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We haven’t taken a look at my “Residential Real Estate Heat Index” for King County single-family homes and condos since the fourth quarter 2017 data, so let’s see how it has moved through 2018 so far.
Wow, that’s quite the reversal this year from the recent trend. After hitting a massive all-time high in the fourth quarter of 2017, just three quarters later the index has fallen to its lowest point since the first quarter of 2012. Coincidentally, the first quarter of 2012 was when home prices in the Seattle area hit their lowest post-bubble point.
This measure is typically highly seasonal, peaking in the fourth quarter most years due to the low number of listings. However, after dropping down to earth in the first quarter, the heat index usually stays fairly stable through the first three quarters of the year. Not so this year. The first quarter was down slightly year-over-year, then the second quarter hit a three-year low, and the third quarter was the lowest level in over six years.
I still don’t think this decline portends another big bursting bubble anything like what we saw 2008 through 2012, since the foundation of the market is much stronger than it was ten years ago. That said, it is definitely becoming very difficult to ignore the dramatic signs of the slowing market here in the Seattle area.
Next year is going to be very interesting.
What Goes Around Comes Around
Great graph Tim, you pegged it.
My only additive to your excellent post is the Achilles Heal of most analyses, root cause….not a complaint at all Tim. All our crystal balls have “Stephen King’s The Fog” in them now…
“I still don’t think this decline portends another big bursting bubble anything like what we saw 2008 through 2012, since the foundation of the market is much stronger than it was ten years ago. ”
Wha? Interest rates are going to break a lot of hearts in the next couple of years. Just like last time.
“‘Seattle right now is an extremely volatile market,’ Kelman said. “There are markets where everyone knows what to expect, and in Seattle that’s not the case. Every month is something new.’
A rapid influx of tech wealth can foster an identity crisis, something the winner of Amazon’s second headquarters should think about. It can be a bit of culture shock when teachers and firefighters suddenly can’t afford to pay the rent or get approved for the mortgage. “Seattle has always had an identity of being a middle-class city,” Kelman said. “We’re not entirely in love with what we’ve become.'”
https://www.bloombergquint.com/business/seattle-the-housing-market-that-can-t-make-up-its-mind#gs.w2aVzvQ
RE: Market Psychologist @ 2 –
I agree. This sucker is going down, to borrow a phrase from G.W.Bush.
@The Tim, I don’t get what you are saying. The MHI for the current bubble 2012-2018 is MUCH higher than it was for the 2002-2007 bubble. Then how can the current MHI not be an indicator of the worst bubble ever?
Sudden thought: I think maybe MHI should be redefined as MHI(old)**(1/3) (i.e. take 3d root) because it is the product of 3 factors. That would make MHI more “normalized” to single-factor measures such as a pure price measure. I haven’t thought very carefully about this, but it is a hunch I have.
Seattle’s overpriced housing market is in part driven by the even more overpriced stock market, in particular Amazon. Here is a plot of AMZN for the last 10 days. Look at that sucker go….DOWN.
https://imgur.com/a/98hjzJg
Seattle speculative buyers are partly loaded with capital gains from Amazon (and others), and partly trying to front-run real or imagined future buyers that are perceived to be loaded with Amazon (etc) cash. It will all end badly, and not just for the speculators. The losses will as always be socialized onto those that deserve it the least. That’s how bubbles work. Bubbles are bad for MOST people.
When the crash comes here
will it crash below what I paid?
too late to undo
-a bubble haiku
I posted this earlier today before the big crash before the bell. I know I’m probably the only one who looks at The Dow as validation for my overall housing market expectation…but…an 832 drop is hard to miss. Nasdaq got hit even harder on a % basis.
“The stock market is not really “extremely high” if you look at a long enough period. The market peaked back on Jan 26, went into correction mode the first week in February (10% below peak) and has been floundering for direction ever since. If you look at the market past February or from February, it looks like an upswing. But if you track back to the 52 week number you will see that getting back over the January number was difficult and market direction is defined as movement past that January 26th number. Recently we got past it…but today it boomed down again and so still no relief from being in correction mode.
Now look at real estate specific stocks like Redfin and Zillow. While many stocks and most stock indexes are running over and under the January 26th peak for 9 months now, these two stocks give you a clearer indication of real estate market expectation. Also watch the rounds of Venture Capital funding that may be propping up the losses.
Those two real estate specific stocks are currently at 40% to 50% below their 52 week high. Only hindsight has 20/20 vision, but clearly that much of a drop tells you something.”
Doesn’t tell us something we didn’t already know…but for those thinking that what they are seeing as to real estate prices is the tail end of something. Uh…no.
Should I buy the dip?
or is it a falling knife?
yes, if you see blood
-a bubble haiku
RE: Market Psychologist @ 2 –
I think that a potential key point is that even if interest rates go up and home prices go down we have stronger home owners now. Fewer low down loans. Liar loans basically don’t exist now. The homeowners have a lot more “skin in the game”. Also those with low interest rates have very low payments making the “accidental landlord” situation much more doable for many.
A few thoughts:
RE “Home”owners – How much real estate has been recently purchased based on its intrinsic value as housing versus those who’ve purchased it as an asset or a store of future value.
RE “skin in the game” – The quality of the loan only means the bank takes less risk. If something costs 150 dollars, and its suddenly worth 95, someone lost 55 dollars.
RE: Justme @ 4 –
Another Difference from the 2007 and theoretical 2018/2019 Bubble Pop
The old money was piled up for burning by the dead parents’ kids…today, that stack of of old money is not “my dad’s Oldsmobile” like it was. Most of the 2007 stock losses were never re-invested in the market [fear]…probably the chief reason I made out in stocks, I had no competitors….still low volume today. We got scared of stocks and never returned for the Trump bull market [its still a Bull Market YOY Bubbleheads, even with today’s 800+ point loss]. I was a dummy too…LOL
Savings rates are dismal on the average now too…we errantly replaced retirement savings with house equity….yikes!
Today is a Horrifying Psychological Day
History Making 155 MPH Hurricane striking Florida and the shocking interest rate stock market anomalies…
https://www.wsj.com/articles/sears-hires-advisers-to-prepare-bankruptcy-filing-1539136189
This news article on Sears sums up the psychological fear we’re feeling today.
SE, Sears was already planning bankruptcy before the storm. I am not a WSJ customer so cannot read the entire article. Anything new to report?
RE: Longtime Listener First Time Caller @ 10 –
Exactly. Skin in the game just means that specuvestors may choose to stay put and lose more money before folding their cards and selling. They still lose money. Actually MORE money, typically, because they stay put too long.
Speculators had better hope that the next batch of speculators that bought AFTER themselves have more skin in the game than they do. Otherwise they are fooked, all of them. The whole thing will unravel.
RE: Justme @ 13 –
It all depends on your time horizon as a “specuvestor”. If you have 50 years it is pretty hard to lose money on a hard asset. If you have 2-3 years, good luck.
RE: Randomseattledummie @ 14 –
That is a bogus argument, and therefore very popular in real-estate propaganda. Who wants to be in a position of loss for 50 years? Is it not much better to be even or profitable from day 1? And invest whatever surplus you might have in something more useful?
I think I know what the correct answer is.
QuickenLoans
30-Year Fixed
4.99%
(5.262% APR)
Calling all specuvestors! Get it now before rates go up even more! Just make sure you have a long time horizon, and don’t mind losses in the meanwhile.
Houston Real Estate in September: “Market Cools”
https://www.calculatedriskblog.com/2018/10/houston-real-estate-in-september-market.html
Seattle Real Estate in September: Sales Down 29% YoY, Inventory up 78% YoY
https://www.calculatedriskblog.com/2018/10/seattle-real-estate-in-september-sales.html
RE: Justme @ 17 –
Serious question here. If you buy a property with a small down payment and the property has a positive cash flow every month after paying your mortgage, property manager, insurance, maintenance, and taxes, what losses are you referring to? Hypothetically if the principal value goes down you would be in the red but it is only a loss if you need to panic sell in the short term. If you wait for it to appreciate more over time and your mortgage balance to reduce with each payment won’t you always end up in the black over time? If you are beating other investments that is a different question but the powers of leverage and amortization are pretty hard to beat…
RE: bryanoens @ 13 – Yes. I walked through a Sears about 10 years ago and it was like they had completely thrown in the towel even back then. Crap inventory, disinterested employees, and messy stores. They spun off their RE holdings into an REIT, and have been milking that cow ever since. The retail business has been dead for years.
RE: randomseattledummie @ 19 – The problem is that many have been purchasing properties for speculative, not investment purposes. Our own negative cash flow hero Erik can talk to you about that, but he has been scarce in the SB comment section these days.
Secondly, the apartment glut is putting pressure on rents.
RE: Justme @ 5 – It’s past time to break up Amazonian squid.
“Perhaps most importantly: Since the Great Recession, Amazon has paid just $1.4 billion in corporate taxes compared to Walmart’s $64 billion.
“We have institutionalized a regressive corporate tax structure at the hands of our idolatry of innovators and Amazon,” Galloway says. In 2017, Amazon paid nothing in federal tax….
“The key to competitive markets is that no one entity has too much control of the marketplace,” he says, adding that no other company has violated anti-trust over the past 100 years as Amazon and its ilk. Bezos’ recent support for a universal basic income is alarming, Galloway writes, because it means he sees a near future in which Big Tech permanently puts people out of work.
“Ma Bell couldn’t have been easy to break up, and we unleashed 30 years of incredible innovation,” Galloway says. “Teddy Roosevelt broke up the railroads. If the Department of Justice hadn’t moved in on Microsoft [in 1998], do you think we would have Google? We don’t break companies up because they’re evil or take jobs or don’t pay taxes. We do it because it’s time.”
https://nypost.com/2018/10/09/break-up-amazon-before-it-does-any-more-damage-to-america/
Thank you Tim, for all the updates and analysis you do. They are very realistic, and good source for information.
RE: randomseattledummie @ 19 –
RE: wreckingbull @ 21 –
Exactly. Negative cash flow is one thing. But even with positive cash flow, would one rather have an investment that costs X and yields Y or one that costs X/2 and yields 2Y, with another X/2 capital gain after Z (<=50)? years? Plus that one case will be liquid at a gain the whole time, if one needs to sell for whatever reason.
I think @randomseattledummie is just pretending to be naive. He sounds a lot like that other guy, whatshisname, oh yeah @whatsmyname is what he calls himself. He also tries to troll me with "serious questions" and is "sincerely curious" about this and that. Maybe they are the same person, who knows.
But the underlying problem here are nasty exploitative people that think of housing as "investments" and profit centers. Housing is a roof over people's heads. It is not for specuvestors to play with. And I sure as hell do not want to pay X for a house because of some nasty speculative bubble, when X/2 (varies) is the correct price.
By randomseattledummie @ 19:
Hypothetically if you had waited your return would be higher IF the market tanks. It’s good to buy a $300,000 property. It’s even better to get it for $250,000.
RE: pfft @ 25 – Don’t be an FB. A Microsoft employee I know HAD to have this particular corner condo in the Bellevue/Redmond Microsoft corridor. He watched, and waited, as the prices edged up. Boom! The for sale sign went up and he snagged it… right at the top of the market during the last rodeo. He watched as it dropped over $150k in one year. He was upside down. Couldn’t get the loan refi’d, as he was fooked. He struggled and sweated, but finally made it. Not the greatest idea to let your heart and desire rule your wallet.
By randomseattledummie @ 19:
The issue is when someone goes underwater and has to sell because they lose their job, get divorced etc. When prices are rising, it doesn’t matter because the house sells quickly. When they are falling, foreclosures come and then it cascades into banks and everything else.
It can and will happen again because the underlying issue of speculators was never addressed during the last crash and then the fed doubled down with QE and decided to intenionally inflate all assets. They let everyone borrow at really low rates and now there are masses who are leveraged to the hilt where rising interest rates and falling prices will hurt them even if the loans are supposedly strong because they were only strong under the conditions of always rising prices.
The housing market will never stop the boom and bust cycle until there are strong disincentives to treat houses as an investment and not a home.
RE: wreckingbull @ 21 –
Sears has been a ghost town joke for 10+ years imo.
How would you define someone buying to speculate vs invest? I hear about people buying properties and letting them sit vacant. That just seems like money laundering or something. I dunno though. Is the different positive vs negative cash flow?
RE: Justme @ 24 –
I am not whatsmyname. Of people who know me in person, nobody would accuse me of pretending to be naive. I think usually it more along the lines of being accused of being a know it all. ;)
Is your basic argument that people should not be allowed to purchase homes for the purpose of renting them out and that is specuvesting? I just don’t quite get what your point is.
@pfft 25 – you’re not entirely wrong but you miss some interesting other potential points.
Let’s assume that you can buy a home at 300k with 20% down on a 30 year loan and an interest rate of 4% or 250k at 6%. If you have a 30 year time horizon you’re actually better off buying for 300k.
Or lets assume you’re paying cash and this magical 300k home rents for 2k/month. Depending on what your other options are to invest the money it might be better for you to buy sooner at a higher price vs later and enjoy the cash flow from the home while you wait for prices to decline.
@Matt P 27 – I see you said, “The housing market will never stop the boom and bust cycle until there are strong disincentives to treat houses as an investment and not a home.” Again isn’t a house an investment for a landlord who is buying it to rent it out? Are you suggesting that renting out homes should not be an option for people to do?
RE: randomseattledummie @ 29 –
uhh not many buyers get the returns that you think of. by speculation, many people buy houses on the assumption that housing price will rise. for example, if you bought a million dollar condo and rented it out, you would never break even due to comparatively low rent. (1m-1.4m dollar condo rents at about 4-5k). that’s speculation. many regular people speculate too. i have speculated before but on my own dime. if you don’t borrow money that’s fine and you can sit (amidst the rising hoa and taxes), but if i had to borrow money and had a negative cash flow, that would be a financial nightmare considering downtrending market will eat away my equity real quick. At that point, people would rather throw the towels and file bankruptcy which is what happened last cycle.
you think it’s a unique situation with higher priced housing, but it always trickles down to impact the lower cost housing and the overall housing market because many of the homes 600k-700k+ fall into this category. it’s hard to get enough rent income to payoff mortgage while paying off hoa and taxes.
However, i have similar suspicion as well. rates were low for a long time and most people who already bought with 20-25% downs are locked into 15, 30 years. Demand would be low for sure in a downtrending frozen market but i think many sellers would be able to afford their mortgages at this economy. (stock is sinking i understand, but unemployment is low and investment properties do maintain a positive cash flow). I think psych economics will be able to trump all these but i question the degree to which it will impact the housing market. I think people will try to sell until they break even to reap the profits, but after that people will stop selling because they can hold onto then current financial situation. don’t get me wrong. i hope it crashes and burns.
RE: randomseattledummie @ 29 –
>>Is your basic argument that people should not be allowed to purchase homes for the purpose of renting them out and that is specuvesting? I just don’t quite get what your point is.
I see what you did there. You skipped right past where I pointed out the obvious folly in your buy-anytime-and-you’ll-be-ok-in-50-years propaganda. You are a distraction-troll. That’s all. Not worth reading. Buh-bye.
RE: steven @ 30 – It has been a while since rental cap rate penciled in this area. If you invest in a rental property today, you are speculating.
Next year??? I’d suggest this year is quite “interesting” too! Olympia 19 is our best chance to fix some structural law impediments to condos, zoning and growth management rules that have impeded our marketplace’s ability to provide enough new more affordable housing options..it ain’t all about the Luxury end…nothing wrong with being rich..but when you outprice a majority of your citizens…its gunna cause problems…and we’re seeing em now.
RE: Justme @ 31 –
I am not trying to troll. I just don’t understand your point. I have read this blog for a long time and found your comments to actually be worth reading unlike some “other frequent commenters”.
On one side you’re saying prices don’t make sense to invest in which is a totally sensible argument.
On the other side you’re saying,
“But the underlying problem here are nasty exploitative people that think of housing as “investments” and profit centers. Housing is a roof over people’s heads. It is not for specuvestors to play with. ”
I just don’t get what this means. You think prices are too high right now so anybody who is buying today is a specuvestor? You think that people shouldn’t be allowed to use housing as a profit center? I mean that is what rent is for a landlord.
If you’re right and have such disdain for “specuvestors” wouldn’t you be happy the more they buy now because if you’re so convinced in an impending Seattle real estate collapse that they will all lose their collective shirts?
@eastsider 32 — If someone buys a place today that is a cap rate of 10 today here would you say that they are speculating? Cap rate is simply a function of what you pay so if you get a good enough deal it is always a good time to buy.
RE: randomseattledummie @ 34 – If you are finding rental properties which are returning a 10% after all costs, including vacancy, you are one heck of an investor. Excellent work. I wish I had those sort of needle-in-haystack superpowers.
By randomseattledummie @ 34:
Good luck trying to actually engage with them. They just want to be right about the market going down even if it took 2+ years. Look at Justme quoting Amazon’s stock price dropping from 2,000 to 1,800 even though he was saying to sell at $600.
Like you said: look at the property, look a the cap-rate, check the buy/rent analysis. Decide what is best for you.
There will be a recession someday (maybe it started this quarter!). Obviously it will effect tech stocks and housing.
All you can do is attempt to dispassionately analyze each situation as it comes up. Or, I guess you can spam post about how sellers are rushing to the exits (at roughly the same amount as usual) and OMG inventory is up a record percentage (but at historical average numbers).
By randomseattledummie @ 34:
Speculative investing is not trying to get cash flow via rentals. It is buying houses with the expectation of rising prices and then selling for a profit. This is not even what people normally think of where the property is being improved. These speculators are simply buying and holding and then reselling when prices surge.
The other set are the massive hedge funds that swooped in after the crash and bought houses and did become landlords. Generally, I think land lords should only be in multifamily structures and houses should be for purchase, but there are many who do not agree.
RE: randomseattledummie @ 19 –
Its Like the old RE phrase “Location, Location , Location”
Have we replaced this axiom, with “Assume, Assume,Assume”?
Maybe your crystal ball is clear?
RE: wreckingbull @ 20 –
Sears Subcontracts its Appliance Warranty Now
Its still a good appliance warranty and pay for it too….appliances are mostly foreign made and junk now, even Maytags…
RE: uwp @ 36 –
Or Simply Give Up on the Seattle Without Manufacturing Jobs?
And move where the money is….seems far less risky to me, but what does SWE know? LOL And yes even any pat answers can swing the other way in a blink of the eye….its virgin territory with no history out there now…
By softwarengineer @ 39:
I would agree with the junk portion of that comment. I have a JennAir (Whirlpool family of products) refrigerator that is about six years old and has needed two air mixer valve motors, one ice maker and even a door gasket at that young age. Fortunately though the parts are cheap (probably why they fail so quickly) and easy to install yourself.
A neighbor had an Electrolux refrigerator that was a complete lemon. They replaced it at about 2 years old.
I had one more thought about HQ2, and maybe someone who works for Amazon can comment.
In the prior thread I mentioned Amazon employees possibly holding off to see if there was an opportunity to move they might want to take advantage of. But it could be a broader impact than that. One of the disadvantages of working for a corporation is the corporation may one day tell you that your job is moving 2,000 miles away, and that if you want to keep your job you’ll have to move. Depending on your level in the company, you may or may not get decent relocation benefits, but you still have to move to keep your job.
I don’t know what Amazon’s policy will be on HQ2, whether some employees will be forced to move, but if so that could really put a dent in the buyer pool. Just the new Amazon employees coming in helped create the bulge in the buyer pool of the past 2-3 years, so imagine the impact of the entire group of Amazon non-fulfillment employees if they are uncertain where their jobs will be a year or two from now.
Of course some of them might feel they could jump to another local company rather than move. But that would be somewhat uncertain because you wouldn’t know what the economy would be like at that point in time or how many other Amazon employees you’d be competing with.
RE: sfrz @ 22 –
Yes, Amazon is an atrocity on so many levels. With a P/E of 143 (yesterday), it is barely profitable. With a P/E of 20 it would still be richly valued. Scott Galloway’s talk in your linked article is recommended to anyone that wants to understand how destructive Amazon is to America and how destructive it will eventually be to investors.
RE: Justme @ 43 – It’s certainly destructive to Sears/Kmart. ;-)
Seriously, for some purchases I do try to look at Sears’ marginal website to see what they offer, and I think I’ve bought off their website twice in the last two years. Ditto Walmart. But usually I’ll pull the trigger over at Amazon.com.
RE: uwp @ 36 –
Good post. Always nice to see that some people out there make up their minds on the basis of the data in hand. The perpetual bulls and perpetual bears are just tiresome.
I am really interested by the herd phenomenon we are seeing. For several years, sellers would not sell because they were concerned that the market was going up. They were concerned they might be leaving money on the table. Then suddenly some perceived a top (or at least the right time to get out) and many more than normal decided to sell. But now buyers are reluctant to buy because the market finally has inventory. If the market is going down, why buy? And this is backed up by several recent postings by potential buyers on this site who are ready, willing and qualified, but have decided to sit on the sidelines.
I was at a wedding this past week and despite the DJ imploring people to come out and dance, nobody budged from their seats. Two songs later, still only one or two couples were out there– and probably feeling pretty self-conscious. On the third song, (and granted it was a better song with an idiot-proof beat) everybody got up to dance. All at the same time.
We really like to think we make up our minds on the basis of data and rational expectations. But we are social animals. We pick up clues from others, some quite subliminal, and that guide us.
If I were thinking about buying right now, I would be weighing two things.
On the one hand, there is the potential gain I could make by having the market drop. On the other hand, I would be looking at how much I could lose if interest rates went up. Of course the two are tied and that is what makes the puzzle more difficult.
I have a god-daughter who was looking at buying a first home with her fiancee. They were pretty sure that, like everybody on this site, she would wait until spring to get serious. I wanted to avoid speculation about the market to them, but mentioned my concern that the potential loss on interest rates might outweigh any gain made by any drop in price. She has a degree in math and her fiancee is a data analyst. Pretty soon they were reading interest rate blogs and were talking about the future of the 10 year bond. Suddenly they were very serious about bargaining hard and locking something down soon. They just went to contract last week. From what I can tell, they got a pretty good deal from a motivated seller. I think they got a pretty good price with some sweeteners thrown in. But they actually want to close sooner than the buyer did. Who ever heard of a buyer pushing for the rent-back?
I think you can see what they concluded. Interest rate increases could cost them way more than potential price drops. Maybe this math only works for entry level homes, but it is something every buyer should consider.
RE: Matt P @ 37 –
Very well put.
I hadn’t really considered that people were buying and holding and then reselling when prices surge. That seems like an insane behavior with financing costs and other significant carrying costs.
For making landlords stick to multi family that is interesting. I definitely don’t agree but interesting.
That would mean that unless you owned you could never live in a house. That seems pretty challenging for a family of 5 without the means or job/location stability to buy but able to rent a house. Seems like a big problem.
By Deerhawke @ 45:
Yeah. While increasing rates will put downward pressure on house prices, the potential buyer still has to buy the house with that new interest rate.
If you bought a year ago for 500k with a 4% mortgage, you have a cheaper mortgage payment than if you bought today for 450k with a 5% mortgage. (And you lived in a house for a year and paid down ~2% of the principal rather than rent).
By Deerhawke @ 45:
I wonder how this will impact the new construction market. They’ve gone from selling houses after completion when buyers could even pick between a few, to selling them before the foundation is even poured. I don’t know that it’s that possible to lock rates for that long, so that would be problematic.
By Matt P @ 37:
ref the speculators you nail it.
ref landlords and SFH…….. families rent homes instead of owning for a whole bunch of reasons, denying them access to single family homes is bit harsh.
RE: uwp @ 47 –
There are a lot of things that make prices drop, including a change in animal spirits that leads to a rapid change in inventory. But you need other things to keep prices coming down. A correction is not a change in the fundamentals of the market.
Every time I look at the Puget Sound Business Journal, I see a lot of activity that will directly and indirectly bring jobs here.
Every time I look at bids from my subs, I am astounded at how much prices of materials and labor have gone up (with no clear end in sight by the way).
Every time I try to get a permit, it is more complex and confusing and takes longer.
Every friend who is trying to remodel, expand or rebuild their house is astounded at how much it costs.
Rents are stable and maybe down a bit, but all that new rental inventory is still awfully expensive. At a certain point, people really will get tired of living in studios and 550 sf one-bedrooms.
My own view is that now through the end of the year, the market will be flat or just a bit down. I rather doubt we will see any month in 2018 where prices were lower YOY than in 2017. Possible, but I dont think so. I anticipate that the spring market will remain relatively flat (or a little up). This will really get the headlines because we will have months in January through May 2019 that will be lower YOY than 2018.
But eventually people will realize that the bubble was in the first half of 2018. At that point it will be behind us. All of those people who waited will find prices creeping up AND higher interest rates.
This is how I see it playing out.
Unless of course, there is a fairly major national recession. I maintain that one is out there and think it will be in 2020. But political factors matter as well as economic factors– maybe more at present. Double dip real estate recessions are not unheard of.
By Deerhawke @ 45:
I am a potential buyer that has been looking for a long time. For me, the combination of prices and mortgage rates continuing to rise over the past two years have led to a breaking point. I can no longer afford the payment for what I could see myself living in for 5+ years. Even though prices have had a bit of a drop since spring, the mortgage rate increases actually make payments more expensive now than in spring.
At this point, either mortgage rates or home prices have to drop for me to want to buy anything. I am not shying away unreasonably like you’re implying when there’s finally more inventory, which is what buyers have wanted for a long time. I’m shying away because home affordability is not realistic anymore and has only gotten worse since spring.
By greg @ 49:
Yes, that is probably too harsh, but limiting investors to 1 house each for renting out would certainly moderate the market significantly. I would bet there are far more families that want to own but can’t afford it than those who rent on purpose.
By Deerhawke @ 50:
do you have examples of other national housing recessions?
RE: Brian @ 51 –
I’m in the exact same boat. Dual income, saving for several years now. Not jumping in any time soon unless affordability improves.
Burn baby burn…
RE: Brian @ 51 – You are not alone. I am also a buyer on strike. I started looking in 2016 and said no thanks. I decided to pay off all my debt instead (inclduing hefty student loans), and I finished that in September. I am now saving up cash for a nest egg, in addition to my regular retirement savings. I’ll rent until its time to move if the market doesn’t get back to a reasonable level. Fortunately, I think it will more than “correct” in the next few years, and it’s cheaper to rent than buy. I seem to remember that was the case when something eventful happened about 10 years ago.
I am convinced a crash will happen again because housing inflation is a global phenomenon. Many countries have had a rapid rise in the cost of housing, and they are all popping at the same time–e.g. Sweden, Australia, Canada, New Zealand, China, and, yes, all over these great United States. So it doesn’t matter what the Puget Sound Business Journal says because the global phenomenon of cheap (and illicit) money flows are the real cause of the “great boom” in housing in the PNW, as well as everywhere else.
There are three structural problems which encourage people to think of their houses as investments more than just a place to live.
1. Our tax structure, including the mortgage interest deduction which provides massive financial incentives for carrying huge loans as well property tax deductions. The fact that renters don’t get any benefits like this is hugely unfair, and makes it reasonable to over-extend to buy a house.
2. NIMBY zoning laws which are hugely influenced by neighborhood property owners that fight any zoning change, no matter how socially valuable, that is perceived to have a chance to negatively impact the value of their “investment”.
3 The destruction of the defined benefit retirement plans, pushing all the initiative and risk onto the individual, who is least able to manage both the investments themselves, or the risk involved. This forces a majority of home owners to think of their house as their retirement plan.
I don’t blame folks for playing the rigged game as best they can. We, as a society, need to change the rules so that we can again treat a house as a home instead of an investment. I’m a pinko-commie-scumbag, but there was one good thing in the Trump tax bill, and that was a curbing of the mortgage interest deduction. They gave the proceeds to the rich and corporations, when they should have given it to renters and homeless, but it was at least small tweak of the tax code in the right direction. The rest of the tax bill was, of course, crap.
@ Kenmorem – To start with the early 90’s and early 2000’s. Depending on what you consider a recession because nationally those times didn’t compare to the great recession/bubble of the late 2000’s but those time had negative housing growth. I am sure others will chime in with early times, I know the 1980’s saw a lot of turmoil, especially in places like Texas.
https://en.wikipedia.org/wiki/United_States_housing_bubble#/media/File:Cshpi-peak.svg
I am another buyer on the fence – and we’ve also been looking for a long time. (I’m so sick of people asking me: “Well, are you still looking?” As if I’ve ever stopped… )
These prices have made me extremely picky. I know the market is high, and whatever we buy will soon lose its inflated value – at least for a while, so we’ll be stuck. Also, when looking at homes close to our top budget – glaring things will really bother me. Yes, I will be concerned if the roof is 30 yrs old, or if there’s LP siding, or if all the bathrooms, the kitchen and all appliances are dated 1990’s. Those are expensive fixes that I may not be able to afford to do for some time if I’m putting all our money just to get the house. But none of those would be deal-breakers if we had enough money to fix them after buying the house.
Basically, we just haven’t found anything that’s really worth the price tag. It’s been a very frustrating search. We’re not as scared of rates rising – as long as prices come down. Even if it means my monthly payment might be the same – at least we won’t be leveraged up to our eyeballs! And if we buy after the market cools, and the prices recede a bit, then we won’t be as stuck as we would have been if we had bought at the top.
I found this article helpful in breaking down the difference between paying a higher purchase price with a lower rate versus rising interest rate with a lower purchase price: https://www.thetruthaboutmortgage.com/would-you-rather-have-a-low-mortgage-rate-or-pay-a-lower-price-for-a-home/
fingers crossed for 2019…
RE: biliruben @ 56 – The mortgage interest deduction isn’t as important as it once was due to: (1) The new caps; and (2) The higher standard deductions allowed couples.
And even before that it was more smoke than fire. Getting back a minority percentage of a fraction of what you paid is not a huge deal for most. The caps were probably a good idea because wealthy people probably benefited the most.
RE: N @ 57 – There were a number of local housing recessions across the country that were entirely missed here. I had at least two bankruptcy clients come from such areas, and one I remember was someone who had been buying rental properties only to discover that not only did they drop in price below their mortgage debt, but that rents dropped significantly too. I don’t remember the areas they came from or the time frame, but it was probably the 1990s for both.
Everything is speculation to some degree. Maybe rents go up, maybe they go down? For years taxi medallions in NYC were a great investment until Lyft and Uber came a long. Maybe your area is nice and then maybe it isn’t.
I just don’t get why people would pay so much in HOA fees but complain about high property taxes or income tax in other states.
Anyone have any insight on what you get for a 2,000/month HOA fee?
Don’t forget that the SALT deductions being rolled back are going to cost taxpayers money plus the tariffs. Can’t help the housing market.
i know this blog is 90% residential real estate and specifically 89% SFR but i was wondering if anyone had insights on commercial real estate and its trends? specifically, i would be more interested in ground leasing
By pfft @ 62:
The SALT limits aren’t that huge of a deal here, except for very expensive properties. For many they will actually benefit from the new rules. And no, that is not inconsistent with my prior post. The higher standard deduction will give them more in their pocket, particularly if it means they no longer need to itemize. And that is why the MID is not as important as it once was claimed to be.
As to tariffs, it’s unclear if that’s going to cost the average person anything. First, China’s currency is now devalued about 10%, and I don’t think other currencies have been doing great either (but I don’t follow that). Second, there’s the issue of whether the tariffs get passed through. Ford apparently doesn’t think they do, since it said it will cut their profits $1B. That’s probably true for Ford given the way they can price their truck products. They’re already pricing what the market will bear because they have a superior product to the competitors. Other auto manufacturers and industries might be different.
RE: Briana @ 58 –
Some thoughts on the article you posted
Mortgage rates, as well as inflation were at historically low rates for the past number of years. Even with increasing interest and mortgage rates, they are both rather low if viewed in historical context. Years ago, mortgage rates were generally 7-9%, and for years, bank savings accounts paid 5.5% interest. Bonds and CDs were paying almost nothing until half a year ago, and those too are at the low end of the interest rate continuum. We have a way to go until interest rates for both savers and borrowers are back to “normal”.
Those who don’t buy housing because of an uncertain market have to live somewhere, thus keeping the rental market, especially for smaller single family houses, fairly strong and robust, even with an oversupply of one and two bedroom apartments. As long as the population in the area continues to grow, there shouldn’t be any radical reduction in rents for SFHs. They sure didn’t build any 1000-1500 sq foot single family houses around here in the latest building boom, and for many, residing in even a small single family house is preferable to some cookie cutter apartment.
By Kary L. Krismer @ 64:
I’ve seen figures that it’s about $1500 PER taxpayer and not limited to expensive properties.
RE: Brian @ 51 – and 206 Architect and Market Psychologist
I totally understand your predicament. I was in your shoes at one time, and I was able to buy a complete POS extreme fixer during the recession precipitated by the first Gulf War in 1991. But just for perspective, my first loan was a 1-year ARM at 9.875%. It was serious white knuckle territory.
I also understand your perspective because both my kids, age 25 and 30, feel just as you do. They are saving like crazy (like most Millenials actually) but don’t feel that they will be able to get a foothold in this housing market.
But when you say “Burn Baby Burn”, be careful what you wish for. Somehow you think that the price of housing will come down but your salary will be stable and your life untouched?
Really?
During the 69-74 double dip recession, Boeing and its employees got hammered, including all those highly trained engineers.
During the ’01 dotcom+9/11 recession, tech types were the center of the bullseye.
During the 80-82 double dip recession and the 2007-2009 Great Recession, all kinds of people lost their jobs or found themselves underemployed as businesses downsized.
As I said, be careful what you wish for. People who run around saying “This can’t go on– it just can’t get any worse. ” suddenly find that it can.
A buyer’s strike brave
who would have imagined
turned out to work well
-a bubble haiku
By Deerhawke @ 67:
wwwoooorrrrdddd. word.
Oh noes must not wish
as if wishes makes come true
bitch, reality
-a bubble haiku
RE: pfft @ 66 – The limit is $10,000 for state/local taxes, including sales taxes. That’s admittedly not that much, but depending on income for the sales tax deduction probably wouldn’t impact a below median home locally. But the other change was to increase the standard deduction (at least for those without kids). That is now $24,000 for couples filing jointly. So they’d need to have over $34,000 of SALT + MID + other deductions before they would even need to itemize, and they still wouldn’t be impacted if they had higher deductions and their SALT was below $10k. Note though at some point income limitations impact the MID, but that was true before too.
Offend the agents
with lowball offers galore
or just sit it out
-an oh-what-a-quandary bubble haiku
RE: Deerhawke @ 67 – In 2009 I was joking that I used to worry about being forced to live on the street, but then I was worried about whether there’d be a street. The potential downside there was much worse than what it ended up being.
Prices will only crash
if everything goes to hell
therefore must buy now
-a saywhaaaaaat? bubble haiku
RE: Deerhawke @ 67 – Yes, I know what you mean. I don’t wish for a crash – maybe a bit of a correction or a flattening and a “normal” market, and definitely some more inventory to choose from. Even in this market – if the right one came along within our budget, I’d go for it.
By Kary L. Krismer @ 59:
It’s a psychological deal. People certainly take it into account when purchasing. It’s probably less of a deal in Seattle, given there is no income tax (so therefore harder to get over the standard deduction – even more so now), but it certainly isn’t a pittance for the rich. It was almost 100 billion annually in lost revenue for the feds, and it’s probably still at least half that. Someone’s pocketing that money, and you are right; it isn’t the dude squeezing into the White Center fixer. But that money could be used to feed and house all the homeless/mentally ill in the whole country, instead of padding rich pricks investment accounts so they can pass an extra few million to their coddled heirs.
Think of what that would do for the condo business in Belltown, if you don’t have to step over our less fortunate to get to the doorman.
By Kary L. Krismer @ 73:
I know people can disagree on how the bailout of the banks happened but NOTHING good would have come from a large bank liquidating. They would sell EVERYTHING. No matter how good the stock or asset. Selling begets selling and one bank would have dragged down the others. I remember one day Goldman Sachs was down 20% and a similar bank stock was down 40%. We are talking about events were bank runs are possible. Northern Rock in Europe had a bank run.
By Deerhawke @ 67:
Earlier you wrote that you and your friend were “astonished” at how expensive materials and labor were. If you remember those past recessions, then I’m pretty sure you remember many contractors were begging for work.
This whole economy has been redlined by the low interest rates. All this angst we are seeing is from a fed funds rate of 2%. The fed is predicting they will raise it to 3% next year. Still probably half the historical average. But they know they have to get it there, because a little pain is better than losing the dollar.
We all know how leverage inflated housing. Everything else was pumped up too. The reason there can be a starbucks on every corner is they could borrow at close to zero. When/if rates normalize that’s 10s of millions of jobs that might have never happened, and will have to be cut. These are the boom times.
This cannot go on
it just can’t get any worse
suddenly it can
-a hysterically funny inadvertent bubble haiku contributed/inspired by Deerhawke
By Briana @ 58:
The article does a good job of showing how lower price matters more than higher interest rates. But they leave out the best part.
When you buy at a high interest rate, you are much more likely to be buying a price bottom. It’s terrible to buy at historically low rates, because there’s nowhere for it to go but up. It’s very likely you are buying a bubble top. Nobody wants the stress of buying a new house, then finding out 2 years later your equity is drying up and you could be under water soon. Everybody wants to see their equity grow.
BTW, that’s how people get rich.
PS — are you still looking?
RE: Justme @ 24 – The reason people will put a question to you as being serious is because they want an answer.
They want to distinguish their question from a rhetorical question – where the answer is obvious and unneeded. They may want to know if there is some coherency owing to an angle they hadn’t thought of. Or they may want to know if you will own the ideas that you are implying. Or if you can be consistent.
By Macro Investor @ 80:
Haha! This is what I tell everyone: “I have never stopped looking.” :D
Thanks for your extra points about that article. It validates my relief of not buying yet.
You had better buy
not making any more lumber
wait, it grows on trees!
-an increasingly-incongruent-buy-now-narrative deconstruction haiku
RE: Kary L. Krismer @ 71 –
This is pure used home salesman poppycock.
There used to be financial incentive for nearly everybody to buy a home so you could itemize and save money (often significantly) on your taxes. Now it is pretty likely than you either won’t be able to itemize because of the 24k standard deduction for married folks or if you do get to itemize the amount you’re going to be able to write off over the standard deduction is extremely trivial.
For better or worse (a different and often politicized question) the new tax policy makes housing more expensive. Pretending that it makes no difference is just silly.
RE: Briana @ 58 –
I am in the same boat as well. I moved to king county in early 2017 and the prices are outrageous. I have been looking consistently and even made an offer on one property that was priced lower due to a short sale, but lost it to a much higher bid (which I would absolutely not be willing to pay). I would like to own again for a number of reasons, but it doesn’t make sense at these prices. I am renting a nice house in a nice neighborhood, and if I were to purchase it at redfin’s estimated price with 20% down my mortgage payment would be double my rent. How could that possibly make sense?
It pains me that I could have easily afforded a beautiful home in my neighborhood in 2015 and even 2016, but the increase over the last two years has been astronomical. Most of my neighbors bought before the market went nuts, and the vast majority would not be able to buy their homes at their current values. I am hoping this market ‘cooling’ brings it back at least a little closer to reality. If it doesn’t I’m not sure what I’ll do.
By randomseattledummie @ 84:
Clearly you totally missed what I said, because my point was the mortgage interest deduction before was over-hyped and it’s even less important now due to other changes in the tax law. I was not saying go out an buy a house to get a tax advantage, I was saying for many people it wouldn’t matter. And the reason it wouldn’t matter is the new higher standard deduction. They have to have MID + SALT + Other Deductions in excess of that amount ($24,000 for a married couple filing jointly), and if they have say $26,000 they might be lucky to save $600 on taxes. Sure that helps, and is better than nothing, but who takes on hundreds of thousands of dollars of debt to save $600 a year?
And pretending it makes no difference? Do you really think the tax act that was passed makes no difference? People can argue whether it was good or bad, but I don’t remember anyone saying it makes no difference. I certainly wasn’t trying to say that. What I was trying to say though is that for many buying a house will make no difference on their tax return.
And finally, I clearly wasn’t making a claim it made no difference. I was explaining (or at least trying to explain) how some of the changes work.
I think a different and better question we should be asking is.
Just because interest rates are rising (which is very likely) will prices stagnate or pull back? All of the reading I’ve done over the years shows no correlation between rising interest rates and lowering home prices and typically rising interest rates happen as home prices continue to rise because interest rates are manipulated to happen when the economy is strong enough to handle the higher borrowing costs.
I don’t have a firm opinion on what to expect but I think the assumption that interest rates are going up so prices are going down should be explored further.
If RE tanks again just remember we have a president who even his own people think is a moron.
RE: randomseattledummie @ 87 –
You bring up a really good point. It doesn’t make sense that prices would decline only because of interest rates. I am wondering though, if it’s making more of a difference in the Seattle market right now because affordability is so low. When the price to enter the market is more than you can afford on its own, a change in interest rates would push affordability even lower. A one percent rate increase on an 800k loan is obviously a lot more than on a 400k loan. I am still at a loss to figure out who can (or should) afford these prices, but I would think that the buyer pool who can is becoming very, very small.
RE: Rentin’ @ 89 –
A pet theory of mine is that the “average Seattle home buyer” is so flush with cash(from stock, signing bonus, selling your house in Silicon Valley, or whatever) that putting 50% down isn’t that uncommon making their payment quite affordable. Also the percent of Seattle home owners who pay cash is shockingly high. Someone dropping a million bucks cash on a house will be viewing the affordability of a purchase quite differently than someone trying to get into a 5% down loan.
RE: randomseattledummie @ 90 – I would have a hard time buying into that theory but could definitely be convinced. I know of a few people like you describe, but I don’t think it’s the norm. I bet our friendly real estate agent commenters could offer more insight. It’s very possible you’re right. Up until a few months ago all of the $1.6M homes near me were selling like hot cakes. But where did the buyers go?
@ Deerhawke
“But when you say “Burn Baby Burn”, be careful what you wish for. Somehow you think that the price of housing will come down but your salary will be stable and your life untouched? ”
I am a potential buyer and have been waiting for two years. I agree with you, if someone loses his job he may not benefit from house crashing. To me, it boils down to
1. how much cash you have saved to enable you to buy at crashing point. Remember, BUY WHEN THERE IS BLOOD, EVEN ITS YOUR OWN BLOOD. Sorry it may sounds very harsh, but nowadays, many people treat house as stock, especially when the price is rising. So to be fair, let’s treat it as stock when it is falling. If you have down payment and emergency fund, you should consider buying a house (especially it is enticing compared to rent cost) when everybody else is so scared about losing job.
2. at crashing point, the danger is BIG money (big institutional investors) may step in and buy up the houses. As a individual it is hard to compete with them, so the best timing is to go with them. The next housing crash will lead to a totally renter nation .
3. Patience is important. It is sellers vs. buyers. Buyer(renters)’s loss is more controllable. you can calculate rental money you wasted fairly well. The home owner lost can be big(property tax, interests opportunity cost of missing best selling window). My view is the longer home owner hold not to sell their host, the heavier their lost. They can only hope to sell to next bagger to recoup their lost which is not likely since we are the later stage of the debt cycle.
RE: Rentin’ @ 91 –
I don’t think it is “the norm” everywhere however there aren’t THAT many 1.6 million dollar homes in Seattle so in that small subset of housing it could be the norm.
Greed and FOMO definitely influenced the quick purchases. Things were appreciating at a torrid pace and the desire to keep up with the Joneses made them fly off the shelf.
Now it is fear. Fear that they’re catching a falling knife. Fear that Seattle might not be their long term place of employment with the overt hostility from the city council toward the local big businesses.
Back to your situation. If you’re a prospective buyer who is going to buy and it is just a matter of timing and finding the right place and assuming you can afford a home now, run the numbers on HOW much you would need housing prices to come down to make waiting to buy pay off. If prices stay flat, even if interest rates stay flat(unlikely), you’re better off buying today. Let’s assume that your rent is $2,500/month and your hypothetical payment is $5,000/month (based on your comment about a payment being double rent). So that’s roughly a 1.2 million dollar home with 20% ish down 30 year fixed market rate mortgage (ballpark, just work with me here). So after 1 year you’ve paid off almost $15,000 of principal. So if you wait 1 year, you would need home prices to come down a little over 1% to even “break even” in waiting. Ask someone looking 6 months ago vs now and they’re glad they waited but now let’s look 5 years out. You would have paid off nearly $85,000 in principal so after 5 years to just “break even” in waiting you would need the market to be down around 7%. If you expect some sort of 2008 style collapse, waiting makes great sense. If you expect stagnation especially paired with extremely high chances of rate increases fudging the math even more then you might be shooting yourself in the foot to wait (again, assuming you can afford to buy today).
RE: Rentin’ @ 91 – If it’s Ballard/Green Lake/Fremont- they are holding a big bag of ooo-poop-ee-do. This area is turning into a rat hole.
Safe Seattle
Yesterday at 8:01 PM ·
In short, I’m no longer feeling safe in my home
.
(This message began on the message board last Friday. The original message may have also been posted on NextDoor.)
.
Yesterday, someone broke the driver’s window on my VW camper van and stole some camping gear. It’s parked behind my house off the alley. Since there’s no window and no way to keep the riff riff out, I decided to sleep in it last night.
At about 6 AM, I heard a vehicle go up the alley and park. Shortly thereafter, my driver door opened. Someone reached in and started to go through the vehicle. He actually grabbed a small box of my dad’s ashes, probably not knowing what it was. (My dad bought the vehicle for me so I take him camping with my son and I.) I flashed my light on his face and he took off running. I ran after him.
He crossed 8th Ave to the RVs parked on NW 48th beside Fremont Brewing. I started yelling for someone to call 911. Someone gave him a bicycle and he took off on the bike, I was able to catch him and knock him off the bike but a second guy holding a big yellow pry bar came at me threatening to hit me with it. The perp also pulled a knife and pointed it at me while he got back on his bike and pedaled off again, this time back toward 8th. I chased him again and knocked him down a second time. He still had the knife but I was also getting surrounded by the RV riffraff who had come out to see the commotion.
This time, when he got on the bike, he got away.
I came back to my vehicle and called 911. Although he was able to get away, the police were able to recover his motorcycle, which was stolen. I also recovered a metal asp baton which he dropped in the alley during our chase as well as my dad’s ashes, which the police dusted for prints.
All of this is to say I HAVE HAD ENOUGH. My property taxes have doubled in the last 7 years. In the last 2-3 years, the crime rate in our neighborhood has skyrocketed.
I now have two police reports and I’m certain I could identify both guys if given the opportunity.
Thanks for everyone who called 911.
Description of person involved – Hair: brownish, slightly blonde, Top: padded motorcycle jacket, Bottom: jeans, Shoes: boots, Age: late 30s/40s, Build: tall, thin, scruffy, Race: white, Sex: male, Other details: Between 5’10 and 6’2. He may be missing teeth.
Description of person involved – Hair: dark, Top: sleeveless t-shirt, Bottom: dark pants, Shoes: white or light colored sneakers, Age: 30s, Build: stalky, Race: hispanic, Sex: male, Other details: About 5’8, stalky, dark skin, dark complexion, shaved or very short hair. Carried a 24-32” yellow piece of steal, maybe a pry bar.
Maybe this family’s home will be on the market for $1mil +. Someone else can clean up the needles, trash and gallon jugs of pee from the sidewalk in front of their home.
“Safe Seattle
October 9 at 9:53 AM ·
“You won’t see me for dust.”
.
The following appeared in a neighborhood blog. Its writer gave permission for the text to be used on the page. We’ve redacted a location mentioned in the original post.
How many other people are facing this in Seattle? A lot, no doubt.
___________
Ok. So I have been trying to ignore the three sofas dumped in the street in front of my house, and the recliner, and the mattress dumped further down [street name redacted]. I still use the Lake City Post Office, and try to shop locally. have just sucked up the massive increases in my utility bills. I have quietly picked up the trash and assorted drug paraphernalia from the sidewalk in front of my property. I have spent the last year or so juggling my family’s two cars in front of my house on [street name] in an occasionally successful attempt to crowd out the RVs that camp out there, and dump said trash. And now I’M the one who gets the parking ticket for parking in the street next to my house for 72 hours.
.
That would include, working backwards, Sunday, Saturday, and Friday, which I did not work, having been laid off. Thanks again, Seattle. Squeeze the people who are actually trying to make a life here. Every little way you can. I was so excited and hopeful when I moved here, five years ago; now I can’t wait till my youngest is out of school – you won’t see me for dust.”
By randomseattledummie @ 34:
Cap rate of 10 today? I couldn’t even get that in the down market. This seems like trolling if you ask me.
By Deerhawke @ 45:
It is always risky to ‘overpay’ for a property even when borrowing cost is low. If one of them loses his/her job, they may be forced to sell the property at a (capital) loss. If they had bought the property at a lower cost, they might even end up with a net proceed in a forced sale. So unless you plan to stay put for 30 years, it is better to buy low at high interest rate than buy high at low interest rate. People sell homes for many reasons, e.g. relocation, illness, job loss etc. Most people don’t stay in their mortgaged homes for over 10 years.
RE: randomseattledummie @ 93 –
It all feels like a gamble. I totally agree that by not buying I have lost opportunity with paying down the principal, but by renting and saving the difference that adds up to 30k per year and 150k over 5 years. If the real estate market stayed flat or went down over that time period I would come out ahead by renting. But if it goes up, it really depends on what my return is on my savings and would most likely be a better deal to buy.
No one can predict the future, but I would describe myself as somewhat conservative when it comes to investing and am a bit risk averse. The fear of losing all equity with a 20% drop in value right away (potentially 200k+) is much more concerning to me than the risk of not paying down 15k in principal. The last housing bubble crash is too fresh in my mind still and several houses I have been watching have had price drops this large already.
That being said, if the right house came along and was within my budget, I would most likely make an offer. Like I said earlier, I did make an offer on a house about six months ago. I just haven’t seen anything else that I’m interested in, they all seem very overpriced and underwhelming. I would have to be really in love with it to weather a downturn and still feel happy about my purchase. And like Eastsider pointed out, you never know what life will bring and it’s risky to be under water on your mortgage because you never know when you might have to sell.
RE: Rentin’ @ 98 –
All makes sense. The one additional thing to consider is that you’re not really saving that delta between hypothetical rent and hypothetical mortgage cost. You’re just stealing it from yourself 361 months from now after your 30 year loan is paid off. You are only delaying the inevitable of having a mortgage which is delaying the goal of having a mortgage paid off. If you buy today and keep for 30 years, you pay whatever the total of the mortgage is. If you rent for 5 years then buy a house for the same price you could today with the same interest rate you could get today you’ve just added 5 years of money on rent to the same total cost of a mortgage. Obviously it is unlikely you keep the mortgage for 30 years but it is somewhat likely you have a mortgage for 30ish years as you refi/move/buy up/work to pay off your loan.
RE: randomseattledummie @ 99 – This is not correct. That delta has an opportunity cost. This is why rent/buy calculators are so useful. Most people do not live in one location for thirty years and thus incur high transaction costs as well. Taxes and maintenance must also be considered. For many, buying is the right choice. For others, renting makes good sense, even when future outcomes are modeled thirty years in the future.
https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html
RE: sfrz @ 94 – Before the Internet my generation had a place for fantasized stories like that–it was called Letter to Penthouse.
Not that there aren’t a lot of things to complain about when it comes to Seattle. But let’s try to keep the stories half-way believable.
RE: Kary L. Krismer @ 101 – I don’t think you have spent much time in Ballard recently, Kary. It’s starting to resemble the set of the movie “The Road”. That story is pretty much the norm now, and was reported on.
https://www.kiro7.com/video?videoId=850715267&videoVersion=1.0
RE: wreckingbull @ 102 – It’s not that I don’t think things happen in Seattle. I’ve been very critical of Seattle. I just don’t believe that particular story. People do sometimes make up stories–that was my point.
That camping gear would be stolen if left in a van–that part was believable. The rest?
RE: wreckingbull @ 100 – Prices would need to dial back at least 2 years before it makes sense to buy. For many, buying at current prices is imprudent. That’s just my opinion.
RE: Eastsider @ 104 –
Based on my buying habits, I would agree. I used to see opportunities I found interesting all the time — multiple times per week. Now I might see them once every few months.
@wreckingbull 100 – I understand and know that is the conventional wisdom. I just happen to disagree for a number of reasons. Here are a few of them.
1. That assumes that people WILL save and invest the entire delta. Some few, most won’t.
1a. For the same reason why housing has added risk — it is not liquid — it makes it a great forced savings account because you HAVE to make your mortgage payment unless you’re prepared for bad things to happen and getting access to that savings account (Heloc/cashout refi/sale) are long processes so maybe your need for the cash will have passed or your better judgement will realize you really don’t need that cool new boat.
2. That assumes people will get the average stock market return which most people won’t because most people suck at investing. Panic sell, buy when things are rising. Just basic herd behaviors that crush investing returns.
3. While it is not possible for a “forever” time horizon as housing costs will run away from everyone, housing in desirable metropolises (both rents and purchases prices) have outpaced inflation significantly, for….a long while.
I am a big believer in buy-rent calculators. They teach you what the real variables are and how important they are over time.
But you also need to remember that over time there are better times to rent and there are better times to buy. It is quite cyclical.
If you are going to rent, remember that the good times will come to an end and the rent will go up. If you are going to buy, all other things being equal, it is best to buy toward the end of the time when it is a good time to rent.
I haven’t run the numbers, but it seems that now is a pretty good time to rent. Apartment builders who were building at the end of the recession hit a huge home run. So they kept at it. And kept at it. And now they are not looking so smart. They are offering a month of free rent, plus a prepaid Visa card, plus a free parking space for a year etc and still they can’t get their rentals filled. The banks are a little slow on the uptake, but eventually they catch on. Two banks I deal with did a lot of apartment financing a few years ago. They both stopped even looking at new apartment projects in early 2017. Stuff in the pipeline from 2016 will get built, but then there will be quite a lull. Then after a lag, rents will go up again and we will see headlines about evil landlords in the newspapers.
So when you look out more than a few years in your buy/rent calculators, your rent numbers may be unrealistic.
Real story. I bought a beater 4-bedroom investment house in 1997 on a busy street. It was rented for $1200/month. By 2007, with paint and landscaping, it had risen to $2100. In 2009, I had to drop the price back to $1600 to get it rented –after 3 months vacant. (Great time to rent, right?) In 2012 it was back at $2100. Six years later it is at $3300– and is a little under market. I have a feeling that it will go up about $100/month each year for the next 2-3 years (considering rising taxes/cos– basically flat). At that point, my bet is that rents will spike again.
This is a relatively good time to rent, but the cycle will turn– guaranteed.
RE: randomseattledummie @ 105 – I never bought the ‘forced savings plan’ argument, commonly used by many in the REIC. You can achieve the same thing with monthly automatic bank transfer between your checking account and investment accounts! If you can’t budget and save on your own volition, you really have no business owning a home. When that decayed sewer line, roof, or HVAC system needs attention, you will be in a world of hurt.
RE: wreckingbull @ 107 – Sorry for my ignorance, what is “REIC”?
@ Deerhawke 106 — awesome info
RE: Eastsider @ 104 – I’d say that’s about right. During that time period, I commented here how conditions were NOT the same as 2008, using the example of 2008 my being able rent a home at 35 cents on the dollar compared to buying. Things are not nearly that bad today, but we are heading back in that direction.
By randomseattledummie @ 108:
Real
Estate
Industrial
Complex
Like the MIC: Military Industrial Complex. It is everyone and everything involved in the industry that keep it moving and generating money.
RE: uwp @ 110 – And we are not talking peanuts, either.
https://www.opensecrets.org/lobby/indusclient.php?id=F10
RE: Deerhawke @ 106 –
>>This is a relatively good time to rent, but the cycle will turn– guaranteed.
Your business model for being a residential landlord is based on the assumption of inevitable population growth in your location, be it Seattle or whatever. There is no guarantee there will be population (or job) growth enough to fill up the empty apartments, for a long time. In particular, ignore the Amazon HQ2 move at your own peril.
AND, as you well know from my previous posts on SB blog, the population growth of Seattle has been greatly overstated due to the “Filled-If-Built” methodology that Washington State OFM uses to estimate population count. Here it is again, for the benefit of new readers, of which there sem to be many recently.
https://seattlebubble.com/blog/2018/09/18/new-listing-absorption-softens-more-as-pending-sales-slip/#comment-274334
There are plenty of places to live. There is a whole giant apartment supply bubble in Seattle. Craigslist is chock full of rental offerings. There is no shortage. Only overpricing.
Search: FIB site:https://seattlebubble.com
A good reminder that Justme thinks everyone is estimating population wrong except him.
He’s figured it out.
By Notme @ 79:
Love it!!!
RE: Eastsider @ 96 –
>>Cap rate of 10 today? I couldn’t even get that in the down market. This seems like trolling if you ask me.
Exactly. @randomseattledummie is not random and not a dummie. He is a little troll that writes convoluted verbose tales where he partly pretends to be a naive gee-whiz owner wannabe, and then inserts his little messages that you buy-buy-buy now.
Writing long and convoluted narratives and anecdotes is a primary tool of REIC propaganda, Fight back with facts.
Haven’t looked at SBubble in a while and pleasantly surprised that the comments have trended towards constructive remarks! Particularly the discussion about the importance of speculation in destabilizing asset prices in markets for essential goods.
Market Psychologist wrote (55):
“Many countries have had a rapid rise in the cost of housing, and they are all popping at the same time–e.g. Sweden, Australia, Canada, New Zealand, China, and, yes, all over these great United States. So it doesn’t matter what the Puget Sound Business Journal says because the global phenomenon of cheap (and illicit) money flows are the real cause of the “great boom” in housing in the PNW, as well as everywhere else.”
Yes, Excellent point. Idiots still try to blame the ’08 crash on the US government when anyone could see that it was a worldwide boom (and bust). Same today. It … is … what … MARKETS… do!
Especially when there is LOTS of “excess” money to invest and speculate.
Macroinvestor wrote (78):
“This whole economy has been redlined by the low interest rates. All this angst we are seeing is from a fed funds rate of 2%. The fed is predicting they will raise it to 3% next year. Still probably half the historical average. But they know they have to get it there, because a little pain is better than losing the dollar.”
Indeed! But due to the huge amounts of dollar-denominated debt (not just her in the US, but worldwide), IF the Fed rates get to just 3% then it is game over for the economy as defaults skyrocket!
“From 1990 to 2000, dollar-denominated debt tripled to $2.17 trillion from $642 billion…In its latest quarterly report, the Bank of International Settlements found that U.S. denominated debt to non-bank borrowers reached $11.5 trillion in March 2018. As the currencies of indebted countries weaken against the dollar, it is becoming harder for some countries to pay their debts.”
This … is … happening… now!
Deerhawke (50):
“I rather doubt we will see any month in 2018 where prices were lower YOY than in 2017. Possible, but I don’t think so. I anticipate that the spring market will remain relatively flat (or a little up).”
But who knows really Deerhawke?
Suppose the Saudi despot is assassinated and the mideast descends into a Shiite-Sunni war…
Or Italy’s interest rates keep rising and their banks collapse… or Turkey, Argentina, Mexico, Chile… Indonesia?
Or the world’s largest corporation gets hit by a recession (or anti-trust laws) and starts laying off thousands…
Or… the largest economy in the world is looted by a kleptocrat and his friends?
Who knows?
RE: sfrz @ 94 –
The Auburn Valley Had the Same Problem 5-6 years Ago
Ya spend time having dinner and such and go back to find your passenger window smashed…many cars in row, not just one….with the dining establishment calling it the new normal. I don’t go there anymore.
BTW, fixing windows that have been smashed also means bits of unseen glass can get trapped in the window mechanisms and the window will jam up later….the fun goes on and on….the window replacements can top $300-400…
By randomseattledummie @ 87:
That’s a good question. The blog I posted earlier on this thread also deals with that question too:
“There’s a common thought that once interest rates rise, they’ll put downward pressure on home prices, meaning property values today could be artificially inflated based on the low interest rates available, which has somewhat increased demand.
This is a bit of a myth, and the image above kind of illustrates that, though the data might be cherry-picked to some degree.
As you can see, house prices don’t just fall when interest rates rise. If anything, the opposite has happened in the past.
Home prices and mortgage rates aren’t that closely correlated over time. In fact, mortgage interest rates may not really affect the price of housing.
In other words, home prices may rise even if mortgage rates increase, despite it being more expensive to get financing.”
(https://www.thetruthaboutmortgage.com/home-prices-vs-mortgage-rates/)
(https://www.thetruthaboutmortgage.com/what-will-happen-to-home-sales-if-mortgage-rates-rise-to-9/)
Despite what he says here in these articles, here’s why I think this time, the rising rates might cause the prices to drop: this drastic spike in home prices have been the direct result of the interest rates staying so low for so long. When the rates rise, I don’t believe these prices can hold.
By uwp @ 113:
Now you are just lying about me. OFM knows perfectly well the limitations and errors inherent in their population estimation methodology. And I have written so myself, with reference to the specific OFM methodology documents where they describe the methodology problems. So clearly it is not me saying that “everyone is wrong”, although as a smear it sounds great, does it not?
But it does appear that many persons and organizations with a self-interest in hyping up population numbers do not want to hear that the numbers are wrong, and gladly quote the OFM numbers as being the gospel on population. Such people very conveniently have ignored and even denied what OFM itself is saying about the errors caused methodology.
And now we have the result: A huge oversupply highrise apartments that cannot be denied.
Uwp, stop lying about me. I know you want to smear me and put me down, but your lies reflect back on you.
RE: Justme @ 112 – Great Point
In 1969 the Movie Midnight Cowboy came out….[great movie BTW] and it pointed out something in NYC I didn’t know….the apartments became destroyed but not bull dozed down and replaced for decades…probably like Detroit today…the homeless used the cold empty structures for survival. Now I understand that old Simon and Garfield song “the Boxer” and their lament about cold winter nights and the depressing homeless lives in NYC…Seattle’s apartments in the future with money shut off?
BTW…new news….China still selling off our equities [debt], at least the American stocks are rebounding.
RE: Brianna @ 118 –
They Needed Negative Interest for Savers Like Japan a Few Years Ago
But abandoned this crazy fix…0 interest= 0% interest…we’re pegged out…
RE: randomseattledummie @ 90 –
Your self-described “pet theory” of buyers from silicon valley with 50% or 100% cash is just a theory coming from thin air, or MAYBE anecdotal, unless you have real DATA. Give me data or I will call BS on your anecdotes.
By the way, are you a REIC insider pretending to be a naive buyer-wannabe?
RE: uwp @ 113 –
40% of Retirees Live in Poverty Today [NBC reported today]
How do they move with no money?
They can’t qualify to sell because they can’t qualify to buy a replacement home anyway?
They’re stuck heading for evictions?
Ya better fix your cash flow problems now [while you’re young enough] with more CASH savings or be left with no life boat?
https://www.king5.com/article/news/local/seattles-hot-real-estate-market-begins-to-slow/281-603816520
According to Redfin Chief Economist Daryl Fairweather, sellers are waiting longer for offers and many are having to drop their list price to attract buyers.
There are a few exceptions. Omaha, Nebraska; Grand Rapids, Michigan; and Boise, Idaho are still seeing more listing go pending faster than a year ago, though the markets have slowed since spring. The common factor, Redfin points out, is they’re smaller cities away from the coast where homes are more affordable.
“This points to a lack of affordability as potentially the biggest factor in why the previously red-hot markets have slowed so much this year,” the report states.
Housing inventory – or how long it would take to sell all homes on the market – sat at 2.83 months in King County, which is a 78 percent increase over last year. Snohomish (2.18 months), Pierce (2.01 months), and Kitsap (1.93 months) counties all saw increases in inventory as well.
https://www.seattletimes.com/business/real-estate/hoping-for-seattle-area-rents-to-get-cheap-dont-hold-your-breath/
Going back 20 years, rents in King County dropped on a year-over-year basis only twice: after the dot-com bubble burst and during the Great Recession. In both cases, rents dropped a total of just 5 percent over two years, before surging back up again. (Why no big drop? While people can afford less during bad economic times, they also are more likely to rent, and developers are less likely to get the financing needed to build the new units that would counteract that demand.)
RE: N @ 124 –
2.83 months
a raging buyer’s market
except buyer’s strike
-a bubble haiku
RE: Justme @ 122 –
Yes Justme
A tech company like Google fires a single young inexperienced engineer for having Populist politics and we think Google is all engineering with huge salaries…LOL…Besos is laughing too…they have us fooled…
RE: N @ 124 –
My Kansas City Home Was Bought for in 2014 for $26K Plus County Code Fixes
Low 30s CASH total and I had the deed in my hand and I get continuous CASH offers for it…it currently lists in the 80s, but has upgrades the last year [new furnace and central air] and could grab high offers. I replaced the furnace and central air for $4500 CASH [total] BTW, try doing that in Seattle….LOL
My daughter’s college money spent well…LOL…sell it now? Why?
https://www.seattletimes.com/business/real-estate/british-columbia-cracks-down-on-dirty-money-in-real-estate-market/
The crackdown comes amid public outrage at the region’s growing unaffordability and the belief that outside capital has stoked the run up in home prices which have more than doubled in the past decade. In Vancouver, the typical single family house costs more than C$1.5 million ($1.15 million), nearly 20 times median household income, making the city the most unaffordable market in North America.
The government has also sought to bring more transparency to the murky property market after a study by Transparency International found that it’s not possible to identify who owns nearly half of Vancouver’s most expensive properties. This month, the province began demanding more information about beneficial property ownership in tax forms. The province plans to make the information available in a public registry and share it with tax authorities and law enforcement agencies.
RE: Deerhawke @ 50 –
>>Every time I look at bids from my subs, I am astounded at how much prices of materials and labor have gone up (with no clear end in sight by the way).
Another anecdote that appears not to hold water. Case in point, price of framing lumber (2×4) is down by over **50%** since May 2018. Have a look at this graph:
https://imgur.com/a/Eb7s9kT
Here is also a live graph for future reference
https://finviz.com/futures_charts.ashx?t=LB&p=d1
Sarcasm: Cue an argument that falling prices on building materials are ALSO bullish, just like rising prices are. I’m waiting.
Justme, once again fighting anecdotal propaganda with DATA, for your benefit.
RE: biliruben @ 56 –
Crap?
I got $3-4K in crap as a tax refund single retiree with no mortgage. It depends on your point of view and your TAX BRACKET being married with the 2nd income whipped to death [this happened before Trump too] too…BTW, a Mexican marriage or vows outside of a church allows marriage without the tax penalties IMO.
Trump does need to make companies pay optional 40 hour weeks with healthcare MANDATORY to drastically lower health care costs [Medicare/Medicaid included BTW]…they got their tax break, now trickle down. The Open Border Party rich elite disagree with this fix, so you probably will too. Why????
It Can All Change in the blink of an Eye
Here’s an example Senate race that had the Democrat way ahead only days ago…
https://www.realclearpolitics.com/epolls/2018/senate/tx/texas_senate_cruz_vs_orourke-6310.html
Its HIGH FLUX out there now, “what goes around comes around”….the worst news the Open Border Party had came this week. The Russian Witch Hunt was exposed for what it is….Rosenstein and Trump had a buddy/buddy negotiations on Air Force One…its over; and the Kavanaugh civility ordeal was an additional coffin nail IMO too…Trump will likely [IMO] fire Rosenstein and Sessions both, but after the Midterms…I wouldn’t play chess with Trump, no way…
Buckle your roller coaster safety belt, the ride is gonna be rough for some and unpredictable from here?
Time to be civil again and fix the economy instead of destroying it with more debt…
By Kary L. Krismer @ 42:
Kary,
I will provide my two cents as an ex-Amazonian…
If I was with Amazon today, hearing about potential HQ2 would make me think about canceling plans to buy. At the same time, it’s very unlikely to be a huge factor in my decision. Reason 1: IT job market in Seattle continues to be strong. I can find a job at another company. Reason 2: HQ2 was pitched as “additional office location”, not as “we’re downsizing HQ1 in favor HQ2”. Reason 3: Relocation packages is (used to be) a thing. Most employees are young and mobile.
Amazon employs a huge number of recent college graduates. Many of them are not strongly attached to location and would be willing to move. Many of those graduates are on job visas. If it comes to worse, they have no choice but to move. Otherwise, their American dream is in jeopardy.
Amazon doesn’t _have to_ forcefully downsize HQ1 to fill HQ2. They could simply to open more internship and job positions in HQ2 and let HQ1 to downsize itself through a natural attrition. Again, college graduates would easily go to where the jobs are. Amazon could easily encourage people moving by simply reducing/freezing salary increases and offer a better deal at HQ2.
I fully agree with you that if Amazon would suddenly let 1000 engineers in Seattle go, this would be a devastating short-term effect on job market, engineering salaries and house prices. I don’t think it’s likely to happen though…
By Brianna @ 118:
Exactly.
Bonds have been in a bull market for 30 years. Guess what else has been in an overall bull market for 30 years? Real estate! If interest rates (and thus mortgage) rates have a long-term reversal upward, that does not bode well for housing long term.
Real estate has become a tool for investors for making money in a low interest rate environment without as high of a risk as what comes with investing in stocks. If interest rates rise beyond the expected investment return from real estate, then investors will leave real estate and put their money in a different place.
The large spikes in real estate prices over the past 30 years and 2008 crash are due to investors flooding into the market because other safe investments (bond yields) sucked. That’s why real estate prices over the past 30 years look more like a volatile stock index than how real estate prices looked the previous 100 years (slowly but steadily increasing).
So I don’t think we can draw much correlation from mortgage rates vs. home prices the past 30 years when the overall trend has been decreasing mortgage rates. If that changes to increasing mortgage rates for several years then home prices will see the effects. Why buy risky real estate with potential 5%/year gain (a generous long-term target) when you can buy a 30-year bond at 5%?
We have moved in and out of King county with job relocations in the past. Last year we bought a home privately that was never listed. I am realizing it doesn’t suit our needs and with the market slowing I don’t want to put a ton in for a remodel, we totally redecorated when we moved in so the house feels very fresh. I am thinking of listing next spring and see if we sell. We are under no pressure to sell and our house is in a very desirable neighborhood. I am thinking of seeing if we sell and if so sitting out the market in a rental for a while as we figure out what we want to do.
I have close friends who are trying to sell the first house their owned in the area, they bought around 2000. They have been renting it out for some time. They are having problems selling and no interest even though it is the kind of house that would usually be snapped up. It does need a lot of updating and I don’t think they are are pricing it accordingly. However, absolutely no interest is very unexpected from 18 months ago. They have already had one big price reduction.
RE: QA Guy @ 133 –
Last I Heard and Saw in Writing Too About 7 years Ago
On engineering salaries [what few there are left in Seattle] were $17/hr at a Bellevue small electronics manufacturing plant….Erik will back me up on this covered up fact too…I read the companies’ cost proposal BTW.
Boeing engineer pensions were basically eliminated [and senior ones laid off] for new hires a few years ago….LOL, that’s nothing new, a degreed engineer at Boeing in 1978 got 30% of the 18% COLA then, while the Machinists got 100%…after a few decades they eliminated the Machinists and even planned to outsource the Dreamliner engineering to South America about a decade ago [a female Boeing engineer on the Dreamliner I was dating told me this, she was buying a $440K home in SeaTac with her $70K Boeing pay…LOL]….Boeing loves its engineers???? Even the U of W recruiters in 1978 warned graduates don’t work for Boeing.
By QA Guy @ 133:
HQ2 doomers here want to portray Amazon as leaving, while they ignore the millions of square footage that Amazon has under construction here and thousands of current job openings.
People act like it’s a no-brainer simple process for Amazon to just open up another headquarters somewhere cheaper and move all their workers there. I would guess most people hired by Amazon this year won’t even be working for Amazon by the time HQ2 is constructed and running.
RE: Eastsider @ 104 – RE: Eastsider @ 104 – I completely agree. In addition, if prices dialed back two years I could also buy a house I like in my ideal neighborhood. Right now my options are to buy a smaller/older house that I don’t like in a neighborhood I don’t prefer or to move further out, and neither option is appealing.
RE: uwp @ 136 – >
>HQ2 doomers here want to portray Amazon as leaving,
Here we go again. More dishonesty ans mischaracterization from uwp. Who are these “doomers”? Where did they say “Amazon is leaving” (with all their employees)? How many such doomers exist? Personally I would say that employee count in Seattle will flatten.
>while they ignore the millions of square footage that Amazon has under construction here and thousands of current job openings.
Uh, can you assure with any certainty that Amazon will fill these buildings with NEW ADDITIONAL employees, rather than with current workers as leases expire on rented office space? I think you cannot.
Do you think Amazon will stop advertising jobs just because the location of HQ2 is not decided yet? Hell, no. And then there is the infamous Amazon job attrition. I guess they need to backfill.
By Brian @ 134
Why buy risky real estate with potential 5%/year gain (a generous long-term target) when you can buy a 30-year bond at 5%?
=================================
A couple of reasons:
Real estate has a chance of increasing with value with inflation. There has been very few times in most societies including the US where there has not been inflation. Even the government’s goal of a modest two percent inflation over time erodes the purchasing power of the dollar over time, and quite often the government is more concerned about controlling inflation than worrying about the lack of it.
In addition, it will be with inflated dollars that pay the mortgage as the years go by and inflation increases. With a thirty year mortgage, the principal and interest payments remain the same, but paid with dollars that have less purchasing power.
A thirty year bond has no built in inflation protection, unless it is some sort of TIP bond. And even with recent increases in interest rates, US government obligations of 30 years are paying less than 4%. It is possible to obtain higher yields with corporate bonds – obtaining higher yield of course increases risk. And those 5% percent yields on long term bonds, if one can even obtain that yield, are going to have less purchasing power over time as inflation marches on.
Any gains from real estate are usually produced with only a percentage of the price of the real estate fronted from the buyer and the rest is financed. For most bonds, one must purchase the entire bond up front, thus preventing that money to be used for other investments.
There is always the risk of losing money in a down market if the property must be sold. But if one must sell a bond in a market where interest rates have risen, money will also be lost on the sale. And with a 30 year bond, it doesn’t take too much of an increase in interest rates to cause the bond to lose value when sold. With a one percent increase of interest, there is a chance that the value of a 30 year bond can be reduced to up to 10% or more, depending on the duration of the bond. And sure, interest rates can go down which increases the value of the bond, but if it is a corporate bond, it may be called early, which is another investment risk, as a new bond that is to be purchased may not yield the same amount as the previously called bond.
All investments come with risks and rewards. Real estate, stocks, bonds, gold, Beanie Babies, old masters, antique furniture – everything has its risks and rewards.
RE: ess @ 140 – Unlike Beanie Babies and antiques, at least with real estate we have a few metrics which can be employed to estimate value, most notably P/E. Many of the comments here seem to feel that current P/E levels are not reasonable and waiting is prudent. I tend to agree.
I don’t think anyone here is saying never buy real estate.
RE: randomseattledummie @ 90 –
Also as to 91 “I bet our friendly real estate agent commenters could offer more insight.”
Using “average Seattle buyer” as one buying at median price, 45% bought at 20% down and another 13% bought at 25% down. So almost 60% at 20% to 25% down. 10% were 10% down. 7% were Cash. 1 or two each of 40%, 55%, 65%, 15%, 30 and 35%. A couple were financed at over asking and one of them substantially so…hard money or private lender. One looks like it will be a flip and the substantially over asking looks like a teardown that will end up as 2 vs 1 property in its place.
So no as to Comment 90 “A pet theory of mine is that the “average Seattle home buyer” is so flush with cash(from stock, signing bonus, selling your house in Silicon Valley, or whatever) that putting 50% down isn’t that uncommon making their payment quite affordable.”
When you get into the high end there is always more money down in most any market and before Amazon, so you would have to strike the difference of what is now vs normal. But using “average Seattle Buyer” as he/she said…no. Not a majority of people putting more than 20% to 25% down and twice as many putting 10% or 15% down as are buying all cash.
I went back 30 days from today as the end point so I could see the mortgage amount and back 60 days from that (90 days) to get the 55 properties or so that sold within $10k of the $750k median price. That should suit as “average Seattle buyer”.
I have to hand search and calculate each sale, so a larger sample would be too tedious. But I think that research is sufficient proof that the theory is not correct as to boat loads of cash vs normal lending %s.
Required Disclosure: Stats in this comment are hand calculated by Ardell in Real Time and not Published, Verified or Compiled by The Northwest Multiple Listing Service.
RE: QA Guy @ 133 – Thanks for your response to my Amazon question.
The Late 60s NYC Past Worst Case Scenario for Seattle Apartment/Condo High Rises Now?
Lyrics from Simon and Garfield, The Boxer:
“I am just a poor boy
Though my story’s seldom told
I have squandered my resistance
For a pocketful of mumbles
Such are promises
All lies and jest
Still, a man hears what he wants to hear
And disregards the rest
Mm-mm-mm-mm-mm-mm
Mm-mm-mm-mm-mm
When I left my home and my family
I was no more than a boy
In the company of strangers
In the quiet of the railway station
Running scared
Laying low, seeking out the poorer quarters [abandoned NYC Apartment Buildings]
Where the ragged people go
Looking for the places only they would know
Lie-la-lie
Lie-la-lie-lie-lie-lie-lie
Lie-la-lie
Lie-la-lie-lie-lie-lie-lie, lie-lie-lie-lie-lie
Asking only workman’s wages
I come looking for a job
But I get no offers
Just a come-on from the whores on Seventh Avenue
I do declare, there were times when I was so lonesome
I took some comfort there
La-la-la-la-la-la-la
Lie-la-lie
Lie-la-lie-lie-lie-lie-lie
Lie-la-lie
Lie-la-lie-lie-lie-lie-lie, lie-lie-lie-lie-lie”
Makes ya think doesn’t it….similar history is repeating its self 50 years later in Seattle?
By uwp @ 137:
I was more asking the question if some departments would be relocated, not the vast bulk of HQ1. If there were uncertainty over that, it could greatly impact the desire to buy.
You raise a good point about the timeline, but I’m not sure that’s a good thing.
By N @ 125:
That data probably is fairly accurate for that claim. But over the long run it’s a bit deceiving because the apartment base was changing, particularly recently, with new units being built.
RE: Ardell DellaLoggia @ 142 – thank you for this Ardell
By Rentin’ @ 138:
Even though prices are high today, they can always go higher tomorrow – just look at Vancouver. The question you want to ask yourself is if you really want to stay in an expensive city, e.g. NYC, London, Tokyo, for the rest of your life. I don’t think prices today make sense for typical families. But I am not going to say that prices can’t move higher.
RE: Locallooker @ 135 – What price range?
By Deerhawke @ 106:
Seattle is a unique market. US home prices generally track inflation over time. So yes, rent will go up, but so will inflation. For many, the cost of living in Seattle is expensive. Unless you are a high earner, you are paying for the ‘privilege’ to live in Seattle (or NYC, SF, Boston) which makes little sense to me. Also, when you bought your investment house in 1997, Seattle was not among the most expensive cities in the country. So your story does not apply today.
Seems to me the housing market has just reached its level after being held back during the Obama years. Now the wannabees are hoping for a crash which may not happen. Meanwhile the Fed is normalizing interest rates effectively making housing continue to rise.
Everyone has been screaming for rising wages and now it has started to happen. Yet the Fed is raising rates to offset inflation concerns and to create room to lower rates if the economy cools. If the economy cools everyone will get scared to buy a house over job concerns. Banks will increase their lending standards.
The wannabees lose out again at every turn.
In reality, if a wannabee buys a house NOW, inflation is their friend. It hurts to make the payments the first few years but the effective cost of that house begins to fade away as inflation compounds away inflation-adjusted principal.
RE: randomseattledummie @ 99 – You really need to map this out in a spreadsheet and look at net cash. The interest alone on this scenario (even leaving out insurance, taxes, and maintenance) will DWARF your rental payment. You come out way behind in a purchase scenario unless you see significant appreciation WITHOUT EVEN DISCOUNTING ANYTHING. In other words, with ownership, you’re spending more money than your rental payment before you put down a dime in principal (using your hypothetical scenario, which isn’t too far from reality).
RE: Justme @ 130 – Can you start a blog already? I would follow.
I already seek out your replies because unlike others, you at least try to provide a unique opinion.
My stats off Trulia are showing slight increases in inventory the last couple weeks, at a time when inventory is usually dropping hard. We’re already two weeks into October and I see no sign of a drop. Thus, inventory is still rising growing fast.
RE: David @ 151 –
Obama is directly responsible for my pet hamster’s death.
RE: David @ 151 –
cool story bro. in what city is the housing continuing to rise right now?
By David @ 151:
That’s completely non-fact-based. Some people who bought during Obama’s second term did incredibly well selling only 2-3 years later, well before Trump’s first year was over. If your goal was to profit after only owning a short time that period was probably historic.
My favorite example of that is a house near me that sold for just over $400k in 2014, then went pending exactly three years later (only a few months after Trump’s inauguration) for a price just under $600k with only minor changes.
By Joe @ 153:
I’m not seeing that at all–it’s fairly flat from the end of the month (King County SFR).
I wouldn’t rely on Trulia or Zillow for any data on anything, but particularly NWMLS data or active listings because they do not get NWMLS feeds.
Term flat from NWMLS sources, but not compiled by or guaranteed by the NWMLS.
Yet another stupid brokerage idea–this time out of San Francisco. They target sellers who want to move out of the area, the hook being offering them a referral agent in the other city, as if that is some sort of a unique service.
https://www.sfgate.com/expensive-san-francisco/article/Bay-Area-exodus-leaving-the-bay-real-estate-broker-13303004.php (Warning–ad-block says that site has 33 ads on it–I take no responsibility for what the site looks like with ads.)
I don’t think anyone has mentioned WUCIOA, the Washington Uniform Community Interest Ownership Act, maybe because the acronym doesn’t just slip from the tongue. It basically makes most new residential communities created after 7/1/18, virtually regardless of form, more condominium-like in that either a public offering statement or resale certificate will be required. One exception is small communities of less than 12 units, but with the exception of those I think this new act will likely result in the end of seeing inactive HOAs if they were created after 7/1/18. Someone will need to be available to create resale certificates. It is also possible for older associations to opt in, but except for perhaps some condos I wouldn’t expect to see that happen much, if at all.
https://www.warealtor.org/resources/media/REmagazine/blog_post/remagazine-online/2018/10/12/what-is-wucioa-and-why-should-i-care
I was unfamiliar with the history of this act. Apparently the goal originally was to clean up some of the condo laws, where there were two acts that applied. Apparently the legislature liked the idea so much they decided to apply it to all types of entities, including regular HOAs. I’m not really sure what the great benefit to this is, other than perhaps making it a bit easier to learn of lawsuits against an association when purchasing. It will add about $250 to the cost of selling a property in an affected community that is not condo (because condos already required resale certificates).
RE: Justme @ 115 –
First off, interesting that you assume I am a guy but I digress…
I would not consider myself part of the “REIC” you speak of. Out of curiosity in your definition of “REIC”, are landlords part of the REIC?
@Kary 159 – I am happy to give you a hard time when you’re spewing used home sales person poppycock but your points about the WUCIOA are on point. I have yet to read a really good analysis showing how this will practically impact communities, buyers, and sellers. It feels to me like a lobbyist pushed bill that might or might not actually help consumers. It seems like the stakeholders in this are mostly homeowner’s (HOA lawyers) trying to protect their investments (see condo developer liability laws in washington) and developers. I totally agree that developers should be responsible for building buildings that can withstand northwest weather but the 100% rate of lawsuits against condo developers has obviously stunted the condo supply which has lead to this glut of apartments and dearth of condos which isn’t great for anybody. I have no suggestions how to fix things but it is obviously a big problem and it doesn’t feel like anybody is actually trying to address it unless WUCIOA fixes it which while I am not sure, I don’t think it did.
By Kary L. Krismer @ 157:
I feel a disturbance in the force of your argument.
Also, Trump had the fifth largest pre-inauguration stock market rally in history. Note: This is before he even takes office. And before he ever held office on anticipation of his policies going into effect. Market went up even more more more after Trump took office. I assume your lucky client has a shrine to Trump in their new home?
SWE Goofed Up Again….LOL
Sorry Art Garfunkel…I errantly called you Garfield…
New eye popping high tech
https://www.wral.com/facebook-says-russian-firms-scraped-data-some-for-facial-recognition/17912141/
news on the net….Facebook face recognition and the recent data breach leak. I have a face recognition log on [True log on] on my Windows 2007 Professional O/S S/W….Hades if I’ll ever use or trust it….LOL
Laptops and iPhones are security nightmares on personal information? Trust ’em anyway and just focus on working ’til ya die? LOL
This week I’m going to do the King County for-sale listing inventory update only in graphical form. As usual, click on the links and then click again to get a magnified version of the graphical plots. Data as usual from Tim’s estately numbers.
KC for-sale listed inventory remains quite elevated compared with last year. Also notable this week is that SFH inventory is still keeping up a near-flat curve, for the last several weeks, as opposed to a notable seasonal droop that is common this time of the year. The inventory is about 1.7X the size it was last year same week.
As for condos for-sale inventory, not only is it not drooping, but rather it is rising at an unabated pace, which is rather unusual compared to both 2017 and most other years. The inventory is about 2.6X what it was last year the same week.
In conclusion, there is a sizeable crowd of sellers camped out at the exit of the King County housing market. Whoever is leaving, by selling (pending) or withdrawing, are quickly being replaced by new sellers.
King County SFH inventory 2017-versus-2018 on 2018-10-13: https://imgur.com/rfccJwT
King County Condo inventory 2017-versus-2018 on 2018-10-13: https://imgur.com/a/8AZQ6Ni
By whatsmyname @ 165:
Regardless of that detail being omitted, this is still a very significant plummet in lumber prices that has brought prices back down to not just 2015 levels, but in line with lumber prices all the way back to 2010 levels.
Edit: somehow whatsmyname posted in the future and I replied in the past, before his future post??? Am I psychic and is whatsmyname a time traveler?
RE: Brian @ 165 –
>>somehow whatsmyname posted in the future and I replied in the past, before his future post??? Am I psychic?
You might be a psychic, or perhaps whatsmyname is being predictable? Snark.
UPDATE: As of now, Brian=165 and Justme=166 and Whatshisname=167. I think we must both be psychics. I would not claim that YOU are that predictable. Any stock tips, Brian? :-) :-)
RE: Alyx @ 153 –
Thanks @Alyx. I have no plans to start a blog. @The Tim is doing a great job with seattlebubble, and think of all the history and data he has already covered up to now! My goal is simply to counteract the REIC propaganda and fight against bubbles. Bubbles hurt those who deserve it the least. Glad you are enjoying it.
EDIT: OMG, whathisname=168 now. He has found a way always to get the last word on a thread. Help!!
RE: whatsmyname @ 164 –
Commenting on Justme @ 130:
RE: Deerhawke @ 50 –
Lumber is only one of the costs in building and only one indicator of housing cost– it is not even the most important indicator or input.
But even lumber had a huge runup nationally and locally from 2015 onward. Click on the 5 year view at
https://tradingeconomics.com/commodity/lumber
It is true that general lumber costs have come down somewhat since the second quarter nationally. But because of lag times and because of our local over-reliance on Canadian sourcing (subject to Trump’s tariffs etc) that is hardly reflected in local pricing– yet. But I hope it will be.
Even there, that does not really come close to telling the whole story. Local/regional structural engineers are responding to new codes and new interpretations of those codes that require stiffer shear panels and structures, mostly because of storm and seismic risk. They are requiring more beams, more engineered lumber, more engineered beams, more hangers and hold-downs, etc. This has a much bigger impact on cost than the mere price of raw lumber.
But this also means wider and thicker footings, more thickened slab areas, thicker concrete walls, more rebar, more use of heavy gauge rebar, more hold-downs, etc.etc.
The whole structure of a new basement+2 story single family house in Seattle is dramatically burlier and stronger than a 6 story 62 unit apartment building I worked on as a kid in 1970. There is simply no comparison of one vs. the other.
So, here is the lesson. Justme says he presents data. But here again, he is actually presenting a misleading slant on the topic using one small period of data on one element of the whole that he claims to represent the whole. It is a classic tactic of misusing statistics.
And here again, he demonstrates that he has no first-hand knowledge about anything, just misguided beliefs and opinions pulled from the ether of the internet.
Put bluntly, he does not really know sh+t about anything.
He should be trying to learn from others rather than trying to teach. Since he does not, he has a kind of contagious ignorance.
He is one of the ignorant but opinionated people on this site who is simply not worth reading, along with David and SWE. If you had not mentioned his posting, I would have missed it entirely.
By Justme @ 130:
RE: Deerhawke @ 50 –
>>Every time I look at bids from my subs, I am astounded at how much prices of materials and labor have gone up (with no clear end in sight by the way).
Another anecdote that appears not to hold water. Case in point, price of framing lumber (2×4) is down by over **50%** since May 2018. Have a look at this graph:
https://imgur.com/a/Eb7s9kT
Here is also a live graph for future reference
https://finviz.com/futures_charts.ashx?t=LB&p=d1
Sarcasm: Cue an argument that falling prices on building materials are ALSO bullish, just like rising prices are. I’m waiting.
Justme, once again fighting anecdotal propaganda with DATA, for your benefit.
Justme, Your live graph is really great, and something everyone here should check out.
With a little toggling, one can quickly ascertain that even with the huge drop, lumber prices are near the high of 2016 and higher than anytime in 2015. One wonders why our champion of transparency would have missed this, but perhaps those were not big years for building.
Do you think prices rocketed on unjustified speculation that there would be more future construction than there ever was planned? Or does it now appear that there will be real cuts in what had been planned? Or has there just been too much lumber production even for high volume building? Fortunately, lumber production is much quicker than the house production, and inventory can equalize more rapidly. In the interim, we can maybe look forward to buying lumber at bargain 2015-2016 prices?
Plus the site covers a myriad of markets. One other cool thing I noticed is that the 30 year bond is down 20% from mid-2016. Not that any unemployed persons would be forced to liquidate their position. As we know, that only happens to home-owners.
Thanks, bro.
RE: Deerhawke @ 168 – Deerhawke still thinks Hillary Clinton would have made his life better. And cannot handle the dissent. He still reads everything I say and will not admit it. He also watches Fox News and screams at the TV.
RE: Brian @ 165 –
Brian, see my post above. (Despite the fact that the posting order is all bolluxed up.) Do not be fooled by this argument. Theoretically lumber prices may be down, but for those of us in the real world, we have to buy real lumber with real dollars.
I just finished framing a house that is nearly the same as a house I framed in October 2016. Two years ago almost to the day. Same lumber supplier. Same structural engineer, but different structure responding to the new codes and interpretations.
2016 lumber bill $38,452.88
2018 lumber bill #52,972. 54
Oh, just for your edification, here is the difference in framing labor
2016 framing labor $30,742.80
2018 lumber bill #$40,296.66
RE: Kary L. Krismer @ 160 – Thank you very much Kary for posting the link to the WUCIOA information! I am the president of our HOA and just read through it – we are not under this new law it appears, but it is important to know about if any homes in our cul-de-sac do change hands and if the question comes up, then I will know the answer.
RE: Brian @ 165 – Ah, Good to be back in your present. As I will again explain to you in 2022, the aberration is not so much the decline back to normal range of prices; it is the extraordinary more than doubling in 2017/early 2018. How did you miss that in a bubble blog?
RE: Justme @ 167 – RE: As you generally fail to answer my questions, I nearly always have the last word with you anyway.
RE: Deerhawke @ 168 –Justme is looking at futures. He knows the price a builder pays to get lumber is irrelevant anecdote. The real impact on housing comes from what speculators do. with perhaps some hedging activity by super large players. His arguments are so compelling that I am even now researching tinfoil futures.
By Deerhawke @ 168:
I think that was pretty obvious. Pointing to one commodity as proof of a contrary position is pretty non-compelling.
And as to your teaching versus learning comment, Justme doesn’t want to learn. He just wants to keep pushing the same nonsense, such as his “sellers rushing to the exit” comments which are not fact based.
By Deerhawke @ 168:
I don’t do a lot in the new construction area, but I’m somewhat familiar of some of that. One thing I do like about this market is that if you are involved in a new construction purchase you’re likely to see the house during framing. I don’t understand even half the engineering that goes into it, but one thing which has occurred to me is that remodeling the lower floors of a modern house will probably be very problematic in the future because what the engineer did isn’t apparent once the siding and sheetrock go up.
RE: Deerhawke @ 168 –
ps. Tardy thank you for all the practical nuts and bolts information that you provide. Frequently appreciated, if not frequently mentioned.
RE: Deerhawke @ 171 –
RE: Deerhawke @ 168 –
Look, Deerhawke’s statement that materials and labor generally went up “every time you looked at bids from subs” was misleading or flawed or both. Yeah, it would depend on exactly when you looked, would it not. As the lumber futures curve shows there has been great volatility this year, but not a sustained price increase.
It’s too bad that Deerhawke paid 33% more for lumber in oct 2018 than oct 2016. From the lumber futures curve it seems to match with a 33% cost differential. If he had waited a month it looks like he would have gotten the same price for nov 2018 delivery as for oct 2016 delivery. Note that futures curve is for the so-called front-month contract, with physical delivery 30 days after. Yes, we all know Deerhawke does not buy lumber on futures contracts, but the 33% number actually does match the curve astonishingly well. And by the way, the futures price reflects the effect of tariffs etc. That’s one of the reasons there was a speculative run-up earlier this year. Some might even call it a lumber bubble? :-)
I don’t have curves for cost of other materials than lumber. If anyone does, by all means post them.
My 2 cents – Lumber prices do affect home prices, and can easily add $10k-$20k to the cost of a new 3,000sf home. To say that the price of lumber does not matter because other (regulatory/labor) costs are higher is being dishonest.
RE: Deerhawke @ 171 –
Thanks for all your insights Deerhawke!
I happen to agree that while the Seattle market may stay pretty flat for the next several months, it will likely start to climb again in the first part of next year. There are too many new techie jobs for this market to collapse.
By David @ 162:
Source.
By pfft @ 180:
You know pfft, you are getting so tiring . . . try doing your own homework for a change. Do you do the same thing in person, asking “source?” every time somebody tells you something that you don’t agree with?
RE: Deerhawke @ 171 –
Question for Deerhawke and others that know of builders in the Puget Sound area:
What is the general feeling of those in the construction business in Puget Sound? A temporary glitch in the market that will resume next spring, or is there going to be a real slow down that one must be prepared for?
Are those in the business starting to pull back, or are they going about their business in a different way:
examples:
Continue to build housing, but with less expensive features that may lower the sell price
Continue to build housing – but concentrate on housing that will sell better in a slowing market
Continue to build housing- but price the length of time the new residence will sell into the budget
Discontinue or slow down construction altogether, such as not amassing new building lots for the future
Interested to know what the housing construction community is thinking, and how they are reacting.
By Eastsider @ 178:
I’m not even sure what you mean by that, but that’s not what’s being said. He was saying that lumber is not the only cost, and that not all wood is reflected in the cost of a 2×4 because a lot of wood products are engineered products. Note there’s a reason when I mentioned remodeling modern homes in the future being problematic, but limited that comment to the lower floors. That was a reference to trusses, but trusses are hardly the only engineered wood going into modern homes. The cost of wood is a component of the cost of such products, but they have their own supply/demand curves.
There are also many other products and also the prices subcontractors charge, which would tend to go up during periods of higher levels of construction. It’s the flip side of being able to get great prices on jobs (e.g. sheetrocking) when construction levels are low.
The one being dishonest is the one pointing to one commodity–wood. That would be like pointing to the cost of tires when discussing the trend in the cost of making a car.
RE: ess @ 182 – I can’t answer your questions about what they think, but as to what they will actually do the answer is likely carry on. Once they get to a certain point in a project it might be difficult to stop, and for some that point might be taking title to the dirt. Things have to get pretty dire for them to stop, but that did happen in 2009. There were some houses with foundations poured where the builder didn’t come back to finish for a couple of years.
By redmondjp @ 181:
And it’s not like having the fifth largest pre-inauguration stock market rally is that much of a boast, particularly if the reference is to the first inauguration of a President. There haven’t been that many Presidents and what the stock market does isn’t only affected by who was elected.
But actually, returning to the claim David made that point regarding, trying to claim part of the increase in price I mentioned was due to Trump, I think it would be a bit hard to say Trump’s election helped the price of houses in King County. King County isn’t exactly Trump country so if Trump’s election caused a surge in pricing it would likely only be because some people wanted to buy a house before the nuclear antihalation they expected to be forthcoming. Thirty year mortgages are not that daunting when you expect the end of the world in three.
By Kary L. Krismer @ 41:
FWIW, I heard someone yesterday complaining about the quality of some Viking appliances which were purchased in the past few years. This is a lot of sample of one data, so not great data, but still . . ..
RE: Kary L. Krismer @ 183 – Sure, lumber is just one input. But it is still an important cost component. Lower lumber prices can potentially save $10k-$20k on a 3,000 sf home.
By Eastsider @ 187:
Deerhawke in post 171 pretty much gave an example of that (although he didn’t mention the size of the house, and his example was for the numbers going up, not down). So I don’t think anyone is disputing that type of spread. My point is more that you do have to look at the big picture, including labor and subcontractor costs.
As to lumber, my terminology sucks, but if the piece you pound a gutter into is still called a fascia board when it’s a 2×4, one practice in some modern construction is to only have fascia boards at the corners, and in the lengths to have the rafters cut about 2″ longer so the gutter can just be pounded into the ends. I’m guessing that saves them maybe 75-200 board feet, depending on the size and layout of the house. Relatively insignificant, but they do it. So clearly lumber is an important cost.
RE: David @ 170 –
Open Border Party Time Magazine Just Did a 180 Degree Reset On Trump
The magazine predicts Trump Populism will go on and on now [through 2045 and beyond] ….no stopping it now….its king of the hill.
Black suited “Open Border Party Antifa Soros demonstrators” violently attack Portland’s prayer and law and order march last night….it was violent and graphic….the pictures are PG rated…Antifa is a NWO monster:
https://www.oregonlive.com/portland/index.ssf/2018/10/patriot_prayer_flash_march_cal.html
Seattle next Bubbleheads? Portland is too close for me….
RE: Kary L. Krismer @ 188 –
Oil has Doubled in Price
Diesel Oil for lumber manufacturing and transportation controls lumber prices…almost everything BTW, including food. Massive diesel oil refinery setup is driving lower lumber prices, because if we retain lowered diesel oil prices and high supply and demand stabilizes, while manufacturing setup sky-rockets when we go to low supplies…same with gasoline, the more we sell at a lower price the lower the refinery setups…
Its more than just $75/bbl…that possibly drives lumber prices up…lower home construction rates will do it…
25 posts worth
on how much lumber can dance
on head of a pin
-a bubble distraction haiku
If You Have McAfee Virus S/W
Ignore their latest Adobe upgrades for $40 for like 6 months [a screen popped up for me asking for CC # this morning]…if you have McAfee LiveSafe check your account on McAfee [you’ll need the McAfee account P/W] and decline the apparently useless Adobe version only protection price gouging by that organized crime. Your paid up for a year $40 LiveSafe will still be active and is. The popup begging for money is bogus IMO.
McAfee has their HQs in Central America BTW….controlled by thugs and gangsters and McAfee is currently running from the law.
By Notme @ 191:
LOL on the distraction. I was sort of wondering why we were discussing the cost to build, since even if the costs had been dropping the sales prices of new construction probably would have been rising at about the same rate.
And remember, sales prices were probably 30-40% lower when many these projects were first bought as dirt, assuming any platting and/or underground utilities were involved.
RE: softwarengineer @ 192 – There was also news last week of some fake Adobe upgrades carrying malware. It packaged the Acrobat (?) upgrade, but also delivered malware.
But as to McAfee, I haven’t used it for over 10 years, before its namesake went totally off the deep end, but the reason I stopped was its files required the use of Flash, one of the most insecure programs on the planet. Not really something your AV software should rely on.
one percent of cost
lumber in new house
still use OSB
a construction quality haiku
There is no need for anything other than the built in Windows antivirus as long as you keep UAC on and don’t install lots of random crap. Even better, run 2 accounts, 1 admin and 1 regular user account and never log on to the admin account except for maintenance.
RE: Kary L. Krismer @ 194 –
Yes Kary
Anyone with laptop experience knows Adobe is just an extension S/W for scanning….rarely used BTW….a good assumption the virus S/W is useless or possible FRAUD [very difficult to prove BTW, as you know] as you stated.
BTW, if you seek news stories on Conservative Drudge the McAfee popup now warns you the site is risky….Hades, I’ve been using Conservative Drudge for decades with no issues…
Who audits any of the S/W companies for truth? The Devil? LOL…..more Tech Deviltry in my book…
RE: Matt P @ 196 –
Free Virus S/W is Difficult to Load
My daughter has been using the free stuff for years…no issues to date…
By redmondjp @ 181:
By pfft @ 180:
By David @ 162:
By Kary L. Krismer @ 157:
That’s completely non-fact-based. Some people who bought during Obama’s second term did incredibly well selling …for just over $400k in 2014, then went pending exactly three years later (only a few months after Trump’s inauguration) for a price just under $600k with only minor changes.
I feel a disturbance in the force of your argument.
Also, Trump had the fifth largest pre-inauguration stock market rally in history.
Source.
You know pfft, you are getting so tiring . . . try doing your own homework for a change. Do you do the same thing in person, asking “source?” every time somebody tells you something that you don’t agree with?
I will do anyone’s homework for them. The people who know me know not to bring weak arguments;)
It’s not that I necessarily disagree I just flat out don’t think it’s true until I see proof.
Most of the stuff I write I can easily find a source for because I read it and remember it and even bookmarked it! What do you guys do?
For example the stimulus bill saved or created millions of jobs. I don’t have a source but can google it real quickly if needed.
Looks like the seattle median just dipped down again, with inventory ticking up. Looking at the home page. The charts update every sunday.
Things could get interesting if the stock market dives. It’s already pretty ugly in china and some of europe. Consumer confidence can change very rapidly when news reports start getting negative.
By softwarengineer @ 192:
John McAfee sold the company over two decades ago. They kept the name due to brand recognition. Where do you come up with this stuff? Do you just make it up or is there some source?
By Macro Investor @ 199:
The economic condition in China will have zero effect on the USA. Even Europe has typically had little effect on the US economy. I was in business in the Netherlands u til about 4 years ago and they had a recession essentially. But they were doing well before that even though Obama had driven the US into a depression.
By redmondjp @ 181:
By pfft @ 180:
By David @ 162:
By Kary L. Krismer @ 157:
That’s completely non-fact-based. Some people who bought during Obama’s second term did incredibly well selling …for just over $400k in 2014, then went pending exactly three years later (only a few months after Trump’s inauguration) for a price just under $600k with only minor changes.
I feel a disturbance in the force of your argument.
Also, Trump had the fifth largest pre-inauguration stock market rally in history.
Source.
You know pfft, you are getting so tiring . . . try doing your own homework for a change. Do you do the same thing in person, asking “source?” every time somebody tells you something that you don’t agree with?
why? if someone spews out something, the burden of proof should be on them. this is like journalists providing sources for their stories, not just making ***** up like foxnews and calling it truth. plus, while you’re a hard leaning (R), even you can admit the stuff david posts is probably the biggest garbage you’ve ever seen on a forum before.
By Deerhawke @ 171:
What about Sheetrock prices? They have significantly increased as well. I think they are just as important as lumber for big homes. I used to get them for $7.50 at Home Depot and now they are over 12 bucks.
Paint prices are unbelievable now, and deck stains have gotten outrageously expensive. Olympic deck stains are at least 10 dollars more than 3-4 years ago (and many paint brands)
Even nail and screws prices have gotten ridiculous as well. I finished a deck last year and could not believe how expensive decking screws and hangers had gotten.
PVC pipes, PVC cement, cedar boards, electrical, and the list goes on and on.
P.S. I do not really blame contractors for raising their prices. An Oregon General Contractor showed me his expenses, and between the Federal and State taxes (and licensing fees among others), there was no incentive to work any more. With all these high expenses I think home prices will fall further since renovations to sell them won’t make much sense in a slumping market, so they will look too expensive given the moss pits that they are.
By David @ 201:
You just keep trying to make that a thing don’t you?
By kenmorem @ 202:
My job is not to do the homework of others. If you state something as fact at least have the courtesy to post a source. Otherwise why would we believe you at all? I can’t believe how many times I get sheet for telling someone to have proof of the utter nonsense they post. Most people who post stupid stuff probably don’t even know if what they post is true it just sounds true or is something they desperately want to believe is true because it goes with their biases. Just post a source or whatever you said is just something you likely saw posted on Facebook or breitbart.
In god we trust all others bring data.
trust but verify.
Not my clowns not my circus.
Things are tough all over.
Sacramento Housing in September: Sales Down 15.5% YoY, Active Inventory up 23% YoY
https://www.calculatedriskblog.com/2018/10/sacramento-housing-in-september-sales.html
RE: Kary L. Krismer @ 194 –
A Security Warning On Paypal Emails
Ignore and delete any of them….there are phishing and Trojan[or just plain harassment?] phony ones that look like real. It was in our computer security training years ago….I just received one and quickly trashed it, something about my account being suspended for intrusions. I then use paypal in my browser and enter the official website myself, log-in and check my account status. It was fine and no messages. The email I just got was definitely phony. Hey, training isn’t always a waste of time….LOL
RE: pfft @ 206 –
Yes Pfft
I was thinking about the lumber price hike root cause today…and yes diesel oil quantity refinery setup is the biggest driver [trucks and trains]…but another big driver is saw mill setup. When truckloads get smaller per delivery and less wood manufacturing is occurring…the price will additionally sky rocket from quantity setup changes; meaning huge costs in plant engineering revisions and shipment logistics….then we add in Home Depot’s profit too…LOL
Hades Pfft your Open Border Party similarly needlessly worries about immigrating a bunch of H-2C farm slaves for food, when the plastic containers and diesel oil with Safeway profit makes $50/hr farm labor a moot point on store prices….its all diesel oil and store profit Pfft, not a need for green card farm workers at all….LOL….straighten your party out on immigration before the Midterms, please. We all want informed voters.
Setup changes the whole cost model.
RE: pfft @ 205 –
97% of All the News Not on FOX is Against Trump
At least FOX is the sole counter balance to this rigged brain washing by 100% of all your CNN, NBC, ABC, CBS crap….LOL
When Bush was President all the MSM swooned over that NWO Open Border Puppet Bush….but Trump ain’t no Open Border Party pawn to the Soros billionaires…him and Bush are foes.
RE: wreckingbull @ 201 –
Did They Really Sell the Company?
I’d have to be in on the closed business meetings to verify/audit that today [follow the organized crime secret money trail IOWs] and look into McAffee’s criminal background up on Google yourself [its there and enjoy your crow with mayonnaise…LOL], I saw it on television [he controls a whole village with his security thugs and guns]. I agree with the bloggers who don’t like folks asking them for proof all the time for easy journalism detective work….get off your duffs and disprove me, or keep quiet and polite. Have a great day ;-)
Or forget about my blog and go back to your iPhone games at work….LOL
By softwarengineer @ 211:
Really, it’s truly bizarre the things you post.
McAfee Associates was founded in 1987.
John McAfee resigned in 1994.
The company was bought by Intel in 2011.
The headquarters is in Santa Clara, CA.
https://en.wikipedia.org/wiki/McAfee
(The current year is 2018)
RE: uwp @ 212 –
LOL…Scroll Down on Your URL Webpage for the Juicy Stuff You [errantly I assume] Over Looked
Do you like your crow baked or fried?
“…Controversies
On January 4, 2006, the Securities and Exchange Commission filed suit against McAfee for overstating its 1998–2000 net revenue by US$622,000,000.[48] Without admitting any wrongdoing, McAfee simultaneously settled the complaint, and agreed to pay a $50 million penalty and rework its accounting practices.[49] The fine was for accounting fraud; known as channel stuffing that served to inflate their revenue to their investors.[49]
In October 2006, McAfee fired its president Kevin Weiss,[50] and its CEO George Samaneuk resigned under the cloud of a recent SEC investigation which also caused the departure of Kent Roberts, the General Counsel, earlier in the year. In late December 2006 both Weiss and Samaneuk had share option grant prices revised upwards by McAfee’s board. Weiss and Roberts were both exonerated of all wrongdoing from the claims of McAfee in 2009.[citation needed]
On April 21, 2010, beginning at approximately 14:00 UTC, millions of computers worldwide running Windows XP Service Pack 3 were affected by an erroneous virus definition file update by McAfee, resulting in the removal of a Windows system file (svchost.exe) on those machines, causing machines to lose network access and, in some cases, enter a reboot loop. McAfee rectified this by removing and replacing the faulty DAT file, version 5958, with an emergency DAT file, version 5959 and has posted a fix for the affected machines in their consumer knowledge base.[51][52] The University of Michigan’s medical school reported that 8,000 of its 25,000 computers crashed. Police in Lexington, Ky., resorted to hand-writing reports and turned off their patrol car terminals as a precaution. Some jails canceled visitation, and Rhode Island hospitals turned away non-trauma patients at emergency rooms and postponed some elective surgeries.[53] Australian supermarket Coles reported that 10% (1,100) of its point-of-sales terminals were affected and was forced to shut down stores in both western and southern parts of the country.[54] As a result of the outage, McAfee implemented additional QA protocols for any releases that directly impacted critical system files. The company also rolled out additional capabilities in Artemis that provide another level of protection against false positives by leveraging a whitelist of hands-off system files.[55]
In August 2012, an issue with an update to McAfee antivirus for home and enterprise computers turned off the antivirus protection and, in many cases, prevented connection to the Internet. McAfee was criticized for being slow to address the problem, forcing network operations to spend time diagnosing the issue.[56]
See also
Monitor padlock.svgComputer security portalIndustry5.svgCompanies portalSF From Marin Highlands3.jpgSan Francisco Bay Area portal
RE: softwarengineer @ 213 – McAfee referenced in your comment is a publicly traded company, not an old crazy dude. Two entities with the same name. Weird, I know!
RE: pfft @ 207 –
I watch that market. My middle daughter just relocated there from L.A. We used to live nearby in Granite Bay for awhile. I told her to rent for a year and let things shake out..told her that a few months ago. Talked with an agent friend back at that time and their market was previously strong…but never as strong as to no contingencies as Seattle or Bay Area.
Buyers on strike
bubble not defensible
cheerleaders give up
-a bubble haiku
RE: wreckingbull @ 214 –
Here’s the URL Journalism Detective Work on McAfee [Virus S/W King] I did in 30 seconds [its there under Mcafee crime family]:
https://abcnews.go.com/US/rise-fall-rise-john-mcafee-tech-pioneer-person/story?id=47346015
No….there was just one McAfee CEO and he was charged for murder and on the run….he’s now going into politics I see….perfect Open Border Party politician IMO…LOL…there’s a picture of him with a machine gun strapped to his shoulder in Belize Central America where he holed up hiding. These are our tech Mother Teresa types we should revere??? LOL
I see a MONSTROUS INVASION [10s of thousands] from Central America is marching in MASS to meet Trump’s Border Patrol soon…Trump announced today he will pull all their countries’ foreign aid if we have to house/feed/care for anymore of these invading leaches. Yesterday’s news…I saw pictures of the invaders [they were mostly fat/obese and strutting/gobbling down food in a tent at American taxpayers’ expense]. They come for the free meals?
RE: Kary L. Krismer @ 194 –
The Intel Chip Was Designed With an Open Back Door
MSFT and Apple know the easy backdoor in command and provide to their secret sales staff…..HACKERS???….LOL
Wreckingbull was savvy asking for recent URL updates on McAfee [thank you Wreckingbull] too, I just learned as a result that this CEO case is a mess per the ABC News article I read recently. I had no idea the McAfee Anti-virus was designed in just a “day and half” and he made billions. That is quite the uneducated quick scheme. No engineering degree required, just use the right witchcraft commands….LOL
Other related S/W Witchcraft news…..BECU just told me their adobe [perhaps the malware Kary mentioned?] paperless account statements from last month were never sent to customers….a S/W glitch in their bank’s high tech website….LOL…bank statements missing???…minor problem ;-) I’m getting mine in paper in the mail late and I politely scolded them for incompetence to customers…
Thank God I ignore most S/W Trojan Horse S/W upgrades unless it affects performance, it rarely does BTW.
Organized Crime in my book.
Again, lumber prices do matter –
“Builders are also relieved that lumber prices have declined for three straight months from elevated levels earlier this summer”
Falling Lumber Costs Push Builder Confidence Higher
http://www.mortgagenewsdaily.com/10162018_nahb_builder_confidence.asp
Lumber was costly
need an idiot-proof beat
why won’t buyers dance?
-a deerhawke-inspired soothing-hodgepodge-narrative bubble haiku
RE: Kary L. Krismer @ 160 – One other issue with WUCIOA, the Washington Uniform Community Interest Ownership Act. I’ve not researched this fully, so I don’t know the answer for certain, but if you have a new 25 lot subdivision, thus subject to WUCIOA, and the developer sells 10 lots to two separate builders, and 5 lots to a third builder, the question comes up as to who has to provide the Public Information Statement, and when. I THINK the developer would need to provide the statement to the builder of the five lots at the time they sell, but I’m not sure about the other two builders. I THINK that the developer doesn’t have to provide the statement to those builders, but does the builder need to do so for their sellers? If so, that would be extremely burdensome. I suspect the two ten lot builders could join together to create one statement, but it’s still going to be burdensome.
Hey, We Could save a Ton of Property Tax Money Replacing Seattle Security Forces With These?
https://newyork.cbslocal.com/2018/10/16/knightscope-robot-security-patrol/
Soon robots will be doing all our jobs?
I’ll Miss the Leather Shoes BOGO Sales at K-mart
Much better product than Fred Meyers or Payless sells…
https://qz.com/1424799/a-map-of-the-142-sears-and-kmart-stores-closing-the-us/?utm_source=YPL&yptr=yahoo
See if your neighborhood store is closing too.
RE: softwarengineer @ 222 – This would be an even better idea.
https://www.technologyreview.com/s/612267/your-next-doctors-appointment-might-be-with-an-ai/
This thread cooled off faster than the local housing market.
Speaking of which, yesterday I could hardly keep up with the amount of “price dropped” emails I was getting from Redfin for listings in my favorite search.