September Reporting Roundup: Unsustainable Trend Edition

It’s way past time for the monthly reporting roundup, where you can read my wry commentary about the news instead of subjecting yourself to boring rehashes of the NWMLS press release (or in addition to, if that’s what floats your boat).

To kick things off, here’s an excerpt from the NWMLS press release:

Housing market slowdown expected
But prices in most areas are still rising

Scarce inventory, new rules for mortgage closings and affordability concerns will likely slow home sales around Western Washington during the remaining months of 2015 and into early 2016, according to spokespersons from Northwest Multiple Listing Service.

The latest statistics from the MLS show a double-digit drop in inventory, a double-digit jump in closed sales, and a near double-digit increase in prices from a year ago, prompting one industry leader to say the trends aren’t sustainable. “We simply can’t sustain double-digit increases in sales when inventory levels continue to drop every month,” remarked OB Jacobi, president of Windermere Real Estate. “We’re on the cusp of a housing market slowdown,” he predicts.

I think this is the first time I have ever seen the NWMLS press release quoting their agents with anything other than a “rah rah hot market” sentiment. It’s very odd.

Read on for my take on this month’s local news reports.

Seattle Times

Sanjay Bhatt: Many homeowners stuck owing more than their houses are worth

After the most brisk summer selling season in a decade, the Seattle area’s home prices showed signs of easing in September.

Potential buyers may welcome a cooling, but it’s grim news for the large slice of the region’s homeowners whose mortgage debt remains greater than their home’s value.

Although home prices have rebounded strongly since the Great Recession, more than 33,500 King County homes had negative equity at the end of June, or 9 percent of homes with a mortgage, according to Seattle-based Zillow, the real-estate website.

Owners in that position have little financial incentive to list their properties for sale, reducing the potential inventory available to first-time buyers. And lower-value homes account for a disproportionate share of these so-called underwater homes.

“It’s causing a lot of friction at the bottom of the market, which then ripples through to the entire market,” said Zillow Chief Economist Svenja Gudell. “For some of these homeowners, they may pay off their mortgages before they resurface.”

With as much as home prices have increased in the last three years, I really doubt that underwater mortgages are having much of an effect on the market anymore.

Note that these estimates for how many people are underwater are based on Zillow’s notoriously inaccurate automated home price estimates. For example, in my neighborhood, one home that sold for $285,000 last month had a “Zestimate” of $191,000. I put very little stock in these “underwater” guesses in this hot market.

Puget Sound Business Journal

Marc Stiles: Windermere president: Seattle’s ‘on the cusp of a housing market slowdown’

September revealed double-digit drops in inventory along with a double-digit jump in closed sales.

This trend isn’t sustainable, said Windermere Real Estate President OB Jacobi, who predicts that the area is “on the cusp of a housing market slowdown.”

Another factor that will slow things down is the new banking and closing disclosure requirements that will extend closing times.

I wish the article had gone into more detail about the new disclosure requirements. That is something I will be looking into.

Tacoma News Tribune / The Olympian

Rolf Boone: South Sound housing market heats up again in September

After a cooler August, the South Sound housing market heated up in September as single-family residence sales once again jumped by a double-digit margin, according to Northwest Multiple Listing Service data released Monday.

And median prices weren’t too far behind, rising 10.3 percent in Pierce County and 7.5 percent in Thurston County from September 2014, the data show.

Given the limited supply of homes on the market, buyers need to be decisive, write competitive offers and be prequalified by a lender to purchase, said Francine Viola, a longtime broker with Coldwell Banker Evergreen Olympic Realty in Olympia, who was showing an open house in the Campus Highlands area of Lacey on Sunday.

But that’s not to say that sellers can sit back and wait for the offers to roll in, she said. They still need to price their residence correctly and be prepared to negotiate.

“This is not Seattle,” she said about the Thurston County housing market, where some buy with cash but many still finance their purchase.

Or, maybe buyers need to sit the market out for a while instead of contributing to the frenzy, making things even worse? Nah, crazy idea.

Since this post is so late, here’s a bonus article from the New York Times last week:

New York Times

Nick Wingfield: Seattle, in Midst of Tech Boom, Tries to Keep Its Soul

SEATTLE — For years, business leaders here have closely studied the San Francisco region, seeking to emulate the way it churns out so many leading technology companies.

In large measure, those efforts worked. But now, leaders in Seattle are looking to the Bay Area as a different sort of model: a cautionary tale.

The giant sums of money spinning around San Francisco in recent years, fueled by a booming tech sector, have generated hordes of 20-something millionaires and thousands more with six-figure salaries. While that wealth has created a widely envied economy, housing costs have skyrocketed, and the region’s economic divisions have deepened. The median rent for a one-bedroom apartment in San Francisco is $3,530 a month, the highest in the country.

“Seattle has wanted to be San Francisco for so long,” said Knute Berger, a longtime chronicler of life in Seattle. “Now it’s figuring out maybe that it isn’t what we want to be.”

Great article with some outside perspective on Seattle’s boom. I definitely recommend reading the whole thing if you haven’t already.

(Sanjay Bhatt, Seattle Times, 2015-10-05)
(Marc Stiles, Puget Sound Business Journal, 2015-10-05)
(Rolf Boone, Tacoma News Tribune, 2015-10-05)
(Nick Wingfield, New York Times, 2015-10-08)


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.

54 comments:

  1. 1
    Craig says:

    Zillow Chief Economist Svenja Gudell: “For some of these [underwater] homeowners, they may pay off their mortgages before they resurface.” Huh? Or is she making a joke? That quote simply makes no sense at all. Then again, she is an economist… :-)

  2. 2
    Blardian says:

    It’s important to understand the difference between a “market slowdown” and price trends.

    From what I see on the comments of this blog, most readers are interested in price trends. They want to know if it’s a good time to buy, sell, or hold.

    News like this, about a pending market slowdown, can confuse some. Market slowdown, meaning fewer homes sold, affects real estate agents and financiers more than it affects buyers/sellers/investors.

  3. 3
    Macro Investor says:

    My neighbor is an agent. He flat out told me prices were insane and he had no interest in buying real estate in this market. He warned me that interest rates will rise someday, and it could be very bad for home owners. I had my mouth shut and just listened the entire time. No macro comments were ever offered.

    Malcontents like this should just be avoided. After all, the majority say it’s never been a better time to buy in Seattle. Look at all those mountains and water as you sit in that traffic jam. Just like San Francisco and LA, only without that cancer causing sunshine.

  4. 4
    Cap''n says:

    RE: Blardian @ 2

    Agreed. But I do think the real estate industry likes the confusion. Market slowdown is coming! You should assume that means imminent price declines and list now! So total sales volume can continue feeding the beast. And if you are a first time home buyer, don’t spend anytime worrying about commission structure, mls market controls, etc. That is the sellers problem. But sellers, even though you pay commission, list now! It’s only gonna get worse.

  5. 5
    whatsmyname says:

    By Macro Investor @ 3:

    After all, the majority say it’s never been a better time to buy in Seattle.

    I don’t think anyone says that. After all, if you like lower prices and more choices, last year was better. And the year before that; and the year before that; and the year before that….

  6. 6
    Jay says:

    RE: whatsmyname @ 5 – I agree!

  7. 7

    Sustainable Greed?

    Is the real unemployment rate 24-25% per and not 5% something?
    Is the budget ceiling debt gonna cause bankruptcy and no Social Security by Dec 11th?
    Will Trump really get us all the jobs we lost back from China if he’s elected?
    Is Walmart sales doomed because of wage increases?
    Will Yellen push the interest rate increase button soon?

    Stay tuned…..this saga gets convoluted. We get hit in all directions at once?

  8. 8
    Jay says:

    Did interest rates just drop again? Redfin says 30 year fixed is at 3.875%. What’s going on?

  9. 9

    RE: Jay @ 8
    Yeah, They Offered Me About a 4% ARM for 20 Years in 2009

    The interest I saved by paying off the principle in 2009 alone more than paid the cash offer off on a $26K foreclosure in Kansas City within 5 years…..but low interest debt is better?

    Remember, even low interest adds up….

  10. 10

    RE: Jay @ 8
    Trump Explains Why Yellen Won’t Raise Interest Rates Until After Election

    Read the end of the attached article, it doesn’t allow copy/paste.

    http://thehill.com/homenews/campaign/256851-trump-economic-bubble-about-to-burst

  11. 11
    boater says:

    RE: Jay @ 8
    We (the US) have a strong currency and relative to the rest of the world a stable to growing economy. Money is pouring in and looking for anything to hold value in. Even a 10% correction in US real estate prices feels safe relative to keeping cash or stocks in some foreign markets. Expect rates to keep low or go lower despite what the Fed would like to do.

  12. 12

    RE: boater @ 11
    Possibly

    But compared to Japan, with more debt per GNP, the biggest in the world; at least Japan uses only sovereign nationals to fund their debt….we use foreign nations mixed in to a large extent….big difference in favor of Japan.

  13. 13

    RE: Jay @ 8

    Not a change. What did you think they were? Reality isn’t matching the hype. Rates have been 1/8th up to 1/8th down in a narrow margin for quite some time.

  14. 14
    Macro Investor says:

    I just found out my real estate agent neighbor reads this blog. We just had a good laugh about all the clueless suckers paying $700k for molding wooden boxes, on tiny little plots of land. It’s like they can’t even open their eyes and see all the beautiful places that have far more outdoor activities, no traffic, and houses that cost less than half. His words, not mine.

    I told him I hope the insanity continues, so he can collect the fat commission checks. We agreed that we are grateful that they can’t see, because it would spoil all the really nice places.

    I showed him some online listings in texas, where my high school friend lives. Sturdy looking, attractive brick homes (often with a pool), with enough room for a good-sized family. All for around $120 per square foot. My friend got a 15 year mortgage and paid it off in 9 years. He’ll be retiring after the kids finish college. All on one salary (wife home schooled).

  15. 15
    Blardian says:

    RE: Macro Investor @ 14

    Compare the Walk Scores of those two homes, whatever you’re comparing from Seattle to your cheap Texan hometown.

    Seattle’s pricing is competitive with other, equally-urban options across the country.

  16. 16
    Jay says:

    RE: Macro Investor @ 14 – Do you watch “Fixer Upper” on youtube? They renovate houses that cost less than $50,000 in Texas, and renovation cost is about $100,000. So for $150,000, the buyers get a very nice house, that in Seattle would cost at least 4 times as much. But who wants to move there? You sound just like Software Engineer, who helped his daughter to move to Kansas.

    Homeschooling is a bad idea! It is like a prison for children!

    Paying off the mortgage early is good! But if you need to sacrifice your lifestyle and career for a cheap house, then it is obviously stupid! There are lots of smart people who don’t want to retire, because they will be bored to death. It is not just for the money, but for the fun and intellectual stimulation!

  17. 17
    Macro Investor says:

    RE: Jay @ 16

    Who wants to move to Texas? Or sacrificing lifestyle and career? You must be a comedian. Seattle/Bellevue vs. Dallas/Fort Worth — sorry, Seattle is still the sticks culturally and economically compared to a major city. Everybody has high tech now.

    Walk score — another useless metric like zestimates. They happen to be about the same, but it doesn’t matter. The Texas neighborhood is superior in every way.

    I’m purposely not giving out specific information for privacy reasons. Look at a few redfin listings and you will just be blown away.

  18. 18
    Anonymous Coward says:

    Macro,
    why don’t you post a link and then we can all discuss the relative merits of the neighborhood in question? I’m a little skeptical I recently saw someone post (on another site) a listing in Jacksonville by way of comparison to Seattle. It was a new-ish ~3000sq ft home for $250k. What they neglected to point out was that it was also in the middle of the ‘hood. (And most native Seattlites have no concept of what that really means…)

  19. 19

    RE: Macro Investor @ 14
    Ahhhhh….But Texas Has Tornadoes, Water Shortages and Hot Summers

    And we have endless rain in the Winter with earthquakes and volcanoes. Job opportunities? Both Texas [low oil prices job cuts now] and Seattle suck in this area….but so does the whole country. Sounds like Texas is a better choice, even with more air conditioning utilities in the Summer [even central air is needed here now, with global warming].

    I’m retiring in Washington….the high property taxes here support Social Services my family member depends on. My daughter is sassy and happy in Kansas City….she never wants to come back to this over-crowded and over-rated area. Bless her heart. I’d love to join her there too.

  20. 20
    Blurtman says:

    RE: softwarengineer @ 19 – Camden, NJ is a deal!

  21. 21
    Blurtman says:

    Today’s BubbleTune™ brought to you by Kurt Vile and The Violators. Pretty Pimpin.

    https://www.youtube.com/watch?v=659pppwniXA

  22. 22
    brian says:

    Re: Macro@17

    To say that Seattle is the sticks compared to Dallas is blowing my mind. Dallas is an enormous sprawl of boring chains and strip malls, filled with some of the most homogenous, closed minded people in the country. Many of the people living in the super nice neighborhoods there have not even been out of Texas, much less the country. The food consists of bbq, texmex, steaks, and CHAINS! Anyone with a brain or anyone different in Texas move immediately to Austin when they can. Dont even get me started on comparing the aesthetics of the two cities. You couldnt pay me enough to live there. In fact, I’ll let you in on the secret why houses are so cheap there—-because no one wants them! JMHO

  23. 23
    LW says:

    I just got a nice house in a good neighborhood. I’m no longer within the city limits of Seattle. I overpaid but I needed to live somewhere and I am fine living in it for 20 + years. The Seattle area is cheaper than California and more expensive than the Midwest. There are lots of nice places to live in the USA. If you are priced out of Seattle. There are plenty of other great options out of state or just farther away from the city of Seattle, like Tacoma or surrounding cities. It sucks getting displaced though. I understand that one.

  24. 24
    Blurtman says:

    If you can deal with the humidity and occasional tornado, Birmingham, AL, is a pretty laid back college town with very good restaurants. And very good Q.

  25. 25
    David B. says:

    RE: brian @ 22 – Indeed.

    My memory of (most of) Dallas is endless mile after mile of multi-lane arterials with posted speeds of 40 mph or higher, no shoulders, no sidewalks. The only differences discernible between “blue collar” and more “upscale” neighborhoods is that tract houses give way to McMansions and the mix of chain shops and restaurants that repeat every mile or so gets more upscale.

    I have plenty of criticisms about how Seattle falls short on its urbanism, but to claim it is “the sticks” compared to Dallas is preposterous.

    Note I said “most of” above. There is a small older core to Dallas that has some areas with better aesthetics and more of a human scale. But I rather suspect those aren’t the areas Macro was touting. And you have to deal with the heat and humidity (and lack of mountains) wherever in Dallas you are.

  26. 26

    RE: Jay @ 16
    LOL Accept Mandatory Double Incomes With No Retirement as Seattle Normal?

    SWE is a happy bachelor that thrives on nothing to do….most people do. We’ll all live to be 100 retired? Die in our 70s [like working women getting more heart attacks now than when most stayed at home]….is normal? LOL

    Retirement is about the same money ya get working too [net pay].

    Ya better think that through better or face the grim reaper sooner? LOL

    I’ll be honest [will you?] and make the statement, most of the stuff I accomplished working I do at my home office now….without the grueling jammed up stressful commute clogging the freeways. I pick my times for driving, like 9AM-2PM….when retirees are out and about. Enjoy the jammed rush hour drives work world parking lots going home tonight. Put some mileage on your car…..and gas in its tank…you’ll need more new clothes for work too.

    I bought a new $49 HP copy/fax/printer for my home office and a new $199 computer with Windows 7 and Microsoft Office 2010 Suite included. I sit with windows wrapped around me and daylight for lights. Its the cat’s meow. I love retirement!

  27. 27
    wreckingbull says:

    By Jay @ 16:

    RE: Macro Investor @ 14

    Paying off the mortgage early is good! But if you need to sacrifice your lifestyle and career for a cheap house, then it is obviously stupid! There are lots of smart people who don’t want to retire, because they will be bored to death. It is not just for the money, but for the fun and intellectual stimulation!

    It’s funny you say this, because when I lived in Seattle, I was sacrificing lifestyle so I could afford an expensive home. Having an extra two grand available per month to spend, save, whatever, as well as no more time sitting in traffic has vastly improved my lifestyle, not hurt it.

    That being said, I guess if you are someone who goes out drinking every night, then yes, you would have a point. I don’t think most people are like that, though.

  28. 28
    Mikal says:

    RE: Macro Investor @ 17 – I have lived in Texas and found it to be nothing like here in a really bad way. Texas is the arm pit of the world.

  29. 29
    wreckingbull says:

    RE: Mikal @ 28 – I even found Austin to be a bit overrated. I guess relative to the rest of the state, it’s a pretty nice city.

  30. 30
    Jay says:

    RE: wreckingbull @ 27 – It is really funny that some people here are making comments about other people whom they never met before in life! No, I don’t drink! No, I don’t sit in traffic, and I only need to walk 10 minutes to work! No, I don’t homeschool, and my kids go to one of the top ten public schools in the States. I love what I do, so does my wife, and we don’t look forward to retirement! By the way, our mortgage is cheaper than rent, so we are happy with that for sure. We don’t need to have double incomes to afford it!

    I feel bad for new people who come here for advice. We used to have David Losh who gave really good solid advice to new buyers. It was very kind of him to take his time and to write unbiased guidance for young people. Now, it is all about personal attacks. I guess when real estate is hot, so is jealousy! The quality of comments here is getting lower and lower! But any smart people can tell that some of them are just plain nonsense!

  31. 31

    RE: Jay @ 30
    Like Your’s Too?

    I agree with you that every case is different, why is anyone’s case the best generally accepted case?

  32. 32
    anonymous says:

    I’ve been following this blog for couple weeks now. Lots of charts and expert opinions.
    To a newbie like me, I am basically looking for an answer to whether I should buy now or hold for few months/year and buy. After all the reading, I am still left without a freaking clue. Most of the houses that seemed interesting so far are priced just North of 2007/8 peak and I’ve been outbid 3 times already over asking price.

    Any expert opinions would really help. I am looking to buy a SFH somewhere in East of 405 in Snohomish County, which is close to work for me, and don’t intend to live in it for more than 7 yrs.

    Perhaps Tim should have a post, to help buyers, with a voting on Sell or Hold.

  33. 33
    Blurtman says:

    With the Seahawks clearly missing the departed Dan Quinn, should Kris Richard be taking the RE exam for his next career mover?

  34. 34

    RE: anonymous @ 32
    It Seems Like You’ve Made Up Your Mind to Buy

    So buy in your area and just do it. Us bloggers can give you advice with no insurance on the advice, so just buy if its what you need and want. You take the risk, we don’t. You reap the benefits and risks of owning a house where you want it located, its that simple. Life isn’t always about the best timing or optimum investment savvy, most of that is just plain luck anyway. Happiness is to the beholder and we’re all different cases.

    Trump has shocked the political world in his campaign against the Dem/Rep party management and is winning anyway. MSM is warming to him, because their ratings go up when he’s on the TV screen. Who would have guessed that Trump was for real [and he could get away with totally different thinking than we were used to]….same with your real estate decisions, the only one that has to live with their outcome is you and your family. Be a doer and planner and its more likely to come true. God’s speed.

  35. 35
    Erik says:

    RE: Jay @ 30
    This site is hopefully just going through a rough patch of people that have no idea what they are talking about. Corn dogs and Ray pepper came on here. If you missed it, they basically said now is not a good time to buy. They were both right before. I would think they are probably right again.

  36. 36

    RE: Jay @ 30
    Even those many years ago there were personal attacks. David Losh did give good, practical advice, but he got attacked pretty regularly.

  37. 37

    RE: Blurtman @ 33
    The Seahawks have become the Seabawks?

    What a difference a year makes in a team. Yesterday’s 4th quarter defense was especially horrifying, as well as their 4th quarter offense passing and rushing. Where the Ravens were risking bodies and souls diving for complete catches, we were playing it safe asleep at the wheel preserving our bodies for the playoffs [which we’ll likely never see now]….the Ravens deserved the win.

  38. 38
    Blurtman says:

    RE: softwarengineer @ 37 – The Pantera-Seahawks match-up seems to have become a bit of a rivalry. I think the team is missing Max Unger. In fact, the play of the offensive line in general is quite offensive. And what blown coverage on the one guy you didn’t want to leave open! I wouldn’t count the Hawks out yet, but they certainly have dug a pretty deep hole for themselves. Good thing the NFC West is crappy this year.

    Go Mets!

  39. 39
    Erik says:

    RE: Ira Sacharoff @ 36
    Losh told me the city would eventually turn my Juanita home into a garbage dump for Kirkland.

  40. 40
    wreckingbull says:

    RE: Jay @ 30 – When I go back you your original post, your assertion was that moving out of Seattle leads to a sacrifice of lifestyle. Did I read this incorrectly? Perhaps a little introspection is in order. I simply pointed out that for many, this is not only not the case, but the exact opposite.

    For example, living outside of Seattle for the last 9 years, in a place with cheap, quality housing, has allowed me retire in my early 40s. In 2006, I never imagined this would have been possible. It’s not that hard to do if you are not encumbered with a high cost of living. Just my story, but the Seattle or bust mentality is a bit daft.

  41. 41
    Gabe says:

    @Anonymous and timing the market….
    There are two camps in investing – value investors and technical investors.
    – Value investors key claim is that “Value is a function of price” meaning that the more you pay for any asset, the less valuable it becomes, because more margins are required for future appreciation.
    – Technical & momentum investors look for trends, patterns or other indicators. Basically they buy on a set up. Find a long term uptrend and buy into it during a period when prices have deviated from the average but then are reverting back to the upward moving average.

    This market appeases neither of the above two camps. It does appease speculation, which is guessing on outcomes without assessing your tolerance for loss. Hint: loss aversion means that you don’t have loss tolerance and will sit underwater.

    In summary… buy REITS for far less headache :) my.02

  42. 42
    Erik says:

    RE: wreckingbull @ 40
    You just retired. A longtime ago you told me you were renting a room in the 60’s. You have some explaining to do.

  43. 43
    HappyRenter says:

    RE: anonymous @ 32
    “don’t intend to live in it for more than 7 yrs.”

    Just rent. Selling a house can take longer than you thought. It’s not worth the hustle. If you are looking to invest money, follow the advise of Gabe @41 and buy REITs.

  44. 44
    anonymous says:

    softwareengineer @34 – Thanks! the answer to buy or not to buy is NP-hard ;)
    Gabe @41, HappyRenter @43 – Thanks for the advice! I will read about REITs

    I’ve pretty much made up my mind to continue renting for the foreseeable future. Although I can comfortably afford, *I think*, a decent down and can survive a loss of a job for ~12-18 months, a house at this moment and age seems like a good to have and not a necessity. Thus deferring it until the market cools down, if ever.

  45. 45
    Amy says:

    RE: anonymous @ 44

    Ditto… I currently have an apartment in a location that gives me a very convenient bus commute to and from work, even if the apartment is a tad pricier than I’d like. I have no immediate need to move, and a couple factors in my personal life make waiting a year or two look like a good idea.

    So, while I can currently afford 15-20% down on any house in my chosen price range, with the stock market and real estate both feeling so inflated I don’t see any reason to jump in right now. Hopefully all those new apartments going up downtown cool off the rental market some in the meantime.

  46. 46
    GoHawks says:

    RE: Amy @ 45 – Amy and Anonymous, out of curiosity what percentage of your decision to wait for a year or two is based off of the current prices and what is based off of the current lack of inventory? If there were better options, would you be willing to pay current prices?

  47. 47
    snoogins says:

    Long-time lurker, rare poster.

    I’m in the same boat as Amy and Anonymous @44, 45.

    We would have bought our first home in 2011-2013 if we could have swung a 20% downpayment since home prices were in a much better valued territory and inventory was OK. We didn’t have 20% down available until mid to late 2014 however when the housing market was already heating up again and prices were hitting (and now have hit!) the peaks of the last bubble.

    The next couple years should see a significant amount of apartments coming online, interest rates lifting off and eventually a Yo-Yo market correction. All signs point to downward pressure on the demand side around the corner. Now if we can just get the inventory supply to climb….

  48. 48
    GoHawks says:

    RE: snoogins @ 47 – Snoogins, thanks for your insight and input. Always helpful when people are transparent on here.

    What signs would you point to in terms of buying demand slowing in the next couple of years? Thanks for your thoughts.

  49. 49
    Amy says:

    RE: GoHawks @ 46

    I believe there’s a confluence of factors causing prices to be higher than is really sustainable… in many large metro areas nationwide, not just here. I wrote a post a couple months ago outlining some of them (foreign investment/tax haven, capital firm speculation on rental houses, low interest rates making higher prices seem more affordable, etc.). There are also a number of factors in this area in particular causing supply to remain low. Both problems are interrelated and working together to raise prices. Because I feel they’re related, I can’t really put a percentage weighting to one or the other. If I had to pick one factor keeping me from buying it’s not wanting to pay for something I feel is currently very overvalued.

    If circumstances required it, I would probably buy a place that looks reasonable at current prices. However, I feel the current trend is unsustainable and completely dependent on the continued influx of high paid tech workers and the view of real estate as a “safe” investment by the investor class. Since I don’t have to buy right now, I’m making the bet that something is going to give eventually. The middle class can only get stepped on for so long.

  50. 50
    Cornix says:

    By snoogins @ 47:

    Long-time lurker, rare poster.

    I’m in the same boat as Amy and Anonymous @44, 45.

    We would have bought our first home in 2011-2013 if we could have swung a 20% downpayment since home prices were in a much better valued territory and inventory was OK. We didn’t have 20% down available until mid to late 2014 however when the housing market was already heating up again and prices were hitting (and now have hit!) the peaks of the last bubble.

    The next couple years should see a significant amount of apartments coming online, interest rates lifting off and eventually a Yo-Yo market correction. All signs point to downward pressure on the demand side around the corner. Now if we can just get the inventory supply to climb….

    Same exact situation here with us down to the dates!

    Lack of inventory is huge of course, but for us it’s also the quality of housing in our price range. We look out at our choices and see that our choice is crappy house A and crappy house B, both of which need of 100K of work to make it fit for something other than racoon. No thanks!

  51. 51
    Anonymous says:

    GoHawks @46 –
    100% of the decision is based on pricing. Increased inventory would likely impact pricing, but I am mainly backing off because the price is just too high, even for wooden boxes.

    I am fairly certain that things would cool down, just today I got a call from a builder ‘recommending’ me to put an offer asking a 35k upgrades on a 500k house. They were pretty strict about offering any upgrades a month ago.

  52. 52
    GoHawks says:

    Appreciate the feedback from you guys, thanks. Seems like buyers waiting it out are certain prices will go lower, while one the fence sellers still think that prices will push higher and they will sell right. Guess that’s what makes a market.

  53. 53
    boater says:

    RE: Amy @ 49
    One more thing could substantially impact prices. If the mass transit solutions king county is trying to implement actually make commuting reasonable again effective supply of housing could increase significantly.
    Right now if you’re a high tech worker with a downtown job it’s a huge quality of life reduction to move out of the city. Seattle traffic is just terrible. You lose hours a day of your life just getting to and from work while getting nothing done. Good light rail and busses could change that. That would expand the pool of acceptable housing greatly.

    That is years away thought so no immediate help.

  54. 54
    Maggie says:

    RE: Cornix @ 50 – Funny, same with us as well – we wanted to buy several years ago but it took us until late 2014 to be able to move. We watched ourselves get priced out of neighborhood after neighborhood as the months ticked by during our search. We finally lucked out and found a house that was being rented out, with an owner and agent who were not in Seattle and didn’t seem to have a bead on how hot the market is – swooped in with the first offer at list price and actually got to have contingencies and everything. We were looking for a year. Whether we bought at a terrible time remains to be seen, but our mortgage is less than our rent so I’m feeling comfortable for now! Good luck!

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