Some quotes from J. Lennox Scott about the local real estate market.
This is an ideal time for buyers because they no longer have to pay the pricing premium that existed in previous years. There is less competition for homes, yet prices continue to appreciate, creating a great opportunity for buyers to position themselves for the future.
Here’s what has happened with home prices since Mr. Scott said that they “continue to appreciate” last October:
Another quote from Mr. Scott, in November 2007:
Well, we’re definitely in the adjustment phase of the real estate cycle. Every time you come off a frenzy market, a surge market… you do see sales pull back. Sales activities does lower about ten to fifteen percent.
And here’s what sales activities have done since the “frenzy market” of 2005:
At the time Mr. Scott said that in late 2007, sales activities were already down 15-40% from the 2005 frenzy. In the year since then they have fallen an additional 30%.
Some quotes from Dick Beeson, Tacoma Windermere broker and NWMLS director:
January 2008:
I believe the bottom has arrived in the Puget Sound marketplace and from here on, prices will stay level or advance slightly in 2008.
The local market “has reached bottom — or pretty darn close” and although inventory continues to grow, so does optimism among buyers, Northwest MLS director Dick Beeson said.
I think we’re as close to bottoming out in pricing as I expected.
Here’s what home prices in Seattle and Tacoma have done since July last year:
I’m not going to tell you who you should or shouldn’t trust when it comes to predictions about the local housing market, but I do think everyone should at least be equipped with all of the data when making such a decision.
With your head stuck up your @$$, everything looks like a bottom
Anyone silly enough to continue bottom-calling deserves all the ridicule they get.
Maybe he’s referring to a bottom he found on the craigslist men seeking men section.
google is too cool,
search for news with “lennox Scott” and this blog entry is at the top.
Thanks again Tim, I always enjoy Seattle Bubble because you’re not afraid to pour a little cold reality on the claims of the real estate industry.
You better watch out or Scott is going to have his PR crony send you another nastygram. I mean, the gall of a blogger to challenge the king!
I’M WITH GREG, TIM DID ANOTHER EXCELLENT PRAGMATIC ARTICLE
Do you hedge your bets on optimism and lose your shirts with more price collapse?
Or hedge your bets on doom and if you’re wrong, so what, you likely couldn’t afford the houses in this city at current prices anyway.
I know a couple of married engineers that just bought a new $400K home last year and are horrified with their decision today. They’re making great money compared to most of us, but have scaled their Christmas expenses way back….trying to save back the massive down payment they lost this year.
I’m reminded of Jon Lovitz:
“This is the bottom. Its a great time to buy. Yeah. That’s the ticket.”
you can’t make this stuff up. thanks, Tim.
Tim, you better get a bodyguard or something. This wont go unnoticed. Kudos for upfront, in your face, devil may care journalism. In this day and age whatever statements you make WILL come back to haunt you. Maybe Scott and Beeson will stop putting out PR statements altogether.
I think we should have a new poll on how many more bottom calls will be made by these “experts”. I vote for at least 8 more (1 every six months until we hit 2012 when finally all the bleeding stops)
It’s a wonder why the news media keeps going to these buffoons for anything! It certainly doesn’t add any credibility to their stories.
Ouch, Snap!
Good burn.
DavidB, the papers don’t go to them, they go to the paper. Papers are hurting financially due to a slowdown real estate advertising, and their best past customers hand them a story for free, so they don’t have to pay for real reporting. They will publish it.
Bravo!
That’s why I don’t listen to anyone’s “professional” opinion. Kind of like the bailouts and all of these so called experts telling me what to think.
I, for one, am glad to see some balls in the reportage here… let’s see more direct graphage and assignations of credit (or blame)….
Our advertising is based on cutting through the “real estate mumbo jumbo”, so I like Seattle Bubble. On the other hand we are part of the real estate industry, so we know our analysis could be interpreted as biased. (At MLS4owners.com we don’t represent either buyers or sellers and don’t earn commissions, but we do get to see what our customers go through.) One person’s forecast is another person’s spin, and one person’s statistic is another person’s lie.
I don’t think Dick Beeson is trying to mislead anybody, as our company’s experience is that he is an honorable man. However, the inaccuracy of the forecasts points out the danger of relying on any person’s opinion, including mine. We don’t know where the market will go, but there are plenty of statistics out there that can be analyzed. In addition to the quotes that get pulled from press releases and newspaper articles, there is a lot of raw data available. We provide that data to our customers and let them make their own judgments about what is best for them.
For the last two years the real estate industry has been living in denial. All one had to do was PAY ATTENTION to the data in order to see falling prices and a widening financial crisis on the horizon.
Good times breed all sorts of negative behavior by greedy brokerages (and agents). One byproduct is an intense level of hybris that leads “the experts” to start fortune-telling…..obviously, a discipline beyond their level of expertise.
As I’ve said before, each and every real estate professional must stop living in the land of DELUSION and choose truth over fantasy. When, as the numbers show, only 8.8% of Puget Sound inventory sold in November (with inventories being at record highs), it’s obvious that we are facing immense challenges as an industry.
Please, would the emperor please put some clothes on!
Ms. Rossi should have let sleeping dogs lie (based on the common avatar…literally!). I doubt this post would have been ignited if were not for her nasty-gram. I thought PR managers were supposed to understand this. Nice work.
Thanks Tim! One of my favorite things about the web is that it is making people accountable for their words and their facts. factcheck.org is one example – it used to be much harder to find out what was really behind the “facts” in political ads. I am hoping it will become even more the norm that when ANYBODY, but especially people with something to gain from their mis-prouncements, like real estate professionals, should expect to have their words checked. We are all better off when gross patterns of erroneous predictions, all in predictor’s favor, are properly identified as propaganda.
Can you find prediction made by J. Lennox Scott & Dick Beeson that turned out to be accurate?
What’s the point?
We hit bottom this year in August. We’re now in December and as the last person to call me asked, “How can we get rid of our house, what does foreclosure do to us, isn’t it smarter to walk away and save the difference, or can we short sale the property?”
Every one in the world knows that the Real Estate market has shifted.
You can now make an offer based on your best guess. It’s easier to negotiate through an agent and usually more effective. This is real estate, not the stock market.
So from the Real Estate professional point of view there really isn’t a better time to buy or sell than right now.
OK, you’re confused. You think your Real Estate professional is the same person who got a Real Estate licesnse because you can make soooooo much money “selling” Real Estate. No, Real Estate professionals position themselves and thier clients in the market place. If you are positioned well the market takes care of itself.
Did you buy well? Will you recover the negatives of todays market? Is your property in a top location? How’s the condition? What’s your circumstances and can we maximize a return for you?
Again, what’s the point of this post?
Excelllent post The Tim!. Real estate seems to be one of the few industries where company leaders can make any wild predictions about the market in their favour without having your company and yourself as a CEO being crucified by the investment community. If in our Nasdaq listed tech company we made such predictions on a regular basis not only would our company be punished by investors it could probably also trigger criminal prosecution. The re-industry spear-headed by the NAR seems to be freed from all such responsibilities even if their “advice”/propaganda could be used by some as basis of investments. Anyone have an idea how this can be acceptable for this industry? Anyway with the internet and brave bloggers like The Tim there is at least some accountability to face up to.
David Losh,
The point of this post was to bring accountability to the words of these two people who are prominent in the local industry. I think that it is very useful, because it shows that I should not trust what these people say.
What would also be useful would be to see quotes from people in the local RE industry who had correct predictions. This would tell me who could be trusted.
Real Estate is subjective. It is a negotiation between two individuals. Commercial Real Estate is held to a different standard.
Residential Real Estate is for home ownership. I will say again, home ownership is owning a property free and clear, that’s the goal.
Real Estate is different, much different, from the stock market.
David L, wouldn’t you say that those lax standards it is a problem when residential real estate is capable of spurring or bringing down the world economy? I’d say it’s a really big problem and that more accuracy and accountability in professional market predictions should be required.
Residential Real Estate has become the scape goat for a global credit crisis. It’s the retail consumer, who is tapped out. In turn they are defaulting on debt. They have stopped buying. It was the large corporate builders who saw the end was near that started dumping properties. Those builders along with Chase, Country Wide, and Citi Group began freezing out the mortgage market. They burst the bubble that they created.
Residential Real Estate sold Plasma TVs, refrigerator made by GE, and cars for the drive way. All was financed at a higher and higher price. K Mart, Costco, and Wal Mart sold rugs, flower pots, and dishware. All purchased with credit cards, then refinanced into the home loan, with a second and consolidation loan for debt.
It’s called the credit market when it’s created, the financial market when it serviced, and securities when it’s rolled into a mortgage.
Residential Real Estate is a bit player in the crisis we have today. Wages never kept pace with the inflation we have seen. Credit floated the spending. Home prices never covered the amount of debt it secured. It was a spiral upward to create the paper, that fed the profits, that drove the stock market. It is the ultimate ponzi scheme.
You look at residential Real Estate or home ownership as the culprit. I look at stock prices based on a consumer spending pattern that was unsustainable. Goldman Sachs, Merrill Lynch, Lehman Brothers are stock based multi national corporations. Banks do a certain amount of mortgage lending. It was Citi Group that is consumer credit that was first in trouble.
For that matter debt between countries is a much bigger problem than home loans. Home loans can be adjusted, consumer spending needs a boost.
Losh- you’re right. Real estate is different that the stock market…far more illiquid, and more risky as most are leveraged out the wazzu in their purchases.
Plus, I can’t use a ‘stop’ in real estate. If things start to tank, there is no saving you.
I thought Tim already nailed these guys on a previous blog. Hmmm. I guess the secretary or one of them really “grinded his gears.” Once again you never request advice from ANYONE who has a vested interest in the promotion of real estate transactions. You might as well go ask some Title and Escrow Reps as well.
You want the truth? Ask investors!! People who put their money where their mouth is. Ask Brent Fosso the advertiser on this site. Never, EVER ask a Realtor(who has a vested interest in real estate activity) their opinion. Its like asking a Chiropractor if you have back problems….Or a car sales person if the deal you are getting is good…
John and Dick have inferior models of real estate that are slowly coming to an end. Its a shame it took a complete meltdown for change to arrive. There will be no SELLER left when we pull out of this in the coming decade that will EVER pay 6% again to sell. They will have to adapt to change and give the people what they want. I will not be surprised to see a collapse of the MLS system as we know it and it will be replaced with a more efficient model powered by the BIG Gorilla.
We have some very difficult years ahead of us and I’m eagerly cautious to see how it plays out. Until then investors, buyers, and sellers think outside the box. Educate yourself first about a given real estate transaction. Then ask questions. The answers will become very apparent.
There is no doubt that if the public in general had been feed realistic predictions on the housing market as the ones often presented here we would be much better off as a nation and the real estate industry as well but I doubt the likes of the ones quoted in this post will ever understand or admit it.
Listening to people who have agenda is hazardous for your wealth.
Nice article over at USA today
Why home values may take decades to recover
http://www.usatoday.com/money/economy/housing/2008-12-12-homeprices_N.htm
“That’s the nature of bubbles,” Schiff says. “The price never comes back.”
Rent —Homes traditionally have sold for about 20 times what it would cost to rent them for a year. In 2006, houses were selling for 32 times annual rent.
Shelley McComb, 30, who manages a doggie day care center, says, “I wish we’d rented.”
People make mistakes. That’s to be expected. What is wrong is when they do not admit, nor learn from them. It is going to be real hard, if not impossible, for the REI to have any credibility when this is all done. However, blogs like this will be seen as the few bright lights in this dark time. It is hard to get any numbers, but I am sure more than a few did not buy into the bubble, thanks to this site.
Great Link Shawn. I’m passing it onto a huge network I have in Washington, Oregon, and Nevada to assist in getting their offers accepted from Lenders in the coming years.
“It is going to be real hard, if not impossible, for the REI to have any credibility when this is all done. However, blogs like this will be seen as the few bright lights in this dark time. It is hard to get any numbers, but I am sure more than a few did not buy into the bubble, thanks to this site.”
Well said Shawn…..
Sadly, nobody seems to be held accountable for trying to get people to commit financial suicide when in fact, their credibility should be destroyed for the rest of their life. Better to go to the zoo and study ape droppings for a view of the future than listen to RE “professionals” and all others who have a stake in “keeping the party going”.
Real Estate sales techniques have always been fascinating. I get Master Mind Group Think proposals all the time. The one I watched this morning told me not to listen to the negativity of CNN about what’s going on in Real Estate. That guy was the media liaison for the Anthony Robbins Organization before starting Real Estate webinars for today’s market.
Real Estate is full of positive thinking gurus who will tell you everything can be conquered by attitude. You get up, dress well, drive a new car, and speak with confidence. This is what the public has grown to expect from the Real Estate Industry.
Large Real Estate companies have promoted the idea of being positive as a way to increase sales. We all use the term Real Estate sales people. There are Real Estate training groups that encourage agents to be great sales people. Many companies follow this concept of making sales to generate commissions to split those commissions and make more money by having more sales people.
The positive spin is more for the rank and file of sales people than it is for the public. These guys make dollars by infecting the sales force with positive affirmations to share with buyers and sellers.
All of that being said the reality is that right now if you follow the numbers you can make a deal in Real Estate. That hasn’t been the case for many years. Sellers who were unrealistic are now trying to figure out how to get a property sold. More people are listening to advice rather than hype. You can, in fact, in reality, go out today and make offers that make sense.
If you have an opinion about pricing more people are willing to listen to that today. Properties will still turn, banks will need to cooperate, and the market place will need negotiators. In my opinion the agency part of Real Estate will come back while the sales force dwindles.
In that regard a concept of rebate or discount brokerage makes less and less sense. Real Estate should return to a value based transaction rather than a price based deal. You can research until you die but doing is the experience that makes a difference. I think that over time people will ask for, or demand service for a commission.
Same thing with RE sections of newspapers. Those ba##tards are trying to sell RE as well. And car salesmen, don’t get me started.
I’m sick of these thieving salesmen, I think everyone in the RE/car business should just move into a shelter until this is over. They may lose everything they have, but at least they will have their self respect for just stepping up to the plate and telling every potential client that comes along that they would be absolutely nuts to do business with them and only an idiot would buy what they are selling.
I agree with David Losh @35. Putting a bid in on a house with Redfin showed great value to me. They were the ultimate professionals in how they guided me through the negotiation, helped with advice on the inspection and also helped me position the bid in relation to the others. David is right in saying that value needs to be provided in the market. I’m sure other ‘non-traditional’ agencies can also provide the same value I experienced with Redfin, too.
That USA Today link was actually a very good summary of the national real estate bubble. It’ll be good reading for “Joe Six-pacs” everywhere.
The article is tarnished a bit by quoting Lawrence Yun:
“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.”
In his dreams…
“He says the bubble largely was confined to four states — California, Nevada, Florida and Arizona.”
Pull the other one…
Radfun did absolutely nothing for you. You paid them a huge fee for doing nothing. They may have cost you thousands of dollars on top of the fee you generously gave them as a gift.
You put in an offer, you negotiated, you were steered towards a closing so that Radfun could get paid for doing nothing. I will admit attorneys are far worse at charging money for doing absolutely nothing in a Real Estate transaction.
Radfun refuses to represent a customer. They are a secretary service that thinks treating the opposition like crap is their function. It is this lack of skill that costs you in a transaction. It is the problem that most people complain about. Unskilled workers trying to fulfill what they think a Real Estate transaction is all about.
I’m also going to say that Radfun has spent millions of dollars on generating comments like this one at #37. The secretarial staff monitors blogs to see where they can put in a plug. It is what they consider grass roots advertising.
David you persist in bashing RedFin while altering their name. It seems like many so-called “professionals” do this in attempt to limit exposure that Redfin might get good or bad thus empowering their business. The fact that they are cheaper than most RE agents is driving alot of you crazy in counting the lost unearned commisions for giving bad advice and easy sales in a raging RE bubble that has now burst. Man up and start behaving like a responsible individual instead of a jerk. Own your comments without deceit and childish games. I know you can do it.
Shawn @ 31.
20X annual rent?
Has anybody else noticed how that number has started to grow this year?
First it was the old 100 GRM for investors and 160 GRM for buyers. That’s what I read on active rain and the Irvine Housing Blog.
Then the NY Times stated that historically, the GRM was 14-16X annual rent on average. (Higher than Active Rain or IHB even suggested)
Is 20 the new 16?
Are we being conditioned/manipulated to accept higher prices?
Besides…what is USA Today’s readership demographic?
David Losh @39, here I thought we were agreeing and then it turns out we weren’t! First, I’m not associated with Redfin in anyway. My opinion is an unsolicited one from a satisfied customer. I don’t even know that much about them other than my direct experience with their great website and that of making the offer I mentioned. You’re clearly in the biz and know much more than I do about all this. You even know what their grassroots blog monitoring budget is. I’m an architect and am looking to buy a house when the time seems right. So just a couple thoughts:
1. My offer through Redfin did not go through and so no commission passed hands.
2. They were much more than secretarial. They told me the price was probably too high, but if I wanted it, then so be it.
3. My offer actually after escalation turned out to be $5k higher than anyone else’s, but was not accepted.
4. Even though I was pre-approved, another offer was accepted because they waived any financing contingency.
5. Here again, Redfin helped by saying they would never recommend a client doing that. Too much can happen between the Purchase Agreement and final Closing.
So I’m not saying they’re the greatest thing on earth. I understand they are in it to make a profit. I’m sure other ‘non-traditional’ firms can provide a similar high level of value, I just don’t have any experience with them.
Redfin has provided me better value than the more traditional firms that I’ve tried, like Windermere for instance. When looking with them, the only properties I was shown were, lo and behold, other Windermere properties. And Redfin is more than the agents who greet you at an open house with, ‘Hi-my-name-is-Becky-Are-you-working-with-an-agent?’ These agents seem more of an impediment than providing much value.
I’m not writing this to change your mind. That is beyond my wish or capability. I’m just saying I’ve had good experiences with Redfin that I have not had with traditional realtors.
Radfun is the ultimate traditional brokerage. It is radfun to be the rebel.
The Glen guy got through to Congress with the help of the Real Estate lobby. Every large corporate brokerage has wanted to get rebate marketing passed since Sears bought Coldwell Banker. The thought they had was to be a one stop shopping experience by rebating Title, Escrow, Mortgages, and House Hold Goods through the Sears brand of companies.
Congress was asked to protect consumers from what could be sever conflict of interests. Go figure a snake oil salesman fresh from expedia.com helped take those protections away so the internet based Real Estate Sales machine could set up shop. You can now get rebates on everything concerning real estate.
I also bash expedia which in my opinion ruined the domestic travel industry. We have long lines, no help, high fares, and a bag of peanuts. The airlines now enjoy the highest level of customer complaints in history. By the way, like the auto industry, we gave them tax dollars to bust up the unions. That was just an aside, Real Estate is still an independent contractor service industry.
Real Estate agency is a service. You pay for a service. You pay for someone to know what they are doing. You pay for some one to know, pricing, location, and condition. You pay for the advice of where the market is going and it’s impact on your purchase or sale.
So there are no predictions in Real Estate because the Real Estate market never changes. People buy and sell Real Estate every day. You make the best deals you can every day. The trick is to hire some one who knows what they are doing.
Real Estate agents are service providers. You pay a commission for a level of service. Paying less gets you less. The idea you will pay less for the same level of service has been proven wrong consistently.
David, it sounds like “paying less” got him good faith advice, which is more than he would’ve gotten from a traditional RE agent. It sounds like “Radfun” deliberately and consciously talked themselves out of a commission, because doing so was in their client’s best interest.
How exactly are you, the traditional RE advocate, going to get that client back when he actually makes a purchase?
Methinks you protest a bit too much.
David- we hit bottom in August? How do you figure that?
As a consumer, I like the Ray Pepper model. I haven’t yet figured out what reductions in services you get for paying a drastically lower fee. Nearest I can tell, you get the same level of service for a fraction of the price. I’m not sure it’s possible, but it appears that way from the outside view.
I am getting ready to buy, in a year or two. In that time what I need to research/learn how to buy my home “without” a Realtor. I hope this web site can provide some direction on how to do that. If nothing else some links to get started with.
What I liked about the USA today article was that it would quote NAR, then follow that with another quote from another economist, and that quote just happened to be reality based. It put the NAR guy in a real context, that was good. What also I liked was just how similar this bubble and its aftermath is a repeat of the Great Depression. I am not saying were are in a GD or going to get into one, but it shows just how easy it would have been to avoid this whole thing, if only people had used reason/research and logic rather than irrational exuberance.
As for their demographics, I was in a line to get some coffee and that headline was sitting there staring at me, so I looked it up on the net.
“Real Estate agents are service providers. You pay a commission for a level of service.”
Here is the difference, when someone pays a fee for a service, they expect that the service is going to benefit them, as in the one paying for the service. People don’t hire someone to find the best deal for the one providing the service. I hope, gosh I hope, that one great bright spot in this mess is an end to the current paradigm. I feel that if I must deal with a Realtor, that I can stay a renter forever and feel real good about that decision.
Well Jonness you should like us. Its the best deal in the State. For godsake use all the tools that Red Fin provides but then when it comes down to buy see if its on the NWMLS and if it is, then see what Red Fin will pay you, then 500 Realty, then Findwell, Handspring, Shop Prop, and Independent Agents at Skyline. Heck someone may give you 80%. Who knows?? As we strive to give 100% back to the consumer the alternative brokerages keep giving less. I’m very sad for Red Fin. I loved Red Fin for starting the revolution of change and they should never be mocked. Because of Red Fin people woke up and we applaud their efforts. The contemporary Agent was coming to a slow demise anyway. Red Fin just helped to speed it up.
However, we WILL do short sales, and our office minimum of 2900 is unsurpassed. Do you want to know why? All our Agents are financially secure and are investors. We do not NEED TO SELL TO STAY OPEN. We moved in with PNC Bank and of course we like our Buyers to use our lenders and Title/Escrow but in the end its your choice.
The fact is this. Do your research. Get Pre-Approved. Then when your ready to Buy don’t be brain dead. You found Seattle Bubble. That should have educated you already. Now find a GEM in the coming years. There will be thousands more 500 Realty type companies coming throughout the Nation. Brokers can make a very good living at giving back 75%. Furthermore, paying more then 500 to LIST? R U NUTTS? Then some Brokerages nail you for another 3000-5000 at close? For God Sake wanna throw your money away at least give it to a charity.
Change is here and it takes every reader here on the Bubble to educate their family and friends on the proper way to buy and sell. As Tim says question if you even need an Agent. If so, and the property is listed on the MLS, the cash machine should ring in your head. That 3% is yours Buyer!! If your going to give any of it away then do it wisely!!
Personally I don’t have a problem with real estate pros expressing opinions. But that’s all they are-opinions, and you know about opinions…they’re like ***holes, everyone has one. Nobody should rely on a real estate pro’s opinion as their sole source of information. I encourage clients to get as much info as possible from a variety of sources before they decide to buy and sell, and I never hesitate to express my opinion, but I also never pretend to know anything.
David,
I know that you and I don’t often see eye to eye on most things, but please stop intentionally mis-spelling Redfin. Why do you do that?
I appreciate that at my request you stopped calling them Rodfun, but really. It is so embarassing to everyone in our industry when you won’t say Redfin. Again I ask, why do you do that?
And “the Glen guy” spells his name with two Ns It’s Glenn Kelman, Redfin, not Glen of Radfun. It makes us all look bad…please stop it. Thanks. If you can’t stop for some reason, then in the name of transparency, at least reveal why you are doing it.
It’s interesting that this post is targeted toward Windermere and John L Scott for puffing the Real Estate market. It is actually called puffery, it’s a real term in Real Estate jargon.
John Jacobi was never a Real Estate agent. He was a property owner who thought the Real Estate Industry could use some professionalism. He built his business by being selective about the agents he hired, insisted on training, then held those agents to higher standards if they wanted to continue representing the Windermere brand. Lennox Scott saw the benefits of the internet and was the profit based investor in Real Estate searches, information, and internet community.
Both of these guys wanted to improve the Real Estate sales aspects of the industry. These were innovators who wanted to make positive steps to “fix” the industry.
Real Estate has been a part of my life since I was in high school. Those were the days of the pearly teeth, big hair, and plaid jackets. Every body smoked cigarettes and drove Cadilacs. In conversation through out the Real Estate Industry most people agree that they never want to go back to those bad old days.
In fact for all the changes we are now getting people who know nothing about construction, land use, planned development, or economic trends writing up deals so you can save money. In the bad old days you would be run out of the business in less than a year with that lack of skill set. Today it’s normal.
Back in the day agents were lifers. You made money by buying Real Estate rather than selling it. It’s a business, a way of life, it’s what you do. Is that the level of service you are paying for? Are you paying some one who knows the game and how to play it, or are you being sold something, an idea, a sales concept, and paying for the privledge?
Gotta go:; I have a computer software glitch and I’m in queue for an online chat about it. Computers are great when they work.
Here are some other famous “bottom callers.” Mssrs Scott et al are in good company.
http://www.gold-eagle.com/editorials_01/seymour062001.html
[…] a post on a popular and provocative blog called Seattlebubble.com. In a recent post entitled “J. Lennox Scott & Dick Beeson Predictions vs. Reality the author basically “called out” the two regional industry gurus buy highlighting […]
I am not sure the relevance of this post other than to prove that anyone who calls the top or bottom of markets whether real estate or financial are are going to be wrong. If you are going to buy a house you need to be reasonably sure that decision will work for you over a 5 year period. If you can’t do that then rent.
I am simple Guy. I dont read much and dont have any finance knowledge but I always make my payments on time & dont apply for a loan (which I cant afford).
For some reason, I always felt the prices in Redmond/Kirkland/Seattle are superficial. Just listen to your heart. You didnt need to read all the blogs or do lot of calculations to identify a big housing bubble like this.
Its just common sense. Lets use our time in building some great products useful to the world until this bubble bubbles out (instead of waiting to see its bottom)….
Robtr,
The relevance is that most of the information coming from the real estate industry isn’t credible. Those individuals were not honestly trying to give professional advice. They were just willing to say anything to get people to buy their product.
Let me make a positve statement of how I think Real Estate agency should work. I have advanced these ideas before and there are only a few groups of agents that use the concept in one form or another.
First and foremost I think Real Estate agents should be mentored for no less than two years. The idea was traditional brokerages would provide that mentoring but they in turn pushed education. Rather than being in the trenches doing mass transactions new agents are given classes and turned lose on the masses. It all goes to getting warm bodies to throw deals together to get more commission split dollars.
Second is that Fiscal responsibility should be a corner stone of Real Estate agency. My wife and I own a cleaning company that other agents used to make fun of me for. Other agents today do have side businesses that can cover the spread between good times and bad.
Another figure from the very bad old days was a woman who ran an Institute of Real Estate Tax Accounting. Her business was to collect commission checks, withhold taxes, pay expenses, and give the agent a pay check. She kept the money in a rolling account that the agent could invest or bank. She held the money. At the end of the year or on the quarter she would give dividends.
There is an agent on the Eastside who runs a board of seven agents. They meet every morning and do the tasks associated with the listings and sales that they are working on. The work week is seven to four Monday through Friday with evening meetings with clients until eight. Sundays are for Open Houses, and Saturdays are for touring buyers and preparing for Sunday. Tasks are rotated with a full medical, dental, and vacation package. Again every one is on a salary with bonuses paid Quarterly. A year end dividend is paid if warranted.
This is traditional brokerage. A Real Estate agent should have a hundred deals under the belt. There should be a pool of knowledge available to the consumer at every turn. From the moment the agency is created by contract the work should be on the shoulders of the agent who is representing the client in a Real Estate transaction.
I know this is an off topic comment. Like i said earlier it bothers me that quotes of puffery are used to denegrate a couple of good companies while a cheap con job of web 2.0 is given a free pass. As a matter of fact it appears to me that the idea of paying some one to do nothing for you but the most remedial tasks is elevated here at the Seattle Bubble.
This is only 1 reason why the traditional Agent profession will join that of the travel agent. You simply cannot trust anyone who has a large vested interest in YOU Buying. NOBODY! The interests of the Agent and THEIR HIGH commission will always trump that of their client. ALWAYS!
http://www.youtube.com/watch?v=ztQTLnCukBw&feature=related
Let me be clear that I include David Losh as one of the individuals referenced in comment 55.
The real irony will be if the REI comes out of this stronger and mightier.
Traditional real estate is dead. Maybe not this year, or next, but it is dead. The current fees are too high for the value received by the buyer. The seller may gain some value now, but technology will eat into what the agent can provide the seller.
After being burned by the current market, buyers and sellers in the future will put a lot more effort into their real estate transactions, and the technology to help them learn and understand what they need to know will be there, most likely through companies like Ray’s. Fee based consultants, not commission based sales people will rule the day.
David,
It’s charming to hear you wax poetic about a failing industry…by chance do you have fins on the back of your car? If I have narrowed down my home search to a specific area and have nailed down my offer price, why then do I have to pay you upwards of 20k to run p-work and talk on the phone for me? I’m sorry, but I can’t help feel a bit flustered that your REIC was a major player in this “buying and selling of each others homes” ponzi scheme we find ourselves in.
The idea of consulting is by far the most viable. It is another model used by some Real Estate groups.
Let me say again that Real Estate agents are independent contractors. They can try a variety of things to generate dollars. My dollars over the years have come from being a contractor in the Real Estate business. If this site were ever to attract or have Real Estate professionals participate here you would find many Real Estate agents saying that the problem with Real Estate today is the caliber of agents.
My point is that you all want to complain without solution. The mind set here is called the week end warrior. Ever since I can remember there was the angry guy in the car on the week end visting open houses. Eventually the guy picks a place out of frustration and there they are. He then starts calling in Real Estate agents to get the house sold as soon as he can financially manage.
The great thing here is that the technology lets people sit at a computer, Real Estate agents included. Neither you nor the agents you are complaining about visit, see, or have a working knowledge of the pretty pictures you see on the internet. Decisions are made by picture puffery rather than value added analysis.
Nobody is discussing that yields on treasuries are really low but everybody is buying like crazy lunatics as if people expected some major deflation to happen soon. This is inspite of the fact that US govt debt is way high and will grow even larger. So the reality is that US govt will likely not be able to pay for all of this. Yet foreign people are still buying – why? Could that be the next bubble?
Normally if say Mexico did the same thing – people would flee. Here they are kind of waiting.
So do we expect a huge price daflation of real estate?
Also what will this do to the USD? This is particularly interesting if some of us contemplate or hold foreign currencies. If the USD falls – then people holding foreign currencies will be able to buy US assets for very little money.
The problem with these kinds of predictions is that they get quoted in the PI and Times and encourage sellers to think that they should stick to their prices because the rebound is right around the corner. Meanwhile, the market continues to drop and they end up selling eventually (if they’re lucky) for FAR less than what they could have gotten when Dick Beeson called the bottom in March. I’m tracking a wide swath of central Seattle on Redfin and the vast majority of sellers are sitting on the market for months, with minimal price drops if any. Sellers here in Seattle are still in denial and RE professionals blowing sunshine and rainbows up their butts aren’t helping them one bit.
My wife and I moved up from Dallas in late 2007, and decided to rent while we got a feel for the city. As we now know, the past few months have been interesting to watch – especially considering that we are sitting on the bench and watching this housing market unfold.
My question is this: there was a time when folks used rules of thumb to gauge how much house they could afford. Depending on the “thumb”, 2.5 to 3 times income (gross or net?) seemd to work regardless of the prevaailing tax and mortgage interest rates.
iMHO, leaving this type of prudence behind certainly contributed to this mess we’re in now.
So, here’s what is bugging me. If we go back to something as simple as 2.5 to 3 times income, how can I (or most of us) ever afford to buy in Seattle? I make good money (6 figures+), no credit card debt, own both cars and maintain a credit score >800… I say that to say this: I refuse to spend $500k on a fixer. We like living in the city, walking to shops and using the bus, so we’re not going to move out east or north.
So now, we are looking at Fortune’s List of Top Places to live and considering a “Cost of Living” adjustment. It’s a shame. We really like Seattle, but we just don’t want to be house poor.
Venting a little here, but I think this forum is filled with like-minded individuals.
Speaking of predictions, there is an interesting post by Aubrey in his blog today: Dupre + Scott is now saying to expect no appreciation in rents for the next two years. Really. Who would have predicted that?
David Losh @43
I don’t know whether your point is valid or not because I stopped reading at “RadFun”. I also stop reading political comments that use “McSame” or “NoBama”. Any intelligent point you might have is immediately diminished by name-calling. Smart readers will just “flip the idiot bit” and move on.
Another poster commented that the repeated misspelling may be some strategy to rag on RedFin while preventing any sort of search engine hit. I don’t know, seems pointless to me. I mean I just included the correct spelling on the same page (as did many others) so….
-N.
FOREIGN CURRENCIES, OIL, GOLD, ETC
In my opinion, overpopulation is the trump card no one is talking about. We’re simply out of fish. We can’t build small cheap cars for $20-30/hr wages, ask Toyota [Toyota City hires temps now at $12/hr].
6.6 billion people mean Boeing and MSFT can’t compete in a world economy that can afford Seattle RE. Not when we can insource or outsource our jobs on the cheap [they are], using globalist common sense [greed?].
The subprime Superman to save the day with stagnant future Seattle pay is gone. We’ve exceeded the Earth’s overpopulation credit limit. Its that simple.
Deflation is the rule now. The solution? [depopulate planet Earth and raise wages again]
“[depopulate planet Earth and raise wages again]”
Are you volunteering, or are you suggesting a non-voluntary approach?
Softwarengineer, why don’t you just change your link to the NumbersUSA website? You just repeat their talking points in every comment. Don’t they have a blog where you could spout this stuff to likeminded nativists?
The ZPG people were all like softwareengineer in the early 70s. And in all of the recessions in the last 100 years, people like se have come up to say “good times are gone for good”. They’ve always been wrong before, and will likely be wrong in this situation too. Before that there were the Malthusians (look it up).
I’m not arguing this won’t be a very painful recession (or isn’t already) – or that it might not be a 2nd “Great Depression” in many ways. Just the idea that there will never be another boom absent mass depopulation, has been demonstrably proven false every single time it’s been predicted. So to for the argument that we’ve reached the pinnacle of society and our standard-of-living is headed nowhere but down.
This is what kills the perma-bears every time. They argue doom-and-gloom for years, some of it eventually comes true, convincing them they were right all along and “this is the big one”, so they stay bearish until the point at which the market has recovered so much they’ve given up a lot of their gains. Again, not arguing that some (Roubini) haven’t been more right than wrong recently, but even he’s not arguing we’re screwed forever.
SWE you fall for too many fallacies. This time the “either or” falacy, if we are overpopulated we need to “either” depopulate “or” the end is here. What about some of us moving to Mars? That would surely buy us some time. I am willing to go first.
http://en.wikipedia.org/wiki/False_dilemma
“Another poster commented that the repeated misspelling may be some strategy to rag on RedFin while preventing any sort of search engine hit. I don’t know, seems pointless to me. I mean I just included the correct spelling on the same page (as did many others) so….”
I think you have to be a non-employee to really be able to appreciate the humor in the terminology “rodfun.”
David Losh,
You remind me of Mr. Potter in It’s a Wonderful Life. You sound so bitter that Redfin exists. I’m sure Redfin has their faults, but they sure bring out the true side of some ‘professionals’. I may use a full service realtor to buy a home, but after reading your rants, I wouldn’t give you my business if you were the only realtor in town.
“But consider this: Perhaps Mr. Potter wasn’t just a heartless Scrooge. Perhaps Mr. Potter, in the absence of sufficient regulatory oversight, was the one voice of sanity keeping the good people of Bedford Falls from over-leveraging themselves.”
http://www.portfolio.com/news-markets/top-5/2008/12/23/Was-Mr-Potter-Right-After-All
[…] not so sure that Dick Beeson is the best person to be “coaching” home buyers, but maybe that’s just me. […]
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Being honest is not working for sale professional.
They have to BS to make a living.
Scott & Dicky is so stupid.
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