Friday Flashback: “We’re Protected” from the Bubble

Here’s a gem of an article from the Seattle Times, December 2006:

Looking ahead: The sky isn’t falling for the Puget Sound market

What will 2007 bring? Here’s what Seattle real-estate experts are saying.

So much for any bubble bursting this year.

Gardner doesn’t see that happening next year, either.

“This bubble lunacy is still prevalent, but not in Seattle, and I’ll keep saying that,” said Gardner, of the land-use economics firm Gardner Johnson. “All the fundamentals are in place for good job growth and in-migration. That, and our limited land availability, means we’re protected and will continue to appreciate in value.”

But, but… we were protected! The “experts” assured us! Limited land! Job growth! Fundamentals!

The national news has been full of stories about homebuilders cutting production and prices as the real-estate market cools. In November, for example, building permits nationwide fell to a nine-year low, according to a government report.

“But that’s the national news, not the local news,” said Suzanne Britsch, senior analyst for New Home Trends, a construction-analysis and consulting firm in Mill Creek. “We still have job growth and a shortage of lots here, so we have just not had a problem with standing inventory.”

All those stupid national headlines. If only we had ignored them and just closed our eyes and wished harder, maybe home prices would have kept appreciating.

If you’re interested, here’s the post we wrote about this article at the time, penned by Synthetik: Always Trust The ‘Experts’

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.
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.


  1. 1

    You Made Me Laugh Tim

    Thanks for the weekend smile :-)

    Perhaps we should of used Ouja Boards and Crystal Balls instead of MSM real estate news the last 10 years, we couldn’t have estimated any worse?

    I was talking to a young co-worker yesterday about the chronic price deterioration in Seattle homes with no end in sight, he agreed with me, but was horrified when I told him I advised many at work to rent instead of buy the last 4-5 years. They all bought and told me I was wrong. Now they “don’t want to talk about it”. Reminds me of what Jesus went through, “Pearls before swine”.

    The co-worker lamented, where were you 4 years ago when I bought in, I could have used your advise then….its too late for me. But alas, even if I told him the right predictions, the MSM probably would have brainwashed him to buy anyway. Perhaps the solution is “don’t read the real estate news at all”.

  2. 2
    m-s says:

    RE: softwarengineer @ 1
    The only thing we have to worry about, given the hubris of 2007, is a repeat (or as Mark Twain would put it, a rhyme) of the same hubris on the downside. I don’t see how it (a turnaround) could happen, but then, neither did many people (except those clairvoyants at SB) see the down coming, either. Keeping a sharp eye on the horizon would be a good idea, but I don’t know what to look for anyway. Giving SB a tip, to have The Tim watch for me…

  3. 3
    Lurker says:

    It’s always interesting to read the comments from back then.

  4. 4
    Lake Hills Renter says:

    What ever happened to synthetik? He just disappeared.

  5. 5
    No Name Guy says:

    By Lurker @ 3:

    It’s always interesting to read the comments from back then.

    Did you catch Jon at comment 7? Too flipping funny…..

    “Fourthly, owning a home is the biggest savings plan and tax shelter you can have. Huge tax benefits offset the cost of the mortgage for the most part, and you get something called an ROI… or appreciation of your home.

    Frankly… you renters out there continue to pay my mortgage payment, increasing my tax deductions, and ability to purchase another property… after all, you are not only giving my pocketbook a nice reprieve, but you are guaranteeing my retirement will be fun, lucrative and filled with travel without worrying about money.

    Go ahead… take your 5% CD and enjoy the interest you earn off that $100k… I will enjoy the 3-5% (conservatively) I gain with a $600k home! ”

    Ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha .

  6. 6
    Lake Hills Renter says:

    By No Name Guy @ 5:

    It’s always interesting to read the comments from back then.

    There were a lot of “you renters” comments back then. Not so much any more.

  7. 7
    David S says:

    RE: Lake Hills Renter @ 6 – The only thing bad I can say about renting is ‘Beware of the Accidental Landlord’. Sometimes they really suck! They are not as mentally or emotionally prepared as an investor might be. We are choosing to be renters and they have no choice but to be landlords.

    Rental markets are a different deal with so many choosing to rent now.

  8. 8
    Macro Investor says:

    All of my bubble friends have completely turned around. Now all they do is complain about how hard it is to maintain a yard (and so forth). I guess they’ve missed the news about all the bidding wars going on out there ;)

  9. 9

    RE: No Name Guy @ 5

    Yeah, Let’s See on a $600K Home Back Then With 90% in Mortgage Principle

    With avg maintenance cost, subtracting interest deduction [which could be butcher axed soon at a Tea Party theater near you]….hmmmm….I get at least $5000/month rent to break even with insurance, HOA fees, empty unit months, etc, etc….

    Does anyone know who in their right mind is paying even $2000/mo rent for this smallish 1920 Seattle shack?

  10. 10

    RE: Macro Investor @ 8

    If They Bought In With a Working Spouse’s Pay

    And babies come later and/or one of the two jobs get butcher axed [their probability for a layoff is twice the single income household], or worse yet, they divorce and neither can afford the house on one income…..they’re mooning through the Camaro’s window…..

  11. 11
    Macro Investor says:

    RE: softwarengineer @ 10

    You got it SW. One couple had the baby. Another is facing a “possible” job loss and may have to move out of the area. A third couple is older and the wife decided she’s had enough of working. Number 4 bought a pricey house they don’t really like because they thought it would appreciate.

  12. 12
    Feedback says:

    Congratulations to Tim and Synthetik for defeating the Seattle Times! What makes matters even worse for the Times is that in 2006 they actually had a competitor. “The Seattle Post-Intelligencer” (ironic, I know, considering they were out-intelligenced by a few bloggers) would close a few years later.

  13. 13
    Ron says:

    Seriously Now-

    Who in there right Mind would be Taking a 600,000. Dollar loan and making into a rental house?
    How would you make those numbers work? I’ve never heard of any professional investor in his/her right mind doing this? maybe San Francisco, then again i’m not sure that area would attract professional single family home investors for cash flow?

  14. 14
    Toad37 says:

    RE: Macro Investor @ 8 – That is exactly why I bought a condo :-)

Leave a Reply

Use your email address to sign up with Gravatar for a custom avatar.
Your email address will not be published.

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

Please read the rules before posting a comment.