What’s the Worst Home Price Haircut You’ve Found?

I received the following suggestion from a reader in an email with the subject: “Column Idea: Worst Haircut?”

Here’s a fun property: 42905 SE 177th St in North Bend

Sold in August 2003 for $570,000, then sold for the insane price of $725,000 in April 2007, only to get taken back by the bank in July 2010. Now listed for $410,000.

Great idea for a post! The example he gave has fallen in value 43% (15% per year) since 2007, assuming they can get the current asking price. That’s a pretty big drop, but I’ve got a better one: 13110 Puget Sound Blvd in Edmonds

  • Sold in September 2005 for $940,000
  • Foreclosed in May 2010
  • Sold in September 2010 for $430,000

That’s a 56.4% drop (15.3% yearly) since 2005. Yowza. And this place isn’t some dumpy Ballard shack, either. This is a decent 2,610 square foot near-waterfront home on half an acre in Edmonds.

Here’s another good one: 20612 Locust Wy in Lynnwood

  • Sold in January 2008 for $1,250,000
  • Sold in September 2010 for $600,000

5 acres with 2 homes and a creek. 52% haircut in under three years (23% per year). Dang.

What’s the biggest haircut you’ve seen in the Seattle area lately? Can you beat my 56% drop since 2005? Add yours to the comments and I’ll update the post with the best examples.

[Update]
Wow, a lot of good entries. Here are the biggest haircuts submitted yesterday by commenters:

Spotted by Brad999: 51602 Skyko Dr in Index

  • Sold February 2007 for $150,000
  • Foreclosed July 2009
  • Sold August 2010 for $35,000
  • 76.7% drop ($115,000) in 3.5 years

Spotted by Carol: 23016 Marine View Dr S in Des Moines

  • Sold July 2007 for $670,000
  • Foreclosed April 2010
  • Sold August 2010 for $242,572
  • 63.8% drop ($427,428) in 3 years

Spotted by Jim Lamb: 3240 S Edmunds St Unit B in Seattle

  • Sold October 2007 for $438,000
  • Foreclosed October 2008
  • Sold February 2010 for $165,000
  • 62.3% drop ($273,000) in 2 years

Spotted by Tom Dunford: 3030 228th St SE in Bothell

  • Sold August 2006 for $1,400,000
  • Foreclosed June 2009
  • Sale Pending at $545,000
  • 61.1% drop ($855,000) in 4 years

Spotted by B&W Nikes: 812 25th Ave in Seattle

  • Sold August 2006 for $399,999
  • Sold August 2010 for $165,000
  • 58.7% drop ($234,999) in 4 years

Spotted by Blake: 5469 Lake Washington Blvd S in Seattle

  • Sold October 2006 for $1,350,000
  • Foreclosed November 2008
  • Sold May 2009 for $597,000
  • 55.8% drop ($753,000) in 2.5 years

Spotted by Brainiak: 6815 NE 204th St in Bothell

  • Sold January 2007 for $365,850
  • Foreclosed April 2010
  • Sold September 2010 for $185,000
  • 49.4% drop ($200,850) in 3.5 years

Spotted by DavidB: 2200 32nd Ave W in Magnolia

  • Sold 2006 for $1,600,000
  • Sold July 2010 for $850,000
  • 46.8% drop ($750,000) in 4 years
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.

91 comments:

  1. 1

    The first two are bank owned. There’s a reason why people are attracted to bank owned properties. The last one is a short sale.

    It would be nice to have some examples of normal sales so that the method of sale doesn’t affect the price.

  2. 2
    Scotsman says:

    I get a kick out of the idea that “bank owned” or “short sale” are somehow not representative of normal sales. They are the new market.

  3. 3
    The Tim says:

    RE: Kary L. Krismer @ 1 – So, let’s limit the pool of possible entrants to only homes where the owner cannot possibly afford to take a big price haircut?

    That makes no sense.

  4. 4

    RE: Scotsman @ 2 – By The Tim @ 3:

    RE: Kary L. Krismer @ 1 – So, let’s limit the pool of possible entrants to only homes where the owner cannot possibly afford to take a big price haircut?

    That makes no sense.

    There are condition and marketing issues that exist. Bank owned and short sales are not even typically comps in our particular market. I don’t even typically use them as comps for my bankruptcy listings.

    As to Scotsman’s comment, they still collectively make up only about 25% of sales, so they’re hardly part of the normal market. There is still a significant decrease in most cases in value for such properties.

  5. 5
    Mark says:

    I don’t think I have you beat on absolute terms, but I had a contract on a place in 2009. The owners refinanced in July 2007 for $950K, and we settled on $590K in April 2009. A little higher on a per-year basis: 21% (if my math is right).

  6. 6

    BTW, I think I’ve made it clear I’m not a big fan of short sales, but in the higher priced area I’ve seen some really interesting prices go through. I think the banks are perhaps more afraid of getting those properties back, or maybe we’re dealing with different types of entities since they were not conventional loans. From the buyer’s point of view it doesn’t really matter.

  7. 7
    deejayoh says:

    By Kary L. Krismer @ 4:

    RE: Scotsman @ 2 – By The Tim @ 3:

    RE: Kary L. Krismer @ 1 – So, let’s limit the pool of possible entrants to only homes where the owner cannot possibly afford to take a big price haircut?

    That makes no sense.

    There are condition and marketing issues that exist. Bank owned and short sales are not even typically comps in our particular market. I don’t even typically use them as comps for my bankruptcy listings.

    As to Scotsman’s comment, they still collectively make up only about 25% of sales, so they’re hardly part of the normal market. There is still a significant decrease in most cases in value for such properties.

    You may not use them as comps – but the banks do. When I got financing, the comps used were 2 short sales and a foreclosure. Those were the only similar sales in the last six months. I inquired as to whether this was normal and I was told it absolutely is.

  8. 8
    Scotsman says:

    RE: Kary L. Krismer @ 4

    So we should throw out the now 25%, soon to be 40%, of sales that you don’t like? I can understand if you don’t want to look into the future and try to make predictions, but you should at least accept the present as it unfolds at your feet.

    Remember back a week or so when Tim ran the series on how much further prices might fall? Didn’t all the analysis show something on the order of another 15-20%? That seems pretty close to the discount on distressed sales. As they say about the stock market- future expectations are priced in.

  9. 9

    RE: deejayoh @ 7 – Nice to see the banks are tightening up on refinance appraisals! ;-)

    If those were truly the only similar sales in the past six months there wouldn’t be much else they could do, other than perhaps loosen their parameters to include a broader type of house or wider area.

    I ran into that once with an development of stand alone condos. I knew the one I was looking at could get more because it wouldn’t have been a short sale, but I didn’t know how much more.

  10. 10

    By Scotsman @ 8:

    RE: Kary L. Krismer @ 4 – So we should throw out the now 25%, soon to be 40%, of sales that you don’t like? I can understand if you don’t want to look into the future and try to make predictions, but you should at least accept the present as it unfolds at your feet.

    It has nothing to do with whether I like them. It has to do with the problems in buying such properties. Bank owned are not nearly as bad as short sales (bank owned are suitable for more buyers), but somehow the bank owned seem to get even less (last I looked), perhaps due to condition issues.

    I would agree if they become too prevalent in the market, they will become comps. We just are not there yet.

  11. 11
    deejayoh says:

    By Kary L. Krismer @ 9:

    RE: deejayoh @ 7 – Nice to see the banks are tightening up on refinance appraisals! ;-)

    If those were truly the only similar sales in the past six months there wouldn’t be much else they could do, other than perhaps loosen their parameters to include a broader type of house or wider area.

    I ran into that once with an development of stand alone condos. I knew the one I was looking at could get more because it wouldn’t have been a short sale, but I didn’t know how much more.

    Seems like this could be a major source of friction in getting deals closed if the seller is not considering these sales to be comps and the bank is – I guess that would be a major reason people are having trouble getting financing, because the homes don’t appraise.

  12. 12
    Pegasus says:

    RE: Scotsman @ 8 – Hey the county finally does it for tax values but why should anyone else have to deal with reality? It could affect real estate values in a negative way…..we can’t have the truth get in the way of the American Dream….Home Ownership!

  13. 13
    One Eyed Man says:

    RE: Pegasus @ 12

    When it comes to how banks value collateral, REO’s (and perhaps short sales too) are apples and non-REO’s are oranges. I’m not a big fan of “mark to market,” but if you believe in mark to market you should believe that if there are enough REO’s in the market place to get comps, the banks should use only those comps to value loan collateral.

    If banks view collateral as necessary to cover their potential loss in a defacto non-recourse environment resulting from non-judicial foreclosure laws, the only comps banks should care about are REO’s. Every SFH the bank has (or will have) for sale is an REO. There are additional risks associated with REO’s and the market discounts the price at least in part to hedge that risk. And face it, banks are “liquidators” and nobody shops at a liquidator unless they think their going to get a “deal.” When there are plenty of REO’s to use as comps, those should be the preferred comps for lenders who desire to fully collateralize their loan and properly protect their investment (the loan).

    Regarding this posts title, to me the term “hair cut” would normally apply to the loss by a single owner, not to the total decline over multiple owners. The entries used in the post are combining the banks loss with the loss of the foreclosed owner to reach a total “haircut”. I don’t have a problem with a little poetic license in the title of the post, but its really the total decline over multiple transfers and multiple owners.

  14. 14
    alex says:

    This is cool – but it would be nicer if it was only the CLOSED properties. That’s the only case where you know for sure that the “haircut” actually HAPPENED – someone took the fall, be it a bank or be it the owner… we don’t care who took the fall, just that the fall is REAL.

  15. 15
    DavidB says:

    Here’s one near the Magnolia Village that sold in July for $850K which was 46.8% lower than the $1.6M paid for it in 2006. Who says homes in the city don’t decline in value?

    http://www.redfin.com/WA/Seattle/2200-32nd-Ave-W-98199/home/125769

  16. 16

    RE: deejayoh @ 11 – Of the appraisals I’ve seen where the property didn’t appraise (which is only a couple), the reason wasn’t including short sales or REOs. One that comes to mind the appraiser used the declining market rational to discount the prior sales even further, but in that case I don’t think it would have really mattered. I would have discounted the house due to condition.

  17. 17

    By One Eyed Man @ 13:

    RE: Pegasus @ 12 -If banks view collateral as necessary to cover their potential loss in a defacto non-recourse environment resulting from non-judicial foreclosure laws, the only comps banks should care about are REO’s..

    That actually makes some sense, so don’t expect the banks to do it! ;-)

  18. 18
    racket says:

    That house on Puget Sound Blvd was a crappy house with a crappy floor plan. The bedrooms were in the basement. The main floor was wide open but useless with all the angles and arches it had. $450,000k seems right for this property. A majority of the view is the trees in the park across the train tracks.

  19. 19
    S-Crow says:

    When 25% of consumers or more are buying these homes, they are clearly part of the market and thus, should not be excluded from sales data. When that number drops significantly, then yes, they are normally not used as traditional comps.

    Short sale & foreclosure data are used in appraisals. Market Conditions addenda addressing short sales and foreclosures are part of appraisals that I see from Ohio, Utah, Kentucky, California, Michigan, Florida, NY and all points between.

  20. 20
    The Danza says:

    I looked at this one. From 2,250,000 in 1999 to 650,000 in 2010…

    http://www.redfin.com/WA/Edmonds/7217-Picnic-Point-Rd-98026/home/2731142

  21. 21
    Pegasus says:

    RE: One Eyed Man @ 13 – My view is even though there are many different factors in each and every sale but because they have an ability to affect other properties that ALL sales be counted. I always objected to the fact that the county did not use foreclosures and many other sales in their tax evaluations until this past year. The market is the market. A foreclosure down the street from you affects your value. As to how banks do their accounting internally does affect pricing in the market because if they carry a loan at face and it is only worth 50 percent it will affect how they deal with the property. In reality by excluding lower prices you are artificially inflating real estate prices. I really doubt that happened by accident. What if we did the same thing in the stock market? On every day there are forced sellers in many companies. Margin calls, fund liquidations, hedge fund redemptions, etc. Should we exclude their sales and only count the ones we want to inflate the price?

  22. 22

    RE: Pegasus @ 12

    Very True

    Hire your own appraiser and get the bank owned and short sales factored in to home valuation correctly in your neighborhood and “walla”; you’ve got a slamdunk property tax decrease report to hand the King County Assessor IMO.

    And with that kind of documentation and the apparent fact [IMO] that “hardly anyone takes the initiative and does it”; it’s likely it will be settled lower out of court too….with likely/possible refunds from previous years added in to a huge property tax refund check too….LOL

    Have this done after they mail your King County Valentines Day Property Tax Assessments.

  23. 23
    The Danza says:

    BTW Tim, I almost made an offer on that house on Puget Sound BLVD. Unbelievable lot, however, the home had 0 livable bedrooms, there was a “bedroom” over the garage that was detached from the house, there was a “bedroom” in an open loft with no closets and there was a “bedroom” in a musky basement. The house had almost zero value.

  24. 24
    racket says:

    By The Danza @ 20:

    I looked at this one. From 2,250,000 in 1999 to 650,000 in 2010…

    http://www.redfin.com/WA/Edmonds/7217-Picnic-Point-Rd-98026/home/2731142

    I know that house well. It’s not worth the $650k that they have it listed for. I hope the kids partying get to enjoy it longer.

  25. 25
    The Danza says:

    RE: racket @ 24 – It is torn to pieces. It would have to be bulldozed. There was actually Pot growing on the roof, broken beer bottles and trash everywhere. Nice lot though.

  26. 26
    racket says:

    I picked up some .20 acre lots close to there for $60K each, so really what is that lot worth?

  27. 27
    Tom Dunford says:

    3030 228th St SE Bothell, WA 98021

    Current (10/4/2010) Pending sale, offered at $545k
    Jun 25, 2009 Sold in Foreclosure at $1,059,470
    Aug 10, 2006 Sold (Public Records) $1,400,000
    61%

  28. 28
    The Tim says:

    RE: Tom Dunford @ 27 – Whoa. Nice find.

  29. 29
    B&W Nikes says:

    812 25th AveSeattle, WA 98122

    08/28/2006 Sold $399,999
    04/02/2010 Listed $189,000
    08/31/2010 Sold $165,000
    ~57%

  30. 30
    racket says:

    I wonder what Mastro’s place on Evergreen point is going to fetch??

  31. 31
    Pegasus says:

    Who was that used to do this monthly for the Seattle area? It was linked here on several occasions.

  32. 32
    The Tim says:

    RE: Pegasus @ 31 – I believe you’re thinking of Seattle Flippers In Trouble, which had some data quality issues in their automated process (many of the properties had actually been split, etc.), and hasn’t updated in nearly 2 years.

  33. 33
    Pegasus says:

    RE: The Tim @ 32 – Thanks..guess it followed the flippers out to sea.

  34. 34
    Jim Lamb says:

    I think I’ve got a new winner:

    http://www.redfin.com/WA/Seattle/3240-S-Edmunds-St-98118/unit-B/home/12538392

    Sold for $438k in October 2007
    Foreclosed in October 2008
    Sold for $165k in February 2010 (62% drop in 26 months!)

    Currently being flipped for $264k, a 60% “appreciation”.

  35. 35
    Brainiak says:

    http://www.redfin.com/WA/Bothell/6815-NE-204th-St-98028/home/283979

    Sold 01/22/07 $365,850
    Foreclosed 04/05/10
    Sold 09/17/10 $185,000

    50%!!

    We inquired with the listing agent saying we would give them $180K back about the middle of August and they said it was a ridiculous offer, and if we did formally submit it the bank wouldn’t even reply. It sold for $5K more a month later. I guess it is all about the timing or something….

  36. 36

    By Jim Lamb @ 34:

    I think I’ve got a new winner:

    http://www.redfin.com/WA/Seattle/3240-S-Edmunds-St-98118/unit-B/home/12538392

    Sold for $438k in October 2007
    Foreclosed in October 2008
    Sold for $165k in February 2010 (62% drop in 26 months!)

    Currently being flipped for $264k, a 60% “appreciation”.

    Assuming that’s the building I think it is, it had special issues. First, as I recall it wasn’t clear that the first sales were legit (for reasons I don’t fully recall so won’t state). Second, and related, the building didn’t have a certificate of occupancy, and for a time didn’t have a functioning association. Thus, buying into that property was risky and resulted in a price of $165k, despite the fact that virtually everything was brand new. I’m not sure of the status of the building after that sale, so I’m not going to comment on the current listing.

    What I never understood was how the original loans were made without the certificate of occupancy.

  37. 37
    guest says:

    What’s the Worst Home Price Haircut You’ve Found?
    “Here’s a fun property: 42905 SE 177th St in North Bend
    Sold in August 2003 for $570,000, then sold for the insane price of $725,000 in April 2007, only to get taken back by the bank in July 2010. Now listed for $410,000.”

    1. What’s up with the sudden popularity of phrases regarding debt and suffering that include the word “haircut.”

    2. A “FUN”property? What exactly is “fun” about this situation. How is an inflated “boom-era” price anything other than merely predictable – why is it “insane?” Please explain. Surely this kind of price history won’t surprise anyone who reads this blog.

    Did you contact the owner(s) of this property to get their story /stories? If you did, I missed it.

    Here’s my experience with this kind of “fun.” During the process to sell our home for $95,000 less than we had paid for it about a year previously, no one in my family ever thought they were having “fun.”

    No one in my family was snickering or wanting to start a contest to see who could come up with the most misery and sadness and grief. There was only a quiet sense of purpose, to pay down the mortgage before the home was sold, and a sense of sadness and loss, then a sense of moving on. No one thought it was “fun” to have their home advertised on the internet and their privacy compromised.

    OK, go for it fellas. Talk about how stupid you just know people like myself are. Throw in a few statistics and charts and hyperlinks. Talk all about how people like my family have caused all kinds of problems in the housing market even if it isn’t really true.

    C’mon, give it your best shot. I want to hear some really mean stuff, some wonderful, snarky, repeatable witticisms. Maybe put me in an indefensible position, then laugh at me for exposing my soft stupid underbelly.

    Bonus points for finding spelling/grammatical posting errors you can pick on.

    Ho-ho-ho you are so darn erudite and cool!

  38. 38

    RE: guest @ 37 – Thank you for your comments. People here tend to take sides, which is fine, but they also assume certain results are good.

    But as a practical matter, the most extreme cases of depreciation are not good in any respect. Either they are extreme examples because the initial prices was too high, or because the subsequent price was too low, or both. The things that cause those extremes are typically the types of things no one would think was good. The buyer being fooled as to value. A bank being caught in a scam. An owner trashing their own property to harm the bank. Defects in construction or condition that result in damages to the property. A bank marketing a property poorly. As you note, in most of these cases there is a human element with a lot of emotional distress.

  39. 39
    Scotsman says:

    RE: Kary L. Krismer @ 38RE: guest @ 37

    There’s a lot to say here, but being older and at least a bit wiser I’m just going to sit here and shut up. And I’ve got a ton of work to do. I really hope both of your lives from here on are blessed with health and happiness. The future will certainly bring change, but also opportunity and blessings for those seek them.

  40. 40
    Blake says:

    I’ve been watching this one in my neighborhood for years:
    5469 Lake Washington Blvd S
    Sold October ’06 for $1.35 million
    Sold May ’09 for $597k
    http://www.zillow.com/homedetails/5469-Lake-Washington-Blvd-S-Seattle-WA-98118/48781858_zpid/

  41. 41
    ray pepper says:

    RE: guest @ 37

    hmmmmmmmmmmmmmmmmm.

    How about 2 free tickets to The Seattle Home Show this weekend? Its on me!

    Now that is TRULY FUN!!!

  42. 42
    Brad999 says:

    “Luxury” homes will be the winners here – homes over $1M in bubble-days, or low-end vacation properties. (Not luxurious, but a luxury.) e.g. this Skyko cabin:

    http://www.redfin.com/WA/INDEX/51602-SKYKO-DR-98256/home/2747875

    Sold Feb 2007 for $150,000.
    Foreclosed for $102,000 in Jul 2009.
    Resold by bank after a year on the market for $35,000 in Aug 2010.

    This is a scrape-off P.O.S., but someone paid and some bank loaned $150k for it three years ago when it was no less of a scrape-off P.O.S. 75% decline in sale price over 3 years, 66% capital loss for the bank.

    Or see this one: http://www.redfin.com/WA/Sultan/19529-River-Pl-98294/home/2747842

    $190k in 2006, on the market for 6 months now at $60k. Nothing like some un-permitted “improvements” to destroy your value.

  43. 43
    wreckingbull says:

    RE: guest @ 37

    OK, I’ll bite.

    I assure you it was not “fun” for me holding back and renting through the boom years, with a kind, reasonable, wife that wanted nothing more than a 1000 square foot roof over her head, whilst I quietly endured coworkers, friends, and even family commenting about how I was ‘throwing my money away’ each month and ‘living like a college student’, pointing out how foolish I was to allow myself to be ‘priced out forever’. I only quote these phrases to point out that they were literally used in almost every conversation. But I just nodded my head in agreement, knowing that the lunacy was not sustainable.

    Sorry you made some decisions that blew back at you. I hope you and your family can recover as quickly and painlessly as possible.

    While I don’t know your situation, I do know that many others experienced a serious case of the stupids during the bubble years. Now, you and I are literally paying for their mistakes, in the form of trillions of added national debt and an economy in shambles. I think it is OK to blow off a little steam in regards to this disaster.

  44. 44

    RE: wreckingbull @ 43 I don’t see a lot of difference in someone back in 2006-2007 who was reading news of the King County median and getting excited about it because they owned or planned on owning, and someone in 2010 to reads the same type of news, and gets excited because prices might be falling and they plan on buying later. Unless you’re an investor in housing, I don’t think you should be getting excited in either situation. That said, there’s nothing wrong with watching the market, no matter what your involvement. It’s the excitement that is the problem because it’s not really all that interesting! ;-)

  45. 45
    ARDELL says:

    RE: Kary L. Krismer @ 4

    There is no “normal”…there is only “the market”.

  46. 46
    wreckingbull says:

    RE: Kary L. Krismer @ 44 – You are completely correct. The reason I am starting to get excited now is that I can again own a reasonable home at 30% of my take-home pay. That possibility went out the window in 2005, and I welcome it back. All I ever wanted was a good night’s sleep.

  47. 47
    cutienoua says:

    RE: ARDELL @ 45 – Hi,
    I know you are the expert,but the market had some bad apples.I can show you a lot of listings of shacks that were sold for a ridiculous high amount,because of “straw” buyers!

  48. 48
    query_squidier says:

    Given the source data of home sales over n years with a unique identifier for each property, this would be a fun SQL query to write to determine those properties with the largest haircut.

  49. 49
    ARDELL says:

    RE: cutienoua @ 47

    Yes…BUT…those “comps” inflated the sold prices of nearby homes during the bubble. So you can’t just wave them away now as if they never existed.

    How come no one screamed “bogus inflated price” on the upside…only noticed the scam on the downside?

  50. 50
    hinten says:

    RE: guest @ 37

    I’ve stated many times to Tim before that some of his posts come across elitist and not helpful in any way. Particularly those where glee at the downturn can be perceived as Schadenfreude at individuals. The last time I mentioned it was when the topic was ‘bad photos’ of homes for sale and it was clear that the ‘bad photos’ were ‘bad’ because they were of substandard housing and, potentially, substandard education and socio-economic control.
    It is his blog and he gets to do what he wants, we are guests.
    Macroeconomic issues always take on a different feel when you show the impact at a microecomic level and hear the stories of individuals. I find the inevitable posts of folks that say ‘I sat out the bubble and rented a shack in the woods’ or ‘I put down 95% of my 30y loan’ as interesting as the stories of the individuals that were negatively impacted but, please, leave out the fingerpointing.
    As a guest I would like to continue to ask for a little moderation when discussing the insanity that we are going through and have led up to this point and remind people that the individual stories can be hearbreaking independent of whose fault it is.

  51. 51
    hinten says:

    To answer the original post. It is easy to find even greater discounting (not haircut or fun) when looking at the original asking price of new homes vs actual sale price. As a matter of fact, you can find homes discounted by millions of dollars, now below actual replacement cost. Selling homes below physical replacement cost is a great indicator that inventory is out of control and, perhaps, that we are overshooting the correction.

    Question: What’s ‘worse’, 50% discount on a $2.9million or $220k home?

  52. 52
    ARDELL says:

    RE: hinten @ 51

    I’d have to answer that as $220 being worse, because often the $2.9M was a pipe-dream.

  53. 53
    cutienoua says:

    RE: ARDELL @ 49 – I thought that is what The Tim was doing! smile

  54. 54
    ray pepper says:

    hmmmmmmmmmmmmmm angry and perturbed people………………means just one thing to me………………

    Its getting time for a Seattle Bubble Party meet and greet again.

  55. 55
    David Losh says:

    RE: ray pepper @ 54

    OK, but it would have to be organized this time. I like Salena’s or Babalu’s in Wallingford. I’m liking Wallingford. There is also the Fuel Coffee that has a room. The Third Place Books was big, and it has the Honey Bear Bakery.

  56. 56
    BillE says:

    By Brad999 @ 42:

    “Luxury” homes will be the winners here – homes over $1M in bubble-days, or low-end vacation properties. (Not luxurious, but a luxury.) e.g. this Skyko cabin:

    http://www.redfin.com/WA/INDEX/51602-SKYKO-DR-98256/home/2747875

    Sold Feb 2007 for $150,000.
    Foreclosed for $102,000 in Jul 2009.
    Resold by bank after a year on the market for $35,000 in Aug 2010.

    This is a scrape-off P.O.S., but someone paid and some bank loaned $150k for it three years ago when it was no less of a scrape-off P.O.S. 75% decline in sale price over 3 years, 66% capital loss for the bank.

    And that $150k purchase was the year AFTER all the road damage in that area due to flooding.

  57. 57
    BillE says:

    Wreckingbull pretty much said what I was thinking. It hasn’t been fun holding out and living cheap while waiting for prices to come back to reality. I put up with plenty of people running their mouth about my choice to live cheap and wait for prices to come back to reality.

  58. 58
    GrizzlyBear says:

    RE: ARDELL @ 49

    Huh? Plenty of us were calling BS the entire way up. You were just drinking the Kool-Aid, and couldn’t be bothered to notice.

  59. 59
    David Losh says:

    RE: ARDELL @ 49

    Many people pointed out the bubble. Appraisers, loan originators, Real Estate agents, all pointed out the high price of Real Estate scams.

    I for one, as you may know, would point the the web 2.0 transparency people as the biggest boosters of buy, buy, buy. You brought up Greg Swan at Blood Hound blog the other day. I’m sure he’s a fine young man, definitely a right thinking American. He was saying Phoenix was a great Real Estate market place even after the bubble had burst.

    Sorry Tim, but redfin was telling people they don’t need the advice of a Real Estate professional, you can buy property on line, we’ll make it easy for you, we’ll give you a rebate, just buy, buy, buy.

    I know many Real Estate professionals who are out of the business, don’t want to be in the business, and are frustrated with all the internet scamming that goes on in the “industry” today.

    Those straw person deals were the result of a lot of amateur hucksters entering the Real Estate field to make some quick money. Many professionals warned clients, but they found Kendra Todd on line, and it all sounded good.

  60. 60
    Jonness says:

    By guest @ 37:

    Ho-ho-ho you are so darn erudite and cool!

    It’s got nothing to do with cool. Some of us just have a better sense for business than you do. I don’t know about the rest of the bubble-heads, but I learned my business sense from making mistakes on par with your own or worse. From this, I learned about caution and moved on to build a better future. Pain and suffering is an excellent teacher. Embrace it. Make it work for you as opposed to you working for it. Without losing your rear-end at least once along the way, life would be rather bland indeed. Once you’ve been thoroughly cleansed, simply start again.

  61. 61
    Scotsman says:

    RE: BillE @ 57

    Yup. Now it’s all I can do to keep quiet. But my hurt/pain was social and temporary. Some of the folks on the other side are going to be facing drastically reduced lifestyles and options for years.

  62. 62
    Hugh Dominic says:

    RE: hinten @ 50 – I have a heartbreaking story. I have been unable to find reasonably priced housing for five years. I’m crammed into a tiny house as my kids grow up.

    I saved up a down payment, only to watch my government use my own tax dollars against me to keep housing out of reach. The government cut my interest rate to zero, attacked my dollars with it’s printing press, and created taxpayer funded programs to keep home prices inflated.

    Then I got laid off. Now I spend my down payment on bills and have no chance of moving.

    Ta-da! (takes bow). I want to thank everyone who helped in the process. Without the housing bubble, I never would have had the opportunity to share this experience with my family.

  63. 63
    Jonness says:

    By Kary L. Krismer @ 44:

    That said, there’s nothing wrong with watching the market, no matter what your involvement. It’s the excitement that is the problem because it’s not really all that interesting! ;-)

    Speak for yourself. For me, it was not very interesting as a wanting buyer watching prices run up to insane levels and beyond. But it’s been a lot of fun watching them fall back to earth. Heck, I would settle for them just getting back to historical relationship to the money I work hard for and earn every day. Considering that we are in the worst downturn since the Great Depression, I think that’s a reasonable expectation.

  64. 64
    Jonness says:

    By ARDELL @ 49:

    How come no one screamed “bogus inflated price” on the upside…only noticed the scam on the downside?

    Those of us who attempted to buy a house and ultimately held off were screaming “bogus inflated price!” The problem was, 99% of the RE agents at that time were screaming, “now is a great time to buy!” At the end of the day, you guys won. When I present your trophy, it will have a McMansion on the spire, and the engraved emblem will read, “For Sale! Bank owned.”

  65. 65
    Herman says:

    RE: Hugh Dominic @ 62 – That bites. But you’re not a victim of the housing bubble.

    The only victims that I’ve read about in the news are the people who irresponsibly jumped into the market, lost money, and now deserve compensation for the loss. Or those who irresponsibly ruined the financial sector, and deserved compensation for the loss.

    The impact to your life and to your family cannot be measured in dollars and therefore it does not count.

  66. 66
    Jonness says:

    By ray pepper @ 54:

    hmmmmmmmmmmmmmm angry and perturbed people………………means just one thing to me………………

    Its getting time for a Seattle Bubble Party meet and greet again.

    Right on! But only if I get a free 500 Realty T-shirt to show off to my friends. :)

  67. 67
    Herman says:

    On topic: http://www.redfin.com/WA/Seattle/913-14th-Ave-E-98112/home/135287

    Sold 2007: $1,550,000
    Tax Assessed: $1,823,000
    For Sale: $999,999 as some kind of “back-to-back short sale”, whatever that means.

    A local goodie: http://www.redfin.com/WA/Seattle/4113-44th-Ave-SW-98116/home/331189

    Sold 2007: $1,175,000 (sucker)
    Sold 2008: $730,000
    Worth in 2010?

    My all time favorite: http://www.redfin.com/WA/Seattle/1603-45th-Ave-SW-98116/home/329830

    Listed 2007: $1,600,000
    Sold 2010: $1,075,000 – after THREE AND A HALF YEARS on the market. Those greedy bastards rode it the whole way down, turning away offers of $1,400,000, $1,300,000, $1,250,000, and $1,150,000 along the way. And those are just the ones I know about.

  68. 68
    Dave D says:

    By Kary L. Krismer @ 4:

    RE: Scotsman @ 2 – By The Tim @ 3:

    RE: Kary L. Krismer @ 1 – So, let’s limit the pool of possible entrants to only homes where the owner cannot possibly afford to take a big price haircut?

    That makes no sense.

    There are condition and marketing issues that exist. Bank owned and short sales are not even typically comps in our particular market. I don’t even typically use them as comps for my bankruptcy listings.

    So if bank owned and short sales are 25% of the market, presumably the bottom of the market and you don’t include them in your comps to the people you are representing, i prepose that to be fair, you don’t include the upper 25% of sales either. What a crock. Comps should include all sales, not just the sales YOU like!!

    You won’t be my agent when i get ready to buy (no time soon).

    As to Scotsman’s comment, they still collectively make up only about 25% of sales, so they’re hardly part of the normal market. There is still a significant decrease in most cases in value for such properties.

  69. 69
    Carol says:

    How about this one…
    http://www.redfin.com/WA/Des-Moines/23016-Marine-View-Dr-S-98198/home/201231

    Sold in July 2007 for $670,000
    foreclosed in April 2010, sold in August 2010 for $242,572

  70. 70
    D. in Ballard says:

    RE: Herman @ 67 – Back to back short sale? One property we were interested in, our realtor called the listing agent and was told they had approval for a short sale at x amount. Buyer would pay more than x amount. House would close at x amount to a temporary buyer in cahoots with listing agent on same day as we would close at higher price.

    The whole thing seemed grossly unethical and I can’t think why the listing agent was so open about it. I told my realtor to steer clear. The property is still for sale with no one biting.

  71. 71
    Racket says:

    By D. in Ballard @ 69:

    The whole thing seemed grossly unethical and I can’t think why the listing agent was so open about it. I told my realtor to steer clear. The property is still for sale with no one biting.

    Probably because the “buyer” was an offer of a friend of the owner. The owner is trying to live there for free for as long as possible.

  72. 72
    ray pepper says:

    RE: Jonness @ 66

    I’ve been outta the 500 Realty shirts for awhile. I gave the last one away in trade to Matt @ Red Fin….. They are a very hot item…Almost as hott as the T Shirt I see at The Reno Rib Cook Off.:

    “Fat People Are Harder to Kidnap”….everywhere I went it was sold out!

  73. 73

    By Jonness @ 63:

    By Kary L. Krismer @ 44:

    That said, there’s nothing wrong with watching the market, no matter what your involvement. It’s the excitement that is the problem because it’s not really all that interesting! ;-)

    Speak for yourself. For me, it was not very interesting as a wanting buyer watching prices run up to insane levels and beyond. But it’s been a lot of fun watching them fall back to earth. Heck, I would settle for them just getting back to historical relationship to the money I work hard for and earn every day. Considering that we are in the worst downturn since the Great Depression, I think that’s a reasonable expectation.

    But what I was saying is you’re no different than the person on the flip side who was excited with prices rising. They didn’t care that it kept others from buying–they only cared that the price change benefited them, and were excited about that. You no seemingly don’t care that the falling prices are causing great harm to others, because those changes benefit you.

    BTW, even before becoming an agent I was arguing that the price change on a house shouldn’t really didn’t matter much to most people, because you still needed to live in a house. It would only benefit you if you were moving to another area that had gone up less, or were downsizing (e.g. retiring), or were in investor in rental houses. I didn’t account for the get out and rent strategy, however.

  74. 74

    By guest @ 37:

    What’s the Worst Home Price Haircut You’ve Found?
    “Here’s a fun property: 42905 SE 177th St in North Bend
    Sold in August 2003 for $570,000, then sold for the insane price of $725,000 in April 2007, only to get taken back by the bank in July 2010. Now listed for $410,000.”

    1. What’s up with the sudden popularity of phrases regarding debt and suffering that include the word “haircut.”

    2. A “FUN”property? What exactly is “fun” about this situation. How is an inflated “boom-era” price anything other than merely predictable – why is it “insane?” Please explain. Surely this kind of price history won’t surprise anyone who reads this blog.

    Did you contact the owner(s) of this property to get their story /stories? If you did, I missed it.

    Here’s my experience with this kind of “fun.” During the process to sell our home for $95,000 less than we had paid for it about a year previously, no one in my family ever thought they were having “fun.”

    No one in my family was snickering or wanting to start a contest to see who could come up with the most misery and sadness and grief. There was only a quiet sense of purpose, to pay down the mortgage before the home was sold, and a sense of sadness and loss, then a sense of moving on. No one thought it was “fun” to have their home advertised on the internet and their privacy compromised.

    OK, go for it fellas. Talk about how stupid you just know people like myself are. Throw in a few statistics and charts and hyperlinks. Talk all about how people like my family have caused all kinds of problems in the housing market even if it isn’t really true.

    C’mon, give it your best shot. I want to hear some really mean stuff, some wonderful, snarky, repeatable witticisms. Maybe put me in an indefensible position, then laugh at me for exposing my soft stupid underbelly.

    Bonus points for finding spelling/grammatical posting errors you can pick on.

    Ho-ho-ho you are so darn erudite and cool!

    You’re not going to hear anything mean or snarky from me. At least this time. There were a lot of perfectly reasonable, intelligent people who bought at or near the peak of the market.
    Including my sister and my son. For those people who have lost their homes or had to sell at a significant loss, there’s real pain involved and lots of stress. It’s not a matter of ” get over it and learn something”, it’s real people we’re talking about. The media was blaring about how the market was different and this rally in home prices was going to go on for a very long time, and a lot of perfectly reasonable intelligent people believed it.

  75. 75

    By D. in Ballard @ 70:

    RE: Herman @ 67 – Back to back short sale? One property we were interested in, our realtor called the listing agent and was told they had approval for a short sale at x amount. Buyer would pay more than x amount. House would close at x amount to a temporary buyer in cahoots with listing agent on same day as we would close at higher price.

    This is actually a good example of fraud–bank fraud and possibly fraud on the seller depending on whether or not they would be responsible for a deficiency. I believe the feds are starting to go after a few of these. Perhaps someone like Rhonda has a link.

  76. 76

    By Racket @ 71:

    By D. in Ballard @ 69:

    The whole thing seemed grossly unethical and I can’t think why the listing agent was so open about it. I told my realtor to steer clear. The property is still for sale with no one biting.

    Probably because the “buyer” was an offer of a friend of the owner. The owner is trying to live there for free for as long as possible.

    That’s possible, but I think others of those were simply wrongdoing at the agent and/or short sale negotiator level. They saw an opportunity to make a buck as a result of banks taking so long to approve sales.

  77. 77
    sallybuttons says:

    RE: guest @ 37 – of course you do know, many of these “contributors” have tiny interiors…c’est la vie!

  78. 78
    RTDK says:

    http://www.redfin.com/WA/Tacoma/4205-N-Stevens-St-98407/home/2992008

    Aug 30, 2010 Sold (Public Records) $312,500
    Mar 22, 2010 Sold (Foreclosure) $629,804
    Nov 10, 2005 Sold (Public Records) $555,000

  79. 79
    S. Marty Pantz says:

    And that Edmonds property is adjacent to the railroad tracks! Those trains run 24 hours a day, and one can hear the train whistle blow in the middle of the night from miles away (particularly if the sky is clear), not to mention the minutes-long rumble several times a day the adjacent property owners must experience as the trains pass by.

  80. 80
    racket says:

    RE: S. Marty Pantz @ 78

    I know for a fact it’s really not that bad, plus at picnic point the only time they blow their whistles is when there are people walking the tracks, or the kids on on the bridge.

  81. 81
    Michael says:

    I agree…bank owned is the way to go…they’re. 20-30% below current market levels…RE: Scotsman @ 8

  82. 82
    S. Marty Pantz says:

    RE: racket @ 80 – But they ALWAYS sound the whistle, without exception, several times a day, when they pass Brackett’s Landing and then again a block farther south. (I could never understand how people could live in those condos in between. Are they THAT sound- and rumble-proof?) You can’t hear that from Puget Sound Blvd? I know folks who can hear it from the Stevens Hospital area–miles away. Just wondering.

  83. 83

    […] from yesterday’s discussion about large price haircuts.photo by Flickr user allyaubryBy Guest:1. What’s up with the sudden popularity of phrases regarding debt and suffering that include […]

  84. 84
    S. Marty Pantz says:

    By guest @ 37:

    During the process to sell our home for $95,000 less than we had paid for it about a year previously, no one in my family ever thought they were having “fun.”

    May I ask why you sold a property you had bought only a year earlier?

  85. 85
    B&W NIkes says:

    RE: guest @ 37
    Haircut is a term that has been in usage for a while, (I think it was misapplied here but got the gist of Tim’s query). So Guest, where you are at in your adventures in Real Estate right now sucks. Me too. Basically if your suffering is equal or worse than mine, I suddenly feel better about my situation. Our ancestors have been telling this same story forever, welcome to the theater and thanks for sharing.

    Usually it’s a little more like commiseration and investigation than schadenfreude, (though there is some of the latter blowing around). Keep in mind, you posted here, it’s not as though everyone here is standing on your front lawn laughing while you burst into flames. Well now that I think of it, Scotsman might, but then he’d turn on the hose, and then Ray would try to get you to buy a towel, and a towelbar with a bathroom attached to it.

    Anyway, you are hardly alone. We are all in the tub together and some make squeaky noises. You may want to try kicking a securities trader or an institutional lender in the nuts rather than take a whack at the snarky local real estate blog.

  86. 86
    2kt says:

    RE: Jonness @ 64

    There must have been a few days without a candy in your childhood, Nelly.

  87. 87
    Racket says:

    By S. Marty Pantz @ 82:

    RE: racket @ 80 – But they ALWAYS sound the whistle, without exception, several times a day, when they pass Brackett’s Landing and then again a block farther south. (I could never understand how people could live in those condos in between. Are they THAT sound- and rumble-proof?) You can’t hear that from Puget Sound Blvd? I know folks who can hear it from the Stevens Hospital area–miles away. Just wondering.

    brackets landing is about 10 miles away from this place. The next closest crossing is at warm beach, since they closed the crossing at the old pier.

    I know several people who live in pt Edwards and love it. I like the trains but not the whistles.

  88. 88
    guest says:

    In a truly ironic twist, I believe the Puget Sound Blvd home was designed and built for Gregory Pinneo. According to the Seattle Times, in 1997, “Gregory Pinneo, 38, was among four people sentenced Monday by U.S. District Judge William Dwyer in a so-called “no money down” real-estate-financing scheme. According to federal officials, Pinneo led the operation in which banks were told that cash down payments were being made on residential property purchases, persuading the banks to lend the balance of the loan. In fact, the buyers were given only promissory notes called “silent second mortgages.”
    http://community.seattletimes.nwsource.com/archive/?date=19970226&slug=2525900
    Although I don’t believe he was not the most recent owner of the home, the design, construction and exuberant valuations seem almost prophetic in hindsight.

  89. 89
    JimN says:

    This is what you call a haircut! (from the asking price)

    http://www.nytimes.com/2010/10/10/realestate/10leona.html?hp

  90. 90
    Eastsider says:

    ZipRealty now has a “sale” feature that makes it easier to find homes with a haircut — check out http://www.ziprealty.com/sale/index.jsp

  91. 91
    Russ says:

    Here’s one I’ve been watching for awhile:

    22302 9th ave SE, Bothell

    2.23 acres
    1305 SQ FT 2bd 1ba

    sold sept ’06 560k
    sold @ foreclosure auction Aug ’10 369K
    listed Aug ’10 310k
    reduced Sept ’10 289k
    reduced Oct ’10 260k

    down 54% and counting

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