Cheapest Seattle Homes: April Edition

Today we’re going to kick off a new feature here that will (hopefully) provide another, more “down to earth” way to track the Seattle-area housing market. Charts and graphs are great, but I think we can also get a picture of what’s going on in the market by looking at what your money can actually buy.

So here’s the methodology: I’ll search the listings for the cheapest homes currently on the market in the city of Seattle proper. Disregarding any properties that are in obvious states of extreme disrepair (based on listing photos and descriptions), we’ll post the top (bottom) three, along with some overall stats on the low end of the market.

Over time, we should be able to see whether the overall quality of the cheapest homes is getting better (or worse), or whether the cheapest homes are getting cheaper (or more expensive).

Please note: These posts should not be construed to be an advertisement or endorsement of any specific home for sale. We are merely taking a brief snapshot of the market at a given time. Also, just because a home makes it onto the “cheapest” list, does not indicate that it is a good value.

So, let’s get on with it. Here are this month’s three cheapest single-family homes:

Address Price Beds Baths SqFt Lot Size Neighborhood $ / SqFt Notes
10225 Evanston Ave N $133,000 2 1.25 820 2,279 sqft Greenwood $162 Bank-Owned
9029 8th Ave SW $147,155 2 1 700 3,480 sqft Highland Park $210 Bank-Owned
7464 S 118th Pl $155,000 2 1 810 6,960 sqft Bryn Mawr-Skyway $191

Stats for Seattle Single-Family Homes Under $200,000
Total on market: 41
Average number of beds: 2.0
Average number of baths: 1.1
Average square footage: 1,178
Average days on market: 63

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.

101 comments:

  1. 1

    “LOCATION, LOCATION, LOCATION”

    That’s a term I’ve heard RE folks use to justify doubling or even quadrupling Tim’s top three lowest price SFHs. The problem with the RE term:

    Location has nothing to do with frequency of foreclosure.

    Location has nothing to do with unemployment/underemployment and giveup impact.

    Location higher prices may likely be short-lived in this horrifying economic downturn, but the impact of three year averaged property taxes will haunt the new owners for years.

  2. 2
    Slumlord says:

    Softwarengineer is right. This is not the time to buy, even at the bottom today’s market. Those houses appear to be decent but modest. A person with a decent but modest job cannot yet afford to buy one of the houses. Take a health care aid or grocery clerk as examples. Those jobs pay 25 to 28k a year. Using the three times the income rule of thumb, the listing price on those houses ought to be 75 to 84,000. My guess is that prices still have a long way to go.

  3. 3
    Dave0 says:

    Tim,
    What method do you use to determine if a listing is bank-owned? For example, that $133k listing on red-fin says nothing about it being bank-owned. Is there a quick way to determine this with 100% accuracy?

  4. 4
    The Tim says:

    RE: Dave0 @ 3 – I’m pulling them up in the parcel viewer and looking at the sale history. Here are the most recent transactions listed for the first two properties on my top three:

    10225 EVANSTON AVE N
    10-17-2008 | $0 | US BANK NA | REGIONAL TRUSTEE SERVICES CORP | 2369706 | 20081031001465 | Trustees’ Deed | Foreclosure

    9029 8TH AVE SW
    10-31-2008 | $0 | MARATHON STRUCTURED ASSET SOLUTIONS TRUST | REGIONAL TRUSTEE SERVICES CORP | 2370239 | 20081106000765 | Trustees’ Deed | Foreclosure

    I guess in the future I should probably link to the King Co. parcel report in these posts.

  5. 5
    Groundhogday says:

    $200 / sq ft for very modest homes in not great neighborhoods = STILL very over priced.

  6. 6
    Scotsman says:

    Interesting question you’ve asked there, Tim! What will your money buy?

    I’m offering the following listing just for perspective on the entire Seattle area. The home is in Spokane, north side of the city in an established mid level neighborhood (heh, I sound like a Realtor) and is the kind of home one would find in Ballard, etc. Yours for $386 a month, P+I after 20% down.

    A guy who works in a tire store and his waitress wife could afford this and, in time, have a really nice home.
    It’s something to think about. Check out the heat pump, floors, etc.

    http://www.johnlscott.com/propertydetail.aspx?IS=1&ListingID=200000528

  7. 7
    Scotsman says:

    Or perhaps you’d prefer to be in the country, about 15 minutes out of town on 3+acres? Under $800 PITI.

    http://www.johnlscott.com/propertydetail.aspx?IS=1&ListingID=300125790

    Is Seattle so much better that you’d pay more to live in a hut in White Center?

    How low do Seattle prices have to go to bring the total lifestyle equation back into balance?

  8. 8
    JJL says:

    Software Engineer:

    Location does affect the foreclosure rates, as I’ve studied the foreclosure rates and it is most definately higher in low income areas and as in lower priced homes.

    Location has nothing to do with employment/unemployment? I don’t think people living in Detroit would agree with you.

    There is no price that I would buy a home in a gang infested area of which are 3 of Tim’s example properties. Unless you don’t mind walking to the corner store in the evening and getting shot.

    “RE folks use to justify doubling or even quadrupling” … not sure I understand this comment. Real Estate folks don’t set prices. Sellers do.

  9. 9
    Roger says:

    Unless you don’t mind walking to the corner store in the evening and getting shot.

    This happens a lot, does it?

  10. 10
    Greg says:

    Thanks Tim, this is interesting. However, like everything else, a cheap home may not be a good value. I’d love to see a companion series: top undervalued homes. Pick some metric – Case-Shiller Index, Zillow Zestimate, whatever. Then let’s debate whether we agree that the home is a good value.

    And we could also look at top overvalued homes. That would be good for a laugh.

  11. 11
    Greg says:

    Nice doggie. Now this should look more like me!

  12. 12
    Tacoma Troll says:

    RE: Scotsman @ 7

    With all due respect, the analogy between Seattle and Spokane is ludicrous.

    And to software engineer, LOCATION will always matter to most buyers and will always affect price. View locations will always cost more than non view, good school locations will always cost more than bad school locations.

  13. 13
    Chris says:

    RE: Greg @ 10

    In this vein, perhaps it would make sense to set a number (or several) and trace what that could buy in certain neighborhoods.

    Although it would be subject to selection and require more searching I’d think, it might give a decent idea, especially over time, about how the market is shifting.

  14. 14

    Just FYI:
    The 7464 S. 118th St address is not within the Seattle city limits. It’s in unincorporated King County, but has a Seattle mailing address.

  15. 15
    The Tim says:

    RE: Ira Sacharoff @ 14 – Hmm. I can’t seem to find a definitive street map of the actual city limits of Seattle. I was trusting Redfin when their search gave me these results as being within the city limits. It looks like that one may be a few blocks outside the city though? Oh well.

  16. 16
    Colin says:

    Two of them have only one (exterior) photo on Redfin, which I take as a bad sign about condition.

  17. 17

    This might help a little:

    http://clerk.ci.seattle.wa.us/~public/nmaps/fullcity.htm

    7464 S 118th ST. is more like a mile from the Seattle city limits, about 8 blocks east of the heart of Skyway, one of the Seattle area’s most blighted retail areas.

  18. 18
    The Tim says:

    RE: Ira Sacharoff @ 17 – Drilling down from that link to the far south-east corner of the city, it still looks to me like this house is only a few blocks outside the city limits.

    Looks to me like Redfin was just not terribly precise when drawing in their boundaries. I’ll have to be more careful to double-check anything near the edge in the future. Thanks.

  19. 19
    seattlerenter says:

    just thought I would share an e-mail I got from a Zip realty agent today:

    Hi &*%$,

    Youve been patient. Youve waited for the perfect time to buy a home. Well this is it.

    Home prices have bottomed out. Many experts see prices rebounding from current lows. The $8000 Federal Tax Credit is available for a limited time. The ZIP Buyers Rebate is yours when you use me as your Buyers Agent. And now Mortgages are at their lowest since 1971 (see article below).

    Your patience has paid off!

    Okay how is it legal or even ethical to tell clients home prices have bottomed out? not we think they have or they may rebound shortly, but they HAVE bottomed out. I e-mailed back and asked how can you know that and be sure, I son’t excpect a response or at least one that is credible.

  20. 20

    I’ve been advised by my own broker to suggest to potential clients that we have hit bottom. Since
    I see no real evidence that we have hit bottom and I don’t agree that we’ve hit bottom, I’m not acting on his suggestion.

  21. 21
    Kary L. Krismer says:

    RE: The Tim @ 15 – I’ve always suspected that the “Seattle” median that the papers report from the NWMLS is not really Seattle either. The NWMLS boundaries don’t follow the city line, and the address doesn’t tell you it’s in Seattle. I certainly don’t have an easy way using Locator to find just Seattle proper listings.

  22. 22
    Kary L. Krismer says:

    On the bottom question: Legal–yes. Ethical–Yes. I don’t think the answer to the latter question should be yes, but as far as I know there are not any ethical rules that prevent it. So it’s a problem with the ethical rules.

  23. 23
    Kary L. Krismer says:

    BTW, I looked at four listings today that were under $200k, a couple of them even duplexes, or at least advertised as such. They were all what you would call fixers. Only one had a decent roof. None were livable, but for one that was only due to the roof.

  24. 24
    David Losh says:

    10342 Stone Ave N Seattle, WA 98133
    Listed at $154,900 Sold for $142,000 2 Bed 1 bth 760 0.12 ac / 5,163.00 sqft 1944 0
    Sold (03/06/09)

    Remodel gone bad, but still has a bigger lot and some good stuff done to it.

    The point about cheap is to buy cheap with the idea you will pay it off by amortizing it quickly and not pay the interest. You buy on a thirty year fixed loan and throw money at the principle balance.

    It’s the way Real Estate was at one time and will be again in the future.

  25. 25
    Jillayne says:

    I can answer the ethics question but it will be a long answer. I will compose and post it as a forum topic and then post the link.

  26. 26
    deejayoh says:

    By seattlerenter @ 19:

    Home prices have bottomed out. Many experts see prices rebounding from current lows. The $8000 Federal Tax Credit is available for a limited time. The ZIP Buyers Rebate is yours when you use me as your Buyers Agent. And now Mortgages are at their lowest since 1971 (see article below).

    Isn’t the tax credit only for first time home buyers? It is usually presented as “for everyone”

  27. 27
    Jillayne says:

    Seattle renter,

    Long answer to the question, “Is it ethical for a Realtor to call bottom in marketing material in order to procure clients?”

    http://seattlebubble.com/forum/viewtopic.php?f=2&t=2174

  28. 28
    Jillayne says:

    RE: deejayoh @ 26
    Yes. This is deceptive.

  29. 29
    S-crow says:

    RE: Ira’s response@ 20

    Broker saying bottom? I hope he/she is right. Kary & Ira, how many price reductions were on the NWMLS today? 200,300,400? I’m of the persuasion that you need to see inventory level out and price reductions start to subside and the number of short sales being overtaken in number by normal sales coming into escrow offices. Remember, we are in tax season and I can tell you the Federal Tax Liens in Sno Co are very heavy.. Many people in housing food chain are showing up there. Builders, agents, homeowners and contractors. Not encouraging.

    While it may be a good time to consider buying, I think bottoming out will be unmistakable….we’ll be bouncing along for quite some time. Remember, a good number of local Boeing folks are still awaiting formal layoffs and only recently have we been reading about Boeing orders being delayed or canceled.

  30. 30
    Kary L. Krismer says:

    Jillayne, much of what you quoted in the other thread only has to do with obtaining a listing, or representing specific property. The one that hits, however is this one you quoted: “REALTORS® shall be honest and truthful in their real estate communications and shall present a true picture in their advertising, marketing, and other representations.”

    I wasn’t thinking of that one when I answered “no” above to whether this violated any ethical rules. I’d now answer maybe. I think they likely have some issues with regard to the tax credit, if not more.

    What I was thinking with my original answer though was more along a line I’ve expressed in the past. Personally I think there should be a rule preventing real estate agents from making market calls (not just an ethical rule applicable only to Realtors). Even a rule that only applied to Realtors would be a good start, however. Agents simply don’t have the training, education or time necessary to make such calls, and even the entities that do can’t accomplish the task with any kind of reliability. Agents making calls like this are not doing the industry any good. They subject it to scorn. They are an embarrassment.

  31. 31
    Kary L. Krismer says:

    By S-crow @ 29:

    Kary & Ira, how many price reductions were on the NWMLS today? 200,300,400? .

    I’d look that up, but I think it’s irrelevant. 24 hours of data doesn’t mean anything. The debate here has been over how many months of consecutive price increases you’d need. I’ve argued against that as a standard.

    I have been monitoring the median list price of pendings in King County, and they have been relatively stable for about 20-25 days. I suspect Ardell’s bottom call was based on something similar, because the pendings in her 7 or so zip codes are relatively strong. But regardless, are median pendings a clear sign we’ve hit bottom? No. It’s just a statistic. We won’t know we hit bottom until years after it’s happened (absent hyperinflation).

  32. 32
    Kary L. Krismer says:

    RE: Kary L. Krismer @ 30 – In editing post 30 I accidentally cut some language indicating I didn’t have a problem with agents pointing out typical seasonal trends.

  33. 33
    Jillayne says:

    Hi Kary,

    I always appreciate your analysis. I’m okay with Realtors or agents making bottom calls or for that matter, top of the market calls, PROVIDED their assertions are backed up with logical facts and data. Many agents only have a high school education. Some have a B.A., fewer have advanced degrees. Rarely would we find an agent with advanced education in economics. I’m okay with agents studying the work of others and coming to their own opinion, provided they can back up their opinion with solid research. Once we know where that person stands, we have the ability to buy in to that opinion or pass it by.

    Too many agents missed the top of the market for me to believe that any group of agents would be capable of finding the bottom on their own. Agents are too personally biased for the bottom of the market to arrive! Agents would be wise to look outside of their own small market area and look at other outside factors.

    I personally like to read the work of the economists and other industry insiders who accurately called the bubble and who predicted the financial meltdown. How did I find out about these guys? By asking for help here on SB and I think it was synthetik or sniglet who pointed me to the forums where there’s a list of links. Here it is:
    http://seattlebubble.com/forum/viewtopic.php?f=5&t=402

  34. 34
    Kary L. Krismer says:

    RE: Jillayne @ 33 – One of the people who made such a call, and became famous for it was a woman who was an expert on two stocks that had nothing to do with housing. But because she got lucky, the press treated her as an expert on housing. I don’t think that way. To me, if an agent made the call of the top, to me that means they were likely lucky, as was the woman I described.

    In the past I’ve given Eleua credit for at least having stated predictions that were actually somewhat close to the facts which caused our recent issues. I’m sure there were some economists making similar statement. I’m not sure there were any agents.

    Stated differently, I wouldn’t give an agent any credit for calling July 2007 as the local top here back a year earlier. But if they said that was going to be the top because there was going to be a worldwide credit crisis brought on by financial entities being over invested in mortgage backed securities, that would be a different matter. Even if they did that, however, that wouldn’t mean that they would be able to call the bottom, because they might not know what type of fact situations would lead to the bottom. Facts that destroy an economy and facts that provide a foundation are totally different facts.

  35. 35
    Scotsman says:

    RE: Tacoma Troll @ 12RE: Kary L. Krismer @ 22

    Ethical? You have got to be kidding. Step outside your legalistic mind and training and try to see the big picture. Didn’t they teach you something about the intent of the law? You’ve dropped a dozen notches in my estimation on that one.

  36. 36
    Kary L. Krismer says:

    By Scotsman @ 35:

    RE: Tacoma Troll @ 12RE: Kary L. Krismer @ 22

    Ethical? You have got to be kidding. Step outside your legalistic mind and training and try to see the big picture. Didn’t they teach you something about the intent of the law? You’ve dropped a dozen notches in my estimation on that one.

    All I’m saying is I don’t think there’s an ethical rule that clearly covers it. I modified the answer somewhat with Jillayne’s post.

    I’m answering it in the hyper-technical sense. Does it violate a specific rule? I’m not saying it’s okay or right to make such statements. Perhaps it’s the difference between ethics and morals, or going above what ethics requires.

  37. 37
    Thomas B. says:

    Um… since we are talking about what is legal and ethical, I’ll throw my two cents in. It’s not legal, or ethical. The Washington Consumer Protection Act prohibits deceptive advertising; that includes false statements. Additional, the NAR code of conduct explicitly states that a realtor may not make a false statement. Calling a bottom with no evidence is asking for a law suit.

  38. 38
    Jillayne says:

    Hi Thomas B.

    Sometimes agents take a look at statistics within their local MLS and make a determination that a bottom has arrived within a narrow set of circumstances. Could this be construed as a “false statement” if said agent came to a conclusion and believed it to be ‘true’ at that time?

    Thanks.

    Some agents may believe that we are at the bottom. With their own personally held belief, they also believe they are being honest and not making false statements :)

  39. 39
    Thomas B. says:

    Unfortunately, the law uses a reasonable person test. Even if the realtor may “believe that it is true at the time”, that would not excuse that realtor if he/she is willfully ignorant or worse, incompetent.

    As for the law (I know some people will ask for sources) here you go:

    RCW 18.235.130(3) Advertising that is false, deceptive, or misleading;

    RCW 18.85.230 (2) Making, printing, publishing, distributing, or causing, authorizing, or knowingly permitting the making, printing, publication or distribution of false statements, descriptions or promises of such character as to reasonably induce any person to act thereon, if the statements, descriptions, or promises purport to be made or to be performed by either the licensee or his or her principal and the licensee then knew or, by the exercise of reasonable care and inquiry, could have known, of the falsity of the statements, descriptions or promises;

    RCW 19.86.020 Unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful.

    NAR Code of Ethics
    REALTORS® shall not knowingly or recklessly make false or misleading statements about competitors, their businesses, or their business practices.

  40. 40
    Kary L. Krismer says:

    RE: Thomas B. @ 37 -On the topic of deception vs. puffery:

    http://www.agecon.uga.edu/~caed/deceptivead.pdf

  41. 41
    Thomas B. says:

    Also, under the law, a statement does not necessarily need to be proved “false”, just merely “deceptive”.

  42. 42
    Thomas B. says:

    Krismer @ 40 Ah… puffery… an old contract idea. The bottom is a factual statement, not like a statement like, “this is a nice neighborhood.” Since, the document you cited was written by marketing people, I would be wary of their interpretation of the law.

  43. 43
    Kary L. Krismer says:

    RE: Thomas B. @ 39 – I really don’t think any of that proves much of anything. You’re arguing it’s deceptive because you say it’s deceptive. It’s circular.

    “There’s never been a better time to buy!” is clearly puffery. But a statement that: “The market has bottomed!” isn’t as clear. You could probably clearly say: “The market appears to have bottomed!” or “We believe the market has bottomed!”

    Taking two of the statements from the ad at issue, I think you’d have a hard time making a case.

    “Many experts see prices rebounding from current lows.” That is undoubtedly true. There are many experts who think that.

    “The $8000 Federal Tax Credit is available for a limited time. ” That is also true. They aren’t saying who’s eligible, they’re just saying the $8,000 tax credit has a termination date.

    The biggest problem would seemingly be with “Home prices have bottomed out.” Is that puffery or a statement of fact. You could probably find case law going both directions with similar statements.

  44. 44
    S-crow says:

    Kary, was the number of price reductions somewhere around zero during the run up not relevant? Arguing that the number of current price reductions is not relevant is absurd. Goodness Kary, the number of price reductions have been going on for months and months, not 24 hours.

  45. 45
    Kary L. Krismer says:

    By Jillayne @ 38:

    Hi Thomas B.

    Sometimes agents take a look at statistics within their local MLS and make a determination that a bottom has arrived within a narrow set of circumstances. Could this be construed as a “false statement” if said agent came to a conclusion and believed it to be ‘true’ at that time?

    What if the agent wrote 20 paragraphs of nonsense and made a couple of graphs? Would that make it somehow okay?

    I just don’t see how providing an explanation changes the result. A long explanation is more likely to be deceptive than a short statement. It gives the appearance that the person knows what they’re talking about.

    I think we all agree this sort of thing isn’t “right.” But the question is where to draw the line, and what the exceptions should be. I’d draw the line in a more restrictive manner than what I think it currently is, and provide fewer exceptions.

  46. 46
    Thomas B. says:

    Ugh… You just stated something I never said. I never said that it is deceptive because it is deceptive. That’s a strawman argument. Only the courts will decide if it the statement is legal, but don’t be surprised if there is a suit. Calling the bottom can be proven. It either is or it’s not the bottom. If the realtor is wrong, then that person would open himself up to liability. He would have been better off by saying that “it’s never been a better time to buy.”

  47. 47
    Kary L. Krismer says:

    By S-crow @ 44:

    Kary, was the number of price reductions somewhere around zero during the run up not relevant? Arguing that the number of current price reductions is not relevant is absurd. Goodness Kary, the number of price reductions have been going on for months and months, not 24 hours.

    I don’t think they were ever around zero. There were fewer than today, but there were still quite a few. It’s not like agents didn’t overprice property to the market in 2007.

    But let’s say tomorrow there were only 2. Would that mean we were at the bottom? I don’t think so. That’s why I think it’s irrelevant.

  48. 48
    Scotsman says:

    RE: Tacoma Troll @ 12

    To return somewhat to the topic here..

    I completely disagree. People are mobile, and while you may not see Spokane as an alternative because of specific employment limitations, etc. for the majority of folks it can be a perfectly reasonable choice. Except for the lack of salt water, it has mountains, lakes, opera, Nordstrom’s, everything one needs, including about 100 extra days of sunshine each year.

    My point is, if you’re a nurse, clerk, manager, whatever, and you want to maximize your lifestyle, after looking at what your $150K gets you in Seattle, maybe you look at Spokane where you can buy the same house and free up $1,000 or more a month for other choices. Or buy a much nicer home for the same amount. When you move from Seattle, the demand for homes has just decreased. When enough do the the same for a variety of price ranges it accelerates the market correction we ‘re undergoing now.

    Someone made the point in a post above that a nurse or health care worker couldn’t even afford the cheapest house- assuming they even wanted to live there. The same is true for a cop, carpenter, mechanic, store manager, etc. In much of the rest of the country such folks buy decent homes all the time. Seattle is WAY over priced relative to other perfectly acceptable choices. Keep the big picture in mind and try to see things from a more common perspective.

  49. 49
    Colin says:

    Thomas, unclench: any bottom call is a prediction about the future and as such, it’s a guess. It can *not* be proven, one way or another. There are no facts about the future.

  50. 50
    Justin Case says:

    Tim-

    Interesting idea. notice the first two have the same listing agent and use of the word “potential” in the listing?

    I’d be interested to see the same thing as cheapest price per square foot rather than just price. all these houses are under 1000 square feet, which I know I wouldn’t consider at any price.

  51. 51
    what goes up must come down says:

    Colin — precisely “it’s a guess. It can *not* be proven, one way or another” then why in the hell say it??? See that is what makes RE people akin to used car sales people.

  52. 52
    Kary L. Krismer says:

    By what goes up must come down @ 50:

    It can *not* be proven, one way or another” then why in the hell say it??? See that is what makes RE people akin to used car sales people.

    Statements like this are exactly why I think there should be a more precise rule prohibiting these types of statements. As I said above, they don’t do the industry any good.

  53. 53
    Colin says:

    I’m not the one calling bottoms, but look, here’s the argument: if you acquire *any* set of assets and liabilities, you have to have a view of the future. I mean, you can’t *not* have a view about the future when you choose to borrow or not borrow, or on one set of terms or another, or when you put savings into one instrument or another. When you buy a house you’re typically buying land plus a building and taking on a large long-term debt to do it, and you have to think about how that works out over several decades. So there’s something to be said for making your view about the future explicit. That includes the future course of real estate prices, so if in your judgment they are unlikely to fall further, why not say so and say why. People who do that and link it to clear analysis do us a favor by helping us think through how things work, even when they’re wrong. I disagree with Ardell DellaL., but I’ve learned a lot from reading her. Those of us (like me) who think prices have further to fall are *also* guessing.

    As long as we all *understand* these are guesses, there’s no harm done. Now, to extend Kary’s counter argument, there’s a problem if there are a lot of really naive buyers who *think* they’re in a predictable system when they’re not, and/or who naively extrapolate from recent history. OTOH there’s a certain point after which you have to say people need to look after their own selves.

    Incidentally, the mistaken view that the system is inherently predictable is widespread, and there are traces of it in Tim’s use of the term “fundamentals,” and in the tendency among boosters and pessimists alike to approach real estate as though it were a closed system, without considering its connections to other markets and other parts of the world.

  54. 54
    JJL says:

    A very timely discussion for me as I finish up my 18 month study of Bothell home sale numbers with charts and graphs. When I post them on my blog I will be very careful in what I say. As a REALTOR, I think it is reckless to “call the bottom” as the bottom doesn’t prove itself until it has past, and any such “calls” are nothing but speculation. What measures bottom anyway? And by who’s definition of data? 3 months YOY, 6 months YOY, by average home prices, by median home prices, by CS home idexes?

    Also, you won’t see the bottom locally by watching national statistics as bottom will occur in different places and at different times; and recovery will come locally in different communities and counties.

    However, my approach in interpreting my data is not to find the “bottom”, but to finds little signs of improvement or recovery. Even these signs cannot prove any trend for certain as we’ve all learned that the market can turn on a dime. I also believe that past historical trends may not be a good comparison due to the extraordinary times we are in. The past as shown that bottoms can over shoot, but will Obama’s plan have any affect, as he exerts pressure to stablize home prices. Since his plan was only announced March 4th, it will be months before we have a chance to see results, if any.

    Also over the next few months, rising short sales and foreclosure notices could have further pressure on home prices. I think the next 3 months will be very telling.

    So I just continue watching the statistics to see how it will play out. Do I think that it’s a good time to buy? Yes and no. But the answer is much more complicated than yes or no, and I’ll cover that in my blog when I’m ready to post my numbers and graphs.

    I will tell you I hope our Country is moving towards recovery as there are many people suffering throughout the country in lost jobs and homes (and I agree some deservedly so). Spring is here, flowers are blooming the sun is out today, and I’m ready for some good news. (Putting on my rose-colored glasses).

  55. 55
    Colin says:

    Where’s your blog, JJL? Bothell is interesting.

  56. 56
    David Losh says:

    There is a difference between stocks and Real Estate. Yes I think any one who claims a top or bottom of housing prices is unethical, absolutely, no question.

    The price of housing is a set of numbers. There are intrinsic values such as views, location, and styles. The numbers, however are the numbers. The numbers don’t change. It is a long list of economic factors.

    As an example let’s say that oil over night became obsolete and the price of everything dropped. Better yet what if we invaded Iraq, yes I know we did, and the price of everything went up. Would that mean that the core value of Real Estate would change? Absolutely not.

    As Real Estate professionals say, Real Estate is a long term investment. Short term economic factors should not be making the price of Real Estate bounce around like the price of a stock.

    We are in the middle of a ten to twelve year apparition that is way out of the norms of Real Estate. Making speculative conclusions from that is a disservice to the consumer.

  57. 57
    Mikal says:

    RE: Scotsman @ 48 – So you are saying real estate is national and not local. That would be true if everything in terms of all jobs were similiar. They aren’t. It is ludicrous to compare them.

  58. 58
    Scotsman says:

    Hey Mikal- I was wondering where you’d gone. Good to have you back. So that parole thing is working out OK?

  59. 59
    Kary L. Krismer says:

    By Colin @ 53:

    Incidentally, the mistaken view that the system is inherently predictable is widespread, and there are traces of it in Tim’s use of the term “fundamentals,” and in the tendency among boosters and pessimists alike to approach real estate as though it were a closed system, without considering its connections to other markets and other parts of the world.

    That’s especially evident in the type of thinking that says Seattle is X months behind City Y. City Y was dropping before Seattle of it’s own weight and is dropping more now than Seattle, but somehow Seattle is only dropping of it’s own weight, and the mortgage crisis of August 2007 and the broader financial crisis of September 2008 are somehow not a factor at all for either city. It makes little sense, but people like it because it’s easy to understand.

  60. 60
    BillE says:

    RE: seattlerenter @ 19
    If you got that bottom-calling email recently, then your agent is late. Here’s part of an email I got from an agent back in November…
    “It looks like the market has hit the bottom and is starting to trend upwards. Let me know if I can help.
    Thank you”

  61. 61
    Mikal says:

    RE: Mikal @ 57 – You must have met my wife. Yup, I’m allowed to comment again. But only on stuff so silly as to be obvious.

  62. 62
    EconE says:

    Who says you won’t find 1/2 off?

    http://www.redfin.com/WA/Seattle/132-NW-83rd-St-98117/home/498150

    Looks like the seller played the “relist” game all the way into foreclosure.

  63. 63
    Jonness says:

    I feel compelled to post this because I don’t think the houses featured are anywhere near fairly valued. It’s kind of a no duh post, but it’s a reminder of an indicator that doesn’t get mentioned a lot.

    Homeownership Percentage in the Western U.s. (source: Bureau of the Census)
    1987 – 58.1%
    1988 – 58.7%
    1989 – 58.2%
    1990 – 58.3%
    1991 – 58.5%
    1992 – 58.7%
    1993 – 59.2%
    1994 – 59.5%
    1995 – 58.9%
    1996 – 58.9%
    1997 – 59.0%
    1998 – 60.1%
    1999 – 61.0%
    2000 – 61.3%
    2001 – 62.0%
    2002 – 62.1%
    2003 – 62.8%
    2004 – 63.7%
    2005 – 64.9%
    2006 – 64.4%
    2007 – 63.6%
    2008 – 62.8%

    http://www.census.gov/hhes/www/housing/hvs/historic/histt14.html

    Note that the housing bubble can be seen in the data as beginning in 1998 and peaking in 2005. The southern portion of the west is mostly driving the statistics you see. Seattle began it’s climb, peaked, and started to fall about a year and a half later. Yet, the result is the same. The percentage of people who owned homes shot up due to unsafe lax lending standards practiced by greedy banks. Home prices shot up to unprecidented levels as buyers competed to get in on the action. But it all cracked up when it turned out the buyers were unqualified to buy the homes and couldn’t make their payments. Now the lenders who took back the overvalued houses are eating up taxpayers savings in an attempt to keep from being seized by the FDIC. Thus, the banks have been forced to revert to normal safe lending standards in order to stay in business.

    IMO, what this really means is the homeownership rate will revert to a historically safe percentage that matches the amount of loans that people are able to qualify for. Thus, I expect house prices to decline back to historically affordable levels prior to the next rally.

  64. 64
    Jonness says:

    “It makes little sense, but people like it because it’s easy to understand.”

    So are you saying that % of home price underwater has little to do with the housing correction? I have to disagree. Housing bubbles are predictable in that declining prices bring increased distress which creates a vicious cycle of declining prices. Look at charts of tops, midsections and bottoms. For the most part, it doesn’t matter when they start, bubbles have classic patterns.

    You are right that nobody can accurately predict the future with 100% accuracy. However, I disagree that charts and fundamentals can’t increase the probability of being correct. In fact, I’ve proven it beyond reasonable refute.

  65. 65
    Angie says:

    By Mikal @ 57:

    RE: Scotsman @ 48 – So you are saying real estate is national and not local. That would be true if everything in terms of all jobs were similiar. They aren’t. It is ludicrous to compare them.

    Just plugging some numbers into the first salary comparison calculator that google barfed up suggests that salary is diminished less in Spokane relative to Seattle, than cost of living is. That is to say, in a perfectly statistical world, indeed, someone could come out ahead financially by moving to Spokane from Seattle.

    Bargain hunter that I am, alas, there are no jobs in my line of work in Spokane. Also, it’s well worth $10K/year in discretionary income to not have snow up to my knees most of the winter, and to be well clear of Idaho. Also, WAY too many conservatives on the other side of the mountains. Ick, ptui.

  66. 66
    Mikal says:

    RE: Jonness @ 63 – How affordable were houses in Seattle in 1995?

  67. 67
    Mikal says:

    RE: Jonness @ 64 – How much have you been drinking?

  68. 68
    Scotsman says:

    RE: Angie @ 65

    Angie- for $10,000 you could spend every other winter weekend in Hawaii camped on the beach in a state park. No snow, no Idaho, and lots of liberal hippy friends. Now wouldn’t that be worth it? And when you did stay home there’s a good chance the sun would be out. Love ya!

  69. 69
    Scotsman says:

    RE: Mikal @ 67

    Worried about the competition?

  70. 70
    Mikal says:

    RE: Scotsman @ 69 – Sure, I’m worried about yours. Then I look at what you post.

  71. 71
    economist says:

    Agents simply don’t have the training, education or time necessary to make such (bottom) calls

    Nobody has the training, education or time. It is not possible to call market bottoms in RE or anything else. You can’t identify a bottom until it’s already past.

    “We are at a bottom now” is neither true nor false, because it is contingent on future prices. In other words it’s a prediction.

    I imagine this could be used as a legal defense against anyone accused of false advertising.

  72. 72
    Kary L. Krismer says:

    By Jonness @ 64:

    [By me.]”It makes little sense, but people like it because itâ��s easy to understand.”

    So are you saying that % of home price underwater has little to do with the housing correction? I have to disagree. Housing bubbles are predictable in that declining prices bring increased distress which creates a vicious cycle of declining prices. Look at charts of tops, midsections and bottoms. For the most part, it doesn’t matter when they start, bubbles have classic patterns.

    No, that’s not what I’m saying at all. What I’m saying is that people like to think they understand things, so they come up with a simplistic explanation that is easy to understand. What drove down San Diego (for example) is entirely different than what’s been driving down our market, because what drove down San Diego didn’t exist at the point in time it went down. San Diego was driven down by local factors. Seattle has been driven down by national factors. To the extent that Seattle might show a pattern similar to San Diego, that would be mere coincidence.

  73. 73
    Kary L. Krismer says:

    By economist @ 71:

    Agents simply don�t have the training, education or time necessary to make such (bottom) calls

    Nobody has the training, education or time. It is not possible to call market bottoms in RE or anything else. You can’t identify a bottom until it’s already past..

    I would agree with that. Look how bad the NAR, Economy.com, Money Magazine, etc. predictions are. They presumably spend a lot more man hours, and have a lot more training, than what any real estate agent in the world possibly could or has.

  74. 74
    Kary L. Krismer says:

    RE: Jonness @ 63 – At the risk of sounding even more elitist than what I typically do, IMHO there are just some people that shouldn’t own homes. They just don’t have the aptitude, ability or willingness to properly maintain a home. Unfortunately that applies to some landlords too.

    Anyway, the point is the goal of increasing home ownership really needs to be tempered with that realization.

  75. 75
    Jonness says:

    Kary:

    You elitist! Nah, just kidding. I appreciate your views because you have a combination of a level head and a lot of years in the housing industry.

    I recall Bush bragging about the increased homeowner percentage during his watch. In the final analysis, that wasn’t such a great accomlishment after all.

    I’m starting to view the economy as a function and governement manipulation as input into the function. The guts of the function (algorithm) typically balance everything out in fairly short order. But the more government inputs into the function, the longer the algorithm has to run before it can produce a balanced output. Lack of government input increases the efficiency of the function and leads to a more rapidly producing a balanced output.

    It appears to me that many people believe government input into the function smooths the peaks and valleys of economic indicators. I’m not sure this is true. There is certainly a decompression effect. I haven’t looked that closely at this. Is it that the highs and lows are brought closer to the middle in exchange for an increased timeline? Or are the highs and lows of the indicators roughly the same, and mostly what we see as is an extended timeline? I’m guessing the peaks and valleys are generally lessoned, and that’s why many people are adamant that it works.

  76. 76
    Jonness says:

    Hmmm. Now that I think about this, it’s highly situation dependent. For instance, the homeownership percentage shot up as a result of manipulation. In many cases, government manipulation creates the peaks and valleys. Then more government manipulation is brought in to resolve the problem. I guess my questions above mostly relate to the attempt to solve the self-created problem. For instance, are the peaks and valleys of the stock market during the bailout affected by increased government intervention, or do we just get an extended timeline? Does extended horizontal lead to lessoned verticle?

  77. 77
    David Losh says:

    RE: Jonness @ 63

    Here’s how housing works as opposed to a Real Estate. We create jobs on an as needed basis. Bricks and mortar, or reasearch and development drive labor markets in certain areas. Then you have the vast expanse of agricultural farm land. Simply put there is urban, suburban and agricultural. Urban is for job centers and the people who congregate there, suburban is worker housing, and farmers.

    Aside from that are the people who own estates. Those people may own more than the home they live in. They may own factories, office buildings, and industrial areas. You may be one of those people but comparing the home you live in to a Real Estate is wrong.

    How’s that for elitist?

    The percentage of home ownership In my opinion reflected what people saw as a stable job market. Now people need to find work, become more mobile, and cut back on expenses. There is no reason to pay a mortgage if your job base is gone. You’re back to saving money so your kids can have a better life rather than you.

  78. 78
    Angie says:

    By Scotsman @ 68:

    RE: Angie @ 65

    Angie- for $10,000 you could spend every other winter weekend in Hawaii camped on the beach in a state park. No snow, no Idaho, and lots of liberal hippy friends. Now wouldn’t that be worth it? And when you did stay home there’s a good chance the sun would be out. Love ya!

    Dude, I don’t know what you’re smoking, but that’s a ten hour flight…I don’t spend that much time an airplane unless someone’s paying me to do it. And speaking of money, my friend, it’s at least $4K to haul both the grownups and the littles.

    And the carbon footprint from air travel? Really harshes my mellow.

    Jesus, it took me all of 30 seconds for this post and the last to actually run some numbers and get some figures to back up my assertions. Scotsman, you’re doing a reeeeally good job of demonstrating how all you economics and finance guys are full of (um, what’s going to get past the profanity filter?) baseless assumptions. Very unscientific, I must say.

  79. 79
    gary says:

    Great post, thanks.

  80. 80
    Scotsman says:

    RE: Angie @ 78

    “to haul both the grownups and the littles”

    Ewweew! NO NO NO! Leave the little crumb crunchers and the old man at home.. This is all about you, and your needs. Sun, surf, surfer boys… or girls, whatever….. Lots of flights to Kona for under $500 RT. Buy the weed once you arrive. Repeat every other week.

    You could try Texas for variety. Lots of repubs though- be careful down there …

  81. 81
    Mikal says:

    RE: Scotsman @ 79 – Not for long. Texas will be voting democrat at some point over the next ten years as the hispanic population is expanding. Then the republicans will truly be a regional power.

  82. 82
  83. 83
    Ross says:

    RE: Jonness @ 81

    The 3.875% sounds amazing, until you realize that it is only available for properties owned by builders to whom the banks (Banner, Sterling) have loaned money. In other words, the low rate is for a small amount of inventory which probably hasn’t been reduced in price to market values. The banks are simply trying to encourage buyers to move their debtors inventory in the hope of recovering some of their principal. It’s a great idea from the bank, but not worth it unless the price on those homes have fallen sufficiently.

  84. 84
    what goes up must come down says:

    Mikal @80 take it easy you are going to freak Scottsman out — he already thinks a liberal commie is hiding behind every tree — you know hugging it.

  85. 85
    Cheap South says:

    I like this series. Is it monthly?

  86. 86
    Kary L. Krismer says:

    RE: Ross @ 83 – I wouldn’t put it quite that way, but yes it does seem similar to 0% auto loan programs.

  87. 87
    Tacoma Troll says:

    RE: Scotsman @ 48

    “I completely disagree. People are mobile, and while you may not see Spokane as an alternative because of specific employment limitations, etc. for the majority of folks it can be a perfectly reasonable choice. Except for the lack of salt water, it has mountains, lakes, opera, Nordstrom’s, everything one needs, including about 100 extra days of sunshine each year.”

    If the majority of folks thought it was reasonable to just pack up and head to the East then who are these people?
    Why stop at Spokane, I can find you a 6000 sq ft lakefront new construction in Crown Point, IN for 350K , or better yet how about a nice $1 foreclosure in Saginaw, MI.

    I am not sure what world you live in but MOST people are not mobile and yes I do believe Seattle is Way overpriced (as is Tacoma), and NO I am not in the real estate business. In my healthcare job dealing with the working class person everyday, talking about their lives, I KNOW what I am talking about, and the fact of the matter is MOST people will not find it easy to leave everything behind just to find cheaper housing somwhere else. There have been a few (one moved to Missouri and another to Alabama specifically for cheaper housing) but I can count those with the fingers of my one hand.

  88. 88
    Kary L. Krismer says:

    I think jobs get people to move, and they deal with the price of housing where they move. The exception might be retired people, where the price of housing could be an overriding factor in where they move.

  89. 89
    booper says:

    Tim,

    I like the concept, but think it would be more useful/interesting to show houses that people here might actually be interested in purchasing.

    Someone else mentioned Case-Shiller bands. I think that’s a good starting point. Maybe taking the Median, +/-1 home in each band? Also, just pick a neighborhood to focus on each band, like Greenlake, Ravenna, etc.

    The bottom house is also going to be subject to wider variations, just from the nature of being at an extreme.

  90. 90
    k2000k says:

    RE: Mikal @ 81
    Not necessarily. It is a big fallacy to assume that Latinos will simply vote for one party, they have beliefs, like many other Americans, that fall on both sides of the political line. The idea that the GOP will become nothing more than a regional party is the same kind rubbish as when certain pundits were predicting the dominance of the Republican party for the next twenty years after the 2000 elections. Parties can, and do shift according to the times.

  91. 91
    economist says:

    . What drove down San Diego (for example) is entirely different than what’s been driving down our market, because what drove down San Diego didn’t exist at the point in time it went down. San Diego was driven down by local factors. Seattle has been driven down by national factors.

    I think what you’re implying is that prices in San Diego started falling because they were too high, but Seattle prices started falling due to external factors because they weren’t too high.

    Well I don’t buy that and I don’t think most of this board does either.

  92. 92
    Kary L. Krismer says:

    By economist @ 91:

    . What drove down San Diego (for example) is entirely different than what�s been driving down our market, because what drove down San Diego didn�t exist at the point in time it went down. San Diego was driven down by local factors. Seattle has been driven down by national factors.

    I think what you’re implying is that prices in San Diego started falling because they were too high, but Seattle prices started falling due to external factors because they weren’t too high.

    Well I don’t buy that and I don’t think most of this board does either.

    Then you haven’t been paying attention. Seattle was actually just starting to become overheated in the summer of 2007. Then in August the mortgage crisis hit. These are the medians Jun-December 2007:

    470,000
    481,000
    477,345 August
    450,000
    443,950
    435,000
    435,000

    There was a significant drop after the August news, which fully hit in October and beyond after the pendings from August and earlier worked their way through. Volume also fell significantly, and some bubble bloggers erroneously thought that 100% financing had gone away, a widely held belief that really hurt the low end of the market at that time.

    Then we have the September 2008 Paulson announcement. For that event I’ll use volume instead of median price, although that fell too:

    1415 September 2008
    1319
    869
    929
    674

    Compare that to the volume of 2 years earlier (because 2007 was affected by the mortgage news):

    2,358 September 2006
    2,300
    2,081
    1901
    1558

    Again the volume didn’t drop immediately on the news, because the pendings had to work their way through the system.

    I will say, however, that had the August 2007 mortgage news not hit, Seattle was showing signs of starting to overheat–a real buyers’ frenzy. If the news had not hit and the type of appreciation we were seeing continued, I think we would have seen declines similar to what say Phoenix saw. We just weren’t there yet. We went from $430k in February 2007 to over $480k in July, 2007, just five months later, and that is too fast of a rise to be healthy. But that rise clearly didn’t stop from buyers suddenly thinking prices were too high, it stopped because buyers were suddenly getting bombarded with news about financing issues, certain banks (e.g. Countrywide) being in trouble, etc.

  93. 93
    Bits_of_Real_Panther says:

    “A person with a decent but modest job cannot yet afford to buy one of the houses. Take a health care aid or grocery clerk as examples. Those jobs pay 25 to 28k a year.”

    I can’t tell if this is sarcasm or not but shouldn’t a grocery clerk at least wait until they make assistant manager before they buy a house?

  94. 94

    everyone cannot be an assistant manager– so should only the management class ever be able to save for a house purchase?

  95. 95
    deejayoh says:

    By Secular Apostate @ 94:

    everyone cannot be an assistant manager– so should only the management class ever be able to save for a house purchase?

    What about the Assistant (to the) Manager?

  96. 96
    Mikal says:

    RE: k2000k @ 90 – Your right. California and Washington will easily turn Republican. Your a dreamer. The republican party has become the party of old white guys.

  97. 97
    Jonness says:

    I feel like I represent the lower middle class of income earners. My GF and I make 6 figures + combined income and have no children. But when I look at the formal definitions, it turns out we are upper middle class. Only 10 or 15% of American families earn as much as we do. Yet we can barely qualify to buy a shack.

    I think we had a housing bubble, and now it’s winding down. Maybe with another 3 years of house price depreciation my GF and I will not only be upper middle class Americans, we will also be able to move out of our shack and live like upper middle class Americans.

    After three and a half years of searching for a house, here’s my opinion on the current state of the market:

    <250: lower class (800 sq ft in the crime district)
    250-350: lower middle class (1400 sq ft with a commute to work)
    350-450: upper middle class (1700 sq ft in the city)
    450-550: doctors (2200 sq ft with a jacuzzi)
    550-750: trust fund babies (has a swimming pool and new carpet and paint)
    750-1 million: lottery winners (gated McMansion shoebox built in 2007. Great view of other shoeboxes!)
    1 million +: top 1% of Americans (80% of the homes on the market)

  98. 98
    Kary L. Krismer says:

    By Bits_of_Real_Panther @ 93:

    “A person with a decent but modest job cannot yet afford to buy one of the houses. Take a health care aid or grocery clerk as examples. Those jobs pay 25 to 28k a year.”

    I can’t tell if this is sarcasm or not but shouldn’t a grocery clerk at least wait until they make assistant manager before they buy a house?

    It’s actually sad to me how weak the retail clerks union is. My first two jobs were in produce in union stores while in high school. I was probably making substantially more per hour then, adjusted for inflation, than what they are making now. Maybe someone can tell me, because I don’t know what they’re making now. In 1976 I think I was making something between $5-6 an hour.

  99. 99

    […] Let’s check in again on the cheapest homes around Seattle proper. For methodology and a brief explanation of the reasoning behind this series, hit the April post. […]

  100. 100

    […] around Seattle proper. For methodology and a brief explanation of the reasoning behind this series, hit the April post.Please note: These posts should not be construed to be an advertisement or endorsement of any […]

  101. 101

    […] overlooked last month. For methodology and a brief explanation of the reasoning behind this series, hit the April post.Please note: These posts should not be construed to be an advertisement or endorsement of any […]

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