deflation beat just goes on and buckle your seat belts, its click it or ticket.

  2. 2
    gortnerp says:

    Message to Sellers,

    “Sell now or be priced in forever.”

  3. 3
    Buceri says:

    “Sell now or be priced in forever.”

    You know, I thought 20% drop would happen during the worst of it. But we are already there and we are still measuring the mess and confronting a brutal 2009.

    50% is starting to look as possible as the bankruptcy of large financial institutions and huge car makers.

  4. 4
    Queen Anne Runner says:

    The scary thing about this implosion is I do not believe there is currently a floor below which prices cannot fall. I own a SFR in Queen Anne and based on my observation, demand for housing has evaporated over the past 4 months. It almost doesn’t matter how you price your home it will not sell. I do not recall seeing any SFR on the market move in my neighborhood in this period.

    Overlay the rapidly deteriorating economy, enormous budget deficits and a trade policy that generates huge deficits for the USA and you are looking at interest rates that will only trend up over the intermediate to long term. We have not even begun to see the glimpse of an end to the housing collapse. You have to be insane to purchase a SFR or condo in this environment. God knows what the economy will do over the next 4 years as we the era of our smoke and mirror economy has ended. We better start building an economy predicated on more than flipping burger or real estate or we are history.

    This from a homeowner that never believed in real estate as an investment but did see it as a break even proposition over the long term. Now I regard it as the part of my portfolio that has lost the least amount of value after my stash of cash.

    We certainly live in interesting times.

  5. 5
    pfft says:

    20% down is pretty big. how long until people give up the “it’s different here” line we’ve heard?

  6. 6
    Joel says:

    …price declines from peak may reach 25% across the board.

    What will Steve Tytler say at that point? Will he ever admit that he was wrong and his 20 years of experience doesn’t include an economic climate anything like this one?

  7. 7
    Buceri says:

    “It almost doesn’t matter how you price your home it will not sell.”

    It is getting to that. There is no interest; it’s not a matter of pricing.

  8. 8

    “Its almost doesn’t matter how you price your home, it will not sell”

    Not true..price it where it should be (40% below current bloated valuations), and I guarantee you can unload it on Queen Anne.

    Did you know that 1/4 homes on the market in King County are priced over 800k!!…yet 1% of the population makes over 250k/ year. Historically, home prices to income is about a 3/1 ratio….we’re not even close to a bottom.

  9. 9
    Markor says:

    Queen Anne Runner: I own a SFR in Queen Anne and based on my observation, demand for housing has evaporated over the past 4 months. It almost doesn’t matter how you price your home it will not sell.

    I’ll buy your place for $100K, cash, no inspection. Seriously!

  10. 10


    I’d add another caveat, most of the top 10-20% of Seattle incomes already bought real estate 10-20 years ago and simply aren’t in the market.

    The first time buyers are mostly in the mid household income range; assuming there’s any hope of them grabbing up a starter house. They qualify for about half of a small fixer upper on a pint-size lot; but with a 40-50% plummet in price, there’s hope for them…..assuming interest rates aren’t fired way up to keep the bank books straight.

  11. 11
    Markor says:

    Buceri: “It almost doesn’t matter how you price your home it will not sell.”

    It is getting to that. There is no interest; it’s not a matter of pricing.

    Yesterday I was browsing the EastsideFlops.com listings, to see what had eventually sold. These are houses that were already listed for below-2006 prices. Hardly anything had sold, including some after further discounts; a lot less had sold than I expected. The ones that did were the really discounted ones, almost all older homes (presumably not upside-down owners). For those who bought prior to 2005, it seems the bad housing market is purely psychological. Those owners simply need to realize that gains made since 2005 are gone. I think the housing market would be brisk if 2003 prices were the norm. (Banks would be more amenable to lending at those prices too.)

  12. 12
    Markor says:


    Likely things will get worse in the short term, but in the long run tax increases could benefit most us, because it would mean the US is finally addressing Republicans’ massive fiscal irresponsibility that has led to this mess. The Dow quadrupled under Clinton, or something like that. I doubt that would’ve happened had he given giant tax cuts to the rich (i.e. by not keeping taxes up and eventually balancing the budget).

  13. 13
    Matt says:

    Any analysis on the months of supply? I am curious to hear people’s thoughts.

    We are currently at the same supply level as December of 07, but higher than October of 07. Anyone want to reveal their crystal ball and predict where we are in January 09 in terms of supply? Will the drop be more or less than the standard decrease from December to January? Or will there be no seasonal decrease in supply?

  14. 14
    Matt says:

    Edit to the last post.

    There is generally a drop in supply from January to February, will we see that again and to what level?

    Anyone know the standard seasonally adjusted changes in supply?

  15. 15
    Joe says:

    I thought the median price in King County dropped below 400,000. Am I being dense?

  16. 16


    Don’t get me wrong, since the Reagan globalization and population growth started, we’ve been on a path to ruin. I’d also give a lot of credit to Ross Perot for balancing the budget in the 90s too.

    The dot com stock bubble during Clinton’s regime was similar to today’s real estate bubble though: hot air into an over-valued commodity.

    History clearly speaks for itself, its not political at all.

  17. 17
    greenthum says:


    The Dems now control Washington DC and Washington State. Blame the Repubs all you want but your boys are in the drivers seat now. Let the show begin! Got popcorn?

  18. 18
    Buceri says:

    Dec. 1st is fast approaching; did I miss any announcements on the Wamu layoffs?

    A bit off topic; Citi anounced over 50000 layoffs, mostly in NY and London. NOW THAT affects RE prices.

  19. 19
    Interloper says:

    40-50%? I think now even we bubble-watchers are getting greedy!

    The media will miss the bottom because they’re too reliant on year-over-year monthly data from sources that are too variable.

    We bubble-watchers will miss the bottom because we’re waiting for a worst-case scenario to play out.

    Except for me of course — I hope to buy at the bottom! (yeah, like that’s gonna happen)

  20. 20
    Groundhogday says:

    I have relatives on Queen Anne and have therefore spent a lot of time wandering and jogging on those streets. Great area, but my BIL purchased his house there for $180k back in the early 1990’s, now (with remodeling, granted) he thinks it is worth close to $1 million. Have Seattle salaries increased that much since 1992?

    Sorry, but a 5% discount off an absurd asking price with a $250 gift certificate doesn’t come close to “any price”.

  21. 21
    The Tim says:

    Joe @ 15,

    Whoops. Somehow the post was displaying last month’s graph for the first chart (SFH Median Price). Sorry about that. I’ve updated it. The spreadsheets and all the numbers in the post were all reflective of October. Only the first image has been updated.

  22. 22
    deejayoh says:


    I’ll continue in my role as accuracy cop. That’s not accurate. Biggest drop was a little less than 20%, in 1998

  23. 23
    anony says:

    Interloper, You won’t miss the bottom simply because the bottom will last a very long time. These aren’t stocks.

  24. 24
    The Tim says:

    Obviously I’m a little late in this, but please try to keep comments on the blog posts mostly on-topic. We have a place for off-topic political arguments: the “Everything Else” section of the forums.

    Please direct future unrelated political arguments there. Besides, it’s been quiet and lonely there since the election, anyway.

  25. 25
    TheHulk says:

    20% from peak… oucheee. Thats gonna hurt a lot of people who purchased any time from 2005 to 2007 (and who I assume are scared to even list their houses on the market).

    I have to agree with QAR @4 above. Been monitoring a few neighborhoods on the east side really closely over the past 2 years. Excellent houses in good shape are simply not moving at the current pricing levels.

    I wonder how the ARM resets are going to look in 2009 and 2010. Just imagine, you are the houseowner already 40Kish underwater AND your mortgage just went up a couple of hundred bucks. Not pretty at all.

  26. 26
    Markor says:

    I doubt ARM resets will be a big factor anymore, as lenders are quickly realizing that they either must modify the loan terms, or be worse off handling a foreclosure. They’ll squeeze their borrowers to the max, but it won’t be as bad as the original terms would allow.

  27. 27
    David Losh says:

    2006 or 2007 had head lines of 14% or 16% pricing appreciation for King County.

    So 20% seems appropriate for King County.

    Now that I’m looking at the graphs you are showing a market correction. The first set of graphs of a year ago seemed dramatic.

    This year these same graphs are showing a slow and steady decline. October is a slow month, prices peaked in 2007.

    It just all looks normal.

  28. 28
    voight-kampff says:

    as far as the demand for homes evaporating ( at # 4 ), I believe some demand is present but paralyzed.
    many will not pull the trigger at this moment in time simply because of an overall “uncertainty” about the market, meaning even if you priced a home( on queen anne for example) far far below comps, it still might not sell. I know a house is only worth what someone will pay, but the number of houses closing ( or lack thereof ) is being effected by fear and uncertainty just as much as by price IMO.

  29. 29
    Scotsman says:

    Arm resets won’t be the factor many once anticipated because by the time they hit, well into 2009, most of those who face them will have negative equity and a new-found understanding that the economy’s long term prospects are bleak. They won’t renegotiate- they’ll walk. Jingle mail will rule the day. Those who got loans with teaser rates (and a future reset) did so because they couldn’t afford the historically low fixed rate. They can’t afford to stay in what they couldn’t afford in the first place. 50% off peak- that’s a given. Who knows what happens from there…

  30. 30
    shawn says:

    I keep kicking myself for having sat on the sidelines waiting. Dang. Now I have to pay less to get more. I should have listened to that sage advice from NAR.

  31. 31
    Gussy says:

    I’ve been trying to buy a house in West Seattle since October. I’ve made offers on 3 different houses, 5-8% under asking price, backed up by strong comps, and each time I was met with no response. None. Not even a counter.

    Obviously I’m only one data point, but my problem has been that sellers seem completely unresponsive to lower but fair offers. Looking at the history of the houses I put an offer on, each of them hasn’t gone down much, if any, from their initial asking price, even after being on the market 70+ days.

    Mayhaps sellers need to adjust expectations, but it doesn’t seem to be happening. Each time, the seller was willing to wait until the offer that they wanted came along. I hope that they have fun waiting.

  32. 32
    Buceri says:

    Adding to what many have said; a $300K loan to get the dream home is still a $300K loan. Some of these “huge” price reductions still leave most priced out.

    A luxury townhome (owned by someone famous) in Manhattan was just reduced from some $30million to $12mil….still no takers.

    NPR had a piece this morning; in Virginia 2006 $450K homes in like new condition are going for $150K. I know, I know, all RE is local.

    We have ways to go.

  33. 33
    stephen says:

    I sure get the feeling that folks here just don’t realize that this is really gutting the country. If prices really did do what most of you seem to hope for the local economy will be completely trashed and even if you escape unscathed someone close to you will not.

  34. 34
    Civil Servant says:

    Stephen, when a market is based in large part on speculation and unsustainable price increases, it needs to be gutted for the ultimate good of the larger economy, and better sooner than later. Thus knocked down, it can revive itself, eventually, from a new position of health — *that* is what people are hoping for. Please be assured that most who post here are very much aware of macroeconomic conditions.

  35. 35
    Matthew says:

    You’re right Stephen, we should just continue the charade forever and live in a world of pink ponies and gum drops raining from the sky!!

  36. 36
    Sniglet says:

    I sure get the feeling that folks here just don’t realize that this is really gutting the country. If prices really did do what most of you seem to hope for the local economy will be completely trashed and even if you escape unscathed someone close to you will not.

    Actually, this is precisely why I have been predicting a greater than 80% decline in peak median prices by the time we hit bottom. The great credit unwind is impact the entire planet, and the local factors of our particular market just don’t matter in the face of a financial hurricane rampaging the globe. It’s not like the Seattle area employers, or banks, can stay unscathed if Asian economies contract and the credit markets grind to a halt.

    That said, I do not think we are facing the end of the world. Yes, the world as we knew it, with the carefree days of credit expansion, are finished for good. But that doesn’t mean anarchy and looting lie ahead either. People are going to actually have to SAVE for the things they buy, and they won’t be turning their noses at jobs they consider beneath their dignity.

    There have been many instances of huge asset price drops, and in almost all cases (with sitations of war/civil war being the exception) life still went on, albeit at a reduced level of prosperity.

    By the way, I have several relatives who are feeling the impacts of all this. One sister in Florida has been delinquent on her mortgage for over a year (the lender still hasn’t bothered to foreclose), another sister was laid off from her long-time job as a flight attendant, and my Dad is considering bankruptcy. I am certainly NOT cheering this economic retrenchment, but I do believe it is necessary (i.e. the mal-investments and credit expansion just grew to unsustainable levels) and I am definitely glad that my wife and I decided to sell our home and rent years ago.

  37. 37
    Brian says:

    thanks for clarifying your position. I wondered what was going on.

  38. 38
    Brian says:

    Thanks for clarifying your position. I was wondering what your justification was.

  39. 39
    Sniglet says:

    Thanks for clarifying your position. I was wondering what your justification was.

    If you are really curious in learning more about my position, just check out my podcasts at http://msurkan.podbean.com.

  40. 40


    2000: -9.14%
    2001: -11.94%
    2002: -22.05%

    TOTAL= approx -42%

    It could be argued that 911 caused half the -42% stock collapse and I’d agree with that scenario…..but to say even 911 was a Bush or a Clinton monster [or none of the above] is stretching the truth.

    So Deejayo is right on the -20%, but another factor to today’s -40% collapse…..we have a longterm caused housing bubble collapse too that we didn’t have in 2000-2002….we can clearly blame that on both Clinton and Bush.

    If all we had was like a -50% stock collapse with no duel party caused housing debt crisis, Seattle would be pink pony right now.

  41. 41
    Ray Pepper says:

    Black friday! 299 LapTops! at Best Buy and WalMart..LCD 46″ for 700?? 1.99 ppg of Gas at Costco and Am/Pm…Wendy’s/Arby’s stock (WEN) 3.00??? Gems everywhere!! IM ALL IN!!

  42. 42
  43. 43
    Tim says:

    “I’ve been trying to buy a house in West Seattle since October. I’ve made offers on 3 different houses, 5-8% under asking price, backed up by strong comps, and each time I was met with no response. None. Not even a counter”

    Any data on when the current occupants bought? Sounds to me like that might indicate that they are very close to upside down on their mortgage.

  44. 44

    Market crash during/ immediately after the Clinton regime:

    You have to distinguish the various markets. Deejoyah is right on when it comes to the DOW, while Software engineer is right on in terms of the NASDAQ.

    In Feb 2000, the Nasdaq hit 4600…a year later, it sat @1500 (ironically, the same price it is right now. That’s a decline of 66%.

  45. 45
    geon says:

    #43 Tim,

    You could us sites like Redfin or the King Co. Parcel viewer to get buy & sell data:



  46. 46
    vboring says:

    what about ARMs?

    everybody stopped talking about them and many have assumed that they are being magically converted into affordable fixed rate loans.

    does anyone have any real data on this? is there still an ARM-bomb on the horizon or not?

  47. 47
    Magnolia44 says:


    Yes they all think they are immune and will be able to buy if the country hits collapse. Unfortunatley they will be up against 2 scenarios. The fed or govt will do something to prevent housing from utter collapse to save the economy, refinancing, govt prohrams, loan term extensions, whatever ypou can think of to at least place an artifical bottom.

    If that does not happen then there will be collapse and it won’t even matter, jobs will collapse yes even people like my family who have a 25% of income mortgage will possibly walk away if jobs are lost what will it matter. I don’t buy the scenario Tim stated that not all will be lost during a very deep recessio or depression. As far as I am concerned it will, so until one of the 2 scenarios happen we won’t know anything.

    My bottom line is a massive undertaking of the mortgage market will need to be done or its game over. I have seen the scenario of 5% or lower rates for all and modified terms, even those who are fine will need to partake and have the option freeing up more money for the economy. It sucks it has come to this but nevermind the finance firms , the real estate market is too big to fail.we have already seen that 30%. Price reductions have done nothing for the stabilization of the economy.

    This was posted from my BB so excuse the typos

  48. 48
    Scotsman says:

    The light is beginning to come on in many peoples heads. As more and more entities came begging to the feds for bailout money- first banks, then insurance companies, then states, manufacturers, cities, etc. it became clear that to continue down that road would exhaust the current and future resources of the government.

    There will be no more bailouts. The second half of the TARP is politically dead. There won’t be a bailout for GM, Ford, etc. And there certainly isn’t going to be some grand housing/mortgage stimulus play.

    Reality wins. Take the bankruptcy, clear the desk, start over using time-tested rules for managing credit and debt. We’ll all be stronger in the end.

  49. 49
    buystocks says:

    I guess you know what we’re all thinking. Your 2 extreme scenarios seem flawed, because you’ve based them around your particular situation; either you fare well(the housing market stabilizes) or you fare poorly(then the world ends). Of course both of these situations are bad for the bubbleheads, how convenient. I’d calmly suggest a scenario in the middle, where housing goes to affordable levels and the world does not end.

  50. 50
    Magnolia44 says:

    Sorry not based on my scenario only. It is what will happen sit back and watch. What industry do you work in that you will be fine from a collapse or 15 to 20% unemployment? All of us are in that boat homeowner and renter alike. That’s why something will need to be done. One side or the other will be satisfied with the outcome, I am not afraid to say that without jobs yeah we will need to move on. We are pusing high six figure income and I am nervous as heck, very little debt other than house but the whole economic situation looks bad.

    If no one here is nervous and is not at risk more power to you, I guess I am a realist and know the potential disaster that lies ahead. Its not about my household its the whole economy that needs saving sorry you don’t see that. Soon enough it will play out.

  51. 51
    deejayoh says:

    does anyone have any real data on this? is there still an ARM-bomb on the horizon or not?

    There is only an “ARM-Bomb” on the horizon if you believe that all those loans are going to reset at higher rates. These weren’t “teaser” rates. They were 5, 7 and 10 year fixed. So where do you think interest rates are going?

    If you think rates are going up then yes there could be a problem with the resets – but high interest rates would also be accompanied by a period of high inflation which would ease the pain in terms of affordability (e.g paying back loan in inflated dollars)

    If you believe we are headed for a period of deflation, then logically should also believe we will see very low interest rates a la Japan. Then those resets won’t be such a problem.in terms of rates but the loan amounts might be.

    But it’s not likely that we will see deflation and that those loans are going to reset at high interest rates

  52. 52
    patient says:

    The fear mongering that if we don’t do anything about housing we will all be in the same boat is just nonsense. The people with large debt, poor cash flow and low savings is in deep do-do. The people with little or no debt, some savings and good cash flow will likely be just fine and on top of that will be able to pick up some great bargains in form of stocks, homes, vacation deals, you name it.

  53. 53
    EconE says:


    what about the option ARMs?

    Are you saying that a neg-am payment isn’t a “teaser”?

    Gussy @ 31…

    They won’t respond to 7% below asking offers?

    Try 20-30%. That’ll wake ’em up.

  54. 54
    Markor says:

    Sniglet: The great credit unwind is impact the entire planet, and the local factors of our particular market just don’t matter in the face of a financial hurricane rampaging the globe.

    Let’s not forget the baby boom / overpopulation / resource exhaustion. As far as house prices go, I’m more concerned about those issues than the financial hurricane per se. It’s a given that I’ll wait until a price plateau to buy a house again, but real US prices could keep falling for decades as millions of aging baby boomers leave their houses and birth rates around the world fall as a result of this global depression, which goes hand-in-hand with overpopulation / resource exhaustion.

  55. 55
    shane says:

    You don’t need to lecture us Magnolia44. We know the situation is bad, and will continue to get worse. This is why so many of us were screaming over the last few years that our economy was headed for trouble. It would have been great if you would have helped warn people of this trouble instead of trying to continue the fraud. You choose to laugh off the reality of the situation and now we have serious troubles.

    This will be rough but it’s not the end of the world. Your silly little dream world has been shattered. Big deal. People like you just need to adjust to the new reality.

  56. 56
    Another Tim says:

    Those are some interesting listings. It’s surprising and sad to see the prices people paid at the top of the bubble. I thought my neighborhood was bad (98188) but those are stupefying.
    If I were to believe the number that Zillow had for my home at the peak ($494000) I would say that the -18.5% drop is just about right for my area.

  57. 57
    Magnolia44 says:

    Dreamworld? If you mean as someone who grew up poor and made to college, graduated along with his wife to have some success (good jobs, money, savings, a home, happiness), yeah I guess it all is a dream and its been a great ride but not shattered. I don’t base my world on things and stuff….. Owning a house does not make me a bad person.

    Never having bought new cars, saved and just a little worried about where things are going that’s all. You have your view I have mine, good luck to us both.

  58. 58
    Yesler Hill says:

    Let’s not forget the upsides to this economic collapse; affordability! More angry young people, with lower rents, will mean more creativity, and maybe something new from the kids; not just a another Punk Rock rehash. I’m actually getting more excited abt things. The harder it all falls, the more room for the creative and the adventuresome!

    And now that the tech sector is in freefall, that will hack off a large section of Microsoft, etcs ability to contribute to gentrification. It also means more land wil remain farmable closer to cities, and that’s a very good thing.

    And we can’t forget that beyond the collapsing economy there is still the environmental collapse. An economic collapse will create at least a midterm softening of humanities rapacious despoiling of the earth. More good news!

  59. 59
    Interloper says:

    Anony wrote: “Interloper, You won’t miss the bottom simply because the bottom will last a very long time. These aren’t stocks.”

    Yeah, that’s a good point. Maybe the bottom will be obvious when it comes.

  60. 60
    Matthew says:

    Option ARM resets are nuclear warheads.

  61. 61
    voight-kampff says:

    why are option ARM’s warheads? they are only warheads if people do not pay, It doesnt seem like banks will be intersted in enforcing new rates that borrowers are unable to pay back. Am I missing something?

  62. 62
    VK says:

    Hey all…I’m a former Seattleite (UW grad and resident for 20 years), now living in the Wash. DC area. Just a little perspective from my world – prices here are still falling a bit, but not as fast nor as much as they were a year ago. I think Seattle is behind us a bit in this area, and, IMHO, is not as “sheltered” (right word?) as the DC area is in terms of a soft landing, due to the economy here revolving around the federal government. Expect BIG cutbacks in defense spending (i.e., Boeing, computers, etc.)…I think Seattle is in for a rough time for the forseeable future, more so than this area. Plan smart.

  63. 63
    Matthew says:


    Google “Business Week Option ARM”. Yes there are some options out there in terms of loan modification, but I don’t think the carnage can be entirely avoided.

  64. 64
    deejayoh says:

    According to this schedule, the Option-ARM issue is not so much in the future as it is now. (see if WP lets me post an image!)
    What happens is as values decline, Option-ARMs are recast as fixed loans at something like 110-115% of equity. So it’s not so much a 2010 bomb any longer as it is a slow burn from 2008 – 2012.

    That said, there is a relatively low correlation between the share of a mortgages in a region funded with option ARMs and market performance of that region. Clearly there are other important factors at work as well.

    Market Option ARM %
    CA-San Diego 32.8% 35%
    CA-San Francisco 30.7% 35%
    CA-Los Angeles 30.9% 28%
    NV-Las Vegas 35.9% 20%
    FL-Miami 34.7% 18%
    WA-Seattle 8.9% 16%
    AZ-Phoenix 36.3% 14%
    OR-Portland 7.8% 11%
    MN-Minneapolis 17.1% 9%
    IL-Chicago 11.3% 8%
    CO-Denver 5.4% 8%
    MI-Detroit 27.2% 6%
    OH-Cleveland 10.5% 4%

  65. 65
    2kt says:


    Your 80% decline prediction reminds of oil to $200 prediction a couple of months ago.

  66. 66
    b says:

    Magnolia44 –

    The “dreamworld” is where you magically get saved by Uncle Sugar for getting duped into buying a home at peak pricing. I think you need to face up to the fact that making decent money isn’t an indication you are not a rube. I work in tech so I see plenty of well to do rubes every day, and some of them are buying condos right now! Yes, the economy is fucked hard, and yes it will impact everyone here renter or owner. The entire point of sites like this are to let people know to hedge their bets. Going all in on a shitbox in Ballard in 2006 and letting your stocks ride in 2008 were specific choices to not hedge bets that many people made, but which most here did not. I would rather eat half of a shit sandwich than a whole one.

  67. 67
    b says:

    Tim – Your filter sucks. I don’t think there are many children or ministers with virgin eyes reading this site.

  68. 68
    The Tim says:

    Be that as it may, my site, my rules.

  69. 69
    b says:

    voight –

    Option arms are where you don’t even pay principle, its added onto the loan up to 115%. They are warheads because the people with them can barely afford the interest only payment, and will never afford the real payment when they hit the cap, pretty much guaranteed loss.

    Then you need to add on the fact that lenders could count the FULL payment as income even though the people were paying the minimum and you have insane losses for lenders. They booked these puppies as ghost profits for several years, oops! The whole house of cards is so ridiculous it sometimes makes me want to puke.

  70. 70
    b says:

    Tim – I agree completely, just registering a feature request. Its just not the same calling the 2/1’s in Seattle with that extra “third bedroom” that has 5′ high ceilings a “chocolate box”.

  71. 71
    Sniglet says:

    Your 80% decline prediction reminds of oil to $200 prediction a couple of months ago.

    A couple months ago I was calling for $30 a barrel for oil. So far it looks as if my predictions were more on track than those looking for $200.

  72. 72
    EconE says:


    I agree that the option-ARMs will be a “slow burn” rather than a spectacular “BOOM”. And even though they may “recast” sooner, the owner is still pretty much S.O.L. Take a person who actually chose one of those $600k Option-ARMs at a $1600-1700 payment in 2005-6, a recast at even 615k would leave them with a payment of around $3600+/mo. How do you modify something like that? What would that do to all the upstream (or downstream…whatever) derivatives if modified?

    I have a feeling that many (if not most) of these Option ARMs are hiding out in the “better” neighborhoods where people took their Ballard bungalow equity upon sale and combined it with a 600k optionARM to get into Madison Park.

    Time will tell.

  73. 73
    what goes up must come down says:

    Mag44 weren’t you laughing at people here a few months ago and their “the sky is falling predictions” I remember a post just like that. How things change in just a short time, good luck with that overpriced asset.

  74. 74
    Matthew says:


    How do you figure that there is a low correlation between share of option ARM mortgages and the region performance? The hardest hit areas on your list (Cali, Miami, LV, Phoenix) have the highest percentage of Opt. ARMs.

    California also has over 50% of the nation’s Option ARMs.

  75. 75
    Matthew says:

    We have yet to see the many option ARM resets yet as the first big group of resets will occur in April 2009, I think the correlation between region performance and loan issuance will be more apparent after the resets.

  76. 76
    Matthew says:

    As I stare at that the list again, interesting that Seattle is at 16%.

    But I thought we only had good loans based on solid fundamentals??????

  77. 77
    Matthew says:


    In my mind you are worse than the ignorant home buyer. You came to this website before you bought, engaged actively in discussion, was basically a bubble believer, and yet still went out and bought a house at market peak.

    Yet now you come back here as a person who has “found God” and has had a complete 180 with regards to the housing market, even though your calls are blatantly wrong. I’m not really sure what your motivation is at this point to join in the discussion other than you a glutton for punishment.

  78. 78
    deejayoh says:

    How do you figure that there is a low correlation between share of option ARM mortgages and the region performance? The hardest hit areas on your list (Cali, Miami, LV, Phoenix) have the highest percentage of Opt. ARMs.

    Because I did the math :^)

    33% correlation. I was surprised.

  79. 79
    Jake says:

    Anybody have any idea if waterfront is tanking as bad as typical SFRs?

    What about property tax appeals? I heard that the Assessor was insisting on January 1 values.

  80. 80
    deejayoh says:

    FWIW – here is a post from Paul Kedrosky I ran across this morning that is an example of what I was referencing above in terms of ARM resets. We’ll see how common this turns out to be, but I think it could certainly mute the impact

    The Option ARM Non-Bomb?

    I just had someone email me something interesting today about their adjustable-rate mortgage resetting –- but to considerably lower levels. How widespread is this phenomenon? Or, asked differently, what percentage of ARMs are tied to Treasuries, as opposed to Libor, etc.? I’d love to see some data.

  81. 81
    acordeon says:

    Thanks very much for this, it’s extremely helpful.

    I downloaded the spreadsheet, but I’d really like it if you’d include Whatcom county in the graphs next time. Any chance of that?

    Also: how about a post sometime about Whatcom/Bellingham, and how closely the market up here has been following Seattle?

    – an appreciative reader in Bham

  82. 82

    […] for real estate, there has been a lot of local news about depressed housing numbers–but there has also been bits and pieces about Seattle being a good prospective investment.  […]

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.