Friday Flashback: Prices will never “stall or even fall”

April 30, 2006, The Seattle Times: Act fast: In many Seattle neighborhoods, few homes are for sale

And so it continues to go in close-in Seattle and Eastside neighborhoods, as scores of well-qualified buyers like the Maxwells outnumber properties for sale, particularly those priced under $500,000.

This is forcing buyers into lightning-fast decisions and bidding wars that reward sellers with thousands of dollars over their asking price, real-estate agents report.

It’s also keeping King County prices climbing, putting to rest any notion that ours is a “bubble market” where prices will stall or even fall.

Good thing Elizabeth Rhodes put that crazy bubble notion to rest. Prices definitely never stalled or even fell here.

The purpose of our Friday Flashback series is to remind people why it’s never a good idea to base your home purchase decisions on the word of someone with a vested financial interest in selling as many homes as possible for as much as possible, no matter what. If you’ve got a good example of local home salespeople or other industry shills on record making fools of themselves in the years before the bubble burst, shoot me an email.
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About The Tim

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

23 comments:

  1. 1
    Bill says:

    I had a WTF moment until I looked at the date :)

    Unrelated but this was all over the news:
    Frustrated Owner Bulldozes Home Ahead Of Foreclosure
    http://www.wlwt.com/news/22600154/detail.html

  2. 2
    Everett_Tom says:

    @The Tim

    Is Flashback Friday going to become a weekly norm? it seems that there’s gotta be a good chuck of this kind of material out there…

  3. 3

    Great Flash from the Past Tim

    It’s also an excellent track record of their subpar projections of alleged real estate price stagnation in 2010, re: these same “supposed” trustworthy pundits.

  4. 4
    Tim says:

    How people could not see that housing was in a massive bubble is beyond me.

  5. 5
    pfft says:

    By Tim @ 4:

    How people could not see that housing was in a massive bubble is beyond me.

    money blinds people to reality. who wants to believe in a bubble when they had just bought 3 condos in Idaho?

  6. 6
    GV says:

    Entertaining snippet. I bought a house in 1996 and had nearly paid it off in full by 2004, when I sold that and upgraded with a 30% down payment. I’ve always been very careful.

    In 2005, 06, 07, I was aware of rising property prices but I really did not know why and didn’t care to know. I was content with my home and financing.

    After the bubble burst, I learned about how during peak bubble, anyone could buy a house with “0 down”. Amazing. This should never happen again. I had no idea. In the meantime, the bubble caused government to rapidly rise because they were enjoying escalating property tax revenue. We can’t get rid of government employees now, they seem to be entrenched just like it’s still “Bubble Days”. My property taxes have nearly doubled since 2004 and it really ticks me off. Effective, sensible leadership is nowhere to be found. I’m drowning in property taxes, and I thought I’d done everything right.

  7. 7
    mukoh says:

    RE: Bill @ 1 – That guy is referred to as a “RATARD”. If the bank sells the home for more then the defaulted obligations at the court house the rest of the money goes to the owner, or at least to the other lien holders which it looks like in his case is IRS. He is just a sore looser.

  8. 8
    paco_serpici says:

    RE: GV @ 6 – I was reading your comment and following it all the way till this point:

    We can’t get rid of government employees now, they seem to be entrenched just like it’s still “Bubble Days”. My property taxes have nearly doubled since 2004 and it really ticks me off.

    What do government employees being entrenched have to do with anything? Aren’t your property taxes based on the value of the home? 2004 was still experiencing unsustainable real estate growth it makes sense that they went up. Can’t you write to the tax assessor’s office and ask for an appraisal that will lower the value and thus lower your taxes? I’m not a homeowner so forgive any ignorance on my part.

  9. 9
    corncob says:

    I find it depressing that, four years and a burst later, I still had to re-read the headline after the blockquote to realize it was from 2006.

  10. 10

    RE: paco_serpici @ 8
    Homeowners get a notice that their house has a new assessed value. If they disagree with the assessment, they can appeal and provide evidence that their property is assessed too high. Every year, people appeal, and some people win their appeals…
    But as far as government employees go, The City of Seattle, King County, and the State of Washington have all laid off employees. They might feel entrenched, but a lot of them have lost jobs.

  11. 11
    crashcadia says:

    Rainier Pacific Bank of Tacoma is the latest to fail.
    Assets of $717 Million
    Deposits $446 Million
    FDIC swallows 95 Million

    So it is about half the book value.

    Who is next on your Home Street?

  12. 12
    BillE says:

    “This is forcing buyers into lightning-fast decisions and bidding wars that reward sellers with thousands of dollars over their asking price, real-estate agents report.”

    Sounds like a bubble to me, but what do I know? I’m not a real estate professional.

  13. 13
    shawn says:

    RE: Tim @ 4 – Tim, I agree. It seemed obvious to me that the world had gone crazy. Here is a real good read http://en.wikipedia.org/wiki/Economic_bubble

  14. 14
    BillE says:

    Speaking of flashbacks, here’s part of an email I got from an agent in 2008.
    “It looks like the market has hit the bottom and it is starting to trend upwards. Let me know if I can help you.”

  15. 15
  16. 16
    GV says:

    @paco_serpici. My home assessment is now the same as 2004 and my property taxes are nearly $7000 per year. In 2004 my property taxes are $4500 per year. Despite lower values, taxes are not going down. You don’t know that?

  17. 17

    RE: GV @ 16 – You don’t indicate what city/state you live in, but assuming it’s Washington state then I would assume there was a difference in school levy result to get that type of result.

  18. 18
    GV says:

    Unincorporated King County. Home assessed at around $475k when I bought it in 2004, and property taxes were in the neighborhood of $4500 per year. My 2010 assessment is now back to the 2004 $475k meanwhile my property taxes are just below $7000 for 2010. I believe the number of bureaucrat employees supported by property taxes has increased, from 2004 to 2010, in correlation with the $4500 to $7000 increase in property taxes. That would be an interesting article for this website perhaps.

  19. 19
    Tim says:

    Just went and looked at a home in Bellingham yesterday. Small 3 bedroom with a strange layout and standing water in one corner of the basement. They are asking 300k. Median family income in bellingham is 63,000. Am I crazy to believe that this is still absurd? I’m getting all kinds of pressure to buy a home due to a kid starting kindergarten and my father in law thinking the 8K tax credit is a gift from the gods. I really feel that particularly in Bellingham there are still LOTS of suckers.

  20. 20

    By GV @ 18:

    Unincorporated King County. Home assessed at around $475k when I bought it in 2004, and property taxes were in the neighborhood of $4500 per year. My 2010 assessment is now back to the 2004 $475k meanwhile my property taxes are just below $7000 for 2010. I believe the number of bureaucrat employees supported by property taxes has increased, from 2004 to 2010, in correlation with the $4500 to $7000 increase in property taxes. That would be an interesting article for this website perhaps.

    Those are some very strange numbers, and again I suspect the result is probably school levy related.

    My property (also unincorporated King County) is still valued above 2007 values for tax purposes, but if I applied the rate from that year (the furthest back I can get the rate) to the 2010 assessed value, my tax this year would be $4937. It actually was $4976. Not a huge difference.

  21. 21
    GV says:

    In 2004 prop taxes about $4500 as I recall. By 2007 prop taxes were $5500, I can see tax history data online. Now in 2010 my assessment is back to 2004 levels, and property tax is $6990. Strange numbers?

    Funny you mentioned school levies, I have kids in the public school and starting this year the bus will not stop at the end of our road. The bus keeps going right by, and we have to drive a mile down to where it stops and gets a large load of kids. Apparently the bus bureaucrats invented this system to save money. I’m not impressed given that my extraordinary taxes are, according to you, paying for schools.

    I also have a rental house in S King County but within city limits. Property taxes were $4500 in 2008, and $3100 2010.

    I do not understand why my personal home assessment is at 2004 levels and property taxes are $200 per month higher.

  22. 22
    ras says:

    Well, I guess we might be

  23. 23
    ras says:

    I assume our .gov workers are jealous and trying to catch up, hence the larger size taxes…
    http://media.sacbee.com/smedia/2010/02/28/00/7W28UNPAIDTABLE.xlgraphic.prod_affiliate.4.gif

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