New listing absorption softens more as pending sales slip

Good news for Seattle Bubble members! The spreadsheets behind the charts in this post as well as all the other spreadsheets I keep have been updated with the most recent data. Become a member of Seattle Bubble to get access to the private spreadsheets folder and join our private Slack channel.

I’ve got a few charts to update you with, but let’s start with a few charts that sum up the state of King County single-family listings, inventory, and pending sales.

After five or six years of the same story month after month—fewer listings, more sales, soaring prices—the market has definitely turned in 2018. Pending sales are now on the decline and inventory is rising rapidly. Let’s see what this looks like in charts.

First up, here’s a chart of new listing absorption. This is a simple look at the ratio of pending sales to new listings. If more homes are going pending in a month than there are being listed, this ratio goes above 100 percent, which is obviously not great for buyers.

King Co. SFH New Listing Absorption Rate

As of August, the absorption metric has dropped to 77 percent—on par with where it was in late 2010. This rate was at its all-time highest level just last December at 162 percent. In past years, the absorption rate typically hits its lowest point of the year in June or July and begins climbing in August or September. If the rate doesn’t spike back above 100 between now and December, the market could get really interesting.

Keep in mind that the pre-2008 data is not directly comparable, since in July 2008 the NWMLS changed how they define “pending sale” to include more sales.

Next up: a comparison of total on-market inventory growth through August for each year:

On-Market Inventory Growth Through August

Since last December was the all-time low for on-market inventory it’s not too surprising that this year set the record for the largest percent gain between December and August. Still, that is a huge difference.

Next, here’s a yearly comparison of the total number of new listings just in the month of August:

Total New Listings in August: 2000-2018

And here’s a broad look at monthly new listings since January 2000:

New Listings 2000-Present

Even though on-market inventory is climbing like crazy this year, the number of new listings isn’t hitting new records at all. This means that most of the increase we’re seeing in inventory is from a decrease in pending sales.

Finally, here’s a simple chart that shows the difference between new listings and pending sales. While the first chart in this post is new listings divided by pending sales, this one is new listings minus pending sales:

New Listings Less Pending Sales 2000-Present

This year is the first year since 2010 that this measure has been above zero every month between January and August. It seems that we may have finally hit some kind of tipping point in the hot market.

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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.

138 comments:

  1. 1
    ohd1122 says:

    I think it’s that last chart that hits home for me that while this market may be turning, it still has a long way to go in order to be considered “normal”.

  2. 2
    David says:

    Pretty clear that the issue here is demand drying up. Why that is is anyone’s guess (some combination of interest rates and maybe unaffordability finally catching up?). It’s interesting to look at these charts against the YOY change in median SFH price: https://seattlebubble.com/blog/wp-content/uploads/2018/07/KingCoSFHPrices_2018-06.png. The inverse proportions in the last chart is stark.

  3. 3
    Matt P says:

    I was thinking about leaving a comment on the old post letting people know there’s a new one, but then I thought it better to just leave them to it.

  4. 4
    Eastsider says:

    We have had so called ‘pent-up demand’ in the past few years driving up prices. Will we have ‘pent-up supply’ going forward driving down prices? That is the $64,000 question.

    Interestingly, Tim wrote a piece on pent-up demand vs pent-up supply almost a decade ago –
    https://seattlebubble.com/blog/2009/04/09/which-is-larger-pent-up-demand-or-pent-up-supply/

  5. 5
    ronp says:

    Yay, a welcome slowdown. HQ2 has done in the SEA single family home market for a few years, then when the recession hits in 2020 we won’t freak out too much when when the average sales price drops another 5%.

    A tapered slowing is better than a sudden drop I say.

  6. 6

    RE: Eastsider @ 3 – Good find, and part of the last paragraph sort of fits in with the discussion at the end of the last thread:

    Admittedly, this is a rather coarse method of investigating the issue of pent-up demand and pent-up supply, but it’s probably the best we can do with the limited hard data that is available

    I would actually disagree with the first part of that article, in that it’s a bit simplistic and dismissive. I think the point Tim was trying to refute was that lower sales one year get deferred to later years. That clearly happens with cars, because cars eventually wear out. Does it happen with buying houses and condos? Probably to some extent, but this is where I agree with you (Eastsider). All those down years where people weren’t buying probably did contribute to the past few years sales activity. Was that more than the effect of Amazon bringing people in? I sort of doubt it, but it was undoubtedly contributing to driving up prices some.

  7. 7

    By Matt P @ 2:

    I was thinking about leaving a comment on the old post letting people know there’s a new one, but then I thought it better to just leave them to it.

    I’m one of those affected by the name/email address/website data not automatically being filled in, so I leave Internet Explorer open just for this site. It auto-fills for me and I don’t close it all that often. But with the count in the other one getting up over 700 comments I was checking from time to time.

  8. 8
    Joe says:

    Tim’s numbers are only through August. The September stats are going to be an eye-opener. My data shows Seattle inventory growing 10% per week.

    Anybody who foresees a need to sell over the next five years should be selling now! Buyers, my advice is to wait things out to see how low it goes. You could lose a quick $100,000 in a matter of months. Per Seattle Times, anybody who bought 3 months ago is already down $70,000.

  9. 9
    Accidental gentrifier says:

    I moved here 2 1/2 years ago from a rural mid Atlantic state. I bought a house right away (Summer 2016) as the market was getting tight fast – very low inventory in my price range of around $450-$500K and interest rates were at their lowest point.
    If I were to buy my same house now, at the price it is listed for (a neighbor is selling a similar house), with a similarly minimal down payment, at current interest rate I’d still be paying about $1000 more per month. It would be $1000 more than renting. It would not be worth it.
    As long as rates keep going up prices will keep going down. If I moved here today I wouldn’t be buying. I’d be renting. I’d be waiting the cycle out until it’s clear that interest rates will begin to go down again. Then I would buy (because I’ve been waiting) likely at a low price with anticipation to refinance in a few years.
    Bottom line: It’s possible we got away with massive property appreciation rates because mortgages were super cheap for so long. If the rates aren’t going back down under 4 percent anytime soon I’m thinking there will be a very slow but continual price reduction for several years. This is mostly conjecture but what do you all think?

  10. 10
    str918 says:

    RE: Accidental gentrifier @ 9 – I tend to agree, all things being equal (i.e. not accounting for economic downturns and such).
    We just bought a house fairly recently and it was clearly a stupid financial decision in the short- to mid- term at least. I’ve calculated the price it makes sense to buy for (compared to renting); then got a house for ~12-14% more in a rushed decision (at list price, so even making an offer was stupid; d’oh). When I did the math again it was clearly an idiotic decision, I expect those 12% are gone in the short term at least, so we’d have to stay here for a while for this to make sense (not that I’d mind…), or absorb the losses if we decide to sell.
    I suspect those 12-14% are basically the YoY growth from last year and the rate hikes, combined. At least in my situation, it generally made sense to buy in 2017, but barely made sense to buy in 2018. So there you go… if it’s similar for many people, no wonder sales went off the cliff.

  11. 11

    By Joe @ 8:

    Anybody who foresees a need to sell over the next five years should be selling now! Buyers, my advice is to wait things out to see how low it goes. You could lose a quick $100,000 in a matter of months. Per Seattle Times, anybody who bought 3 months ago is already down $70,000.

    I don’t believe you have the ability to predict the next five years or even five weeks, but I do agree with you that things can change quickly. And that’s particularly true at the very local level. Ignoring median changing, the number of active listings in a given area can change quickly, making a quick sale less likely. Actually I had that happen once during a much better market. I was following the client’s market for about 6 months prior to his listing date, and there was nothing similar coming on the market. Then when we listed two similar units came on the market the same week. We still received multiple offers, but not as many as I was hoping for.

  12. 12

    By Accidental gentrifier @ 9:

    If I were to buy my same house now, at the price it is listed for (a neighbor is selling a similar house), with a similarly minimal down payment, at current interest rate I’d still be paying about $1000 more per month. It would be $1000 more than renting. It would not be worth it.
    As long as rates keep going up prices will keep going down.

    This is actually a good example of change in demand. There are two factors mentioned in this post. The first is rising prices and the second rising interest rates. Both would possibly move this poster into a position of not being a buyer today, and tend to result in fewer houses being sold, but they are different.

    The first, change in price, merely reflects what the particular buyer is willing to pay, but the prices going up do not reflect a change in demand, they only show part of the demand curve. As prices rise, fewer and fewer people are willing to buy, in part due to substitution (renting in this case). That’s the demand curve.

    The second, a change in interest rates, reflect a change in the demand curve. At the same price for sale fewer buyers are willing to buy because of an external factor. That’s a change in the demand curve. Other things that change the demand curve would be things like employment levels and even pregnancies.

    Both changes would tend to reduce the quantity sold, but only one is a change in demand.

  13. 13
    Justme says:

    News you can use: The TNX (10 Year Treasury Index) spiking is up sharply today, it is up 33 bips. The 10T UST rate is 3.079% right now. That will put some upward pressure on mortage rates.

  14. 14

    From My Kent Hill Periscope

    Still no open houses [zero] at my 140 unit gated HOA, and all Summer too [Autumn begins Sep 23]. the modular home price spike is really weird lately…S-crow first spotted it. My property tax assessment from 2017 and 2018 [40% structure assessment increase] confirmed it. Mostly new homes with more cash down and tighter lending are the bulk I see listed….a sprinkling [compared to 2017] of used homes [stick] are open house outside my HOA community, some with issues [like locations on busy/noisy streets, etc]. Now, with the price spike identified on modular, I see likely now why the home insurance companies for modulars had a big shake up lately “with doubling in monthly cost and insurance companies dumping coverages on modulars”], the liability on structure has vastly changed making risk much higher. BTW, I negotiated my insurance with Bremerton Foremost insurance [I worked with a great sub-contracted Farmers agent, ask me who he is if you need his name]…but went through like 10-15 agents before some one finally struck a contract and I’m a Toastmaster too…LOL. It was like pulling teeth, I pity banks trying to it with less skilled communicators.

    Not like 2017 at all [we had like 10-15 open houses last year]. I;m really excited to see the 3rd Qtr long-term federal treasury rates at the end of the month….this should help focus our crystal balls. This MAGA is great with lower taxes and fair trade, but a quagmire in specific issues, like lending acceptance windows with higher rates. No more Quantitative Easing, we’re on our own now, its completely different.

  15. 15

    One other factor that could be causing rising inventory is the McCleary related real estate tax increases, which I believe hit Seattle and some parts of King County harder than others. Unfortunately this link doesn’t show the increase as a percentage, but the increases in many areas are significant.

    https://www.seattletimes.com/seattle-news/politics/property-tax-qa-why-your-king-county-bill-is-going-up-so-much-and-where-is-the-money-going/

    If sellers and their agents don’t account for this in pricing they could have problems selling, and thus need a price reduction and/or not sell. It would be just like the situation where a condo significantly increases its dues, or assesses a special assessment. Sellers don’t tend to react to that in their pricing, but buyers do! And until the sellers do react, sales will decrease.

  16. 16

    RE: Kary L. Krismer @ 15
    More Unknown Rattle Snakes to Throw Into the Chicken Coop?

    https://www.bloombergquint.com/global-economics/2018/09/18/china-cuts-u-s-treasury-holdings-as-trade-war-starts-heating-up#gs.=gYehHQ

    I hear Japan is pulling out of America Treasuries too….trade swords are up and the fight begins….

  17. 17
    Justme says:

    RE: Kary L. Krismer @ 15

    Let’s look at the published Seattle numbers a bit more carefully here

    2014: homevalue=326000 tax=4140
    2018: homevalue=509000 tax=5904

    509/326= 1.561, the home value increased by 56.1%
    5904/4140= 1.426, the property tax increased by 41.6%

    Read that again. It was the home value that rose, not the property tax rate. The property tax rate was effectively lower in 2018 than in 2014. Are we supposed to feel sorry for these the homeowners? All the poor-grandma stories are just propaganda from the ultra-wealthy homeowners that want special treatment for all their riches. Boo hoo.

    Reference: The numbers are from the graphic on top of this article

    https://www.seattletimes.com/seattle-news/politics/property-tax-qa-why-your-king-county-bill-is-going-up-so-much-and-where-is-the-money-going/

  18. 18
    Longtime Listener First Time Caller says:

    To this moment, one third of this thread’s posts belong to Kary, and none of them are worth reading.

  19. 19

    RE: Kary L. Krismer @ 15
    Thanks Kary

    I assumed the stick home property taxes weren’t like 40% increase…I was wrong, based on your article [thanks] a smaller sample size from SB [or bad blog data?]…GOOD GOSH….we’re all apparently on the sinking modular Titanic for property tax spikes. Horrifying.

  20. 20
    Jake says:

    “Anybody who foresees a need to sell over the next five years should be selling now! Buyers, my advice is to wait things out to see how low it goes. You could lose a quick $100,000 in a matter of months. Per Seattle Times, anybody who bought 3 months ago is already down $70,000.”

    @Joe, I’m not sure that last sentence is accurate. The median price is down $70k, but did average price per square foot go down? If not, then that is not the same thing as losing $70k on average. The drop in median price is obviously telling, but that doesn’t mean the price of houses has actually dropped quite yet based on just the median price dropping.

  21. 21
    Webinator says:

    By software engineer at 14:
    “Now, with the price spike identified on modular, I see likely now why the home insurance companies for modulars had a big shake up lately “with doubling in monthly cost and insurance companies dumping coverages on modulars”

    Hi guys,
    I’ve been reading your comments for a while now. As I am looking at options for my three new stubbed lots in Burien under the flight path, I am interested in insurance considerations for modular vs. stick-framed homes. Software engineer: Should I just call Bremerton Foremost to get the full story on this liability shift?

    I have also been crunching my own numbers, graphing King County price trends, and reading for the past 5 years to make sense of this cycle. Here are some takeaways:
    1) In “The Secret Life of Real Estate and Banking,” Phil Anderson (published 2008) makes the case that real estate credit collapses occur regularly in our country, and elsewhere. Since the first federal sale of land in 1800, the collapses have occurred approximately every 18 years. Per his thesis, this slowdown we are experiencing might be what he calls a “mid-cycle economic slowdown” driven by the roughly decadal business cycle, vs. by a collapse of overextended credit sources leveraged on marginally-profitable real estate purchases.

    2) Our run-up in SFH prices has largely coincided with cheaper cash. The excellent graph that Tim produced in 2007 shows an asymtotic rise in KC SFH prices:
    https://seattlebubble.com/blog/2008/02/19/king-county-home-prices-1946-2007/

    What this graph mostly shows is the change in the cost of a mortgage. When you run the numbers, you see that mortgage prices are our anchor. As an example of this: when we collapse, we fall back to an inflation-adjusted median mortgage payment of ~$1350/mo. (2007 US$). So it seems to me that analysis of this question of how high/low we can go and when is best answered in terms of the constituent pieces: lending rates, wages, and–to the extent that limited supply tends to shut out lower wage buyers more–volume, particularly since all three are fairly well squeezed into one end of their respective spectra. Viewed from another perspective:
    The median KC SFH price going forward can only go up if 1) wages go up, and/or 2) interest rates and 3) volume go down. And considering that we are already low on 2 and 3, this leaves wages. And wages, at least for the upper percentiles that are able to buy, are relatively high.

    My conclusion is that Anderson is likely right: banks have not yet been sufficiently unleashed yet, so their final act in this cycle is yet to come: likely 2024-2026. We may see a temporary slowdown in demand here through 2019, black swan events aside. But the effect of loose lending in this cycle may be dampened by interest rates rising, or at least not falling. Supply volume seems fairly steady with little room to fall further. Wages could go up. As some like to say: “its all about jobs.”

    Thanks for all the time and effort you have all put into these comments. And thank you Tim.

  22. 22

    By Longtime Listener First Time Caller @ 18:

    To this moment, one third of this thread’s posts belong to Kary, and none of them are worth reading.

    Only to you because you don’t have a reading comprehension level high enough to understand what I’m saying. That was proven in the last thread.

    And as long as we’re keeping count, three posts by you this week, none of which were worth reading, and two of which were complete nonsense and misleading at best.

    Troll much, troll?

  23. 23

    By Justme @ 17:

    RE: Kary L. Krismer @ 15

    Let’s look at the published Seattle numbers a bit more carefully here

    2014: homevalue=326000 tax=4140
    2018: homevalue=509000 tax=5904

    509/326= 1.561, the home value increased by 56.1%
    5904/4140= 1.426, the property tax increased by 41.6%

    Read that again. It was the home value that rose, not the property tax rate. The property tax rate was effectively lower in 2018 than in 2014.

    That’s a point I’ve made many times. The bulk of the real estate tax in Washington is not directly based on a rate based on value, but instead the rate is determined after all the properties are valued. Thus if all the properties doubled in value, the tax rate would be cut roughly in half–subject to something like a 3% total increase in total taxes collected.

    But there are other portions of the taxes such as for schools and fire departments that do increase proportionately with value.

    And finally, another point I’ve made–we’re in a transition year with McClearly, where the school portion is currently the new system and in some areas part of the old, so next year the total taxes should decrease, making the rate increase comparison you’re making now even less.

    Still, even a 30% increase in taxes would affect buyers. And that was my point–not to claim that we should feel sorry for the property owners.

  24. 24

    Ritzy Seattle Crab House Marina Restaurant Going Out of Business Next Week

    I enjoyed their bar steak happy hour menu….reasonable prices. Gone now. New replacement restaurant?

    https://www.trumba.com/eareg.aspx?ea=Rsvp

  25. 25
    Justme says:

    RE: Justme @ 17

    The Q/A section of the ST article (not the same as comment section) is worth reading; it has more facts than the main article with its poor-grandma propaganda stories.

    Notable is the item that explains why there is a jump from 2017 to 2018. Readers should note that between 2014 and 2018, the property tax RATE has DROPPED overall, but there is a dollar-jump in 2018 that will reverse some in 2019, for the same property value. Other notable Q/A items is the stuff about age 57+/low-income relief.

    But the upshot is that Washington State and Seattle effective property tax RATES are on a downslope over time. So the tax rate is NOT increasing, it is decreasing. That is not stopping the propagandists, of course.

    ——————————————————

    Q: Why is the bite so big for 2018?

    A: While voter-approved levies and rising home values play a significant role, the biggest factor is a boost in spending on public schools.

    The Legislature passed the plan last year in an effort to comply with the state Supreme Court’s 2012 McCleary ruling, which found the state has shirked its constitutional duty to pay for public schools.

    The solution that lawmakers came up with included a so-called property-tax swap, which increases the state’s property-tax levy for schools to $2.70 per $1,000 of assessed value, up from $1.89 in 2017. The plan also will reduce local school levies, thus ensuring state dollars fund the full cost of everything deemed basic education.

    But here’s the twist: Lawmakers raised the state tax for 2018, while delaying the reduction in local levies until 2019. That means everyone gets a tax increase this year.

    Also — and this gets in the weeds — the additional state schools tax was written into law as a fixed-rate increase, meaning the tax rises directly with every property’s assessed value. That’s a change from past practice, and it required a four-year suspension of a law that limits increases in overall state property-tax collections to 1 percent per year.

    “The amount you are going to pay is now tied to your assessed value — and it will be that way for four years,” said Snohomish County Assessor Linda Hjelle.

    In King County, the Legislature’s tax increase accounts for about two-thirds of this year’s increase in property taxes, according to the assessor’s office.

    ———————————————————-

    UPDATE: Some of the information here overlaps or is tangential to what Kary posted in NN above. Kary, I like it best when you post specific, comprehensive explanations than just saying “it”s McCleary”.

  26. 26

    Chinese Air Pollution and Environmental Toxic Waste [i.e., Lithium Batteries for electric cars]

    Glossed over by Clinton’s WTO …the like puny percent of pollution America adds in comparison to China is the real environmental concern forcing us to Chinese Solar Cell systems on real estate costs? LOL…what a complete unscientific joke. Reduce OVERPOPULATION now instead, end the alleged carbon footprint concern over American cars [its completely ludicrous, owning dogs is far worse].

    https://www.breitbart.com/tech/2018/09/18/google-vows-to-fight-u-s-air-pollution-while-censoring-data-on-chinese-smog/

    Our NWO friends [foes?] at Google trying to brainwash us all?

  27. 27
    Eastsider says:

    RE: Justme @ 17 – On property tax increase, you are missing the point. Most homeowners are not investors. They want stability and predictability. A 40% increase in property tax in 4 years is not something that they can plan for. Sure a new homebuyer has to account for taxes and expenses. But the vast majority of existing homeowners do not plan for such hikes far beyond inflation in their financial planning. Homeowners at the margin can’t afford the increased tax. (Similarly a doubling of gas prices will affect motorists at the margin.) They are ordinary people, not your poor-grandma or ultra-wealthy homeowners.

  28. 28

    RE: Eastsider @ 25
    Yes Eastsider

    They have no brake pad left [or credit for that matter] for additional home owning costs….I see plenty of fairly new used homes with paint falling off them in Kent. Soon a foreclosure statistic at a theater near you?

  29. 29
    Justme says:

    RE: Eastsider @ 25

    I refer you to my later post (23) RE: Justme @ 23

    Respectfully I will disagree. Of course people like predictability and non-rising taxes. They also like property value windfalls, though. If you are low income or 57+, you can get relief. Everyone else pay up. And by the way, did you notice what I said about 2018 being a temporary bump and 2019 being lower? And effective property tax rates actually dropping? And how some of property taxes are not even a flat rate, but prorated as propval/totalpropvalacrossstate?

  30. 30
    uwp says:

    By Kary L. Krismer @ 15:

    If sellers and their agents don’t account for this in pricing they could have problems selling, and thus need a price reduction and/or not sell. It would be just like the situation where a condo significantly increases its dues, or assesses a special assessment. Sellers don’t tend to react to that in their pricing, but buyers do! And until the sellers do react, sales will decrease.

    This (combined with the interest rate increase) is a big cause I think, and it doesn’t get the same frenzy of attention around here that rising inventory does.

    If agents in late spring and early summer were using comps from Jan/Feb closings, they were missing interest rates moving half a percent (or more), property taxes rising 20%, and a (moderate) rise in inventory. The market went from everything in the sellers favor to a mixed bag, but people were still listing at the earlier comps.

    A median Seattle house that sold in Jan/Feb for 800k was probably 10% cheaper by mortgage payment than the same house listed in May at the same price. And suddenly, you have more than 1 option to choose from.

    Prices may be up “only” 4% YOY for Seattle, but mortgage payments on that same home are up about 15% YOY, which is roughly the same as the YOY rise 2016-2017.

  31. 31
    Justme says:

    We need to get back on track with bubble talk: TIm’s data in this thread shows that absorption rate is back to 2010 levels, which is quite a shocker. It should be noted that

    Monthly absorption rate = Monthly new pendings / Monthly new listings

    No, absorption is not a PERFECT measure of anything but absorption. But low absorption shows that the balance of supply and demand is tilting quite notably in the direction of more supply than demand for the current set of offerings/listings/prices with the current set of interested buyers, as of August 2018.

    Thanks Tim, for coming back with data, in between fun trips to the Multiverse. I would like to go to a Multiverse where NWMLS data was free and open to all.

  32. 32
    wreckingbull says:

    RE: Justme @ 27 – A property going up in value does not mean anything until a gain is realized, and for many, especially those who are buying homes for the right reasons, this is decades in the future.

    Maybe we can at least agree that residential property taxes are a piss-poor way to fund the government. While they may be augmented by an income tax someday, they won’t ever go away.

  33. 33
    Justme says:

    RE: wreckingbull @ 32

    I just can’t feel very sorry for people who complain that they must pay about 1% of the home price appreciation in taxes each year. And for 57+ seniors and low income persons, there are plenty of programs to help them:

    https://www.kingcounty.gov/depts/assessor/TaxpayerAssistance/TaxRelief.aspx

    Exemptions: More than 26,000 qualified seniors and disabled persons have yet to register for the exemption.

    Deferrals: Only 1 in 100 of those eligible for deferrals are currently enrolled.

    Those who have not should get off their duffs and apply. Otherwise I say they are just whining and being used for propaganda by the ultra-wealthy,

  34. 34
    wreckingbull says:

    RE: Justme @ 33 – Respectfully, I think you are suffering a bit from the notion that home ownership is only for tech bros and grannies. As Eastsider points out, it is middle class families who purchased their homes before they were ridiculously priced who get hurt the most with our Kafkaesque taxation methods. We still want plumbers, mechanics, roofers and teachers in King County, right?

  35. 35

    By Justme @ 31:

    We need to get back on track with bubble talk: TIm’s data in this thread shows that absorption rate is back to 2010 levels, which is quite a shocker. It should be noted that

    Monthly absorption rate = Monthly new pendings / Monthly new listings

    No, absorption is not a PERFECT measure of anything but absorption. .

    I much prefer using closed sales over pendings, because pendings can fall out and also have duplicates if double-listed (or if it flips and goes back pending???). Also, I prefer to use total actives rather than new actives, but I think you’d need to do that in any event if you were using closed sales.

    I suspect by using new listings the numbers Tim’s reporting above really misrepresent the markets in 2009-2012 when inventory was high and sales were low.

  36. 36
    N says:

    @ Jake 20 – Interesting idea you have suggested. The medium price is down $70k but does that equate to the average home price being down?

    I think it’s pretty rare that you would have medium and average trending in opposite directions, although as Kary has pointed out a change in mix can cause some differences. And of course these are averages and specific neighborhoods will vary. In the Seattle market Average price doesn’t seem to be widely reported.

  37. 37

    By wreckingbull @ 32:

    RE: Justme @ 27 – A property going up in value does not mean anything until a gain is realized, and for many, especially those who are buying homes for the right reasons, this is decades in the future.

    Maybe we can at least agree that residential property taxes are a piss-poor way to fund the government. While they may be augmented by an income tax someday, they won’t ever go away.

    I can see where you’re both coming from. The RE tax in Washington is roughly 1% of value, and if someone’s property value increases from $200,000 to $1,000,000 it’s a bit hard to feel sorry for them having to pay $10,000 in tax each year when they’re sitting on a $800,000 gain. Worse things can happen, right? But on the other hand, having your tax raise from $2,000 to $10,000 while you own the property is not exactly a pleasant experience, particularly if you have no desire to move.

    And before anyone else throws out the California “solution” that has a lot of problems. Washington’s system of allowing some lower income seniors a reduction or deferral helps some.

  38. 38

    By Jake @ 20:

    “Anybody who foresees a need to sell over the next five years should be selling now! Buyers, my advice is to wait things out to see how low it goes. You could lose a quick $100,000 in a matter of months. Per Seattle Times, anybody who bought 3 months ago is already down $70,000.”

    @Joe, I’m not sure that last sentence is accurate. The median price is down $70k, but did average price per square foot go down? If not, then that is not the same thing as losing $70k on average. The drop in median price is obviously telling, but that doesn’t mean the price of houses has actually dropped quite yet based on just the median price dropping.

    It also ignores the point I’ve made repeatedly about bidding wars driving up the sales price on some properties, and thus the median. What has gone away some percentage change to sell your house for more than it is worth, but that doesn’t mean that others have lost value.

    Now perhaps those bidding war winners have lost out, if in doing so they paid more than the property was worth. That that’s hardly “anybody” as claimed in the quoted material. In fact you could have won a bidding war without having paid more than the property was worth. Quite frankly I’d worry more about those who bought without an inspection contingency than those who won a bidding war, particularly if an appraisal was required by a lender and it appraised.

  39. 39
    LessonIsNeverTry says:

    By Kary L. Krismer @ 15:

    One other factor that could be causing rising inventory is the McCleary related real estate tax increases….
    https://www.seattletimes.com/seattle-news/politics/property-tax-qa-why-your-king-county-bill-is-going-up-so-much-and-where-is-the-money-going/

    Thanks for this link Kary!

  40. 40
    LessonIsNeverTry says:

    By str918 @ 10:

    RE: Accidental gentrifier @ 9 – I tend to agree, all things being equal (i.e. not accounting for economic downturns and such).
    We just bought a house fairly recently and it was clearly a stupid financial decision in the short- to mid- term at least. I’ve calculated the price it makes sense to buy for (compared to renting); then got a house for ~12-14% more in a rushed decision (at list price, so even making an offer was stupid; d’oh).

    Sorry to hear you may be in a tough position with your recent purchase but I admire you being so honest about the situation! Hopefully you’ll be there long term and any short term fluctuations will be meaningless.

    Renting has been better than buying, based on historical numbers, for at least three years (assuming you take into account forgone capital gains on downpayment investment, closing costs on future house sale, new tax laws, etc). However, that didn’t matter until recently because appreciation was blowing historical analysis out of the water. Three years of frenzy…. it could be like a popping balloon but I still think it will be more like early nineties than 2008, unless we get a heavy recession in 2019.

  41. 41
    Erik says:

    RE: wreckingbull @ 32 –
    Wrong again. If you have a lot of equity, you can get a heloc to sustain your cashflow.

  42. 42

    By Erik @ 41:

    RE: wreckingbull @ 32 –
    Wrong again. If you have a lot of equity, you can get a heloc to sustain your cashflow.

    Or once you get to a certain age a reverse mortgage, but be careful.

  43. 43
    Justme says:

    RE: Webinator @ 21
    RE: Erik @ 41

    Hey Erik, there’s another disciple of the 18-year real-estate cycle on this thread! And he even has provided a reference on the theory, which I think we have been missing.

    Webinator, meet Erik, meet Webinator.

    >>1) In “The Secret Life of Real Estate and Banking,” Phil Anderson (published 2008) makes the case that real estate credit collapses occur regularly in our country, and elsewhere. Since the first federal sale of land in 1800, the collapses have occurred approximately every 18 years. Per his thesis, this slowdown we are experiencing might be what he calls a “mid-cycle economic slowdown” driven by the roughly decadal business cycle, vs. by a collapse of overextended credit sources leveraged on marginally-profitable real estate purchases.

    DISCLAIMER: I’m not a believer in 18-year cycle theory. Just feeling humorous today. I know I’m going to regret this post ;-).

  44. 44
    Eastsider says:

    RE: Justme @ 29 – Let me explain it again. I bet fewer than half of homeowners in KC can afford their homes at today’s prices. Many can ill afford to come up with another $1,000 to pay for the property tax hike. They are not your low income or 57+ residents. They are the middleclass families.

    For example, Seattle’s median household income is $80k and median home price is $800k. Using NerdWallet’s home affordability calculator, a median household with no debt can afford a $416,643 house with a $100,000 down payment! Now tell me where they can find another $400k to afford their own homes. Or another $1,000/yr for the property tax hike.

  45. 45
    kenmorem says:

    RE: Webinator @ 21
    whoa, is this erik’s twin brother?

  46. 46
    ess says:

    As the housing market slows down, what will happen with the rental market?

    – As per rents?

    -As per new rental units as well as all housing being built?

    -As per more good renters staying in their rentals rather than buying as they don’t perceive buying to be as good as an investment as renting. Added to that – what kind of housing will they choose – single family houses over apartments, especially as they mature, marry and have kids. Will the increase of long term renters have any impact on the rental market in the area, especially on the rent of “starter houses” which have not been constructed in this area for some years.

    -Will the two large companies that buy houses and rent them swoop in and buy more “starter” and mid level houses if the market in Seattle gets softer? They may still the cash to afford to buy when buyers can’t because of increased interest rates.

    Of course part of the equation is the continued population growth of the Puget Sound area, as well as the economic vitality of the area. It will be interesting to see how it all plays out.

  47. 47
    Erik says:

    RE: Justme @ 43
    I’ve posted references on here multiple times.

    I don’t get it. 18 years has been the most common time interval between land peak values in America for the past 200 years. I’m a data guy and that’s what the data says so I believe it.

    Webinator is my twin if you consider my twin someone that reads and understands data. Based on your comments, I think you probably use more than data to make decisions. I just look at data and purposely filter out the nbc/Fox News/CNN propaganda machines.

  48. 48
    Justme says:

    RE: Eastsider @ 44

    A. One thing is to worry about the effect of housing inflation on property taxes for existing homeowners. I think it is clear what I think they should do, either apply for relief, if qualified, or pay up.

    B. Another thing is to worry about housing inflation with respect to the ability of people to buy houses (AND pay the property taxes on those expensive houses). I thought it was clear what my position is. STOP MAKING BUBBLES, damned Federal Reserve and damned Congress-enacted bailouts. DEFLATE the bubble and leave it alone.

    >>Now tell me where they can find another $400k to afford their own homes.

    They already bought. They don’t need “another 400k” to afford the home they already bought before the house went up 400k. Come on, man, that is not a valid argument by any stretch of the imagination. See also (B) above. Let’s get the damned prices down.

  49. 49
    Erik says:

    RE: ess @ 46
    Hey ess, last time we conversed, you were gonna read “The housing boom and bust” by Thomas Sowell. Well, did you read it? What did you think? Seemed like a pretty accurate account of what happened. Others on here seem to have been more confused than me about what exactly happened. Probably because they get their information from the news, which is slanted for their political agenda.

    Deerhawke, read the book I cited above and point out which facts you refute. I’d love to hear the argument against it, but I think if you look at it honestly, you’ll have to agree.

  50. 50
    Justme says:

    RE: Erik @ 49

    How did Erik’s post just turn yellow? Is this because of his status as the special socio-pet of the petit-bourgeois?

  51. 51
    ess says:

    By Erik @ 49:

    RE: ess @ 46
    Hey ess, last time we conversed, you were gonna read “The housing boom and bust” by Thomas Sowell. Well, did you read it? What did you think? Seemed like a pretty accurate account of what happened. Others on here seem to have been more confused than me about what exactly happened. Probably because they get their information from the news, which is slanted for their political agenda.
    —————————————————————————————————————————-

    Erik – I do believe that I mentioned here at the time that I read the book. Although some of his arguments are specific to the events of the great real estate melt down of the last ten years, much of it is still relevant, especially regarding government interference in the housing market.

    As I understand it, his regular commentaries are coming or have come to an end, as Sowell is in his 80s.
    A shame, because so often he is right on the mark.

    Again – thanks for the heads up on that book. He wrote a basic economics text, and in it he dedicated two or three chapters to the follies of rent control, which still remains the most powerful set of arguments against rent control I have encountered in my research on the subject.

  52. 52
    Eastsider says:

    By Eastsider @ 842:

    30yr mortgage rate hits 52-week high and 10yr treasury yield spikes to 3.04% this morning. We may soon witness 10yr yield at level not seen since 2011. Will the economy cope with higher interest rates? The stock market appears to think so as it also moves higher this morning.

    I wrote the above just yesterday and we are already there… interesting time for housing…

    Mortgage Rates Knocking on 5% Ceiling
    http://www.mortgagenewsdaily.com/consumer_rates/875048.aspx
    Mortgage rates are in bad shape. At some point in the past 3 days (depends on the lender), top tier 30yr fixed rate offerings hit their highest level in 5 years, then 7 years. For the first time since 2011, the most prevalent top tier rate is 4.875% (meaning a handful of lenders are at 4.75% or 5.0%). If this trajectory holds, the average lender would be at 5% next week.

  53. 53
    Eastsider says:

    RE: Justme @ 48 – “They already bought.” Okay, where do you suppose they find $1k to pay for the property tax hike this year or 40% increase over 4 years? Many family budgets are stretched thin. They simply can’t afford property tax on a $800k house. They never bought a $800k house because their budget did not allow it.

  54. 54
    David says:

    I wonder how much the decreased demand is due to the poor quality of remaining inventory?

  55. 55
    whatsmyname says:

    By Eastsider @ 44:

    For example, Seattle’s median household income is $80k and median home price is $800k. Using NerdWallet’s home affordability calculator, a median household with no debt can afford a $416,643 house with a $100,000 down payment! Now tell me where they can find another $400k to afford their own homes. Or another $1,000/yr for the property tax hike.

    https://seattle.curbed.com/2018/2/2/16965992/seattle-renter-homeowner-household-share

    Nearly half of Seattle households rent; a proportion that is only growing. Why would anyone try to match median household income to median single family house price?

  56. 56
    Eastsider says:

    RE: whatsmyname @ 55 – I believe the proportion of homeowners vs renters was much higher a decade ago. (US ratio is around 60%.) Also, homeowner society is generally better than renter society. Do you prefer to live in a 100% renter city or 100% owner city?

    Btw, most of these homeowners were middle income families when they purchased their homes. The huge tax hike totally upends their finances. That is the point.

  57. 57
    David says:

    By Eastsider @ 56:

    RE: whatsmyname @ 55 – I believe the proportion of homeowners vs renters was much higher a decade ago. (US ratio is around 60%.) Also, homeowner society is generally better than renter society. Do you prefer to live in a 100% renter city or 100% owner city?

    Btw, most of these homeowners were middle income families when they purchased their homes. The huge tax hike totally upends their finances. That is the point.

    The voice of reason from Eastsider. But the people of Seattle could care less who their pet bus-train hurts. It just isn’t in their psyche. A 40% rise in taxes is shocking to most people.

    They pushed the taxable area out just far enough that they can tax far-flung people who will never see a benefit from the bus-train, yet not include so many of them that they could defeat the initiative. Then, later, they will poo-poo those dimwitted folks for not saving for retirement. How can you save effectively if your money goes to projects that do nothing for you? Of course, the mockers will be living in the area that caters to the affluent few who get a cute little train (bus) to ride around in whenever they want.

  58. 58
    Rentin’ says:

    The Tim, you seemed so certain that we were in a bubble last time, yet you’ve seemed reluctant to make a call with our current market. I’m so curious about your thoughts on this if you’d be willing to share them. To me it looks likely to be a bubble, but I am also hoping that’s the case so there’s bias there. I would like to own again but the math just doesn’t make sense at these prices.

    Thank you (and others here) for your efforts in making this information available. Data geeks like me definitely appreciate it.

  59. 59
    B says:

    I’ve been reading this blog for years but have never commented. I have an offer pending inspection on a property. I know it’s probably not a good time to buy but I also found something real close to what I’m looking for (2 bed, Beacon Hill) and planning on living in it for quite a while. That said, it has retaining walls in the front of the house and behind it. I’m worried about landslides. Is this a legitimate fear? I consulted this city map and it seems where the house is, one of the little red spots, not one of the massive red areas. Thoughts? Do I need a special kind of inspector to assess this vs. a regular inspector? Someone who knows earthquake/landslide stuff better?

    listing: https://www.redfin.com/WA/Seattle/3807-14th-Ave-S-98108/home/169849

    city landslide risk map:
    https://www.seattle.gov/dpd/cs/groups/pan/@pan/documents/web_informational/dpdd017622.pdf

    Also, general thoughts on this property and price point are welcome. Everything is still contingent on the offer.

  60. 60
    Justme says:

    My oh my the bubble monger propaganda department has been busy tonight. Now that it has become difficult to deny that median prices are dropping and a downturn is in progress, the propagandists are going back to sowing FUD and tinkering around the edges, planting fake stories and trying to generate demand even at today’s ridiculous prices. Some of the favorite tactics are

    Lie1: Masses of renters descending on Seattle (aka. the Filled If Built fallacy, aka. FIB and BIFF ). Debunked at
    https://seattlebubble.com/blog/2018/06/07/new-listing-absorption-falls-to-a-seven-year-low/#comment-271606

    Lie2: Shortage of good SFH because supposedly many are so ill maintained (that would explain why they are so expensive, SARCASM, yes). No source on that one, just rectal extraction, I suppose.

    Lie3: SFH aren’t actually expensive, it is just that few people can afford them, which creates rental demand (see Lie1/FIB), but never mind, there is big demand from rich people anyway. Even with the Chinese demand gone. So there.

    The strategy is to keep posting variations on the same lies over and over again. And once in a while come up with a completely new lie.

  61. 61
    Erik says:

    RE: Justme @ 50
    Yellow seemed like a good color for the “comment warden.” I realized that these comments have gotten off topic at times and I need to start regulating my authority.

  62. 62

    By Eastsider @ 53:

    RE: Justme @ 48 – “They already bought.” Okay, where do you suppose they find $1k to pay for the property tax hike this year or 40% increase over 4 years? Many family budgets are stretched thin. They simply can’t afford property tax on a $800k house. They never bought a $800k house because their budget did not allow it.

    40 percent over four years would be tough, but again their should be some relief from McCleary next year. Over longer periods of time the increases are partially just inflation. But conversely, I’d note the RTA vehicle tax is an additional burden in some areas.

    But there’s another thing at play too. I know at least one person who felt out of place as values in their neighborhood skyrocketed. They were no longer like any of their neighbors, and this person made a decent amount of money! Nothing you can really do about that, but it’s another thing that might compel someone to sell.

  63. 63

    By David @ 54:

    I wonder how much the decreased demand is due to the poor quality of remaining inventory?

    That has decreased sales the past two years or so, but I really doubt that’s a major issue now. I still think price is a likely factor, although I’ll admit the DOM of the active listings does not support that theory (but that stat doesn’t fit with a lot of other theories either).

  64. 64

    RE: Webinator @ 21

    Call Daniel Wayne Judd, Farmers Insurance Group, 3721 Kitsap Way STE2, Bremerton, 98312….360-447-8106….tell him a Kent modular home owner recommended this agent.

    Be sure to have the stats on your modular available, like Declaration liability limit [big one]…$100-200K should cover it, the higher the liability the higher the monthly cost. Have size of modular, and they reduce costs with “backup” heating for emergencies and prevents mildew damage….my rich’s Stove qualified..the modular appears new, that helps a lot.

    Good Luck.

  65. 65
    Eastsider says:

    RE: Kary L. Krismer @ 62 – The ‘relief’ from McCleary is just a ploy to pacify angry residents. Taxes are still going up many times faster than inflation! Who are enriched by these higher taxes? Special interest groups including Teachers! (Okay, I am being cynical.)

  66. 66

    RE: B @ 59 – I can’t comment on pending listings, but this document might be useful.

    http://file.dnr.wa.gov/publications/ger_homeowners_guide_landslides.pdf

    Also, this would be out of the area of a regular home inspector, although some can spot conditions that would call for further inquiry. Either your inspector or your agent could provide you a referral, but time limits on your inspection may mean you’d need to line things up in advance.

  67. 67

    By Eastsider @ 65:

    RE: Kary L. Krismer @ 62 – The ‘relief’ from McCleary is just a ploy to pacify angry residents. Taxes are still going up many times faster than inflation! Who are enriched by these higher taxes? Special interest groups including Teachers! (Okay, I am being cynical.)

    Ordinarily I’d agree with you, that once a tax goes up it doesn’t go down. That’s why WR has fought temporary increases in the REET so hard. But there are a number of restrictions on how the RE taxes can change, and in dealing with the McCleary issue the legislature seemingly did nothing to deal with transition (either unintentionally or purposefully). So it did create a surge situation on the RE taxes. But we’ll know for sure when tax statements go out next year.

  68. 68
    Eastsider says:

    RE: Kary L. Krismer @ 67 – Yeah, our teachers statewide just got a huge raise this year. Coincidence? The McCleary is simply a pretext to rob taxpayers. In 2016 pre McCleary tax increase, WA spending per pupil is just about the US average according to the Census Bureau.

    Education Spending Per Student by State
    http://www.governing.com/gov-data/education-data/state-education-spending-per-pupil-data.html

  69. 69

    RE: Justme @ 29
    Relief If Your Household Income is Less Than $40K in King County

    Most retirees can’t live on like equivalent $20/hr pay, how could they in Seattle? Social Security checks for retirees average like $1200/MO BTW…pittance too…

    That’s why the retirees are leaving Seattle and other Sanctuary Cities in droves. Did you read the recent Times magazine article on teachers pay in LA? Let’s put it this way, even if its like $100K with retirement and health coverage….they live in poverty 1 bdrm apartments or in NYC share rent with many bunk buddies with $100K+ salaries and Masters Degrees….Horrifying! And you end up with insane school debt forever if you have no scholarships or SUPER rich parents…

  70. 70

    Remember the Movie, “The Blob”

    The horrifying creature that sucked up everything like a vacuum cleaner?

    Amazon is the new “Blob” creature attacking Seattle….now it wants to suck up ma and pa businesses and burger flipping manufacturing jobs too…HORRIFYING!

    https://www.bloombergquint.com/business/2018/09/19/amazon-is-said-to-plan-up-to-3-000-cashierless-stores-by-2021#gs.2qYuqqs

  71. 71
    B says:

    Slept on it. And Changed my mind. Don’t want to live on landslide hotspot. Also hoping market chills out in a year.

  72. 72
    ess says:

    RE: Eastsider @ 68

    And in the chart of spending per state that you provided – check out Washington DC, which has always had one of the highest rates of spending per pupil, but yet their results have been substantially sub par for decades. While there may be a co-relation between amounts spent and results, there are other factors involved (such as parental involvement and their approach to the educational experience) that are much more important, but no one really wishes to acknowledge for various reasons.

    As per the housing and rental market, the increases in salaries for teachers and support staff will result in their increased ability to either purchase their own homes, or pay more rent. So it isn’t all bad news for some.

  73. 73

    By Eastsider @ 68:

    RE: Kary L. Krismer @ 67 – Yeah, our teachers statewide just got a huge raise this year. Coincidence? The McCleary is simply a pretext to rob taxpayers. In 2016 pre McCleary tax increase, WA spending per pupil is just about the US average according to the Census Bureau.

    Education Spending Per Student by State
    http://www.governing.com/gov-data/education-data/state-education-spending-per-pupil-data.html

    McCleary wasn’t about how much was spent, but how spending was established. There was too much emphasis on voter approval of levies, leaving some districts and some students out. The entire decision is rather lengthy and complicated, but I think this paragraph spells it out nicely.

    Our insistence on “regular and dependable tax sources” in Seattle School District focused appropriately on state-provided funding. Id. at 523. Contrary to the State’s view, we rejected special excess levies as “dependable and regular” not only because they are subject to the whim of the electorate, but also because they are too variable insofar as levies depend on the assessed valuation of taxable real property at the local level. Id. at 525. This latter justification implicates both the equity and the adequacy of the K-12 funding system. Districts with high property values are able to raise more levy dollars than districts with low property values, thus affecting the equity of a statewide system. Conversely, property-poor districts, even if they maximize their local levy capacity, will often fall short of funding a constitutionally adequate education. All local-level funding, whether by levy or otherwise, suffers from this same infirmity. In short, the State’s reliance on local dollars to support the basic education program fails to provide the “ample” funding article IX, section 1 requires.

    http://www.courts.wa.gov/opinions/pdf/843627.opn.pdf

    Given the fact that our state constitution requires education funding to be “paramount” it is hard to argue with the result, when you have voters who won’t even fund the operation of fire stations 24/7. (Reference is to Maple Valley).

    Ironically it was apparently Seattle that started the suit, and Seattle is one of the areas being hit hardest even though it is a high value area where funding under levies should not be that difficult.

  74. 74
    wreckingbull says:

    By Erik @ 41:

    RE: wreckingbull @ 32 –
    Wrong again. If you have a lot of equity, you can get a heloc to sustain your cashflow.

    At some point, you volunteered information here on the SB comment section about how the bank repossessed your Everett home. Just curious, was a HELOC involved with that? If so, did it “sustain your cashflow?”

  75. 75

    RE: wreckingbull @ 74
    Trump Did the Same Thing With Casino Foreclosures

    But bounced back to control billions in real estate. Success is measured in trying and failing too…that’s how we learn lessons. Keep trying!

    In Toastmasters leadership training, perseverance is the key.

  76. 76
    wreckingbull says:

    RE: softwarengineer @ 75 – As posted earlier here several times, Trump would have been better off investing his inheritance in low-cost index funds. He could have golfed all day every day and still have been richer today.

    As to HELOCs, they are a financial product that might be appropriate for a very small minority, but in reality just prey on the stupid.

  77. 77

    By wreckingbull @ 76:

    As to HELOCs, they are a financial product that might be appropriate for a very small minority, but in reality just prey on the stupid.

    Nonsense. They are a borrowing tool. Sure they can be misused, but so can regular financing (e.g. refinancing your house to borrow more or sometimes even to just get a better interest rate.)

    The main downside to them is you are encumbering your homestead, which may mean foreclosure but in the event of bankruptcy the less likely sale of your house by the bankruptcy trustee. Conversely, if you use a HELOC to purchase a car, then it is more likely a creditor could execute on the car because it would be unencumbered.

    But ignoring financial crisis situations they are little different than any other loan, and offer considerably lower rates than credit cards. I suspect though you could get a better rate on a non-promotion rate car loan if that is your intended use of funds. Edit: I just checked and BECU is almost 2% lower for a new car loan as opposed to a HELOC.

  78. 78
    Eastsider says:

    RE: Kary L. Krismer @ 77 – I disagree that HELOC is a borrowing tool. When you have to borrow to pay taxes, you have a negative cashflow (Erik – this is directed to you.) It is unsustainable and many HELOC borrowers lost their homes in the last great recession.

  79. 79
    Eastsider says:

    RE: ess @ 72 – Let’s say when spending per pupil is high, teachers union has way too much power. That’s just my opinion.

  80. 80
    Eastsider says:

    Interesting post from Redfin… Seattle (+10.1 pts to 37.1%)

    More than One in Four Home-Sellers Dropped their Price Last Month
    https://www.redfin.com/blog/2018/09/more-than-one-in-four-home-sellers-dropped-their-price-last-month.html

  81. 81
    David says:

    By wreckingbull @ 76:

    RE: softwarengineer @ 75 – As posted earlier here several times, Trump would have been better off investing his inheritance in low-cost index funds. He could have golfed all day every day and still have been richer today.

    As to HELOCs, they are a financial product that might be appropriate for a very small minority, but in reality just prey on the stupid.

    WreckingBull doesn’t understand the concept of ‘rent-seeking’ vs long-term investing activity. Imagine Seattle if Paul Allen just put his money into bonds.

  82. 82
    N says:

    @ Eastsider 78 – Agree completely, negative cash flow is risky. But Eric is on record many times as being a big fan of negative cash flow and doubling down on his market timing beliefs. He isn’t shy about the fact he is cash flow negative on many properties and that is with today’s high rents. If rents crater, well….

  83. 83

    By Eastsider @ 78:

    RE: Kary L. Krismer @ 77 – I disagree that HELOC is a borrowing tool. When you have to borrow to pay taxes, you have a negative cashflow (Erik – this is directed to you.) It is unsustainable and many HELOC borrowers lost their homes in the last great recession.

    I wouldn’t agree with that use either, because it is not self-sustaining. The same issue can pop up with a reverse mortgage, unless maybe there are additional draw rights, because you still have to pay the taxes going forward.

    But just picking some bad use for a HELOC does not mean it not a valid borrowing tool. I could have picked using a HELOC to invest in Bitcoin, which would probably be the worst use possible.

  84. 84

    By Eastsider @ 80:

    Interesting post from Redfin… Seattle (+10.1 pts to 37.1%)

    More than One in Four Home-Sellers Dropped their Price Last Month
    https://www.redfin.com/blog/2018/09/more-than-one-in-four-home-sellers-dropped-their-price-last-month.html

    I’m actually a bit surprised it’s that low, but it apparently isn’t just local stats. That is consistent with my theory that agents/sellers got ahead of themselves and/or did not know how to assess comps that were involved in bidding wars.

  85. 85
    Matt P says:

    HELICs should be illegal. Borrowing based on the paper value of your home just leads to people taking out loans to buy homes as investments driving up the price for everyone which then drives speculation creating bubbles.

  86. 86

    RE: Matt P @ 85 – So would you also make it illegal to refinance for more than they currently owe? I would go along with the idea that you couldn’t deduct that interest on taxes as a MID (as opposed to business expense) for amounts borrowed in excess of what you paid for the property (the IRS has been all over the place on that).

    Seems pretty nanny state to me. I paid cash for my house. That would mean I could never borrow against it even though I am fully aware of the risks and alternatives.

  87. 87
    Longtime Listener First Time Caller says:

    Wow, 86 comments in and nearly one quarter of the remarks belong to Kary. He must save some kind of app. that keeps his rate between .25 and .33 , or maybe he is just a bot?

  88. 88
    Eastsider says:

    RE: Kary L. Krismer @ 86 – So if you paid $400k for your house, and it is now worth $800k. You have paid $150k principle so far and have an outstanding $250k mortgage payment. HELOC allows you to borrow up to $550k ($800k-$250k, for simplicity). You would be borrowing against paper gain. Sure you could sell the house but how many HELOC borrowers are prepared to give up their house? None. In that case, you can spend another $400k paper gain over your $150k principle. But as soon as there is a downturn, your house will be foreclosed. That’s why we have many HELOC foreclosures in every recession.

  89. 89

    By Longtime Listener First Time Caller @ 87:

    Wow, 86 comments in and nearly one quarter of the remarks belong to Kary. He must save some kind of app. that keeps his rate between .25 and .33 , or maybe he is just a bot?

    Other than trolling and counting it doesn’t seem like you have any knowledge or insight to add to this page. Four posts and yet a single intelligent thought expressed.

    Pathetic, but I guess that’s what we get with our education system today. (I just wanted to connect this up to some of the discussion here).

  90. 90

    RE: Eastsider @ 88 – I doubt you could borrow so much on a HELOC, both due to the amount and LTV, but so what? Who are you or the government to say what someone can do with their assets?

    What I will say though is there probably should be tighter restrictions on lenders. I once saw a US Bank representative try to talk an elderly gentleman out of a reverse mortgage and into a HELOC because the bank doesn’t do reverse mortgages. Those are not the same thing, and contrary to Eric’s position I don’t think a HELOC would likely be the best thing for that person (although that’s just a guess). And there are also a number of lenders out there who take advantage of veterans with VA loans on refinances, offering “deals” which are much worse than they should be. Stockbrokers have suitability requirements, why not loan originators? They probably know more about the finances of their clients than stockbrokers.

  91. 91

    This just popped up in my email on the HELOC topic.

    https://magazine.realtor/daily-news/2018/09/20/when-is-it-ok-to-tap-home-equity?tp=i-H43-Bb-2ql-53Kqw-1p-CIlP-1c-53RCJ-28aJNT&om_rid=74676826&Om_ntype=RMOdaily&om_mid=10959

    Not a big fan of Realtor Magazine articles, but this just seems to be mainly report on situations where people think it’s okay to draw on home equity, and who is more likely to think so.

    The most accepted reason is to make a home improvement or repair. But I guess some people here think a person should sit in an house with a leaky roof or go with a cheap replacement rather than be allowed to draw on their equity to get a proper high quality new roof installed. ;-)

  92. 92

    RE: Justme @ 48

    In King County in 2004 over 30,000 Residential Properties sold for $400,000 or less.
    Recent 12 month rolling basis…down from 30,000+ to just over 8,000. The change from just 2004 to 2007 is pretty eye-popping, but in recent times it’s gone to jaw dropping.

    Now consider the flip side of the coin. 1,050 or so sold for $900,000 or more in 2004…jumped to just under 7,400.

    The prices and taxes are not only going up, the lower end is disappearing and the higher end is sucking all of the oxygen out of the air. :)

    Sharing my stats with you by posting them here http://raincityguide.com/2018/09/20/seattle-aint-what-it-used-to-be-home-stats/

    You’ll probably see a lot more in all that than I did. Mostly it just made me a bit sick to my stomach.

    We are officially out of “Correction Phase” today for the first time since January 26th. Unless something changes, that means the Real Estate correction by year end should stop at 15% or so. Spring Bump next year should be lower than this year’s peak but higher than 4th Quarter median or Nov. – Dec. 2018 median.

  93. 93
    uwp says:

    Rain City Guide is still around?

  94. 94
    Ardell says:

    RE: uwp @ 93

    Only when I need a place to put something. :)

    Mostly I answer questions on Quora where I’m creeping up on a million views. But for that many graphs, WordPress works better.

  95. 95
    Dirt says:

    RE: Ardell DellaLoggia @ 92

    Ardell, I don’t follow what you mean here:

    “We are officially out of “Correction Phase” today for the first time since January 26th. Unless something changes, that means the Real Estate correction by year end should stop at 15% or so.”

    Are you saying that prices have been dropping since Jan 26 and they are now stopping a slide? Or the opposite?

    I’m (like probably every one else) trying to understand this market and time my next move. I appreciate your postings and insights!

  96. 96
    steven says:

    anybody notice a bigger market change in downtown/belltown area?

  97. 97
    uwp says:

    By Dirt @ 95:

    RE:

    Are you saying that prices have been dropping since Jan 26 and they are now stopping a slide? Or the opposite?

    She’s talking about the DOW.

  98. 98

    RE: Dirt @ 95

    Sorry. To some extent several of us have an ongoing conversation for years here, so the background of my last paragraph goes back for months and years as to things I have said here before.

    Probably best explained with this link than to rehash it all.

    https://www.quora.com/Will-the-housing-market-in-Silicon-Valley-crash/answer/Ardell-DellaLoggia

    Basically I use The Dow as the forecast for the housing market. Jan was the Dow peak. The Correction happened the first week of February. That predicted the similar correction in the housing market with a 4 to 6 month lag. All of that already happened and is continuing to happen.

    We have been waiting for a direction from the stock and bond markets. I use The Dow, but as you have seen here many others use other indicators, all good. We just use what we are accustomed to using.

    I still think there will be a more major decline in 2020, but I think the 2019 Spring Season will have its bump. The only question is how low will it go before getting to the bump. Past 2019 bump we should be getting full swing into the election cycle and all hell should break loose. Usually that is only expected to happen…or not…in the 8 year cycle. But this 4 year cycle is a more extraordinary time.

    Back in February, given the market indicator and signal from The Dow, we knew it was a signal for sellers who were holding out for more gain to get on market pretty much ASAP after Feb 6. For buyers, it’s not as simple. While the markets have peeked their head above the last peak, today for The Dow and before that for S&P and NASDAQ, that only tells us the correction in real estate will continue until it lops of 10% of the true value. How much deeper it may go depends on the direction of the markets from here.

    If the new peak sustains the answer is different than if it doesn’t. So stay tuned.

    If you give me a better idea of what and where and buying or selling, I can probably go a bit further. The market isn’t reacting the same everywhere locally. Some areas are following the National Trend more closely than others.

  99. 99
    Dirt says:

    RE: Ardell DellaLoggia @ 98

    Yes, that makes a lot of sense now that I follow the subject change! Thanks for the detailed reply. When you say:

    “While the markets have peeked their head above the last peak, today for The Dow and before that for S&P and NASDAQ, that only tells us the correction in real estate will continue until it lops of 10% of the true value.”

    Where does 10% come from? Is that what you expect an average real estate correction to be? Or did I miss something else?

    Looking to sell a condo in 98109 and move farther out where money goes a bit farther. Though, I’m afraid it might be too close to the holidays before I can make it happen this year.

    Thanks again!

  100. 100
    Justme says:

    RE: Ardell DellaLoggia @ 98

    I totally do not agree that Dow Jones DJIA index will directly predict the housing market. Just to get that on the record.

  101. 101
    Justme says:

    Seattle should upzone everything to duplex, too. That ought to put a damper on the fake shortage meme, when EVERYTHING gets duplexed. Woo-hoo!!

    https://twitter.com/ByRosenberg/status/1042889964072034304

    Vancouver, BC, where home prices are at San Francisco-levels, will allow duplexes in 99% of its single-family zones. It’s a relatively small step but blanket rezones are usually off-limits in cities so pretty big deal.

    Here is the original article. 7-4 vote in the city council.

    https://vancouversun.com/business/local-business/making-room

  102. 102
    The Tim says:

    By Justme @ 50:

    RE: Erik @ 49

    How did Erik’s post just turn yellow? Is this because of his status as the special socio-pet of the petit-bourgeois?

    It’s one of the perks of Seattle Bubble Membership. If you want to provide me some token financial support on a monthly or yearly basis, you too can have yellow-highlighted comments!

  103. 104
    Justme says:

    RE: Ardell DellaLoggia @ 92

    Ok, so your barcharts indicates that much of what was sold lately fetched a lot more than what it did in 2007, at the peak of the last bubble. I guess no general disagreement with Case-Shiller there ;-). And that this is another horrible bubble that will cause great damage when it pops. When will FRB ever learn not to blow bubbles? When will fucked borrowers stop buying overpriced houses?

  104. 105

    RE: Justme @ 100

    There’s really nothing to agree or disagree with at this point because I said it would happen and it did. Nothing to dispute there.

    As to the rest of it, I was trying to show you how you are barking up the wrong tree and spent many hours slicing and dicing it for you. Sorry I wasted my time. It won’t happen again. AKA “upzoning” doesn’t help fix what I laid out as the problem. It gives you half a house on half a lot for 4 x the price. Not helping the people who need the help.

    I’m all for attached housing, and duplex is not the remedy, but that is only because most every other major city already had a significant supply of row homes and duplexes and Seattle didn’t. So they are playing catch up.

    But seriously…go back to haggling with Erik and whatsmyname. I’ll go back to talking to people who aren’t just pounding on a table with their fist.

  105. 106
    Notme says:

    well debt and bubbles
    has left you shafted
    and on top of that, ha-ha
    you just got duplexed
    you just got duplexed
    (even your sister)

    -a non-haiku bubble poetry musical adaptation

    (is anyone getting the reference at all? Name that song!)

  106. 107
    Justme says:

    RE: Ardell DellaLoggia @ 105

    I did not mean to disrespect your data collection effort. Not even sure what your data collection comparing 2004, 2007 (etc) and 2018 sales counts as a function of price ranges had to do with anything except saying that “look at those prices going up the last 10 years!”. I had no idea it was in response to me barking up some wrong tree (what tree was that?), or even any tree that had anything to do with you. But whatever. I guess I was not able to decode how your data spoke to anything that had to do with me. What can I say.

  107. 108
    Erik says:

    RE: wreckingbull @ 74
    No, a heloc was not involved that time. I didn’t even know what a heloc was. I bought an old fixer without any money just out of college. I was making $16/hr when I bought it, so I was poor and didn’t have any idea what I was doing. It was a hard lesson to learn, but I think I’ve really turned things around since then.

  108. 109

    RE: Dirt @ 99

    Hurrying up vs doing it 4 months ago is not really an issue. Looks like 4 months of inventory there right now. You might be better off waiting until some of those Actives sell or give up. February usually one of the better months, but depends on what builds up by then. January may be better if some people pull their listings waiting for Spring. Take a read around Jan 5 and see what’s happening.

    A few under priced ones sold quickly recently, but my guess is they were pricing low to sell high and got caught with their pants down.

    Unless you have an exceptional product and really want to move to wherever “Farther out” is, you’re probably better off staying put. Can it cash flow for you as a rental if worse comes to worst? If you’re in one of the super charming older buildings, those seem to still be doing fairly well over there.

  109. 110
    Erik says:

    RE: softwarengineer @ 75
    Failing is the best way to learn in real estate. Thanks for the support swe!

    Wreckingbull was a programmer and doesn’t understand money or real estate.

  110. 111
    David says:

    RE: Ardell DellaLoggia @ 105 – I think, to some extent, we are reading a lot of whinging from people with instated agendas on SB – mostly politically motivated.

    The DOW is a pointless metric. IMO, you’d be better off watching QQQ. And EVERYONE has been predicting a downturn in the economy ALL the time for two years now. Mostly people who desperately want Trump to fail in time for the election. Seattle is a bubble of weak-minded-boobies and titty-babies who stamp their feet and wear their pink hats in protest of anything – NEVER EVER forget that.

    Having just returned from Florida AGAIN yesterday, let me assure you that housing is going STRONG!! Try to even buy a single family piece of ground in central Florida is tough. It is all packaged up to sell to large corporate builders.

    ALSO, housing starts jumped 9.2% in August: https://apnews.com/a12d0f73851945418bd54d90e30cc301

  111. 112
    Erik says:

    RE: Matt P @ 85
    I agree, but they are not illegal. Real estate investors get rich from leverage and compounding interest. If I could get my grubby paws on 10 million dollars and real estate went up 10%, i would have 1 million dollars in equity. The game is to get as much leverage as possible without losing your a$$. I will buy and sell until I can own 10 awesome rental condos in Seattle. Extend myself to risk and then contract to safety by selling and paying off another mortgage. Then buy more. Rinse and repeat until my passive income exceeds my expenses. Seems pretty easy, I’m not sure why more people don’t do this?

  112. 113
    David says:

    RE: Erik @ 112 – You mean paws on $10M in loans? Explain the compounding interest?

  113. 114
    Notme says:

    Not bubble monger
    nor a fucked borrower be
    or compound the damage

    -a bubble haiku

  114. 115
    whatsmyname says:

    By Eastsider @ 56:

    RE: whatsmyname @ 55 – I believe the proportion of homeowners vs renters was much higher a decade ago. (US ratio is around 60%.)

    – Agreed. That is the trend I was pointing to. Median income is not very relevant to median house price, and less so each year.

    Also, homeowner society is generally better than renter society. Do you prefer to live in a 100% renter city or 100% owner city?

    I prefer an owner city, but what I prefer has nothing to do with what is happening.

    Btw, most of these homeowners were middle income families when they purchased their homes. The huge tax hike totally upends their finances. That is the point.

    If you’re up 100 and you have to borrower 1 for the incremental taxes each your, you’re doing fine.

  115. 116
    Eastsider says:

    By whatsmyname @ 115:

    If you’re up 100 and you have to borrower 1 for the incremental taxes each your, you’re doing fine.

    California voters in 1978 overwhelmingly disagree. You should read the literature on prop 13. I find it unacceptable that “Median income is not very relevant to median house price.” Your grandparents would have agreed with me.

  116. 117
    Erik says:

    RE: David @ 113
    Yes, $10M in loans. I’ve written this here many times, but the equation that I think about is F = P(1+i)^n. “P” is your present value. You can make that larger with more leverage, borrowing more money. The only other thing you have control of is “n,” which is he number of compounding periods.

    This is nothing fancy, just the simple interest formula we learned in high school.

  117. 118
    Erik says:

    RE: The Tim @ 102
    My life has really improved with the yellow colored comments. It’s hard to put a price on that, but it’s more than worth my meager contribution.

    One graph people on here are talking about is the DJIA vs CS HPI graph. One idea is to post a graph overlaying each curve so we can see if there really is a phase shift.

  118. 119
    Deerhawke says:

    I have 5 experienced agents I touch base with to keep my finger on my local sub-market. They are all in different offices but generally have similar opinions drawn from different experiences. I can’t come up with any kind of data to support what I am seeing in the market now. In the areas I watch in Seattle (Greenlake, Wallingford, Fremont, Ballard, Phinney), it is really just a much more discriminating market out there.

    1) A lot of buyers felt no pressure to buy during the summer. Many took the summer off completely to enjoy their vacations. They felt they could come back in the fall without penalty. But in the fall, the buyers did come back– they felt that interest rate concerns outweighed the risk of catching a falling knife (buying a house with a dropping value).

    2) Well prepared, well marketed, well priced houses got a lot of traffic and sold quickly. Especially those with architectural integrity and charm. There were — surprise! — multiple offers on a couple of properties in the area that got bid up a few percent.

    3) Poorly prepared, poorly marketed, unrealistically priced houses were ignored. Shunned is a better word. As one agent put it, if you can’t talk your client into doing the right thing and they want to list it anyway, then bring your computer or a good book to the open house.

    4) Now, sellers who put things on the market in the summer are realizing their mistake and starting to pull their listings unsold. My guess is that some will be back in the spring, with a coat of fresh paint, a bit of landscaping and a more realistic price. Other sellers may choose to hold, rent or re-rent.

    5) From my perspective, it is still a flattening, more realistic market, not a real drop from last year’s YOY prices. Most of the change is the perceived drop that calculated in the bid-up bonus. We will start to get more realistic comps now.

    6) Listing properties low to gin up a multiple offer situation can really backfire. Nowadays, if you list a property for a certain price, you should be prepared to sell it for that price.

    7) There are a lot of greedy people on the buy side and on the sell side who are quite disappointed right now. On the sell side, everybody wishes they had been on the market in February. On the buy side, folks are wondering why things haven’t fallen as much as the newspaper articles have led them to believe.

  119. 120
    LessonIsNeverTry says:

    RE: Deerhawke @ 119 – Excellent information Deerhawke. Thanks!

  120. 121
    Justme says:

    RE: Eastsider @ 116

    California Voters in 1978 overwhelmingly were fooled by propaganda and lies in the form of poor-grandma stories and other trickery. The winners were the top 0.1% and in particular big owners of commercial real estate, who have made out like bandits ever since.

  121. 122
    Justme says:

    RE: LessonIsNeverTry @ 120

    Don’t be fooled. Deerhawke is the resident master of “sounding reasonable”, which nearly always translates into “prices will rise, or else they will be flat at worst”, all wrapped in a layer of oh-so-reasonable sounding soothing verbiage that in reality amounts to very little solid fact. Deerhawke has MORE vested interested in high and rising prices than most people on Seattlebubble. His livelihood as a developer essentially depends on it. Deerhawke is no friend of buyers, you can be certain of that.

  122. 123
    Justme says:

    A two-for-one: The condo supply is going up because the apartment supply is already too high.

    http://www.king5.com/article/news/local/condos-are-making-a-comeback-in-seattle/281-596502530

    From King 5 in Washington. “A collection of housing developments in Seattle originally planned as apartments will now open as condo units instead. It’s a move that’s somewhat indicative of the changing housing market in Seattle that has become one of the hottest in the nation.”

    “Developers for the Neighborhood Collection confirm the three buildings, Atrium (750 11th Ave. E.), Wallingford 45 (1601 N. 45th St.) and Edison (121 12th Ave. E.) will open 133 new units and be move-in ready sometime this Fall. Units average around $500,000.”

    “While it’s obvious Seattle is experiencing a construction boom, 94 percent of all housing projects have been apartments over the past decade.”

    The Los Angeles Times in California. “After a remarkable run-up in housing costs that has crimped budgets, it appears rent growth is slowing in Southern California and across the nation. Experts attribute the tapering in part to an increase in new apartment buildings that, although not giving tenants the upper hand, is giving them a bit more leverage than in years past.”

    “The deceleration is most pronounced for more expensive rents, which is also where most of the new apartments are aimed. But data show slackening in older buildings as well. Rent growth in the Bay Area has also tapered off from the sharp increases seen several years ago.”

  123. 124

    By Deerhawke @ 119:

    6) Listing properties low to gin up a multiple offer situation can really backfire. Nowadays, if you list a property for a certain price, you should be prepared to sell it for that price.

    Well that’s sort of always true, unless you like paying commissions without a sale.

  124. 125
    Justme says:

    RE: Kary L. Krismer @ 124

    That brings up a question: How common is it for sellers to have a clause in their listing agreement that the REAL price the agent has to obtain, in order to be owed a commission, is something else and higher than the “listing price”?

  125. 126
    wreckingbull says:

    By Erik @ 110:

    RE: softwarengineer @ 75

    Wreckingbull was a programmer and doesn’t understand money or real estate.

    Wow, how did I become a computer programmer?

    You could be right. Or you could be wrong. Or you could take out a HELOC to pay property taxes.

  126. 127
    wreckingbull says:

    RE: Kary L. Krismer @ 77 – So your response is that while HELOCS are bad in that they encumber your homestead, they are good for buying a car on credit and carrying credit card debt.

    You just made my point for me. Thanks!

  127. 128
    wreckingbull says:

    RE: wreckingbull @ 127 – And I will add, Kary, a person who has had a complete Come to Jesus moment about their financial debauchery, takes out a HELOC, pays off and closes all credit cards, and then pays their HELOC off is indeed what I call the “small minority” Yes this person should get a HELOC, but this person is rarely seen in the wild.

    So I suppose we are in complete agreement on the subject.

  128. 129

    By Justme @ 125:

    RE: Kary L. Krismer @ 124

    That brings up a question: How common is it for sellers to have a clause in their listing agreement that the REAL price the agent has to obtain, in order to be owed a commission, is something else and higher than the “listing price”?

    Probably very uncommon, because I doubt the NWMLS would approve it, and without approval it would not be effective (at least as to the listing agent paying the buyer’s agent).

  129. 130

    By wreckingbull @ 127:

    RE: Kary L. Krismer @ 77 – So your response is that while HELOCS are bad in that they encumber your homestead, they are good for buying a car on credit and carrying credit card debt.

    You just made my point for me. Thanks!

    Not quite what I said. Correct they are bad in that they do encumber the homestead, but sometimes that can be good (keeping a bankruptcy trustee from selling house). They could be used for a car loan, but the interest would likely be higher and the car would not be as well protected from other creditors (or bankruptcy trustees). I don’t think I mentioned credit card debt, but that would be one way of reducing the interest paid–if the person has the self-control to contain the debt. I’m not sure how balance transfers to a promotional rate card work, but that might be another way to reduce the interest rate without encumbering the homestead.

    But the main place they would be good would be for home repairs, particularly where other funds are not available.

  130. 131
    Eastsider says:

    RE: Justme @ 121 – It has been 4 decades since prop 13 passed. If what you wrote is true, CA would have repealed it by now. I won’t be surprised if WA voters put a prop 13 like initiative on ballot. Look no further than the car tab initiative. When taxes get out of control, people will revoke.

  131. 132
    whatsmyname says:

    By Eastsider @ 116:

    I find it unacceptable that “Median income is not very relevant to median house price.” Your grandparents would have agreed with me.

    I find it unacceptable that my income is not very relevant to the price of median Hunts Point waterfront. But there it is.

    Perhaps we can both find consolation in that median income is relevant to the prices of housing options in aggregate – to also include rentals, apartments, condos, shelters, and tent cities.

    My grandparents could have agreed with that.

  132. 133
    Erik says:

    RE: wreckingbull @ 128
    You are right, helocs are bad. In fact leverage is bad because it creates risk.

  133. 134
    Eastsider says:

    RE: whatsmyname @ 132 – I think you agree with me owning is better than renting. Your grandparents would too. Cheers.

  134. 135

    By Eastsider @ 131:

    RE: Justme @ 121 – It has been 4 decades since prop 13 passed. If what you wrote is true, CA would have repealed it by now. I won’t be surprised if WA voters put a prop 13 like initiative on ballot. Look no further than the car tab initiative. When taxes get out of control, people will revoke.

    It would need a constitutional amendment.

  135. 136

    By Erik @ 133:

    RE: wreckingbull @ 128
    You are right, helocs are bad. In fact leverage is bad because it creates risk.

    Who are you listening to now? Yes leverage adds risk, but it also adds opportunity. If you want to totally avoid risk in your life you would not own or invest in anything (other than maybe a spider hole).

  136. 137
    Erik says:

    RE: Kary L. Krismer @ 136
    I was telling Wreckingbull what he wanted to hear so I could keep him unsuccessful in real estate. Real estate is all about taking on the most leverage you can without losing everything.

    If you understand that concept, I’m not sure why you paid all cash for your house in Renton minus a $30k loan from becu in 2007. Seems like the exact opposite of leverage and timing.

  137. 138
    Tysha Carter says:

    Thank you! We are just about to start our house hunt (this will be for our family of 7, not an investment property) and we aren’t sure whether to jump right in or wait a bit, knowing interest rates keep climbing.RE: Joe @ 8

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