Case-Shiller: Seattle is #1! …for month-over-month price declines

Let’s have a look at the latest data from the Case-Shiller Home Price Index. According to September data that was released today, Seattle-area home prices were:

Down 1.3 percent August to September
Up 8.4 percent YOY.
Up 30.2 percent from the July 2007 peak

Last year at this time prices were down 0.3 percent month-over-month and year-over-year prices were up 12.9 percent.

Seattle’s streak of dead last for month-over-month price changes increased to three months in September. Quite a flip from the four-month streak at #1 earlier in the year.

Seattle is still at #3 in year-over-year price growth, but falling fast. Two metro areas had higher price growth from a year earlier in September: Las Vegas at 13.5 percent and San Francisco at 9.9 percent.

Case-Shiller Year-Over-Year Home Price Change

Here’s a Tableau Public interactive graph of the year-over-year change for all twenty Case-Shiller-tracked cities. Check and un-check the boxes on the right to modify which cities are showing:


Here’s how the month-over-month price changes looked for all twenty markets:

Case-Shiller HPI: Month-to-Month

Hit the jump for the rest of our monthly Case-Shiller charts, including the interactive chart of raw index data for all 20 metro areas.

Just three metro areas hit new all-time highs in September (down from 11 in July and 6 in August): Atlanta, Charlotte, and Cleveland. Those are definitely not the typically “hot” markets.

Here’s the interactive chart of the raw HPI for all twenty metro areas through September.


Here’s an update to the peak-decline graph, inspired by a graph created by reader CrystalBall. This chart takes the twelve metro areas whose peak index was greater than 175, and tracks how far they have fallen so far from their peak. The horizontal axis shows the total number of months since each individual city peaked.

Case-Shiller HPI: Decline From Peak

In the 134 months since the 2007 price peak in Seattle prices are up 30.2 percent.

Lastly, let’s see how Seattle’s current prices compare to the previous bubble inflation and subsequent burst. Note that this chart does not adjust for inflation.

Case-Shiller: Seattle Home Price Index

The latest few data points in this chart definitely look quite a bit different than recent years’ seasonal flattening. To be honest it looks a lot more like it did in late 2007…

Here’s the Seattle Times’ story about this month’s numbers: Metro Seattle home prices falling at fastest rate in U.S.

(Home Price Indices, Standard & Poor’s, 2018-11-27)

3.50 avg. rating (75% score) - 2 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.

210 comments:

  1. 1
    Market Psychologist says:

    Gotta love that blow off top! Textbook, my friends.

    https://globalnews.ca/news/4658156/fentanyl-making-a-killing-introduction/

    Billions laundered through Vancouver, B.C. real estate. Wonder if that’s happening around here?

    Bubble Bulls, start your rationalizing.

  2. 2
    Brian says:

    By Market Psychologist @ 1:

    Gotta love that blow off top! Textbook, my friends.

    https://globalnews.ca/news/4658156/fentanyl-making-a-killing-introduction/

    Billions laundered through Vancouver, B.C. real estate. Wonder if that’s happening around here?

    Bubble Bulls, start your rationalizing.

    Well real estate laundering will be harder to do in Seattle now that FinCEN is going to be reviewing all LLC real estate purchases above $300K.

  3. 3
    Joe says:

    As I have been predicting, the Seattle price drops are continuing. Seattle RE prices went down 1.3% in a month! So we can add another couple percent to the loss that has rapidly accumulated from this Summer.

    The eager buyers are getting burned. I understand some people hate renting, but that is not reason to run into a burning house. Better to wait this out and see how low she goes. Waiting just a year could prevent a 5-10% loss.

    Meanwhile, Fed representatives come out today with talk of continuing the gradual rate hikes well into 2019. As I said, expect mortgage rates to be 6% sometime in 2019, which will worsen the picture. As I have been predicting, we won’t see the light at the end of the tunnel for a while. Lots of dark bends ahead.

  4. 4
    eddiemaster says:

    RE: Market Psychologist @ 1 – That is horrifying about actual impact in life expectancy number from Fentanyl related death. I shouldn’t be surprised that you took that article in a way different route.
    There was recently an armed robbery and police chase in Bellevue by this couple who were found to be high on Fentanyl.

  5. 5
    Blurtman says:

    Buffalo Bob: Say kids, what time is it?
    Kids: It’s Asset Stripping Time!

    It’s Asset Stripping Time!.
    It’s Asset Stripping Time!
    Bob Smith and Howdy too
    Say Howdy Do to you.
    Let’s give a rousing cheer,
    Cause Jerome Powell’s here,
    It’s time to start the show,
    So kids let’s go!

    (Second verse, same as the firs’)

  6. 6
    eddiemaster says:

    RE: Joe @ 3 – New blog post, new debate, Joe. Already gotta correct you on the Fed stuff that you said, Clarida said that the interest rates are much closer to neutral rate and should be data dependent. Sure it is still necessary to hike, but he is signalling a more flexible stance in schedule to accommodate to the economy.
    And again, that Fed rate hike is not related to mortgage rate, which tracks long term yield.

    Everyone who has been commenting can claim this short term decline prediction. Although starting to see that you shrank the depreciation from at first over 30%, to last two years gain (~27%), to now 5-10% next year. We have seemed to converged lol

  7. 7
    redmondjp says:

    RE: Brian @ 2

    Foreign money here
    safety deposit boxes
    on a narrow street

    A can’t-be-happening-here haiku

    oh p.s. My newest neighbor is one of the top lawyers at Microsoft who lives and works in Europe. But they have a 4100sf $1.8M house that they let sit empty here, for 11 months out of every year. Must be nice, eh? The property taxes alone on that house are around $13K per year.

  8. 8
    Market Psychologist says:

    RE: eddiemaster @ 4 – The journalists specifically address the impact on housing. This is the SBB, not the Seattle Public Health blog, so I don’t think I was out of line.

    Btw, did you ever get around to figuring out how subprime inflated a national housing bubble? You’ve been lobbing insults at everyone here about ignoring questions, so just wondering.

  9. 9
    Richard says:

    if you are on the fence, just watch two things:
    1. Chinese money
    2. interest rate
    if there is less Chinese money coming in and interest rate is high, the house price will fall.
    The housing speculation is purely determined by these two factors, nothing else. Other reason to justify high prices just BS, period.

  10. 10
    Joe says:

    RE: eddiemaster @ 6

    More ego and bluster from Eddie, as he gets frustrated with his own inability to call this market. Market information must be absorbed, not discarded. Also, don’t fight the Fed. You’ll get there Eddie.

  11. 11
    Joe says:

    RE: Richard @ 9RE: eddiemaster @ 6

    More ego and bluster from Eddie, as he gets frustrated with his own inability to call this market. Market information must be absorbed, not discarded. Also, don’t fight the Fed. You’ll get there Eddie.

  12. 12
    eddiemaster says:

    RE: Market Psychologist @ 8 – The journalist mentioned a link, but if you read the article, it is clearly not its main point like you are making it out to be.
    As for your beloved article, I did take a closer look on that research paper it’s based, guessing that you didn’t. I took your long silence on that topic as defeat, but I’m ready when you are. BTW insults went both ways, good job pretending that the bears never throw jabs.
    What I found was that from the data table in the research that your article cited, I was able to extract the per qtr origination between each type of mortgage (prime, subprime, VA…) What was really interesting was that after seasonality adjustment the subprime origination continued to rise per qtr (whereas prime origination stay flat) all the way to Q3 2004 and actually accounted for about the same amount of prime origination. In several qtr, the subprime origination was exceeding the prime origination of previous qtr. You can link that to the graph from a different article that shows many of the subprime loans were being securitized, which makes sense from the lender’s perspective.
    I plotted that against the mortgage rate/LIBOR because often the subprime are done with ARM. So it makes sense with the 3 year ARM reset (based on LIBOR that tripled from 04-07) that the default was bound to happen. And once the default started, MBS was junk, sending shocks through financial system, freezing up credit, effectively killed the demand side of the balance. So yes, I maintain that the subprime market significantly boosted the RE speculation, and its subsequent default brought on the financial shock that brought on the recession. Once the recession started rolling, people (prime or subprime, everyone) were under water so they thought to get out, exacerbating the situation further, fear. I’ve already said this, your article is misleading, but the research paper (still under revision) the article is based simply was pointing out that the recession wasn’t just a subprime event, that is correct.

    Your turn lol I’m guessing not much. I might add, those risks (subprime % and securitization) that was seen in 2004, it’s at a very significantly lower level today. You logic that now is 08′ hence we are tanking is wrong still.

  13. 13
    Joe says:

    RE: Richard @ 9

    Richard, I would offer up stock prices as an add to your list. Lots of stock-based compensation in Seattle, and lots of wealth has been lost of late. That’s less money to buy RE. It may also be less reason to live in Seattle. As I’ve pointed out earlier, Amazon employees have lost about $25B in stock wealth over the last couple months. Microsoft and Boeing down too.

    Chinese money is drying up, interest rates are headed up, stock prices are falling – so it ain’t looking good. This trend obviously won’t reverse overnight. The Doubting Eddie’s among us will be bagholders and watchers, as others prudently alter their decision-making.

  14. 14
    Joe says:

    RE: Market Psychologist @ 8

    Don’t mind Eddie. He gets easily distracted, but I’m working with him on that.

    I understand your main point, which is clearly financial in nature. Interestingly, the clamp down on money laundering has already begun by the Feds. The fight against money laundering can be added to the long list of negative influences in the Seattle RE market.

  15. 15
    eddiemaster says:

    RE: Joe @ 11 – Call what market? I yanked my equity position at beginning of Oct as soon as SPX was under 200 dma, and advised a bunch of people at work to do the same. My ROI on my equity portfolio is still up 20% as I’ve made short positions and hedging bets. You just keep rambling on about the Fed and calling others filtering info lol

    You still can’t reason with me on the Fed stuff for whatever reason. It takes time to learn, Joe, don’t rush it, you might get frustrated. You will then look back and wonder why you made a fool of yourself spilling nonsense.

  16. 16
    eddiemaster says:

    RE: Joe @ 14 – Give your fellow bear friend a chance to respond, I’m curious to see what he has to say this time.
    But it is sweet that two poor bears are holding each other’s hands. You guys can get together and work through some first grader math problems. Real world stuff maybe leave it to the adults.

  17. 17
    Pappu says:

    how will the renting scenario look like – here on the eastside rents have been rising like crazy !

  18. 18
    Joe says:

    I couldn’t help but notice the exclamation point in Tim’s title, highlighting Seattle’s lead role in the market decline, which has become a downward sprint.

    I think it’s warranted. Anybody who bought a house last month is now down 1.3% right off the bat. That’s a $13,000 quick paper loss on an average $1M house. It’s also a $400 loss per day. It will take a while for the panic buyers to fully leave the market, although quick losses like this should hasten the process. The sellers are dropping prices quickly to seduce them, but there’s still a huge gap between buyers and sellers, evidenced by the unusually low transaction volume. This means seller’s will have to drop prices even faster to fill the gap.

  19. 19
    richard says:

    people are so nice, why not advocating a total ban of Chinese buyers like what New Zealand did. Of course, the real estate complex and corrupted government won’t allow.

    Anyway, sale volumes will be way down, maybe more realtors will quit (good news is there will be less annoying real estate propaganda).

    Remember, buyers are speculators too, they buy when they expect the price will go up and they hesitate to buy when they don’t know where the price go. Next spring will be telltale sign of the trend.
    If I am a buyer, I will at least wait for that long.

    If you are a homeowner and plan to retire, better sell now to get your retirement money since suckers are still abundant.

  20. 20
    biliruben says:

    “Remember, buyers are speculators too, they buy when they expect the price will go up and they hesitate to buy when they don’t know where the price go. Next spring will be telltale sign of the trend.
    If I am a buyer, I will at least wait for that long.”

    I don’t agree with this. I think the vast majority of folks just want a house to live in, present company accepted. It’s the speculators, the flippers, the “investors” that made RE a gambler’s-game, instead of the slow, plodding rise in prices that tended to track inflation we could generally expect in the past, we now see wild swings up and down. It’s not good for our society to have so much of our wealth dumped into a roof over our heads. We need to invest in many, many more important things, if our society is going to grow and flourish.

  21. 21
    Market Psychologist says:

    RE: eddiemaster @ 12 – “I’ve already said this, your article is misleading, but the research paper (still under revision) the article is based simply was pointing out that the recession wasn’t just a subprime event, that is correct.”

    I don’t think you have admitted that until now. I recall that you said that we could not be in a bubble today becuase “there is no risky lending” or something of that nature. That’s why I shared the article. Clearly, subprime is not a sin qua non for a housing bubble, but I agree it does help. And, while we are at it. Subprime is actually coming back: https://www.cnbc.com/2018/04/12/sub-prime-mortgages-morph-into-non-prime-loans-and-demand-soars.html. Add to that gro

    So if prime borrowers were the majority of defaults in the last housing bubble, how were they not primarily reponsible for inflating the bubble in the first place?

    Subprimers were just the scapegaot. The poor and powerless always are. The real problem was people like you, dear Eddie, that bet lots of money on prices going to the moon forever.

  22. 22
    Richard says:

    @biliruben
    I agree with you 100% emotionally. what you described is what house should be like.
    Unfortunately, the FED and other interest groups want people to think that house is an asset and they are very successful in that. An asset means it can create wealth over time, not just through the inflation , but through appreciation.
    The average people are mouth-fed by this thinking through media and recent price movement.
    Even a innocent buyer inadvertently become a speculator. hypothetically, you ask a buyer if he will buy a house if the price will drop, let’s say 2% next year as a fact. Or even more moderate, let’s say you tell them you know for sure the price will be flat for the next couple years, will they buy? All my friends’ answer is absolutely no.

  23. 23
    Joe says:

    RE: Richard @ 21

    Thankfully, it’s all coming to an end. Million dollar houses are dropping at a rate of $400 per day, or $13,000 per month, in Seattle. Those buyers who keep their heads cool will have the house of their dreams in 2 to 3 years. Those jumping early are getting financially burned on a houses they don’t even like that much.

    Clear trends like this don’t reverse quickly. Best to let them run their course.

  24. 24
    eddiemaster says:

    RE: Market Psychologist @ 20 – I had said that about the research paper before regarding the event claim, the paper tried to be careful about it. I was trying to explain to you that the paper was misused by the article. Go back to last post it’s in there. Even if that is besides the point that the issue is still that you thought that article was quoting a research paper saying that prime mortgage caused the recession, which is still not the case.

    We might just live with disagreeing over this detail — whether the speculation was done at the hands of mostly prime or subprime mortgage origination, I might just have to come to the middle to say that both as well as the bank lending are to fault. I don’t understand the where the poor and powerless reference came from, but in retrospect that the recession hit the lower price tier harder than the higher price tier by %. Also fear had a lot to do with the fall, which I won’t rule out now.

    I also never mentioned the word “bubble” in any of my posts. I don’t know how to quantify levels of speculation or “hot money”. I do think that article mentioned sometime about LTV, and that was pretty good to use if we are able to get up-to-date data.

    As for being a speculator, technically I didn’t do that in the last recession, I was just out of school in 05′ and getting pressured by parents to buy, which I still sort of hold a grudge over. But I admit for probably a third or fourth time time on this blog that I was a speculator in 2012/2013, I had to make a lot more than what I lost in last recession, you can understand that :P

  25. 25
    BacktoBasics says:

    By Joe @ 22:

    RE: Richard @ 21

    Thankfully, it’s all coming to an end. Million dollar houses are dropping at a rate of $400 per day, or $13,000 per month, in Seattle. Those buyers who keep their heads cool will have the house of their dreams in 2 to 3 years. Those jumping early are getting financially burned on a houses they don’t even like that much.

    Clear trends like this don’t reverse quickly. Best to let them run their course.

    By redmondjp @ 7:

    RE: Brian @ 2

    Foreign money here
    safety deposit boxes
    on a narrow street

    A can’t-be-happening-here haiku

    oh p.s. My newest neighbor is one of the top lawyers at Microsoft who lives and works in Europe. But they have a 4100sf $1.8M house that they let sit empty here, for 11 months out of every year. Must be nice, eh? The property taxes alone on that house are around $13K per year.

    Expat house is pay by the company while they are working oversea. They can make some money by renting it out.

  26. 26
    BacktoBasics says:

    Expat house is pay by the company while they are working oversea. They can make some money by renting it out.

  27. 27
    redmondjp says:

    By BacktoBasics @ 26:

    Expat house is pay by the company while they are working oversea. They can make some money by renting it out.

    Exactly correct. And for whatever reason, they choose to let it sit empty. Think of how many local employees would love to live there, a mile away from Facebook’s new campus.

  28. 28
    steven says:

    this is kinda fun watching from the side lines… keep on fighting lads… for the bears what do you guys suppose the correction is gonna be compared to the peak? and when?

  29. 29
    No Name Guy says:

    Popcorn is out. I’m munching away. Sitting on the wads of cash I have now, that I didn’t have last time. Now….give it a year or three……blood (not literal) in the street….and pick up some bargains.

  30. 30
    Notme says:

    Oh those big meanies!
    wanting affordable price
    my privilege hurts

    -a poor-me-money-for-nothing-debtowner haiku

  31. 31
    eddiemaster says:

    RE: redmondjp @ 27 – Rich people value other things such as privacy or partying more than to maximize cash flow. A 1.8 mil house to a top lawyer should be just a small portion of his/her net worth. My often-not-around lake front neighbor is an Amazon VP who has been at company for 7-year, he would host parties for employees and neighbors, and just lets friends, families, and his employees (even his gym trainer) stay there whenever.

  32. 32
    Joe says:

    RE: steven @ 28

    I wouldn’t be surprised to see the last three years of price gains evaporate. Panic buyers were playing with themselves during that time frame.

    I guess the magnitude of the drop will depend on the magnitude of the stock price drop and the extent of the layoffs at Microsoft, Boeing and Amazon during the upcoming recession. These layoffs are coming, and they often aren’t announced with great fanfare.

  33. 33
    whatsmyname says:

    RE: Joe @ 18 – Hey Joe, help a brother out. You say the sales volume is unusually low. Do you have a source for November sales? All I can access is the October data in the other thread. It says October closed sales were right at median, and pending sales were slightly below median, but much closer to the high outlier than the low outlier. This would be a far cry from what I would call unusually low. Maybe it is that difficult communication issue that Ardell speaks of, or perhaps you could share some more current info. Thanks, man.

  34. 34
    Erik says:

    RE: Richard @ 22
    Should I call you Richard, or do you prefer Dick?

    Oh well, based on your comments, I’ll assume you prefer Dick.

    An asset is something that puts money in your pocket every month. Appreciation doesn’t count because appreciation doesn’t put money in your pocket every month. A home is a liability, not a debt because it takes money out of your pocket every month.

  35. 35
    Eastsider says:

    A few interesting notes in this WSJ article –

    The U.S. Housing Boom Is Coming to an End, Starting in Dallas (pay wall)
    https://www.wsj.com/articles/the-u-s-housing-boom-is-coming-to-an-end-starting-in-dallas-1543248073

    Dallas, which had the second-strongest annual increase in employment of any metropolitan area in the country in September, helps explain why. Even though the economy in the sprawling metro area has boomed, home prices have grown much faster than wages, and buyers have been straining to afford homes.

    Those price challenges have been masked in part by access to cheap credit, but that era is coming to an end. Since the beginning of the year, mortgage rates have risen about a percentage point, to the highest level since 2011.

    “We have this huge affordability crisis,” said Ted Wilson, principal at Residential Strategies, a Dallas consulting firm. “With mortgage rates going higher, we’re hitting a ceiling.”

    Dallas has been the “canary in the mine shaft” this housing cycle, said Paige Shipp, regional director for Metrostudy, a consultant to home builders. Homes are taking longer to sell, bidding wars are rarer and price cuts are more common as buyers absorb the impact of higher rates.

  36. 36
    eddiemaster says:

    RE: whatsmyname @ 33 – Don’t do a brother in like that, he probably hits you with the below the treeline or filtering of info or ignoring the lag comment. Or better yet, the you are just being emotional rant. Wait for it though, he might just start doing the fake news denial as well.

    He will never ever answer with data or facts instead.

  37. 37
    Joe says:

    RE: whatsmyname @ 33

    My data is good, but there’s only so much I can do for you. You’ve got to spend some time with the transaction data on your own if you want to fully understand current trends. You can’t take a cursory glance at an article and expect to get everything you need. Even Eddie can tell you that.

    Transactions are clearly falling. It’s documented. It’s real. Look at where we are in relation to recent trends. I hope you get the picture.

  38. 38
    Ian Dunn says:

    Hey Tim, thanks for publishing these posts, they’re very helpful.

    Sometimes the comments section is pretty difficult to follow, though, because people are replying back-and-forth to each other, but it’s not easy to associate them together, especially for someone new who hasn’t memorized all the regular commenters and their “side” of the common debates.

    One thing that might help would be to enable WordPress’ “threaded comments” setting. It’s under Settings > Discussion > Enable threaded (nested) comments.

    Regardless, thanks again for this great site!

  39. 39
    whatsmyname says:

    RE: Joe @ 37 – You mean you have no November data? I didn’t glance at an article. I looked at historical numbers on a chart, (albeit one by infamous bubblemonger, “the Tim”). Perhaps “usual” only applies to the last couple years? That seems like an unusually low level of diligence. Transactions are falling, but they still are not low. I want to take your word for it, but then I remember you’re the one who said prices have been going up for 10 years.

    Ardell, I know you were trying to lend Joe some credence. Can you translate for me? Thanks.

  40. 40
    whatsmyname says:

    Hey Joe,
    Not to pile on, but remember when I told you a week ago that the Fed would likely have to back down from what they were saying? That just started with Vice Chair Clarida’s remarks about approaching neutral, and maybe setting up some tests for further increases; he’s clearly setting the table.

  41. 41
    Richard says:

    Wow. I didn’t expect my comments will lead to name calling. I must wrote something significant and hit somebody’s nerve.

    I noticed when you try to make a rational argument about housing, the real estate propagandist will use all kinds of smoke and mirror to avoid addressing the real rootcause of the high housing price(forget about inventory BS).

    To me, the understand Seattle market is really dead simple, for buyer’s benefit, let me reiterate,
    Only two things you need to watch: 1. Chinese money 2. interest rate (well, to Joe’s credit, the overinflated stock value, even though i think it is highly tied to low interest rate).

    Let me elaborate a little bit.
    Chinese money. The government and real estate complex are collectively silent about this. To me, it is a major cause. In the last few years, (2014 is the year of first massive spike of chinese money inflow to U.S.), Chinese money is like a Tsunami flooded into Seattle market. The Chinese buyer represent the most irrational marginal buyer (super rich Chinese pay 100% cash, relatively rich Chinese pay 50% cash typically). There is no much information about how much Chinese money flow to real estate every month. TO me, this is a first order factor, for whatever reason, the Chinese is the most persistent house buyer no matter whether the market is low or high. I am scared of their buying power and their irrational behavior (leave millon-dollar home vacant or rent it out for way under market value).

    Interest rate. for practical purpose, buyer needs to watch 10 year treasury yield, the mortagage rate is correlated to long term bond yield.
    The higler the 10 yield yield, the more likely price will fall. Here is the reasoning, if 10 year yield goes higher, the 30 year yield need
    to go higher too to attract buyer, therefor mortagage rate will rise and kills the leveraged housing buying. if the 30 yield holds low then the yield curve will reverse, which usually means recession and house price usually fall as well.

    Treasury needs to raise debt to support deficit spending and Fed is doing QT to sell bonds it currently holds at the same time, so the short term yield more likely to rise.

    I am not saying the house price will go down for sure in near term. I am saying a buyer need to collect as much as data about these two things for the market timing.(Yes, for real estate, timing is everything!)

    My pessimisitc short-term view will be that there will be a period of seller-buyer standoff(holding off selling and buying at the same time). The buyer (renter)probably will continue suffer due to high rent for a while. If this situation holds a little longer, the home owner will feel the pain(more interest payment
    and taxes) too. Another pain will be felt by realtors since contracting transaction number, which I don’t have much sympathy .

    The home buyer is fighting an uphill battle since they are against the whole system: the government, real estate complex, media, home owner, institutional and individual landlord, banks, investors. Hopefully current bubble has been blown so big that the system can not use trick to defy the market physics. Who knows what FED will do this time? another round of QE? 40-year Mortagage? The housing crisis is the real dividing issue which rips the society apart…

    Hopefully next spring will be a Stalingrad moment for housing.

  42. 42
    Eddiemaster says:

    RE: whatsmyname @ 39 – we discussed this in the last post’s comment this morning. He had already taken it the opposite direction and dismissed it. I don’t think it’s going to get across to him the second time around.

  43. 43
    Eddiemaster says:

    RE: Richard @ 40 – who were you replying to? You should click the reply from the post you are getting back at. I’m not sure anyone would disagree with short term weakness.

    I agree with you on the long term yield bit. That will likely hit higher especially if the rate hike slow and unwind doesn’t (happy stock market and less interest in 10Y UST which would be over supply) but probably 30 y mortgage rates settle around 5.5%.

    As for Chinese foreign injection, I think if you can quantify it by data and how it represented in the impact of real estate bidding, that will help. I don’t think anyone is denying that Chinese capital outflow has a bit to do with coastal real estate, but as for how that is weighed vs job market or locals, that requires data. Something like the 2004 data showing subprime origination increased to nearly match the prime origination.

  44. 44
    whatsmyname says:

    RE: Eddiemaster @ 41 – That’s OK. It will just be that much funnier in 6 months or a year.

  45. 45
    Brian says:

    By Erik @ 34:

    RE: Richard @ 22
    Should I call you Richard, or do you prefer Dick?

    Oh well, based on your comments, I’ll assume you prefer Dick.

    Erik’s true colors come out. Must be getting scary in the condo market.

  46. 46
    pfft says:

    Wow, YOY price changes have topped out at about 13% and have plunged to single digits. It’s like the opposite of less bad. Less good.

  47. 47
    Richard says:

    RE: Eddiemaster @ 42
    Whenever I ask my realtor friend about Chinese buyer (who they are? what type of house and price range they are targeting).
    They says very little. I have no first hand information on the scale and number. you should ask FBI or other goverment agency.

    I understand you are trying to discredit me since it is beyond my ability to provide you such sensitive data. But i think it is well known facts of chinese buyers is large. Have you been to any open houses? Have you seen the tour bus of chinese buyers? Have you read any related Chinese buyers.

    But for buyers who are serious what kind of game during their buying. I can offer some investigate data i did in 2017 in eastside.
    Basically i use some script to scrub some data in Zillow. I was trying to identify the house owner’s identify in certain neighborhood. Below are some example.

    House(Value >3million) bought in Medina neighbor hood and Identity of owner.
    1. 1851 Evergreen Point Rd, Medina, WA 98039
    name: Yuan Shengang(Chinese national) WangKang Tech CEO Sep 2016 for $5,695,000

    2. 3254 78th Pl NE, Medina, WA 98039

    Name: MEDINA 3252 LLC(purchase through LLC), May 2017 for $3,780,000
    Agent Name BING LI–>Chinese name, speculated the real buyer is Chinese national
    Address 3248 78TH PL NE
    City MEDINA
    State WA
    ZIP 980390000

    3.7808 NE 12th St, Medina, WA 98039

    Name: Fang Jinchang(Chinese national) Beijing Sanjiang Capital LL Nov 2016 for $3,300,000

    4. 7844 NE 10TH ST 98039, Medina, WA 98039
    Name: DAI XIAOJIE&ZHI XIUDI(Chinese national) Apr 2017 for $3,010,000

    5. 925 80TH AVE NE 98039
    Name: LIAN XUNXIAO(Chinese national), Feb 2017 for $3,065,000

    6. 3409 EVERGREEN POINT RD 98039
    Name: WEI XUE(Chinese national),may 2017 $4,750,000

    I also did a search in Bellevue area in 2017, i remember about 25% transaction was done by Chinese(again through script to scrub zillow and judge by name spelling ).
    If everybody are serious, you can do your own investigation by researching county record. In luxury neighborhood, some time houses were bought through LLC or family trust.
    Usually you can only speculate by the agent’s name to speculate buyer’s nationality.

  48. 48
    Eddiemaster says:

    RE: Richard @ 46 – no, I’m not trying to discredit you. I would like to know how to quantify hot money, but I haven’t encountered a good way. And I worry about discussing it without knowing how to weigh its effects.

    I know an RE agent who deals a bit with Asian clientele around west Bellevue area, perhaps I can tap that for some info, but even that I’m not sure how well representing it can be.

    As for moving money, it’s still not difficult to move money out using private equity firm at offshore account, which my hedge fund friends do for Chinese clients. Of course it was much easier before just go to the bank and wire, but I wouldn’t say it’s dead now. Especially with trade war, Chinese assets will do much worse, so there is real incentives to move now.

  49. 49
    Joe says:

    RE: Richard @ 40

    Good thoughts. Yet I think you are overly generous in saying the market will face a seller-buyer standoff for a while. The prices are dropping quickly right now. Median price in Seattle has dropped over 9% in six months, and that was before stocks tanked in October. In other words, we are in the middle of a stock market and RE rout. As you indicate, it pays to be very cautious so as to not lose a ton of money.

    Of course, Doubting Eddie, UMP, and some others are indignant toward the facts/trends. That is OK by me. In a fast-moving RE market, there usually is a slow mover on the other side of every successful real estate transaction. The successful investors will readily recognize the clear trends and not let emotions get in the way.

  50. 50
    Joe says:

    RE: pfft @ 45

    Yeah, but last year’s price seems about as relevant as a crusty sock under Eddie’s bed (Sorry Eddie, couldn’t resist). A million dollar house in Seattle has been dropping $400 per day according to the most recent Case Shiller data.

  51. 51
    Eddiemaster says:

    RE: Joe @ 48 – lol classic Joe. You are becoming an entertainment, no fact check required.

  52. 52
    Eddiemaster says:

    RE: Joe @ 49 – so by your way of thinking, I had been raking in $1200 per day from RE for the past 5 years, not counting rental. Hmm that’s 1825 days, so yea how much u got in ur little CD? Sorry Joe, lol too easy to get right back at ya

  53. 53
    Erik says:

    RE: Brian @ 44
    The condo market is doing great and I’ll tell you why. Condo market is great because if you own condos in Seattle, you can rent those condos out as long as you want and sell the condos when you want. Condos are low risk and high reward.

  54. 54
    Joe says:

    RE: Erik @ 52

    True, the demand for rental condos is usually robust. The cash flow might not work out, though, if you buy when prices and interest rates are near peak highs, like today. There are periods of high risk in condo investing, and I think we are in one of them. People have lost out in rental condos, usually after sustained price run ups.

    The level of association fees, and management fees, can be a huge factor as well. Personally, I wouldn’t be investing in rental property unless I could manage it on my own. The management companies take all the profit, and they don’t manage a property like it was their own.

  55. 55
    Joe says:

    RE: Erik @ 52

    I’ll add that if I owned rental condos right now, making good cash flow, I wouldn’t be selling them unless I anticipated a need to sell them within 10 years. For those not in it for the long haul, now is a good time to sell. I’m sure the Eric’s of this world will try to bid low though.

  56. 56

    RE: eddiemaster @ 4
    A Lion’s Share of Prescription Drugs From the ACA Follow a Pattern

    They sell it on MSM, it doesn’t work or gives you horrifying symptoms…the company is sued, the litigants get relief and so do the attorneys…the drug is terminated and replaced with another, etc, etc….

    I just use holistic cures.

  57. 57

    RE: Joe @ 54
    Good Renters Are Like Gold

    Pray they never leave.

  58. 58
    Eddiemaster says:

    RE: Joe @ 54 – ahh snap, what did Powell literally just said? Hey Joe, guessing who knows better than you? Did I or did I not say that Fed would be accommodating based on data?

    Did Powell just say that rate is near neutral and hence stock market up 400 pts? Wow must be a terrible day for you eat your words. Keep singing that tune and stay poor. Maybe you learn that there is no certainty in life so you should speak in probability term. Lol

  59. 59
    ronp says:

    RE: eddiemaster @ 15 – dude, tell us about your losses over time too. How did you do in 2007-2008?

    You really should take a look at https://www.bogleheads.org/wiki/Getting_started . Seriously.

  60. 60
    Eddiemaster says:

    RE: ronp @ 58 – I was just out of school so quite oblivious to anything. I would say I lost probably 100k in RE that was unrealized. But guessing you don’t care what my net positive is over time.

  61. 61
    uwp says:

    RE: Eddiemaster @ 57
    Eddie, can you calculate how much more buying power Seattle area employees just gained in the last hour?

    With AMZN, BA, and MSFT all up around 4% today, that is roughly 70 billion in equity gained. So clearly house prices will be up big next month. It’s so simple!

  62. 62
    Justme says:

    From Jerome Powell’s speech just a few minutes ago.

    QUOTE: Interest rates are still low by historical standards, and they remain just below the broad range of estimates of the level that would be neutral for the economy‑

    Note that phrasing: below the “BROAD RANGE of estimates”. Wall Street is misinterpreting Jerome Powell as turning dovish today. He is not. Gradual FFR interest rate increases will continue, and so will QE-unwind.

    Update: Right the minute I posted the above, the markets started realizing what Powell was REALLY saying, and started dropping again.

  63. 63
    Eddiemaster says:

    RE: Justme @ 61 – I see you still talking like you know better than the investors who have real money in this. The historical rate range is at this point just a reference, we have been below that for two decades now, the rate will be whatever it needs to be for slow gradual growth. The Fed is not looking to cause a recession like the bears hope.

  64. 64
    Justme says:

    CONTINUED:

    Also, both in the speech and in the Q/A session, Powell hinted broadly that the US “financial system” is in good shape and can withstand a sizable global downturn.

    Martin Feldstein asked Powell whether monetary policy (MR) was a suitable tool for achieving “financial stability”. Powell’s answer was very telling: He said that regulatory action (RA) was the tool that should be used to ensure financial stability, and that MP should only be used for the existing dual mandates: Employment and inflation. Powell even referred to the Yellen regoime as one where MPO was used to get stability, and implied that he wanted to get away from that mode. Conclusion: Powell is saying that a stock or housing marlet crash will not stop him, and that RA is the only tool he will use to prevent instability. Powell just killed any notion of the existence of a “Powell Put”.

  65. 65
    Market Psychologist says:

    https://www.kuow.org/stories/why-home-prices-in-seattle-are-dropping-faster-than-anywhere-else-in-the-country

    Kim Malcolm (KUOW): So is Seattle now a city where the dream of home ownership for a middle class family is pretty much just not going to happen?

    Mike Rosenberg (Seattle Times): Sadly, yeah. I think so. There’s very few times in history really – the recession was the only time – when prices dropped significantly. Unless you’re expecting that to happen again, and be even more significant than it was during the bubble a decade ago, I mean we’re kind of here to stay.

    We’ve seen other cities – San Francisco, Vancouver, New York – once you sort of get up into that high-priced stratosphere, you don’t go back down. I think that’s the future that Seattle is facing.

    ——————

    Guess ol’Mikey doesn’t read the news from these cities. Their markets are softening as well, particularlry Vancouver:

    https://www.narcity.com/ca/bc/vancouver/news/vancouver-housing-prices-are-finally-dropping-significantly-and-we-are-shocked

  66. 66
    Eddiemaster says:

    RE: uwp @ 60 – well good ole Joe will just focus on how much the stocks had gone down anyway. Not that using stock market to predict RE is a valid strategy to me. I’m still bearish on local RE short term. I just think there is flexibility long term. Dovish stance will mean more gradual schedule of hikes, the amount of balance sheet unwind per month is also something to watch for, I’m not sure how flexible the Reserve is with it.
    I’m pretty centrist in RE, but arguing against perma bears sure makes me sound like a bull. If I were bullish I would had been buying past 3 years.

  67. 67
    Justme says:

    RE: Eddiemaster @ 62

    >>The historical rate range is at this point just a reference,

    You are grasping for moss.

    QUOTE: Interest rates are still low by historical standards, and they remain just below the broad range of estimates of the level that would be neutral for the economy‑

    The above sentence contains TWO reasons for continuing gradual increases (a) history and (b) that FFR is still below even the *lower* outlier of estimates of the neutral (the famous “dot plot), which has quite a spread in it.

  68. 68
    Eddiemaster says:

    RE: Market Psychologist @ 64 – yea but he isn’t incorrect, places like Manhattan is a millionaire/billions playground nowadays. Unless a middle class bought in early or inherit a place on the island, they pretty much have to go outward.
    I track Curbed NY and there is a commentator who just ceaselessly cheers on that reality. Even if the prices are softening (mostly at top), they are not affordable to middle class, nor will the price be coming down. That is why you see LIC and BK being over $1000 per sf.

  69. 69
    Eddiemaster says:

    RE: Justme @ 61 – maybe you want to check again on your imaginary chart, equity market isn’t retrieving. They are just not agreeing with you.

  70. 70
    Eddiemaster says:

    RE: Justme @ 66 – no one is interpreting that Fed is stopping rate hike, that isn’t what dovish mean. It’s the frequency of rate hike slowing, that is accommodating the economy so it grows gradually. I’m jabbing at Joe because of his whole premise being based of Fed rate hike.
    Balance sheet unwind will be a more interesting factor in the mortgage rate, I’m basing a conjectures rate of 5.5% late next year from a previously held belief that QE shaved off up to 1.5% off of long term yield. So now it’s up to the mixture of mortgage rate, wage growth, employment growth to get RE to the new balance. But RE will be bearish short term at least.

  71. 71
    Justme says:

    RE: Eddiemaster @ 68

    Well, that down blip I pointed out, was some people realizing what Powell really said, and then that was in turn overwhelmed by the headline-reading sheep that believed the headlines. It may take until Friday or even longer before reality sinks in. It depends on how the sheep are feeling.

  72. 72
    Joe says:

    RE: Eddiemaster @ 57

    Eddie, what is amazing is how you reach conclusions based on daily data points, like a few misinterpreted words. For example, you used a 5% daily stock price rise in GM to illustrate your points a couple days ago, yet that daily stock movement came and left like a warm summer breeze.

    The midpoint of the broad range mentioned by the Fed is 3-4 rate hikes away. That’s a 6% mortgage rate next year. If not, there is extremely low growth and maybe a recession, all of which supports a continuation of the current RE price rout.

    You should learn to distinguish what matters from what doesn’t. Daily data points are not trends. Weigh actions over words. You will get there Eddie. The only question is – how much money will you forgo in the meantime.

    The only reasonable conclusion drawn from the data, based on your excessive reaction and jubilation, is that another sock or two will go missing.

  73. 73
    Eddiemaster says:

    RE: Justme @ 70 – that down bleep was more likely prop algo trading selling when hitting technical resistance. The fact is that the Fed turns dovish today. at beginning of Oct Powell said that the rate was far from neutral, this signaled a change in tone today. I would be way more concerned that he said to stop rate hike or lower rate. Like he was saying, the economy is doing well and should grow slowly rather than overheat, those numbers will be reflected in inflation/employment reports.

    You may conclude that to mean stock market crash or housing crash, I would like to see you try to profit on those claims. The fact is slow GDP growth and steady employment and steady inflation doesn’t lead to stock market crash or housing crash.

  74. 74
    Eddiemaster says:

    RE: Joe @ 71 – lol oh Joe, even on a day that your whole belief is destroyed you still remain a fool. I see you sticking with the Fed rate tied to mortgage rate still, You are making it hard for your bear friends to corroborate with your fiction.

  75. 75
    Joe says:

    RE: Eddiemaster @ 62

    Think through it through weed hopper. You are asking some worthy questions, but I see you on a side track.

    Ask yourself what factors are causing stock and RE prices to drop. Interest rates are merely a reflection of the general economy itself. Understand the structural factors that have been driving the economy and the bubble, as well as the direction of these items, and the light bulb may turn on for you.

    Distinguish the symptoms from the drivers. The symptoms are noise.

  76. 76
    Eastsider says:

    RE: Eddiemaster @ 72 – As far as I can tell, Powell hasn’t said much to influence interest rate direction. Just check the Fed fund futures, it is basically the same as a week before.

    https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html

  77. 77
    uwp says:

    Man, Amazon is currently up over 5% today.

    Or to put it in terms Joe can understand, that is equivalent to 60,000 median single-family homes that are being purchased by Amazon employees. Active listings is now negative 55,000 and I am a multi-millionaire with my starter-home.

    Weeeeeeeeee!

  78. 78
    Joe says:

    RE: Eddiemaster @ 72

    “The fact is that the Fed turns dovish today.”

    Eddie, I think we’ll be referring back to this quote, unfortunately.

    I expected more from you. The media pundits bounce around like a bunch of pin balls, speculating on quarter points rate hikes here and there. They are unable to see through the fog, so they focus on what’s immediately in front of them. Have you joined them now? You started with such promise.

    To find clarity, you must understand the ultimate drivers of the everything bubble, and the reversals that are now taking place. These reversals will unfold gradually over the next few years, dragging the general economy and RE down with it. Goldilocks is fairy tale.

    Interest rates are headed up. GDP and productivity growth are headed down. Debt and deficits are rising fast. Inflation will be heading up as trade barriers take hold. Spending cuts, austerity, and layoffs are right around the corner. We are in for a longer-term RE price drop until these structural issues are resolved. Your prediction of short-term pain followed by quick recovery is way off. We’ll see some price blips, but this turkey is heading toward the turkey plant.

  79. 79
    Mark says:

    RE: Eastsider @ 75 – He can greatly influence the short end of the yield curve through changes in to the Fed Funds Rate, and statements that change the market’s expectation of where the Fed Funds Rate will be in the future.

    He has very little influence on the long end of the yield curve, even with the QT program running in its current form.

    Would be watching the yield curve very closely over the next year for where the stock market and real estate are heading. So far it still looks like no recession for at least the next 12 months or so. The current market dip is probably the last entry point for stocks this business cycle.

    I think now is a good exit point for home sellers that aren’t planning to stay in their current home long term. If I were a first time homebuyer, I’d short the market through renting and get in at cycle bottom in ~2-3 years.

  80. 80
    Joe says:

    RE: Eastsider @ 75

    That’s a good point for those who understand how markets work. Pros focus on the 10-year. Pundits focus on distractions of the moment and are quick to post their daily tripe.

  81. 81
    Eddiemaster says:

    RE: Joe @ 77 – yea.. I’m done debating with your nonsense. It’s truly a waste of time. Keep chanting, I’m sure you will and someone else will take my place to refute your whatever that is, which seems to be put on repeat.

    I’ll just keep focusing on getting richer while you keep wishing that others will lose their money instead of you making any. Signing off, thanks to others for the perspective.

  82. 82
    Eastsider says:

    RE: Mark @ 78 – I was responding to the noise by Eddie et al on Powell’s statement today. Basically it is a nothing burger according to Fed Funds Futures.

    “Fed funds futures are used by banks and fixed-income portfolio managers to hedge against fluctuations in the short-term interest rate market.”

    Read more: Fed Funds Futures Definition | Investopedia https://www.investopedia.com/terms/f/fed-funds-futures.asp#ixzz5YBVZutja

  83. 83
    Joe says:

    RE: Eddiemaster @ 80

    I hope that nobody loses money. That is why I am warning of the gradual but long-term RE price drops and the recession is not too far ahead. That is why I argue against the misleading media pundits and the Goldilocks scenario. Nothing personal.

  84. 84
    kenmorem says:

    By Erik @ 52:

    RE: Brian @ 44
    The condo market is doing great and I’ll tell you why. Condo market is great because if you own condos in Seattle, you can rent those condos out as long as you want and sell the condos when you want. Condos are low risk and high reward.

    erik: if you want to buy another condo, i have one in queen anne i’ll sell you for $270k. market value (today, even with the falling market) is easily $300k. $10k of improvements would put it around $330k (tile and trim). if you’re interested, LMK and we’ll figure out a way to connect.

  85. 85
    justsomedude12 says:

    By Erik @ 52:

    RE: Brian @ 44
    The condo market is doing great and I’ll tell you why. Condo market is great because if you own condos in Seattle, you can rent those condos out as long as you want and sell the condos when you want. Condos are low risk and high reward.

    Seattle condos may have turned out to be a nice investment if one bought 4-5 years ago, but that’s just because they basically caught a one-time fantastic run up in prices. This was definitely not the norm, and shouldn’t be used as a baseline to determine whether Seattle condos are a good investment or not.

    Now that it appears things have normalized somewhat and the boom is over, I think it’s difficult to make a case that Seattle (or Eastside) condos are a good investment going forward. Even for those who bought say 4-5 years ago, yes the monthly cash flow might feel good, but your total ROI will likely be better with other more diversified investments. Especially considering the risk of price declines, special assessments, bad tenants etc… that come with condos.

  86. 86

    Weather Changes Coming Fast to Seattle?

    We’ve all heard about global warming theory, but how about the other theory, that a horrifying coming ice age due to sun spots [in a matter of months]? Smoky summers and horrifying snow storm winters for Seattle commutes, soon at a theater near you? Seattle hills and snow make for impossible commutes. We already had some 30 degree nights and clear, so its already getting cold enough for snow.

    https://www.iceagenow.info/mini-ice-age-in-a-matter-of-months/

    Pick the theory that fits your politics? LOL…it is what it really is. The blizzard that dumped a foot of snow on Kansas City was bad this week….my daughter’s significant other took vacation during the ice/snow conditions. The NE States are already pegging century temperature records on cold temperatures…coldest Thanksgiving in NYC in a century this year. Ya see why I call global warming possible [glacier shrinkage], but fuzzy over-all logic proof.

  87. 87
    S-Crow says:

    “The recent rise in mortgage rates have reduced the pool of eligible homebuyers,” said Lawrence Yun, chief economist for the Realtors in a release. — today via CNBC

    It’s never prices. It’s never people leveraging the hell out of everything they’ve got to get in or once your “in” then leveraging all your debt onto your house via refi’s after meteoric price escalation . Same playbook.

    I get so tired of this commentary in this industry.

  88. 88

    RE: No Name Guy @ 29
    Or Just Sit On the Cash Through Retirement

    $1M CASH in the bank= a $5000/mo annuity payment for like 2 decades…sounds better than a moss pit to upkeep.

  89. 89
    Joe says:

    RE: softwarengineer @ 87

    Be careful. Because of stock price overvaluation, some say the stock market will produce a negative return over the next 15 years, even with dividend payments included. I don’t think you can reliably bank on a 6% return at this time.

  90. 90

    RE: S-Crow @ 86
    Yes S-Crow

    And I’d add with QEs down the toilet forever, this new paradigm of manufacturing growth necessary, makes loan acceptance on mortgages much more tight than the corporate welfare to the banks in the past [the lazy way to wealth].

    It is what it is, we can put lipstick on the pig, but it doesn’t change the facts.

  91. 91

    RE: Joe @ 88
    Lots of Profit Taking Yesterday

    The market MOM figures release next week….stay out of equities now. But bargain prices on stocks are out there right now and the stock pundits are not calling the equity market over-valued at all. Would I buy in? Hades no, I’m set for life now. Would I buy in now if i were not set for retirement? Yes. But keep it in stocks for the long haul if you do.

  92. 92
    Joe says:

    RE: softwarengineer @ 85

    If eating a certain food had a 5% chance of killing you, would you eat it? Or would you look for another food source, just to be safe? When the potential consequences are catastrophic, it pays to be cautious. I think this is what people miss in the climate change debate.

  93. 93

    RE: uwp @ 60
    High Tech Equity Profits Don’t Pour Into Seattle

    Ask GM and Boeing….they pour into China/Japan/EU. Its called “America Last”, or globalism.

    Trump is thinking of 40% tariffs on cars from China….that’s not chicken feed.

  94. 94

    RE: Joe @ 91
    Yes Joe

    Your comment reminds me of Trump Jr’s joke about Skittles and OVERPOPULATION immigration….”would you grab a handful if you knew there were a few ISIS terrorist poison ones mixed in?”

  95. 95
    Joe says:

    RE: softwarengineer @ 93

    You can do background checks for immigration purposes. You can’t do that for climate change. So Trump Jr’s comment is invalid and isn’t really helpful.

    So which is it – you would take the 5% risk or not? If you would do it personally (maybe because you are older), would you recommend the same decision for $2B children?

  96. 96
    Mark says:

    RE: justsomedude12 @ 84 – Add in the high costs associated with transacting in real estate, price opacity, and the fact that it’s pretty illiquid – especially in down markets.

    Also, on average US real estate has appreciated about 1%/year over inflation. Living in a hot geographical area during a boom makes us think 10%+/year home price appreciation is normal when for most places and most times, it is not.

    IMHO, most folks would do much better putting their monthly savings into an S&P500 index fund and moving on with their lives. Why deal with renters and upkeep when an equity index gives better long term returns plus price transparency, liquidity, and has very low costs to hold or transact?

  97. 97
    uwp says:

    By Joe @ 88:

    RE:
    Be careful. Because of stock price overvaluation, some say the stock market will produce a negative return over the next 15 years, even with dividend payments included.

    If we are in for 15 years of negative returns in the stock market, might as well be buying guns and canned food. Real estate and physical assets would probably be a decent purchase if you though the stock market was headed down for 15 years.

  98. 98
    Joe says:

    RE: uwp @ 96

    I do think all markets are heading down, which will lead to asset price deflation and subsequent restructuring events, but I also think there’s a possibility that our weaselly central banks will attempt to delay the inevitable by stoking inflation, in which case housing, possibly gold, and other tangible assets would offer some hedge to an inflating currency. If that alternative scenario were a concern, I’d wait until housing prices stabilize before buying in. Prices are dropping too quickly right now. Patience is required. As Kary and Ardell say, sentiment and expectations have changed.

    It’s a lot less painful to rent when you can sit back and watch prices fall.

  99. 99
    Justme says:

    RE: Justme @ 61

    Here is the the ONLY sentence in today’s released FRB/FOMC minutes from the Nov7-8 meeting that referred to the “neutral interest rate” (and in fact the only use of the word “neutral” at all).

    QUOTE: A couple of participants noted that the federal funds rate might currently be near its neutral level and that further increases in the federal funds rate could unduly slow the expansion of economic activity and put downward pressure on inflation and inflation expectations.

    “A couple of participants” and “near its neutral level” is just another way of saying what Powell said yesterday, that rates are near the LOWER end of the BROAD numerical range of estimates/opinions by FOMC members as to what constitutes the “neutral” rate.

    I think this confirms what I said yesterday about Wall St misinterpreting yesterday’s speech by Jerome Powell. There is now sign of interest rate hike slowdown. It’s all on track.

    Now, the FFR interest rate is not the end-all or be-all of Seattle housing prices. Far from it. But for bubble-mongers hoping for some changed factor to point to, FOMC and Powell have not provided it.

  100. 100
    Justme says:

    RE: Justme @ 98

    QUOTE: Almost all participants reaffirmed the view that further gradual increases in the target range for the federal funds rate would likely be consistent with sustaining the Committee’s objectives of maximum employment and price stability.

  101. 101
    elliptico says:

    By softwarengineer @ 89:

    RE: S-Crow @ 86
    Yes S-Crow

    And I’d add with QEs down the toilet forever, this new paradigm of manufacturing growth necessary, makes loan acceptance on mortgages much more tight than the corporate welfare to the banks in the past [the lazy way to wealth].

    It is what it is, we can put lipstick on the pig, but it doesn’t change the facts.

    If the market perceives progress with China, up it goes. If the market perceives and end to rate increases, or if rates drop a bit, up it goes.

    These are man made restraints and can be changed.

  102. 102
    MOMENTUM says:

    https://www.seattlepi.com/realestate/article/Case-Shiller-real-estate-Seattle-prices-decline-13425442.php

    Is it just me or does this Seattle Pi author totally misunderstand what they are saying? It seems they are getting data that is different form the data I’m reading. “Housing prices are not decreasing they are just increasing less than before.” They say it multiple times in the article. They are saying, correct me if I’m wrong, that the last few months have not seen a price decrease, but instead the price increase is less than the month before. Is this correct?

  103. 103
    Maktub says:

    Seattle Pi seems to be referring to YOY prices when they say they are increasing, but at a lower rate and MOM prices when they state prices are down.

  104. 104
    Justme says:

    RE: MOMENTUM @ 101

    That journalist either had a bad day or is plain incompetent. Prices are dropping. Here are some of the worst whoopsies committed by the journalist,with my corrections underneath,

    >>metro area price increases declined 1.3 percent in September from the month before.

    metro area prices declined 1.3 percent in September from the month before.

    >>To be clear, prices aren’t falling — they just aren’t increasing as fast as they have been.

    To be clear, prices are falling. Falling. Period.

    >>Of course even though September marked the third month in a row that price increases declined in Seattle, the metro remains well above the national average.

    Seattle has the biggest price drops of any city in the nation the last three months.

    ——-

    And there is more of this absolute nonsense in the article. It appears that the journo has been reading too many press releases from Das REIC over the years, and have become unable to tell up from down.

  105. 105
    David says:

    Seattle’s population is still going up. How many people have moved here in the last 12 months? (a lot?). Also, mortgage rates appear to be heading down:

    https://www.cnbc.com/2018/11/29/mortgage-rates-could-head-lower-after-powell-comment-cuts-bond-yield.html

    I’m not a big believer in reading journalists for financial advice – other than they are good for making people emotional and helping me to buy on the drops if I can afford it.

    Housing in Seattle is likely to start up again after the New Year. This time of year is slow anyway. After the Fed stabilizies rates then housing sales will ramp back up again. If sales do not, eventually the pent-up demand is going to snap back and start the mania ALL over again.

    Also, if the Fed sees weakness they are going to unload those rates again. Which is why they are raising them anyway.

  106. 106
    Eastsider says:

    RE: MOMENTUM @ 101 – The PI writer is writing about YoY price changes. Here is the very first paragraph.

    “The latest Case-Shiller home price index brings some good news for home buyers: Seattle’s average year-over-year price increases have dropped to their lowest level in three years — a faster rate than anywhere else in the country.”

    Otherwise, prices peaked earlier this year and have been dropping since.

  107. 107
    Jake says:

    Anecdotal, but I noticed that in Rainier Valley that most homes seem to be selling. Some are going a little below asking but nothing crazy. Townhomes on the other hand are really sitting a lot longer and the price drops don’t really seem to be doing anything. I know personally I bought my townhome two years ago because it was brand new, I wasn’t willing to waive inspection, and was not interested in a bidding war. But if it had been a better market for buyers, I probably would not have bought one or even thought of it. I’d be interested to see an analysis of single family homes vs. townhomes price changes as I think townhomes are included with SFHs in all these articles coming out.

  108. 108
    No Name Guy says:

    Looking at the CS numbers:
    Peak is June 2018 at 258.97. Current Sept 2018 is 250.30, -8.67 points from the peak, or -3.35% from the peak.

    The last comparable decline on the same time scale was Sept to Dec 2011, a couple months before the bottom in 2012. Numbers were 135.59 to 130.99, -4.6 points, -3.39%.

    Near and just after the start of the roll over after the July 2007 top was the time of Sept to Dec 2007. CS dropped from 191.66 to 184.88, -6.78 points or -3.54%, comparable in percent terms to the current down leg. At that time, it more or less kept going for a couple of years.

    Another thing – I looked at the yearly CS numbers over the last 27 years.

    Minimums for the calendar year happened in only December (4), January (17), February (4), and March (1).
    Peaks for the calendar year were January (2 – when the market was falling steadily) and then July through December (July 6, August 3, September 2, October 1, November 3, and December 10. Many of the December year highs were when the market was steadily climbing).

    So, the pattern would indicate that the market will continue to fall for at least several months.

    Another thing I looked at: The Tim’s CS data goes back to January 1990. The index was 58.23 at that point. September 2018 was 250.30, a net increase of 192.07 points. Which months of the year results in the changes? I summed up the total change by month for the data that The Tim has posted:
    Jan: -13.09
    Feb: +10.96
    March: +44.80
    April: +58.51
    May: +49.97
    June: +35.04
    July +18.81
    August: +5.67
    Sept: -2.08
    October: -0.48
    November: -6.19
    December: -9.85

    I suspect the October 2018 numbers will make the net -0.48 CS index points for October 1990-2017 “catch up” a bit with September. After all, September would have been positive except for the -3.42 index points in 2018.

  109. 109
    Jake says:

    Maybe we should stop predicting things and realize that we only understand where things are, not where they’re going.

  110. 110
    Justme says:

    RE: David @ 103

    >>How many people have moved here in the last 12 months? (a lot?).

    Give me a valid source, or that claim is just pure speculation. Don’t give me any OFM numbers that are based on counting newly constructed dwellings and assuming they are filled. There are 1000s maybe 10000s empty apartments in Seattle right now, especially around downtown.

  111. 111
    David says:

    10,000s EMPTY apartments? You really believe that? Why not 1,000,000? Which wise old banks are lending on 10,000s of empty apartments? I want to sell their stock if I own it.

    Do you have some proof of this wasteland of empty apartments? How in the world are the developers maintaining the grounds of such massive numbers of empty apartments without going bankrupt? Do you have proof that population growth is a scam?

    Seriously, if you have it, I’d like to see it.

    Why such a Debbie Downer for real estate? FEW things in life are essential to life. Housing is one of them. You can literally buy a sofa and a fridge and live just fine in a house. You need nothing else. BUT you do need housing and most people want single-family houses to insulate themselves from the lifestyle and filth of other people. A house – The ability to control your own environment even if a total douchebag lives 40 feet away.

    By Justme @ 109:

    RE: David @ 103

    >> maybe 10000s empty apartments in Seattle right now, especially around downtown.

  112. 112
    justsomedude12 says:

    By David @ 104:

    Housing in Seattle is likely to start up again after the New Year. This time of year is slow anyway. After the Fed stabilizies rates then housing sales will ramp back up again. If sales do not, eventually the pent-up demand is going to snap back and start the mania ALL over again.

    The slowdown started last summer. It was not seasonal. There’s really no logical reason to believe housing sales will ramp back up again after the new year for some reason. One could hope for it to happen, but that’s different than really having a reason to think so.

    And pent up demand is unlikely to snap back, because there would need to be a reason for the demand to become pent up and then be released. There isn’t currently anything holding buyers back which will suddenly be alleviated.

    There’s just no logical reason to believe that prices will start increasing again in the foreseeable future. The tailwinds are simply not there anymore.

  113. 113
    Erik says:

    RE: kenmorem @ 83
    Thank you for the generous offer. Right now is not a good time for me to buy or I would.

  114. 114
    Erik says:

    RE: justsomedude12 @ 84
    Thanks for the tip. I have been waiting for these condo conversions and a lawsuit to follow. When this happens, condos become cash only and get very cheap. It would be nice to buy one with cash, rent it out a few years, then sell when the lawsuit is settled.

  115. 115

    RE: Joe @ 88
    Yes Joe

    Anything is possible except “instantly” creating MASS new skilled Manufacturing Engineers in America managing new tooling with new machinery factory skills to acquire. New infrastructure requires Civil Engineering and Material Processing Plant Engineering skills…we’ve flushed this down the toilet lately…it will take time to get back on board and make America Skilled again. Service jobs can be done with FAR less labor than today [IMO, i.e., medical billing can be done without a Business Degree and S/W development can be done with a high school diploma]….we need more BIOENGINEERING centered at reducing “doctors and nurses work forces” to reduce health care costs too.

    Ignore my blog if you’re lazy and don’t like skilled/experienced workers being appreciated.

  116. 116
    Matthew says:

    DING-DONG DING-DONG!

    Wait, I thought they didn’t ring a bell at the top?!

  117. 117

    RE: Justme @ 109
    They Live in Homeless Tents or They Sleep in Their Cars on the Dinky Seattle Average Job Pay?

    LOL….good questions on where all the Seattle Growth is or even if it exists…seems to me by all the help wanted signs and high school kids “suddenly” back in fast food again [I check 3 Jack in the Boxes in the East Hill area every week]….the jobs are back. They pay nothing worth noting for Seattle rents…but bunk buddies per 1 bdrm can get them housed, even on burger flipper pay.

    Traffic lately is the antithesis to my logic….its recently heavy during the weekdays from 10-2 and that’s not normal. Perhaps its chain migration living with recent foreign relatives, but without a SSN [or equivalent green card] now, employers won’t hire ya?

    Lots of questions and undocumented aliens can’t be counted accurately anyway? They’re undocumented?

    No wonder they want to give out my Medicare [or the disabled Medicaid] to everyone that didn’t pay into it….LOL…Trump makes the old history applications a joke now and Trump opposes Obamacare.

  118. 118

    RE: Erik @ 113
    Its a Bit of a Gamble Erik

    But what the heck, roll the dice! Its better than a “possible” price decrease holding on to it?

    I like your logic, wait until the generally incompetent Condo HOAs [I could rant for hours on how bad mine is] generally let the units deteriorate to eventually become slum lord apartments and forced sales of Condo units [at way reduced prices]. Your timing may work [buy up older Condos on the brink for cheap?]? Toastmasters Clubs are a great way to develop a communication opportunity like this…

    Hey, savvy real estate Flippers use their gut more for plans than their brains…ask Trump….LOL….he sure gobbles up repos for $CASH$ as his main profit blood. It has some failures, but overall successes. Timing, timing, timing…

    Branch out Erik like SWE’s research on Seattle growth direction, find tenants to communicate to possibly find recent information on landlord foreclosures [they occur all the time randomly]….then offer to buy it from that bank for like half price on a short sale before the eviction auctions…let the old tenants stay for a cheaper “seamless” deal, then sell it? So many options and ways to make money during any economy. Its not evil, if someone doesn’t buy you won’t get it, someone else will. Ask Trump….LOL

  119. 119
    David says:

    RE: justsomedude12 @ 111 – The logical reason is that interest rates either stibilize or begin to be reduced. Rising interest rates create uncertainty.

    There is a reason ALL markets began to slow down in unison – RISING RATES.

  120. 120

    RE: Joe @ 94
    OVERPOPULATION is Slam-dunk Risky

    And the root cause of global warming carbon footprint. One dog has the carbon footprint of three Hummers. Yet guys like Joe allege OVERPOPULATION is not a problem. The Open Border Party pushes more OVERPOPULATION growth….that’s HYPOCRITICAL. One flight on a 737 in carbon footprint= a year of recycling.

    We accept far more risk on this so called theory by pretending we’re concerned and dousing the fire with OVERPOPULATION gasoline to make it worse? Sorry to be so blatant, but you asked about risk.

  121. 121
    justsomedude12 says:

    By David @ 118:

    RE: justsomedude12 @ 111 – The logical reason is that interest rates either stibilize or begin to be reduced. Rising interest rates create uncertainty.

    There is a reason ALL markets began to slow down in unison – RISING RATES.

    I agree that rising rates (and the probability of future rising rates, since markets are forward looking) was the catalyst for the recent decline in various financial markets.

    But Seattle real estate has other main drivers as well. The other primary drivers for the hot market over the last few years were mainly the huge number of tech hiring, and possibly Chinese money (although the latter is tough to pin down for sure). These are no longer tailwinds for the RE market. Say what you will about the future of tech hiring, but it will surely not be as strong over the next few years as it was in the last few. There will also likely be less foreign/LLC money. And long term interest rates are more likely to stay about the same or go higher than to go lower from where they are now.

    A perfect storm of bullish conditions is what propelled the RE market higher the last few years. Those conditions are no longer so bullish (or bullish at all).

    None of us can say with certainty what the future holds, but a somewhat informed and impartial person would have to say that for the foreseeable future Seattle RE prices are more likely to remain relatively flat or decline a little than to go up. And that’s assuming current long term interest rates hold constant. If rates increase, it is likely that prices would decrease by a somewhat corresponding amount.

  122. 122
    Eastsider says:

    For those who care about interest rate trend, according to the current Fed Funds Future, there is a 70% chance that rate will be at least .5% higher, and about 1/3 chance it will be at least .75% higher. In the last 12 months, the rate went up 1%, and mortgage rates went up by similar amount. If there is no recession, we can expect mortgage rates to end the year around 5.5%-5.75%. An increase in mortgage loan rate by 10%-15% will worsen affordability. So expect a challenging housing market in 2019.

  123. 123
    Joe says:

    RE: softwarengineer @ 119

    When did I say overpopulation is not a problem? When did I even mention overpopulation as an issue?

    You’re getting a little loose with the commentary and assumptions.

  124. 124
    richard says:

    RE: Eastsider @ 121
    at 5.5% rate, the housing market will be dead if not crash.
    The FED will halt rate raise next year. Even December rate raise is not a sure thing.
    I feel stock market will keep falling and we will see massive layoff in the near year. But I am not sure
    bond market will fall or not. I will be a little surprised that the system will allow 30-year mortgage rate to reach that high. to me, to keep housing market float, you have to stop 30-year rate rise now.

  125. 125
    Joe says:

    RE: Eastsider @ 121

    If rates go up, housing prices keep dropping.

    If rates hikes pause, that means we’re approaching a recession and housing prices should keep dropping, especially if there is reduced hiring in town. The prices plummet if there are layoffs.

    I see nothing that will stop the current price drops of about 1% per month, which equates to about $10,000 per month on a million dollar house. Who wants to catch that falling knife. Trends like this don’t turn around quickly.

  126. 126
    richard says:

    Let’s review some BS from real estate complex to justify high price
    #1 it is low inventory
    now inventory is up, the price is falling , then they switch to
    # 2 it is interest rate and BTW, the price will keep rising next year and current slow is seasonal
    well, that’s good. at least buyer will know price is direct function of interest rate, big reason for house price inflation is from low interest rate support.

    if you look at news or opinion pieces realtor-backed media, the core message they want to deliver is “the price will keep rising”. you can read their panic. to me, it means the real estate industry believe buyers will not buy if they don’t believe the price will keep rising. The main thesis of their propaganda is the price will keep rising, the only difference is pace.

  127. 127
    richard says:

    forget the next phase of real estate industry propaganda campaign:

    # seller need to be realistic (drop your damn listing price! otherwise I will be out of business)

  128. 128

    RE: Joe @ 94

    You Have Me Rolling On the Ground in Laughter

    Background checks on illegal aliens? What paper checks work when the foreign governments are like run by the Mob? The only i.e., background check we do on college applications [student green card] from Chinese students at the U of W for transcripts is a similar joke, its phony and fraud and no way to prove it isn’t….a lot of the Chinese foreign students couldn’t get accepted in China, but America is the laughing stock of the world on paper security, so they go to college here. Then take our jobs away from us later.

  129. 129

    RE: Joe @ 122
    You’re Right Joe

    Its the other Joe that said he didn’t believe in OVERPOPULATION. I apologize and please blame it on two bloggers with the same “Joe” name….I’ll be more careful in the future.

    BTW, I appreciate your stand on possible global warming or cooling [if it wasn’t man caused]….I don’t think we’ll ever really prove global warming is real, but to many it is. Its become a wedge issue like gay rights and abortions….

    So many opinions and its almost impossible to make everyone happy, but I’ll try….LOL

  130. 130
    richard says:

    RE: softwarengineer @ 127
    cant help commenting on chinese students.
    since their tuition is higher. the universities has more motivation to admit more and more chinese students. and wealthy chinese.students alsoba good force for higher rent and housing price since many students parents will buy house for them. so economic wise, the system like it and there are no much motivation to do strict background check on them. it is about money. our educational system is too bloated and wasted a lot of tax money. the victim will be the kids of poor or middle class state residents because even the university want to reduce their tuition using chinese money,which i doubt, they can not afford higher living cost. in short, there is no reason fo the system to resist chinese money coming in buying up assets and good education resources. unless there is a political uproar when the city further gentrified by those have and havenot say enoghis enough.

  131. 131
    Eastsider says:

    By richard @ 123:

    at 5.5% rate, the housing market will be dead if not crash.
    The FED will halt rate raise next year. Even December rate raise is not a sure thing.
    I feel stock market will keep falling and we will see massive layoff in the near year. But I am not sure
    bond market will fall or not. I will be a little surprised that the system will allow 30-year mortgage rate to reach that high. to me, to keep housing market float, you have to stop 30-year rate rise now.

    Fed Funds Future is the best forecasting tool on FED rates. If you disagree, you can bet against it and make a big profit. 5.5% mortgage rate may seem high today but it had never been this low from 1970-2003 (before the last housing crash.) The rate fell below 5% following the crash and it is just starting to climb back to normal.

    https://www.valuepenguin.com/mortgages/historical-mortgage-rates

  132. 132
    Eastsider says:

    RE: Joe @ 124 – I am a big believer in housing affordability. As interest rates normalize, affordability will become the dominant factor in setting home prices. No more subsidized rates means families will need to have the means (income!) to afford housing. Normalization will force us to address income and costs and it’s about time…

    Yes, I think prices will have to drop when interest rates normalize.

  133. 133
    richard says:

    RE: Eastsider @ 130
    dont get me wrong. i wish the rate can get 5.5% since it will kill the market. actually i think to keep current housing market float. the rate need to go back maybe to 4.5%.
    i am not so sure about wether it will go that high. the reason is i think fed will try to save housing market, i hope it fails but it will try. FED Slowed rate hike or even pause raise becoz it saw the weakening of stock and real estate market and recent GM layoff. on top of that, maybe more worrisome the corporate debt (used for share buyback and m&a activities). fed is ultimate buyer if long term bonds if nobody want them but it can do that to keep rate artificially low if it want to save housing market. lets wait and see.
    but put rate aside, hopefully recent market condition will impact house buyers psychology to put their buying on hold. painfully and necessarily, the coming layoff will put the buying thoughts way behind their heads.

  134. 134
    JustSomeDude says:

    Just an anecdotal story, but interesting none the less. Just recently my wife was talking to her co-worker about housing. He co-worker is renting much like we are. We are waiting to see what happens to the prices and for houses to get back into the range of prices we had saved a down payment for a couple years ago so are continuing to rent. My wife was wondering what her co-workers plans were. Her friend had just recently talked to the realtor they had been working with and the realtor told them to wait a year or so before trying to buy a house because of the prices going down.

  135. 135
    David says:

    RE: JustSomeDude @ 132 – This is the psychology that says I will not buy while prices are predictable and wait until they start to rise again.

    Prices usually fall when there is oversupply. Show me the oversupply?

  136. 136
    justsomedude12 says:

    By David @ 133:

    RE: JustSomeDude @ 132 – This is the psychology that says I will not buy while prices are predictable and wait until they start to rise again.

    Prices usually fall when there is oversupply. Show me the oversupply?

    Response from a different “Justsomedude” – No, it’s the psychology that says prices have been going down and I think they’ll go down more, so I’ll wait for prices to go down further before I buy.

    And supply (over/under) is not the only factor at work. When buyers decide that they’re unable or unwilling to purchase at current prices, they stop buying. This can be the case even when there is very little supply (homes for sale). So that’s a case of very little supply, yet also falling prices.

  137. 137
    richard says:

    RE: David @ 133
    here come again, supply…
    use stock as an analogy. if you know a stock is falling down, even if there is only one share of the stock is for sale , you still will not buy it. you will not buy it because there is only one share ,or low inventory. for housing game at this stage, house already effectively being treated like stock, the buyer sentiments play a huge role.

  138. 138
    Eastsider says:

    By David @ 133:

    Prices usually fall when there is oversupply. Show me the oversupply?

    Inventory (“seasonally adjusted”) has been increasing in recent months even as prices fall. When we are at equilibrium, i.e. inventory neither increasing nor decreasing, prices will stabilize. We are not there yet.

  139. 139
    David says:

    Um, if SUPPLY is not in actuality rising, then these wise waiter-and-seers are going to get screwed. Housing is not the last toy on the shelf. Redfin is STILL showing my house going UP in value about every two weeks.

  140. 140
    Eastsider says:

    RE: David @ 137
    From Calculated Risk blog – “note that inventory in Seattle was up 102% year-over-year in October
    Read more at https://www.calculatedriskblog.com/2018/11/housing-inventory-tracking.html

  141. 141
    justsomedude12 says:

    By David @ 137:

    Um, if SUPPLY is not in actuality rising, then these wise waiter-and-seers are going to get screwed. Housing is not the last toy on the shelf. Redfin is STILL showing my house going UP in value about every two weeks.

    Supply has indeed risen over recent months, as the monthly data has shown.

    But again, supply is not the only factor. If buyers aren’t buying, prices will still decline even in cases of incredibly low supply. Doesn’t matter how small the supply is.

  142. 142
    richard says:

    home depot issued more debts for share buyback. looks like executives take the last chance to enjoy A rating status to borrow money for share buyback and unload their shares. watch out for this stock. instead of more deleveraging, corporate america is taking more debts to do financial engineering before their bonds will be downgraded. average employee will pay the final price..sigh

    Home Depot Prices US$3.5bn Bond While Weathering Sluggish Housing Market https://seekingalpha.com/article/4225465?source=ansh $BZH, $DHI, $HD, $KBH, $LEN, $LEN.B, $MTH, $TOL, $WSM, $XHB

  143. 143
    David says:

    RE: justsomedude12 @ 139 – This is wrong. Supply always matters for staples.

  144. 144
    justsomedude12 says:

    By David @ 141:

    RE: justsomedude12 @ 139 – This is wrong. Supply always matters for staples.

    You’re assuming one NEEDS to purchase a home. They don’t. They can stay in their current living situation. If they’re moving from a different area they can rent. There is actually a large number of vacant apartments in the greater Seattle area right now.

    People could literally stop buying homes for the next several years and be just fine. No one needs to purchase a home. That’s where your logic is off. For staples such as food, I would agree with you.

  145. 145

    RE: richard @ 129 – The Average High School GPA to get admitted into the U of W was like 2.5 in1975….its like 3.8-4.0 today, Phony foreign transcripts at U of W causing this? I wouldn’t blame it on the falling 40-50 point average IQ level since 1970….LOL….nor would I credit higher GPA rates on our decrepit public schools, especially math and science.

  146. 146

    RE: justsomedude12 @ 142
    You’re Right

    If buying a home keeps you from accumulating $CASH$ for your retirements, I’d pick retirements in a heart beat and keep renting. When you do retire buy something cheap….that’s not Seattle BTW….LOL….ask my 30 YO daughter living in Kansas City now who is property manager of my repo. The property tax went up $16/yr there for 2019….LOL.

    Enjoy your first $1M in $CASH$ and smile at the mortgage owners. The buffoons.

  147. 147

    RE: softwarengineer @ 116
    Seattle clogged Traffic May be the Achilles Heel for Low Employment With Higher Population Anyway?

    https://www.studyfinds.org/25-workers-quit-job-long-commute-study-finds/

    The URL above is national average, so IMO, the 25% in Seattle is really as high as 50% due to our parking lot ACUTE/CLOGGED freeway systems? The workers are quitting their jobs over the long 2-3 hour bus rides or $30/day [2-3 hr] commutes/parking costs? Perhaps they’re baby sitting for $CASH$ under the table [the child day care establishments are closing left and right in Kent due to excessive costs]. Makes sense to me as a possible root cause, assuming my local area evidence observations are spot on.

    I remember in 2006 paying $4.50+/gal on gas and spending like $10/day on just gas to drive 30 mpg to a 50 mi/day R/T work commute….add in $10/day lunch and 20,000 miles/yr on your car…you get the gist. My office buddy bought a Prius that year….LOL…thank God for telework in my case.

  148. 148
    richard says:

    RE: softwarengineer @ 143
    a news related to chinese student. universities buy insurance to hedge against potential drop of chinese student. you can how much some universities rely on chinese students tuition…

    https://www.google.com/amp/s/qz.com/1479925/a-us-college-is-insuring-itself-against-a-drop-in-chinese-students/amp/

  149. 149
    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. The graphs compare 2018-versus-2017 inventory on an hourly basis.

    King County SFH active for-sale inventory 2017-versus-2018 on 2018-12-01
    https://imgur.com/a/CSu9nlP

    King County Condo active for-sale inventory 2017-versus-2018 on 2018-12-01
    https://imgur.com/a/aHlpVcP

    Year 2018 KC SFH active inventory outnumbers year 2017 by a factor (a ratio) that has been above 1X since mid-March, and has been on a upward trend all year long. Last week the ratio passed 2.0X for the first time, after a sudden surge the last several weeks. This week the ratio is down a bit but still above 2.0X. Both 2017 and and 2018 could be expected to be more volatile on Nov30/Dec 1 than usual, because the month-end is coinciding with the start of the weekend, namely Fri (2017) and Sat (2018), with Fri night being the usual inventory peak for the week. Here are the graphs of the factor (2018/2017 ratio):

    King County SFH active for-sale inventory ratio 2018/2017 on 2018-12-01
    https://imgur.com/a/LtrhtcX

    King County Condo active for-sale inventory ratio 2018/2017 on 2018-12-01
    https://imgur.com/a/3HYu5LB

    The trend is continual and upward. For KC Condo inventory, the factor dropped a bit to 3.3X after breaking 3.5X for the first time last week. The previous (above) observation about volatility applies here as well.

    There remains a crowd of sellers at the exits of the KC housing market, even on Dec 1. Presently observed inventory levels have not been reached since 2011, and they mark a rapid rand strong reversal from last year.

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

  150. 150
    whatsmyname says:

    By justsomedude12 @ 142:

    People could literally stop buying homes for the next several years and be just fine. No one needs to purchase a home. That’s where your logic is off. For staples such as food, I would agree with you.

    People could literally stop buying meat for the next several years and be just fine. No one needs to eat meat. But many people like to do that, and they will.

    October inventory was well under median; October sales were not. November will be interesting to see, but so far the hypothetical is not consistent with the actual, even when the absolutism is eliminated .

  151. 151

    RE: David @ 137

    If you list it for $100,000 less…that “value” on the site will be changed downward within a few hours. Not a reliable source of info.

    I thought your house was for sale some time ago in a thread about your not wanting to have any Open Houses. I could have you confused with someone else. It had been on the market quite sometime at that point. Again, could have been a different David. Renton…I think or “down that way”.

  152. 152
    whatsmyname says:

    RE: Justme @ 147 – I took time to really look at your graphs. I liked your other presentation better. That is because you disclosed the actual numbers that you were using, rather than an undisclosed number we could roughly approximate from the graph, keeping things visual, but vague.

    Vague as things are, it does look like about an 800 sfr drop in the month of November. While we can see that is greater than 2017 on your chart, isn’t that also about as big a November drop as can be seen in all the years that Tim has charted?

    It’s certainly a fact that the number of sellers crowding the exits is below the November median. But never mind all that. What is it that you think the charts really say?

  153. 153
    justsomedude12 says:

    By whatsmyname @ 148:

    By justsomedude12 @ 142:

    People could literally stop buying homes for the next several years and be just fine. No one needs to purchase a home. That’s where your logic is off. For staples such as food, I would agree with you.

    People could literally stop buying meat for the next several years and be just fine. No one needs to eat meat. But many people like to do that, and they will.

    October inventory was well under median; October sales were not. November will be interesting to see, but so far the hypothetical is not consistent with the actual, even when the absolutism is eliminated .

    I used the example of food having inelastic demand, not meat. Yes, if meat gets too expensive, people will stop buying it and substitute other protein sources. Meat is elastic. Food is not.

    Purchasing a home is elastic. If prices are too high, people will not buy. They don’t have to.

  154. 154
    whatsmyname says:

    RE: justsomedude12 @ 151 – That’s a bit like saying houses are elastic, housing is not – which also is true, and I honored that in my example.

    Point I’m making is that while some people here are saying houses are too expensive, (just as they have in every year since 2005), houses are evidently not too expensive for other people; i.e. sales were actually above median last month.

  155. 155
    justsomedude12 says:

    By whatsmyname @ 152:

    RE: justsomedude12 @ 151 – That’s a bit like saying houses are elastic, housing is not – which also is true, and I honored that in my example.

    Point I’m making is that while some people here are saying houses are too expensive, (just as they have in every year since 2005), houses are evidently not too expensive for other people; i.e. sales were actually above median last month.

    Agreed, there will always be at least some number of buyers out there willing and able to purchase a home at almost any elevated price. I just don’t believe there are enough of these people to propel the market (as a whole) higher.

    To propel the overall market higher, the masses need to be willing and able to purchase at ever higher prices. This is no longer happening. It seems to have stopped last spring, and I don’t think there’s good reason to believe it will start up again for some reason within the next few years.

  156. 156
    whatsmyname says:

    RE: justsomedude12 @ 153 – I have to agree that a dip of some kind seems already in place. I am unsure where we go from here. There is definitely downward potential. I can also see some potential local upward pressures from things previously mentioned here. I wouldn’t discount them entirely.

    Relief from HQ2. – It looks much less a rival than feared. If people were holding back in hope of Denver or Austin prices, or the “new, true” home office; they can start to readjust their plans. People who were reported to be holding back for deals resulting from the great Amazon exodus can also readjust.

    Patterns – We often say the prime areas rise first, and suffer last. However, there has to be some limits, even with a rising commute premium. Equalization is a potential time lagging factor for some areas.

    Population growth. Whatever the faults of the State methodology, traffic is still getting worse. Traffic is people. Perhaps it’s not everywhere. Perhaps it’s an inter-regional re-distribution, but I doubt it.

  157. 157
    Honolua_Bay says:

    RE: richard @ 123 – In 1998 I bought my first house at age of 24 in Maui, Hawaii. It was a starter house with 3 bd and 2 bath. My interest rate was 9% through FHA. It was in perfect location 5 mins walk to white sand beach. Six years later, I sold it for almost 500k and now it’s over a 1 million because of the proximity to the beach. And My parents paid over 11% in late 80’s.

  158. 158
    Matt P says:

    By whatsmyname @ 150:

    RE: Justme @ 147 – I took time to really look at your graphs. I liked your other presentation better. That is because you disclosed the actual numbers that you were using, rather than an undisclosed number we could roughly approximate from the graph, keeping things visual, but vague.

    Vague as things are, it does look like about an 800 sfr drop in the month of November. While we can see that is greater than 2017 on your chart, isn’t that also about as big a November drop as can be seen in all the years that Tim has charted?

    It’s certainly a fact that the number of sellers crowding the exits is below the November median. But never mind all that. What is it that you think the charts really say?

    Like or hate the graphs, it’s following last year and every other year as normal on a percentage basis. SFH inventory is going to start the new year at around 2750 to 3000 if the trend holds, which will be the highest starting inventory since 2014 or 15. If inventory rises as quickly as last year, we’ll be at levels not seen since 2011 post-crash or 2007 pre-crash by September. No one can tell the future, but we’re definitely not where we were last year – ridiculously low inventory heading into the new year.

  159. 159
    Brian says:

    RE: Justme @ 147

    Thanks for the update! Look forward to this every week because I find the graphs pretty interesting.

  160. 160
    Justme says:

    RE: Brian @ 156

    Glad the graphs are useful. Thanks Brian (and Matt P and several others that have expressed their appreciation in the past). Tim does a great job, but he as a full plate of data every month. I had always been curious what is going on in the housing market at a more fine-grain time scale. After doing some hacking I thought the data was rather informative in several ways, so I decided to make more of an effort in getting the data presented in graphical form.

  161. 161
    Matt P says:

    By Justme @ 157:

    RE: Brian @ 156

    Glad the graphs are useful. Thanks Brian (and Matt P and several others that have expressed their appreciation in the past). Tim does a great job, but he as a full plate of data every month. I had always been curious what is going on in the housing market at a more fine-grain time scale. After doing some hacking I thought the data was rather informative in several ways, so I decided to make more of an effort in getting the data presented in graphical form.

    Yep, appreciate them much. Could you do a combined set of graphs? Would be interested in seeing that.

  162. 162
    JustSomeDude says:

    By David @ 133:

    RE: JustSomeDude @ 132 – This is the psychology that says I will not buy while prices are predictable and wait until they start to rise again.

    Prices usually fall when there is oversupply. Show me the oversupply?

    Are you referencing the psychology of the realtor giving advice? Or of me waiting to purchase? Or both?

    I can’t speak about the realtor – I never heard a realtor recommending waiting two years so thought it was odd. Most realtors I’ve talked to tend to go with the approach of “You better buy now because you’ll never have this chance again at these prices, these rates, this location, blah, blah.”

    I am waiting until prices fall to what I can afford to pay 20% down on. If the house is something I want I’ll buy unless I decide to move somewhere else – depends on how long it takes. In my current location I have about a 6 year window due to kids school – at some point I will not want to be tied down to a mortgage and will just stay renting for the freedom to not be stuck somewhere.

  163. 163
    JustSomeDude says:

    By David @ 137:

    Um, if SUPPLY is not in actuality rising, then these wise waiter-and-seers are going to get screwed. Housing is not the last toy on the shelf. Redfin is STILL showing my house going UP in value about every two weeks.

    Why would people waiting to buy a house they can want to afford be screwed? Priced out maybe – but why screwed? If your definition of screwed is priced out than that’s been my case for the last two years and I’ll just move somewhere more affordable at some point or continue to save until I can afford the house I want.

    It’s not like buy a house now or live on the streets and starve to death is the choice I face. (More realistically it is buy the house and then starve to death since there will be no money left after mortgage for food – lol!)

  164. 164

    RE: Honolua_Bay @ 156
    How Much $CASH$ Have You Saved For Your Retirements?

    None or no enough? I suppose in that case you could sell later if possible…assuming its sellable and what’s left today in housing net worth is like $1M [$1.5M before capital gains]…ya better get started before ya retire? Good luck.

    I prefer doing retirement planning and house buying on the same page…..LOL….emphasizing retirement planning. Its less anxiety.

  165. 165
  166. 166

    RE: richard @ 147
    Gosh Richard You’re a Great Journalistic Detective

    The MSM generally omits NWO news like this, but I also read about 10 years ago the U of W owns 1/2 the real estate in Seattle city limits….the U of W is a rich spoiled land baron? We should feel sorry for the poor babies and give them more welfare to the rich? LOL

    The bottom 90% American household incomes are the enemy of the state now, China fits them better for patriotism? LOL

  167. 167
    uwp says:

    It’s so weird that we aren’t getting daily updates on the market value of Amazon, Microsoft, and Boeing anymore? Does anyone know why that is???

    By my math, those three companies added $230 billion in value over the last 2 weeks. You would think that would be of interest to our friends here in the comments who salivated over each percentage drop.

    Gosh, I was made to understand that money goes directly into the PNW housing market, and once it is gone, the houses here are given away for free as the last person to leave turns out the lights.

  168. 168
    Joe says:

    RE: whatsmyname @ 155

    Regarding Amazon, the big issue has never been whether current employees of Amazon in Seattle will move to the new headquarters locations. The big issue is that fewer people, if any, will be moving to Seattle because Amazon will be focusing its new hiring in Washington and New York. If Amazon has to staff 50,000 people in New York and Washington, common sense says they will reduce the hiring in Seattle.

  169. 169
    Justme says:

    RE: uwp @ 166

    Your hyperbolic exaggerations and mischaracterizations aside, you are contradicting yourself.

    >>It’s so weird that we aren’t getting daily updates on the market value of Amazon, Microsoft, and Boeing anymore? Does anyone know why that is???

    There rarely were *daily* updates om AMZN, or others, posted on this blog.

    >>By my math, those three companies added $230 billion in value over the last 2 weeks. You would think that would be of interest to our friends here in the comments who salivated over each percentage drop.

    So now YOU are the one with the updates? I thought you disliked stock price updates? Oh, maybe only when the price goes down?

    >>Gosh, I was made to understand that money goes directly into the PNW housing market, and once it is gone, the houses here are given away for free as the last person to leave turns out the lights.

    Make up your mind. You wanted to push the narrative that what we call the Seattle Bubble was natural and organic because Seattle is oh-so-speshul and productive. But then AMZN stock dropped 20-25%, and you felt the need to poo-poo the importance of stock prices. And now AMZN bumped up 5-10%. so it is important again.

    Must be a frustrating situation with dropping house prices, it creates a such a need to contort yourself.

  170. 170
    uwp says:

    By Justme @ 168:

    So now YOU are the one with the updates? I thought you disliked stock price updates? Oh, maybe only when the price goes down?

    I’m just asking for consistency.

    Were you the one giving us updates on the 10-year earlier in the year?
    It dropped under 3% today. Does that matter? Or is it only important when it goes over 3%?

    By Justme @ 168:

    Must be a frustrating situation with dropping house prices. when there is such a need to contort yourself.

    I’ve said it before, but I would like to buy a nice big house in the area someday, and the higher prices go, the more difficult it would be. As the owner of a “starter home” bought a few years ago, house price drops across the board is probably a net good for me. So, I don’t care too much if house prices go down. I just don’t think a crash is a positive for the area in general. Why people want to relive 2008-2009 is beyond me.

    It must be something to do with having waited several years to buy a house while watching prices rise. It’s probably somewhat damaged your psyche.

  171. 171
    sfrz says:

    Concern. Caution. Wary. aka- TIMBER!
    “It’s that trend line people are noticing and wondering whether they should be at all concerned. The wariness is understandable, for four reasons:

    ▪ One is that the gallop of housing prices — the index was up 12.7 percent in 2017, 10.75 percent in 2016 and 9.7 percent in 2015 — has been so powerful as to threaten to trample affordability into the increasingly expensive dirt. A housing market torrid for so long does few favors for anyone (even sellers are stuck if they’re trying to buy in the same market), and carries the risk of becoming bubble-like.

    ▪ It’s not just housing that has been at risk of a correction. The national economy is, by historical measures, overdue for a slowdown, although a combination of low interest rates and energy prices and tax cuts have helped keep it afloat.

    And while those who lost jobs and homes during the last recession might not have the same impression, this region got off lightly because aerospace and tech did well during the downturn.

    ▪ The third source of nervousness is that the recession isn’t so far distant in the rear-view mirror that people have forgotten what it was like.

    For those who do need a reminder, the Case-Shiller index numbers are here to help: a drop of 13.35 percent in 2008 (reinforcing the view that things could have been worse, the 20-city index was down 18.6 percent that year), followed by a 7.9 percent slump in 2009 and two more years of declines, albeit smaller, after that.

    ▪ The fourth and potentially biggest, cause for worry is what this means for the economy.

    Is a cooling, stalled or even contracting housing market the product of what’s going on in that sector, or a byproduct of underlying bad news for the economy as a whole? Can the housing market take down the economy the way it did a decade ago?”

    https://www.thenewstribune.com/news/business/biz-columns-blogs/article222317930.html

  172. 172
    Matt P says:

    Yield curve inversion spotted. Recession looming?

  173. 173
    richard says:

    RE: uwp @ 169
    first about rate, I think 3% is not a hard criteria and more of psychological threshold. the 2 year and 10 year yield is very close today and indicate a potential recession.

    uwp
    “Why people want to relive 2008-2009 is beyond me”
    this is not either an honest or fair statement, actually it is pretty hypocritic and pathetic. I don’t think buyers in recent years have any sympathy for sideline buyers or renters. Recent buyers (especially in the last three years) are partly responsible for such high prices and potential downturn. You can not claim yourself a winner when your equity goes up and when the price is going down you say no-no because it will be another 2008-2009 and everybody will suffer. you can not get and win both ways, it is not true and immoral. When you make a good bet and buy a house at the right time, bravo to you. when the price goes down and you lose equity then sorry. If recession is the only way to get house more affordable then there is nothing wrong. some renters may loose job and still can not buy but some may have a chance to buy. Remember, irresponsible buyers of the last few years is part of the reason for potential recession. You eat what you sow.

  174. 174
    Eastsider says:

    RE: uwp @ 169 – Look at big picture, not day-to-day interest rate and stock price swings. According to current Fed Funds Future, in a year’s time, there is a 75% chance (from 70% last Friday) that rate will be at least .5% higher. The market expects short term rate to rise in spite of yield curve inversion. There is a good chance that we enter a recession in 6-18 months. A recession can’t be good for the housing market. So here is the big picture for you.

  175. 175
    Matt P says:

    By Eastsider @ 173:

    RE: uwp @ 169 – Look at big picture, not day-to-day interest rate and stock price swings. According to current Fed Funds Future, in a year’s time, there is a 75% chance (from 70% last Friday) that rate will be at least .5% higher. The market expects short term rate to rise in spite of yield curve inversion. There is a good chance that we enter a recession in 6-18 months. A recession can’t be good for the housing market. So here is the big picture for you.

    Coincidentally, the fed came out with a new predictor for recessions that wasn’t inversion but rather when futures markets predicted rates would be cut, which was even more accurate than inversion, so according to that no recession coming yet but we are getting closer.

  176. 176
    Luke says:

    By David @ 138:

    Um, if SUPPLY is not in actuality rising, then these wise waiter-and-seers are going to get screwed. Housing is not the last toy on the shelf. Redfin is STILL showing my house going UP in value about every two weeks.

    This is a joke, right?

  177. 177
    richard says:

    prepare for the downturn,says fdic chair.
    people in the know starts warning people of next recession…
    https://finance.yahoo.com/news/fdic-chair-echoes-concerns-large-risky-business-loans-110635302.html

  178. 178

    Global Warming Theory Causes Carbon Taxes to Rise Exponentially in France Violent Riots Lately

    Ya see why Trump wanted out of the “destroy Capitalism excuse theory”, the climate accord taxations?

    OVERPOPULATION is never mentioned when it comes to global warming….why not? Its the root cause if its real. China is like an evil MOB OVERLORD laughing at America…and EU too. Global warming buffoons.

    http://www.climatedepot.com/2018/12/03/un-climate-chief-has-solution-to-urgent-climate-threat-we-require-deep-transformations-of-our-economies-and-societies/

    The best part of this URL are the blog comments….LOL…we the people can’t be fooled.

  179. 179

    RE: richard @ 176
    When Did Truth Become Lies and Lies Became Truth?

    And why did we allow it? If we can figure out this psychological brain washing mess…the real estate bubbles in Seattle will seem like a piece of cake in comparison.

    No wonder the Milenails want out of two income families supporting mortgage debt….I’m on their side. Politics is the swamp. We can’t force an Autistic adult to be just like us, we must accommodate their life style or they have Autistic rages….especially the non-verbal ones. Same type of thing.

  180. 180
    David says:

    By JustSomeDude @ 162:

    By David @ 137:

    Um, if SUPPLY is not in actuality rising, then these wise waiter-and-seers are going to get screwed. Housing is not the last toy on the shelf. Redfin is STILL showing my house going UP in value about every two weeks.

    Why would people waiting to buy a house they can want to afford be screwed? Priced out maybe – but why screwed? If your definition of screwed is priced out than that’s been my case for the last two years and I’ll just move somewhere more affordable at some point or continue to save until I can afford the house I want.

    It’s not like buy a house now or live on the streets and starve to death is the choice I face. (More realistically it is buy the house and then starve to death since there will be no money left after mortgage for food – lol!)

    True. People can and should move to other places if the housing market is too high to survive affordably. There was an article yesterday in the Seattle Times that defined housing policy change as creating more duplexes and apparently subdividing existing housing into triplexes etc. All because people are squishing themselves into small pockets of Seattle. Have people not heard of OUTSIDE of Seattle? Seattle has a SMALL footprint. Movie to Burien, SeaTac,

    Still, if people really are stuffing themselves into ‘pockets’ then I see no housing price crash or serious pullback UNLESS the FED induces a recession by their crazy interest rate increases. The Fed appears to be trying to cause a recession. Still, unless we have another Obama-Style-Depression, most recessions last 6 months. That is not much of a respite from housing price increases.

    Nevertheless, if you cannot afford a house in METRO Seattle, then I’d look to move to a city that is affordable. There is nothing about Seattle that is worth the trouble of being house poor.

  181. 181
    biliruben says:

    “Nevertheless, if you cannot afford a house in METRO Seattle, then I’d look to move to a city that is affordable. There is nothing about Seattle that is worth the trouble of being house poor.”

    Reply — Quote

    Except Seattle is where the many of the good paying jobs are.

    A Burien (not cheap either) to downtown Seattle commute is 3 hours of slow death daily. You would have to be either an idiot or a masochist to subject yourself to that. It’s worth being house poor if it means you have a life beyond staring at brake lights.

  182. 182
    Joe says:

    RE: biliruben @ 180

    But if a $1M Seattle property is dropping at a rate of $400 per day, like it is currently, commuting is a whole lot less painful.

  183. 183
    David says:

    RE: biliruben @ 180 – It does not take 3 hours to go to and from Burien each day.

  184. 184
    Joe says:

    With the yield curve threatening inversion, which greatly increases the odds of recession, I wonder if Microsoft, Amazon, and Boeing are preparing some restructuring and layoff plans. These companies are stock market darlings, and their first instinct will be to cut first, ask questions later, should quarterly EPS be jeopardized in any way.

    This has always been an essential part of my analysis. The housing market looks like a lose-lose situation. If rates go up, bad for housing prices. If rates go down, that means we are going into recession, which is bad for housing prices.

    Simply put, Seattle housing prices ran too far too fast, for no reason other than buyer panic. Now the panic buyers are starting to regret it.

  185. 185
    Eastsider says:

    News from a national builder with presence in local markets – They have many local homes available for ‘quick’ deliveries and are offering cash bonuses on some of them. If you must buy now, negotiate hard. Otherwise, I would wait…

    Toll Brothers orders slump for first time in more than four years
    https://www.reuters.com/article/us-toll-brothers-results/toll-brothers-orders-slump-for-first-time-in-more-than-four-years-idUSKBN1O3106

    Orders fell the most in California, Toll’s biggest market by revenue, declining 39.4 percent to 226 units in the quarter, the company said.

    “Significant price appreciation over the past few years, fewer foreign buyers in certain communities, and the impact of rising interest rates, all contributed to this slowdown,” Chief Executive Officer Douglas Yearley said, referring to the California market.

  186. 186
    biliruben says:

    It does not take 3 hours to go to and from Burien each day.

    At rush hour, you would definitely be hard pressed to get downtown in less than an hour. So we will say 2-3 hours at day, every day of your life, destroyed in what I would consider the worst possible way to spend 2-3 hours. Stressing out in traffic, feeling your blood pressure rise, your belt digging into growing waistline, listening to your arteries clog from not having time to make a decent meal, sucking fumes from all that gas you are burning, destroying the environment, spending $10,000/year keeping your junker on the road. Pretty much my worst nightmare.

    Let’s get specific: Here’s a house I favorited – now pending. Shitshack in Burien:

    https://www.redfin.com/WA/Burien/14617-24th-Ave-SW-98166/home/332902

    …and a comparable house an easy stroll to the future Roosevelt light-rail that zips you downtown in 15 minutes.

    https://www.redfin.com/WA/Seattle/3610-NE-65th-St-98115/home/316407

    You have to “Squish” into a few hundred fewer sq ft, but jeezus. If I threw all my free time down the sewer through a long commute for that house in Burien , I would be dead in a decade. Probably suicide.

    And the car costs would eat up any savings and then some.

    That’s why people are still buying in Metro and not Burien or Seatac. They aren’t stupid.

  187. 187
    biliruben says:

    And as for declining values, you have a short memory. In the last downturn, it was the outlying areas that got hammered with steep declines. Not metro.

  188. 188
    Market Psychologist says:

    RE: Joe @ 183 – I just heard a story from one of these buyers yesterday. She said her and her husband bought a house last March because it was their “last shot” to own a home in the area. Now she says they see the news and hope the market doesn’t keep going down. I am sure their realtor warned them about that possibility, right? (SARCASM)

  189. 189
    biliruben says:

    https://www.redfin.com/WA/Seattle/129-NE-64th-St-98115/home/304049

    I like this one better. Get in shape gutting it, instead of getting fat driving an hour south. Stumbling distance to LINK and Greenlake. Have a million dollar house afterwards.

    Unfortunately, I don’t think my marriage can survive another project house.

  190. 190
    richard says:

    wow, near 600-points drop, looks like yesterday’s 300 points rise is a bear market rally.
    December rate raise seems will be on hold. Even if FED do it for the face-saving it will the last one. Then people will realize the economy is in trouble and be more hesitant in buying a house.. call me wishful thinking

  191. 191
    QA Observer says:

    By Eastsider @ 184:

    News from a national builder with presence in local markets – They have many local homes available for ‘quick’ deliveries and are offering cash bonuses on some of them. If you must buy now, negotiate hard. Otherwise, I would wait…

    Toll Brothers orders slump for first time in more than four years
    https://www.reuters.com/article/us-toll-brothers-results/toll-brothers-orders-slump-for-first-time-in-more-than-four-years-idUSKBN1O3106

    Orders fell the most in California, Toll’s biggest market by revenue, declining 39.4 percent to 226 units in the quarter, the company said.

    “Significant price appreciation over the past few years, fewer foreign buyers in certain communities, and the impact of rising interest rates, all contributed to this slowdown,” Chief Executive Officer Douglas Yearley said, referring to the California market.

    This project in Queen Anne, by Toll Brothers, seems to have stalled. Quick sells in the spring, but now some of the THs that are framed out AND have a sold sign on them have not progressed in 5 months. Some show mold growth over an extensive area of the exterior. Anecdotal observation: slow waking prospective buyers with their hands behind their backs are no longer seen perusing.

    https://www.tollbrothers.com/luxury-homes-for-sale/Washington/McGraw-Square-at-Queen-Anne

    Maybe it’s the $1.2 x 10^5 starting price.

    What happens if the market tanks on pre-sells? Does the buyer get a “price adjustment”?

  192. 192
    Brian says:

    I don’t feel sorry for companies like Toll Brothers that only build 4000 sq ft McMansions. They should have started building smaller houses in more dense developments a while back.

  193. 193
    tc says:

    Regarding Commute Time:
    I am not familiar with Burien commute, but the times quoted seem too long. For other places that I am familiar with (personally or through coworkers). North-End (Lynnwood for example), commute varies between 30-90 minutes, depending on wether accident on Southbound I-5 prior to express lanes, or if downtown clogged. Eastside (Redmond) about 30 minutes (surprising how tolls keep traffic down, but Metro busses are a breeze both to downtown or UW with access to light rail. South (Tacoma) is 60 minutes by Sounder. West (Bremerton) is 30-60 depending on Fast Ferry or regular ferry. In 2020, the Fast Ferry will also go from Southworth in addition to Bremerton and Kingston. Southworth is 25 minutes from Gig Harbor North. Therefore, it puts Gig Harbor North also in the approximately one hour category. People, you just have to be more imaginative and not get bogged down by car mentality.

  194. 194
    Dustin says:

    RE: biliruben @ 185 – I’ll second David on this. There are rush hour buses that can get you to Burien from downtown in 45 minutes. After rush hour, in low traffic conditions, you can get to Burien in 20 minutes by car. Going to North Seattle or Redmond from Burien would be a pretty painful commute, but travel between downtown and Burien is more reasonable than you think. I’ll also say that, while I understand the appeal of living a light 10 minute walk from work, a 2 hour round trip commute isn’t that unusual or unreasonable in my opinion.

    The Burien listing you posted may be overpriced – I didn’t look closely – but if your argument is that the value of living in Burien is lower than living in Green Lake or Ravenna, I think that’s rather obvious. For those who can’t afford single family homes next to one of the three new light rail stations opening up in Seattle, I think Burien provides a pretty good value for what you get, relative to other areas.

  195. 195
    Joe says:

    RE: Market Psychologist @ 187

    Thanks for the example. Yes, they would be the classic panic buyer. At least they are getting some education out of it, even though it’s costed them dearly. We are down roughly 8% from March. Worst part is, inventory was very low during that timeframe, so they may not own the type of house they wanted.

    There are a few panic buyers still out there, thinking now is deal time because prices are down a bit. They’ll get taken to the cleaners. When I look at the “sold” properties in October, I simply cannot believe what people have paid for junk. Quick losses will continue to pile up for those panic buyers.

    The prudent buyer will wait 2-3 years and re-evaluate then. Prices are dropping fast now. The yield curve is showing signs of recession ahead.

  196. 196
    Eastsider says:

    RE: Brian @ 191 – Toll Brothers also owns CamWest, which used to build starter homes in the area. But in the last decade, costs have escalated so much that it is no longer possible/profitable to build starter homes. Toll Brothers has nothing to do with escalating home prices. Their margins do not approach anywhere near those iGadgets that people are buying.

  197. 197
    Matt P says:

    By Dustin @ 193:

    RE: biliruben @ 185 – I’ll second David on this. There are rush hour buses that can get you to Burien from downtown in 45 minutes. After rush hour, in low traffic conditions, you can get to Burien in 20 minutes by car. Going to North Seattle or Redmond from Burien would be a pretty painful commute, but travel between downtown and Burien is more reasonable than you think. I’ll also say that, while I understand the appeal of living a light 10 minute walk from work, a 2 hour round trip commute isn’t that unusual or unreasonable in my opinion.

    The Burien listing you posted may be overpriced – I didn’t look closely – but if your argument is that the value of living in Burien is lower than living in Green Lake or Ravenna, I think that’s rather obvious. For those who can’t afford single family homes next to one of the three new light rail stations opening up in Seattle, I think Burien provides a pretty good value for what you get, relative to other areas.

    Driving commutes of 45+ minutes are connected to a whole host of physical and mental health issues. 1 hour commutes may be common these days, bit they are not good for you. If you get to sit around on a train or bus and read, it’s not so bad.

    On a different note, when are we going to start seeing the November numbers?

  198. 198
    Sfrz says:

    RE: Brian @ 191 – what’s that smell? Ahhh…. I love the smell of specuvestors burning. Toasty mold with a faint aroma of dollars and aftershave.

  199. 199
    Market Psychologist says:

    https://www.google.com/amp/s/www.nbcnews.com/news/amp/ncna943711

    Amazon will likely get bigger bills from USPS! Next stop, anti-trust sledgehammers.

  200. 200
    redmondjp says:

    By Eastsider @ 195:

    RE: Brian @ 191 – Toll Brothers also owns CamWest, which used to build starter homes in the area. But in the last decade, costs have escalated so much that it is no longer possible/profitable to build starter homes. Toll Brothers has nothing to do with escalating home prices. Their margins do not approach anywhere near those iGadgets that people are buying.

    Absolutely correct! On a busy corner near my house, a teardown, approved for a two lot short-plat, just sold for $1.06M, and the buyer had to demo the old house to boot. So that’s a half-million per undeveloped lot just for starters. Now, the dirt work starts which includes new sidewalks, planter strips, curb/gutters, repaving the widened street on two sides of the lot, stormwater detention system and drain lines, street light, mailbox post, and all underground utilites installed. All of that before the foundations even go in.

    And there is a massive-overkill on-site stormwater filter tank and pump system, just for a half-acre lot! The water n a z i s here in Redmond are very strict. To compare and contrast, they are building a massive warehouse just south of the airport now on Port of Seattle land (formerly affordable homes, but taken over by our big government so they can enrich their developer buddies) where they are doing ZERO stormwater treatment at all, and they have a couple acres of exposed dirt around the perimeter of the building (I walk by it every day during lunch). Just goes to show that, like Orwell said, some animals are more equal than others . . .

    What I find most interesting on the nearby short-plat is that the builder is only building ONE house, instead of two, for starters. This speaks volumes to me about them being cautious about the market. This is a fairly large builder who could easily afford to build both, and economies of scale dictate that it would be more efficient to built both homes simultaneously since they are only 10 feet apart. And in a peak “tech” neighborhood too.

    Good times! I’m enjoying the heck out of the haikus, and try to come up with one or two myself when a creative moment happens.

  201. 201
    Eastsider says:

    RE: redmondjp @ 199 – In the worst case, the city requires extending underground city sewer line to the property street. The cost can easily run into hundreds of thousands of dollars. To keep prices down, builders generally pass on sewer capacity charges to new owners rather than escalating prices further.

  202. 202
    pfft says:

    By Market Psychologist @ 198:

    https://www.google.com/amp/s/www.nbcnews.com/news/amp/ncna943711

    Amazon will likely get bigger bills from USPS! Next stop, anti-trust sledgehammers.

    Thanks to Trump.

    Is Kary going to chastise Trump like he did with Obama and his reasonable Vegas/Big banks criticism? No!

    From Toll Bros and CR.

    “California has seen the biggest decline. Significant price appreciation over the past few years, fewer foreign buyers in certain communities, and the impact of rising interest rates all contributed to this slowdown.”

    https://www.calculatedriskblog.com/2018/12/lawler-excerpt-from-toll-brothers.html

    Update: Framing Lumber Prices Down Year-over-year
    https://www.calculatedriskblog.com/2018/12/update-framing-lumber-prices-down-year.html

  203. 203
    Blake says:

    The 0.1% don’t mind a little pain for the commoners. “Cleansing…”
    http://www.cnbc.com/video/2018/12/04/recession-would-not-be-a-bad-thing-says-ceo-jamie-dimon.html

    “Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate. It will purge the rottenness out of the system. ”
    – Treasury secretary Andrew Mellon’s advice to President Hebert Hoover as the country plunged into the Depression.

  204. 204
  205. 205
    Notme says:

    It is curious
    dub don’t care that prices fall
    except when they do

    -a u-dub-wants-to-help-the-millenials-REALLY! bubble haiku

  206. 206
    Notme says:

    Some developers
    half a lot short of a plat
    we’ll all pay for it

    -a developer bubble haiku

  207. 207
    redmondjp says:

    By Eastsider @ 200:

    RE: redmondjp @ 199 – In the worst case, the city requires extending underground city sewer line to the property street. The cost can easily run into hundreds of thousands of dollars. To keep prices down, builders generally pass on sewer capacity charges to new owners rather than escalating prices further.

    Oh, thanks to me working with the city for almost 20 years, they already have a sewer stub into that lot – they did that when they ran the main into our cul-de-sac where we formerly had a private lift station.

    And I didn’t get paid a red cent for saving them the $500K it would have cost to extend it to that lot either – the lot was essentially worthless without the sewer, since the city wouldn’t let anybody build there without it. Oh well, I no longer have to worry whenever I flush (gravity works 24/7/365), so that’s something I’ll always be thankful for.

  208. 208

    SWE’s MOM Report for Nov 2018 and the Seattle Real Estate, Re: the Stock Market Crash

    https://www.cnbc.com/2018/12/04/bank-stocks-fall-the-most-in-more-than-a-year-enter-bear-market.html

    Nov 0.26% 0.62% 2.04% 1.92% (0.13%)
    YTD 2.65% (1.65%) 5.08% 1.61% (9.04%)
    Last 12 mo 2.85% (1.18%) 6.24% 2.08% (7.58%)

    Long-term CDs, Long-term Bonds, American stocks, Foreign stocks, foreign stocks

    As you can see Nov 2018 was a Bull American Stock Market, but is reversing itself in December? We’ll see. Interest rates have stabilized MOM, but approximate 3% long-term savings is still like 20% more than a year ago. A big COLA increase for the 401K retirement savers that spread their investment portfolios out of just “risky” equities. The Dec 2018 MOM report changes everything? Soon, at a theater near you.

  209. 209

    RE: redmondjp @ 206
    I Paid That Sewage Enlargement New Home Fee Too

    It was like $1000 in 2000….but payable per year with 8% interest for 10 years…pay it or get a County lien on your title.

  210. 210
    biliruben says:

    By Dustin @ 193:

    RE: biliruben @ 185 – I’ll second David on this. There are rush hour buses that can get you to Burien from downtown in 45 minutes. After rush hour, in low traffic conditions, you can get to Burien in 20 minutes by car. Going to North Seattle or Redmond from Burien would be a pretty painful commute, but travel between downtown and Burien is more reasonable than you think. I’ll also say that, while I understand the appeal of living a light 10 minute walk from work, a 2 hour round trip commute isn’t that unusual or unreasonable in my opinion.

    The Burien listing you posted may be overpriced – I didn’t look closely – but if your argument is that the value of living in Burien is lower than living in Green Lake or Ravenna, I think that’s rather obvious. For those who can’t afford single family homes next to one of the three new light rail stations opening up in Seattle, I think Burien provides a pretty good value for what you get, relative to other areas.

    I agree, Dustin. A 2 hour commute isn’t unusual.

    I don’t agree that it isn’t unreasonable however. We, as a society, have gotten used to it. But it’s fueling a massive epidemic of obesity, diabetes, cancer and all sorts of horrible cardiovascular outcomes. It’s also incredibly bad for your stress levels and other aspects of mental health. If you don’t give a ***** about yourself, then set yourself up for an early death, and likely disability and low quality of life by making a 2 hour commute a “normal” part of your routine. I won’t even get started on what it’s doing to our environment.

    My main point was actually that you won’t really be saving that much money. Cars are expensive. Not building your exercise into your daily routine and having to buy a gym membership is expensive. Your time is incredibly valuable and other things that you need to pay someone else to do instead of doing yourself, live maintaining your house and making your own meals get expensive when you don’t have that time. Your health is incredibly valuable, and incredibly expensive when it goes to ***** People don’t take these things into account when they choose the extra 500 sq ft as a trade off for 2 hrs a day of (what I consider) a living hell. If they did, they would often make a different decision.

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