Around the Sound: Misery for Buyers Everywhere

Let’s update our monthly stats for the local regions outside of the King/Snohomish core. Here’s your May update to our “Around the Sound” statistics for Pierce, Kitsap, Thurston, Island, Skagit, and Whatcom counties.

Are things any better in the market right now for buyers outside of the core Seattle areas? Unfortunately, not really. It’s still a pretty terrible time to be buying a home just about anywhere in the Puget Sound area.

First up, a summary table:

May 2015 King Snohomish Pierce Kitsap Thurston Island Skagit Whatcom
Median Price $480,942 $350,000 $255,000 $266,950 $246,850 $286,000 $247,400 $289,000
Price YOY 8.7% 7.7% 8.5% 15.8% 7.8% 15.7% 6.0% 5.9%
Active Listings 3,280 1,816 2,818 911 1,085 577 545 1,000
Listings YOY -21.1% -17.7% -17.8% -26.4% -14.8% -24.8% -30.4% -22.4%
Closed Sales 2,684 1,082 1,203 329 344 150 178 288
Sales YOY 15.4% 26.1% 10.8% 10.4% 11.0% 25.0% 16.3% 34.0%
Months of Supply 1.2 1.7 2.3 2.8 3.2 3.8 3.1 3.5

Next let’s take a look at median prices in May compared to a year earlier. Prices were up from a year ago across the board. Gains ranged from as low as 6 percent in Whatcom to as high as 16 percent in Kitsap.

Median Sale Price Single-Family Homes

The number of listings on the market fell by double digits year-over-year in every county. The biggest loser of listings was Skagit County, where listings fell 30 percent from a year ago. The smallest decrease was in Thurston, where listings were down 15 percent from last year.

Active Listings of Single-Family Homes

Closed sales increased in May compared to a year earlier in all eight counties. The biggest gains were in Whatcom County, which saw 34 percent more sales than last May. The smallest gains were in Kitsap County, where sales increased 10 percent.

Closed Sales of Single-Family Homes

Here’s a chart showing months of supply this May and last May. The market was less balanced than a year ago, skewing more toward sellers in all eight counties. The least terrible market for buyers was in Island County, which still has just 3.8 months of supply.

Months of Supply Single Family Homes

To close things out, here’s a chart comparing May’s median price to the peak price in each county. Technically everybody is still down from the peak, with drops ranging between just 0.01 percent in King County to 19 percent in Skagit County. Note of course that this chart is not adjusted for inflation. Here’s a recent post that shows how King County home prices look when you take inflation into account.

Peak Median Sale Price Single-Family Homes

This year is basically a bust for home buyers, no matter where around the sound you’re looking for a home.

If there is certain data you would like to see or ways you would like to see the data presented differently, drop a comment below and let me know.

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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.

76 comments:

  1. 1
    Blurtman says:

    What a bargain! $499,000. 839 sq. ft. $427/month HOA dues.

    This one won’t last long. A real GEM!

    https://www.redfin.com/WA/Seattle/2018-NW-57th-St-98107/unit-202/home/52595189

  2. 2

    I don’t agree with the conclusion. The further away you get from Seattle/Bellevue/Redmond the better it is for buyers. The buyer pressure is no where near as great outside those areas. That probably doesn’t show up in graphs simply because how bad the situation is for buyers in S/B/R doesn’t show up in the graphs.

  3. 3
    greg says:

    Wow .

    Re market getting back to super fun crazy time, and the stock markets looking about as safe as a toddler running with scissors.

    The Government is determined to force every last dime out of the banks, but we have no where safe to put it. buy more housing? buy more stock? or perhaps become some sort of a gold bug?

    The price of risk is getting to risky for me to risk.

  4. 4
    redmondjp says:

    RE: Kary L. Krismer @ 2 – Yes and no, Kary . . . you can go all the way east of Duvall up in the foothills, literally at the end of the road (where remnants of former hunting shacks used by long-dead Seattleites can still be found), and find $500K+ houses (that may be 35 years old and need a lot of work) on 5 acres (that you can’t subdivide or do anything with), and pay crazy-high property taxes ($8K per year in some cases, being taxed on all that land that you can’t use), and get: no paved street or sidewalks, no streetlights, no water, no sewer, no natural gas, no cable TV, no high-speed internet/fiber, and unreliable overhead electrical service that may take a week to restore after a big storm. Oh, but at least they will pick up your trash for a fee.

    One would look at that area (where it can take 15-20 minutes just to get to downtown Duvall on dry roads) and think that there are bargains to be had, but current pricing proves otherwise . . .

  5. 5

    Did Anyone Say a 40% Collapse in Real Estate is Imminent?

    Yes they did:

    “…Housing prices will fall again, by as much as 40%… the so-called “recovery” of 2013/14 will diminish faster than an ice on a hot summer day as mortgage rates rise and the wrong group of investors – a.k.a. speculators – lose their taste for the market….”

    http://economyandmarkets.com/exclusives/greatest-stock-market-collapse-great-depression/?z=366817

    I’ve got news for you, the savvy investors already left real estate about a decade ago.

  6. 6
  7. 7

    RE: Kary L. Krismer @ 2

    Yes Kary

    Retire or relocate to Bellingham or south of Olympia and the real estate becomes more real. Telework?

  8. 8

    RE: redmondjp @ 4
    Even the SE King County, Noted for Its Bargains

    Just build like new 3000 sq ft behemoths in the $300K+ range on dinky lots. They like us living in high utility units with purposely high social support property taxes going through the roof. We’ll be forced to keep the Millenials in the extra rooms or on to the next Z generation there until they retire too….LOL….or you drive each other nuts …. a wonderful place to retire by yourself or with just a spouse too….LOL

    They have Seattle brainwashed…

  9. 9
    Mike snyder says:

    RE: softwarengineer @ 5

    If any real estate investors got out of the market 10 years ago they missed out on huge profits of the 2011 bottom.

  10. 10
    Erik says:

    I told buyers on here to buy now or be priced out forever and I was made fun of on this site. Now the bidding wars are getting even more serious you weak minded pundits. I think prices will keep going for a while still. Expect a long expansion period with increasing home prices.

  11. 11
    wreckingbull says:

    ↑ This message brought to you by the Help Me Sell my Condo on Stilts Foundation. Forward looking statements may change based on my current housing situation. All other offers null and void. Cash value: 1/100th of one cent.

  12. 12

    RE: Mike snyder @ 9
    Investors Don’t Invest in a Low Listing Environment

    There are no bargains to grab up. Speculators speculate in that area though, as do the cash bag kids born with a golden spoon in their mouths, but they aren’t investors and/or they have no skin [money they earned or a job that’s stable] in the game.

  13. 13
    Blurtman says:

    RE: Erik @ 10 – I love the smell of bidding wars in the morning. The smell smells like victory. Someday these bidding wars are gonna end.

  14. 14

    RE: redmondjp @ 4 – I’m not talking just about price.

  15. 15
    redmondjp says:

    By Kary L. Krismer @ 14:

    RE: redmondjp @ 4 – I’m not talking just about price.

    Me neither.

  16. 16
    jon says:

    The Seattle housing bubble will burst as soon as the Chinese stock market bubble bursts: http://www.bloomberg.com/news/articles/2015-06-16/china-bubble-debate-turns-to-when-not-if-stocks-will-tumble

  17. 17
    MD says:

    I, for one, am extremely excited for the Chinese bubble to burst.

    And I’ve put my money where my mouth is: renting for now, instead of buying; and just today I bought 100 put contracts on FXI, strike price of $30, expiration date Feb 2016.

    If the Chinese market crashes 40% between now and February, I make $10,000 for every 100-point drop in the Shanghai index below 3,000. If it doesn’t crash, I lose $1300 total. Seems like a better gamble than Seattle real estate!

  18. 18

    By softwarengineer @ 12:

    RE: Mike snyder @ 9
    Investors Don’t Invest in a Low Listing Environment

    There are no bargains to grab up. Speculators speculate in that area though, as do the cash bag kids born with a golden spoon in their mouths, but they aren’t investors and/or they have no skin [money they earned or a job that’s stable] in the game.

    There are very large corporations building apartment buildings like crazy within the city of Seattle, especially in the denny Triangle/northeast end of downtown. A number of these are publicly traded companies. So they claim to be investors. They might not turn out to be smart investors, but six story buildings are being replaced by twenty five story buildings. I wouldn’t do it, or buy a stock in a company doing it, but there are people with good track records investing in these things.
    But you’re right: since a lot of these can’t possibly produce much or any positive cash flow, they’re confident that they’ll make their money in rising values. Which, to me, is risky. Two years ago would’ve been smart.

  19. 19
    Blurtman says:

    By Ira Sacharoff @ 18:

    By softwarengineer @ 12:

    RE: Mike snyder @ 9
    Investors Don’t Invest in a Low Listing Environment

    There are no bargains to grab up. Speculators speculate in that area though, as do the cash bag kids born with a golden spoon in their mouths, but they aren’t investors and/or they have no skin [money they earned or a job that’s stable] in the game.

    There are very large corporations building apartment buildings like crazy within the city of Seattle, especially in the denny Triangle/northeast end of downtown. A number of these are publicly traded companies. So they claim to be investors. They might not turn out to be smart investors, but six story buildings are being replaced by twenty five story buildings. I wouldn’t do it, or buy a stock in a company doing it, but there are people with good track records investing in these things.
    But you’re right: since a lot of these can’t possibly produce much or any positive cash flow, they’re confident that they’ll make their money in rising values. Which, to me, is risky. Two years ago would’ve been smart.

    As Tishman Speyer has shown, developers can walk away from huge RE development loans and suffer no consequences, unlike defaulting peasants. Corporations are very special people.

  20. 20

    RE: Ira Sacharoff @ 18

    $2000+ Rent for a One Bdrm and $4000+ Rent for a 3 Bdrm Apartment

    And that excludes parking costs. Or live without a car and shop at a few scarce downtown QFCs with little or no parking [walk there]. Eat at Subway everyday?

    What a joke.

  21. 21

    RE: MD @ 17
    Rent is High Now and Costly

    But the risk factor when it all goes to “Hades in a Hen Basket” is far lower. Its like paying the attorney legal costs in your rent to avoid the inevitable collapse. Low inventory high prices reminds me of the gold rush in 2007 when it hit $2000/oz….many buyers were using equity to borrow or leverage gold purchasing and that scheme went down the toilet to $1200/oz.

  22. 22
    Blake says:

    By jon @ 16:

    The Seattle housing bubble will burst as soon as the Chinese stock market bubble bursts: http://www.bloomberg.com/news/articles/2015-06-16/china-bubble-debate-turns-to-when-not-if-stocks-will-tumble

    Indeed… a classic bubble.
    … “China’s market capitalization has tripled in the past year to $9.8 trillion. At 84 times projected earnings, the average stock on mainland exchanges is now almost twice as expensive as it was when the benchmark Shanghai Composite Index peaked in October 2007.”
    And i read that over 35% of the new investors have less than a high school education… sad.

  23. 23
    astelin says:

    RE: MD @ 17 – long put, I hope.

  24. 24
    HomeOwnerInMapleLeaf says:

    Serious question then: should I sell my 2 bedroom, 1.5 bathroom, house in Maple Leaf now? Or should I wait another 60-90 days until I’m done with the basement, at which it point it will then be a 4 bedroom, 2 bath? (yes, the basement bedrooms have legal egress windows). Decisions… decisions…. of course, I’d wait, if I wasn’t concerned that the bubble may burst this summer?

  25. 25
    HomeOwnerInMapleLeaf says:

    My other idea is to turn it into a rental, but I’m not all that interested in being a landlord. Anybody know any great property management firms?

  26. 26
    Erik says:

    RE: Blurtman @ 13
    I too enjoy a good bidding war and watching buyers squirm. Next time I hear a buyer whine and cry, I will spit in their face after I backhand them for being pathetic. If it’s a code monkey I’ll slap them twice.

  27. 27
    Erik says:

    RE: MD @ 17
    Good odds, but you will probably lose. We have another 9 years of increasing prices. The market will definitely crash, but probably not for 9 years.

  28. 28

    By HomeOwnerInMapleLeaf @ 24:

    Serious question then: should I sell my 2 bedroom, 1.5 bathroom, house in Maple Leaf now? Or should I wait another 60-90 days until I’m done with the basement, at which it point it will then be a 4 bedroom, 2 bath? (yes, the basement bedrooms have legal egress windows). Decisions… decisions…. of course, I’d wait, if I wasn’t concerned that the bubble may burst this summer?

    I think it’s pretty unlikely that the bubble will burst this summer, and it’s also unlikely that we’ll see much more inventory in the next few months.
    Oh, the bubble will burst alright. I disagree with Erik that it’ll take nine years. But maybe two?

  29. 29
    Jack says:

    RE: HomeOwnerInMapleLeaf @ 24 – What are you going to do when you sell? Buy another place? I wouldn’t want to be out of a home in this rental/buyer market.

  30. 30
    HomeOwnerInMapleLeaf says:

    RE: Jack @ 29

    True, if I had to buy another place, I would not be thinking about selling, but I have other options that are probably too complex to try and explain here, they basically boil down to this not being my primary residence by the time I sell (but I don’t have to buy another place).

    My bigger question is, from an ROI perspective, trying to decide if I should sell now, or at the end of the summer when I’m done adding 2 BRs, or just turn it into a rental (given that I don’t really like the idea of being a landlord).

  31. 31
    Mike says:

    By Erik @ 26:

    RE: Blurtman @ 13
    I too enjoy a good bidding war and watching buyers squirm. Next time I hear a buyer whine and cry, I will spit in their face after I backhand them for being pathetic. If it’s a code monkey I’ll slap them twice.

    The number of bidding wars in Ballard seems to be going down. The last few weeks of closings have a lot more homes selling at or below asking than a few months ago.

  32. 32
    Bill johnson says:

    That’s good to know Mike.
    Thanks for sharing!
    RE: Mike @ 31

  33. 33
    Mike says:

    By Bill johnson @ 32:

    That’s good to know Mike.
    Thanks for sharing!
    RE: Mike @ 31

    We saw a similar pattern last year. Most of the appreciation happened before school let out, later sales held relatively steady in price with few upside surprises. If the pattern holds, there will be a july/august lull where DOM increases slightly for all but the most high demand properties.

  34. 34
    Erik says:

    RE: Mike @ 31
    Hopefully housing prices catapult up over the next few years. With super low inventory and bidding wars, I would like to see double digit gains in Seattle.

  35. 35
    MD says:

    A big indicator to watch in July will be Amazon’s earnings report.

    We’ve seen other retailers struggle across the country – Gap, Abercrombie, Walmart, others. If Amazon misses revenues expectations, it would suggest economic headwinds that could affect the local economy. Will hiring slow there? Will the stock drop, affecting buyers’ ability to make a down payment?

    For all of you who see prices going only up, up, and away, you seem to be ignoring the fact that the economy may be stalling…

  36. 36
    Mike snyder says:

    RE: softwarengineer @ 12

    Ah, but they do, I know people personally that bought up property during this time and have made large profits.

    I can only assume there are many others.

    I bought my house in DEC of 2011, and our house price has doubled.

    Ive been reading here for years now and I don’t recall anything that you have said to be correct.

    Just my 2 cents

  37. 37
    Saffy The Pook says:

    By Mike snyder @ 36:

    RE: softwarengineer @ 12

    Ah, but they do, I know people personally that bought up property during this time and have made large profits.

    I can only assume there are many others.

    I bought my house in DEC of 2011, and our house price has doubled.

    Ive been reading here for years now and I don’t recall anything that you have said to be correct.

    Just my 2 cents

    That’s the beauty of SWE, he’s the perfect contrary indicator. It’s too early to tell with Erik. If he makes a big profit on his current project, he’ll be insufferable for the rest of his life as he tells the whole world about his two successes over and over again. If he loses on #2, he may shut up for a while and I’d argue that a big failure will make him a better person in the long run, so a win-win. Or he could go postal.

  38. 38
    Kelly says:

    Does anyone know a way to save an old home from demolition? There is an exceptionally darling vintage home in my neighborhood (prime area for real estate) that I’ve admired for many years. Due to multi-use zoning the owners have a couple offers from builders, but I’m certain there are folks out there who would buy it at their price to live in it. They’re selling FSBO with only a small sign in the yard that was put up Wed, so I don’t think the exposure has been very high at all. I’d really hate to see it torn down though I realize it’s a long shot to save it…

    I tried contacting Nickel Bros (local company that does house moving) to see if they might be interested. Anyone else have any ideas? Or anyone have a client looking for a one-of-a-kind vintage home in the $550K range? This house is a GEM and I would buy it myself if I had the money.

    Thanks,
    Kelly

  39. 39
    Tim McB says:

    RE: HomeOwnerInMapleLeaf @ 24

    Hey this is my ‘hood. So my two cents is definitely; finish the basement out then sell. With basement finish outs the ROI in Seattle can easily be over 100%, even when using a contractor, since the shell and subfloor is already done for you. My guess is that you’d get $175-200 per square vs. $25-$50 per square foot for the unfinished space. In fact, for appraisal purposes unfinished space has no value whatsoever (though some appraisers like real estate agents will fudge this). Also, for appraising purposes finished basements yield less per square foot than above ground square footage but in the real world of Seattle there really is little difference between the two provided the basement ceilings are high enough (7 ft+). In fact, lots of families are specifically targeting finished basements right now I know of several; though primarily for family rooms not bedrooms (having both are ideal though). If you sell unfinished someone else will scoop up the low hanging equity which is okay if you don’t want the hassle. But the basement remodel if done right (read not too over the top) is a long time Seattle equity build tradition, especially if you can do some of the work yourself. Where you will technically lose money is upping your 1.5 bath to 2 bath since plumbing costs are high but most real estate agents will tell you the difference between the two is huge (having two showers vs. only one). Not knowing the too much about your house it sounds as if you’d be moving your house from the starter home market to second home market doing your remodel. If you are in it for the long haul renting it out is also a good way to go especially if you’ve owned it a while and can get a 10-20% positive monthly cash flow immediately (minus the 8% property management fee that will offset future cost increases for the rental/different housing situation you find yourself in, plus a buffer if the rental market turns and you have a couple months of vacancy. You may want to check current rates (craigslist, zillow) to get a feel for that or check in with a property management firm to get a sense. Our neighbors use Real Property Associates on 75th and Roosevelt. I’ve heard tenets hate them but our neighbors seem to be happy with them. Good luck whatever you decide, Maple Leaf’s a great neighborhood for families so I’m sure you’ll find a buyer/renter; my wife and I plan on living here for a long time.

  40. 40
    I'm just here so I won't get fined says:

    RE: Saffy The Pook @ 37

    I don’t know if SWE is a contrarian or if he is just perma-bear. He is just counting on the fact that eventually he will be right about home prices going down if he keeps calling for it long enough, and eventually he will be right about it. He will just have missed the part where prices skyrocketed before going down.

    He doesn’t seem to think that millennials are capable of home ownership and are destined to permanently live in the basement at mommy and daddy’s house, unless daddy can afford to buy a house in a “beautiful” Kansas City for them. However I own a home and I know several millennials who are on to there second home already, non of whom are highly paid Amazon workers either.

  41. 41
    Erik says:

    RE: Saffy The Pook @ 37
    I made 128k on a remodel while simultaneously getting a masters degree from uw and working full time. You dirt bags on here kept telling me I would fail and I proved you all wrong. As a result, I live at a really nice place and have an awesome job.

    I’ve already won. Let go, it’s over. I have no problem stomping you and your simple minded computer friends again.

  42. 42
    Shoeguy says:

    By Erik @ 10:

    I told buyers on here to buy now or be priced out forever and I was made fun of on this site. Now the bidding wars are getting even more serious you weak minded pundits. I think prices will keep going for a while still. Expect a long expansion period with increasing home prices.

    Said every buyer in 2006.

  43. 43
    Wanttobuybutnotatthatprice says:

    RE: MD @ 17

    Please teach me! : ) I’m ready to give up on real estate for now before I have to take a vacation at happy acres. Lol

    Or I could buy this http://www.redfin.com/WA/Seattle/6528-Delridge-Way-SW-98106/home/160782

    and put up a sign that says “chicken coop ranch”

  44. 44
    Desi says:

    Any increase in Interest rate will cool the markets.. If interest rate go up 1% 2016 will be vacation time for agents.

  45. 45
    Erik says:

    RE: Shoeguy @ 41
    The writing was on the wall in 2006. In 2006 I got a negative amortization loan and I knew I would never pay it back. A lot of people knowingly did the same. My loan was 220k and my payment with taxes was about 950/mo. I lived in north e rot and I was hood rich renting rooms and buying lots of beer as any north everett male hood rat would.

    I wouldn’t be surprised if we had another recession. I would be very surprised to see another recession where housing prices dump like they did during the last recession. That last recession was probably the best thing to ever happen to me. I don’t think that opportunity will come for about 9 more years.

  46. 46
    Mellon says:

    @ Kelly 38

    You could post the address here for starters.

  47. 47
    Blurtman says:

    By Erik @ 44:

    RE: Shoeguy @ 41

    I would be very surprised to see another recession where housing prices dump like they did during the last recession.

    RE only goes up.

  48. 48
    redmondjp says:

    By Blurtman @ 46:

    By Erik @ 44:

    RE: Shoeguy @ 41

    I would be very surprised to see another recession where housing prices dump like they did during the last recession.

    RE only goes up.

    Right along with dot com stocks! This time around, the sock puppet is wearing an iWatch.

  49. 49
    MD says:

    RE: redmondjp @ 47 – Amazon and Expedia are going to take over the world, don’t you know? They’re building a new campus in SLU – there’s no way bad things could happen to a company that is building a new headquarters.

    http://www.businessinsider.com/poorly-timed-headquarters-2009-11?op=1

  50. 50
    Jonness says:

    By Erik @ 40:

    RE: Saffy The Pook @ 37
    I’ve already won. Let go, it’s over. I have no problem stomping you and your simple minded computer friends again.

    My cousin’s car cost more than your condo. You and I are doing pretty well for a couple of bottom feeders though.

    Let’s face it, the only one who deserves to say “game over” who posts on SeattleBubble is Ray Pepper. Now that’s what I call cashing in on an unprecedented real estate downturn.

  51. 51

    RE: Jonness @ 49 – Please educate me on what you think Ray did.

  52. 52
    Jonness says:

    By Erik @ 44:

    I would be very surprised to see another recession where housing prices dump like they did during the last recession. That last recession was probably the best thing to ever happen to me. I don’t think that opportunity will come for about 9 more years.

    The last one was not typical and was largely caused by loose lending standards creating too much competition for existing supply. Eventually, builders obliged demand and continued to build until there was an oversupply. The banks attempted to continue to oblige the builders by dreaming up “no doc” loans and every other crazy-a$$ scheme they could think of. But when those loans went sour, the rug got pulled from under their feet. That sent everybody who was holding real estate into a panic.

    Credit is pretty tight (relatively speaking) right now. That’s one of the reasons I’m not buying into the “bubble theory.” Despite the big increase in price over these last few years, many people still lack the equity to be able to sell. This restricts supply and props up price. So even though credit is much tighter than it was during the bubble run-up period, there is still upward pressure on house prices.

    The first phase was to soak up the available oversupply. But when the supply evaporated, builders didn’t step back in and fill the void. Many were still not over getting wiped out in the last cycle. To add to that, the banks weren’t handing the construction loans out at the same rate as in the previous cycle.

    This year has been a little different. Land prices are making a comeback in rural areas because builders are gaining the confidence and solvency to start new projects. This is a big sign that we’ve begun the next leg of the cycle, which is to match supply to available demand.

    So we have all these people screaming we’re in a bubble because prices have gone up much faster than incomes (much like myself in the previous cycle). But IMO, that indicator should not be read in isolation. The key to spotting these tops is watching available supply. The builders have not yet had their way, so the supply remains tight. However, they are starting to come on board.

    So it seems to me, we have a ways to go until we start looking for a top. I’m keeping in mind, housing typically leads us out of a recession, and so far, we haven’t really seen this occur. What I’m saying here is, we are still early in the housing cycle. New jobs cause people to buy houses, which create more new jobs, which cause people to buy more new houses.

    But there are no definites here. Anything can come along and crush this market, such as war, famine, plague, or simply an abrupt turnover in the business cycle (recession). But, IMO, housing is OK right now by its own merit. In order to understand the next housing downturn, we must look to other related economic factors that could interrupt the supply meets demand stage. Either that occurs, or we live out the current cycle.

  53. 53
    Jonness says:

    By Kary L. Krismer @ 50:

    RE: Jonness @ 49 – Please educate me on what you think Ray did.

    Compared to yourself and others who bought a single house that you could afford at the peak of the market, Ray leveraged the heck out of himself by picking up a bevvy of rentals that eventually foreclosed. Of course, this was accidental genius. But it didn’t take him long to realize he could simply stop making payments and continue to collect the rents, which lasted about 5 years. So with all this cash flowing in, and not having to spend anything on taxes or upkeep, every time he got another $50K, he would run down to the auction and pick up another rental for cash. Now while the rest of us were worried about damaging our credit, Ray didn’t care, because that lasts a maximum of 7 years, and it really didn’t matter to him because he was now an all cash buyer (which is necessary at the auctions).

    So we have this registered nurse, who knew relatively little about RE, starting out by getting overleveraged and getting his a$$ completely handed to him. But he managed to turn it around and make it work for him. He started out with little skin in the game on a bevvy of rentals that foreclosed, and he wound up owning just as many all cash. Since he picked them all up at the bottom of the market and at auction, he’s made a killing on appreciation in addition to the free money coming in from the renters every month.

    This is the type of thing that goes down in folk lore. As time goes on, how much of it is even true, nobody knows, but it’s become the legend of the savvy investor we all wish to be. He has set an example that the little guy can rise up and rule the kingdom. And in doing so, he has unleashed the Erik’s of the world who are well on their way to becoming future Real Estate champions.

    That said, I like Ray mostly because his $500 Realty model landed me a check for $10K the first time I used it. Now I’m hooked and on my third time around with his company. What can I say? I like free money!

  54. 54

    RE: Jonness @ 52 – You believed that? Funny how none of that shows up in the public records. You might want to check the public records. Yet another instance where consumers really don’t have a clue what is going on regarding the activity of some of the agents who post here because they either don’t have the tools to check the claims or don’t know how to use the tools they have.

    Anyway, that was the advice he was giving out, and it was poor advice. I don’t see any evidence that he personally followed that advice, either personally or through an entity he owned (the latter of which would be foolish given it would require personal guarantees).

    BTW, a foreclosure is forever as far as answering questions on a loan application.

  55. 55
    Gabe Sanders says:

    We’re still a long ways from getting any where near the situation of the last melt down.

  56. 56
    Jonness says:

    Kary:

    You have been searching in Nevada under the correct name, right?

    You talk about misinformed or stupid consumers that don’t know anything about real estate getting tricked and deceived by agents. Well, it’s these same consumers who continue to fall for the old 6% real estate model still used by the quickly fading old-timers in the industry.

    The best evidence I need that Ray Pepper is spot on is a free $10,000.00 every time I buy a house.

    I’ve previously talked about my neighbor who pulled $300K out of his house and then stopped making payments. Then he lived there for 5 additional years with free rent is no taxes. Ray did not give poor advice. The catch was, it took guts to follow it.

  57. 57

    By Jonness @ 54:

    Kary:

    You have been searching in Nevada under the correct name, right? .

    No, I’m limiting my search to what he’s done here locally. Do you have a clue what I’m talking about? It makes your comparison to what he’s done and what I’ve done seem rather absurd.

    But I don’t know the laws in Nevada on deficiencies and how they compare to Washington. Maybe doing what he advised makes more sense in Nevada, because it clearly makes no sense here.

    As to your getting money back from him, that’s his choice. You should be thankful for that and you are. But that’s an entirely different issue.

  58. 58
    Erik says:

    RE: Jonness @ 49
    I agree. Ray Pepper did it right and got rich via tax payers. He is someone to listen to.

    I went from broke to having some money. It was life changing for me although I’m far from rich. Getting rid of that big stress of counting every penny and stressing about money is very nice.

  59. 59
    Erik says:

    RE: Jonness @ 54
    Mr. Peppers is a genius. Ray sacked up and got paid. Good on him.

  60. 60
    Erik says:

    RE: Gabe Sanders @ 54
    2024 is my crash prediction. I’m not a real estate pro, but it seems like a good guess to me.

  61. 61
    Jonness says:

    By Kary L. Krismer @ 56:

    As to your getting money back from him, that’s his choice. You should be thankful for that and you are. But that’s an entirely different issue.

    It was no special favor to me. That’s his business model. All of his clients get either 60 or75% of the buying agent’s commission. Since I had multiple contracts drawn up along the way, I got 60%, which was a clean $10,000.00. But that was on the first transaction. I got 75% on the second. I’m currently in the midst of my 3rd go-round with his company.

  62. 62
    MD says:

    RE: Erik @ 59 – Based on what? The mythical 18-year real estate cycle? There have been other times when it’s only 7 or 10 years between RE cycles, instead of 18.

  63. 63

    By Jonness @ 60:

    By Kary L. Krismer @ 56:

    As to your getting money back from him, that’s his choice. You should be thankful for that and you are. But that’s an entirely different issue.

    It was no special favor to me. That’s his business model. All of his clients get either 60 or75% of the buying agent’s commission. Since I had multiple contracts drawn up along the way, I got 60%, which was a clean $10,000.00. But that was on the first transaction. I got 75% on the second. I’m currently in the midst of my 3rd go-round with his company.

    Yes, I realize that’s his business model.

  64. 64

    By Jonness @ 52:

    By Kary L. Krismer @ 50:

    RE: Jonness @ 49 – Please educate me on what you think Ray did.

    . . ..Ray leveraged the heck out of himself by picking up a bevvy of rentals that eventually foreclosed. Of course, this was accidental genius. But it didn’t take him long to realize he could simply stop making payments and continue to collect the rents, which lasted about 5 years.

    By Erik @ 57:

    RE: Jonness @ 49
    I agree. Ray Pepper did it right and got rich via tax payers. He is someone to listen to.

    The boy genius almost got it right. What Jonness describes is almost certainly a federal crime if you buy the property intending not to repay, and if you get your loan from a federally backed entity. So Erik is almost right in that even ignoring the issues I’ve raised in the past about judicial foreclosure, Ray is not someone to listen to.

    I once attended a continuing legal education seminar where Melissa Huelsman was the speaker. She’s one of the attorneys representing the prevailing parties in Washington’s MERS decision. Anyway, she described how easy it was to depose people who do real estate scams because usually they’ve been taught whatever the illegal thing was that they’ve done, and they come out and freely admit it. I suspect Ray and maybe even Jonness have been to a few of those type of real estate scam classes.

  65. 65

    I’ve got a friend that has bid on several homes and he is an Amazon employee. Yes these guys have a lot of cash and yes are driving the market up. It’s comical, disturbing and telling how the employees outbid each other and drive the market up for everyone else — along with the investors trying to cash in. You’d think as a senior Amazon executive, I’d they’d know this would happen just like in San Francisco.

    It’s as manipulative as the IOC and just as disturbing and corrupt — now to find that one email, one text, one phone call, one person to testify. Just one to bring the market to reality, but you could argue that this -is- reality — we are corrupt beasts.

  66. 66
    Erik says:

    RE: MD @ 61
    Based on the 18 year cycle and where we are in that theory. It appears like we are starting into the expansion phase and inventory is still low. It will be years until builders build enough for supply to exceed demand. Then it will take a few years for buyers to overpay and implode. 18 years is the most common interval and everything we’ve seen so far supports that interval in my mind.

    Taking the pieces and putting it together is something the computer people struggle with because it is complex thought. Think about it and put the pieces together. 2024 seems like the most likely scenario. Like jonness said though, if some unforeseen catastrophe happens, then it could happen sooner.

  67. 67
    Mike says:

    RE: Erik @ 63 – Irony. You were predicting the market would crash by now a year and a half ago. You might be able to assemble the pieces, but it’s not necessarily into anything useful.

  68. 68
    Jonness says:

    By Erik @ 63:

    2024 seems like the most likely scenario.

    Our economy is stitched together with band-aids. The Fed has rates all the way to 0, so if something bad happens now, real estate won’t fare well. That said, as long as the Wizard can keep the phony economy going, housing supply will continue to increase in order to meet demand.

    The big difference between now and the 80’s is, back then, we saw a wage/price spiral push prices up no matter what. So real estate was a much safer bet than cash, which rapidly lost its value. These days, we’re living through wage stagnation, which is far too scary for me to take a 100% bullish approach on real estate. I’m currently hedging my bets and liquidating some assets in order to pay down some debt. Cheap loans are nice, but I only want to hold so many of them.

    The most interesting development I’ve had my eye on lately is house prices in the sticks are coming back, and raw land out there is getting pretty hot again. Last year, you couldn’t give the stuff away.

  69. 69
    DG says:

    @Tim
    Tim, I wonder if you can do a post on following subject….And comments are welcome here as well.

    Who are those buyers the market needs? I argue that new buyers contribute to just about 1/6 of all volume of transactions. That means that for market to *really* move into any direction, transaction have to take place mostly between people already in the market. Now transactions between this group have stopped. Why?

    (According to stats I have sees, the sales of new homes is about 1/6 of all sales. It does not matter who gets new home, what matters is that this is a good proxy for knowing how many new people have stepped into the market.)

  70. 70

    RE: HomeOwnerInMapleLeaf @ 25
    What Tenants?

    If they make the kind income to afford the kind of rent you envision, they mostly already own a house and aren’t in the market.

    I talked to a Covington resident last Saturday and he said his son fixed up his house for open house at $575K….no one showed up….just a bad example, LOL.

  71. 71

    RE: Mike snyder @ 36

    Are They Investors?

    I doubt it, they bought a house.

  72. 72

    RE: Saffy The Pook @ 37
    I Paid $26K for My Foreclosure

    I’ve put $3600 into it so far.

    Tell me how I could lose money on that investment, when the market is $59K and the assessed value is $52K?

  73. 73
    Rebecca says:

    RE: DG @ 68 – I can only speak for our household, but we are first time home owners who bought 3 years ago when prices came within our reach at last. Since then we have had an interest in moving and realizing some of the amazing equity we’ve gained on paper, but our wages and therefore what we qualify for in terms of a mortgage have not risen substantially so we would be using all that equity to get into a home in roughly the same price range as our current was when we bought it. So thanks to the same push up in prices that helped us realize great equity, it would now take about 100 – 200k more to buy an equivalent house to the one we have now and we cant “move up” which is about the only scenario that appeals to us as buyers still interested in living in the same general area.

  74. 74
    Erik says:

    RE: Jonness @ 67
    Why have you bought 3 houses if you think housing is about to bust again? Although you are giving reasons to have opposing views, in the end it seems like you pretty much agree with me that we likely have a ways to go before the next housing bust.

  75. 75
    HomeOwnerInMapleLeaf says:

    RE: softwarengineer @ 69

    You seem out of touch with the market in this part of North Seattle (where Mape Leaf is located, just NE of Green Lake). Maybe you confused it with Maple Valley (since you mentioned Convington) — common mistake for people newish to the area.

    If not, than you must be very out of touch. The rental market here is on fire. School district feeds into Roosevelt High School, bus lines to Microsoft, Amazon, Downtown, U of WA, SLU, etc.

    There are a lot of people that want to rent in this area that can afford the rent. And Amazon, Microsoft, T-Mobile, Expedia, etc, etc… are bringing hundreds/thousands more into the economy every month.

  76. 76
    Jonness says:

    By Erik @ 73:

    RE: Jonness @ 67
    Why have you bought 3 houses if you think housing is about to bust again? Although you are giving reasons to have opposing views, in the end it seems like you pretty much agree with me that we likely have a ways to go before the next housing bust.

    Yes, I agree we most likely have a ways to go. But I would like to be a little more diversified. Housing is not the only game in town.

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