Foreclosure Increases Slowed in November

Here’s your November update on Foreclosure activity in King, Snohomish, and Pierce counties. First up, the Notice of Trustee Sale summary:

November 2008
King: 540 NTS, up 57% YOY
Snohomish: 220 NTS, up 28% YOY
Pierce: 465 NTS, up 28% YOY

The graphs below are derived from monthly Notice of Trustee Sale counts gathered at King, Snohomish, and Pierce County records. For a longer-term picture of King County foreclosures back to 1979, refer to this post.

For the full legal definition of what a Notice of Trustee Sale is and how it fits into the foreclosure process, check out RCW 61.24.040. The short version is that it is the notice sent to delinquent borrowers that their home will be repossessed in 90 days.

First let’s look at the percentage of households that received a Notice of Trustee Sale (based on household data for each county from the American Community Survey, assuming linear household growth between surveys):

Households in Foreclosure

For comparison, the latest press release from RealtyTrac (whose definition of foreclosure includes Notice of Default, Auction, Notice of Trustee Sale, and Real Estate Owned) gives foreclosure rates for every state in the country.

Following are charts of King, Pierce, and Snohomish County foreclosures from January 2000 through November 2008, with uniform y-axis scales to provide easier comparison. Unfortunately I’m on the road today, so I don’t have the time for the usual commentary to go along with the charts. Click below to continue…

Notices of Trustee Sale - King

Notices of Trustee Sale - Snohomish

Notices of Trustee Sale - Pierce

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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
    David McManus says:

    Shouldn’t the value of a home not have any correlation at all to the chances of an “owner” going into foreclosure? I bought my home in 03 for 300K. If the value of my house goes down to 200K, why should it matter to me and cause me into foreclosure? I will still make my monthly mortgage payment and go about my merry way.

  2. 2
    cheapseats says:

    “Shouldn’t the value of a home not have any correlation at all to the chances of an “owner” going into foreclosure?”

    I think it is the most significant factor, otherwise the homeowner can just sell the house.

  3. 3
    Another Tim says:

    Are you assuming the person in foreclosure is still employed? Are you assuming the person in foreclosure is on a standard mortgage rather than a “teaser” loan?

  4. 4
    David McManus says:

    Are you assuming the person in foreclosure is still employed?

    There is no certain job.

    Are you assuming the person in foreclosure is on a standard mortgage rather than a “teaser” loan?

    I’m sure that that was spelled out in their closing documents that they signed.

  5. 5
    TJ_98370 says:

    Foreclosure Storm Will Hit U.S. in 2009 as Loan Changes Fail
    ….Rising unemployment, expiring foreclosure moratoriums and state efforts that “run out of steam” will push monthly filings (up)…..

  6. 6
    deejayoh says:

    A bit off topic – but a thought for those who think that 4.5% interest rates are going to revive the housing market:

    30 Year Mortgage Rate Lowest Since 2004

    So if rates are already lower than they were through most of the boom – and homes sales are still dropping, how is lowering them further the answer to the problem?

    Kind of like 0% interest rate offers on car loans. Plenty of those to be found. How are car sales responding?

    It works in theory. But it seems in practice, not so much.

  7. 7
    Buceri says:

    This was explained by the media as the result of moratoriums, some state laws (asking lenders to work harder with HO), and worst of all, lenders being overwhelmed by the load of foreclosures and getting behind generating notices, etc.

    They expect a significant increase in the first quarter of 2009.

    Shouldn’t the value of a home not have any correlation at all to the chances of an “owner” going into foreclosure?

    If your mortgage requires two incomes and one is lost (layoff or illness), you foreclose.
    If your loan resets, you can’t afford the new payment and you can’t refi as you were “guaranteed” you would be able to do 2 years ago; your house is worth $200K but you owe $299K, you foreclose.
    I will assume that flippers have been out of the game for at least 6 months in the Puget Sound area and are not a factor anymore.

  8. 8
    b says:

    I don’t think we can extrapolate anything useful from foreclosure statistics anymore. Maybe at the beginning of the year and 2007 (for other states) they meant something. With all of the heavy pressure for loan mods or so many lenders just ignoring non-payment and not starting foreclosure the stats are now heavily manipulated by this dysfunctional market.

  9. 9
    jon says:

    “how is lowering them further the answer to the problem? ”

    They need to stop the deflationary cycle. Although the national months of supply is high now, if sales were to go up, that would cause the MOS figure to drop to normal levels soon. Driving interest rates down to where owning is comparable in cost to renting would encourage people to buy now. If people believe that the interest rates will go back up later then they will take the risk of missing even lower prices in the future. Of course higher interest rates in the future mean there will be fewer buyers when it comes time to sell, but if prices have stabilized by then that means more buyers because they will have stopped waiting.

  10. 10

    the equivalent of a bear market rally…remember fannie and freddie are not foreclosing over the holidays.

  11. 11
    mukoh says:

    If you look at the MOM. The actual amount of houses on the market is down. All the speculation out there points to that if the absorption were to go up, the Months of Supply would go down.

    Banks are sitting on some serious amounts of mortgage apps right now, just my banker at Wells said he has 19 approved apps. As interest rates go from 5.75 Real rate right now to 5.25 rate. It will put more purchasing dollars in sellers pocket thus getting them off the fence. Those “apps” are sitting as I was told waiting for rates to go down by .25-.50. At least thats what he said.

    I would be sitting waiting for prices to come down IMO.

  12. 12
    sf_boomerang says:

    We’re not ready to buy yet, but the wife and I are definitely taking notice of the falling mortgage rates.

    We’re hoping in a year that there’s a perfect storm of lower prices, low mortgage rates, and our savings reaching our target. Until then, all we can do is keep watching the numbers, save, and try to keep our jobs :)

  13. 13
    Joel says:

    Shouldn’t the value of a home not have any correlation at all to the chances of an “owner” going into foreclosure?

    Quite the contrary. Falling values are the cause of foreclosures. The reason is that normally, when home values are inching upwards, anyone that cannot make their house payments (for whatever reason) can just sell their home and rent or buy something cheaper. With falling home values though many people that bought recently and now cannot make their payments have no choice but to default because they are underwater on their loan.
    It is true however that falling values should have no effect on the ability of the homeowner to make payments. Falling values only effect the ability of a homeower to sell their house if need be.

  14. 14


    See the11/21/08 proof:

    So the November foreclosure numbers may likely be mitigated during the Bush helm for now, with a giant avalanch of Bush helm foreclosures added in after Obama gets in.

    Its all politics.

  15. 15
    masaba says:

    4.5% interest rates are enticing.

    That is, however, until you realize that you probably will sell the house in 5-10 years and rates will be substantially higher. Add to that the fact that houses are still significantly overpriced by any normal standard of appreciation. Then add to that the fact that the Fed will most likely do everything it can to keep interest rates low until we come out of this deflationary cycle (which will most likely be after house prices get back to normal).

  16. 16
    vboring says:

    I think foreclosures are the single most important factor that help prices correct.

    They transfer an asset from an emotional “owner” with price and contractual constraints to a seller seeking only to minimize losses.

    The pattern in bubble areas has been: 1) prices peak, 2) inventory builds while prices slowly fall about 10% over a year, 3) foreclosures swamp the market and prices crash on light volume, 4) prices stabilize as value investors buy the foreclosed properties.

    Step 5) is either that prices fall further as value investors are forced out of the market due to falling rents and lack of loans or that prices form a bottom based on fundamentals of cash flow value.

    We’re at the end of step 2). Foreclosures are critical to our reaching stability in step 5 in a few years instead of a few decades.

  17. 17
  18. 18
    alex says:

    why isn’t this post titled “Forecluses Decreased in November” ?

  19. 19
    deejayoh says:

    They need to stop the deflationary cycle. Although the national months of supply is high now, if sales were to go up, that would cause the MOS figure to drop to normal levels soon

    I agree they need are trying to stop home price deflation – but my point is that interest rates have already fallen dramatically and home sales are still falling. So what logic says that dropping them even further will automagically fix sales volume by causing people to buy? There is no evidence that this approach will work in this market. What is happening is exactly the opposite. There are too many other factors at work here, the interest rate play will just be throwing good money after bad – a bonus for people who were going to buy anyway.

  20. 20
    deejayoh says:

    why isn’t this post titled “Forecluses Decreased in November” ?

    Maybe because they were up between 28 and 57% from last year? Is that a decrease? Generally M2M figures are pretty meaningfulness.

  21. 21
    patient says:

    I agree with deejayoh, the gov is spending billions of tax payer dollars that ends up just generating noise on a bone crushing trend driven by fundamental forces that will continue to up foreclosures and drive prices down until things are in a sounder balance. It’s just laws of nature and how things works.

  22. 22
    Gene says:

    I wonder what will happen in the area as more “Pay Option” loans start resetting. Would be interesting to know how many of these were used in the area:

  23. 23
    jimmythev says:

    So what will happen when the “Pay Option” Loans start to hit hard in 2009 and 2010.

    Tim, do you have data on how much exposure the Seattle area has to “Pay Option” loans relative to the rest of the country… or relative to other types of loans?

  24. 24
    mukoh says:

    The transaction posted above with Navy is 100% taxpayer dollars on the back of it as well as the front.

  25. 25
    jon says:

    “I agree they need are trying to stop home price deflation – but my point is that interest rates have already fallen dramatically and home sales are still falling. So what logic says that dropping them even further will automagically fix sales volume by causing people to buy?”

    Of course if interest rates got low enough, even happy renters would jump in. Looking at the low interest rates now and saying it’s not working isn’t really possible because we don’t know what would happen if no action was taken. It’s pretty safe to say it would have been even worse that it is now. Whether bailouts are worth the long term consequences is harder to say.

    “, the interest rate play will just be throwing good money after bad – a bonus for people who were going to buy anyway.”

    Not necessarily. Every sale these days is letting the most desperate hard luck stories get out of the market and puts someone fresh in. So it benefits the lender and ultimately the government, which has put its credit behind mortgages also.

  26. 26
    deejayoh says:

    Of course if interest rates got low enough, even happy renters would jump in.

    of course, that’s an assertion.

    by that logic, car sales are doing just fine too

  27. 27
    patient says:

    “Of course if interest rates got low enough, even happy renters would jump in.”

    Not true. 0% interest rate is comparable to a cash buy. I wouldn’t buy today even if I had the cash for a cash purchase. Why would I when homes are getting cheaper by the month?

  28. 28
    EconE says:

    0% interest rate is comparable to a cash buy.

    A full cash purchase has opportunity costs.

    30 year fixed at 0%…not so much…other than the down payment.

    On another note. Don’t most potential buyers have 401k’s/pensions that have been cut nearly in half? That alone is enough of a factor to leave people on the fence for quite a while IMHO.

  29. 29
    jon says:

    Cars depreciate pretty quickly compared to a house. Even the bears here would have to agree that over a 30 year house loan you will at least get your purchase price back. So 0% mortgage means you are just paying taxes, utilities, insurance and maintenance. That’s going to be lower than rent. For 0% on a car loan, first of all you know they are jacking up the price, but also in tough times the depreciation is still enough money to make it worth squeezing out a few extra years doing maintenance your current car.

  30. 30
    jon says:

    “Why would I when homes are getting cheaper by the month?”

    That’s pretty much the same thing they said in the other direction on the up side of the bubble.

  31. 31
    mukoh says:

    Houses have that weird appreciation factor. Who knows why. My neighbour bought a house for $8000 in Shoreline in 1979. Is he worst off now?

  32. 32
    EconE says:

    $8000 in 1979?

    That was 29 years ago.

    Let’s try a “housing bull” calculation of appreciation. You know…the rule of 72…10% yearly appreciation doubling every 7 years.

    1979 ——- $8,000
    1986 ——- $16,000
    1993 ——- $32,000
    2000 ——- $64,000
    2007 ——- $128,000

    Hmmmm. Interesting.

  33. 33
    Joel says:

    Even if a house costs less than rent people may not want to buy it if they are afraid they might lose their job and need to move.

  34. 34
    David Losh says:

    In my office a short sale assistant has six sales waiting for lender approval. The lenders are countering offers.

    Number one it’s the end of some fiscal years. Some lenders want to wait for the new year to take the losses or write downs. Second is that the law may change in January to allow owners to stay in the home at a reduced payment.

    Lenders have way too much inventory. Even if they liquidate for cash the market is frozen.

    The next shoe to drop will be commercial. If and when commercial properties begin to go down in price then we will see redsidential begin to loosen up.

    The dollars, big dollars, are in those office spaces, retail, and industrial lands. Once a bank, investor, or holding company sees an opportunity to invest in commercial at a lower price they will begin to dump the residential properties for what ever cash they can get. Over time they will reinvest that cash in properties that have a higher and more stable value.

  35. 35
    b says:

    jon –

    The problem is that buying at 0% because the government pushes rates down artificially means when you go to sell, your buyer will be paying 7-8% (assuming the gov’t cannot afford to push down rates forever).
    People generally buy a home on the monthly payment basis, in my opinion, and not necessarily on the overall purchase price.
    To put this into numbers:
    – You can afford $1800/month for your mortgage payment (plus maintenance/insurance/etc)
    – The homes you want are overpriced right now, so you are waiting for that $400k house to drop to $300k (assuming you have 6%)
    – Uncle Sam steps in and says, we will give you $400k at 0% interest and now your payment is $1100/mo. If you are smart, you stick with the house you wanted before and not now extend into a huge house (this will be approx 2% of buyers, with the other 98% buying as much as possible)
    – After 5 years you want to move and upgrade to a better house, you owe $333k on your mortgage so you go to sell. Lets assume there has been no appreciation or depreciation overall since then (it fell then came back up)
    – Your buyers come around and have $1800/mo to spend. Why? Because the home you bought is one which an $1800/mo household would want.
    – Rates have now gone back up to a more normal 7% (though they will probably be far higher). Your buyers can afford $270k. You owe $333k. Even if you plowed the $700/mo you saved on interest onto principle, you are still underwater. If you add in transaction costs, you are REALLY underwater.

  36. 36
    patient says:

    Opportunity costs and monthly costs etc are all good and valid points in a some what normal market but I think not so much in a falling market. I think it’s overshadowed by the fact that waiting gives you a lower price. Prices are falling pretty much 1% per month. It’s simple enough math for most to do. The median home get about $4000 cheaper each month. I don’t know about you but to me that’s a significant amount and good savings that I can put to good use. Definately significant enough to wait.

  37. 37
    jonness says:

    Deejayoh @6:

    When I made the tool to look at mortgage rates compared to house prices, I was surprised to see that rates don’t seem to matter much. You and I are not alone in our belief that lower rates won’t fix the problem.

    ” A 2006 study of mortgage rates and New York City housing prices going back to 1975 by Lucas Finco of Quadlet Consulting found no correlation between lower mortgage rates and higher housing prices, or vice versa. “The relationship between mortgage rates and home prices is pretty obscure,” says Jack Guttentag, a professor emeritus of finance at the Wharton School of Business.

    James Hamilton, a professor of economics at the University of California, San Diego, says he used to think that lower mortgage rates were responsible for rising home sales in the first half of this decade, and for that reason he projected home prices would rebound in 2007. He now says rising home sales were the result of deterioration of lending standards and not lower mortgage rates. “I was wrong. The real story with home sales has to do with the availability of credit,” says Hamilton. “And credit is tight now.”

  38. 38
    mukoh says:

    The house that he owns is a 2400, Split. Huge yard though. And is probably $400s today.

  39. 39
    EconE says:

    mukoh // Dec 11, 2008 at 9:26 pm

    The house that he owns is a 2400, Split. Huge yard though. And is probably $400s today.

    Exactly why I stated “hmmmm, interesting”.

    Perhaps the bubble started in the 70’s?

    My parents bought a house in 1972.

    They were the second owners and purchased it for double the price it cost to build (including land from what I am told).

    It was built in 1925.

    Food for thought.

  40. 40
    EconE says:

    Oh…and I’m not using my above examples as “predictions” of sorts. Just thinking outside the box. Way outside, I admit.

    We do live in strange times.

    I wonder how much wealth was really created in the last 30 years compared to what was merely transferred to the current uber rich (9 figure+ net worths) ?

  41. 41
    what goes up must come down says:

    Jon, Mukoh,

    All the wishful thinking in the world won’t get buyers off the sideline, because houses are fundamentally overpriced. People simply can’t afford it. Now add in unemployment increasing and things only get worse.

  42. 42
    jon says:

    I’m not saying that now is a great time to buy, but if someone offers you a 0% house mortgage, take it. You could run Tim’s spreadsheet on rent vs. buy to see where the interest rate cutoff is for any given buy vs. rent case. If you get a rate that pencils out, then even if you have to move away without a buyer because of high rates later, you can still break even by renting it out and thereafter watch your income rise with inflation.

  43. 43
    patient says:

    jon, why buy at 0% interest if you could buy at 0% interest at 20% lower price. Just because something pencils out it doesn’t automatically make it a smart move.

  44. 44
    harbord says:

    Joyous Festivus to all the rest of us

    This is a great thread. Thanks to all for logical, reasoned, thought provoking posts. Many excellent points, bravo gents and ladies. Hat tip to The Tim et al.

    David Losh @ 34 points out a pending shift, an inflection point of what classes investment capital is migrating from and will be moving into. Japan in the 90’s all over again? Who knows.

    After much much more pain, the rental market will eventually pull us out of the bear market. Because this is where commerce occurs. When investors, not celebrity flippers, can earn a return on investment, at a sane acceptable level of measured risk, the market will hit bottom and begin to recover.
    This will apply pressure to the ‘at risk’ segments that includes marginal rentals, bought or refi’d in during the boom. Rents will drop as these gems enter the market with lower break even points.

    A last wave of foreclosures (dare I say a foreclosure apocalypse) will hit and the market which will be characterized by a trough pattern for an extended period.

    As prices slide and foreclosures pile up, low interest rates and fire sale prices will incentivize investment capital (as DLosh pointed out #34) into the market.

    We won’t know when we reach the bottom, as it is always confirmed anecdotally.
    Nor will we see a symmetrical recovery, bear markets jump around, rallies are the norm, interspersed with dead cat bounces, bear traps, sell offs, profit takers, short sellers, puts, derivatives, swaps, indexes, etc.

    0% doesn’t exist in a liquid market. Period.
    Too many reasons to list:
    Time Value of Money
    Costs, et al.

    No matter how much they would like to Barack, Nancy, Harry, Joe, Hillary, B-Rich, and Rahm ain’t gonna give us all 0% loans. And if anybody gets one, it better be me.
    My gut tells me we all feel like this. F the taxpaying American and his great grandkids.

  45. 45
    dailyt says:

    An actual sane article put out by a newspaper on the housing situation: From USAToday,

    As painful as the decline has been, history suggests home values still may have a long way to drop and may take decades to return to the heights of 2½ years ago.

    “We will never see these prices again in our lifetime, when you adjust for inflation,” says Peter Schiff, president of investment firm Euro Pacific Capital of Darien, Conn. “These were lifetime peaks.”

    Read more

    Don’t let the gagging response from Lawrence Yun’s quote (NAR’s economist) prevent you from reading the full article. For your reading pleasure, I’ll put it out:

    National Association of Realtors chief economist Lawrence Yun predicts home prices will keep falling in 2009 but could return to their 2006 peak in three years, not counting inflation.

    He says the bubble largely was confined to four states — California, Nevada, Florida and Arizona. “People who bought at the peak in those states will need time for prices to recover, even up to five years,” he says. Yun says people who buy now “have much less risk of price declines and a great possibility of price gains.”

    “Return to their 2006 peak in three years, not counting for inflation.” I wonder how Yun explains the impending devaluation of the USD, and the ensuing inflation, in relation to his “appreciation” calcs. Any thoughts?

  46. 46
    what goes up must come down says:

    imho, the problem is as shown clearly in posts 32 and 38, a very reasonable appreciation get’s one to $128k and a very reasonable guess states the supposed “value” at $400k.

    Basically these numbers need to move much closer together so let’s split the difference so $264k, wouldn’t want to being buying that place today at $400K because watch out below.

  47. 47
    Buceri says:

    Off topic, but relevant.

    The Chinese Gov’t is asking its airlines to postpone or cancel plane orders in the next few months. This was reported on NPR during a piece on decreasing US exports; a segment were Boeing is number 1 and it was specifically singled out as a company that “would suffer in 2009”.

  48. 48
    Sniglet says:

    Low interest rates might encourage a handful of people to buy sooner rather than later, but once deflationary expectations take hold (i.e. when people expect prices to keep falling), you can take the interest rate to 0% and you still won’t see a lot of sales. As I’ve pointed out before, Japan has been dealing with this for a decade.

    A Tokyo resident who “jumped” at the chance to buy a home in 1994 (after prices had dropped some 40% from peak prices) at near 0% interest is now living in a home that is work over 30% less than what they paid in 1994. There is ample evidence that low interest rates are not sufficient to prevent price declines.

    Another point I’d like to clear up is the belief that interest rates are “artificially” low. The primary reason for low rates is that investors are rushing for the safety of treasuries and government backed securities (e.g. Fannie & Freddie paper). This is a very rational response to deflation, as people come to realize that ALL asset prices are going to see significantly greater declines.

    I have a podcast on why low interest rates are a bad omen.

  49. 49
    BondsOfSteel says:

    ARM resets vs recasts.

    With the extrodinary low LIBOR and 3 month TBill rates, ARM resets might even lower mortgage rates. This should help people stay in homes in the short run.

    ARM recasts happen when LTV (loan to value) or too many minimum payments are made on option payment ARMs. Recasts will always increase the payment and will most likely force refinancing or forecloure.

    Recasts peek in 2010…

  50. 50
    Ray Pepper says:

    Emerging from all the carnage of the economy are young and energetic entrepreneurs who seek a better life through hardwork and the acquisition of GEMS!

  51. 51
    patient says:

    Just to be clear I don’t expect 0% interest rates, I don’t expect them to go lower than 3% for a 30y fixed. The 0% is just to highlight that as sniglet says it doesn’t matter how low the rates goes if people expect prices to fall further the market will be slow until they are truly affordable to the average person. The “why buy todays if tomorrows price is lower” is a strong sentiment that most people understands and I think follows.

  52. 52
    David Losh says:

    Some time in the 1980s talk in the Real Estate community shifted from Location, Price and Condition to Location, Price, and Terms. With 16% interest rates terms became an important key to seller financing or assumable loans. When rates went down both seller financing and assumable loans went away, but terms stayed as a part of Real Estate jargon.

    Rates have nothing to do today with Real Estate value, or price. It is how much you can buy it for, rather than how much you can finance.

    In my opinion the global market is fascinated with interest income. You just trade a bunch of paper and make money. You can create paper by producing crap, charging way too much for it, then financing. Heck we’ll even buy stuff from China at twice the price if we can finance it.

    Also in the 1980s there was a shift from value based profit to paper profit. Those 16% notes created income, got refinanced, prices of Real Estate began to go up, and the mortgage backed security market saw a chance of recitative income. Again it’s my opinion that wealth created by paper profits far exceeded anything that a working company could produce.

    Those are purely my assertions, but in the world of Real Estate it changed the market place. With huge price tags we had huge equities. In residential, having a house go up $100K looks great for the home owner so they played along. In many cases prices did double and triple quickly.

    The money, the real money, was in the commercial Real Estate market where terms took on magical powers. Donald Trump I think is the most recognizable player in the terms market. He has said on more than one occassion it’s all about the terms. In commercial, when there is a profit, there is that chance interest rates, and long term financing may be a benefit. Even some small rental investors may be interested in terms, but for home ownership it’s a joke.

    Your home, as every financial planner will tell you, should be owned free and clear. That’s home ownership. How close will you be to owning your home free and clear? That’s the only question. It is the same for small investors. It’s what stabilizes rents. It is all about income.

    Price is what makes the deal for the home owner or the ability to get it paid off.

  53. 53
    mukoh says:

    What goes up,
    I am not stating that as a true case for every house, in every area. The 7 year metric is hard to swallow but in the last 30+ years has shown to be true.
    Is it wrong? Who knows but the following changes it a lot.
    I suppose if you average it out not on a one house scenario but on 15000 houses scenario appreciation (double up) will actually even out to every 15 years, as you throw in decrepit homes, hardship sales, lost equity, bankruptcy, divorces, disability and etc..
    Thats at least my opinion. So it brings back the following statement that I have said before. Its not when you are buying it is what you are buying. If there is a house that fits the criteria and it is at 1998 price does it make sense then.

  54. 54
    EconE says:

    And coming full circle regarding the “7 year metric” (averaging out to 15 per Mukoh when you include the chocolate houses.)

    Once again….

    $8000 in 1979?

    That was 29 years ago.

    Let’s try a “housing bull” calculation of appreciation. You know…the rule of 72…10% yearly appreciation doubling every 7 years.

    1979 ——- $8,000
    1986 ——- $16,000
    1993 ——- $32,000
    2000 ——- $64,000
    2007 ——- $128,000

    and at the 15 year average doubling that Mukoh states above.

    1979 ——- $8,000
    1994 ——- $16,000
    2009 ——- $32,000

    So, moving back to Mukoh’s example of a person who bought a house in 1979…

    It’s obviously not “average” as it’s worth more than $32,000

    It’s certainly not one of those rare “double in every 7” year houses, because Mukoh states that it is now worth over $400k instead of $128k. From this…all I can conclude…is that must have been one really lollypopping special house.


  55. 55
    Alan says:

    8k -> 115k over 29 years comes out to 10% return a year.
    8k -> 400k over 29 years comes out to 15% return a year.
    8k ->1300k over 29 years comes out to 20% return a year.

  56. 56
    David Losh says:

    i did a quick search and found home prices in 1978 closer to $30K to $50K in the Seattle area.

  57. 57
    mukoh says:

    Well the home is over 2000 Square feet, I have seen it when it was vacant, i.e. without a tenant. Nothing special, a regular California split, in fairly good condition. The backyard is enormous though. Homes up and down the avenue are in the 400’s closed sales this year. I laughed when he told me he bought it for that much. He is an old timer who has 12-15 of these properties in Kenmore, Northgate, and such. Considering neighbors at that time thought he was nuts as they paid way below that. The property BTW is free and clear.

    David this is Shoreline, which is not included in that report. Right before Innis Arden.

    EconE, what do you think a home in Shoreline 2000+, with ready to move in condition worth? Considering almost .47 of an acre lot.

  58. 58
    TJ_98370 says:


    Anybody who bought any real estate 30 years ago and held onto to it is way up in nominal dollars.

    Whatever the true market value of that house may be right now, there is a really good chance it will be less in six months and it may stay that way for years.

  59. 59
    mukoh says:

    Thats fine. However if you still take the metrics of 8k to 128k in 30 years it aint bad.

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