NWMLS: Inventory up big from 2017, sales slip

Get access to the full spreadsheets used to make the charts in this and other posts, as well as a variety of additional insider benefits by becoming a member of Seattle Bubble.

October market stats were published by the NWMLS today. Home prices were basically flat from September, and inventory dropped a bit but was up dramatically from 2017. Sales continued to slip from last year as well. September’s year-over-year listing growth was an all-time record at 68 percent, but October’s 86 percent blew that out of the water.

The NWMLS hasn’t published their press release yet so let’s just get right to the data.

CAUTION

NWMLS monthly reports include an undisclosed and varying number of
sales from previous months in their pending and closed sales statistics.

Here’s your King County SFH summary, with the arrows to show whether the year-over-year direction of each indicator is favorable or unfavorable news for buyers and sellers (green = favorable, red = unfavorable):

October 2018 Number MOM YOY Buyers Sellers
Active Listings 4,873 -6.5% +86.1%
Closed Sales 2,052 +11.9% -15.9%
SAAS (?) 1.29 -25.5% +24.8%
Pending Sales 2,295 +2.3% -16.8%
Months of Supply 2.37 -16.5% +121.3%
Median Price* $670,999 +0.4% +6.5%

Here’s the graph of inventory with each year overlaid on the same chart.

King County SFH Inventory

Inventory fell seven percent from September to October, and was up 86 percent from last year. Before this year, the highest year-over-year inventory gain was 61.3 percent way back in February 2008. The number of homes on the market was at its highest October level since 2011.

Here’s the chart of new listings:

King County SFH New Listings

New listings were up five percent from a year ago, but began the usual seasonal decline month-over-month.

Here’s your closed sales yearly comparison chart:

King County SFH Closed Sales

Closed sales rose 12 percent between September and October. Last year over the same period closed sales dropped three percent. Year-over-year closed sales were down 16 percent.

King County SFH Pending Sales

Pending sales were up two percent from September to October, and were down 17 percent year-over-year.

Here’s the supply/demand YOY graph. “Demand” in this chart is represented by closed sales, which have had a consistent definition throughout the decade (unlike pending sales from NWMLS).

King County Supply vs Demand % Change YOY

For the last few months we’ve been charting new territory in year-over-year inventory growth.

Here’s the median home price YOY change graph:

King County SFH YOY Price Change

Year-over-year home price changes edged down from September to October.

And lastly, here is the chart comparing King County SFH prices each month for every year back to 1994 (not adjusted for inflation).

King County SFH Prices

October 2018: $670,999
July 2007: $481,000 (previous cycle high)

The Seattle Times hasn’t posted their story yet. I’ll probably update this post when they do.

0.00 avg. rating (0% score) - 0 votes

About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market. Tim also hosts the weekly improv comedy sci-fi podcast Dispatches from the Multiverse.

764 comments:

  1. 501
    Blurtman says:

    By Joe @ 481:

    RE: QA Observer @ 476

    I predict those houses will be worth less than 70% of today’s asking price in three years. If anybody bought one of those, they should be factoring in the probability of a $500k or more market value loss.

    Price out the lumber, materials, and finishes, and you’ll see they are worth no more than $300,000. A rational person would pay no more than $300,000 for the postage lot. This means they are asking about $1.1M for three months labor from a three person construction team. The cost of that team is no more than $300k, so they are bucking for $800k profit. Reduce the price at least $500k and you get to a more realistic profit the property deserves.

    Making an argument based on fundamental value is jousting at windmills.

  2. 502
    Blurtman says:

    By QA Observer @ 476:

    A developer/realtor bought a larger lot and built 2 houses in lieu of 1 in its place. I was aghast when they listed both of them for what they did, so I decided to tour one. Unimpressed with the finishes I let the realtor that they were asking too much. They laughed and said I was out of touch with the market.
    60 days later I continue to chuckle. May be I should offer $500k.

    https://www.redfin.com/WA/Seattle/2217-3rd-Ave-W-98119/home/132608?utm_source=ios_share&utm_medium=share&utm_campaign=copy_link&utm_nooverride=1&utm_content=link

    Don’t underestimate the wicker chairs on porch feature, easily worth $200k.

  3. 503
    Eddiemaster says:

    RE: Eastsider @ 500 – we are much less export dependent than China is, so Trump is leveraging up (along with other countries according to your WSJ article) to get China to negotiate more fair and transparent terms. China won’t be able to get out of this one. As for Boeing, China already slapped tariff on Boeing’s end of life 737, but none since. They are aware that this can hurt them a lot more. This most likely ends in 2019.

    That’s the logical explanation. From the money side, investors are becoming more optimistic as well. There, I have checked myself~ if you don’t believe it, you can short Boeing.

  4. 504

    RE: Blurtman @ 501
    Yes Blurtman

    When illegal aliens were doing all the Issaquah framing and sheet rock and the homes were getting slapped together for FAR less labor….their prices kept going up and up anyway….what good are illegal aliens to Americans in general then? They just steal our jobs.

  5. 505

    RE: Eddiemaster @ 503
    Bringing Aluminum back to America with tariffs helps Boeing to keep jobs in Seattle too….their materials ship shorter distances…but will Boeing ever break its addiction to Japanese stealing its life cycle intellectual property?

  6. 506
    Eddiemaster says:

    RE: softwarengineer @ 505 – it might still cost Boeing more now than before the trade war on aluminum anyway. I do agree that Trade War if continues and worsens wouldn’t be good for Boeing and others, but I still think it ends in 19’.

    In the meantime, US 10 year yield drops back down to mid September level. How dare it not increase perpetually?? Just kidding, another monthly round of balance sheet unwind is out soon so about time to short the 10 yr.

  7. 507

    RE: Eddiemaster @ 506
    Yes Eddiemaster

    Boeing has a Defense Contract Buffet with Trump too….but I seriously doubt they’ll be using a 737 Japanese Manufacturing life cycle plan [that’s 90% of the cost of an American program BTW all going to Japan with our tax bucks] on refurbished 737 commercial A/C, especially the 737 P-8. It will be all American Manufacturing or nothing with Trump, he’s already mentioned China stealing 737 P-8 IP too.

  8. 508
    uwp says:

    By Justme @ 455:

    Weekend Update, graphical edition:

    Weekend active inventory update, King County, graphical edition. As always, click on link, then click once more for enlarged view.

    King County SFH active for-sale inventory 2017-versus-2018 on 2018-11-17

    Wow, look at those upward streaks. Bring your laptop and show’em off if you meet any bubble-mongers or sellers or buyers this weekend.

    What is a normal market to you?
    2017? 2014? 2008?

    This is why your 2017-2018 comparisons aren’t actually that enlightening.

    I don’t think anyone would say 2015-2017 Seattle housing was normal/healthy. 15 bids for the single house that is available in your target neighborhood is not good.

    If you compare to any other year, current SFH inventory is not scary (in fact, it’s sort of low).

  9. 509

    I was looking at new construction yesterday, three different contractors. One of the three apparently didn’t hire a very good sub to install the siding. I’d be very concerned what that siding will look like in 3-4 years. I would expect significant cracking.

    One actually used metal for the roof valleys. That’s always been my preference, but I did recently see a situation where that really would have been a huge advantage (although a different gutter design would have probably been better).

    And not one I saw, but the inspector I was with on Saturday said the new construction he had just come from the windows were installed upside down (weep holes on top).

  10. 510

    Is the Recent High Tech Stock Degradation Led By Face Book Zuckerberg’s Data Security Issues?

    About a decade ago I warned the Bubbleheads don’t sign up with Face Book, its a security nightmare; I estimated the risk was high then, imagine now.

    https://www.cnbc.com/2018/11/19/facebook-is-on-track-to-post-its-longest-losing-streak-ever.html

    No wonder the Russians and Chinese have all our personal information now and are influencing elections on FB [collusion]. Hold a vampire cross to Zuckerberg’s lame promises. Its the data leak.

  11. 511

    By uwp @ 508:

    What is a normal market to you?
    2017? 2014? 2008?

    The first half of 2012 was pretty normal, or at least returning to normal. Few people recognized it back then.

    This is why your [Justme’s] 2017-2018 comparisons aren’t actually that enlightening.

    They aren’t enlightening due to obvious bias and agenda.

  12. 512

    RE: Kary L. Krismer @ 509
    LOL Kary

    Installed the Windows Upside Down?

    Hey my brother in law bought a new home in 1999 and the copper plumbing use temporary plastic elbows as permanent in the walls….the Olympia location inspectors missed it too [or were paid bribes to miss it?] and the home was water destroyed with the “organized crime” building contractor gone and hiding out with McAfee’s criminal mob in Central America….LOL

    I think the home insurance paid for the damage, have to ask my brother in law if that was possible.

    I still have my original modular windows from 1999 and they all seal water tight still today.

    The fun goes on and on….

  13. 513

    Speaking of new construction, one thing we haven’t really focused on much is how much it is impacting the market (DOM, Median, etc.). Currently new construction makes up about 20% of the active listings and about 15% of the YTD sold listings. And unlike a couple of years ago, they are often selling after completion, as opposed to after the pouring of the foundation. And now you see price reductions rather than price increases on new construction.

    I don’t typically track new construction but seemingly when you have a single year of construction making up such a significant portion of the market that’s going to have an impact.

    Numbers from NWMLS sources, but not compiled by or guaranteed by the NWMLS.

  14. 514
    uwp says:

    By Kary L. Krismer @ 511:

    The first half of 2012 was pretty normal, or at least returning to normal. Few people recognized it back then.

    Yeah, I made a little chart for myself and decided 2003-2004 and 2013 were normalish. I could make a graph for Justme, but I have a feeling he wouldn’t understand it.

    We still have less SFH inventory than 12 of the last 18 years.

  15. 515

    LOL….Seattle Real Estate Perhaps Suffering Severe Mental Consequences From Too Much Screen Time on iPhones?

    Last I read it kills creativity in kids and is degrading IQs. Adults too? Now its depressing all us too….do what SWE does, just use a cheap $8/mo 3G and limited screen time laptop instead….throw away the mind destructive addictive organized crime “drug like” iPhones? A fried egg in a pan….your mind on iPhone screen time drugs…..LOL

    https://www.marketwatch.com/story/new-study-claims-facebook-instagram-and-snapchat-are-linked-to-depression-2018-11-09

  16. 516
    Eddiemaster says:

    RE: uwp @ 514 – short term we should be bearish side on stock, bond, and local housing. I don’t think we have much to go in higher growth rate than we have had since the recession, and as monetary policies normalize, we should get to a slow growth state overall. Long term Seattle area will remain a tech hub with mix of corporations and startups, and population growth will stay modest.
    I think investors chasing yield will be concentrated more on China going forward and USD will start to lose its luster.
    I argue with Joe and Justme because their opinions are highly one-sided, which to me is not true. But I’m not denying that we are in for bearish sentiment. I’ve moved out of my long positions from AMZN, AAPL, NVDA, TWTR on 10/8 to gold and swing trading US bond.

  17. 517
    redmondjp says:

    By Kary L. Krismer @ 509:

    And not one I saw, but the inspector I was with on Saturday said the new construction he had just come from the windows were installed upside down (weep holes on top).

    Those “weep holes” are actually engineered air leaks, Kary, and they are now required by code because the homes are built so air-tight.

  18. 518

    RE: Eddiemaster @ 516
    I Like Your Plan Except Longterm Bonds During Interest Rate Hikes

    I’d go long term CDs or MMs instead.

  19. 519

    By redmondjp @ 517:

    By Kary L. Krismer @ 509:

    And not one I saw, but the inspector I was with on Saturday said the new construction he had just come from the windows were installed upside down (weep holes on top).

    Those “weep holes” are actually engineered air leaks, Kary, and they are now required by code because the homes are built so air-tight.

    Those are something different, and larger, and they are typically at the top of the window. But note I did not see what that inspector saw. I did see the weep holes in the windows at the house being inspected.

  20. 520

    RE: redmondjp @ 517
    Yes Redmonddjp

    Except upside down weep holes mean rain in the house? My manufactured modular is so airtight they had to add many 3 inch circular carbon filter breath holes to the surrounding walls. Allergy sufferers can empathize with me….energy air tight efficiency is a joke too, as breathable air vs energy efficiency are foes…so old leaky windows are good for your health? LOL

  21. 521

    By uwp @ 514:

    By Kary L. Krismer @ 511:

    The first half of 2012 was pretty normal, or at least returning to normal. Few people recognized it back then.

    Yeah, I made a little chart for myself and decided 2003-2004 and 2013 were normalish. I could make a graph for Justme, but I have a feeling he wouldn’t understand it.

    We still have less SFH inventory than 12 of the last 18 years.

    Yep, and here’s a graph showing that for those willing to actually understand facts as opposed to having an agenda. This is the 7th lowest year for inventory, and if only slightly lower it would have been the 4th lowest. But sellers are rushing to the exits! ;-)

    https://seattlebubble.com/blog/wp-content/uploads/2018/11/KingCoSFHInventory_2018-10.png

  22. 522

    RE: redmondjp @ 517 – BTW, one other thing I saw in one of the three new projects which I found surprising was a high efficiency furnace in the garage with no obvious air source (the intake for the furnace did not extend through the wall to the outside). There was a rather large hole that the AC/Heat Pump tubing went through into the crawlspace, but other than gaps around the garage door no obvious air source. Is that now typical?

  23. 523

    RE: Kary L. Krismer @ 522
    Unfortunately Yes Kary

    That’s why I always install my home’s fire extinguisher next to the furnace, plugged dryer vents cause house fires similarly….my dryer is by my furnace next to the safety engineering fire extinguisher too.

    This should be a building code BTW in my book…not just a factoid a few safety engineers [like SWE LOL] aren’t always sharing with us.

  24. 524

    RE: Eddiemaster @ 516
    Gold is Anomalous, So Is Silver

    The owners allege the precious metals are a safe alternative to normal investments [BTW, I have some silver coins, but paid way too much for them to call it an investment]….they price of gold is stuck or plummeting slowly in price for years now…

    https://www.google.com/search?q=gold+price+history&ie=utf-8&oe=utf-8&client=firefox-b-1

  25. 525
    Eddiemaster says:

    RE: softwarengineer @ 518 – I am not longing US10y T tho, rather I’m going with the higher probability that Fed continue the unwind, raising yield, then followed by the investors seeking safe haven, dropping yield. Essentially a swap of insurance policies not unlike hedge fund trading the CDS swap.

  26. 526
    Joe says:

    Several billion dollars of Seattle wealth is evaporating today. Boeing down 5%. Amazon down 4%. Microsoft down 4%.

    Stock markets and RE is highly correlated. In the last bubble, RE plummeted shortly after the stock market, which makes sense given they are competing asset classes, and a sizeable share of compensation is tied to stock.

    Meanwhile, interest rates keep moving up on schedule until this bubble is fully deflated. The Fed would like to see many years of gradual asset price decline ahead, to remove systematic risks from the economy. This bubble went too far too fast, and a LOT of air needs to be let out.

  27. 527

    By Joe @ 526:

    Several billion dollars of Seattle wealth is evaporating today. Boeing down 5%. Amazon down 4%. Microsoft down 4%. .

    And Bitcoin down about 9%. ;-)

    Stocks do affect the upper end of the market.

  28. 528
    DavidE says:

    By Eddiemaster @ 525:

    RE: softwarengineer @ 518 – I am not longing US10y T tho, rather I’m going with the higher probability that Fed continue the unwind, raising yield, then followed by the investors seeking safe haven, dropping yield. Essentially a swap of insurance policies not unlike hedge fund trading the CDS swap.

    Actually, I used to track the 10 year yield, but now equally important is the MBS market. The selling of MBS held by the Fed is actually rising the mortgage rates even thought he 10 year yield is falling. Interesting times.

    “In other words, mortgage rates are climbing faster than the 10-year Treasury yield, now that the Fed has begun to shed mortgage-backed securities. This is expected. It’s part of the QE unwind – it’s part of the Fed exiting the mortgage market and pulling its support out from under it.”

    https://wolfstreet.com/2018/11/14/mortgage-rates-reach-6-percent-sooner-fed-sheds-mortgage-backed-securities-whatll-that-do-to-housing-bubble-2/

  29. 529
    DavidE says:

    By Kary L. Krismer @ 527:

    By Joe @ 526:

    Several billion dollars of Seattle wealth is evaporating today. Boeing down 5%. Amazon down 4%. Microsoft down 4%. .

    And Bitcoin down about 9%. ;-)

    Stocks do affect the upper end of the market.

    Crypto carnage is definitely having a negative impact on Seattle. There are several Seattle based Crypto Wannabees who initially got their funding in Bitcoins and Etherium (when BTC was 19K). Now they are laying off staff and their coins have crashed to nothing. RCHAIN is a good example.

  30. 530
    Eddiemaster says:

    RE: Joe @ 526 – I think I get your point, just that you probably don’t mean ‘highly correlated’ if you know how correlation is computed and viewed mathematically. If you want to keep saying highly correlated, then probably good to back it up with some math. I think you are inferring that these two can have a causality relationship, which still may not may not be true, in 08’ housing crisis shock there was a relationship, in 01’ Dot Com crash, not so much. So again, you are conjecturing. Today we have a high tech valuation situation that is being corrected, if anything this looks closer to the Dot Com bubble.

    And umm your second paragraph, the Fed wanting to see gradual decline of asset classes to remove systematic risk? This I will just straight up disagree with you. Care to cite some sources that isn’t from Zillow? You want to think that there is a consipiracy theory, fine. Bubble went too far too fast..? We have had one of the weakest recovery from a recession in history. Many things you say just don’t add up, it’s as if you look/think things up that agree with your narrative and just plot them down as facts…

  31. 531
    Joe says:

    Amazon stock has dropped $250B in value over the last two months, and this should be expected to have a big impact on Seattle housing demand, unless the stock price quickly rebounds, which , based on current general market activity, is unlikely.

    A $250B drop in Amazon’s stock means that Amazon’s employees have lost about $25B in paper wealth, assuming 10% of the stock is held by employees, which is standard in the Fortune 500. Somebody can provide the exact percentage if they care to research that.

    Of the $25B drop in employee wealth, let’s conservatively assume just 10% of that total relates to employees who are currently renting, are saving for a 20% deposit, and would like to purchase a house or condo. These employees just lost $2.5B of paper wealth. That wealth alone could have purchased 2,500 Seattle homes worth $1M apiece (in cash). It gets worse though. If you assume they would not pay cash, but instead put the usual 20% down, then 5 times that amount of home buying demand has just evaporated. That’s 12,500 homes worth $1M apiece.

    Now, add in stock market drops in Boeing and Microsoft of late.

    Through this simple exercise, you can see that stock price variations can have an enormous effect on housing demand.

    Of course, there are many ways to tweek this crude model, and change the assumptions, but the point is to understand the general magnitude of stock market impacts.

    If you want to know where RE is headed, watch the stock market.

  32. 532
    eddiemaster says:

    RE: DavidE @ 529 – I wouldn’t say how negative yet because these are not good sized companies to begin with, think RCHAIN only has about 50 ppl. And they pay well to get good engineers, who can easily find jobs at either startup or tech corps after layoffs.

  33. 533
    uwp says:

    By Joe @ 531:

    Amazon stock has dropped $250B in value over the last two months, and this should be expected to have a big impact on Seattle housing demand, unless the stock price quickly rebounds, which , based on current general market activity, is unlikely.

    blah blah blah

    That is a lot of fun math.

    Here is some more fun math: Amazon stock is still up 25% year to date.

    Can you re-do your calculations and tell us how many more Seattle houses Amazon employees can buy now than they could in 2017?

  34. 534
    Matt P says:

    By uwp @ 533:

    By Joe @ 531:

    Amazon stock has dropped $250B in value over the last two months, and this should be expected to have a big impact on Seattle housing demand, unless the stock price quickly rebounds, which , based on current general market activity, is unlikely.

    blah blah blah

    That is a lot of fun math.

    Here is some more fun math: Amazon stock is still up 25% year to date.

    Can you re-do your calculations and tell us how many more Seattle houses Amazon employees can buy now than they could in 2017?

    Could be this was a major cause in the crazy bidding this spring. Amazon stock spiked and employees took the gains and bought houses. Now the stock is dropping so they aren’t buying anymore.

  35. 535
    Joe says:

    RE: Eddiemaster @ 530

    You seem to want to focus on pedantic detail, but in moments like this, you have to stay focused on the big picture, which I’ve outlined for you. Have you forgotten the main drivers of this market already? If you choose to focus on the relative pay differences between Amazon employees and Facebook employees, or other loose factors, during the middle of a stock market and RE route, you will be very disappointed.

    The main driver, of course, is interest rates, which are headed to 6% next year. The Fed has told us this, and the Fed is the party that determines interest rate policy. The Fed has said it would only consider pausing interest rates if the economy stalls or asset prices drop 20%. So whether the Fed continues raising rates or pauses, RE takes a big hit. It’s that simple. You are imagining complications that don’t exist.

  36. 536
    uwp says:

    By Matt P @ 534:

    Could be this was a major cause in the crazy bidding this spring. Amazon stock spiked and employees took the gains and bought houses. Now the stock is dropping so they aren’t buying anymore.

    As Kary has said, there are likely lots of factors that brought about the slowdown of the last 6 months. But whatever the case, shares of Amazon are higher now than they were at the start of the year.

    If I wanted to create a ridiculous argument, I could say:

    “The recent dip in Amazon’s stock price has probably spooked employees into selling their shares because they realize they won’t go up 100%/year forever. And now that the housing market has somewhat cooled, they will likely take those gains and finally buy that house they were losing to competing all-cash offers. Plus, they learned that they won’t be able to request a transfer to a HQ in Austin, Texas, land of warmth and low-house prices.

    Look out for a stampede of buyers who had been waiting for the HQ2 announcement before they bought!”

    (I don’t necessarily believe that, but you know, I have to play the part of the Bubbler!”

  37. 537
    Eddiemaster says:

    RE: Joe @ 535 – yea.. Fed’s interest rate raise isn’t what the mortgage rate rise is based on… the mortgage rate tracks the longer term yield, which is more of the balance between investor sentiment and bond supply. This is how I know you don’t know what you are talking about. Keep it up tho, it’s kinda amusing.

  38. 538
    Bumble says:

    By Kary L. Krismer @ 521:

    Yep, and here’s a graph showing that for those willing to actually understand facts as opposed to having an agenda. This is the 7th lowest year for inventory, and if only slightly lower it would have been the 4th lowest. But sellers are rushing to the exits! ;-)

    https://seattlebubble.com/blog/wp-content/uploads/2018/11/KingCoSFHInventory_2018-10.png

    True, 7th lowest inventory out of 18 years ain’t bad. But we started 2018 in 1st out of 18. It only took 8 months to go from 1st to 7th. That is the headline RE story for 2018 imho.

    Look at the graph again. The other years with steep increases mirroring 2018 are 2006, 2007, 2008. You are right that 7th isn’t bad and the sky may not be falling, but the chart shows there is more to the story than simply being in “7th.”

  39. 539
    DavidE says:

    By Joe @ 531:

    Amazon stock has dropped $250B in value over the last two months, and this should be expected to have a big impact on Seattle housing demand, unless the stock price quickly rebounds, which , based on current general market activity, is unlikely.

    A $250B drop in Amazon’s stock means that Amazon’s employees have lost about $25B in paper wealth, assuming 10% of the stock is held by employees, which is standard in the Fortune 500. Somebody can provide the exact percentage if they care to research that.

    Of the $25B drop in employee wealth, let’s conservatively assume just 10% of that total relates to employees who are currently renting, are saving for a 20% deposit, and would like to purchase a house or condo. These employees just lost $2.5B of paper wealth. That wealth alone could have purchased 2,500 Seattle homes worth $1M apiece (in cash). It gets worse though. If you assume they would not pay cash, but instead put the usual 20% down, then 5 times that amount of home buying demand has just evaporated. That’s 12,500 homes worth $1M apiece.

    Now, add in stock market drops in Boeing and Microsoft of late.

    Through this simple exercise, you can see that stock price variations can have an enormous effect on housing demand.

    Of course, there are many ways to tweek this crude model, and change the assumptions, but the point is to understand the general magnitude of stock market impacts.

    If you want to know where RE is headed, watch the stock market.

    I think Boeing and Microsoft stock price is much more important to the local economy than Amazon’s–many more employees have vested stock options at Boeing and Microsoft and many more have retired. Both companies however have moved a great number of employees outside the U.S. and the ones working there are mostly contractors now, so going forward the stock options will not really help Seattle any more as it did in the past since most employees at Boeing and Microsoft won’t get any. Amazon is doing the same thing now.

  40. 540
    Jason says:

    RE: DavidE @ 539 – I don’t know about Boeing, but I work at Microsoft. Microsoft had 50,294 Puget Sound FTEs as of June 30, and has been adding headcount. The upcoming campus refresh adds more office space, and individual offices are going away as FTEs are moved into denser open space.

    Amazon’s stock might be more important for its employees because it’s a larger focus in their compensation philosophy. No one gets more than $160k cash comp (I’m not sure if that number has changed recently, but that was the deal within about the last year), but they can get quite a bit more in restricted stock units (RSUs) that vest over 2(?) years. Microsoft will pay more cash (base salary + cash bonus), so while MSFT RSUs can be a significant source of income, they’re not necessarily as dominant as AMZN. As such, I’d expect that Amazon employees were expecting a higher total compensation this summer than what they could currently expect. MSFT hasn’t been hit as badly, although AMZN’s growth was also better.

    https://www.google.com/search?q=msft&tbm=fin#smids=/m/07zl90k&wptab=COMPARE

  41. 541
    Joe says:

    RE: uwp @ 536

    You could make that argument, but it would be silly.

    Let’s focus on what we know for sure. Amazon employees now have $25B less paper wealth than they had two months ago. All else equal, this will remove demand from Seattle RE market, relative to two months ago, a time when RE transactions were already falling.

    This would impact Seattle the most, but the East Side should be impacted as well. Of course, if Microsoft stock starts dropping in line with its fallen tech brethren, the East Side would surely get hammered by a huge drop in wealth.

  42. 542
    Rentin’ says:

    RE: Bumble @ 538

    Yes. This. It’s the dramatic change that’s important here. No one can actually know where this is headed, but the market is changing and doing so quickly.

  43. 543
    redmondjp says:

    By Kary L. Krismer @ 522:

    RE: redmondjp @ 517 – BTW, one other thing I saw in one of the three new projects which I found surprising was a high efficiency furnace in the garage with no obvious air source (the intake for the furnace did not extend through the wall to the outside). There was a rather large hole that the AC/Heat Pump tubing went through into the crawlspace, but other than gaps around the garage door no obvious air source. Is that now typical?

    This seems typical to what I have seen as well. Garage doors are pretty leaky along the sides especially, so it doesn’t worry me that much. The high-efficiency furnaces used to have a separate combustion air inlet, but due to cost-cutting in the furnace itself, this feature seems now to be commonly omitted, which means that the home designer must allow for a source of combustion air. I have installed two high-efficiency furnaces in my house in the past 20 years (they tend to corrode internally due to a leaking secondary heat exchanger, which causes a lot of internal damage to the rest of the furnace from the corrosive condensate), and the newest one has a seamless, stainless-steel tube secondary heat exchanger. We’ll see how long this one lasts.

  44. 544
    SeattleTechie says:

    I work for a big tech company in the area. There are unsubstantiated rumors of layoffs. Emphasis on unsubstantiated. Still, it’s unnerving. If layoffs hit Amazon or even Facebook, the housing market in Seattle could seriously chill further.

  45. 545
    Gooddeal says:

    I’m sorry but you are flat out wrong. Code requires ventilation due to increasingly tight homes, yes, but windows are not engineered to leak air. Windows should be air tight. Those holes are weep holes for drainage and they do not go through the IGU into the interior and only allow moisture that gets between the window cladding and IGU to drain out.

    By redmondjp @ 517:

    By Kary L. Krismer @ 509:

    And not one I saw, but the inspector I was with on Saturday said the new construction he had just come from the windows were installed upside down (weep holes on top).

    Those “weep holes” are actually engineered air leaks, Kary, and they are now required by code because the homes are built so air-tight.

  46. 546
    whatsmyname says:

    I know that the Estately inventory count tends to run lower than the NWMLS official numbers as announced at the end of the month. Still, the former has just re-crossed what one Seattle Bubble poster has called the “all important” 4,000 mark.

  47. 547
    Gooddeal says:

    By redmondjp @ 517:

    Those “weep holes” are actually engineered air leaks, Kary, and they are now required by code because the homes are built so air-tight.

    I’m sorry but you are flat out wrong. Code requires ventilation due to increasingly tight homes, yes, but windows are not engineered to leak air. Windows should be air tight. Those holes are weep holes for drainage and they do not go through the IGU into the interior and only allow moisture that gets between the window cladding and IGU to drain out.

  48. 548
    Gooddeal says:

    By Kary L. Krismer @ 522:

    RE: redmondjp @ 517 – BTW, one other thing I saw in one of the three new projects which I found surprising was a high efficiency furnace in the garage with no obvious air source (the intake for the furnace did not extend through the wall to the outside). There was a rather large hole that the AC/Heat Pump tubing went through into the crawlspace, but other than gaps around the garage door no obvious air source. Is that now typical?

    If it was a heat pump system the furnace is likely not a furnace but an air handler.

  49. 549
    Joe says:

    Various pundits appear to be placing significance on the thought that sellers are not panicking, but this is the type of half-baked thinking you often see used to confirm a bias or defend an ego. The fact is, the panic has always been on the buyer’s side. Up until six months ago, buyers had extreme fear of missing out, and panic buying drove prices up by 20-40% in only a few years. Sellers were in no rush to sell, evidenced by unusually low transaction volume.

    Fortunately for buyers, you don’t need panic selling for prices to drop fast. All you need is an end to panic buying, which we are now experiencing.

    People who have a need to sell are dropping prices quickly. Prices are down 9% in just the last six months, and prices are continuing to fall. The number of price drops per month is now over 3x the level of last year (see link to article below).

    A few sellers on the margin are creating new lower comparables for the entire market. By the end of this rout, which will likely take a few years to unfold (like last time), 95% of home owners will watch as the other 5% lock in some gains and drive down prices for the entire market.

    Buyers that jump early will get hurt as they try to catch the falling knife. Those who bought this summer have already lost $100,000 in market value in many cases, and much evidence indicates this rout has only begun. We just passed the inflection point of a multi-year price run. Buyers who wait this out patiently will likely be able to purchase a much nicer home in a better location, relative to what they could buy today.

    https://wolfstreet.com/2018/11/17/housing-market-downturn-seattle-bellevue-king-county-active-listings-price-reductions/

  50. 550
    whatsmyname says:

    RE: Joe @ 531
    If someone had suggested to you two months ago that there was immediate Amazon based sales demand for 12,500 $1 million dollar homes in Seattle, you would have bust a gut laughing. But now you tell us with a straight face that such demand as did not exist has just gone away. This is not good for your credibility.

  51. 551
    Justme says:

    I think it matters not so much that Amazon stock is still up 25% for the year, when it has dropped 26% in 10 weeks. Q4 (Xmas) is not going to be pretty either.

    QUOTE: Amazon [AMZN] dropped 5.1% today to $1,512.29 and is down 26% from the peak on September 5, when shares almost kissed for the briefest moment $1 trillion. Up by escalator, down by elevator. $254 billion have gone up in smoke. No one on Wall Street griped when market cap jumped by $254 billion in 12 months for no reason, but now the wailing and gnashing of teeth is deafening.

    https://wolfstreet.com/2018/11/19/fangman-stocks-plunge-fb-amzn-nflx-goog-ms-appl-nvda/

  52. 552
    Justme says:

    Another important topic is exactly how Amazon uses RSU (stock) grants as part of employee compensation. I looked at Quora and it seems that Amazon tends to target a dollar value for the RSU so that the total compensation reaches a specific amount assuming the current stock price.

    As long as the stock keep going up, people are happy and apply the “mental accounting” (remember that phrase?) that the RSUs are worth X. But when the stock price starts dropping, and the RSUs have not vested, you cannot sell yet and you get the mental losses as well. That does have a psychological effect on your willingness to buy houses at high valuation levels, like now. Better wait for the stock to rise again, right? But Amazon stock may take 10 years to recover, like it did after 1999.

    https://www.quora.com/Does-Amazon-award-RSU-every-year

    QUOTE: If the share price has increased a lot, you may not receive new RSUs despite performing well in the team as the dollar value matters to them (not the number of RSUs) or you may receive something for future years. I have seen cases where people got promoted but received no additional shares.

  53. 553
    Eastsider says:

    From today’s WSJ –

    Amazon Employees Join the Rush to Buy Long Island City Condos (pay wall)
    https://www.wsj.com/articles/amazon-employees-join-the-rush-to-buy-long-island-city-condos-1542709801

    Condo sales in Long Island City are suddenly soaring, thanks to Amazon.com Inc.’s decision to open a headquarters in the Queens, N.Y., neighborhood. One local brokerage firm reported it sold nearly 150 units over four days last week, about 15 times its usual volume.

    Joining the rush were at least three Amazon employees who recently bought homes in Long Island City, according to real-estate brokers. Two of them signed contracts at the Galerie, a new 11-story condo building with a pool and interior courtyard, said Brendan Aguayo.

    As Amazon Plants HQ2 Flags, Seattle’s Housing Market Shudders (pay wall)
    https://www.wsj.com/articles/as-amazon-plants-hq2-flags-seattles-housing-market-shudders-1542715205

    Amazon.com Inc.’s announcement last week that it will add new headquarters in New York and Virginia, far from its hometown, injects new uncertainty into the already slowing Seattle market.

    Seattle home sales are already down this year compared with last and home price growth has eased. Price cuts are becoming more common and bidding wars more scarce. Rental landlords are struggling to lure tenants, promising perks like free rent and $2,500 Amazon gift cards.

  54. 554

    By Gooddeal @ 546:

    By Kary L. Krismer @ 522:

    RE: redmondjp @ 517 – BTW, one other thing I saw in one of the three new projects which I found surprising was a high efficiency furnace in the garage with no obvious air source (the intake for the furnace did not extend through the wall to the outside). There was a rather large hole that the AC/Heat Pump tubing went through into the crawlspace, but other than gaps around the garage door no obvious air source. Is that now typical?

    If it was a heat pump system the furnace is likely not a furnace but an air handler.

    It was a natural gas high efficiency furnace with an AC or heat pump connected.

  55. 555
    whatsmyname says:

    RE: Justme @ 550 – Very interesting. The first 2 of the 3 responses on the board go further to explain that the vesting is slow enough that Amazon can and does treat the cash bonus as an up-or-down equalizer to pay what they intended from the start. That would mean that an employee could do the same “mental accounting” no matter what is happening with the stock price.

  56. 556

    Here’s a story that caught my eye. Shorting natural gas in the autumn lead to an option firm’s bankruptcy.

    https://oilprice.com/Energy/Natural-Gas/Natural-Gas-Price-Explosion-Bankrupts-Traders.html

    I haven’t followed NG prices, other than noting they’ve been volatile. Still, seems like an odd position to take, but I wonder if the price move was magnified by that pipeline issue up in Canada. Maybe that news never made it to Florida.

  57. 557
    Joe says:

    RE: whatsmyname @ 548

    I suggest you are emotionally invested in the bubble, groping for reasons to support an emotional bias. WAKE UP! All indicators are pointing down, and it’s sinking fast. Prepare yourself to avoid big financial losses. I’m here to help you.

    Meanwhile, Microsoft joins the wealth reduction party. $32B in market capitalization has evaporated this morning as I write this. That’s $3.2B of local Seattle wealth gone up in smoke

    As I said earlier, follow the stock market to see where buyer wealth, local compensation, and local RE demand is headed.

    You do yourself a disservice by focusing on message board fights and ego preservation at a time when rational big picture thinking is required.

  58. 558
    Eddiemaster says:

    RE: Eastsider @ 551 – I know I am going in on speculate on LIC. I don’t see a problem chasing yields at all in a tax advantageous situation. I also haven’t plunked down anything in Seattle for over 3 years, so I’m not contributing locally lately, but mostly I just haven’t believed that I would make money local RE for several years.
    The WSJ article does quick updates on the big points relating to just HQ2 and provides a more fair discussion of headwinds and some of tailwind factors. It indicated that AMZN HQ 2 will have relatively benign effect. I do like that speculators (the ones who willingly buy ramblers for 900k and rent them out for 3k for super low CAP rate) will divert attention, and hopefully families buy houses to live in and raise children in them.
    I don’t particularly buy the stock market theory that some are trying hard to sell, suggesting that the market cap is held heavily in would be buyers hand), ultimately the supply and demand comes down to job creation/loss, rent-own ratio, affordability, none of which is static. A perma bear might just claim that each will continue to get worse. And People can be emotional and driven by fear mongering to not buy anything, so I believe short term bearish sentiment has set in motion.
    People can find all kinds of opinions online to support whatever sentiments they hold. I think Joe (the parrot?) does a good job sticking to that narrative albeit he has little understanding of the facts and just recite what he reads on wolfstreet. Ultimately the investors are the ones who have to soak all info good or bad to make decisions and hedge against risks. Those who just talk will keep talking, at worst they eat their words, that’s all.

  59. 559
    Ardell says:

    RE: Gooddeal @ 547

    He is correct about the “leaking air” feature. They are called “trickle vents” and are usually on the side vs top or bottom. They have an open/close feature and so do not remain open as a constant like weep holes. Not sure if they are a code requirement, but am working on replacing a faulty one in a new construction condo sale in Redmond. So maybe yes in Redmond but not everywhere? I don’t remember when I first started seeing them, but at least a couple of years ago and likely longer.

  60. 560

    By Ardell @ 559:

    RE: Gooddeal @ 547

    He is correct about the “leaking air” feature. They are called “trickle vents” and are usually on the side vs top or bottom. They have an open/close feature and so do not remain open as a constant like weep holes. Not sure if they are a code requirement, but am working on replacing a faulty one in a new construction condo sale in Redmond. So maybe yes in Redmond but not everywhere? I don’t remember when I first started seeing them, but at least a couple of years ago and likely longer.

    Much longer–probably over 15 years ago. The ones I’ve seen break are the ones where there’s a sliding mechanism about 12-15 inches long that sits inside the window frame, and has a small point sticking out that you’re supposed to use as a handle to move it back and forth. Move it one direction and it moves out from the frame to create a vent opening. Like the open and closed pictures here: http://www.1stassociated.co.uk/articles/trickle-vents.asp

    Others have the mechanism inside the frame with just a small knob sticking out to move it back and forth. Those would probably be difficult to break.

  61. 561
  62. 562
    Joe says:

    RE: Eddiemaster @ 558

    More name-calling from Eddie, as the stock markets and RE are tanking.

    Be very careful. If you apply Eddie’s thinking, there is never a bad RE market.

    Prices falling fast – that’s a fluke
    Transaction volume drying up – that’s doesn’t mean anything
    Local stock market wealth evaporating – that doesn’t matter
    Real estate prices at a multi-year inflection point – why would that matter?

    The only thing that apparently does worry Eddie is the thought that another message board poster has a handle on this market.

    It’s hard to perform objective analysis in this state of mind. Look at the efforts wasted on ego preservation.

  63. 563
    whatsmyname says:

    RE: Joe @ 557 – Too, too funny. You are here to help me – with logic chains that you cannot defend on their own merits. Earlier this month you expressed alarm that the falling knives in Seattle had been thrown 50 feet in the air!!!! Then you decried that prices had been rising for a decade (since 2008)??? I would counter that it is you living in an emotional dysfunction, my friend. I think that, like Justme, you are desperate to get a house that you cannot afford; and perhaps to get a deal that will make your house-owning friends wish they had listened to you. I don’t know why else you would keep bringing ego into the equation.

    As for my emotional situation, I would/will welcome an opportunity to find contractors more available, and more hungry. I like being able to sell a house with confidence that I can find a replacement. I’m ready.

    This is not my first real estate rodeo, and certainly not my first experience with downturns . But RE is not for day traders. I do not suggest that you buy any. I am personally not looking for any at this time. Like Eddiemaster, I think we are due for a down period of reasonable decrease and duration – although I am not certain. Somehow, in this alternative world, messing with the perma-pandas’ worst errors makes me a bubble monger. OK.

  64. 564

    RE: Joe @ 562 – There are several reasons the stock market is going down, including relatively benign things like the price of oil dropping or investors realizing that $1,100 smartphones are not that popular (or necessary).

    But there’s also what I would call sentiment. Part of the reason I like watching the price movement of Bitcoin is it’s a market that is moved virtually only by sentiment, and only has value due to sentiment. It’s just pure market and nothing else. What has happened there really causes me to question stock market valuations.

  65. 565
    Ardell says:

    RE: Kary L. Krismer @ 561

    Seriously? You’re either joking or you get the asshat of the year award for that link. LOL!

  66. 566

    RE: whatsmyname @ 563 – The Seattle Times is reaching out to hear from the perma-bears. :-D

    https://www.seattletimes.com/seattle-news/data/are-you-living-with-your-parents-in-the-city-of-seattle-we-want-to-hear-from-you/

    (Yes, that was low, but I couldn’t resist.)

  67. 567

    By Ardell @ 565:

    RE: Kary L. Krismer @ 561

    Seriously? You’re either joking or you get the asshat of the year award for that link. LOL!

    Huh? You object to the name of the site? I didn’t find anything offensive in the article I linked, but mainly I linked it for the pictures.

  68. 568
    Momentum says:

    Inventory when looked at in time has a vector and therefore direction of the vector is just as important as the magnitude. ONE must look at both magnitude and direction to understand the market IMHO!!

    Momentum is a commonly used term in sports. A team that has the momentum is on the move and is going to take some effort to stop. A team that has a lot of momentum is really on the move and is going to be hard to stop. Momentum is a physics term; it refers to the quantity of motion that an object has. A sports team that is on the move has the momentum. If an object is in motion (on the move) then it has momentum.

    Momentum can be defined as “mass in motion.” All objects have mass; so if an object is moving, then it has momentum – it has its mass in motion. The amount of momentum that an object has is dependent upon two variables: how much stuff is moving and how fast the stuff is moving. Momentum depends upon the variables mass and velocity. In terms of an equation, the momentum of an object is equal to the mass of the object times the velocity of the object.

    Momentum = mass • velocity
    In physics, the symbol for the quantity momentum is the lower case p. Thus, the above equation can be rewritten as

    p = m • v
    where m is the mass and v is the velocity. The equation illustrates that momentum is directly proportional to an object’s mass and directly proportional to the object’s velocity.

    The units for momentum would be mass units times velocity units. The standard metric unit of momentum is the kg•m/s. While the kg•m/s is the standard metric unit of momentum, there are a variety of other units that are acceptable (though not conventional) units of momentum. Examples include kg•mi/hr, kg•km/hr, and g•cm/s. In each of these examples, a mass unit is multiplied by a velocity unit to provide a momentum unit. This is consistent with the equation for momentum.

    Momentum as a Vector Quantity
    Momentum is a vector quantity. As discussed in an earlier unit, a vector quantity is a quantity that is fully described by both magnitude and direction. To fully describe the momentum of a 5-kg bowling ball moving westward at 2 m/s, you must include information about both the magnitude and the direction of the bowling ball. It is not enough to say that the ball has 10 kg•m/s of momentum; the momentum of the ball is not fully described until information about its direction is given. The direction of the momentum vector is the same as the direction of the velocity of the ball. In a previous unit, it was said that the direction of the velocity vector is the same as the direction that an object is moving. If the bowling ball is moving westward, then its momentum can be fully described by saying that it is 10 kg•m/s, westward. As a vector quantity, the momentum of an object is fully described by both magnitude and direction.

  69. 569

    RE: Kary L. Krismer @ 564
    Another Reason Tech Lost a Trillion in Stocks for the year To date

    The Open Border Party took control of the House again? Cortez would agree with me. No one admits it, but it appears a good theory anyway.

  70. 570

    RE: softwarengineer @ 569
    They Want Tax Cut Phase II

    And now that’s flushed down the toilet bowl with the WALL money.

  71. 571
    whatsmyname says:

    RE: Momentum @ 568 – That was excellent. I can only add that per the discussion in the earlier unit, “When vectors are outlawed, only outlaws will have vectors”.

  72. 572

    The Bubbleheads Thriving Off Quantitative Easing Debt Zero Interest

    Are in for a HUGE nightmare in their portfolio in my opinion…$CASH$ is King now? Sell a lion’s share of your MSFT/AMZ stock now and convert to CDs or MMs?

    https://www.bloombergquint.com/markets/goldman-says-it-s-time-for-equity-investors-to-boost-their-cash#gs.kYfrSCs

    We’ve reached a new paradigm branch in the financial path to profit or failure?

    IMO, we have.

  73. 573

    Maybe Medical Marijuana Can Help Seattle Psychologically?

    Its classed a mild euphoric [not a depressant like alcohol or a narcotic like opioids] and does calm the nerves [especially the high CBD content indicas for pain relief and insomnia]…our anxiety level is high right now they say:

    https://theweek.com/articles/808417/american-anxiety

    Throw that anxiety generator iPhone in the trash? Its like a new horrifying drug addiction in America now? Wide World of Weed in Tacoma has high grade medical indica ounces for like $80 with tax. Put down the booze bottle and switch to indica? LOL

    I stopped drinking alcohol years ago BTW, but it makes me fat or I’d have some.

  74. 574
    Blurtman says:

    RE: softwarengineer @ 573 – A homeless wizard, who I took to be Zeus himself, incarnate, once explained that the brain likes to get high. Alcohol related calories add up A healthy pour of a full bodied red can add 200 calories. But if ganja you must do, eat it. Smoking anything is bad for you.

  75. 575
    Joe says:

    RE: SeattleTechie @ 544

    You are correct to be worried. The layoffs are inevitable. We are at the tipping point of a multi-decade stock price run where P/E ratios and asset prices expanded for no reason other then speculation. Now, the Fed has to put on the brakes because there is too much debt and speculation out there. Interest rates are rising, which hurts earnings. Wages are rising, which hurts earnings. Consumer confidence is falling with the stock market, which hurts final demand and revenues. This is why retail stocks took a 10% pounding today alone. Worse of all, these items create a negative feedback cycle that can go on for many years, just like the positive feedback cycle fed the excesses on the way up.

    Look at the debt levels of big tech companies and the system at large. To handle the higher interest costs and future revenue stagnation, they’ll have to cut costs elsewhere. Compensation is the biggest line item on the income statement for them to look at.

    The fact is, they’ve utilized every imaginable tool to squeeze all the juice out of this economy. The bull market has been extended well beyond its rightful stay. The fat asset prices in stocks and RE will have to be sharply reduced before real long-term investment and economic growth can begin again. We have experienced the beginnings of this titanic shift the last few months. Prudent buyers will wait for the significantly reduced asset prices that lay ahead.

  76. 576
    Notme says:

    Das REIC helps buyers
    suddenly it is time to stop
    and right at the peak

    -an any-time-before-the-peak-was-a-good-time-to-buy bubble haiku

  77. 577
    Joe says:

    RE: Kary L. Krismer @ 564

    I agree with that wholeheartedly. Sentiment does matter, and it drives asset prices more than fundamentals, even over long periods. History is full of speculative frenzies, like that one that is just beginning to end. History tells us the results of these sentiment frenzies are always the same and not good. Sooner or later, they fully deflate. Once a negative feedback cycle sets in, like we are seeing right now, there is no stopping it.

  78. 578
    Notme says:

    The vesting is slow
    refill of stock may help me
    in about four years?

    -a waiting-out-the-bust-out-of-necessity bubble haiku

  79. 579
    Notme says:

    Bubbles of smoke drift
    can’t help the moss collapsing
    only medicinal use

    -a bubble haiku

  80. 580
    Joe says:

    RE: whatsmyname @ 563

    It’s good that you are not buying any RE right now. Delaying RE purchases to avoid significant loss has been my objective as well. It appears you learned a bit from your first “dance” with a RE downturn, which is good.

    I have no objection to your post, aside from the personal insults, which might denote some sort of emotional agenda. I can, however, confirm your fear of falling prices is well placed, but I believe you underestimate the severity of what looks to be a multi-decade turning point in asset prices.

  81. 581
    Eastsider says:

    By SeattleTechie @ 544:

    I work for a big tech company in the area. There are unsubstantiated rumors of layoffs. Emphasis on unsubstantiated. Still, it’s unnerving. If layoffs hit Amazon or even Facebook, the housing market in Seattle could seriously chill further.

    I want to add that most tech workers stay at one job for under 3 years. The median age of tech workers is just under 30. At FB, it is 28 according to Statista.

    https://www.businessinsider.com/median-tech-employee-age-chart-2017-8

  82. 582
    Joe says:

    Wow, stock market dip buyers are getting burned today. Even if it recovers, the volatility and uncertainty will linger. It’s a good day to be hedged. Amazon back down into the 1400’s again. Lots of negative sentiment out there that likely won’t go away anytime soon.

    Stocks lead, RE follows.

  83. 583
    momentum says:

    technically it would be a positive feedback system. Negative feedback systems typically keep things static like your thermo”stat”-which works off a negative feedback system. :)

  84. 584
    eddiemaster says:

    RE: Joe @ 562 – hello good ole Joe, again resorting to labeling people as emotional, egotistical, and name-calling, all while doing the same himself and avoiding to acknowledge that he doesn’t understand what is going on.
    Go ahead, educate people here why you linked Feds raising interest rate to mortgage rate increase (mortgage rate dropped today, hmm did the Fed lower interest rate?). Same with stock bear market, you immediately linked it to tanking real estate with absolute certainty and called them highly correlated. Several have challenged you, and you have yet to produce any logical response but to brush off as pedantic.
    You see, it is an easy tactic to take on, you just link one thing to another, sort of find supporting articles from another blog, and be done, but when you start to believe that what happens in the future must mean exactly what you think is going on now, you better be able to put money where your mouth is. It is that easy, make money off your prediction or you are just all talks. Now, can you honestly put 1 mil (provided that you even have that) on something that you don’t actually understand? Let’s see if you are an even bigger gambler than your mouth is. There, I’m trying to help you, pushing you to make money off ‘certainty’ that you so claimed. Although chances are high again that you are going to avoid.

  85. 585
  86. 586
    Blurtman says:

    As folks bail from their underwater homes, or lose them to interest rate resets, the homeless will be viewed as trendsetters. Get you spot under the freeway now, before it is too late.

  87. 587
    whatsmyname says:

    RE: N @ 585 – True question, as I am not familiar with the subject except through references here, but: If we were to temporarily define “making money” as any financial benefit not derived from the act of declining to buy real estate, has anyone ever made any money by following the advice of wolfstreet.com?

  88. 588
    uwp says:

    I like that 4 “different” people in the last 24 hours have posted articles from trusted news site “Wolf Street.” As I’m sure you are all aware, “Wolf Street” is the successor to (I am not making this up) “TESTOSTERONE PIT: Where The Truth Comes Home to Roost.”

    Founder and publisher Wolf Richter has been imparting his truth nuggets on “Housing Bubble 2” since 2011. With great pieces our friends here have not linked to like:

    Schizophrenia in the Housing Market“Home prices are going to drift lower for years to come. “ – July 2011

    Bullish Hoopla in Housing Is Driven by Bogus Inventory Reports“There has been another wave of media hoopla about housing being on the upturn…Just like the good ol’ times.” – July 2012

    Housing Bubble In Full Bloom, Zany Price Increases, And Now A Sudden Slowdown“The new housing bubble has been beautifully inflated – and is approaching full bloom.” – Sept 2013

    Housing Bubble 2.0 Veers Elegantly Toward Housing Bust 2.0 “This is so like 2006.” – April 2014

    I would link to them all, but it would just get caught up in moderation, so you can peruse at your leisure:
    https://wolfstreet.com/category/all/housing/page/36/

  89. 589
    Joe says:

    RE: eddiemaster @ 584

    I only read the first sentence of your note, but I sense you’ve moved from dependent to obsessed. Don’t be paralyzed by incoming information. Filter out what matters. Stay focused on the key facts and trends I outlined for you earlier. And for Pete’s sake, don’t allow yourself to be broken by personal vendettas. Nobody here has time to put Humpty Dumpty back together. Things are moving fast!

  90. 590
    whatsmyname says:

    RE: Joe @ 580 – Thanks for your good wishes. I hope you will revisit the insults in 563 to see that they are merely a reply in kind to your post 557, albeit I felt compelled to provide a rationale for them. I realize the amplification may have made them seem more abrasive.

    I think you should amplify your theory of a multi-decade asset price deterioration. My thoughts in a nutshell are that this kind of deterioration is what we call a recession or depression, and that neither the government, nor the banking system could survive that prolonged eventuality. And that they don’t have to. It’s a grow or die system. You can’t protect the dollar by killing it, no matter the alternative.

  91. 591
    whatsmyname says:

    RE: uwp @ 588 – Too, too funny. I am torn. I usually feel that I get all the comedy I need right here, but …..

  92. 592
    eddiemaster says:

    RE: Joe @ 589 – lol totally called it on your response! U have no credibility left to cash. Stay low, maybe you get to lead the populist movement.

  93. 593
    Ardell says:

    RE: Kary L. Krismer @ 567

    1) Did you really think that after almost 30 years in real estate you needed to show me what a weep hole was? And yes…the site name.

    2) We agreed not to fight, but now that everyone else is fighting I felt we needed to participate in th name calling. LOL!

  94. 594

    RE: Ardell @ 593 – That wasn’t posted just for you. If it was a message just to you I would have emailed you. ;-)

    But it was referencing something you posted, and there seemed to be some confusion among some, so I posted examples.

  95. 595
    Joe says:

    RE: whatsmyname @ 590

    That’s plausible, but it implies the Fed would be willing to apply QE to infinity. How else could they support the debt?

    I think central banks have realized QE is useless now. It does more harm than good at this point. It only inflates asset prices and does not promote real economic growth. It actually hampers it. Further, continued QE makes it difficult if not impossible for prudent people to save for important things like housing, education, and health care, which creates generational wealth shifts and much uncertainty. Plus, as you now, continued QE would bankrupt the pension system, which is now teetering, in a relative short period of time.

    I think we’ve reached the point where the Fed’s hands are tied. It cannot do more QE. This is consistent with the Fed’s current policy of raising interest rates and reducing the balance sheet. At some point, I think the Fed looked at what they were doing and thought – this isn’t working. We need to completely change policy for the long-term health of the economy.

    As a consequence, I think we’ll see asset prices and RE drop significantly without any support from the Fed. Stocks could drop 30% to 50%. RE could drop 20%. This could happen without any huge disruption to the economy. Once asset prices are lowered, people may be able to find productive investments again. The current RE cap rates, which don’t allow for current real estate investment, would become much more favorable after a 20% price drop.

  96. 596
    Joe says:

    RE: whatsmyname @ 590

    I’ll add, if the asset price reduction happens fast, then growth can being again relatively quickly.

    If the Fed chooses to intervene again and again to keep asset prices propped artificially high in hopes of continuing some sort of wealth effect, the real economy will suffer and then that’s when the multi-decade asset price deterioration occurs. There would never be a chance for real growth to commence.

    If the Fed is successful in dropping RE prices a good 20% over the next few years, then I agree multi-decade asset deterioration isn’t on the table.

    My main point is asset prices must drop from here. P/E ratios are too high. Cap ratios are out of whack. These things are preventing productive investment, and the Fed knows it.

  97. 597
    uwp says:

    By Joe @ 595:

    As a consequence, I think we’ll see asset prices and RE drop significantly without any support from the Fed. Stocks could drop 30% to 50%. RE could drop 20%. This could happen without any huge disruption to the economy. Once asset prices are lowered, people may be able to find productive investments again. The current RE cap rates, which don’t allow for current real estate investment, would become much more favorable after a 20% price drop.

    As someone who is encouraging people to sell their homes, can you walk me through how the current owner of a median Seattle home with a 4% interest rate would benefit by selling in your hypothetical world?

    I see:
    An 8%+ cost of sale.
    Potential taxes on gains.
    Money from your sale just sits in short term CDs because other investments could drop 30%.
    Finding place to rent.
    Moving.
    Prices drop 20%. Yay!
    Finding a new home.
    Buying a new place with a 20% lower price, but higher mortgage payment than before (6.5% interest rates, because the “Fed’s hands are tied”).
    Move again.
    Hold house-warming party and mock those who foolishly bought houses in 2017/2018.

  98. 598
    David says:

    Too much technical analysis on this site that is WAY out of the IQ-league of almost every writer. All I care about is:

    1) Are there more people arriving in Seattle than leaving?
    2) Are there fewer houses than these people can buy?
    3) Are interest rates still low enough to allow purchases?
    4) Did anti-business Democrats get elected to Congress?

    The answer to each is: YES. The primary symptom is: UNCERTAINTY. The cure is to oust the Democrats from the U.S. House of Reps in 2020 – because there is a downturn whenever they get control.

  99. 599
    N says:

    Yet the charts and data Wolf Street reports are coming public, so called reliable sources.

    I get it, the bears on this site won’t listen to anything that contradicts their views and same for the bulls. So when prices spiked the last 4 springs, the bears nearly disregard and when price reductions increase 3 times and inventory increases 90% the bulls won’t listen… where is the middle… sounds familiar.

  100. 600
    eddiemaster says:

    RE: N @ 599 – I don’t think there is a bull on this blog anymore, just highly bearish and moderately bearish. Maybe we get Erik back some day.

  101. 601
    whatsmyname says:

    RE: Joe @ 595 – Nope. The Fed balances based on the most immediate threat. That’s why they are tightening. It is a cycle, and they are making room to loosen and then will tighten again. What the Fed did was to save the banking system. We can say it was not the best way, but it’s already worked.

    RE is a purely secondary consideration for the Fed. The commercial banking system is primarily short term focus by nature. They do construction loans, but the larger part of the commercial mortgage business continues to be dominated by longer term portfolio holders such as life companies. Banks have been holding more RE debt due to lack of shorter term business activity financing needs. They are constrained in this (mortgage) activity by being near the top of regulatory capital ratios. Cap rates are whatever investors will pay, and they are currently no problem. Big properties are changing hands every day.

    Housing finance is an entirely different animal. Banks hold some, but most bank activity is fee driven origination for securitization and catching the servicing business. This is consumer business, and cap rates don’t apply. Determinant here is risk/yield/other opportunities for investors used to this business. Fed’s effect on the general economy is the basic link here.

    Treasury has to deal with financing government and the debt. Goal is meet the obligations with the benefits of having a strong dollar – not too strong for selling overseas; but also not too weak for selling domestically.

    Deflation kills faster than inflation. That is why the goals everywhere are modest inflation, but with periodic checks against it getting out of control. Drastic reduction of economic activity kills the banks for too little economic activity, and kills tax revenues, resulting in unsupported treasuries and dollar destruction by hyper-inflation. Between here and there lies the elections, and the policy changes that would be implied by that.

  102. 602
    Eastsider says:

    FAA(mazon)NG stocks have collectively dropped a trillion dollar from high. In comparison, the FED has reduced its balance sheet by about $360b this year. So the FAANG stock decline is about 3 times the size of FED balance sheet unwind. This is not counting the total stock market decline. Massive amount of global wealth has evaporated this year. There is nothing special about RE…

  103. 603
    eddiemaster says:

    RE: Eastsider @ 602 – A bit less than 20% of the equity market is held by ordinary folks, which isn’t the case of RE. I don’t disagree that there will be spill over effects, but it shouldn’t be directly proportional in impact.

  104. 604
    Joe says:

    RE: whatsmyname @ 601

    I could have written that myself because I agree with almost all of it. The one point I disagree with is short-term vs. long-term planning. I don’t believe the Fed is solely managing immediate risks. Even if they are, however, that is reason for them to take stocks and RE asset prices down. Every overpriced asset financed with a loan is a bad accident waiting to happen, whether it’s stocks or RE, commercial or residential. Why else would we see tech stocks fall 20%, without a peep from the Fed. I expect these asset price declines to continue until the excess froth is taken out of the market.

    Also, I believe the Fed is worried about the national RE market. I doubt the Fed cares too much if the the panicked RE buyers in Seattle in 2016/2017/2018 lose their 20% down payment. They are a small faction of the market, and these buyers wouldn’t even be underwater on the loan.

    We may have an honest disagreement on some detail.

  105. 605
    redmondjp says:

    By Gooddeal @ 547:

    By redmondjp @ 517:

    Those “weep holes” are actually engineered air leaks, Kary, and they are now required by code because the homes are built so air-tight.

    I’m sorry but you are flat out wrong. Code requires ventilation due to increasingly tight homes, yes, but windows are not engineered to leak air. Windows should be air tight. Those holes are weep holes for drainage and they do not go through the IGU into the interior and only allow moisture that gets between the window cladding and IGU to drain out.

    I helped to build an addition onto my brother’s home. The local code inspector checked them- each bedroom had to have the window with the engineered air leak in it. Along with the whole-house ventilation fan on a timer for something like two hours a day. This was in the city of Lacey.

    So you may want to do some more research.

  106. 606
    Eastsider says:

    RE: eddiemaster @ 603 – Ordinary folks don’t buy million dollar homes in Seattle/NYC/DC. These homes are bought by people owning a lot of stocks LOL.

  107. 607
    whatsmyname says:

    RE: Joe @ 604

    ” Even if they are, however, that is reason for them to take stocks and RE asset prices down. Every overpriced asset financed with a loan is a bad accident waiting to happen, whether it’s stocks or RE, commercial or residential.”

    Your cure is to insure that all of these accident’s happen. It is a bit like removing the lung cancer risk by removing the lungs. And that is why the Fed will not likely do that.

    The Fed doesn’t manage and doesn’t really care about equity prices- unless they imperil the banking system. That is why they happily stand by while stock or RE prices go down, or up. It is actually the healthiest thing they can do. Especially because one person’s overpriced is another person’s under-priced. These guys really aren’t that good. You don’t want them consciously pricing assets.

  108. 608
    eddiemaster says:

    RE: Eastsider @ 606 – Lol that’s true, forgot how much a million is to folks outside of 10% is sometimes. Regardless though, the top 10% has the income and net worth to sustain the lifestyle. My new-ish neighbor has a Bellevue lake front because he really likes standup paddleboarding, and stays at his Seattle DT residence for work during the week.
    I do think that there is a general disconnect (HBO’s Silicon Valley is a good depiction, albeit exaggerated) between the top 10% mindsets and bearish logic, not saying one is more right, but the high income earners often don’t feel as threatened by a bleep in long horizon. It is possible that they just accept that as facts of life to go through recessions. They work hard and want the lifestyle they want. I won’t pretend that my household isn’t part of that group, but I think I’ve been the minority in perceiving the economy and money. Most of the people I’ve known and talked to about these topics in tech industry are quite oblivious to all these data, the actions and consequences of the Fed. But I just can’t fault them, as long as the money is good, stay happy, why worry much.

  109. 609
    Rentin’ says:

    RE: uwp @ 597
    I think I’m looking at this differently. Is it encouragement to sell your house or just caution about buying? There are many people who are in my position. Renting. If you’ve already found a house you’re happy with then great! But for the rest of us I think it makes sense to wait this out a bit. Why buy too soon and end up with a less desirable house in a less desirable neighborhood when patience may pay off? There are no guarantees, but the last housing bust is too fresh in my mind for me to want to spend 1M on a house as the market is tanking. And I’m not seeing really any reason why it wouldn’t continue going down at least in the near term. My friends who purchased a house this past June are already upset about buying at the peak. I’m not seeing a downside to waiting this out, and I think many other potential buyers are in the same boat.

  110. 610
    Eastsider says:

    RE: Rentin’ @ 609 – People also need to be aware that there is no capital loss tax write-off if you lose money on your home due to move, illness, job loss, etc. You can’t offset housing loss with capital gains in stocks. In the last housing bust, many people were forced to hold on to their homes even when they relocated to new cities. Unless you are certain that you will be staying here for at least 10 years, you are better off renting.

  111. 611
    Joe says:

    RE: whatsmyname @ 607

    You misinterpreted my point a bit. The Fed believes asset transactions at today’s price levels expand a systematic risk. The Fed wants to prevent further expansion of that risk by increasing the interest rate. The Fed also believes there are current systematic risks already in the system, such as elevated stock prices and commercial real estate. They’ve mentioned that many times as you may know.

    This means the Fed will keep raising interest rates until asset prices drop “enough”. That is the only effective way to reduce systematic risks to the banking system. Macro-prudential policies are BS and everybody knows it.

    I think a 5-10% RE national price drop will be the result of the Fed’s agenda. This would obviously do no damage to the general economy. Isolated cities like Seattle that had nonsensical price run ups would likely see higher losses in the 15-30% range. This would barely erase two years worth of frothy behavior, so no harm done. The easy paper gains of the past two years will reverse quickly like they never happened. New loans can then be made without the speculation and systematic risk. This process could take 2-3 years. Stocks would of course drop at the same time.

    My belief is that a real estate price drop of the magnitudes I mentioned will not throw the economy in a recession. Maybe we differ on that point. It’s hard for me to imagine that the loss of quick speculative paper price gains will matter much to the system at large. If such a minor disturbance does take down the economy, then we have much bigger problems than what the Fed can control, and things would get much worse than anticipated.

    We agree the Fed doesn’t care all that much about stock market declines, as long as they happen in a controlled fashion over a period of time. I think they will provide some soothing words if everything kept dropping 2-5% per week. Their goal would be to slow things down a bit, but they don’t care where the chips fall in the end.

  112. 612
    Rentin’ says:

    RE: Eastsider @ 610
    Agreed. I have no plans to leave within 10 years, but I also know there are no guarantees in life and you never know what could force you to sell. There are so many reasons why you never want to be underwater if you can avoid it. Losing that 20% (or even part of it) would be very painful.

  113. 613
    Eastsider says:

    By eddiemaster @ 608:

    RE: Eastsider @ 606 – Lol that’s true, forgot how much a million is to folks outside of 10% is sometimes. Regardless though, the top 10% has the income and net worth to sustain the lifestyle.

    This is not my experience. Perhaps people have short memory. The Great Recession was not even a decade old. I don’t think many of your 10% friends are prepared for the tough times.

  114. 614
    Eddiemaster says:

    RE: Eastsider @ 613 – you might be surprised how much money the 10% have. But I’m not necessarily disagreeing with you that would be the case if today were like 08’. I just say that a lot of them are practically in a bubble that they don’t rush to the exit or not buy as a speculator would or wouldn’t. It’s not their main training to view real estate as an investment. They just move somewhere and buy a house to settle in with family or not, a lot of time on the east side.

  115. 615
    Eddiemaster says:

    RE: Joe @ 611 – interesting perspective, and that is probably why we keep differing in end result. I view Fed’s QT action as a retooling process to combat the upcoming recession, that is why it uses such an low inflation target as a major reason to do so. The Fed can continue to shrink balance sheet and gradually raise rate as long as the job report/inflation indicators and national economic outlooks are ‘fine’, mixed in with certain nonlinear weighing of global economy. To me the Fed would be fine with the stock market and real estate price to keep escalating as long as the Fed can retool with normal rate and balance sheet size, as unlikely as that is. And I suspect that Trump had a point by questioning Yellen for not doing QT already 2 years ago, instead of waiting until the asset classes getting to the current level. No one envy Powell’s position now.
    What you think is that Fed wants to reduce asset values to a more reasonable spot where the society can then grow gradually from there. So I can see why you are adamant about asset classes depreciating as long as there is no ‘shock’ to the system. To me the Fed wouldn’t want to take on that kind of responsibility because it would be impossible to estimate the impact, and the last thing that the Fed wants to do is to be the reason that the recession starts due to its action.

  116. 616

    By Eastsider @ 613:

    By eddiemaster @ 608:

    RE: Eastsider @ 606 – Lol that’s true, forgot how much a million is to folks outside of 10% is sometimes. Regardless though, the top 10% has the income and net worth to sustain the lifestyle.

    This is not my experience. Perhaps people have short memory. The Great Recession was not even a decade old. I don’t think many of your 10% friends are prepared for the tough times.

    The short memories may be on the opposite side. The people who made the mistake during/after the Great Recession, were the ones who intentionally defaulted and/or did a short sale when they had another choice. The recent prices were higher, so unless they were one of the “lucky ones” whose foreclosures took years and they actually continued to live in the house during that period, they lost out.

    Remember back then when law professors were giving financial advice? Suggesting a strategic default was appropriate?

    https://blog.seattlepi.com/realestate/2009/11/29/strategic-defaults-and-foreclosures-law-professors-should-stick-to-the-law/

    Unfortunately one thing I suggested in that piece didn’t happen. People who did short sales were not subjected to any lengthy scrutiny afterward.

  117. 617

    By eddiemaster @ 608:

    RE: Eastsider @ 606 – I do think that there is a general disconnect (HBO’s Silicon Valley is a good depiction, albeit exaggerated) between the top 10% mindsets and bearish logic, not saying one is more right, but the high income earners often don’t feel as threatened by a bleep in long horizon. It is possible that they just accept that as facts of life to go through recessions. They work hard and want the lifestyle they want.

    There was actually a mini-financial crisis in 2007 affecting mortgage lending. It was widely misreported in the press as being more severe than it was. The lower income people accepted the news and assumed that they could not get financing. They quit trying to buy houses. Higher income people had never had a problem with financing in their lives and ignored the news. That mini-crisis affected the low end of the market first. It possibly even contributed to the timing of the 2008 crisis.

  118. 618
    Joe says:

    RE: Eddiemaster @ 615

    Its’ s hard to know whether the Fed is more interested in doing the right thing or avoiding blame. It’s also unclear whether they think about the long-term consequences of their policy. It’s basically a black hole that may be run by overconfident gamblers, as evidenced by two decades of bubbles and blowouts.

    One thing for sure, when the national debt and deficits have to be reckoned with, we enter that multi-decade period of austerity I referenced in discussions with whatsmyname. That problem is way beyond the Fed’s control, and when it comes home to roost, we’re talking about a long-lasting deep recession. RE price drops will be the least of our worries. It seems clear this economy is only being kept afloat by increasing debt and growing deficits. Very many people have been promised future payments and benefits they’ll never see.

  119. 619
    whatsmyname says:

    RE: Joe @ 611 – We don’t disagree all that much. I do think the benchmarks that you believe are the Fed primary targets are those which it can least control, especially without doing more damage to the real economy. Compounding this, I think the general economy outside a few “star” industries and places remains fragile, and weaker than the last cycle. I think they will have to back off sooner than they say because of the more vulnerable areas, but it’s not like they haven’t screwed the pooch before. If so, it will still be better to be in a “star” area. I just hope some of the skilled labor sticks around.

  120. 620
    Eddiemaster says:

    RE: Joe @ 617 – I can’t imagine the Fed has the target of asset depreciation in mind though. It makes sense with the impending debt deleveraging, basically what Ray Dalio is saying. Between the QT and the market cap wipe out, the Fed will effectively complete QT and retool. The decline in housing is a side effect that is not avoidable, and the ones who bought within the two to three years are going to sacrifice some. But housing decline shouldn’t be the Fed’s intention as it doesn’t change the liquidity unless you talking HELOC.
    Provided that the fundamentals of the actual economy, not stock market, is sound, then QT is the right move and we would experience slow growth in both GDP and wage and equity for many years to come, rather than long recession. Hence my take of moderate impact.

  121. 621
    Notme says:

    I agree with you
    that prices will go down
    but they will go up

    -an oh-so-reasonable-new-bubble-monger-propaganda-strategy haiku

  122. 622
    Notme says:

    Whatshisname, really?
    turning his coat with the wind
    the great pretender

    -a bubble-monger-tactically-changing-his-spots haiku

  123. 623
    Notme says:

    What’s my word salad?
    sounds important like TV
    but devoid of meaning

    -a bubble-monger-sounds-very-sophisticated haiku

  124. 624

    RE: David @ 598
    Yes David

    They were blaming the MASSIVE recent equity crash the last month on everything from Chinese Soy bean Trump tariffs to the Global Warming [with MUCH colder Winters too]….how about the Hose got flipped to the open Border Party and be careful what you wished for….

  125. 625

    RE: Eddiemaster @ 619
    This a Republic Not a Fascist Socialist State

    Electoral voting majority and Open Border Party wishes are diametric opposites that mix as well as oil and water…let’s end the argument and vote instead. And hope we don’t get what we wished for…lately, an equity crash with Trump losing the House….I vote my pocketbook, most others do too. I’m glad I didn’t share in the Trump equity profits from 2016/2017 now….then I’d have to stomach the boom-a-rang equity slides in high tech stocks [or time my selling right]…I kept everything in nice safe MM and low interest annuity funds…ask Bloomberg.

    Recession in 2019 due to lame duck government and no tax cut phase II…too early to call now….but MOM trending and YOY equity downward trending are matching up and make this a likely scenario now? These are non-partisan facts whether we like them or not.

  126. 626
    Deerhawke says:

    RE: Kary L. Krismer @ 561

    I have seen a lot of stupid practices in my years as a builder, but it is really hard to imagine installing a whole house of windows upside down so that the weep holes are at the top. That would take a truly active form of stupidity as the windows come with large branded stickers on them with u-values and other information.

    On the other hand, I would believe almost anything said about the lack of competence of an inspector conducting an inspection on a new home.

    Back in the day, a home inspector was generally an older guy who had been a builder who was going into semi-retirement. He would know what he was doing. Now you have people who have never built anything in their lives but have taken online inspection courses. They may not know the right end of a hammer, but they have a set of initials after their names and a series of checklists to work from. They will go to ludicrous lengths to justify their fees.

    WARNING: This house does not have a heater installed! This will lead to discomfort and the growth of dangerous mold! (The house had radiant in-floor heat run off an oversized high-efficiency water tank).

    WARNING: This house does not have fans installed in the bathrooms and therefore does not meet ventilation code. This will lead to the build up of toxic gasses in living spaces and lead to the growth of dangerous mold! (The house had a whole-house heat recovery ventilator system.)

    WARNING: This house has no insulation under the rear deck. This will lead to a lack of efficiency and the growth of dangerous mold. (There was no heated space above. Why insulate an exterior storage space under a waterproof deck?)

    There are plenty of cheap, lousy, inexperienced builders out there, but it seems unlikely that they would go out of their way to install windows upside down. Sounds apocryphal– a stretcher if you ask me.

    It is much more likely that you would get new builders who do not know how to properly flash a window. If you do any step wrong or out of order, it is likely to leak.

  127. 627

    RE: softwarengineer @ 624
    And Lastly

    HAPPY THANKSGIVING Turkeyheads!!!

    Our Bubbleheads turned into Turkeyheads for the holidays….LOL

    I’m baking a turkey for my severely disabled adult Milenial son….he’s Autistic and loves rides in my red Dodge Charger too….you may see him “smiling” on weekends on Kent hill with the window open and his hand in the wind…..LOL

    We do have SOOOOOO much to be thankful for!!!

  128. 628
    whatsmyname says:

    Poet of wolf street,
    There is hope after the crash,
    Can you clean windows?

  129. 629

    By Eastsider @ 610:

    RE: Rentin’ @ 609 – People also need to be aware that there is no capital loss tax write-off if you lose money on your home due to move, illness, job loss, etc. You can’t offset housing loss with capital gains in stocks. In the last housing bust, many people were forced to hold on to their homes even when they relocated to new cities. Unless you are certain that you will be staying here for at least 10 years, you are better off renting.

    There’s also typically no tax gain either, and in any case the tax consequences of gain/loss are not typically a reason to hold on or sell. You wouldn’t hold onto a property simply because you couldn’t take a tax loss. A bigger concern would be the tax consequences of a foreclosure, although there again there often is little or no consequence.

  130. 630

    RE: Deerhawke @ 625
    Perhaps the Windows Had No Stickers or Words In-printed upside down on installation?

    But yes, it does sound blue moon as you stated, but hey, I’ve seen it all [like the plastic temporary fittings on copper pipe], so even this wouldn’t surprise me. You should see the lack of skill the “village idiot” carpenter put into my car port addition to my Modular; junk wood covering up “unpainted” structure posts so they leak moisture [warp and leak moisture over a couple decades] if not rebuilt and resealed, etc, etc….a double post for structure, when its obvious three were needed, etc, etc…. where’s the county inspectors? Out getting drunk with bribe money from the illegal alien contractors? LOL

    As far as bad contractors and good contractors go….how can you really separate the two? They’re hopelessly mixed together with the same illegal alien framers…greedy profit mongers all in my book.

    Good blog Deerhawke, made me think ;-)

  131. 631
    Justme says:

    By David @ 598:

    Too much technical analysis on this site that is WAY out of the IQ-league of almost every writer. All I care about is:

    1) Are there more people arriving in Seattle than leaving?
    2) Are there fewer houses than these people can buy?
    3) Are interest rates still low enough to allow purchases?
    4) Did anti-business Democrats get elected to Congress?

    The answer to each is: YES. The primary symptom is: UNCERTAINTY. The cure is to oust the Democrats from the U.S. House of Reps in 2020 – because there is a downturn whenever they get control.

    The level of dishonest+incoherent rambling on SB has been epidemic this week, so don’t feel singled out just because I call out the above particular gem. The combination of rampant lying and faulty assumptions, together with nonsensical statements is something to behold.

    >>(1) Are there more people arriving in Seattle than leaving? Claim: YES Truth: hard to say.

    We don’t know. OFM population statistics are based on counting new dwellings and ASSUMING that they are occupied. There are lots of unoccupied rentals in Seattle, as has been documented,

    >>(2) Are there fewer houses than these people can buy? Claim: YES Truth: NO+Faulty assumption that newcomers must buy.

    Even if there is some net increase in population, any newcomer has plenty of empty apartments to chose from, and if they are smart they will not buy now, with prices dropping. And then there is the KC SFH inventory, which is 1.9X last year values. So NO.

    >>(3) Are interest rates still low enough to allow purchases? Claim: YES Truth: Not for many people.

    Even the crazy overpricing of housing in 2016-2018, only SOME people can “afford” to overpay. The rest cannot. Good for them, they’ll lose less money that way.

    >>4) Did anti-business Democrats get elected to Congress? Claim: YES Truth: What a non-sequiteur.

    >>The primary symptom is: UNCERTAINTY.

    The primary symptom of WHAT? Are you having some internal conversation in your head and forgot to let the rest of the world in on what disease you were thinking about?

    >>The cure is to oust the Democrats from the U.S. House of Reps in 2020 – because there is a downturn whenever they get control.

    Cure of what? By the way, the standard operating procedure of US congress is that Republicans enact unfunded tax breaks for the rich, speculation ensues, and then Democrats get elected to clean up the mess that the Republicans made.

    Summary: Rambling lies and nonsense on a grand scale. My head hurts, but probably not as much as yours.

  132. 632

    By Deerhawke @ 625:

    RE: Kary L. Krismer @ 561

    I have seen a lot of stupid practices in my years as a builder, but it is really hard to imagine installing a whole house of windows upside down so that the weep holes are at the top. That would take a truly active form of stupidity as the windows come with large branded stickers on them with u-values and other information.

    On the other hand, I would believe almost anything said about the lack of competence of an inspector conducting an inspection on a new home. .

    I think you underestimate the stupidity of some of the people working on houses, but I would agree with you about some inspectors, particularly those just trying to enter the industry. Accordingly I typically ask inspectors not to bring new inspectors along for the ride on my inspections. First, it’s impossible to follow two people around, and related to that, if something shows up in the report that you weren’t aware of because of that, then another trip back to the property is necessary. For example, I once had an inspection report indicate that an outlet was non-functional in a bedroom. My guess was right, that it was a switched outlet, but it wasted over an hour of my time to go verify that.

    The inspector that commented on the weep holes was an older experienced inspector, but again I didn’t see the windows he was commenting about. Not my transaction.

  133. 633
    npeterson5068 says:

    Someone get some cookies for haiku guy

  134. 634

    RE: Justme @ 631
    The Open Border Party Deep State Lobbyist Billionaire Soros Agrees With SWE on GOP House Loss= Equity Collapse

    He may be Open Border Party slanted, but he’s not stupid:

    https://www.barrons.com/articles/george-soros-sold-facebook-stock-just-before-it-tumbled-1542801600

    Some would call this insider stock trading corruption….perhaps it is?

  135. 635
    Joe says:

    RE: Justme @ 631

    You make an unsupported sweeping assumption about “anti-business Democrats”. That generalization is false on its face, and your belief in it makes an intelligent person wonder whether what other “skews” exist. I’m not a Republican or Democrat, but it’s obvious to me business has flourished under both Republicans and Democrats. I also realize it’s difficult to attribute economic performance to any particular political figure or party because of lag effects, trends, and natural cycles. It makes me think other parts of your analysis are just as “skewed”.

    Reagan used debt to create to create growth, which is hardly difficult. Clinton takes credit for riding a tech boom, not of his doing. Obama “rescued” the economy by bailing out greedy bankers, creating huge deficits, and adding more additional hazard. Trump is following the easy debt-based Reagan approach, which steals growth from the future. These fools know nothing. Growth in business over the past 40 years can only be attributed to smart decisions made by business people in the trenches.

    I think the other factors you mention aren’t valid, and that is why prices are dropping fast right now. Interest rates are rising. Prices have risen to crazy heights. Affordability is near an all-time low. Two years worth of stock and RE price gains have to evaporate to get things back to a sustainable productive state, until the Big Daddy arrives (i.e., the national debt problem). Then we’ll see economic austerity as far as the eye can see.

  136. 636
    eddiemaster says:

    RE: softwarengineer @ 634 – Soros just increased his stake by 31 mil USD on FB in Q2 18′. When did he actually unload? If he unloaded after 7/25 earning, he was just cutting out a loser. It wouldn’t be related to politics.

  137. 637
    Joe says:

    RE: Eddiemaster @ 620

    I was in the same camp as you, until I heard the Fed say there is no sense triggering a recession, which would cause them to reduce rates soon after they raised them. Avoiding this type of flip-flop, which only increases variation and uncertainty, makes great sense to me.

    I take the Fed at its word. The Fed thinks the natural interest rate is about 1% higher than the current policy rate. That would equate to a 6% mortgage rate next year, assuming there is no yield curve inversion. In other words, the Fed thinks current rates levels are stimulative, but the Fed wants to decrease this stimulus because systematic risks have developed will keep growing as long as the rate stimulus stays in place. Their plan is very clear and transparent. Powell has done a great job communicating with the public.

    The Fed is targeting stocks and housing, although it nicely refers it as reducing a systematic risk. If people kept taking out mortgages to buy houses at today’s price levels, we’d have another 2008 disaster. The Fed wants to avoid this.

    A ton of future systematic risk can be avoided by increasing mortgage rates 1% and reducing housing prices. Of course, this would likely eliminate the “paper” housing gains of the past couple years. Easy come, easy go. Nobody will really care. A relatively small number of “panicked” parties bought overpriced houses over the last year or two, and they will be disappointed to see their down payments dwindle away on paper, but the loans won’t go underwater and the loss would be a paper loss that could be recovered over a period of time. The harm done to a few persons by deflating the housing bubble is much less significant than the systematic risks of letting the housing bubble continue.

    Also, its clear the Fed never forecasts a recession in its models because the Fed believes its actions prevent recessions. If the Fed is saying it will increase rates by 1% over the next year, the Fed actually believes the economy can handle it and will still keep growing. The results of this overconfident approach haven’t been stellar, but at least we know what the Fed plans to do. It would take some serious dislocations to take the Fed off this path.

    The way I see it, it’s a bad time to buy RE in Seattle. If the Fed continues raising rates as planned and communicated, affordability gets worse and prices will fall to make up for it. If the Fed pauses the rate hikes, that means we are in a recession or close to a recession and that won’t help RE prices either. In that latter scenario, we could be talking about layoffs at big tech companies, which could impact the market more than the interest rate.

  138. 638
    Justme says:

    RE: Joe @ 635

    You talkin’ to me?? I think your response should be directed at David-the-puppy-dog.

  139. 639
    Eddiemaster says:

    RE: Joe @ 637 – the Fed’s next meeting will be important to gauge where they are at in QT. The rate hike is affecting the short term so less to do with mortgage, and it’s direct impact to bank income at the reserve, so expect CD rate to go up. For the mortgage and long term, it depends on how bad the equity market gets, that will drive investors to longer term yield (like I’m with the swing trade) and that will have downward pressure on mortgage. You are seeing that effect this week with the pressure on US10y and subsequently mortgage rate.

    The Fed may maintain the scheduled rate hike and unwind, which messes with equity market and mortgage, but at some point that will mess with employment and inflation as well if the system becomes illiquid. So I think they will slow the QT to be cautious, even if they want to maintain the hikes to normal in years to come. At least that is where I am, I know where u are now, let’s keep up with the discussion and debate. It’s quite interesting stuff.

  140. 640
    Joe says:

    RE: Justme @ 638

    Sorry, my note was to David. That makes sense now. I thought it was out of character for you.

  141. 641
    Joe says:

    RE: Eddiemaster @ 639

    If you think they’ll slow QT to be cautious, you may want some gold. If the market thinks the Fed has become dovish again, higher inflation risks come into view and gold usually does well in that environment. I have some gold exactly for that reason. I heard someone refer to gold as a “non-expiring hedge” today, which sheds a favorable light on it. I don’t hold any more than 5% though. It’s still a non-productive asset.

    That just triggered something in my mind. The Fed really can’t slow QT if inflation stays where it is. You not only need a GDP growth slowdown for the Fed to slow QT, you also need a drop in inflation. To me, this means the Fed may be forced to continue raising rates in the face of a bad economy. Bad economies and low inflation usually go together, but not always. There have been stagflationary periods. Trade wars significantly raise the odds of stagflation because they increase import costs (inflation) while hurting GDP growth.

    Despite all this, what would happen if the Fed could and did simply pause rate hikes? My guess is that Seattle RE would continue to drop several points from here because sellers haven’t reduced their prices enough to meet the reduced buyer demand. The buyer’s stopped panicking, and they are sitting back and waiting. A lot of them have no choice because they can’t handle the current 5% interest rate in a low appreciation scenario. The just saw recent summer buyers get burned with a quick 9% price drop. Given the low transaction volume, I think sellers haven’t adjusted to the current realities yet, but that will happen. When I look on Trulia, I see many empty and staged houses that nobody is living in. They have to sell those home to get rid of the carrying costs.

    In the last bad market, I had a house sitting empty for 1.5 years as prices were dropping. It cost me about $40k with taxes, maintenance, interest, etc. I should have dropped the price early on to get rid of it. And I never did get the price I was initially holding out for. I got about 10% less.

  142. 642
    Eddiemaster says:

    RE: Joe @ 641 – I think that the Fed may slow rate hike and/or slow unwind if employment report hits a wall such as unemployment claim increasing as earnings and equity market rout continue. That is a strong precursor to inflation impact, but of course if the two correlated then that’s a better indicator. And I think when that situation happens and Fed does slow rate hike, there wouldn’t be an inflation problem as that would be the reason that Fed slows QT.
    The Fed can also decouple raising rate from balance sheet unwind. These two processes affect different ends of yield curve thus different aspects of economy. So I wouldn’t rule that out either. I’m watching Duke’s game so probably think of the scenarios later.
    Also, I do hold gold, cashed out on tech beginning of Oct n been holding gold since. And I had a townhouse that I was living in through the last cycle as well, though I was just out of college so quite oblivious then.

  143. 643
    Market Psychologist says:

    https://www.marketwatch.com/story/amazon-has-revealed-that-just-half-of-the-positions-at-its-hq2-locations-will-be-tech-jobs-2018-11-21

    “Amazon has revealed that just half of the positions at its HQ2 locations will be tech jobs

    Only half of the positions that Amazon.com Inc. AMZN, +1.42% has promised to bring to its two new headquarters in New York and Virginia will be tech jobs, government officials in both states say.”

    Womp, womp…

  144. 644
    Luke says:

    By Joe @ 635:

    RE: Justme @ 631

    Growth in business over the past 40 years can only be attributed to smart decisions made by business people in the trenches.

    There’s plenty of evidence that political stability, social stability, and an educated work force all contribute to economic growth. So let’s not ignore the role of good government in protecting and nurturing our economy.

  145. 645
    Market Psychologist says:

    I expect upward, slightly downward pressure on QE, QT, ZIRP normalizing interest-rate hiking, Chinese bubble, double-top, head and shoulders peaks, outgaining commodity slowdowns, unwinding inflationary tailwind-headwinds, medium bearish, slightly bullish, bi-cuiorus, dovish policy, VIX-index, Democrat, Republican, border wall returns in the short-term. Long-term, I am out of ideas.

    Happy Thanksgiving, folks!

  146. 646
    Luke says:

    RE: Market Psychologist @ 643

    You clearly don’t work in tech. It takes a lot of non-engineers to run a tech company, and I would expect that New York and DC locations would be better-suited to folks on the business side.

  147. 647
    Gooddeal says:

    By Ardell @ 559:

    RE: Gooddeal @ 547

    He is correct about the “leaking air” feature. They are called “trickle vents” and are usually on the side vs top or bottom. They have an open/close feature and so do not remain open as a constant like weep holes. Not sure if they are a code requirement, but am working on replacing a faulty one in a new construction condo sale in Redmond. So maybe yes in Redmond but not everywhere? I don’t remember when I first started seeing them, but at least a couple of years ago and likely longer.

    Hi Ardell, I’ve never heard of trickle vents, thanks for sharing. I googled them and most of the links are from the UK so I can’t imagine they’re very common here stateside. I had imagined something quite different, like you said, permanently open penetrations.

    I would never recommend using trickle vents. In the US, builders must follow ASHRAE requirements for new construction which typically requires the use of an HRV/ERV or standard mechanical ventilation fans to meet the necessary air exchanges.

  148. 648
    Gooddeal says:

    By redmondjp @ 605:

    By Gooddeal @ 547:

    By redmondjp @ 517:

    Those “weep holes” are actually engineered air leaks, Kary, and they are now required by code because the homes are built so air-tight.

    I’m sorry but you are flat out wrong. Code requires ventilation due to increasingly tight homes, yes, but windows are not engineered to leak air. Windows should be air tight. Those holes are weep holes for drainage and they do not go through the IGU into the interior and only allow moisture that gets between the window cladding and IGU to drain out.

    I helped to build an addition onto my brother’s home. The local code inspector checked them- each bedroom had to have the window with the engineered air leak in it. Along with the whole-house ventilation fan on a timer for something like two hours a day. This was in the city of Lacey.

    So you may want to do some more research.

    Yes, Ardell mentioned the trickle vents to me. I apologize, I’ve never seen those before in the U.S. so I figured you must have been mistaken. Instead of using the trickle vent windows I wonder why your brother didn’t increase the run time of the fan or use a fan with a higher flow? It’s much easier to figure out how much air exchange is happening with the fan than trying to calculate how much air movement there is through the window vents.

  149. 649
    Justme says:

    3 months ago: “Excellent time to buy!”
    Same folks now: “well the market is nosediving but …”

    https://twitter.com/ByRosenberg/status/1065319350523973632

  150. 650
  151. 651
  152. 652
    Eastsider says:

    Another article on Amazon. Publicity like this is usually bad for business. Peak Amazon?

    Our new column from inside Amazon: ‘They treat us as disposable’
    https://www.theguardian.com/us-news/2018/nov/21/our-new-column-from-inside-amazon-they-treat-us-as-disposable

  153. 653
    David says:

    My trickle vents are a Harry Potter style magical spell: Openus Windowis.

  154. 654
    Blake says:

    Just a glance at some headlines…
    GE May Be $41 Billion Problem For the Banks
    China’s $3 Trillion US Dollar Debt Problem
    ‘Misguided’ Stock Buybacks Hollowing Out Balance Sheets
    US Existing Home Sales Fall For 8th Straight Month
    Credit Card Delinquencies Blow Through Crisis Peak
    18 European Nations Have Negative 2 Yr Yields

    Carry on… nothing to see here!

  155. 655

    RE: Gooddeal @ 648

    No amount of “run time” of the fan helps in the situations I have seen the trickle vents being required in the windows for fresh air intake. When I see them, the heating system does not provide for fresh air intake. The fan is only circulating the air that is inside the unit or house. King County refers to the saying “Build it tight; ventilate it right”.

    When I googled them I also saw the UK versions you saw, but they are very common here in new construction even though Google brings up the UK ones. King County refers to them on their website “Some homes utilize trickle vents in windows coupled with pre-programmed whole house fans.” The earliest reference I see in King County is in a 2015 County PDF.: “Window trickle vents are used in conjunction with whole house exhaust fans to provide fresh air ventilation.”

    The “whole house fans” either have no fresh air intake or insufficient fresh air intake, depending on some other factors. I have seen them often in Seattle for some time now in townhomes that do not have a forced air central heating system, usually a water heat based system. The most recent ones I saw in Redmond in a condo I just closed on, which I mentioned before. So not sure if a big house with sufficient fresh air intake through the heating system would need them. I’ll try to notice next I’m in one when I get back from Thanksgiving holiday.

    The tiny fans they are calling “whole house fans” are not what I have called “whole house fans” which have been around for many decades. The ones I call by that name sound like an airplane taking off when you turn them on. They have big metal flaps that open and suck all of the air out of the house and in through the open windows. They are used in summer when it cools down in the evenings to replace all of the hot air with cool air and the whole house cools down very quickly. They do make quieter versions now but the “whole house fan” referred to in the King County Literature is usually a small timer fan in the laundry area that doesn’t seem to have anywhere near the power of a traditional “whole house fan”.

    Odd I can’t google much locally about the trickle vents. Just tried again. Maybe Deerhawke (local Seattle Spec Builder) will give more detail about the code requirements when he stops by after the Holiday here on SB. I’ll be sure to ask him when I see him around.

  156. 656
    npeterson5068 says:

    Existing home sales rise 1.4 percent:
    https://www.youtube.com/watch?v=13ZA6Ao2N2s

    That’s not a lot, but was surprised to see a month come in which wasn’t a decline. Especially considering rate hikes are still happening.

    Relatively speaking, interest rates are low, and I think there will be a fresh group of buyers wanting to buy before they continue to rise with each Fed hike.

    I do feel there were a lot of folks waiting on the HQ2 announcement. Seeing it’s not truly an HQ2 (split, so smaller than Seattle’s footprint) I get the sense people will prefer here over LIC and Virginia. Those areas are not really cheaper in terms of housing, and they have state income tax. Those people who were waiting will likely start looking again, if they haven’t already.

    True Amazon’s stock has plunged recently, but that’s believed to be short-lived, and still up considerably for the year. Very few analysts have budged from the original price targets, despite what’s happening to the market right now. In fact, some have increased after the last ER. IMO, I don’t think Amazon’s impact on the local housing market will be lost just yet.

  157. 657

    RE: Gooddeal @ 647 – The point of the trickle vents is to let the smallish whole house ventilation fan (which as Ardell notes is different than the large ones used for cooling in summer) to draw in air from an outside sources, scattered throughout the house. Absent such vents if the house is built tight enough the fan would not be as efficient and/or suck in air from places like the crawlspace.

    The heat exchanger systems you mention are not at all common in the US. I don’t think I’ve ever seen one installed, unless those are part of systems where the forced air furnace will at times suck in air from the outside based on an electronically controlled damper. Those may have a heat exchanger as part of the system (and now that I think about it probably do otherwise the tight house issue would keep them from sucking in much air).

    But getting back to the trickle vents, those aren’t designed to just let air flow in and out, although that undoubtedly occurs, but instead to allow air to flow in when a fan is running, including a bathroom fan. And as to bathroom fans, having these vents scattered throughout the house you’d be less likely to get a mildew problem in a bathroom with such vents than you would opening a window in the bathroom while running the fan during a shower.

  158. 658

    This is the first time in a long time (months?) that when I’ve looked at the 7 day activity for King County SFR that price reductions are not the first or second category. They are currently third (103), with pending first (172), sold second (148). Of course it could be people are just waiting until after Thanksgiving to reduce the price. We’ll soon see.

    Numbers from NWMLS sources, but not guaranteed.

  159. 659

    The IQ of a Most Folks Lacks Common Sense?

    https://www.cnbc.com/2018/11/19/how-to-deal-with-a-holiday-debt-hangover.html

    Read the cnbc MSM article on why last year’s $1000/YR Christmas bills are still not paid a year later….the article speaks to like grade school level but is an adult article…don’t they teach anything useful in schools anymore, like balancing a check a book? We’ve largely become a brainless entity on simple things, like budgeting our money.

    Ya see why immigration needs to be merit based like Australia?

  160. 660
    whatsmyname says:

    I am thankful for many things today. And that includes our Estately SFR inventory of 3,835, and all the great new inventory we will get on Friday.

  161. 661

    RE: eddiemaster @ 636
    The Beginning of the Baron’s Article State Sold Just Before the FB Stock Collapse

    I apologize for the Barron’s MSM suddenly turning pay per view on us….I’ve quit these greedy MSM websites and they later die out on their own when this happens anyway…

  162. 662
  163. 663
    Justme says:

    RE: whatsmyname @ 660

    I’m thankful I’m not a compulsive liar that tries to conflate seasonal inventory drop with a real inventory drop.

    I’m thankful that I know (and have informed everyone here) that the active inventory ratio between 2018 and 2017 (same week) reached a new high of 1.9X last week

    I’m thankful that I understand that 1-1.5 months worth of active inventory is a balanced market, unlike the 6-month-requirement-for-balance lie that NAR and REIC has been feeding the gullible public forever.

    I’m thankful that I know that pending inventory already is NOT counted as active inventory, so I don’t make the mistake of thinking that any extra months worth of “inventory” is needed to represent properties that already had offers accepted (are in the closing pipeline).

    I’m thankful that I know that Washington State OFM estimates population increase by counting the number of new dwellings and ASSUMING these dwellings are occupied at the same rate and household size as existing dwellings, and therefore is prone to severe overestimation of the population, especially when there is an apartment building boom and high vacancy rates, as has been the case for several years now.

    I’m not thankful for dishonest trolls. Trolls out.

    I’m thankful I don’t play with dishonest trolls.

  164. 664
    whatsmyname says:

    RE: Justme @ 663 – Did you decide prices were too high in 2013, (or one year on either side)? Thrice asked, never addressed. Only a yes or no question. Shouldn’t muddy the waters too much.

  165. 665
    Eddiemaster says:

    RE: softwarengineer @ 661 – yea wasn’t about to pay just to find out whether he sold before or after earning lol was hoping you did.

  166. 666
    whatsmyname says:

    By Justme @ 663:

    RE: whatsmyname @ 660

    I’m thankful I’m not a compulsive liar that tries to conflate seasonal inventory drop with a real inventory drop.

    I’d be thankful to know if you are the same Justme that made a big point that we were crossing the all important 4,000 inventory number during the Spring run-up.

  167. 667
    Luke says:

    RE: Justme @ 649

    Mike’s a hack who has been parroting the industry and hyping Seattle real estate for years, including after it was clear the market was turning.

  168. 668
    Joe says:

    RE: npeterson5068 @ 656

    The measly 1.4% increase in transactions is no surprise. We should would expect number of transactions to increase as prices drop. This could mean the price gap between sellers and buyer’s is not widening any more. Seller’s have been reducing prices, as evidenced by the 9% drop in Seattle RE over the past six months. But there still is a large price gap between buyers and sellers, and this is why transactions remain so low. Expect more price declines as sellers respond to fill that large price gap.

  169. 669

    By Joe @ 668:<blockquoteSeller's have been reducing prices, as evidenced by the 9% drop in Seattle RE over the past six months.

    For the millionth time, part of that, and possibly even most of that, is buyers not bidding prices up.

  170. 670
    Justme says:

    RE: Joe @ 668

    Exactly. With 1.7-1.8X the inventory in October relative to 2017 same time, there should be 1.7-1.8X as many transactions, because in 2017 the market was inventory constrained, right? Right? NO, Wrong. The market was overprced in 2017 and even more so now, That is why people will not buy. And price cuts must follow if sellers want to sell.

  171. 671
    whatsmyname says:

    RE: Justme @ 670 – With less than half the inventory of 2008, should we have half the sales instead of 60% more? Uh, oh; looks like prices are now too low.

    Be more careful cherry picking; sometimes you get a pretzel. Mmmmmm, food holiday.

  172. 672
    Gooddeal says:

    By Ardell DellaLoggia @ 655:

    RE: Gooddeal @ 648

    No amount of “run time” of the fan helps in the situations I have seen the trickle vents being required in the windows for fresh air intake. When I see them, the heating system does not provide for fresh air intake. The fan is only circulating the air that is inside the unit or house. King County refers to the saying “Build it tight; ventilate it right”.

    The “whole house fans” either have no fresh air intake or insufficient fresh air intake, depending on some other factors. I have seen them often in Seattle for some time now in townhomes that do not have a forced air central heating system, usually a water heat based system. The most recent ones I saw in Redmond in a condo I just closed on, which I mentioned before. So not sure if a big house with sufficient fresh air intake through the heating system would need them. I’ll try to notice next I’m in one when I get back from Thanksgiving holiday.

    Odd I can’t google much locally about the trickle vents. Just tried again. Maybe Deerhawke (local Seattle Spec Builder) will give more detail about the code requirements when he stops by after the Holiday here on SB. I’ll be sure to ask him when I see him around.

    Truth be told, my time spent on this blog has mostly come down to waiting for Deerhawke to post. I find his insight into construction a refreshing reprieve from the off-topic drivel that now infests this site.

    I do appreciate you and Kary as well.

    Did King County really say “Build it tight; ventilate it right”? I don’t know if you recall but a while back I had posted about construction practices and how structures need to be air tight as possible but properly ventilated. Build tight and ventilate right is a principle championed by Joe Lstiburek who is often regarded as the father of building science. Others joined him, such as Pete Yost and Martin Holladay and we also have “rock star builders” such as Matt Risinger carrying the torch.

    Back to point, proper ventilation is a cornerstone of proper construction. The fact that trickle vents in windows were used informs me that the ventilation was never designed properly in the first place. Best practice is to avoid any penetrations in the building envelope. Having a direct pathway from the interior and exterior via trickle vents is a subpar solution for ventilation because ideally one would attempt to minimize the energy loss of the incoming make up air as much as possible. These days, builders do so by employing HRVs and ERVs. A proper ventilation system is always engineered to avoid issues such as using trickle vents because the HVAC designer goofed and the intake duct for the whole house fan is undersized.

    I must say, I have dealt with many HVAC companies in the area and they don’t do the Manual J, D and S calculations and simply “guess”. I just had to drop a HVAC sub from a job because he refused to do the proper calculations.

    Happy Thanksgiving!

  173. 673
    Gooddeal says:

    By Kary L. Krismer @ 657:

    RE: Gooddeal @ 647 – The point of the trickle vents is to let the smallish whole house ventilation fan (which as Ardell notes is different than the large ones used for cooling in summer) to draw in air from an outside sources, scattered throughout the house. Absent such vents if the house is built tight enough the fan would not be as efficient and/or suck in air from places like the crawlspace.

    The heat exchanger systems you mention are not at all common in the US. I don’t think I’ve ever seen one installed, unless those are part of systems where the forced air furnace will at times suck in air from the outside based on an electronically controlled damper. Those may have a heat exchanger as part of the system (and now that I think about it probably do otherwise the tight house issue would keep them from sucking in much air).

    But getting back to the trickle vents, those aren’t designed to just let air flow in and out, although that undoubtedly occurs, but instead to allow air to flow in when a fan is running, including a bathroom fan. And as to bathroom fans, having these vents scattered throughout the house you’d be less likely to get a mildew problem in a bathroom with such vents than you would opening a window in the bathroom while running the fan during a shower.

    Hello Kary,

    The use of the energy recovery systems (HRV/ERV) may become standard practice in the future as energy codes become more stringent. To build a passive or net-zero home they are practically a requirement. I’m building a home right now that uses them and have seen a few in the Seattle area but only on custom homes by good builders ( or perhaps clients steeped enough in building science to request them).

    Since you’re a RE agent I have a tip that may help your clients sell older homes. Air-tightness is just as important if not more so than insulation value. There is a company in the area called Ekovate that uses a technology called aerobarrier. Aerobarrier works by pressurizing the home and then using a misting machine that releases an acrylic sealant which gets forced through all the nooks and crannies, sealing gaps even 1/2″ wide. The cost is very reasonable, less than $5K typically. In my new construction strategy I have the framers construct the house to about 3.0 ACH50 air tightness and then use Aerobarrier to reduce it to 0.6 or less. It’s much more cost effective because to frame a house to 0.6 ACH50 could cost tens of thousands more due to to the increased sealing strategies and the need for top notch, skilled labor.

    My point is, aerobarrier can be used on an older home as well and would bring an old home to modern air tightness making the house much more marketable. Of course, proper ventilation would then be required.

  174. 674
    Joe says:

    RE: Kary L. Krismer @ 669

    Kary I don’t follow your point. If prices are dropping, it follows by definition that sellers as a whole are reducing prices and buyers are paying less. You seem to be denying a fact.

    I agree panic buyers have left the market, but that does not contradict anything I’ve said. If follows from what I’ve said.

    Prices are in a fast-moving downtrend. The number of transactions is very low, which means there is still a gap between seller expectations and buyer expectations. Given current trends, it appears sellers are reducing prices to meet the buyers, and this must continue for a long time until the gap is closed.

    Sellers sitting on empty houses have to do what is necessary to sell or they get creamed by the holding costs. I look at the inventory and I see plenty of empty houses. Most likely the owners have moved out of Seattle. The buyers are in the driver’s seat. They have much more time to sit back and rent while waiting for prices to drop. A lot of people don’t like to rent, but they’d rather do that than lose $70,000 in six months like the panic buyers of this summer.

  175. 675
    Joe says:

    RE: Justme @ 670

    Agree, price cuts will follow, and I expect the price gap between sellers and buyers to widen as one of two things happens. Mortgage interest rates will either increase on schedule (thereby constraining buyers even more), or the economy will falter from here and the job and earnings picture weakens (also constraining buyers). Either way, it puts a ton of downward pressure on housing prices. Anybody having to sell their empty house or condo will have to drop their prices considerably. I expect all these new empty condo complexes coming on line in Seattle will be offering some smoking deals 2-3 years from now. The developers can’t afford to sit on empty condos for too long, at a time when interest rates on their huge loans are rising.

  176. 676
    npeterson5068 says:

    By Joe @ 668:

    The measly 1.4% increase in transactions is no surprise. We should would expect number of transactions to increase as prices drop. This could mean the price gap between sellers and buyer’s is not widening any more. […]

    I guess what surprised me was I wasn’t expecting the market to acclimate while we saw mortgage rates continuing to increase. We know they came down a bit, but are still trending up. I believe this is why there could be a fresh wave of buyers wanting to take advantage of lower rates while they can.

    Seasonal Fall increase in inventory is self explanatory, but the unique increase that happened in summer I feel was triggered mostly by the loss of foreign buyers in part from trade disputes and global economy diverging. In the video they mentioned investors and all-cash buyers were re-entering the market.

    Between HQ2 decision being finalized and Seattle’s unique job market (Microsoft is surprisingly picking up steam again) I’m not as bearish, but still cautious.

    On that note, it’s been great reading your and everyone else’s perspective. There are a lot of smart people in these comments.

  177. 677
    Eddiemaster says:

    RE: Joe @ 675 – we will keep disagreeing on this. There was an estimate that QE shaved off 1-1.5% off of long term US rate, so with the mortgage rate .75% higher than last year when balance sheet roll off started, we should expect on the high end another .75% eventually in 2020, bring us to around 5.55%, provided no further yield curve flattening, which there will be getting later in the cycle.
    As for the Fed rate hike, I counted about 10 times since the recession, it is still likely that the Fed will become dovish to slow the hike pace to not stunt the growth. We will get some indicator reporting in the coming week.
    I just can’t agree with you on your theory that Fed has the intention to devalue assets, which is a recession. To me what we will face in both equity and asset is slow growth for many years to come as a country. For the local area, I think we are just scratching the surface with cloud space, data science, AI, and machine learning. I would still expect a steady population growth, even at a lower percentage growth. To say that this area’s job market is just done is wildly exaggerating.
    Also don’t forget that the effective mortgage rate for the 10% folks is lower because of the higher income tax bracket.

  178. 678

    By Gooddeal @ 672:

    Back to point, proper ventilation is a cornerstone of proper construction. The fact that trickle vents in windows were used informs me that the ventilation was never designed properly in the first place. Best practice is to avoid any penetrations in the building envelope. Having a direct pathway from the interior and exterior via trickle vents is a subpar solution for ventilation because ideally one would attempt to minimize the energy loss of the incoming make up air as much as possible.

    It does sort of seem like the situation we have with cars/trucks, where they install carpet and then we buy WeatherTech floorliners to protect the carpets. At least base level pickup trucks can still come with vinyl flooring.

    I must say, I have dealt with many HVAC companies in the area and they don’t do the Manual J, D and S calculations and simply “guess”. I just had to drop a HVAC sub from a job because he refused to do the proper calculations.

    My main issue with them is doing unlicensed electrical work. There they can’t even figure out what color the wiring should be, or even that it should be two different colors.

  179. 679

    By Joe @ 674:

    RE: Kary L. Krismer @ 669 – Kary I don’t follow your point. If prices are dropping, it follows by definition that sellers as a whole are reducing prices and buyers are paying less. You seem to be denying a fact.

    My point is this. In 2017 a house that everyone thought was valued at $550,000 could get bid up to $625,000 due to a buyer frenzy. It doesn’t mean that house was worth $625,000, and in fact if it had been listed at even $600,000 it might have only sold for much less. Also, another identical house listed for $550,000 might have only sold for only $550,000 if listed a week later depending on the other listings active that week, the weather, or whatnot.

    What has been reduced is the opportunity for a seller to sell their property for more than it is worth. Those bidding war sales still were reflected in the mean and median since every house sale is reflected in the mean or median. But if you just asked an appraiser what a house was worth at different points in time, it wouldn’t reflect that same variation, because the value of the house wasn’t really fluctuating that much.

    Or here’s another way to see it. During September 2017 the median sales price (King County SFR) was roughly $10,000 over the ORIGINAL list price. During September 2018 the median sales price is $10,000 less than the original list price. Part of that latter number was just agents/sellers getting ahead of the market, but a big part of the former number was due to buyer bidding each other up. Sure a few agents did try to underprice to generate a bidding war, and I would even tell sellers there was less risk to underpricing than overpricing, but the point is with some regularity bidding wars in 2017 would drive the price up far beyond what the agent or seller even dreamed of, and that would be reflected in the median for the month.

    Finally, what confuses some people is thinking that the sales price equals FMV. That is incorrect. FMV is what a hypothetical buyer would pay in an arm’s length transaction. Buyers can agree to pay more than FMV for a house, which is part of the reason banks require appraisals.

    So yes, buyers are paying less, but that doesn’t mean the values are less by the same amount.

    Numbers from NWMLS sources, but not compiled by or guaranteed by the NWMLS.

  180. 680
    whatsmyname says:

    Well, the turkey bubble has popped! I predict November to December turkey sales will plummet by 69.1% to 74.2%. There is no private resale market for bacteria covered, decaying meat. No doubt many of you discovered that too late, and just gave away portions of your expensive cooked birds to your more prudent guests and family members.

    We are now nearing peak ham. Due to religious and ethnic diverity, the numerical December to January sales drop could be numerically much smaller. But the percentage drop may, in fact, be even more serious, (ominous wink).

    The FGIC (food and grocery industrial complex) is raking in trillions by conning the workers with these and other expensive “holiday” treats – and not that long before tax time.

    I hope we can overcome these horrific developments, and just have a happy holiday season. (Coded message to you know who: It’s Black Friday; buy, buy, buy.)

  181. 681

    RE: npeterson5068 @ 676
    Yes npeterson5068

    The blogs that pick out folks that are silver tongue devils [in their opinion only] and not the rest of the bloggers as a team is short sighted in my opinion. We all contribute in this blog and its not just a few that meet your politics screening, no, not at all. All of us, even Pfft…LOL…understanding his blue dog Open Border Party attitude is part of compromising too.

    Some of the best medical information comes from the sickly patients not the haughty medical fee sellers. Toastmasters teaches this as leadership and management training BTW.

  182. 682

    RE: whatsmyname @ 680
    LOL

    They’re fighting like competing buyers for the single listing left….$100 55 inch flat screens and $99 laptops thrown in the cart as they fight their way back to the free Black Friday doughnuts and coffee counter with old dried turkey dressing still on their face after 3 hours sleep in the pup tent lines at 3AM….LOL

  183. 683
    uwp says:

    By whatsmyname @ 680:

    The FGIC (food and grocery industrial complex) is raking in trillions by conning the workers with these and other expensive “holiday” treats – and not that long before tax time.

    Luckily, it is always a great time to buy or sell apple pie!

  184. 684
    whatsmyname says:

    By uwp @ 683:

    Luckily, it is always a great time to buy or sell apple pie!

    I cannot agree with this without undermining my message, and I cannot disagree without looking foolish. Therefore, I will ignore it.
    wait,
    woops.

  185. 685

    RE: Gooddeal @ 672

    They refer to “build it tight; ventilate it right” as “an industry saying”. If you google that phrase and King County WA you should be able to get the full PDF on the topic and yes, they say the common low priced version of how you do that (as I mentioned earlier) is the LEAST (emphasis added) preferable.

    I have mixed feelings on the issue of retrofitting older structures because all too often the cart pulls the horse on that, historically speaking. I started real estate in 1990 (portfolio stock/bond management immediately prior in my former 20 year work-life as a bank officer). Around that time older homes were being upgraded as to double-pane, vinyl vs wood windows and new siding with extra insulation. It was very common for me to find black mold on the attic side of the roof sheathing panels. “2nd shingle” roofs were not as uncommon then and a house wood be listed as “NEW ROOF! Newer windows and siding! Added insulation!

    As a result almost every home inspector said “A home has to breathe!!!” and the mold in the attics was a result of air not being able to escape. Then we had an increase in “black mold” and illness because the air had no way to get in or out. I still remember one of the only times in almost 30 years “we” had to walk away and cancel “on inspection” because the owner’s new roof had black mold on the underside of the sheathing.

    Yes…that later (cart pulling the horse) resulted in the invention of “ridge vents” which solved most of the problem for awhile. But lately in the last few to several years I am again seeing several kinds of mold in attic inspections including mushrooms growing up there due to a higher standard for “tight” and ineffective counter-balancing ventilation, especially on older structures. Any ventilation that requires the homeowner to act fails because they understand their utility bills more than they understand the need to ventilate. Yes you CAN open the trickle vents and turn on that “whole house fan” and that bathroom fan…but you can also not run those fans and not open those trickle vents…and I see the negative impact OFTEN from people who don’t like the fan noise and feel their money leaking out of the pocket at the mere idea of air coming in through a trickle vent. So while technically “correct”, I see the negative impact more than I see homeowners who understand the concept.

    I must ask and hope you will reply honestly, what you do for a living and/or if you have any connection to the named companies you have interspersed into your comments. Once you call out a specific company by name for sealing up air leaks in older structures, and not that you had to let a “sub” go for…I think we need to know if you are in any way connected to those companies you “pushed” in your comment. Just a courtesy and I hope you will be honest about that. What do you do that requires you to hire HVAC subs?

  186. 686
    Joe says:

    RE: Kary L. Krismer @ 679

    We agree then. Buyer frenzy has dissipated, which is leading to a reduction of unsupportable market prices.

    I happen to think house prices will keep dropping until the last two years of price gains are wiped out, because the last two years were driven by buyer frenzy and an irrational fear of missing out.

    But evaporation of buyer frenzy is just the start of this problem. Lots of factors are supporting a continued price drop – rising interest rates, increasing inventory, reduced transaction volume, rising debt levels, stock market drops, recent home price drops, increased volatility, increased threat of 2019 recession, etc.

    We’ve just seen the stock market drop on Black Friday, which is usually the most celebrated spending day of the year. Such price drop hasn’t occurred on a Black Friday since 2010 I heard. Sentiment is changing because asset prices (both stocks and RE) rose too far too fast for many several years. This realization is starting to put a damper on everything.

    Selling lowers prices, which generates more selling. Stock price drops lead to less wealth and put pressure on RE prices. The negative feedback cycle has begun. I’ve already commented on all the wealth lost in Seattle over the past month and how this will likely hurt local real estate prices.

    My prediction: a very nasty Spring housing market.

  187. 687
    Ardell says:

    RE: Joe @ 686

    Unrelated to retail and Black Friday, this has been the worst Thanksgiving Week since 2011 for all 3 Major Stock Indexes. Also today marks a possible new correction. The current home price downtrend came from the February stock market correction. This new correction should elongate the pattern and deepen the drop in home prices. But we won’t be sure until next week.

    The underlying political pressure on rates and other market disrupters will get stronger and stronger as well. Trump and Republicans will be pushing against Democrats more and more on that. A bad market is the goal of Democrats to help switch the Presidency on the 4 year cycle. A good Market is the goal of Republicans. The mid-terms didn’t tell us enough to predict the winner on that as to housing price projection, so we have to rely on the stock and bond markets.

    The spiral down in housing prices will accelerate if next week we see a continued decline in the stock market. A clear 2nd correction will start to push some neighborhoods underwater, mostly down in Kary’s areas vs mine. I ran those numbers before leaving for Thanksgiving and won’t be back until Tuesday, so can’t give the detail on that right now.

  188. 688
    Joe says:

    RE: Eddiemaster @ 677

    Eddie, you are suggesting the Fed can’t raise rates any more or the economy will tank. This means the natural interest rate is the current rate or less, and it implies interest rates will stay at this level for a long period of time, which will support current asset prices.

    I vehemently disagree. Low interest rates imply low economic growth and low inflation. If interest rates are really going to remain low for an extended period, what happens when the stock market realizes earnings growth of 10% per year is not going to happen? Look at the forward S&P earnings estimates. It assumes a long period of high economic growth.

    I think the stock market is now starting to realize this contradiction, and this is why stock prices are plummeting. It does not matter whether interest rates rise or fall from here. In either case, the earnings growth expectations are ridiculously high and stock prices will fall, which drags down RE. it’s happening right now.

    I’m not overly focused on interest rate levels. I think rates will continue to rise as the Fed seeks to avoid systematic risk, but I think stock market prices have a bigger influence on RE right now. There has been a positive feedback cycle between stocks and RE for many years ending this Fall. A negative feedback cycle is now taking hold and forcing prices down. Stocks and RE are now falling side by side, just like the last asset price downturn. There’s a long way to fall from here in my opinion.

    I think Kary is correct in saying market sentiment has a lot to do with it as well. The positive sentiment defied facts on the ground way too long. Now we have to deal with the reversal of that sentiment, in addition to the cold hard numbers.

  189. 689
    sfrz says:

    The slide continues. Free vacations! We’ll throw in a media room, blinds! This puppy’s gonna blow.

    “In Seattle, where home prices have doubled since 2012, builders are offering cash for customers to “buy down” mortgage rates—that is, pay to get a lower interest rate. “Builders are calling us,” says Andy McDonough, senior vice president at HomeStreet Bank, which works with the companies on such promotions. “They weren’t doing this earlier because buyers were lining up.””
    https://www.bloombergquint.com/global-economics/free-vacations-100-000-discounts-homebuilders-get-desperate#gs.LugCPrg

  190. 690
    Gooddeal says:

    By Ardell DellaLoggia @ 685:

    RE: Gooddeal @ 672

    I have mixed feelings on the issue of retrofitting older structures because all too often the cart pulls the horse on that, historically speaking. I started real estate in 1990 (portfolio stock/bond management immediately prior in my former 20 year work-life as a bank officer). Around that time older homes were being upgraded as to double-pane, vinyl vs wood windows and new siding with extra insulation. It was very common for me to find black mold on the attic side of the roof sheathing panels. “2nd shingle” roofs were not as uncommon then and a house wood be listed as “NEW ROOF! Newer windows and siding! Added insulation!

    As a result almost every home inspector said “A home has to breathe!!!” and the mold in the attics was a result of air not being able to escape. Then we had an increase in “black mold” and illness because the air had no way to get in or out. I still remember one of the only times in almost 30 years “we” had to walk away and cancel “on inspection” because the owner’s new roof had black mold on the underside of the sheathing.

    Yes…that later (cart pulling the horse) resulted in the invention of “ridge vents” which solved most of the problem for awhile. But lately in the last few to several years I am again seeing several kinds of mold in attic inspections including mushrooms growing up there due to a higher standard for “tight” and ineffective counter-balancing ventilation, especially on older structures. Any ventilation that requires the homeowner to act fails because they understand their utility bills more than they understand the need to ventilate. Yes you CAN open the trickle vents and turn on that “whole house fan” and that bathroom fan…but you can also not run those fans and not open those trickle vents…and I see the negative impact OFTEN from people who don’t like the fan noise and feel their money leaking out of the pocket at the mere idea of air coming in through a trickle vent. So while technically “correct”, I see the negative impact more than I see homeowners who understand the concept.

    I must ask and hope you will reply honestly, what you do for a living and/or if you have any connection to the named companies you have interspersed into your comments. Once you call out a specific company by name for sealing up air leaks in older structures, and not that you had to let a “sub” go for…I think we need to know if you are in any way connected to those companies you “pushed” in your comment. Just a courtesy and I hope you will be honest about that. What do you do that requires you to hire HVAC subs?

    I certainly understand your reluctance to retrofit older homes. There need to be some planning before undertaking a drastic change to a home’s building envelope or issues can arise which is something that homes have experienced after installing spray foam insulation, for instance. If you’re interested in building science I would recommend purchasing some of Joe Lstiburek’s books, such as “Builder’s Guide to Mixed climates” which is appropriate for the PACNW climate. He goes into great detail on the fundamentals of building science.

    The black mold issue you mentioned is caused by trapped moisture. It may be non-intuitive but airflow and moisture are two separate things. There are four control layers in construction – rain; air; vapor; and thermal, in this order of importance. One can make a structure airtight but vapor permeable so that moisture, in vapor form, is not trapped and mold does not develop. In the case of spray foam, spray foam was added to improve the thermal control layer. However, closed-cell spray foam is also a vapor barrier, therefore unbeknownst to the contractor and homeowner it also affected the vapor control layer which they did not design for.

    My recommendation of the Aerobarrier is pretty safe since the sealant that it uses is vapor permeable allowing moisture to escape. That said, one would still want to design a proper ventilation system to assist with the removal of moisture as well.

    To address your questions, I work in government in a non-construction capacity. However, I am building a custom home for myself and I am the general contractor on the project. I am also a consultant for a couple other construction projects for family members. My being a GC on my home was unintentional. It was only through the failure of my architect and builder to properly design a structure, in my view, that maximizes energy efficiency, health, and durability that forced me to assume their responsibilities. It was frustrating to ask them their thoughts on something only for them to parrot my own words because they had no clue. I figure I needed to stop asking and simply tell them how they need to build my house. I have no regrets being the GC – I doubt I could find a better house for less than 2 million, if not more, and it’s going to cost significantly less than what the average builder could build for.

    I’m not affiliated with Ekovate or Aerobarrier in any way. However, I feel that it is a technology with the potential to reshape construction and I love to share technology that can help others build a better product for less. I’m using it on my own home in fact.

  191. 691
    Ardell DellaLoggia says:

    RE: Gooddeal @ 690

    Thank you. I appreciate your taking the time to reply to my question. Most times when I see attic mold it is due to the bathroom vent being dislodged over the years and venting bathroom moisture into the attic. Cause of the problem much easier to fix than the problem it created.

    It’s a shame people only hire home inspectors when buying a house. Certainly worth the cost to do one every 5 years at minimum. We find so many things a home owner would have fixed if they only knew.

  192. 692

    By Gooddeal @ 690:

    The black mold issue you mentioned is caused by trapped moisture. It may be non-intuitive but airflow and moisture are two separate things. There are four control layers in construction – rain; air; vapor; and thermal, in this order of importance. One can make a structure airtight but vapor permeable so that moisture, in vapor form, is not trapped and mold does not develop. In the case of spray foam, spray foam was added to improve the thermal control layer. However, closed-cell spray foam is also a vapor barrier, therefore unbeknownst to the contractor and homeowner it also affected the vapor control layer which they did not design for.

    Assuming most of what Ardell sees with respect to mold/mildew/fungus are the same as what I see, many are related to new roofs or insulation, and a lot of it can be blamed on shoddy roofers and insulation contractors. On the roofing front I saw a metal roof installed with no ventilation as part of the system, and a composition roof added on a house that was shake, with insufficient ventilation in part because the house was apparently designed with no soffit vents and none were added when the shakes were removed. The most common mistake with blown in insulation is failing to add blocking pieces to keep the insulation from blocking the soffit vents. But apparently even the simple act of adding more insulation in the attic can require additional venting.

    Edit: I wrote this before seeing Ardell’s response. Bath fan ventilation is also an issue, and perhaps the most common in older houses, but I would still say the worst ones are the ones with inadequate ventilation in general.

  193. 693

    By Joe @ 686:

    RE: Kary L. Krismer @ 679

    We agree then. Buyer frenzy has dissipated, which is leading to a reduction of unsupportable market prices.

    Yes, but I’m also distinguishing between a change in value and a change in the median.

    This is somewhat related to the comments I’ve been making about a cause of over-pricing listings: Failing to look at the price history of the sold comps. In some situations a sold comp is completely worthless as a comp if it was excessively bid up over list. That is somewhat of a judgment call, but some situations are obvious. But such sales still affect the median. Note many/most of those sales are likely thrown out as being paired sales in the Case-Shiller system, so the Case-Shiller system may be less susceptible to such variations.

  194. 694

    RE: Gooddeal @ 673
    Now I’ll Address This Air Tight Issue as a Mechanical Engineer

    Your house is like a solid metal ball with an air valve and the heater is sucking the air out; without holes the heater will just turn off [burn itself up] and if inside you’ll die from lack of air….LOL

    All this “phony contractor [uneducated?] witchcraft” to make it air tight to some “x” value is pagan religion to this engineer. I read their fake news research into toxicity and mold not related to reduced circulation. That’s like saying cardio vascular disease has nothing to do with plugged arteries. The ‘greedy contractor” Fake News science makes no sense, something doesn’t breath without air holes. Period.

    http://topdailytrends.com/2018/09/30/research-shows-shocking-levels-of-toxic-air-inside-homes/

  195. 695

    RE: Ardell @ 687
    Ardell

    I said it before and I’ll say it again. You are a great realtor and the one the buyers should hire. No fog, no illusions, just the facts.

  196. 696
    redmondjp says:

    RE: Kary L. Krismer @ 692 – Regarding moisture in the attic, my house has this problem at certain times in the winter. During below-freezing temperatures, I get condensation on the underside of the sheathing on the north side of my house (no sun exposure to warm it up). The condensation sometimes freezes, and then when it warms up, the water drips down and then out of one of my ceiling light fixtures. This also happens in some of my neighbors’ homes as they were built at the same time by the same builder.

    And I have a very well-ventilated attic too. I doubled the number of roof vents when I had a new roof put on, and my eaves have plenty of ventilation holes.

    I have yet to find a solution to this problem. I don’t know that the moisture is coming from inside the house necessarily – I suspect it is from the humidity in the outside air, in the same way that I get condensation underneath my patio awning roof and the metal shed roof in my storage area next door (both of which are open on the sides to the outside). Any ideas to correct this would be welcome!

  197. 697
    Joe says:

    Insanity at its finest. Maybe if they reduce the price by $4M they’ll get a nibble.

    https://www.trulia.com/p/wa/kirkland/555-5th-ave-w-kirkland-wa-98033–2118461442

  198. 698
    Gooddeal says:

    By redmondjp @ 696:

    RE: Kary L. Krismer @ 692 – Regarding moisture in the attic, my house has this problem at certain times in the winter.

    I have yet to find a solution to this problem. I don’t know that the moisture is coming from inside the house necessarily – I suspect it is from the humidity in the outside air, in the same way that I get condensation underneath my patio awning roof and the metal shed roof in my storage area next door (both of which are open on the sides to the outside). Any ideas to correct this would be welcome!

    Your attic moisture issue during the winter is caused by humidity generated inside your home from the occupants, cooking, and showers. During the winter the air outside has less humidity than the air inside the home. With a vented attic such as yours, there needs to be a vapor barrier separating the conditioned area from the attic space. Latex paint over drywall is a vapor barrier. Check the ceiling and make sure there aren’t any cracks or openings between the house and attic. The most common culprit is an inadequately sealed attic entrance. Also check the exterior and make sure soffit and eave vents are unobstructed.

    If you absolutely cannot remedy the root of the problem you can place a dehumidifier in the attic (make sure the drain line runs out to the exterior or to plumbing) which will at least address the moisture (symptom) but not the cause.

  199. 699
    Ardell DellaLoggia says:

    RE: Gooddeal @ 698

    I don’t like dehumidifiers as a solution as they tend to overflow if people don’t empty them often enough…and they usually don’t in my experience with people and their houses. I prefer using damp rid crystals. When people whom I have sold houses to invite me to dinner throughout subsequent years I don’t bring wine. I bring a new supply of damp rid. :)

    I keep one canister behind the toilet in any bathroom that has a shower. I use the hanging bag version in any closet that is near a bathroom, usually the master bath but sometimes Jack and Jill rooms. Basements, crawl spaces… Generally I try to reduce the moisture at the source and again just inside and outside the areas with the interior crawlspace and attic hatches. Each house is a bit different as to those needs.

  200. 700
    Gooddeal says:

    By Joe @ 697:

    Insanity at its finest. Maybe if they reduce the price by $4M they’ll get a nibble.

    https://www.trulia.com/p/wa/kirkland/555-5th-ave-w-kirkland-wa-98033–2118461442

    I wouldn’t pay the asking price. In their defense, the house is built really well. You can see that a lot of thought went into it. For example, the commercial steel and concrete framing with curtain walls and corner glazing. The balusters on the balcony actually go through the decking and is secured on the underside for a clean look. All the hvac registers are flush with the finished wall surfaces. Lights are well placed and selected with thought. The boxed ceiling is impressive. I’m curious how they constructed it – are the joists running above it or are they using steel beams to support the upper floor? Of course, you also have the really high end materials like the large format tiles, the extra thick countertops, the integrated appliances, etc. I wouldn’t be surprised it the cost to build was 2 million.

    How much is the land worth?

  201. 701
    Gooddeal says:

    By Ardell DellaLoggia @ 699:

    RE: Gooddeal @ 698

    I don’t like dehumidifiers as a solution as they tend to overflow if people don’t empty them often enough…and they usually don’t in my experience with people and their houses. I prefer using damp rid crystals. When people whom I have sold houses to invite me to dinner throughout subsequent years I don’t bring wine. I bring a new supply of damp rid. :)

    I was referring to a dehumidifier with a permanent drain line installed that removes the water to the plumbing system or to the exterior. Having a portable unit that would need to be emptied manually would be a hassle indeed! :)

  202. 702

    RE: Kary L. Krismer @ 692

    Most of the time when I see insulation blocking the airways it is in the crawlspace. Probably 80% crawlspace and 20% attics. Also, at least half the time that I see it it is brand new insulation added when getting the house ready for sale, so the moisture issues haven’t revealed themselves yet…just the blocked airways as the “problem” to resolve. In fact I have a house in escrow in Shoreline with that problem right now.

    The sellers aren’t adding the insulation to sell their house for the value of the added insulation. They are adding the insulation to replace or cover up the rodent invested insulation, hence the “new insulation” prior to sale.

    Anytime someone sees “new added insulation!” as part of a listing description they should ask if the rodent entries were closed up and the other rodent issues were addressed…or did they just do a clean out and new insulation.

  203. 703

    RE: redmondjp @ 696 – That is interesting, and not something I’ve seen or heard of. During below freezing weather there should be very little moisture in the outside air, although the relative humidity could still be high at times. Based on that alone I would suspect that Gooddeal is right, that the moisture is coming from inside your house. I have heard the moisture will pass through the sheetrock. Perhaps you just need more air exchange inside the house with the outside air, because that air from outside would be very low humidity when heating to normal living temperatures. That would drag down the relative humidity inside your house fairly quickly. Alternatively you could use a dehumidifier inside the house during those weather periods, but that really shouldn’t be necessary during cold weather if you have enough air exchange.

    Have you checked the relative humidity inside the house during those periods? It should naturally be below 50% during very cold weather, and if not, something is wrong.

  204. 704

    By Ardell DellaLoggia @ 699:

    RE: Gooddeal @ 698

    I don’t like dehumidifiers as a solution as they tend to overflow if people don’t empty them often enough…and they usually don’t in my experience with people and their houses. I prefer using damp rid crystals. When people whom I have sold houses to invite me to dinner throughout subsequent years I don’t bring wine. I bring a new supply of damp rid. :).

    Dehumidifiers that don’t have drains should have functioning shutoffs when they get full. My mom used those crystals–the amount of water they pull out of the air compared to a dehumidifier is insignificant. It’s gallons a day versus ounces.

  205. 705
    npeterson5068 says:

    Another interesting watch, which supports some things I’ve been seeing in the market recently. Some of this is anecdotal to California, though I think Seattle draws some similarities:
    https://www.youtube.com/watch?v=xtnZBLtz_ys

    This has me extra curious for Tim’s next round of stats.

  206. 706

    RE: redmondjp @ 696 – Have you checked to see if your exhaust fans are actually exhausting?

  207. 707

    I wonder why there haven’t been any news stories lately about houses being listed with a price in Bitcoin. ;-)

    https://www.coindesk.com/price/bitcoin

    Even with a one week close a seller would have lost about 20% of value.

  208. 708
    Ardell DellaLoggia says:

    RE: Kary L. Krismer @ 704

    If a house needs to be relieved of GALLONS of water in a day, the fix is not a dehumidifier.

  209. 709
    Momentum says:

    RE: npeterson5068 @ 705

    Won’t year over year continue to be positive until all of the massive gains from last spring corrected for? If we really want to look at what the market is doing should we not be graphing the year over year gains each month and thus can see an accurate depiction of the direction of the market? I keep reading individuals who have vested interest in populace continuing to invest in real estate cherry picking data and statistics. Choosing a static data point that is negative and contrasting to a more dynamic data point which is still positive without mentioning that the direction of that particular data point when looked at over time is actually negative. I don’t know if this is a short, medium, or long term correction, but saying that year of year price is still positive is like telling someone that your average speed is still 25mph 10 minutes after you slammed into a wall and came to a complete stop-3 hours into your Thanksgiving drive back home. It is accurate to say this, but doesn’t accurately describe the current state the motion of the car is experiencing. You shouldn’t feel good that your still averaging 25 miles an hour while the ambulance and firetruck is trying to remove your wife and kids from the car!!!

  210. 710

    RE: softwarengineer @ 694

    Love your “pagan religion” reference. I try to keep an open mind as to the new “air tight” craze trend…as well as those who practice pagan religions. But when I have a client complaining that the trickle vent when closed is not “air tight” and I know he is never going to let even a trickle of a trickle of air in, I know that the current method is going to fail.

    Being IN real estate we understand everyone’s perspective, but we also see first hand the poor results and damage caused by good plans going badly due to user error.

    Basically it’s the age old “penny wise and pound foolish” problem. They can “feel” the pain of their utility bills repeatedly each month more than they can visualize the more expensive cost of remediating the resultant damage in the long term.

  211. 711

    RE: redmondjp @ 696
    Do You and Your Neighbors Turn Your Heat Way Down When you’re Not Home?

    Try leaving it on 7/24s like I do [or turn the off thermostat to like 70 degrees]….the North end coldness/moisture disappears and so does the slight mildew odors. Perhaps that’s why these new air tight homes can’t be monitored for systems adequacy too without continuous heat? My heating bill really didn’t go up much either, it takes more heat to reheat cold bulk materials than warm bulk materials.

  212. 712
    Lars says:

    RE: Blurtman @ 502

    As well as the fine opportunity to live in a fishbowl…

  213. 713

    By Ardell DellaLoggia @ 708:

    RE: Kary L. Krismer @ 704

    If a house needs to be relieved of GALLONS of water in a day, the fix is not a dehumidifier.

    Incorrect.

  214. 714
    Ardell says:

    RE: Kary L. Krismer @ 712

    Haha! Well you can sell that house to your clients. LOL! If EVERY house or ANY “good” house had that issue, they would all or most come with dehumidifiers.

    Though I understand your perspective given the area where you live is known to have excessive moisture issues. Still…there are much better ways to deal with those issues than regularly running a dehumidifier.

  215. 715
    Gooddeal says:

    By softwarengineer @ 694:

    RE: Gooddeal @ 673
    Now I’ll Address This Air Tight Issue as a Mechanical Engineer

    Your house is like a solid metal ball with an air valve and the heater is sucking the air out; without holes the heater will just turn off [burn itself up] and if inside you’ll die from lack of air….LOL

    All this “phony contractor [uneducated?] witchcraft” to make it air tight to some “x” value is pagan religion to this engineer. I read their fake news research into toxicity and mold not related to reduced circulation. That’s like saying cardio vascular disease has nothing to do with plugged arteries. The ‘greedy contractor” Fake News science makes no sense, something doesn’t breath without air holes. Period.

    http://topdailytrends.com/2018/09/30/research-shows-shocking-levels-of-toxic-air-inside-homes/

    I’m not tracking with you here. Are you saying you are not an advocate for air tight homes? The article you linked to is the result of builders not engineering a proper ventilation system from the get go. I think we’re on the same page – houses need to be properly ventilated and it needs to be via a system that cannot be shut off easily, like an erv/hrv.

  216. 716
    sfrz says:

    Make an offer! Waive the inspection! Let’s add that escalation clause! It’s never been a better time to buy! Oh those were the days.
    “The hot Seattle real estate market seems to have reached a turning point, with the average home selling for 0.6% below listing price in October, the first time prices were below asking since 2014.”

    “‘Prices have gone up so much recently in Seattle that buyers have reached a point where they’re saying they’re not going to accept these,’ Ms. Fairweather said. ‘And with mortgage interest rates going up, more people are thinking of renting instead of buying.’”

    “Seattle is not the only market experiencing a slowdown in sales and sales prices. In Los Angeles, too, 23.8% of sellers sold their homes for below the listing price this September, while the median home price in Los Angeles County saw a 3.6% gain, the smallest in three years.”
    https://www.mansionglobal.com/articles/mansion-global-daily-los-angeles-opportunities-seattle-inventory-increase-and-more-110650

  217. 717
    Ardell DellaLoggia says:

    RE: Gooddeal @ 714

    I do follow him as too many are pushing “green” and “air tight” as a hook to nab buyers or as spin to charge more for houses. He is quite right about that. Many are trying to capitalize on the whole “air tight” thing and it truly is NOT necessarily the best way to make a house if someone doesn’t understand the need to ventilate…especially where any user action is needed like trickle vents.

    It’s just a trend right now. Not bad…but not as important as some make it out to be either. Houses DO need to BREATHE! Everyone will agree about that and making them air tight can cause more problems than not making them air tight.

    It really is not the be-all-end-all for all people. You can like it. You can think it’s awesome. But you can’t think it is right and awesome for everyone, because it isn’t always the best way to go for everyone.

    Though I think it’s great that you are doing that for yourself in the house you are building, because you value that, I hope you don’t think that means everyone should think exactly like you.

  218. 718

    By Ardell @ 713:

    RE: Kary L. Krismer @ 712

    Haha! Well you can sell that house to your clients. LOL! If EVERY house or ANY “good” house had that issue, they would all or most come with dehumidifiers.

    Though I understand your perspective given the area where you live is known to have excessive moisture issues. Still…there are much better ways to deal with those issues than regularly running a dehumidifier.

    You clearly don’t understand how humidity works. Here’s a clue–it’s different at different times of year and a lot of the seasonal humidity that enters your house is the result of the outside conditions (unless maybe you live in an unhealthy air-tight house that has no provisions for air exchange). If it were raining and 60 degrees out there would be a lot more humidity entering your house than if it were 20 degrees and clear. Other sources are plants and people. I’m not sure where you think the humidity is coming from, but you don’t need a leaky roof or failed siding to get significant moisture in a house.

    If you want to keep your house under 50% relative humidity you will likely need to use a dehumidifier at certain times of year, and those toy things you recommend will not do much of anything because they eliminate very little water. There’s a reason common sizes for dehumidifiers is 30, 50 and 70 pints (roughly 4-8 gallons). The air inside a house can hold a lot of air and depending on the area of the house and the conditions they might need to remove that much each day (especially when you first start reducing the humidity).

  219. 719
    Ardell DellaLoggia says:

    RE: Kary L. Krismer @ 717

    Kary, Let’s not play the right wrong game. You and I both know I’ve been through many hundreds more home inspections than you have. I am always talking from a real estate perspective and with regard to creating damage to a house. Never is dehumidifier the correct answer in that regard. The canisters are very important for many reasons I don’t expect you to understand. I just used the canisters at a now sold house. They worked for the purpose intended. By the time you need a dehumidifier you have a bigger problem that needs a better fix than a dehumidifier.

    Every time I’ve seen a dehumidifier dragged in to a house while getting a house ready for sale it has been to hide a big problem. When it comes to real estate you should almost always run from the house with the dehumidifier. I’ve literally seen vacant houses with nothing in them except a dehumidifier. Run!!! People don’t run from canisters. :)

  220. 720
    Gooddeal says:

    By Ardell DellaLoggia @ 716:

    RE: Gooddeal @ 714

    I do follow him as too many are pushing “green” and “air tight” as a hook to nab buyers or as spin to charge more for houses. He is quite right about that. Many are trying to capitalize on the whole “air tight” thing and it truly is NOT necessarily the best way to make a house if someone doesn’t understand the need to ventilate…especially where any user action is needed like trickle vents.

    I won’t disagree with that. If you don’t understand and refuse to learn about how your home’s ventilation system works then you shouldn’t live in a tight house.

    It’s just a trend right now. Not bad…but not as important as some make it out to be either. Houses DO need to BREATHE! Everyone will agree about that and making them air tight can cause more problems than not making them air tight.

    It really is not the be-all-end-all for all people. You can like it. You can think it’s awesome. But you can’t think it is right and awesome for everyone, because it isn’t always the best way to go for everyone.

    Though I think it’s great that you are doing that for yourself in the house you are building, because you value that, I hope you don’t think that means everyone should think exactly like you.

    I try to avoid forcing my views on others. I’m building a tight home because I don’t like high energy bills and I want to be able to control the incoming air exactly how I want it. Not everyone cares about saving money or improving indoor air quality and would rather put the money toward aesthetic details. I also concur that one should not pay such a huge premium towards the goal of saving money when there is no way to recoup the cost in a reasonable length of time, e.g. paying 70K for a Tesla to save money on fuel costs.

    One thing I disagree with though is that building tighter homes is just some trend or fad that will die. Energy codes will become increasingly strict and all new construction will be very tight in the near future. Permitting officials are also placing greater emphasis on best practices such as moisture management, e.g. ventilation behind wall cladding and roofs using rainscreens. The future of construction is looking really bright and I look forward to the day when even tract homes are built to a standard that will ensure they will last at least 50 years with minimal maintenance. I would love to get Deerhawke’s opinion on the matter.

  221. 721
    Justme says:

    Weekend Update, graphical edition:

    Weekend active inventory update, King County, graphical edition. As always, click on link, then click once more for enlarged view.

    King County SFH active for-sale inventory 2017-versus-2018 on 2018-11-24
    https://imgur.com/a/9OiLa16

    King County Condo active for-sale inventory 2017-versus-2018 on 2018-11-24
    https://imgur.com/a/V0QbFXu

    As has been the case since mid-March, year 2018 KC SFH active inventory outnumbers year 2017 by a factor (a ratio) that has been above 1X since mid-late March, and has been on a upward trend all year long. The factor was ~1.9X last week, and this week it has crossed 2X. This fact indicates that while the seasonal slowdown is ongoing in 2018, as it is every year, the slowdown in 2018 is relatively smaller in 2018 than it was in 2017. To illustrate the trend. I have, just as last week, calculated and graphed the inventory factor (2018/2017 ratio). Here it is:

    King County SFH active for-sale inventory ratio 2018/2017 on 2018-11-24
    https://imgur.com/a/aaSC7XH

    King County Condo active for-sale inventory ratio 2018/2017 on 2018-11-24
    https://imgur.com/a/djt5dqk

    The trend is upward and there has been no sign of it abating. For KC Condo inventory, the factor just broke the 3.5X for the first time, after a temporary downward blip in early November. I think that number 3.5X is quite something. The factor just crossed 1X in mid-February, and it is now 3.5X. I think it is an old saying in real estate that condo prices and sales are the last to rise and the first to go bust. It looks like history is rhyming with itself again.

    Reader alert: Watch out for rampant mis-characterization of the graphs and what they say, various misdirections,and generally that propagandists try to sow uncertainty about what the graphs say. Please examine each graph yourself, it is worth the time.

    SKIPPED: Coming up (if the trend in propaganda continues): Whatshisname mis-characterizing the numbers, making irrelevant comparisons, and generally trying to sow uncertainty about what this all means.

  222. 722

    By Ardell DellaLoggia @ 718:

    RE: Kary L. Krismer @ 717

    Kary, Let’s not play the right wrong game. You and I both know I’ve been through many hundreds more home inspections than you have.

    I don’t know that. I do know you’ve had more buyer clients go without an inspection than I have. ;-)

    But I’m not talking about using a dehumidifier to fix a condition that already exists. I’m talking about someone who has a need (or desire) to use a dehumidifier to keep their humidity below a certain level. Perhaps they are allergic to dust mites, or have other allergy issues. If they need or want to use a dehumidifier then they will be removing gallon(s) of water from their house each day during the period of time that they need to run the dehumidifier. The toy devices you recommend will do nothing for them. They are practically a placebo. But let’s face facts, you’re more likely to give bad advice than I am. And more likely to not have a clue what you’re talking about. And more likely to argue repeatedly about it even though you don’t know what you’re talking about. This topic fits your pattern to a tee.

    Also, one other thing. The relative humidity of a house will be higher the colder the temperature in the house. So if someone keeps their house at 80 degrees they will be less likely to have a need to run a dehumidifier because the relative humidity will be less.

  223. 723

    By Gooddeal @ 719:

    I try to avoid forcing my views on others. I’m building a tight home because I don’t like high energy bills and I want to be able to control the incoming air exactly how I want it. Not everyone cares about saving money or improving indoor air quality and would rather put the money toward aesthetic details. I also concur that one should not pay such a huge premium towards the goal of saving money when there is no way to recoup the cost in a reasonable length of time, e.g. paying 70K for a Tesla to save money on fuel costs.

    You can have a tight house and one that gets fresh air efficiently if a heat exchanger system is used. I agree though about the cost considerations. Letting a bit of warm air out is not really that big of deal in the scheme of things, but in the very long run it does add up. And I agree codes will probably cut down on that, regardless of the economics.

    The example I would give is just the opposite of heating. In the summer time when your house gets over 80 inside you can pump a lot of air through your house at night when the temperature drops below 70 without having that big of an impact on the temperature inside your house. There’s a lot more to keeping your house warm than keeping the air inside the house.

  224. 724
    Eddiemaster says:

    RE: Joe @ 688 – No, I said that the Fed can slow the frequency of rate hike to be more accommodating and still maintain the target going forward. The Fed’s goal is to have slow and steady growth, not recession as you are suggesting. The increased rate hiking to once per qtr is due to hawkish view from the GDP, inflation, and job number. If the numbers are impacted, it doesn’t mean we are going under, it just means we won’t be as historical low in unemployment or risking deflation (same with the housing inventory relative to historic low). I wholeheartedly disagree with you on that recessive asset projection.

    Let me repeat again so it is clear, the Fed will raise interest rate, but it can slow the pace of hike to accommodate a less hawkish view. A slower pace allows the economy to maintain the growth but weed out heated speculation (which is really just fatter bonuses for the 1%). Fed could care less if AMZN revenue doesn’t grow at 10% per year, but it would care a lot if the GDP isn’t growing.

    I don’t know what you are talkin about when you said Low interest rates imply low economic growth and low inflation. But I’ve addressed your subsequent logic. I don’t think the Fed will stop raising or even drop interest rate, the economy is doing well, but the Fed can slow the pace, which it will have to at certain point anyway.

    As for stock market comments, I think there is so far an overemphasis on what is happening to US alone in these comment section and that is sensible given the backdrop of a bubble blog. But the volatility really is reflecting a mixed uncertainty of available credit at certain premium, geopolitical risk, oil, global outlook, USD strength, and the Fed action. Too much of the stock market action is credited to what goes on in US that is why I think you link the stock market to RE so much. I think the link is way overblown.

    I say that because really the QT has two things going on, a Fed rate hike that’s been going on since 2015, but really picked up on pace last year, that is impacting the USD, dropping our competitiveness, this is the side that has been contributing to the equity market volatility; the second is the balance sheet unwind that started just over a year ago, affecting the long term yield, that is where the effects on RE affordability comes from the mortgage rate side. The two QT actions are now both happening so you can see both equity market and RE have some correlation , but they are impacted different forces until the equity market really are causing companies to stop hiring and lay off people, that we are not seeing, thus that link between the equity market leading to RE or vice versa is not valid. And as I was saying the last post, the Fed has flexibility to alter either QT method, it can slow the frequency of hikes or lower the per month unwind, again I am not claiming that the Fed is quitting QT, but they can be accommodating. That is why I vehemently disagree with you about your claim of unwavering certainty.

  225. 725
    whatsmyname says:

    RE: Justme @ 720 – Thank you for directing the readers’ attention to my once future, but now contemporary, post. You Justcan’t buy advertising like that.

    The graphs are very pretty, and clearly demonstrate that there is more inventory this year than there was for the lowest year on record – for anyone who didn’t already know that.

    Lacking data for any other years, they say absolutely nothing about the more-than-2-year supply universe. That, we can know with certainty. No uncertainty there. Fortunately, we can look at Tim’s graphs at the top of the page, and get a less manipulated idea of where we fit in.

  226. 726
    Ardell DellaLoggia says:

    RE: Kary L. Krismer @ 721

    I’m talking about real estate Kary. Not dust mites. That is the distinction. I’m talking about mushrooms I see growing in attics. I’m talking about black mold. I’m talking about things I see in home inspections. I’m talking about musty smells in basements or closets. I’m talking about mildew in bathrooms. It’s about real estate and primarily older resale houses and the problems that surface from the houses getting more air tight due to upgrades and the damage to the houses I see on a regular basis as a result.

    But if you don’t know I’ve been to hundreds more home inspections than you and have seen more houses in more different climates than you, then you just have been talking and not paying attention for the 10 to 11 years I have known you.

    You often say my advice is wrong because you don’t have advice for clients. You believe in no advice as to where the market may be heading. You don’t believe in telling people when it’s not a good time to buy. You think a buyer shouldn’t complain if a roof is old but not leaking. BUT I do notice you’ve grown somewhat over the years. You copy me and learn from me more than you realize. I don’t point out when you now say something you formerly told me was wrong. You now adopt it as if you didn’t hear it from me. You do it often. I’m glad you’re learning even if you don’t remember who taught it to you.

  227. 727
    Eastsider says:

    Cheer up people! Happy holidays ;)

  228. 728
    redmondjp says:

    (Replying to several posters on attic humidity) Yes, all of my exhaust fans are tightly ducted to the exterior – I installed my own bathroom fan when the new roof went on (so I did all of my roof openings for the additional vents and skylights right before the new roof was installed), and have redone my kitchen fan exhaust as well so those are not an issue.

    I know that my ceiling lights (can lights) are not air-tight to the attic, so that’s a likely pathway for interior house moisture to make it into the attic. With the older, incandescent lights, there was a considerable amount of heat generated in these fixtures, and my original fixtures are not of the air-tight design as you can now buy. Plus we now have LED lights that generate much less heat.

    This has been a very good discussion! I pay close attention to how new homes in my neighborhood are built. I really wish that I could agree with poster Gooddeal on the concept (which I support) that even starter homes will be built to better standards someday. Sadly, the $1.5M – $2M homes that I watch going up don’t seem built well nor do they use many new energy-saving technologies that are now available. Just the slap-dash way that the exterior vapor barrier is installed is one example (I have a roll of Tyvek and have read the instructions on how to cut in a window opening; I have NEVER seen a builder/contractor even come close to following them!)

  229. 729

    By Ardell DellaLoggia @ 725:

    RE: Kary L. Krismer @ 721

    I’m talking about real estate Kary. Not dust mites.

    No, you’re talking about things you don’t know about, and it started when you said people needed to remember to empty their dehumidifiers or they would overflow. Then it continued when you started to discuss how much water needed to be removed from houses.

    You often say my advice is wrong because you don’t have advice for clients. You believe in no advice as to where the market may be heading.

    I give my clients advice, but not fake advice about where the market is headed. Do we need to go over your history again of not understanding where the market is headed? You pretend to know and give that information to your clients in the form of advice. I pity your clients because you don’t understand the legal matters and pretend to know the market. You’re just one of those agents who has been around a long time but don’t know squat. But you sound confident, like you know what you’re talking about, so people tend to believe you.

    You think a buyer shouldn’t complain if a roof is old but not leaking.

    BS. You’re referring to my patent/latent distinction, which is an entirely different issue and has more to do with ethics. As to not calling you out as much when you’re wrong that’s just due to fatigue. You give horrible advice over and over and over.

  230. 730

    RE: Ardell @ 713

    Yes Ardell

    If your house needs a humidifier, try turning up the costs [heat]. We’ve become a society that believes heating bills can be replaced with smelly mildew. Old churches smell that way too, they leave the heat off….LOL

    Even my car defrost running without heat can create moisture on the inside window, does that mean I need a humidifier in my Dodge Charger or should I just turn up the heat a bit? The portable air conditioners don’t run without electricity too and where do you put it so its strong EMF radiation isn’t absorbing into your flesh? EMF causes psychological [possible poltergeists can be explained away as phony with strong EMF] and other health concerns, like insomnia. The fan noise will drive you nuts if you hear well. If you’re gonna put a bunch of motors and compressors in your home you’ll need a “ghost hunter” EMF meter….LOL

    My small portable air conditioner is an EMF safety concern at 5 feet from it.

  231. 731

    Here’s Ardell’s price history as I reported it back in 2010, when she was again negative on the market. As we all know, things really fell apart in the market in 2010–people who bought back then were wiped out! /sarc

    https://seattlebubble.com/blog/2010/10/26/case-shiller-seattles-home-price-double-dip-begins/comment-page-1/#comment-113959

  232. 732
    Eddiemaster says:

    RE: Kary L. Krismer @ 730 – it is impossible to time the bottom or peak, and hindsight is 20/20. I think that the true bottom was early to mid 2012 if judged from annualized return. But yes making prediction with a tone of certainty requires someone to back it up or own up later.
    Ever since Ardell mentioned certain stock performances and linked them to RE prices and didn’t defend or own up, for me I began to question her opinions beyond buying and selling a house. Seems that she has dropped Wharton in her comments more than once.

  233. 733
    Eddiemaster says:

    GM cut 15% North America work force, shares up 7%, but downward pressure on RE for those affected areas. There u have it, an example of how the two having higher correlation but in opposite direction. Or by someone else’s logic, RE should move up because stock is up…

  234. 734

    RE: Kary L. Krismer @ 730

    I received this email while reading your comment “Thanks for sharing this real world info, very valuable.” referring to a public comment from Brian Sloan to me. You and he have something in common. He also quit being a lawyer full time, but you may have seen him in Playboy as he is now best known for using crowdfunding as a source in 3 indiegogo campaigns for products we don’t want to drag in here. :) I get notices of thank yous like this all year long, as well as questions from people from around the globe, mostly with respect to real estate and homes and houses.

    At some point you have to start feeling silly to continually act as if I am not who I am. Known far and wide for my real estate advice. Being front page news locally on my real estate advice. Being quoted in The Wall Street Journal and Newsweek and many other publications around the Country. Top Writer on Quora with over a million views. You in fact only know me because you know that. So let’s stop pretending you might remotely have more experience with home inspection issues than I, given you were brand new when I met you and I was already a national expert at that time.

    I fully understand that you can’t drop your lawyer practice of attempting to disqualify people constantly. It is what you learned in school and practiced for most of your life. If you can’t give better information, then you just attack the person. You do it continuously to many. No surprise given your lawyer training. But do recognize that this is just an acquired skill of yours and does not reflect poorly on the people you choose to attack. It’s just what you do…to pretty much everyone at one time or another.

  235. 735

    RE: Eddiemaster @ 731

    It’s not about right/wrong or top/bottom. It’s about the principle of “informed consent”.

    Everyone here has a method of determining where the market is expected to go. None is each in and of themselves the be-all-end-all in establishing pure peak or bottom. That is not even the goal. The value is in everyone sharing their thoughts and links to experts…none of whom are guaranteed to be right, so people aren’t walking around in a fog as to what they should do next.

    It’s well known that since mid 2016 or so I cautioned that the market was entering a 50/50 chance to start turning. By late 2016 I raised that to an 80/20 chance that it would go down within 12 months. Any seller client of mine was advised to sell IF they had been thinking about selling at some point in the next few years. Any buyer client of mine was cautioned not to purchase with a short hold period time horizon as the likelihood that the home price would be down vs up by the time they were ready to sell was getting very high. In fact all buyer clients were advised that it was a better time to sell than to buy since early 2017 or before. Likely for a year before.

    It doesn’t matter if I am right or wrong. There is always a % chance that one will be wrong about market predictions. What matters is the %. When you get to 20% chance of being “wrong”, for most people the decision rests in the 80% and not the 20%.

    When someone is buying or selling a house, and some here are just playing the right/wrong game for hobby purposes (and that’s fine too), but when someone is signing a contract with me to buy or sell a house they are entitled to do so with “informed consent”. They fully understand when I tell them that they should not buy right now…but decide to do so for their very own good reasons, that my advice is not a guarantee of any kind. It is needed information to them so they can make decisions.

    There are never guarantees when we call where the market is headed. We all have different methods and we don’t have to agree with one another’s methods or prove out our methods. The stock market going up does NOT indicate that real estate will also go up. BUT the market taking a freaking nose dive should at least put up a yield sign if for no other reason than consumer confidence, which DOES impact real estate prices, will start to erode or at least cause pause which impacts the real estate market. Apologies if you translated what I said to the stock market going up means real estate will go up. When I looked at the stock market this morning I am looking at that important point where the market is going into correction territory…and it didn’t. These are important benchmarks as continued decline and a correction decline are not to be ignored. How you utilize the information varies…but clearly these are important benchmarks.

    Whether we are at a “death cross” or my personal favorite “dead cat bounce” is something we all need to pay attention to, again if for no other reason than buyers pause (and rightly so) at times of extreme yellow light, caution points. In real estate whether we list on a Monday or a Thursday gets a fair amount of consideration. Why would we NOT pay attention to the stock market…or look the fool to say “It’s a great time to buy!” without even knowing that the stock market is dropping 800 points that same day? Is there a correlation? Maybe yes…maybe no. But to put blinders on as if it is of no-never-mind is just foolish.

    I am not always right…but I’m never foolish.

  236. 736
    Joe says:

    RE: Eddiemaster @ 733

    So one day of trading variation is basis for your thesis? Eddie, you are dropping back into that desperation mode. You must rise above the trees to see the forest.

    By the way, Ardell is dead on. Stock market losses result in lost wealth and buying power. Money is fungible. Less wealth mean people have less RE demand. This is simple logic.

  237. 737
    eddiemaster says:

    RE: Ardell DellaLoggia @ 735 – I have always agreed with the probability aspect of commenting. Actually that part I wasn’t directed at you (those people know who they are), it just so happened that I was replying Kary. The part I was getting at you was when you brought up RDFN, Zillow, and some other stocks as a precursor to RE prediction. At the time of your comment I did reply to argue about that, but I didn’t get response.

  238. 738
    eddiemaster says:

    RE: Joe @ 736 – nope, that is not my thesis. It is a situation that actually has causation effect between the two parameters moving in opposite direction. And that is opposite of what you have been claiming. You can name call all you want, but the reality is that what you have been preaching with total certainty is not true. And for you to say that isn’t logical, then you are the desperate one.

    BTW, stock market loss is not evenly spread amongst all would-be buyers. Also judging from your defense, you don’t even know what I was referring to regarding Ardell’s claim. So quit bragging about simply connecting two dots. You don’t have anything to say about what I’ve replied you earlier, and I would like to see you try. I’m maintaining that you still don’t quite understand what this situation actually is besides reading up on another bear blog. I think you like those sayings about above the trees and falling knives a bit to much, diverting attention from actual logic.

  239. 739
    Joe says:

    RE: Ardell DellaLoggia @ 735

    Lots of common sense there, from a real estate agent on the ground. There clearly is a negative feedback loop in play between stocks and RE. In 2009, stocks fell hard, and RE followed. In 2012 stocks began to rally again, and RE followed. In Fall 2018, stocks began to fall, so did RE. The logic is simple. When people lose their wealth in the stock market, they don’t feel like buying overpriced houses.

  240. 740
    Jake says:

    Joe,

    When do people like buying anything that is overpriced?

  241. 741
    Ardell DellaLoggia says:

    RE: eddiemaster @ 737

    I didn’t respond because you came in at the tail end of a longer conversation. I do not personally use those stocks in my market analysis. I was using those stocks to add credence to Joe or Just Me’s comments. I think I was talking to Kary as to expectations. If there was in fact a strong counter argument to the obvious real estate is going down and expected to continue to go down, then real estate stocks en masse…all…would have a buy signal from some pundit at these 52 week low prices. Maybe every single stock market expert combined is wrong about that. But not likely.

    Everyone has a very good reason to say what they are saying at the time they are saying it. There is always a factor of taking it out of context from a very long conversation. We need a little more respect generally. At least three commenters here said at least 10 absurdly wrong things recently. But their bottom line was correct, so I chose not to mention it. We need more of that…but we won’t get it. Some people here just have long standing vendettas that they refuse to let go.

  242. 742
    eddiemaster says:

    RE: Joe @ 739 – Wrong again. SPX bottomed out during the last recession in Q1 2009, by 2012 it had already doubled from the bottom, same thing with Nasdaq. Housing didn’t hit bottom til 2012. So let’s see, that is about 3 years during which these two asset classes were moving in opposite direction. Keep guessing though, you might be almost 50/50 after another few attempts.

  243. 743
    uwp says:

    Whether or not the stock market impacts house prices (I’m sure it’s somewhat correlated), the recent drop shouldn’t give anyone special insight. It is barely down 10% from recent highs, which happens pretty often: roughly every 18 months.

    Was it a bad time to buy a house in:
    Mid 2015? S&P 500 Down 12%
    Mid 2012? S&P 500 Down 10%
    Mid 2011? S&P 500 Down 19%
    Early 2003? S&P 500 Down 14%

  244. 744
    uwp says:

    By Joe @ 739:

    In Fall 2018, stocks began to fall, so did RE. The logic is simple.

    Stocks actually fell slightly more in Jan/Feb 2018 than this recent drop (so far).
    Weird that RE spiked up hard over the next few months. The logic is so simple.

  245. 745

    RE: eddiemaster @ 737

    I didn’t answer you because your entire premise was incorrect because you came in at the tail end of a longer conversation. Some of us have been talking for over a decade, and so would know that I never use real estate stocks in my analysis.

    I was lending credence to the bearish thoughts of Joe and JustMe and actually (as I recall) talking to Kary about bearish being obvious as to present AND likely future as well OR all real estate stocks wouldn’t be running at their 52 week bottoms OR they would have buy signals from the Pundits at that price. No buy signal at a low price = expectation of a market.

    It had nothing to do with those particular named (as example) stocks. The point was larger than the glance at a comment and was taken out of context.

    In the last 10 days I have seen at least 3 commenters here post some ridiculously incorrect info, but their underlying premise was correct. I choose not to point out every wrong data point, but unfortunately there are many here just waiting for the opportunity to see the 1% wrong of some others vs the 99% right. Long standing vendettas sometimes filter the comments here. It takes awhile to see who is just waiting for the opportunity to jump down the others throat. I lose track. Whatysmyname and Just Me? Joe is too new to get his head chopped off at the first opportunity by someone…but I see that tide changing recently. :)

    A little more respect and benefit of the doubt would be nice…but not likely to happen.

  246. 746
    David says:

    Last week on falling stock prices – I dumped in about $20k into stocks over a couple of buys. I have standing orders to drop in another $30k on subsequent drops. I also have a contract on a house in Florida.

    Let the market drop. I never sold a single, solitary share when Obama brought on the Depression. I kept buying stocks. ONLY during the Obama Depression have I bet on real estate and had trouble (serious illiquidity and long, long, long-term future value of money losses).

    You can expect market problems with the Democrats in charge of the U.S. House. If they get both House & Sentate, even more problems. All three? Expect your kids to live in your basement well into their 20s and 30s. The Millenials are still living at home in large numbers – a form of death.

  247. 747
    Ardell says:

    RE: uwp @ 744

    10% drop in early Feb was the correction. The lag to RE is about 6 months so prediction was around August. I call that right in hindsight. The recent drop was touted as a new correction of 10% by some news sources on Friday, but that was technically wrong by a few points and in actuality hasn’t happened yet. Also it didn’t fit the dead cat bounce pattern because we had a new high after the Jan high.

    These relationships exist along with a varying degree of margin for accuracy. There is for sure a relationship, but without a Vulcan Mind Meld it’s not apparent to most outside of the industries involved.

    Some will argue that 10% is not a “correction” but it is whether people agree or not.

  248. 748
    uwp says:

    By Ardell @ 747:

    I call that right in hindsight.

    Everything is easy to call right in hindsight. Just go back through Kary’s post about your intuitions from 2010.

  249. 749
    eddiemaster says:

    RE: Ardell DellaLoggia @ 745 – I didn’t just glance at your comment. I’ve been reading this blog for years now, so I’m aware of the interactions between several commenters. I also wasn’t the only one to question the validity of your linking RE stocks to RE, so maybe your premise is also incorrect that I was a newbie and others assumed you wouldn’t make the link.

    I don’t mind whether you are helping the bearish cause, or whether it was over a decade long convo, now by your admission that you were drawing the connection between stock market and RE (even though you said you would never use real estate stock in your analysis), but things we say are recorded, so you can brush off things by saying that others don’t have the right context and never admit to being wrong, after a few times, you will start to lose credibility. That was part of Kary’s point in -731 comment. It seemed that your response back in 2010 then was to sidetrack the conversation by saying that you wouldn’t say some word like “golly”. There is no owning up to what you say.

    As a sidebar, so you claim credit for calling the Feb equity market correction to manifest in the RE decline say 6 months later, so what about the subsequent equity market climb since Feb to Sept? Are we to see that RE also climb as a delayed reaction as well? Or are you to alter your logic that only drops lead to drops?

    Maybe you want to be specific about who is 1% wrong and 99% correct. Are you saying that you are or Joe is? It is hard to debate online, all kinds of people here.

  250. 750
    Joe says:

    RE: eddiemaster @ 742

    Eddie, you to factor in lag. Think before you speak. See the big picture. Read what I’ve said before doing a knee-jerk response.

Leave a Reply

Use your email address to sign up with Gravatar for a custom avatar.
Your email address will not be published.

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

Please read the rules before posting a comment.