Reader Comment: “Now all I seem to be able to afford are the meth houses!”

A reader going by the handle “JustSomeDude” left a comment this morning that is worth highlighting:

Came upon this website a couple months ago and find everyone’s perspectives interesting. I see a lot of wondering on what potential regular, non-speculating, non-investor sellers and buyers are thinking and doing. People who just want to live in a nice house.

I can’t speak for others, but I can share my thoughts / experiences recently as well as some anecdotal stories.

I find the current environment frustrating as a buyer.

We are in Pierce County and lived in unincorporated Pierce County – we sold our manufactured house and 1 acre land Spring 2017 to move to a better school district. After our experience selling (and shock at cost of houses last year) we decided to rent a year to see what the market does.

We first went on the market in Fall of 2016. I was a bit shocked when the Realtor said if there is no offer the first week we should lower by $5,000 – $10,000 each week until we sell. I didn’t want to go down in value and was not in a rush to sell – so after turning down a few lower than asking offers we took our house off market to save more on a down payment for the next house. We put our house back on market Spring 2017 – but raised the price by $5,000 assuming people would go lower again (then we could just counter at what we originally wanted). We got two offers on the first day of listing. After asking for their best offers we accepted the offer that was $25,000 more than what we were asking! We collected our winnings (er, I mean investment results) and moved to the better school district. (Sumner School District for those wondering)

During the last housing bubble I remember distinctly knowing things were off because:

  1. All the people around me who I voiced my concerns on prices and environment told me things were different this time, prices will never be lower, or told stories on so-and-so who quit their job to flip houses. You can’t lose! I finally stopped voicing my opinions as it seemed to make people mad. (Incidentally, I had the same reaction during the Dot Com bubble when I stated how dumb some of these websites were and how they had no business model, etc. I’m a tech guy – hardware and software and yet all the people around me apparently knew better than me! lol)
  2. I also took a look at the ghetto meth house prices in certain areas in the Bonney Lake area and nearly lost my lunch at the prices that were being asked for.
  3. On the radio and HGTV every other ad or show seemed to be about getting rich quick with real estate, or refinancing into the new, improved, [insert very long name for some sort of mortgage thing] so you can have lots of money to retire with, live that life, blah, blah, blah.

The above is obviously not any scientific, methodical approach to investing – but it spared me some financial heartache and hardship considering them. Sadly, all three points above seem to be repeating – except now higher than last time. Did you know Dean Cain is looking for a few good investors to learn the secrets to house flipping – no need for good credit or experience? Also – if you have that house with lots of equity you can do that reverse mortgage and if your house is more than a $million you can get the new improved jumbo reverse mortgage! And apparently, 5% down is still being allowed (and I have been told when pre-qualifying for a loan that if I have to do less than 20% down and do not qualify for 5% down – there are creative ways to get that house of my dreams!) And people seem to still get upset when even hinting that perhaps we are back in a bubble or at least getting unhinged with reality…

Long story short, last year I balked at the cost of the nice houses in our new area so decided to wait a year to save more of a down payment and hope things lowered to a realistic level. Based on how much I got approved for on a pre-qualified loan last month I could afford one of the houses I actually like – but then I couldn’t save for my kids college, go on vacations, and would need to eat bread and water. And when the correction happens I could possibly owe more than the house could sell for – possibly a lot more!

So considering the amounts I’d prefer to pay for a house – October-December there were houses in $300,000 – $325,000 range that I wouldn’t mind – 4 months later they are in the $375,000-$425,000 range! Everything rose higher and faster than I could save so now all I seem to be able to afford are the meth houses!

So we’re going to continue to rent, continue to save for a down payment, and hope reality and prices comes back down to earth. If it doesn’t – I’ll never be able to save fast enough to buy so will look to eventually move somewhere more affordable – hopefully somewhere warmer. Maybe somewhere out of state (but probably not since family is here). Maybe we’ll just end up renting for the rest of our lives – it’s cheaper and safer than buying the meth house!

One other anecdotal story – my wife’s co-worker heard we were looking to buy. She shared that their house went up a lot in value – but if they sold they couldn’t even afford a down payment on any of the other houses in their neighborhood so would have to move somewhere else. So they are not even considering selling even though they’d love to get the equity.

I’ll stop typing as I feel my negative sarcasm bubbling up and I’m trying to stay more positive these days…

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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.